MBA Program

Course Code: MGT601

Mid-Term Exam

Submitted to:
Prof. Dr. Nazmul Amin
Adjunct Faculty, Brac University

Submitted by:

Name ID
Ummah Shafi 20164008

Submitted Date: 21/11/2021

Brac University Student Honor Code

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____________Ummah Shafi__________________________
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Question 2 a) Why is it important for a firm to study and understand its internal
environment? Discuss with examples. b) What are the four criteria firms use to determine
which of their resources or capabilities are core competencies? Why is it important for
these criteria to be used? Discuss with examples.

Answer 2 a)
Internal environment analysis
An internal environment is a set of elements that define the atmosphere within the company's
structure and an internal environment analysis examines an organization’s internal environment
to assess its resources, assets, characteristics, competencies, capabilities, and competitive
advantages. In short, it allows us to identify our organization's strengths and weaknesses, which
can help management during the decision-making, strategy formulation, and execution
processes[ CITATION Cas212 \l 1033 ].

Why Grameenphone need to study and understand its internal environment

It is vital for a firm to study and understand the internal environment because the overall success
and sustainability of a firm depends on the factors of internal environment. The factors of
internal environment help firms to gain market share, operate business effectively and efficiently.
Among all the factor some factors accelerate the growth of a firm whereas some factors help a
business to run their operation in optimum manner. The factors of internal environment are the
Resources, Capabilities, Core Competencies, Competitive Advantage, Value Chain Analysis, and
SWOT Analysis. In below I will present components of the Internal Analysis in figure 1.1:
 Figure 1: Components of the Internal Analysis

The Chart/internal environment of a firm represents the firm’s internal strengths, weaknesses,
opportunities and threats. If a firm wants to be the market leader and operate business efficiently
than their competitors then firms have to analyze and comprehend the internal analysis. For
example, Grameenphone is the market leader in the telecom sector of Bangladesh, whereas
Teletalk’s market share are lower than all other operators even though the company is owned by
the government of Bangladesh. Recently Mr. Md. Shahab Uddin, the managing director of
Teletalk contacted Sigma consultancy firm to accelerate the business of the company. On of the
executive of the consultancy firm suggested the MD of Teletalk to perform their internal analysis
so that they will know the specific problems of the company. The MD asked the firm to perform
the analysis on behalf of the company. The results of the analysis presented below:

Resources
In the production process of a company, resources are inputs. They include a wide range of
personal, social, and organizational phenomena, including capital, equipment, individual
employee skill, patents, financing, and brilliant management. There are two types of resources:
Tangible resources and Intangible resources. Tangible resources are assets that can be observed
and quantified. The four primary categories of tangible resources are financial, organizational,
physical, and technological. Intangible resources are assets that are rooted deeply in the firm’s
history, accumulate over time, and relatively difficult for competitors to analyze and imitate
because they are embedded in unique patterns of routines. The three categories of intangible
resources are human, innovation, and reputational. If we analysis one resource (human) of
Grameenphone and Teletalk we will see that;

The employees of Grameenphone are highly efficient & skilled. They always maintain the
standard of working there with the help of their skills. The HR department is also very efficient
in managing and hiring staffs for this Telecom Brand. The reason behind this responsible manner
is the Human Resource Department of Grameenphone which follows an ethical strategy to
recruit and manage employees. On the other hand Teletalk has a lack of market knowledge and
shortage of skilled manpower of run the business in Bangladesh. So, by this analysis the Teletalk
Company needs to hire skilled manpower and have to train their employees of continuous basis
to solve their problems.

Another example is that in the management body of Grameenphone, employees from different
countries and cultures exist. The Chief Executive Officer and Chief Technical Officer are Indian
and many employees come from different countries around the world. Because of this reason,
there may sometimes be a lack of understanding due to the cultural gap. Also, they might not
realize to understand the future goals of the company. This cultural gap is not good for
Grameenphone to achieve future goal, so they need to analysis how to reduce this cultural gap.

Capabilities
Capabilities refer to an organization's ability to coordinate its resources and put them to
productive use, or "the capacity for a group of resources to undertake a task or activity in an
integrated manner."
For example, Grameenphone Limited has the capabilities to Collaboration with Apple and
Samsung. It sells smartphones of different recognized brands including apple (iPhones) and
Samsung (Galaxy). These phones are offered with different packages. Users can buy these
smartphones paying the price at instalment. This strategy gives Grameenphone extra advantages
to reach and sell their connections to the upper society of the country. On the other hand due to
the lack of specialists the Teletalk Company failed to do so till now.

Core Competencies
Core competencies are the distinguishing features that distinguish a company or an individual
from the competition. So, Resources & capabilities that serve as a source of competitive
advantage for a firm over its rivals. Identifying and leveraging core capabilities is critical for a
new firm looking to make a name for itself, as well as an established organization looking to stay
competitive. A successful company has determined what it can do better than its competitors and
why. The "why" is one of its fundamental strengths. Core competences, also known as core
capabilities or distinctive competencies, are a subset of core competencies. Competitive
advantages are derived from core capabilities.
For Example, Grameenphone has the largest network coverage. It has a large number of BTS
station all over Bangladesh. That is why the company can provide better connectivity with
excellent clear networking system in most of the areas of Bangladesh. Also, Grameenphone has
been dedicated to set up a strong network through the widest rural area across the country to
provide the utmost service to the people of the country. This is a core competencies of
Grameenphone.

Competitive Advantage
A competitive advantage is a competitive advantage acquired over competitors by providing
consumers with more value, either through lower pricing or by delivering superior goods and
service that justify higher prices. Porter proposed four "universal" business tactics that may be
used to acquire a competitive edge. The strategies are concerned with the extent to which a
company's operations are limited vs wide, as well as the degree to which it strives to differentiate
its products. To gain the competitive advantage the company needs to increase their efficiency in
business operations. However, the company have some competitive advantage over it
competitors that the company failed to utilize.
For example, Grameenphone Limited introduce their Own Field Force. GP make a Regional
Operation team by own employee who are working dedicatedly 24X7 to live the network from
32 sub center of whole the country. This field force actually create the difference among telecom
operators for the network availability & quality & make GP no one network operator in
Bangladesh. Their dedication, innovation, efficient operation give uninterrupted network service
to the customers.

One another example of Grameenphone competitive advantage is, they provide the sufficient
bandwidth all over the country GP go with partnership to Bangladesh Railway to take support
from its existing optical fiber & lies to deploy new optical fiber. Besides this GP placed 1500KM
highway fiber for 1+1 protection purpose.

Figure 2: Optical Fiber Route Information

Value Chain Analysis

The sequence of actions that a company engages in to produce value, which includes not just the
many elements of the supply chain but also operations like marketing, sales, and service.
Grameenphone concentrates more on it supply chain to create value to their consumers.

For example, to reduce the operational cost GP has taken initiative to outsource in supportive
function. In technology division they outsource their passive maintenance part. Besides this some
other supporting function like P&O, Information technology, call center etc. Through
outsourcing GP reduced its employee no from 5200 to 2650 in last four years. In this way GP
reduce its operational cost. One another example is that GP also introduce voltage dependent
timer & bring some efficient process in DG sites to save the fuel cost. This is also a major cost
drive which help GP to reduce the operational cost.

Through this above project GP magically reduce its half of the energy cost which help to be a
cost leader in telecom market in Bangladesh.

SWOT Analysis
It is the analysis of a firm’s strengths, weaknesses, opportunities, and threats to determine what
magnitude of a firm’s operation can increases. This analysis is performed by most of the
renowned and prominent companies in the world to judge their internal environment.

For example, Grameenphone has so many strength, weaknesses, Opportunity and Threats:

Strengths
Strengths describe the internal and positive attributes, tangible and intangible to your
organization. GP strengths are given below:

Market leader
GP is the market leader in Telecommunication industry in Bangladesh. It has most of the
subscribers into the country and also it has a strong mobile networks. It has 73 million
subscribers as of January 2019 data collection. GP market demand is high and most of the
customers uses the GP SIM for their business and personal purposes.

Collaboration with Apple and Samsung

It sells smartphones of different recognized brands including apple (iPhones) and Samsung
(Galaxy). These phones are offered with different packages. Users can buy these smartphones
paying the price at instalment. This strategy gives Grameenphone extra advantages to reach and
sell their connections to the upper society of the country.

Introduction of latest Technologies

It has always been the first mover to introduce latest technologies among all the private
telecommunication companies of Bangladesh.

Good Ownership Structure

Grameenphone has the best ownership structure in the telecommunication industry in
Bangladesh. Telenor is one of the largest companies, which is operating in different countries
around the world. In Bangladesh, Grameen Bank is one of the largest NGO, which has the sound
communication all over the country. It is a joint venture enterprise between Telenor (55.8%), the
largest telecommunications service provider in Norway with mobile phone operations in 12other
countries, and Grameen Telecom Corporation (34.2% ), a non-profit sister concern of the
internationally acclaimed micro-credit pioneer Grameen Bank. The other 10% shares belong to
general retail and institutional investors.

Skilled Human Resource

The employees of Grameenphone are highly efficient & skilled. They always maintain the
standard of working there with the help of their skills. The HR department is also very efficient
in managing and hiring staffs for this Telecom Brand. The reason behind this responsible manner
is the Human Resource Department of Grameenphone which follows an ethical strategy to
recruit and manage employees.

Effective Support Organization

GP has taken this idea from the employees of Bangladesh Railway and Grameen Bank who are
experienced and capable of providing precious and effective guidelines for the operations.

Easiest Access to the Widest Rural Network

Grameenphone has been dedicated to set up a strong network through the widest rural area
across the country to provide the utmost service to the people of the country.

Network Availability
Grameenphone has the largest network coverage. It has a large number of BTS station all over
Bangladesh. That is why the company can provide better connectivity with excellent clear
networking system in most of the areas of Bangladesh. Among all, GP introduced 3G networking
service second after the Teletalk (the government-owned Telecom Company).

Brand Value
Grameenphone is well known all over the country because of its strong network which
developed the strongest brand image in the country. This brand recognition symbolizes the
strongest business activities.
Revenue
Because of effective strategic planning, quality service, and networking coverage Grameenphone
has been able to earn a strong revenue growth which gave them financial soundness.

Largest Geographical Coverage

GP already have covered most of the geographical areas in Bangladesh. Their widest network
coverage all geographical locations all over Bangladesh. That’s why the company can provide
better connectivity in most of the area of the country.

High Ethical Standard

GP always ensure the quality of telecom service. Grameenphone is strict to follow its ethical
standard of service quality.

Weaknesses
Weaknesses are negative and internal factors that reduce from organizational strengths.
Organizations need to enhance these areas in order to compete with their best competitor.

Complicated pricing structure

Grameenphone has lots of service packages. The pricing of these packages and their billing
policies are different. These are difficult to promote and hard for users to understand.

Technical Problems with Offered Packages

Almost all of the new offers from Grameenphone are having some technical problems and users
are experiencing those problems. Either they are not working at all or part of the services of
those offers is disabled. The Grameenphone is not aware of those problems. They are delaying to
give a solution to these problems. As a result, it is increasing customer dissatisfactions.

Cultural Gap
In the management body of Grameenphone, employees from different countries and cultures
exist. The Chief Executive Officer and Chief Technical Officer are Indian and many employees
come from different countries around the world. Because of this reason, there may sometimes be
a lack of understanding due to the cultural gap. Also, they might not realize to understand the
future goals of the company.

Different Mind
Sometimes different ideas may create problem. In Grameenphone, this is highly encouraged to
apply new strategy for better performance. Sometimes, it may create problem because employees
are used to with previous strategy.

Poor Interconnection with BTTB

GP has poor connection with the Bangladesh Telegraph and Telephone Board (BTTB).

No Long-Term Channel Strategy

GP has no long term distribution channel. It has always short term distribution channel to gain
more profits in a short term period.
Opportunities
Opportunities are external attractive factors that represent reasons your business is likely to
prosper.
Increasing demand for telecom service
As Bangladesh is a developing country, its people are developing in technologies too. As a
result, there is increasing demand for the mobile phones and mobile network providers.GP has a
lot of opportunities in this sector for increasing their demand.

Better Interconnect Agreement

Grameenphone is going to have agreement with T&T to have better communication from land
phone. The organization has agreements with other operators like Robi, Citycell, and Banglalink
to have better internal connectivity.

Economic Growth
The economic growth of the country will increase the expansion of telecommunication industry
from 2016 to 2018; there is a huge change in the telecommunication sector.
Buying power of customer is increasing
Grameenphone customers are increasing day by day. Also customer’s buying power is
increasing. For example many customers can afford smartphone and also using multiple SIMs
for regular uses. That’s why it is a big opportunity for Grameenphone.

Increased International Activities in Bangladesh

As Bangladesh has been experiencing FDI and many foreigners are working here, the
international activities have increased in the country. They need to be connected not only within
the country but also outside of the country. So, the market is also expanding globally.

Increased Cross Boarder Communication

As international activities increased in the country, people need the connectivity not only within
the country, but also outside of the country. So, the market for outside of the country is also
expanding.
Flexibility of Mobile Phone
Mobile phones became more dynamic today. These modern handsets are being used as an
alternative to many devices such as music, video, camera, laptop etc. Communication through
mobile phone became popular. The land phone connection is pretty costly also. Smartphones are
also easier to carry because of the portability, people are getting more dependent on mobile
phones than land phones. So, there is a strong probability of achieving more sales of connections.

Economic Growth of Bangladesh

The economic growth of the country will increase the expansion of telecommunication industry.
From 1995 to 2012, there is a huge change in telecommunication sector. Increasing Demand for
Telecom Services: The market of telecommunication is expanding. So, this is easy for
Grameenphone to achieve the major portion of expanded market because of its leading position.

Declining Prices for Handsets

In the past, people of low income had low access to mobile phone services due to the high price
of handsets. When the Chinese mobile industry enters the market, the flood of cheap handsets
with the latest technology started. Now anybody can buy and maintain handsets as the telecom
service price is also at the decrease.

New International Gateway

As BTTB’s new gateway of an international connection made it easy for the telecom companies
to provide services of ISD call and international roaming.

Threats
Threats are external and negative factors that you have no control but you may benefit by having
contingency plans to address them if they should occur.

Maturity Stage of Industry Life Cycle

The telecommunication industry is in the maturity phase. The basic characteristics of this phase
are that the profit stops to grow as because the existing companies already grabbed all the market
shares, and there is nothing left. So, the net income stops growing further.

Intense Competition
In the mature level of the industry life cycle, the competition is intense. In our country, the
competition in the telecommunication industry is intense as well. Every company is trying to be
the best telecom brand in this country.

Devaluation of Taka
As the investment comes from the overseas and profit goes to the home country, there is a risk of
currency depreciation which may reduce the profit.

Latest technology
Upgraded technologies are being used by the competitors every day in every detail. They are
using the latest technology for getting best network provider station, which is a big threat for GP.

Strong Competitors
Robi and Airtel is doing extremely well in the telecommunication sector of Bangladesh. They are
now in 2nd position. Their market coverage is also increasing and currently they are offering
many lucrative offers to the customers.

3rd party involvement

Currently Grameenphone is hiring some 3rd party company to run some business sector like
customer service, technology etc. Those companies are not giving proper service as like as
Grameenphone did.

More Rigid Government Regulations

Government is becoming restricted for taking away currency from the country. So, foreign
companies are threatened because they may have risk to back their investment to the country.
The government also put restriction for work permit of foreign employees.
Upgraded Technology Used by Competitors
New mobile phone operators like Banglalink, Airtel are establishing their channels with latest
technology, whereas GrameenPhone is using the stations which are five years old. So, this is one
of the disadvantages for Grameenphone.

Political Instability
Political instability is another threat. With the change of Government, policies are also changed.
So, this is difficult for any multinational organization to cope with new policies.

Price War
Finally, the price war is the biggest threat for the company for its profit. As the competition is
intense, the competitors are offering new packages frequently which are decreasing the prices of
the services as well. There is a direct negative effect on the profit margin of Grameenphone.
Recently, it has been the primary concern for any mobile operator in the market. To remain
competitive, they must reduce the price of their offered products.

So, by analysis this internal analysis Grameenphone can gain market share, operate business
effectively and efficiently.

Answer 2 b)
A resource or capability that provides a firm competitive advantage is defined as core
competencies. The business functions or operational tasks that a corporation excels at are known
as core competencies. The key competences of a corporation are what set it apart from its
industry competitors. They are also the assets and capabilities that enable a business to be
profitable.

The four criteria are the valuable, rare, costly to imitate, and non-substitutable, which used by
firm to determine the core competencies of a firm. The resources and capabilities of a firms are
part of the operating strategy of firm. To determine which resources or capabilities are the core
competencies a firm analyze those four criteria. Core competencies are defined as a company's
resources or capabilities that meet specified criteria. If a resource or capability fits the following
characteristics, it helps a company gain a competitive advantage over competitors and achieve
profitability.

When a company's capability or resource helps it to seize opportunities or fight against external
dangers, it is valuable. When few or no other competitors in the sector have the resources or
expertise, it's an uncommon occurrence. When competitors must pay a high price to duplicate a
resource or capability, it is considered costly to copy. When no other options are available, it is
non-substitutable.

In our analysis I will show how SCB Bangladesh can recognize their core competencies by using
the four criteria.

Valuable:
This particular capability helps firms to neutralize opportunities and exploit threats. A capability
or resource is valuable when it allows the company to capitalize on opportunities or defend
against external threats.

Example: SCB Bangladesh is always utilizing opportunities before the most of the banks in
Bangladesh because the bank has multinational appearances in most of the countries in the world
also it is defending external threats by other Bangladeshi banks in Bangladesh.

Rare:
Rare capabilities are possessed by few, if any current and potential competitors. This capability
is not possessed by many other businesses.

Example: SCB Bangladesh Limited use SAP software, a high end ERP software to perate thei
business. In Bangladesh no other bank is using this particular software, most of the Bangladeshi
banks are using simple ERP software.

Costly to imitate:
Other firms cannot produce the same product easily because the cost of production is substantial.

Example: The Letter of Credit service of the bank is unique that is somewhere impossible to
imitate because other banks have to set up country offices in other countries to provide the
service.

Non-substitutable: This one has no strategic equivalence.

Example: SCB is planning to implement Blockchain based letter of credit in Bangladesh that has
no substitute in Bangladesh.

From the above-mentioned analysis, it can be state that SCB Bangladesh has many core
competencies over its competitors that derived by analyzing the four criteria valuable, rare,
costly to imitate, and non-substitutable.

To identify which resources or capabilities are core competencies, it is significant to use the four
criteria because the four criteria points out the core competencies of a firm. The core
competencies help the business achieve sustainable competitive advantage and the optimum
return from the market. The idea here is that if a firm is to maintain sustainable competitive
advantage, it must control a set of exploitable resources that have four critical characteristics.
These resources must be (1) valuable, (2) rare, (3) imperfectly imitable (tough to imitate), and (4)
non substitutable. It is critical to possess all four attributes. If you don't add value, no one will
care what you have. You can't have something unique unless it's rare. Any ostensibly positive
differences will be negated if others can reproduce what you have or replace it with a substitute.

True sustainable advantage comes from assets and business models that are simultaneously
valuable, rare, difficult to imitate, and for which there are no substitutes. For that reason, in our
previous example of SCB Bangladesh we have seen that the four criteria help the company to
develop and find out the core competencies which will help them to do business by topping the
chart.
Question 3 a) What is the usefulness of Porter’s ‘Five Forces Model’ in strategy making?
Discuss with examples. b) Discuss (with example) how the strong bargaining power of
buyers influences the strategic approach of a company.

Answer 3 a)
The Usefulness of the Five Forces Model of Porter:
The Five Forces Model is a tool for identifying mission-critical factors based on so-called five
forces that govern competition. These forces are: (1) the intensity of rivalry among competitors;
(2) the threat of potential entry; (3) the bargaining power of suppliers; (4) the bargaining power
of buyers; and (5) the threat of substitution.

One of the benefits of the Five Forces Model is that it provides a framework for assisting an
organization evaluate its competitive situation based on the five categories above. Doing so can
be helpful in identifying opportunities and threats from the external environment needed to make
informed strategic decisions and solutions.

Another thing is that examining how the five forces of competition as it applies to a particular
organization can also help in determining the effects on organizational performance and
understanding the level of competition within the industry or market in which it operates.

Another key advantage of the Five Forces Model is that it does not require specialized or
technical skills. It is also inexpensive. An organization can simply choose individuals from its
pool of workforce. Take note that these individuals should have established familiarity about the
organization and over the industry and market, as well as strong research competencies.

The Integration with other analytical frameworks or tools is another benefit of the Five Forces
Model. The framework can be used to expand the SWOT and PEST analytical frameworks,
particularly by providing a specific guideline for external situational analysis. It can also help
expand the VRIO framework, particularly when it comes to analyzing the capabilities and
resources of existing and emerging competitors.

Example: In the Smart-phone market, the customers’ bargaining power is rising because of the
increasing number of choices in the Smart-phone industry. Apart from that, customers have all
required information so that they can bargain effectively. In Bangladesh, there are different types
of Smart-phones at different prices. However, low-end Smart-phones like Symphony, Walton,
Micromax are popular here. Recently, some leading brands of the world like Huawei, Samsung,
LG, Sony, Nokia started supplying Smart-phones in Bangladesh with low prices. This is because
the number of opportunities to switch from one product to another is becoming higher and
customers have lot of bargaining power in Bangladesh. Symphony Mobile industries in
Bangladeshi market have created significant brand positioning and target segment on income
categories people. Moreover, advanced technologies make it difficult for new entrants in the
market, because they have to develop those technologies before effectively competing. Apart
from that, Bangladeshi government has imposed a huge tax on handset from import can also
make difficult for the new entrants.

The degree of rivalry depends on some factors: similarities of companies, competitor size,
number of players, low-cost switching, level of differentiation, etc.

Answer 3 b)
The Bargaining Power of Buyers, one of the forces in Porter’s Five Forces Industry Analysis
framework, refers to the pressure that customers/consumers can put on businesses to get them to
provide higher quality products, better customer service, and/or lower prices.

It is important to keep in mind that the bargaining power of buyer’s analysis is conducted from
the perspective of the seller (the company). The bargaining power of buyers would refer to
customers/consumers who use the products/services of the company.

Determining Factors: Bargaining Power of Buyers:

Buyer power gives customers/consumers (buyers) the ability to squeeze industry margins by
pressuring firms (the suppliers) to reduce prices or increase the quality of services or products
offered.

There are four major factors to consider when determining the bargaining power of buyers:
1. Number of buyers relative to suppliers: If the number of buyers is small relative to that of
suppliers, the buyer’s power will be stronger.
2. Dependence of a buyer’s purchase on a particular supplier: If a buyer is able to get similar
products/services from other suppliers, buyers depend less on a particular supplier. Therefore,
the power of the buyer would be greater.
3. Switching costs: If there are not many alternative suppliers available, the cost of switching is
high. Therefore, buyer power would be low.
4. Backward Integration: If the buyer is able to integrate or merge suppliers, the buyer has
greater bargaining power over the existing suppliers.

The Bargaining Power will be high if

 There are fewer buyers relative to that of suppliers
 The switching costs of the buyer are low
 If the buyer is able to backward integrate
 The buyer purchases product in bulk (high volume)
 The buyer is able to get similar product/services from other suppliers
 The buyer purchases the majority of the seller’s products
 Several substitutes are available on the market
 Product is not differentiated

Taking into consideration the four factors that affect buyer power, we can tell that the buyer
power in the pharmaceutical industry is overall high/medium.

However, buyer power alone does not determine the overall attractiveness of a Firm. Other
forces (threat of new entrants, rivalry among existing competitors, bargaining power of suppliers,
the threat of substitute products or services) must be taken into consideration to determine an
industry’s overall attractiveness.

Example:
In Telecommunication industry, Grammenphone Limited can tackle the Bargaining Power of
Buyers By building a large base of customers. This will be helpful in two ways. It will reduce the
bargaining power of the buyers plus it will provide an opportunity to the firm to streamline its
sales and production process. By rapidly innovating new products. Customers often seek
discounts and offerings on established products so if Grammenphone Limited keep on coming up
with new products then it can limit the bargaining power of buyers. New products will also
reduce the defection of existing customers of Grammenphone Limited to its competitors.

Question 4 a) Define the term ‘strategy’ what is its significance for any Business
Organization? Explain with a suitable illustrative example. b) Consider Porter’s three
generic strategies. In your opinion, how cost-leadership strategy advantages can be
sustained? Give example to support your argument.

Answer 4 a)
Strategy is an action that managers take to attain one or more of the organization’s goals.
Strategy can also be defined as “A general direction set for the company and its various
components to achieve a desired state in the future. Strategy results from the detailed strategic
planning process”. A strategy entails combining organizational operations as well as utilizing
and distributing scarce resources within the organizational environment in order to achieve
current goals. When developing a strategy, keep in mind that decisions are not made in a
vacuum, and that any action done by a company is likely to elicit a response from those who are
affected, such as competitors, customers, employees, or suppliers.

Because it is impossible to predict the future, strategy is essential. Firms must be prepared to deal
with the unpredictable events that make up the business environment even if they lack perfect
foresight. Strategy is created to take into account the probable behavior of customers and
competitors. Strategies dealing with employees will predict the employee behavior.

The importance of strategy in a business organization is enormous because Strategy is a well-

defined roadmap of an organization. It defines the overall mission, vision and direction of an
organization. The objective of a strategy is to maximize an organization’s strengths and to
minimize the strengths of the competitors. Strategy, in short, bridges the gap among “where we
are”, “where we want to be”, and “how will we get there”.

Illustrative Example: A business wishes to expand its current operations to include the
production of widgets. The company's strategy could include researching the widget sector as
well as other companies that produce widgets. As a result of this study, the company can set a
target for how to join the market while distinguishing itself from competitors' offerings. It might
then devise a strategy for determining whether the strategy is effective.

Answer b)
Porter (1980) argued that there are: 3 basic ‘generic’ competitive strategies attempt to gain SCA
through: Cost leadership: Being the lowest cost producer/supplier in the industry;
Differentiation: The consumer perception of uniqueness in product/service; Focus/Niche:
Finding a market segment and concentrate activities there.

Cost leadership is one of three generic business strategies discussed by Porter in his well-known
book. Essentially, a firm that follows a cost leadership strategy attempts to earn higher returns
and competitive advantages through offering products or services at the lowest prices in the
industry. Cost leadership necessitates a relentless pursuit of cost-cutting techniques. Improved
operating efficiencies, production learning or scale economies, unique raw material access, or
particular partnerships with suppliers, distributors, or customers can all help cut costs.

Within a Cost Leadership approach, there are two basic ways to accomplish and sustain this:
Profits are increased by cutting costs and charging industry-average pricing. Increasing market
share by offering lower prices while maintaining a respectable profit margin on each transaction
due to lower costs. Vertically integrated or integrated into high value added, proprietary
components and services are common among cost leaders. They can be the most efficient
processors in at least one level of the value-added chain because of these capabilities.
Furthermore, a low-cost leader often has a significant relative market share, allowing for
numerous scale advantages in purchasing and manufacturing that enables the low-cost leader to
sustained the operation.

Example: A company like Sajao.com is a good example of this strategy. They try to limit the
number of employees in their shops and allow customers to serve themselves in an effort to cut
operational costs. These cost cutting measures allow them to offer brands that are of a certain
quality at an affordable price. This is how the company sustained the strategy in their industry.
References
1) Cascade Team. (2021, August). Retrieved from https://www.cascade.app/blog/internal-analysis
2) Company Profile. (2021). Retrieved from https://www.grameenphone.com/about/discover-
gp/about-grameenphone/company-profile
3) en.wikipedia.org. (2021, August). Retrieved from https://en.wikipedia.org/wiki/Grameenphone
4) Faizul Haque. (2021). The Strategy Watch. Retrieved from
http://www.thestrategywatch.com/swot-analysis-grameenphone/