STRATEGIC

MANAGEMENT
1. Define Strategy. What Vision? What is Mission? How is it important for
organizations?

Strategy means – Setting the objectives, make action plan to reach the objectives and
get resources to carry out action plan.
Strategy is the means to achieve long-term goals and objectives that best utilize
resources and aims at a sustainable competitive advantage.
A strategy gives a clear direction to the organization on how to achieve desired goals
and objectives efficiently and effectively.

C K Pralhad

Strategy can be defined as the determination of the basic long-term goals and
objectives of an enterprise, the adoption of courses of action and the allocation of
resources necessary for carrying out these goals.

Vision

Vision is a future-oriented concept of the business (Strategic Management). It

provides a company the sense of ‘where they want to be’ or ‘what they want to
become’. A vision describes some ideal future state of the organization. It describes
management’s aspirations for the future – a destination for the organization. We can
say that a vision is a dream – a distant, long-term dream. However, a vision is
‘distinctive and specific to a particular organization.’ Therefore, it helps a company
create a distinctive identity and focus on its products, customers, and technology.
(Vision helps organisation to create mental picture of the end which the organisation
is targeting and should create passion among employees. But it does not specify the
methods or means to be used to reach the result. It intends to answer the basic question
– “what do we want to become?)
 Vision should be
• Leader inspired
• Shared and supported
• Comprehensive and detailed
• Positive and inspiring
• Easy to communicate
• Flexible

Importance of Vision in an organization:

Builds a Stronger Team

It can take some effort to educate your team on 1) what is a business vision? and 2)
why they need to care. But when your employees understand your vision, they try to
embody this vision, and apply it not just to their work but their personal lives.

Defines Company Culture

Is your workplace a reflection of your vision? If not, it might be time to reassess your
vision. If your staff believes in your company vision, then it will show in the
workplace. For companies that value creativity and innovation, a line of cubicles in
the office might not be in line with this vision. Most modern workplaces have shifted
to a more open space, which is a sign of a collaborative and dynamic work
environment.

Guides Important Decisions

Another reason why vision is important is to have a moral compass in times of
difficult decisions. Your company vision defines your values as an organization. It
draws a line between what kind of organization you want to be and what you don’t
want to be. Having vision statements can help difficult decisions be less confusing
and easier to make. Because you have clearly defined your values in your vision, you
are more decisive in critical business decisions and you do it with conviction.
Strengthens Brand Identity
Customers love your company for a reason, and most of them probably have to do
with your values. Having vision statements help you create a business that clearly
defines your brand and its target market. Even when your sales are on a decline, you
won’t doubt your product or service because it has attracted the right people that
believed in your vision. You’ll continue to stick to your brand’s identity and core
values because it is in your vision.

Identifies direction for the organisation

Provides Interest and Commitments

Encourages and builds confidence

Builds loyalty

Leads to creativity

Provides a competitive advantage

When Vision is idealistic, Mission is Realistic. Vision and Mission is for both
individuals as well as for organizations.

Mission

What an organization is, why it exists and what purpose it serves.

A mission acts as a guide to decision-making for all levels of management. As a broad
goal of an organization, a mission justifies an organization’s existence. It is a
statement of an organization’s reason to exist. It states what the company is providing
to society. It expresses ‘who we are; what we do, and why we are here.’

Mission statement should meet following criteria:

• It should have a market emphasis rather than product emphasis
• It should be focused - not vague and too general
• It should be achievable
• It should be motivational and inspiring
• It should differentiate the organisation from others
• It may change over a period of time – depending on management focus, purpose of
an organisation may change. A mission should reflect this.

Importance of Mission in an organization

Creating identity
Mission statements create the core identity of a company and establish a basis for
everyone in the company to make decisions. Mission statements contribute to a
company's brand and encourage unity among everyone who supports or works with
the company. A company's identity differentiates it from competing organizations,
and the mission statement is one of the most defined ways to express that identity to
others.

Attracting talent
When looking for a job, many people use a company's mission statement to decide if
they want to apply. A strong mission statement that people can relate to encourages
talented people to get involved with the company. Mission statements allow like-
minded people with similar goals to naturally work together on projects that are most
important to them.

Guiding culture
A company's mission statement provides a guide for the company culture and
workplace environment to develop positively. The values, norms and beliefs of a
company create a unique cultural environment, and mission statements provide an
official method for expressing that culture. A mission statement should clearly reflect
these values to guide employee actions and organizational initiatives.
Developing purpose
A strong mission statement gives employees purpose and improves engagement in
their work. Mission statements help employees see the meaning and purpose of their
work by giving them clear reasons their job benefits a larger goal. Mission statements
help employees see the positive aspects of their daily activities, boosting morale and
creating long-term employee investment in the workplace culture.

Improving performance
Mission statements provide a clear goal for employees and can improve their job
performance. They are a great way to motivate employees to work towards a
company's long-term plans for growth. A good mission statement creates an
environment that encourages everyone to produce high-quality work and hold high
standards for themselves. Employees can engage with a company's core values by
reading its mission statement and applying those ideas to their work.

Building community
Mission statements help companies and employees connect with members of their
community and establish a good reputation among customers, clients and business
partners. Working for a company that has a great mission statement can help you
network with like-minded people who share a similar mission. A mission statement
should be appealing to potential customers and community members to build positive
associations with their brand.

Envisioning the future

A mission statement provides an ideal vision for the company's future and directs its
growth. Mission statements encourage employees to think about how their actions
will impact future business success and positive company culture. Because mission
statements direct employee actions, they can have a significant impact on people's
futures within the company and how the organization itself will grow over time.
Aligning behaviors
Mission statements help everyone on a team align their behaviors toward the same
goals. They can use mission statements to evaluate a business structure or make
decisions about policies and procedures. Following a mission statement makes sure
different departments work together and that every aspect of the workplace
contributes to progress. Mission statements keep behaviors consistent with ideal
outcomes, regardless of the situation.

Encouraging critical thinking

Mission statements encourage people to think critically about the influence their
actions will have on company goals in both the long and short term. Having a clear
mission statement helps people consider how the company could grow in different
contexts while still upholding their values. A mission statement is important because
it provides a concise strategy and philosophy that applies to any situation within a
company.
2. Distinguish between Vision and Mission.
 3. What is Strategic Management Process? Explain each element with detail.

Strategic management is a dynamic process. it is continual, evolving, iterative

process. it means that it cannot be a rigid, stepwise collection of few activities
arranged in a sequential order rather it is a continually evolving mosaic of relevant
activities. Managers perform these activities in any order contingent upon the
situation they face at a particular time. And this is to be done again & again over the
time as the situation demands.

There are four major phases of strategic management process which are as under
• Establishing the hierarchy of strategic intent
• Formulation of strategies
• Implementation of strategies
• Performing strategic evaluation and control

Establishing the hierarchy of strategic intent:

It is a first step in strategic management Process. It involves the hierarchy of
objectives that an organization set for itself. Generally, it includes vision, mission,
business definition and objectives establishing the hierarchy of strategic intent which
includes –
1. Creating and communicating a vision.
2. Designing the mission statement.
3. Defining the business.
4. Adopting the business model.
5. Setting objectives.
The hierarchy of strategic intent lays the foundation for strategic management of any
organization. The strategic intent makes clear what organization stand for. In the
hierarchy, the vision intent serves the purpose of stating what the organization wishes
to achieve in the long run. The mission relates the organization to the society. The
business definition explains the businesses of the organization in terms of customer
needs, customer groups and alternative technologies. The business model clarifies
how the organization creates revenue. And the objectives of the organizations state
what is to be achieved in a given period of time.

Formulation of Strategy:
Formulation of strategy is relating to strategic planning. It is done at different levels
i.e., corporate, business, and operational level. The strategic formulation consists of
the following steps.
1. Framing of mission statement: Here the mission states the philosophy and
purpose of the organization. And all most all business frames the mission statement
to keep its activities in the right direction.
2. Analysis of internal & external environment: The management must conduct an
analysis of internal and external environment. Internal environment consists of
manpower, machines, and other sources which resides within the organization and
easily alterable and adjustable. These sources reveal the strength and weakness of the
organization. External environmental factor includes government, competitions,
consumers, and technological developments. These are not adjustable and
controllable and relates to organizations opportunities and threats.
3. Setting of objectives: After SWOT analysis, the management can set objectives in
key result areas such as marketing, finance, production, and human resources etc.
While setting objectivities in these areas the objectives must be realistic, specific, time
bound, measurable, and easy attainable.
4. Performance comparison: By undertaking gap analysis management must
compare and analyse its present performance level with the desired future
performance. This enables the management to find out exact gap between present and
future performance of the organization. If there is adequate gap then, the management
must think of strategic measures to bridge the gap.
5. Alternative strategies: After making SWOT analysis and gap analysis
management needs to prepare (frame) alternative strategies to accomplish the
organizational objectives. It is necessary as some strategies are to be hold and others
to be implemented.
6. Evaluation of strategies: The management must evaluate the benefits and costs of
 every alternative strategy in term of sales, market share, profit, goodwill and the cost
incurred on the part of the strategy in terms of production, administration, and
distribution costs.
7. Choice of strategy: It is not possible to any organization to implement all strategies
therefore management must be selective. It has to select the best strategy depending
on the situation and it has to consider in terms of its costs and benefits etc.

• (Doing organisational appraisal

• Performing environmental appraisal
• Formulation corporate level strategies
• Formulating business level strategies
• Undertaking strategic level analysis
• Exercising strategic choice
• Preparing strategic plan) (GNVS)

Strategy Implementation:
Once the strategies are formulated the next step is to implement them. The strategic
plan is put into action through six sub processes known as project, procedural,
resource allocation, structural, behavioural, and functional implementation. The
project implementation deals with the setting up of organization. Procedural
implementation deals with the different aspects of the regulatory framework within
which organizations must operate. Resource allocation relates to the procurement and
commitment of resources for implementation. The structural aspect of
implementation deals with the design of organizational structures and systems and
reorganizing to match the structure to the needs of strategy. The behavioural aspects
consider the leadership style for implementing strategies and other issues like
corporate 8 culture, corporate politics, and use of power, personal values and business
ethics and social he responsibilities. The functional aspects relate to the policies to be
formulated in different functional areas. The operational implementation deals with
the productivity, processes, people, and pace of implementing the strategies for any
strategy implementation there are five major steps. Such as
• Formulation of plans.
• Identification of activities.
• Grouping of activities.
• Organizing resources.
• Allocation of resources.

• (Continuous Growth, Stability, Turnaround, Combination

• Designing the structure, systems, and processes
• Managing behavioural implementation
• Managing functional implementation
• Operationalising strategies) (GNVS)

Strategic Evaluation:
Strategic evaluation appraises the implementation of strategies and measures
organizational performance. The feedback from strategic evaluation is meant to
exercise control over the strategic management process. Here the managers try to
assure that strategic choice is properly implemented and is meeting the objectives of
the firm. It consists of certain elements which are given below.
1. Setting of standards: - The strategists need to set standards, targets to implement
the strategies. it should be in terms of quality, quantity, costs, and time. The standard
should be definite and acceptable by employees as well as should be achievable.
2. Measurement of Performance: - Here actual performances are measured in terms
of quality, quantity, cost and time.
3. Comparison of Actual Performance with Set Targets: - The actual performance
needs to be compared with standards and find out variations, if any.
4. Analysing Deviation and Taking Corrective Measures: - If any deviation is
found then higher authorities tries to find out the causes of it and accordingly as per
its nature takes corrective steps. Here some time authority may re-set its goals,
objectives or its planning, policies, and standards.
• (Performing strategic evaluation
• Exercising strategic control
• Reformulating strategies) (GNVS)
4. Explain Mintzberg’s 5 Ps for Strategy.

The 5 P’s of Strategy model was developed by the Canadian management scientist
Henry Mintzberg with an objective to develop five distinguished strategic visions for
the organizations. The Five strategic visions are Plan, Pattern, Position, Perspective,
and Ploy. All the five components allow the organizations to implement
the strategy in a more effective manner.

Strategy as Plan

In this case, the entire strategy and its planning are done in much in advance with the
long-term and a futuristic approach in mind. Aftermath, the process is followed by the
actual implementation and development of the strategy.

Strategy as Ploy

Here, the strategy is planned and executed with a specific intention to beat and
outperform the competition in the market gaining the competitive edge and advantage.

Strategy as Pattern

In this case, the overall strategy is emerged as a pattern considering the various
internal and external situations rather than being pre-planned in nature.

Strategy as Position

Here, the organizations formulated the strategy to carve a distinctive niche or an

identity in the market through exclusive products or services gaining a competitive
edge in the market and in the minds of the consumers.

Strategy as Perspective
In this case, the strategy is formulated as per the organizational culture and the way
organization views itself.

In-depth analysis of the 5 P’s of Strategy by Mintzberg:

1) Plan

It is always better for the organizations to have a plan of action much in advance to
be prepared for any unforeseen internal and external situations. And a well-planned
strategy is a plan to deal with such situations. A plan needs to be made with a long-
term and a futuristic approach in mind with its execution and development followed
up in a detailed and intricate manner. The business goals and objectives can be
attained with a good plan plus it enables the management and the key employees of
the company with a clear vision and mission in hand.

2) Ploy

The facet of ploy is also one of the strategic options to beat the competition in the
market and gain the advantage. In this scenario, the organizations can come up with
something very outlandish and unexpected and surprise the market environment that
also creates the waves of the ruckus within the minds of the competitors. It can be a
well placed promotional tool or a feature in the product or service that is sure to
outsmart and beat the competitors as a ploy.

3) Pattern

As mentioned earlier, the aspect is the plan in the 5 P’s of Strategy model by
Mintzberg focuses on the intended strategy but the aspect of pattern comes into the
picture where the strategies have already been implemented before. The earlier
patterns that have worked wonders for the organization before are an integral part of
developing the new strategy. The regular pattern that has been quite successful in
nature is used in the decision making flow and process. The strengths of such patterns
are included in the future strategies as intentionally or unintentionally, there is a
consistent positive behaviour of employees and internal teams is displayed towards
these patterns and are well accepted without any prejudice and issues.

4) Position

The aspect of position in formulating the organizational strategy needs to be carefully

understood, designed, planned, and executed as it will define the overall position of
the organization in the market considering all the internal and external factors.It
focuses on how the organization wants to portray itself in the market and in the minds
of the consumers that will gain it a competitive advantage. What will be the
core values, unique selling propositions, nature and attributes of the offerings of
products and services, and the overall brand strength and value proposition? Working
on all these factors in a detailed manner will help the organization carve a distinctive
position in the market with an edge over others.

5) Perspective

The facet of perspective in the model of 5 P’s of Strategy is quite indifferent to all of
the above-mentioned paths this one draws a larger perspective keeping the
organization at the focal point. The organization formulates the strategy by dwelling
on the crucial and important details such as how does the target audience think about
the organization? How do employees of the company perceive the management and
the brand as a whole? What is the perspective of the investors and other stakeholders
of the organization? The culmination and thought patterns of all
these individual perspectives work as the valuable source of information for the
company and help it to make a strategic choice.

Example of 5 Ps of Strategy

Apple
Plan: The technology giant continues to plan and come up with the consumer
electronics that offer operational excellence and are easy to use. They also plan and
come up with the various software updates expanding their ecosystem.

Ploy: The Company is highly renowned for offering the products that are innovative,
unique, and outlandish in nature that gives them a competitive edge in the market.
They threaten to sue their competitors that copy their technology or features of the
company’s products.

Pattern: Apple uses the previous innovations that have been quite successful in the
past and follows the same pattern to challenge the competition in the market.

Position: Apple has successfully carved a niche for itself in the market and in the
consumers’ minds as a niche and premium brand that offers only high-end products
that are difficult to compete against in terms of both hardware and software
capabilities.

Perspective: The core values of Apple are innovation and to think differently and
they work as an integral part of their company culture. And their product offerings to
stand as a testimony to the same.
 5. What is business environment? Explain with the help of diagram. Who are
the stakeholders of business? How to exceed and balance their need? How
should organisation manage threats from macro external environment?

Business Environment is sum or collection of all internal and external factors such as
employees, customers’ needs and expectations, supply and demand, management, clients,
suppliers, owners, activities by government, innovation in technology, social trends, market
trends, economic changes, etc. These factors affect the function of the company and how a
company works directly or indirectly. Sum of these factors influences the companies or
business organisations environment and situation.
Who are the stakeholders of the business?

Stakeholders are parties that take interest in a specific company, often for financial
investment. They can directly impact decisions or successes of an organization through:

• Sharing their feedback on company decisions or processes

• Providing continued loyalty or participation

• Increasing or decreasing financial investment

• Taking a position or making a decision that goes against a company's goals and
strategy

There are two types of stakeholders: internal stakeholders and external stakeholders. It
is important to consider how an organization's decisions can influence stakeholders
because they often have the potential to change the priorities of how a business function.
Understanding who your organization's stakeholders are and what they need can help
you achieve your business goals.

Stakeholders are as follows:

• Employees (Internal Stakeholder)

• Shareholders
• Customers
• Suppliers
• Government
• Society

How to exceed and balance the stakeholders needs?

1. Understand who the stakeholders are

The first step in building great relationships with project stakeholders is to understand
who they are. Many projects get delayed or end up not delivering the value they
promised because the project manager failed to identify and engage all the
stakeholders. This means that essential requirements, needs or insights might have
been missed. To find out who all the stakeholders could be, brainstorm groups and
individuals who have an interest in the project or who will be affected by it. Whenever
you identify a stakeholder, ask them if there’s anyone else they believe you need to
speak to. Keep going until you’re sure you have identified all of them.

2. Pinpoint stakeholders with high levels of power and influence

If you’re leading a large project, you won’t be able to spend an equal amount of time
with every stakeholder. Naturally, you will have to engage and learn about every
group or person you have identified, but the people you need to concentrate your
efforts on are those with the most power and influence. Look at all the stakeholders on
your list and assess who the three to five most impactful people are, i.e.: Those who
have the power to define your project, who can affect its direction, and who can help
move it forward. Always make sure that your relationships with these influential
decision-makers are the best that they can be.

3. Engage in a one-to-one conversation

Building great relationships is not about the amount of time you spend with someone,
but about the quality of that time. Consider for instance how many people you interact
with in meetings without knowing much about them. Great relationships are built
through one-to-one conversations where you can find out more about what makes
each person tick. Stakeholders are busy people, so respect their time by keeping your
discussions as short as possible. Come prepared and let them know that the purpose of
the meeting is to uncover anything that can help the project be successful—including
how the two of you will be working together.

4. Seek to understand their world

At the most fundamental level, project stakeholders will only open up to you and trust
you when they feel that you understand them and that you have their best interests at
heart. Your most important task is to inquire about their stake in the project, their
requirements and any knowledge or experience they have that can help deliver an
outcome that adds more value.

5. Communicate with clarity and honesty

To deepen the level of trust between you and each stakeholder, it’s imperative that
you communicate with clarity and honesty and that you don’t sweep anything under
the rug. Your stakeholders want to know what the true state of the project is, how it
affects them, and if there is anything they can do to help. Send out weekly or bi-
monthly status reports with an executive summary, an overview of which milestones
have been delivered and which ones are still outstanding. Include the project’s top five
risks and issues with actions and owners. Similarly, conduct a monthly steering
committee presentation where you talk about the real status of the project and what
support you need from the committee members, if any, to overcome roadblocks and
move the project forward.

6. Continuously demonstrate your competence

Building good relationships with project stakeholders is not a one-off exercise or

something that only happens at the beginning of the project. Continuously walking
your talk and delivering on your promises will help you to further develop each
relationship. This can be done by demonstrating that you are a reliable and competent
project manager—someone who is skilled at defining the project, locking down
the scope, creating a realistic plan, capturing requirements, managing risks, tracking
the budget, and understanding the context of the business you are operating in. You
can also demonstrate your competence by keeping meetings on track, capturing
agreements and decisions, and holding people accountable for their actions.

How should organisation manage threats from macro external environment?

Formulate SWOT on a continuous basis

Management must continually scan, assess and analyse the macro / external environment
and identify those factors that could have an impact on the company.

Organizations should proactively manage the threats posed by the macro external
environment by being aware of the constantly changing external environment and its
potential to impact the organization. They should recognize the need to stay informed
and up to date on changes in the macro environment and adjust their operations
accordingly. Organizations should also develop strategies to mitigate any possible
threats, such as diversifying operations to reduce the risk of failure, and investing in
research and development to stay ahead of the competition. Additionally, organizations
should have contingency plans in place to ensure they are able to respond quickly to any
changes in the external environment. Finally, organizations should also be open to
collaboration, such as working with external consultants or industry associations, to
develop strategies to respond quickly and efficiently to external threats.

Plan A :

a. Developing Employees

b. Continuous improvement

Developing Employees

• Personal Efficacy

Internality, Self-Management, Optimism, Trust, Collaboration

• Openness – Sharing of Knowledge and Information

• Innovation

• Competitiveness
Internal Factor Evaluation
Continuous Improvement for Sustainable Business

• Product Quality

• Technology

• Productivity

• Processes

• Organizational Culture

• Leadership

• Safety

Approach towards Market Maximisation

Who are the Stakeholders of Business?

• Employees (Internal Stakeholder)

• Shareholders

• Customers

• Suppliers

• Government

• Society

Plan B

a. Building long term relationship with Stakeholders

by

Balancing and exceeding their expectations, consistently

1. Understand who the stakeholders are

2. Pinpoint stakeholders with high levels of power and influence

 3. Engage in a one-to-one conversation

4. Seek to understand their world

5. Communicate with clarity and honesty

6. Continuously demonstrate your competence

Plan C

a. Aspire to be better than competitors

Competition
• Product quality
• Price
• Customer service
• Speed
• Technological superiority
• Financial strength
• Advertising effectiveness
• Dealer relationship

Plan D

a. Formulate SWOT on a continuous basis

Key Macro Environmental factors: P E S T E L

• Political and Government factors
• Economic factors
• Social & Cultural include Demographic factors
• Technological factors
• Environmental incl Natural Factors
• Legal incl international trading factors
 6. In which areas one should compete with Competitors?

Organizations should compete with competitors in a variety of areas, including product

innovation, marketing strategies, customer service, pricing, distribution networks, and
technological advances. Organizations should also strive to maintain a competitive
advantage by staying ahead of the competition in areas such as research and
development, product design, and marketing. Additionally, organizations should also
focus on improving their core competencies, such as customer service, and expanding
their global presence in order to remain competitive in the market. Lastly, organizations
should also be open to strategic collaborations with other organizations to gain access to
new markets and resources.

• Product quality
• Price
• Customer service
• Speed
• Technological superiority
• Financial strength
• Advertising effectiveness
• Dealer relationship
 7. Explain McKinsey’s 7 S for Strategy and elaborate on Soft and Hard factors

McKinsey 7S Framework was developed in 1980s by McKinsey Consultants Tom

peters, Robert Waterman and Julien Philips with the help from Richard Pascale and
Toney Athos.

Since the introduction, the model has been widely used by academics and practitioners
and remains one of the most popular strategic planning tools. It sought to present and
emphasis on human resources, soft skills, rather than traditional mass production
tangibles of capital, infrastructure and equipment, as a key to higher organisational
performance.

The model can be applied to many situations and is valuable tool when organisational
design is at question. The most common uses of the framework are:

• To facilitate organisational change

• To help implement new strategy
• To identify how each area may change in a future
• To facilitate merger of organisations
Strategy: A strategy is a plan the company develops to maintain its competitive
advantage in the market. It consists of a set of decisions and action steps that need to be
taken in response to the changes in the company’s external environment which includes
its customers and competitors. An effective strategy would find external opportunities
and develop the necessary resources and capabilities to convert the environmental
changes into sources of new competitive advantage.

Structure: The structure is the organizational chart of the company. It represents how
the different units and divisions of the company are organized, who reports to whom
and the division and integration of tasks. The structure of a company could be
hierarchical or flat, centralized or decentralized, autonomous or outsourced, or
specialized or integrated. Compared to most other elements, this one is more visible and
easier to change.

Organizational Chart

Systems: These are the primary and secondary activities that are part of the company’s
daily functioning. Systems include core processes such as product development and
support activities such as human resources or accounting.
Skills: Skills are the skill set and capabilities of the organization’s human resources.
Core competencies or skills of employees are intangible but they a major role in
attaining sustainable competitive advantage.

Staff: The most valuable strategic asset of an organization is its staff or human
resources. This element focuses on the number of employees, recruitment, development
of employees, remuneration and other motivational considerations.

Style: This refers to the management style of the company leadership. It includes the
actions they take, the way they behave, and how they interact.

Shared Values: Shared values are also referred to as superordinate goals and are the
element that is in the core of the model. It is the collective value system that is central
to the organizational culture and represents the company’s standards and norms,
attitudes, and beliefs. It’s regarded as the organization’s most fundamental building
block that provides a foundation for the other six elements.
 8. Elaborate on business level and corporate level strategies. Explain SWOT
analysis. What is Core competency? How can organisation create value?

Strategy can be defined as the effective path to achieving organizational goals and
objectives in the best possible way. In organizations, there exist three levels of strategy
namely corporate level, business level, and functional level.

Corporate Level Strategy

Corporate level strategy is the uppermost level of strategy made by top-level

management which sets the overall direction of the organization. It addresses the
question of what business are we in? The corporate level strategy attempts to obtain
synergy among employees, product lines, business units, and other components of the
organization believing that the whole is greater than the aggregate of individuals.
The corporate strategy works based on what the organization wants to achieve overall
and sets strategies following the overall goals and objectives. Corporate-level
strategies are set deriving ideas from vision and mission statements. Small and large
multinational corporations can both benefit from corporate strategy. Corporate
 strategy in a multi-business organization is concerned with geographic coverage,
diversity of products/services or business units, and resource distribution to various
segments or units of the firm. As the organizational parent, the corporate headquarters
works with diverse products and business units as children. These business units are
coordinated at the corporate level so that the company as a whole succeeds as a family.
As a result, it was determined that corporate-level strategy is linked to an
organization’s total scope and development. Its constant goal is to bring value to
various product lines and enterprises.

A corporate strategy might concern itself with:

• Diversification
• Expansion
• Downsizing
• Mergers and acquisitions
• Divestments

Business-Level Strategy

Business strategy is the most common level of strategy we are discussing probably all
of us heard about it. Business level strategy is the which is designed to use the best
use of organizational competencies to gain a long-term competitive advantage over
competitors. Business strategy deals with the question of how do we compete? It aims
to how to best successfully compete with competitors so that competitive advantage
will be gained. It steers a strategic business unit (SBU) in the direction of competitive
advantage. A strategic business unit is a division of an organization that has a separate
district external market for goods and services from the other strategic business units.

It could be a distinct business or product such as Samsung selling smartphones,

cameras, TVs, microwaves, refrigerators, etc. The corporate strategy is followed by a
business-level strategy. As a result, there should be a clear link between SBU and
 business strategy. Every distinct SBU requires different strategies to compete in the
market. A manager can usually go for a cost leadership strategy, differentiation
strategy, and focus strategy in order to get a competitive advantage against
competitors.

Business strategies focus on how the business unit will compete and may involve
strategies such as:

• Cost Leadership
• Cost Focus
• Differentiation Leadership
• Differentiation Focus

Functional Level Strategy

The functional level strategy also called operational level strategy is developed to run
effectively the day-to-day activities of the organization. Most operational strategies
are no longer than one year. The functional level strategies aim to deal with the
question of how do we support the business-level strategy? Several functions are
carried out regularly to effectively run the business as different functional
departmental are created – production department, HR department, marketing
department, customer service department, etc. functional strategy aims to bring
effectiveness in such functional areas.

At the functional level, resources, work pressure, information, and manpower are
integrated to bring effectiveness to the business and corporate-level strategies.
Functional strategies are for short time usually less than one year. These strategies are
related to capability, efficiency, customer service, product quality, and marketing. All
these functional strategists support the business level and ultimately the corporate
level strategy. Production Strategy, marketing strategy, finance strategy, human
resource strategy, and research & development strategy – all are very important say
 parts or types of functional level strategy. Effectiveness on all these functional types
is required to run shorter activities of the organization smoothly.

SWOT Analysis
Identifies internal and external factors of an organisation and assesses risk,
performance, etc.

Strength: Separates organisation from its competitors

• Unique product

• Location of your business

• Patents, know-how, trade secrets

• Worker's unique skill set

• Corporate culture, company image

• Quality of your product

• Access to financing

• Operational efficiency

Weakness: Stop an organisation from performing at its optimum level

• Location of your business

• Lack of quality and customer service

• Poor marketing and sales

• Access to resources

• Undifferentiated products or services

Opportunities: Favourable external factors

• A new emerging or developing market (niche product, place - new country, less
competition)

• Merger, joint venture, or strategic alliance

• Market trends

• New technologies

• Social changes (for example demographics)

Threats: Factors that harm an organisation

• New competition in the market, possibly with new products or services

• Price wars

• Economic conditions

• Political changes

• Competitor oligopoly or monopoly

• Taxation

• Availability of resources

Organisational Appraisal: S & W

Environmental Appraisal: O & T

Core Competencies:

Core competencies help an organization to distinguish its products from it's rivals as
well as to reduce its costs than its competitors and thereby attain a competitive
advantage. It helps in creating customer value. Also, core competencies help in
creating and developing new goods and services.
 An organization's core competencies -- sometimes called core capabilities or
distinctive competencies -- explain what it can do better than any other company, and
why. These capabilities provide a strong foundation from which the business will
deliver value to customers and stakeholders, seize new opportunities and grow. They
set the company apart from its peers and help create a sustained competitive
advantage in its industry or sector.

A company can have one or more organization-wide core competencies, such as the
following:

• product quality

• buying power

• customer-centric omnichannel support

• design or innovation capabilities

• sales and marketing ecosystem

• automated workflows and processes

• size
VRIO framework is the tool used to analyse firm’s internal resources and capabilities
to find out if they can be a source of sustained competitive advantage. Term VRIO comes
from the words value, rarity, imitability, and organization.

Valuable: When a resource is valuable, it's providing the organization with some sort
of benefit. However, a resource that is valuable and does not fit into any of the other
dimensions of the framework, is not a competitive advantage. An organization can only
achieve competitive parity with a resource that is valuable and neither rare nor hard to
imitate.
Rare: A resource that is uncommon and not possessed by most organizations is rare.
When a resource is both valuable and rare, you have a resource that gives you a
competitive advantage. The competitive advantage achieved from a resource that is both
valuable and rare is usually short lived though. Competitors will quickly realize and can
imitate the resource without too much trouble. Therefore, it's only a temporary
competitive advantage.

Hard to Imitate: Resources are hard to imitate if they are extremely expensive for
another organization to acquire them. A resource may also be hard for an organization
to imitate if it's protected by legal means, such as patents or trademarks. Resources are
considered a competitive advantage if they are valuable, rare, and hard to imitate.
However, organizations that aren't organized to fully take advantage of the resource,
may mean the resource is an unused competitive advantage.

Organized to Capture Value: An organization's resource is organized to capture value

only if it is supported by the processes, structure, and culture of the company. A
resource that is valuable, rare, hard to imitate, and organized to capture value is a long-
term competitive advantage. A resource cannot confer any advantage for a company if
it’s not organized to capture the value. Only a firm that is capable to exploit valuable,
rare, and imitable resources can achieve sustained competitive advantage.

A Real-life VRIO Example: Google

There’s no doubt that Google is one of the most powerful companies in the world, and
its success arguably stems from a sustained competitive advantage in human capital
management. If we were to break down Google’s VRIO framework from the HR
perspective, it might look something like this:

• Value: Use human capital management data to hire and retain innovative,
productive employees. These employees consistently create some of the most
popular consumer products and services in the world.
 • Rarity: No other companies are using data-based employee management so
extensively.

• Imitability: Data-based human capital management is both costly and difficult

to imitate, at least for the near future. Companies have to build the software and
invest in training their HR staff on the new technology and strategy.

• Organization: Google is organized to capture value from this capability. The IT

department has the skills to collect and maintain the data, while HR and team
leaders are trained on how to use the data to hire, promote, manage, and improve
performance of employees.

How can an organisation create value?

Organizations can create value for their stakeholders by offering a unique and attractive
product or service based on customer needs, providing a superior customer experience,
and leveraging the latest technologies to increase efficiency and reduce costs.
Additionally, organizations should strive to build strong relationships with suppliers
and partners to ensure the availability of quality and cost-effective resources.
Organizations should also focus on investing in research and development in order to
stay ahead of the competition and create a competitive advantage. Furthermore,
organizations should focus on expanding their global presence in order to tap into new
markets and create new value opportunities. Finally, organizations should also explore
the potential of strategic collaborations with other organizations to create new sources
of value.
 9. Explain Mike Porter’s Five Forces Model w.r.t. an organisation or a product/
service.

1. Competition in the Industry

The first of the Five Forces refers to the number of competitors and their ability to
undercut a company. The larger the number of competitors, along with the number of
equivalent products and services they offer, the lesser the power of a company.
Suppliers and buyers seek out a company's competition if they are able to offer a better
deal or lower prices. Conversely, when competitive rivalry is low, a company has
greater power to charge higher prices and set the terms of deals to achieve higher sales
and profits.

2. Potential of New Entrants Into an Industry

A company's power is also affected by the force of new entrants into its market. The
less time and money it costs for a competitor to enter a company's market and be an
effective competitor, the more an established company's position could be significantly
weakened. An industry with strong barriers to entry is ideal for existing companies
within that industry since the company would be able to charge higher prices and
negotiate better terms.

3. Power of Suppliers
The next factor in the Porter model addresses how easily suppliers can drive up the
cost of inputs. It is affected by the number of suppliers of key inputs of a good or
service, how unique these inputs are, and how much it would cost a company to switch
to another supplier. The fewer suppliers to an industry, the more a company would
depend on a supplier. As a result, the supplier has more power and can drive up input
costs and push for other advantages in trade. On the other hand, when there are many
suppliers or low switching costs between rival suppliers, a company can keep its input
costs lower and enhance its profits.

4. Power of Customers
The ability that customers have to drive prices lower or their level of power is one of
the Five Forces. It is affected by how many buyers or customers a company has, how
significant each customer is, and how much it would cost a company to find new
customers or markets for its output. A smaller and more powerful client base means
that each customer has more power to negotiate for lower prices and better deals. A
company that has many, smaller, independent customers will have an easier time
charging higher prices to increase profitability.

5. Threat of Substitutes
The last of the Five Forces focuses on substitutes. Substitute goods or services that can
be used in place of a company's products or services pose a threat. Companies that
produce goods or services for which there are no close substitutes will have more power
to increase prices and lock in favourable terms. When close substitutes are available,
customers will have the option to forgo buying a company's product, and a company's
power can be weakened. Understanding Porter's Five Forces and how they apply to an
industry, can enable a company to adjust its business strategy to better use its resources
to generate higher earnings for its investors.
 Amazon Porter's Five Forces Analysis
Porter's five forces model is an analysis tool that explains the competition and profit
margin in the industry using five forces. These five forces determine the level of
competition in that industry using factors like barriers to enter, buyers' and suppliers'
bargaining power, substitute products, and so on. Amazon is a leading eCommerce
business so let us analyse Amazon Porter's five forces to see how it is doing in the
industry.

Amazon Porter's Five Forces

Amazon is the giant and a market leader in the e-commerce industry. But its position
is always in danger because of the intense competition; hence, Amazon works hard to
maintain its brand image. It especially focuses on the customer experience and making
its products and services more user-friendly. So, let us analyse Amazon Porter's five
forces model to see how the industry affects Amazon and how it deals with it.

• Competition in the industry (Strong force)

• The threat of new entrants (weak force)
• The bargaining power of suppliers (moderate force)
• The bargaining power of customers (Strong force)
• Threat of substitute products or services (Weak Force)

3.1. Competition in the industry (Strong force)

Amazon operates in a very competitive market, and the Amazon competitors' analysis
shows that the rivalry in the online retail market is increasing very rapidly. The
number of players in the market is increasing, and small-scale brands and startups are
making their place because of low switching costs. Amazon faces throat-cut
competition from Walmart, Flipkart, Alibaba, eBay, etc. However, Amazon enjoys
economies of scale and large investment options.
3.2. The threat of new entrants (weak force)

Amazon is a giant in the market, and it has a very strong brand image. Also, it enjoys
economies of scale and large warehousing and delivery facilities. Since it is a large-
scale company, it has a massive investment in eCommerce solutions, customer
services, logistics, and marketing. So, it is rather challenging for any company to beat
this brand image and make its prominent place in the market. However, small-scale
companies can grab a limited segment of customers because of low switching costs.
So Amazon Porter's five forces analysis shows that the threat of new entrants is a
weak force with no substantial setback for Amazon.

3.3. The bargaining power of suppliers (moderate force)

Suppliers control the availability of products for the eCommerce operations of

Amazon. Also, Amazon relies on the equipment and hardware components for
information systems in cloud services. In Amazon Porter's five forces analysis, the
bargaining power of suppliers is a moderate force. The contributing factors to this
force are small suppliers, moderate forward integration, and the size of suppliers.

However, Amazon dictates the supply chain because of its large business and ease of
switching suppliers.

3.4. The bargaining power of customers (Strong force)

The bargaining power of buyers in Amazon Porter's five forces model is medium to
high. Amazon's success is based on customer satisfaction and product quality. Though
switching costs for the customers are very low, substitutes have emerged in large
numbers. Customers have access to general information about products and services
that different suppliers offer, making it easy for them to find alternatives.

3.5. Threat of substitute products or services (Weak Force)

Amazon Porter's Five Forces Analysis shows some forces in the threat of substitute
products and services. These forces are low switching costs, high availability of
substitutes, and low cost of substitutes. The low switching costs mean customers can
easily choose a customer without any extra cost. So, if they buy from Walmart or
Amazon, they do not pay any extra cost. Then many low-scale substitutes offer low-
cost substitutes. So, Amazon is continuously fighting against these substitutes to
maintain its leadership image. But Amazon's brand image is a successful shield
against these threats. Also, its infrastructure, distribution, warehousing network, and
service quality are hard to beat.
 10. Explain Mike Porter’s Generic Value Chain model.

Primary Activities

Primary activities relate directly to the physical creation, sale, maintenance and
support of a product or service. They consist of the following:

• Inbound logistics. These are all the processes related to receiving, storing, and
distributing inputs internally. Your supplier relationships are a key factor in
creating value here.
• Operations. These are the transformation activities that change inputs into
outputs that are sold to customers. Here, your operational systems create value.
• Outbound logistics. These activities deliver your product or service to your
customer. These are things like collection, storage, and distribution systems,
and they may be internal or external to your organization.
• Marketing and sales. These are the processes you use to persuade clients to
purchase from you instead of your competitors. The benefits you offer, and how
well you communicate them, are sources of value here.
• Service. These are the activities related to maintaining the value of your product
or service to your customers, once it's been purchased.
 Support Activities

These activities support the primary functions above. In our diagram, the dotted
lines show that each support, or secondary, activity can play a role in each
primary activity. For example, procurement supports operations with certain
activities, but it also supports marketing and sales with other activities.

• Procurement (purchasing). This is what the organization does to get the

resources it needs to operate. This includes finding vendors and negotiating the
best prices.
• Human resource management. This is how well a company recruits, hires,
trains, motivates, rewards, and retains its workers. People are a significant
source of value, so businesses can create a clear advantage with good HR
practices.
• Technological development. These activities relate to managing and
processing information, as well as protecting a company's knowledge bas e.
Minimizing information technology costs, staying current with technological
advances, and maintaining technical excellence are sources of value creation.
• Infrastructure. These are a company's support systems, and the functions that
allow it to maintain daily operations. Accounting, legal, administrative, and
general management are examples of necessary infrastructure that businesses
can use to their advantage.

Companies use these primary and support activities as "building blocks" to

create a valuable product or service.
11. Explain Mike Porter’s National Competitive Model (Diamond).

Competitive Advantages

Competitive superiority is derived from four factors, viz., factor endowment, demand
conditions, related and supporting industries and firm strategy, structure and rivalry.
All the four factors need not always be favourable for a company to get global
supremacy. But the interactive effect of these four factors need to be favourable if an
industry/ company in a country is to gain a global competitive advantage.

Factor conditions

Factor conditions include factors of production, viz., land, labour, capital and
organisation. Porter emphasises other factors like educational level of labour and the
quality of the country’s infrastructure. Country’s ability to compete globally depends
upon the country’s factor resources, viz., research, innovation and training. The USA
has rich factor endowments and enjoys top position in world trade and world
economy.
Demand Conditions

The existence of a large number of sophisticated domestic consumers who are

economically able and willing to consume create and improve the demand for various
products in the country. Companies improve the existing products and develop new
products to meet the increasing demand. In addition, domestic companies compete
with each other in developing existing and new products. As such some of the
processing domestic companies would be ahead of the international companies and
export to other countries. For example, Japanese companies developed camcorders,
big screen TVs and VCRs better than the international companies and exported them
to European and North American countries after meeting the domestic demand.
Related and Supported Industries

The emergence and growth of an industry provide the scope for the development of
suppliers of raw material, market intermediaries, financial companies, consulting
agencies, ancillary industries etc. These supporting service agencies compete among
themselves leading to high input quality and lower prices. Availability of high-quality
inputs at lower prices in the domestic country enhances competitive advantage of the
firm internationally.

Firm strategy, structure and rivalry

Firms continuously improve the quality, product design, invest in R&D in order to
compete domestically. Firms also invest in human resource development, technology
etc., in the domestic market. These developments result in high quality and lower
prices in domestic country which are transferable to international markets. Intense
competition for Japanese automobile manufacturers and electronics goods
manufacturers led to their success in international markets. The same theory holds
good in case of Indian garment manufacturers and US personal computer
manufacturers.
 12. Explain Mike porter’s Competitive Advantage Model for Structure.

Cost leadership pertains to a firm's ability to create economies of scale though

extremely efficient operations that produce a large volume. Cost leaders include
organizations like Procter & Gamble, Walmart, McDonald's and other large firms
generating a high volume of goods that are distributed at a relatively low cost
(compared to the competition).

Differentiation is less tangible and easily defined, yet still represents an extremely
effective strategy when properly executed. Differentiation refers to a firm's ability to
create a good that is difficult to replicate, thereby fulfilling niche needs. This strategy
can include creating a powerful brand image, which allows the organization to sell its
products or services at a premium. Coach handbags are a good example of
differentiation; the company's margins are high due to the markup on each bag (which
mostly covers marketing costs, not production).

Focus: Market segmentation is narrow in scope (both cost leadership and

differentiation are relatively broad in scope) and is a cross between the two strategies.
Segmentation targets finding specific segments of the market which are not otherwise
tapped by larger firms.

4. Strategies for Success

After Amazon Porter's five forces analysis, we can now see the success strategies that
Amazon employees use to maximize its profits and maintain its brand image. The
strategies for success we have identified are cost leadership, differentiation, and focus.

1. Cost leadership
2. Differentiation
3. Focus

4.1. Cost leadership

Amazon's most successful business strategy is cost leadership, and it gains a
competitive advantage through price, convenience, and range. Since the profit
margins are very less, Amazon counts on its widespread distribution network,
warehousing, economies of scale, and a wide customer base. All these factors help
Amazon to procure products on higher profit margins.

In the future, Amazon can also increase its customers and sales using the cost
leadership strategy, and it can offer more deals and sales to attract buyers.

4.2. Differentiation

Amazon has built its brand on the successful strategy of differentiation. It

differentiates itself using cutting-edge technology, human resources, easy-to-use
websites, and cloud services. Amazon has software support and algorithms for swift
delivery, warehousing, product listings, and so on. Amazon's services business in
itself is a pioneer in cloud storage products. Also, electronics and gadgets production
can benefit from more advanced products and features.

4.3. Focus

Amazon has many business tracks, including a retail eCommerce store, a cloud
services business, and an electronics gadget production track. Focus strategy means
focusing on a narrow and specific segment in the market. Amazon can reap the
benefits of focus by developing products for geographical locations, the elderly,
children, etc.
13. Explain Ansoff Model. Or Explain Expansion by Concentration with
examples. Explain Expansion by integration with examples.

Ansoff Matrix definition refers to a tool for framing effective strategies to ensure
product and market growth and expansion. Every matrix quadrant – market
penetration, product and market development, and diversification – identifies a
different product-market strategy. Diversification is the riskiest approach, while
market penetration is the least risky.

Companies can establish these strategies by combining existing and potential

products. Businesses can use the Ansoff Matrix to examine all of their alternatives,
analyze them, calculate the risks, and plan how to make new and existing products
available to untapped and established markets.

Expansion through concentration (Ansoff Model)

• Market Penetration: Make Customer Satisfied

• Market Development: Explore new markets and make more Customers Satisfied
 • Product Development: Develop more Products to satisfy Customer of each
Segment. Hitting Market Share

Each box of the Matrix corresponds to a specific growth strategy. They are:

1. Market Penetration – The concept of increasing sales of existing products into

an existing market
2. Market Development – Focuses on selling existing products into new markets
3. Product Development – Focuses on introducing new products to an existing market
4. Diversification – The concept of entering a new market with
altogether new products

1. Market Penetration: It refers to the business strategy adopted or implemented to

increase the sale of existing products or services in the established market. It attempts
to increase the market share for existing offerings without changing them by reaching
present and potential customers. The various ways include providing discounts,
enhancing promotional campaigns, improving distribution channels, and acquiring
competing brands.
2. Product Development – It is a strategy to introduce new products or services to the
existing market. The strategy works when firms have complete knowledge about the
existing market. They develop new products, considering the requirements of existing
and potential customers. Finally, they introduce them in the existing market after
performing extensive market research, entering strategic partnerships, or acquiring
another brand.
3. Market Development – It refers to strategies implemented to introduce existing
products or services with minimal development into new markets. The compatibility
between the offerings and the market exists if they are suitable for each other.
Businesses introduce attractive prices for different products, select new markets
within or beyond local borders, cater to new customer segments, add new features to
the products, choose new product packaging, adopt new online distribution channels,
etc., to make this approach effective.
4. Diversification – It includes strategies adopted to introduce new products in a new
market. However, it requires researching and developing both the market and
products. Given the high level of risks involved, the diversification quadrant of the
Ansoff Matrix is sometimes referred to as “suicidal cell.” But if implemented
successfully, this strategy may result in increased business revenues.

Market penetration is the least dangerous strategy in the Ansoff Matrix Model, while
diversification is the riskiest. Therefore, companies must conduct extensive research
to analyse the risks and develop a fail-safe backup strategy.

Ansoff Matrix Examples

Let us look at Ansoff Matrix with examples to understand each of the strategies:

Example #1 (Market Penetration)

Fast food restaurants operate in the same market, and hence, their target customers
are the same. Let us assume restaurant A has more customers than B. The former can
have a unique menu or discounted price, or maybe it keeps open 24/7, which the latter
does not do to attract new customers. This way, restaurant A would have a larger
market share for their existing products and services.

Example #2 (Product Development)

An electric vehicle manufacturer announces to roll out hybrid automobiles in a city.

It is also in line with the local government’s initiative to ensure effective
transportation electrification at a lenient cost. Furthermore, this announcement marks
the introduction of a new product into the already existing automobile market to make
transportation eco-friendly in the city.

Example #3 (Market Development)

The e-commerce firm Amazon, Inc. decided to set up a brick-and-mortar store in the
United States. However, even though the brand has built a reputation for itself in the
online shopping sector, its struggles could be observed given the physically operating
competitors in the market. Hence, for Amazon, establishing itself in the new market
with products existing in its online store might take time.

Example #4 (Diversification)

Maria is in the food industry, and her outlets are doing great. However, she plans to
start a textile business with an entirely new market segment to target. Doing so may
involve a high degree of risk as Maria is completely new concerning the products she
will be dealing with and the market she is planning to enter.

Expansion through Integration:

Expansion through integration is performed through value chain, which ensures the
integration of an organization’s interlinked activities. For example, an organization
can integrate the activity of procuring raw material with the activity of producing
finished product. Expansion through integration widens the scope of an organization’s
growth by combining the activities related to the present activity of an organization.

An organization moves either vertically or horizontally in the value chain to

concentrate more broadly on customer groups. For example, if the cost of producing
the products is less than the cost of procuring them from suppliers, an organization
moves vertical in the value chain by making the products itself. In such a scenario,
the organization itself supplies the raw material.

Types of Integration

we can divide the expansion through integration strategies into two types, which are
as follows:
• Vertical Integration: Implies an activity that is carried out with the purpose of
supplying inputs, such as raw materials; or distributing the final product to customers.
Backward and forward integration are two types of vertical integration. In backward
integration, the organizations become their own suppliers; whereas in forward
integration, the organizations take control of distributing the products. For example,
if an automobile organization buys its supplier organization, which sells tyres for its
cars, it is known as backward integration. However, if a wholesaler purchases a
retailing outlet to directly sell products to end costumers, it is known as forward
integration.

• Horizontal Integration: Refers to a situation when an organization merges with or

acquires other organizations serving the same customers, with the same or similar
products, and adopting the same marketing process. Horizontal integration increases
the size and profits of an organization by increasing its market share. An example of
horizontal integration can be a pizza restaurant expanding its product range by
acquiring a hamburger chain.

• Forward Integration. Forward integration when a company opens up its brand

retail stores and directly approaches the final customers and offers them the
product/service. For instance, the outlets of Apple, Samsung, Huawei, etc.
• Backward Integration. Backward integration is when a company goes back to
produce its raw material for its finished products/services. For instance, a shoe factory
also makes the leather, raw material, for its final products.
 14. Explain Expansion by Diversification with examples. Explain Expansion by
Internationalisation with examples.

Expansion though Diversification:

Definition: The Expansion through Diversification is followed when an

organization aims at changing the business definition, i.e., either developing a new
product or expanding into a new market, either individually or jointly. A firm adopts
the expansion through diversification strategy, to prepare itself to overcome the
economic downturns.

Generally, the diversification is made to set off the losses of one business with the
profits of the other; that may have got affected due to the adverse market conditions.
There are mainly two types of diversification strategies undertaken by the
organization:

1. Concentric Diversification: When an organization acquires or develops a new

product or service that are closely related to the organization’s existing range of
products and services is called as a concentric diversification. For example, the shoe
manufacturing company may acquire the leather manufacturing company with a view
to entering into the new consumer markets and escalate sales.
2. Conglomerate Diversification: When an organization expands itself into different
areas, whether related or unrelated to its core business is called as a conglomerate
diversification. Simply, conglomerate diversification is when the firm acquires or
develops the product and services that may or may not be related to the existing range
of product and services.

Generally, the firm follows this type of diversification through a merger or takeover
or if the company wants to expand to cover the distinct market segments. ITC is the
best example of conglomerate diversification.

Risks of Diversification

1. Diversification, especially unrelated, is a complex strategy to formulate and

implement. It demands a very high level of managerial, operational, and financial
competence to be successful.
2. Diversification strategies demand a wide variety of skills. Different businesses
operating in diverse industries would require dissimilar sets of skills to manage them
successfully.
3. Diversification results in decreasing commitment to a single or few businesses and
diverting it to several of them at the same time. This phenomenon often results in a
situation where businesses that need more attention get less and the ones needing little
get more. Imbalance of commitment does not help to realize the many benefits of
diversification such as maximum returns.
4. Diversification often does not result in the promised rewards. Experience around the
world shows that it is easy to be lured by the glamour of diversification and not be
able to reap the benefits of synergies and strategic advantage ultimately. In fact, cases
are legion where the shareholders’ value instead of being enhanced, has been lost due
to diversification.
5. Diversification increases the administrative costs of managing, integrating and
controlling a wide portfolio of businesses. This can often offset the savings expected
through synergies in the case of related diversification or decreasing risks anticipated
in unrelated diversification.
 Expansion through Internationalisation:

Expansion through internationalization is when a company goes beyond the country’s

national border and market. The reason for internationalization is when the company
has utilized all the opportunities in the domestic market. Now the brand expands into
the global market to exploit opportunities in the international market.

Businesses and companies perform the following strategies for expansion through
internationalization;

▪ Global Strategy. Global strategy is when a company follows the low-cost approach
and offers its product/service to a particular foreign market where lower-cost is
available. The company provides the same low cost manufactured product to the rest
of the world.
▪ Multi-domestic Strategy. A multi-domestic strategy is when a company provides a
customized product/service relevant to the foreign market conditions. It’s a costly
strategy because of its research and development cost, market, and manufacturing
costs by following the local markets’ needs in different countries.
▪ International Strategy. International strategy is when a company offers its
product/service to those markets where they don’t have access to it. It requires strict
controls over the operations in the other countries and offering them the same standard
product.
▪ Transnational Strategy. A transnational strategy when a company follows the
global system and multi-domestic process at the same time. Here the company offers
customized and low-cost products/services to the local market by following their
environmental conditions.
 Expansion through Cooperation

When a company agrees with the competitor brand to perform business operations
together and compete simultaneously. The expansion through cooperation has the
following types, and they’re as follows;

▪ Strategic Alliance. The strategic alliance is when two or more businesses integrate
to execute their business operations coactively and work independently to achieve
their individual goal. The purpose of the strategic partnership is to exploit any of the
companies’ human resources, technology, and expertise.
▪ Joint Venture. A joint venture is when two or more companies plan to execute their
business operations jointly. The purpose of the joint venture is to utilize the strengths
of the two companies. Businesses and companies go on a joint venture to achieve a
particular task or goal.
▪ Takeover. A takeover is when one company buys the other company and becomes
responsible for the operations of both.
▪ Merger. A merger is when two or more companies integrate where one company
buys the other’s assets for cash. Both companies get dissolved and form the new
company. The acquisition is the buyer company, and the merger is the acquired-
company.
 15. Explain Mergers & Acquisition as expansion strategy, with examples. What
are the advantages and disadvantages of M & A?

Mergers are a way for companies to expand their reach, expand into new segments,
or gain market share. A merger is the voluntary fusion of two companies on broadly
equal terms into one new legal entity.

Acquisition involves the purchase of one organization by another for integration into
the acquiring organization.

Organizations have a number of reasons for wanting to acquire or merge with other
firms, including horizontal or vertical integration, diversification; gaining access to
global markets, technology, or other resources; and achieving operational efficiencies,
improved innovation, or resource sharing. As a result, M&A have become a preferred
method for rapid growth and strategic change.

Examples for M & A

1. Tata Steel acquiring Corus from Holland

2. Asian Paints acquiring Berger Paints from Singapore
3. Microsoft acquiring Nokia
4. Facebook acquiring WhatsApp
5. Idea merger with Vodafone
6. Tata Motors acquiring Jaguar/ Land Rover

Advantages of a Merger

1. Increases market share: When companies merge, the new company gains a larger
market share and gets ahead in the competition.
2. Reduces the cost of operations: Companies can achieve economies of scale, such
as bulk buying of raw materials, which can result in cost reductions. The investments
on assets are now spread out over a larger output, which leads to technical economies.

3. Avoids replication: Some companies producing similar products may merge to

avoid duplication and eliminate competition. It also results in reduced prices for the
customers.

4. Expands business into new geographic areas: A company seeking to expand its
business in a certain geographical area may merge with another similar company
operating in the same area to get the business started.

5. Prevents closure of an unprofitable business: Mergers can save a company from

going bankrupt and save many jobs.

6. Market entry

7. Possession of marketing infrastructure

8. Achieving economies of scale

9. Increasing the market power

10. Diversification

11. Acquisition of technology

12. Use of surplus funds

13. Optimum utilization of resources and facilities

14. Product mix optimization

15. Tax benefits

16. Logistical factors

17. Minimization of Risk

Disadvantages of a Merger

1. Raises prices of products or services: A merger results in reduced competition

and a larger market share. Thus, the new company can gain a monopoly and increase
the prices of its products or services.

2. Creates gaps in communication: The companies that have agreed to merge may
have different cultures. It may result in a gap in communication and affect the
performance of the employees.

3. Creates unemployment: In an aggressive merger, a company may opt to eliminate

the underperforming assets of the other company. It may result in employees losing
their jobs.

4. Prevents economies of scale: In cases where there is little in common between the
companies, it may be difficult to gain synergies. Also, a bigger company may be
unable to motivate employees and achieve the same degree of control. Thus, the new
company may not be able to achieve economies of scale.

5. Indiscriminate acquisitions land several companies in financial and other problems

6. When company is taken over, its problems are also often inherited

7. If adequate homework was not done and the evaluation was not right, the
acquisition decision could be wrong.

8. Some of the units acquired would have problems such as old plant, obsolete
technology, surplus or demoralized labor
16. What is Balance Score Card? Explain how is it used as strategic tool in
today’s modern businesses?

A balanced scorecard is a performance metric used to identify, improve, and control

a business's various functions and resulting outcomes. It is a management tool that
provides stakeholders with a comprehensive measure of how the organization is
progressing towards the achievement of its strategic goals.

The concept of BSCs was first introduced in 1992 by David Norton and Robert
Kaplan, who took previous metric performance measures and adapted them to
include nonfinancial information. BSCs were originally developed for for-profit
companies but were later adapted for use by non-profits and government agencies.

The balanced scorecard involves measuring four main aspects of a business:

Learning and growth, business processes, customers, and finance.

BSCs allow companies to pool information in a single report, to provide information

into service and quality in addition to financial performance, and to help improve
efficiencies.

The Balanced Scorecard (BSC) is a strategic management tool used by businesses

to align their activities to their vision and strategy, assess their current performance,
and create future action plans. It helps organizations to identify key performance
indicators (KPIs) and measure their progress against key operational objectives. The
Balanced Scorecard is typically used to measure financial performance, customer
satisfaction, operational performance, and learning and growth.

The BSC takes into account the different perspectives that must be managed for
success, including financial, customer, employee, internal process, and innovation.
This helps organizations to better understand the causal relationship between their
actions and the results that they are trying to achieve. It provides organizations with a
comprehensive and holistic view of their current performance and informs their
decisions around what and how to improve.

Furthermore, the BSC offers a more balanced view of performance than traditional
financial metrics alone. It helps organizations to measure the effectiveness of their
strategies and to identify areas where they need to adjust or invest more resources.
This can lead to increased customer satisfaction, employee engagement, and
improved operational efficiency. As a result, the Balanced Scorecard is a powerful
tool for businesses to stay competitive in today’s business world.
 17. BCG Model with examples

• BCG stands for Boston Consultancy Group which was developed in early 1970’s.
• The BCG matrix or also called BCG model relates to marketing.
• The BCG model is a well-known portfolio management tool used in product life cycle
theory. BCG matrix is often used to prioritize which products within company product
mix get more funding and attention.
• The BCG model is based on classification of products into four categories
• It is based on combinations of market growth and market share relative to the
largest competitor.

When to use the BCG matrix model?

• Each product has its product life cycle, and each stage in product's life-cycle
represents a different profile of risk and return. In general, a company should maintain
a balanced portfolio of products.
• Having a balanced product portfolio includes both high-growth products as well as
low-growth products.
• A high-growth product is for example a new one that we are trying to get to some
market.
• A low-growth product is for example an established product known by the market.
Characteristics of this product do not change much, customers know what they are
getting, and the price does not change much either.
• The BCG matrix reaches further behind product mix. Knowing what we are selling
helps managers to make decisions about what priorities to assign to not only products
but also company departments and business units.

What is the BCG matrix and how does the BCG model work?

❑ Placing products in the BCG matrix results in 4 categories in a portfolio of a company:

BCG STARS (high growth, high market share)

• Stars are defined by having high market share in a growing market.

• Stars are the leaders in the business but still need a lot of support for promotion a
placement.
• If market share is kept, Stars are likely to grow into cash cows.

BCG QUESTION MARKS (high growth, low market share)

• These products are in growing markets but have low market share.
• Question marks are essentially new products where buyers have yet to discover them.
• The marketing strategy is to get markets to adopt these products.
• Question marks have high demands and low returns due to low market share.
• These products need to increase their market share quickly or they become dogs.
• The best way to handle Question marks is to either invest heavily in them to gain
market share or to sell them.
 BCG CASH COWS (low growth, high market share)

• Cash cows are in a position of high market share in a mature market.

• If competitive advantage has been achieved, cash cows have high profit margins and
generate a lot of cash flow.
• Because of the low growth, promotion and placement investments are low.
• Investments into supporting infrastructure can improve efficiency and increase cash
flow more.
• Cash cows are the products that businesses strive for.

BCG DOGS (low growth, low market share)

• Dogs are in low growth markets and have low market share.
• Dogs should be avoided and minimized.
• Expensive turn-around plans usually do not help.

Limitations of the BCG matrix model

• The first problem can be how we define market and how we get data about market
share
• A high market share does not necessarily lead to profitability at all times
• The model employs only two dimensions – market share and product or service
growth rate
• Low share or niche businesses can be profitable too (some Dogs can be more
profitable than cash Cows)
• The model does not reflect growth rates of the overall market
• The model neglects the effects of synergy between business units
• Market growth is not the only indicator for attractiveness of a market
 Example 1: BCG Matrix – Apple

Here is the strategic analysis of Apple products: 👇

• Stars – iPhone: from Apple’s beginning, the iPhone has been THE flagship product!
Its demand is very high and its growth is uncertain, as there are more and
more competitors.
• Cashcows – MacBook: this laptop is one of the market-leader today. It is produced
in large quantities and its quality is recognized, hence its high selling price.
• Question marks – Apple TV: this is a new product that has a low profitability for the
moment, because it is not up to date with its competitors like Amazon “Fire
stick”/Alexa, etc. Nevertheless, it has a strong growth potential.
• Dogs – iPad: has become a niche product for graphic designers and businesses. But
it’s not the novelty it was a few years ago, so growth is low.
 18. GE Nine Cell Matrix

❖ The GE/McKinsey Matrix is a nine-cell (3 by 3) matrix used to perform business

portfolio analysis as a step in the strategic planning process.
❖ The GE/McKinsey Matrix identifies the optimum business portfolio as one that fits
perfectly to the company's strengths and helps to explore the most attractive industry
sectors or markets.
❖ The objective of the analysis is to position each SBU on the chart depending on the
SBU's Strength and the Attractiveness of the Industry Sector or Market on which it is
focused. Each axis is divided into Low, Medium and High, giving the nine-cell matrix
as depicted below.
❖ Different factors can be used to define Industry Attractiveness. Like: -
❖ Market Size, Market Growth Rate, Demand variability, Industry Profitability,
Competitive Rivalry, Global Opportunities, Entry and exit barriers, Capital
requirement, Macro environmental Factors (PEST)
❖ Different factors can also be used to define SBU Strength. Like: -
❖ Market Share, Distribution Channel Access, Financial Resources, R&D Capability,
Brand equity, Production Capacity, Knowledge of customer and market, Caliber of
management. Relative cost position
❖ The factors and their relative weightings are selected. The rating values for each factor
are entered for each SBU and Industry.

❑ Grow – Business units that fall under grow attract high investment. Firms may go for
product differentiation or Cost leadership. Huge cash is generated in this phase.
Market leaders exist in this phase.
❑ Hold – Business units that fall under hold phase attract moderate investment. Market
segmentation, Market penetration, imitation strategies are adopted in this phase.
Followers exist in this phase.
❑ Harvest - Business units that fall under this phase are unattractive. Low priority is
given in these business units. Strategies like divestment, Diversification, mergers are
adopted in this phase.

Market Attractiveness

• Annual market growth rate

• Overall market size
• Historical profit margin
• Current size of market
• Market structure
• Market rivalry
• Demand variability
• Global opportunities

Business Strength

• Current market share

• Brand image
• Production capacity
• Corporate image
• Profit margins relative to competitors
• R & D performance
• Promotional effectiveness

Strength

• a) It allows intermediate ratings between high and low and between strong and week.
• b) It helps in channeling the corporate resources to business and achieving
competitive advantage and superior performance.
• c) It helps in better strategic decision making and better understanding of business
scope.

Weakness

• a) It tends to obscure business that are become to winners because their industries are
entering at exit stage.
• b) Assessment of business in terms of two factors is not fair.
19. Discuss VUCA environment and how to develop sustainable business in
VUCA environment.

Volatility = Everything is changing fast

Uncertainty= Everything is becoming Risky
Complexity = Everything is high technology
Ambiguity = We cannot predict future

Volatile:
Volatility refers to the speed of change, to market variations, to how the world changes
in general. It is associated with fluctuations in demand, changing user and customer
requirements, and stakeholder turbulences. The more volatile the world is, the more
and the faster things change. And when the context changes, the leading companies –
companies that rely on digitalization and adaptation through Agile, ExO, etc.
Methodologies that are used to quickly to put the customer at the centre so they can
continue to offer exactly what is needed and define their future.
 Uncertain:
Uncertainty refers to the degree of prediction, to the confidence about what will
happen in the future. Part of the uncertainty is perceived and associated with people’s
inability to understand what is actually going on. However, uncertainty is also a more
objective characteristic of an environment. Truly uncertain environments do not allow
any prediction, even in a statistical way. The more uncertain the world is, the more
difficult it is to make any predictions.

Complex:
Complexity refers to the number of components to be considered, their variety and
their interrelations. The more components, the more variety and the more interfaces
between components, the more complex the environment. When complexity is high,
it is not possible to completely analyse the environment and reach rational
conclusions. The more complex the world is, the more difficult it is to be analysed.

Ambiguous:
Ambiguity refers to the lack of clarity about how to interpret matters. When we lack
information, when they are contradictory or too imprecise to draw clear
conclusions. It refers to confusion and vagueness in ideas and terminology. The more
ambiguous the world is, the more difficult it is to be interpreted. Therefore,
ActioGlobal advocates the use of methodologies that really put our capabilities at the
service of the client so that their needs are at the centre of our business. Then, we are
capable of really adapting ourselves to the environment, change what must be changed
and optimize the delivery of value to clients who have placed their trust in us
expecting great results.

• The deeper meaning of each element of VUCA serves to enhance the strategic
significance of VUCA foresight and insight as well as the behaviour of groups and
individuals in organizations. It discusses systemic failures and behavioural
failures, which are characteristic of organisational failure.
• V = Volatility. The nature and dynamics of change, and the nature and speed of
change forces and change catalysts.
• U = Uncertainty. The lack of predictability, the prospects for surprise, and the sense
of awareness and understanding of issues and events.
• C = Complexity. The multiplex of forces, the confounding of issues, no cause-and-
effect chain and confusion that surrounds organization.
• A = Ambiguity. The haziness of reality, the potential for misreads, and the mixed
meanings of conditions; cause-and-effect confusion.
These elements present the context in which organizations view their current and
future state. They present boundaries for planning and policy management. They
come together in ways that either confound decisions or sharpen the capacity to look
ahead, plan ahead and move ahead. VUCA sets the stage for managing and leading.
The particular meaning and relevance of VUCA often relates to how people view the
conditions under which they make decisions, plan forward, manage risks, foster
change and solve problems.
In general, the premises of VUCA tend to shape an organization's capacity to:
• Anticipate the Issues that Shape Conditions
• Understand the Consequences of Issues and Actions
• Appreciate the Interdependence of Variables
• Prepare for Alternative Realities and Challenges
• Interpret and Address Relevant Opportunities

To successfully develop sustainable business in a volatile, uncertain, complex, and

ambiguous (VUCA) environment, organizations need to prioritize agility and
flexibility. They must be able to quickly adapt to changing conditions and take
advantage of emerging opportunities.
To start, organizations need to develop a clear vision and strategy. They should
identify the most important elements of their business and create an action plan to
achieve their goals. This will enable them to focus their resources on the areas that
are most likely to create long-term value. Additionally, organizations should ensure
that their processes and structures are able to support rapid changes and adapt to new
opportunities.
 20. What is Turnaround strategy? What are the symptoms of organisation
sliding down? How to revive stagnating organisation?

The Turnaround Strategy is a retrenchment strategy followed by an organization

when it feels that the decision made earlier is wrong and needs to be undone before it
damages the profitability of the company.

Simply, turnaround strategy is backing out or retreating from the decision wrongly
made earlier and transforming from a loss-making company to a profit-making
company.

Now the question arises, when the firm should adopt the turnaround strategy?
Following are certain indicators which make it mandatory for a firm to adopt this
strategy for its survival. These are:

• Continuous losses

• Poor management

• Wrong corporate strategies

• Persistent negative cash flows

• High employee attrition rate

• Poor quality of functional management

• Declining market share

• Uncompetitive products and services

Also, the need for a turnaround strategy arises because of the changes in the external
environment Viz, change in the government policies, saturated demand for the
product, a threat from the substitute products, changes in the tastes and preferences of
the customers, etc.
 Example: Dell is the best example of a turnaround strategy. In 2006. Dell announced
the cost-cutting measures and to do so; it started selling its products directly, but
unfortunately, it suffered huge losses. Then in 2007, Dell withdrew its direct selling
strategy and started selling its computers through the retail outlets and today it is the
second largest computer retailer in the world.

Symptoms and solutions of organisation sliding down:

1. Turnover

High turnover refers to an organizational issue where employees leave their

companies frequently and at high volumes. To compensate, an organization has to
regularly hire new people to fill those roles. This can take up company resources and
cause delays in company workflows. Some reasons for high turnover rates may
include:

• Employees are discontent with management and their leadership officials.

• They feel dissatisfied with their work and do not find it fulfilling.
• Staff members are underpaid and want more compensation for their work.
• Employees don't believe their employer hears their voices, ideas and concerns.
• Team members don't see a path for growth within the company.

To overcome this challenge, it may help organizations if they reach out to their
employees and receive feedback from them. It's beneficial for managers to listen to
their employees concerns and seriously consider where they can change or improve.
Taking actionable steps to meet the concerns of your team members can help increase
employee retention rates and improve productivity.

2. Productivity

Productivity refers to the volume of work employees complete successfully and

according to schedule. Having high productivity means a company is meeting their
 production quotas, business operations are on track and the business is fulfilling all
orders on time. An organization may suffer from productivity losses because:

• Teams are understaffed.

• Employees lose interest in the work or get distracted.
• Sudden structural and procedure changes can be jarring.
• Stress inducers like unrealistic deadlines and poor leadership can make working
challenging.

To combat this organizational issue, managers may benefit from hiring on additional
staff or provide employees with breaks so they can relieve stress. Slowly ease your
team members into upcoming changes so they can prepare accordingly and set
deadlines that are realistic and achievable.

3. Process management

Managers use process management to ensure that their team is following the best
processes for completing their work in an efficient and timely manner. The manager
has to set the rules and guidelines and decide what practices to maintain and identify
which ones don't add value. Poor process management can occur because:

• Managers establish processes that are convoluted and complicated.

• Company leadership isn't flexible and ignores feedback from employees.
• Managers lack an in-depth understanding of their team's work and what they need to
accomplish it.

To overcome process management problems, a manager should work closely with

their team, understand their needs and take steps to implement processes that allow
them to do their work simply and efficiently.

4. Role specification
 Role specification means hiring the most qualified person for a job and assigning work
to the most appropriate employee. A lack of quality role specification can disrupt
workflows, reduce efficiency and decrease communication between team members.
Role specification issues can occur because:

• Managers may show biased behaviour towards or against particular individuals.

• A hiring manager doesn't take the time to interview a candidate thoroughly.
• Leadership may not understand their team's capabilities and particular strengths.
• Nepotism can sometimes lead to an unqualified new hire.

To overcome this organizational challenge, it's important that managers learn about
the skills and interests of their team members so they can assign work to the most
qualified member or train members on how to succeed. It's also essential that
managers conduct a thorough hiring process for new candidates to hire people that
suit company openings. They may enlist the help of recruiters who are more adept at
finding qualified candidates for specific roles.

5. Customer satisfaction and relationships

One of the most important aspects of a successful organization is its relationship with
its customers. Satisfied customers contribute to increased revenue and consistent
purchases as a source of income. Customers may become unsatisfied with an
organization due to poor customer service or poor quality of a company or service.

A solution to customer satisfaction as an organizational issue could be to retrain

employees on how to provide the best customer service and engage with consumers
through surveys, social media and market studies.

6. Innovation

Innovation is how companies develop new ideas and expand their products and
services. An organization that is innovative opens itself up to new opportunities,
 integrates updated technology tools and becomes an industry leader. Organizations
experience low innovation and grow stagnant because:

• They have a company culture that stifles employee creativity.

• The company uses outdated business practices that don't facilitate innovation.

You can encourage innovation in your organization organizations by listening to the

ideas of your team members and creating a culture where they feel comfortable being
able to express their ideas openly and freely. It's also helpful to thoroughly analyse
current business practices and make necessary changes so new ideas and innovations
can easily integrate into the company's processes.

7. Teamwork

Teamwork involves employees working together to achieve a common goal. Effective

teamwork increases productivity, revenue and makes everyone's job easier to
complete. Teamwork within an organization can falter when:

• Team members have conflicting personality traits.

• Some individuals contribute more to projects than others.
• Managers show favouritism towards specific people.
• The organization has poor communication channels.

To resolve this organizational issue, try facilitating team meetings so everyone can
share their concerns and craft solutions. Avoid showing favouritism so everyone feels
valued and encouraged when they speak up about their ideas. You can also conduct
individual meetings with each team member to assess the best way to improve the
team based on each person's feedback. If there are conflicting personalities, it's
important to have the involved parties discuss their issues civilly so they can
determine a way to work together peacefully.
 21. . Explain TQM and BPR and how is it being practiced in industries to make
it competitive in today’s global scenario?

Total Quality Management (TQM):

Total Quality Management is mainly concerned with continuous improvement in all

work. It is a long-term planning. It is consistent improvement in quality. It is a never-
ending process. Total Quality Management consists of three words:

i)Total ii) Quality iii) Management

Total- Makeup of the whole Company process and set up

Quality- Degree of excellence a product or service provides.

Management- It is a process of planning, organising, directing, and controlling.

TQM is the art of managing the whole setup to achieve excellence. TQM covers all
set rules, regulations, guidelines, and principles that contribute in improving the
organization continuously. It is a continuous process of improvement for individuals
and the whole organisation. It is the application of quantitative methods and human
resources to improve all the processes within an organization to satisfy the needs of
customers consistently.

Pillars of TQM
1. Customer Satisfaction
2. Continuous improvement
3. Company-wide quality culture
4. Leadership & strategic planning
5. Employee involvement and focus
6. Stakeholder involvement and Focus
7. Top management commitment
8. Broad Goal of TQM is continuous improvement.
9. Aims to impress upon workers the importance of continuously improving the
efficiency of the production process in order to a) Reduce Cost b) Improve Quality
c) Reduce Waste
10. Workers in a TQM system are expected to make suggestions for improving all aspects
of the work process and are expected to share their specialized knowledge with
management so that it can be communicated throughout the organization.
11. TQM is a rational technique which is driven by hard statistical data on the need for
improvement.

TQM and its impact on global competitiveness:

Total Quality Management (TQM) is a philosophy and set of practices that strive to
improve the quality of products and services. It has been widely embraced by
businesses around the world as a means of achieving a competitive edge in the global
marketplace.

TQM focuses on the use of data and on continuous improvement in order to meet and
exceed customer expectations. Companies that have adopted this approach have been
able to reduce operating costs, improve quality and productivity, and increase
customer satisfaction.

The principles of TQM are being implemented in many industries, including

manufacturing, healthcare, and hospitality. In the manufacturing industry, for
instance, TQM helps companies reduce waste and increase efficiency. Quality control
practices, such as inspection and testing of products, are used to ensure that products
are in line with customer requirements. In healthcare, TQM is used to improve patient
care and safety. Hospitals use TQM to develop quality standards, measure and analyse
performance, and improve processes.

In order to stay competitive in today's global market, companies must stay up-to-date
with the latest quality standards. TQM is a powerful tool that can help companies
 achieve this goal. By adopting the principles of TQM, companies can ensure that their
products and services meet and exceed customer expectations, resulting in increased
customer satisfaction and loyalty.

Business Process Reengineering (BPR):

Business process reengineering is the act of recreating a core business process with
the goal of improving product output, quality, or reducing costs. Typically, it involves
the analysis of company workflows, finding processes that are sub-par or inefficient,
and figuring out ways to get rid of them or change them.

BPR has often been confused with the quality movement. Quality specialists tend to
focus on incremental change and gradual improvement of processes, while proponents
of reengineering seek radical redesign and drastic improvement of processes.
It is based on four key words:
1. Fundamental
Why do we do what we do? And why do we do it the way we do?
Why the old rules and assumptions exist?
2. Radical
Disregard all existing structures and procedures, and inventing completely new
ways of accomplishing work.
3. Dramatic
Not about making marginal improvements.
4. Processes
a. Dysfunctional b. Importance c. Feasibility

While most companies find that the benefits of BPR far outweigh the negatives, here
are some pros and cons to consider.
 Pros

• Can improve business performance and productivity.

• Can reduce costs and improve competitive advantage.
• Can improve customer service.
• Can introduce greater flexibility and responsiveness.
• Can simplify operations and processes.

Cons

• Can require a significant investment of resources.

• Can create disruption and resistance within the organization.
• Can be challenging to manage and implement.
• Can lead to increased complexity and confusion.
• Can produce unexpected negative results.

BPR and its impact on global competitiveness:

Business Process Reengineering (BPR) is a systematic approach to redesigning

business processes to improve efficiency, reduce costs, and increase customer
satisfaction. It has been widely adopted by businesses around the world to help them
remain competitive in the global market.

With BPR, companies analyze their existing processes and identify areas where
improvements can be made. The process involves rethinking processes from the
ground up, replacing outdated and inefficient processes with new, streamlined ones.
This allows companies to reduce costs, improve quality, and increase customer
satisfaction.

BPR is being used in many industries, including healthcare, retail, and manufacturing.
In healthcare, for example, BPR is used to improve patient care and safety by
streamlining processes and procedures. In the retail industry, BPR is used to create a
more efficient supply chain and reduce costs. In manufacturing, BPR is used to
improve quality, reduce waste, and increase efficiency.

In today's global market, companies must stay ahead of their competitors in order to
remain competitive. BPR can help companies achieve this goal by streamlining
processes, reducing costs, and improving efficiency. By implementing BPR in their
operations, companies can maximize their resources and increase their competitive
edge.
22. .“Innovate or Perish” is the biggest challenge faced by every organisation.
What strategies are being employed to make the organisation sustainable?

"Innovate or Perish" is a phrase that has become increasingly relevant in today's

business world. Many organizations are struggling to stay competitive and remain
sustainable in a rapidly changing business environment. As such, organizations must
adopt strategies to drive innovation and create an environment of continuous
improvement.

One such strategy is to invest in research and development. By investing in R&D,

organizations can gain a competitive edge by developing new products, services, and
processes that can help them differentiate themselves from the competition.
Furthermore, R&D can help organizations to stay ahead of the curve by developing
new technologies and staying up-to-date with the latest industry trends.

Another strategy organizations can employ is to foster a culture of creativity and

collaboration. By creating an environment that encourages innovative thinking,
organizations can tap into the collective knowledge of their employees and come up
with new ideas and approaches to solving existing problems. This can result in
improved efficiency and productivity as well as cost savings.

Finally, organizations should focus on building strong relationships with their

customers. This can help them to gain a better understanding of customer needs and
preferences, enabling them to develop products and services that meet these needs.
By doing so, organizations can ensure their products remain relevant in the ever-
changing business landscape and remain sustainable over the long run.
23. “Adopt stability and safety-first policy, rest leave it to emerging markets.”
Do you believe in this strategy? If yes, why? If not, why not?

While it's true that stability and safety should be prioritized in uncertain markets, I
don't believe that this should be the primary strategy for all organizations. In today's
increasingly competitive business landscape, organizations must take risks to stay
ahead of their competitors and remain sustainable.

For example, organizations should not hesitate to embrace emerging technologies and
trends, even if they are uncertain. By taking advantage of emerging opportunities,
organizations can differentiate themselves from their competitors and create new
products and services that will help them remain competitive. Additionally,
organizations should actively seek out new markets and customers, as this can open
up new revenue streams and help them to stay ahead of the competition.

At the same time, organizations should not take unnecessary risks and should always
prioritize stability and safety. To do this, they should thoroughly assess any potential
risks and make sure they have the necessary resources and expertise to handle them.
Additionally, organizations should be prepared to quickly adapt their strategies in
response to changing conditions. In this way, they can ensure they remain competitive
and sustainable over the long run.
 24. Discuss Red Ocean, Blue Ocean and Purple Ocean strategies with industry
examples.

Red Ocean Strategy Meaning

Red ocean strategy is a plan of action to make a product survive (and make profits) in
a competitive market. The strategy aims to beat the competition. Red ocean strategy
examples show certain characteristics associated with red ocean theory. They are:

• Organizations Compete in An Already-Existing Marketplace

• The Focus Is on Value/Cost Trade-Off. An Organization Can Decide Whether To
Create More Value For Customers At Higher Costs Or Not
• Organizations Exploit the Existing Demand In A Red Ocean Market
• Quality Of Execution Is Improved
Red ocean strategy examples tell us that an organization must choose between low
cost and differentiation. According to the red ocean theory, they’ll have to align all
their activities in a specific strategic direction.

Red Ocean Strategy Examples

Red ocean strategy gives a clear view of customer needs in an established market. It’s
a big advantage, but the competition is fierce—every player is trying to carve out a
niche for themselves by offering better quality and deals. A red ocean strategy will
work if the organization has faith in its product and strategies. Let’s look at some
examples to make the red ocean strategy meaning clearer.

• Reliance Jio

Reliance Jio entered a red ocean market in telecommunication with strong, established
players Airtel and Vodafone. Well-versed with the red ocean strategy meaning, they
offered unique deals and generous internet packs that eventually made Jio a market
leader.

• Ryanair
 Ryanair is a European airline that used the red ocean strategy to operate in a saturated
market. They chose a low-cost model to offer basic air services and cheap airfares
compared to their competitors.

SpiceJet airlines and Jio Telecom in India are examples of the red ocean strategy.

SpiceJet is a low-cost airline that has built its customer base by offering lower-cost
services than its competitors. Still, it is always in direct competition with other budget
airways. As Jio Telecom entered the crowded Indian market, it disrupted the telecom
industry by providing free services. Jio brought affordable tariff plans, fast internet,
calling connectivity, etc., which affected the market share and the profitability of other
companies like Airtel, Vodafone, IDEA, etc.

Pros of Red Ocean Strategies

Red Ocean Strategies are Less Risky: Minimal risk is the key advantage of the red
ocean strategy. Businesses don’t have to create new demand for their products in an
established market. Instead of struggling to make a new market, a company can focus
on improving its customer service and revising its pricing policy.

Future Clarity: In a red ocean strategy, the company has clarity regarding the market
and consumers, which allows them to focus on the product and marketing strategy.

Requires Limited Resources: A red ocean strategy is ideal for a company with
limited resources as the business is already operating in an established market. In
addition, working in an established market provides a margin of safety for the
company.

Cons of Red Ocean Strategy

The following are the disadvantages of the red ocean strategy:

• It can be difficult to challenge and overthrow an established competitor.

 • Companies must face tough competition.

Blue Ocean Strategy:

Blue ocean strategy is a device to acquire uncontested market spaces by creating fresh
demand. It’s a pacifist marketing scheme that allows an organization to tap into
unexplored industry gaps with vast potential. Blue ocean strategy is a path-breaking
tool for creating new demand for upgraded or advanced products. The products are
familiar to the customer and stand out because of their unique features and
utilities. Strategic planning based on blue ocean theory prevents benchmarking
competition and opens up a unique profitable space in the market.
By adopting the blue ocean strategy and entering a new market, an organization can
establish complete monopoly instead of fighting with the competition and sharing
profits. Conducted over a decade, the blue ocean strategy is a study of over 150
strategic moves across 30 industries over 100 years. Researchers Renee Mauborgne
and W. Chan Kim devised the blue ocean theory by focusing on discovering the
common factors that create blue oceans and the key differences between champions
of the market and the ones who either merely survive or who drift into the red ocean.
Research and the database continue to grow and the blue ocean strategy depicts
similar patterns with blue ocean companies in for-profit industries, non-profit
industries and public sectors.

Characteristics And Importance of The Blue Ocean Strategy

The meaning of blue ocean strategy implies that it pushes an organization to look
beyond its competition. While red oceans see businesses offer similar products at
different rates, blue ocean products are unique and can sell at premium prices. Let’s
look at some important characteristics of blue ocean strategy:
• Competing Factors And Costs Have To Be Reduced By Creating New Industry
Factors
• The Competition Automatically Becomes Irrelevant When An Organization Taps Into
Uncontested Market Spaces
• Common Frameworks And Strategic Patterns Are Used To Execute Strategies
• The Management Uses Step-By-Step Processes Instead Of Traditional Practices To
Implement Strategies
• Risks Are Mitigated, Losses Are Minimized And Chances Of Success Are Maximized
• Employee Support Must Be Ensured By Including Them In Process And Tool
Management
• Sustainability Can Be Ensured By Aligning People, Values And Profits

Example of Blue Ocean Strategy:

Yellow Tail

The development of Yellow Tail, a new wine brand from Casella Wines, is another
great example of blue ocean strategy in action. And it’s a case study which clearly
demonstrates the rewards blue ocean strategy can bring: within three years of entering
the market, Yellow Tail had become the fastest growing wine brand in US history.

How did the brand achieve this level of success so rapidly? Yellow Tail recognised
that most wine brands operate in a red ocean where competition for market share is
fierce. They realised that by reducing or eliminating the elements that the industry
competed on and differentiating themselves, they could create a blue ocean and tap
into a new set of customers.

Yellow Tail abandoned the traditional focus on prestigious vineyards and aging. And
they ditched the complex terminology normally found on wine bottles which can be
prove intimidating for potential customers. Instead, Yellow Tail created a drink which
was sweet enough to appeal to the masses and therefore capture demand from beer
and spirit drinkers rather than just wine buffs. And they made it easy to buy by only
introducing two varieties: one red and one white. The rest, as they say, is history.
Purple Ocean Strategy:

The Purple Ocean strategy is the new terminology being used to describe when the red
ocean (highly competitive markets) mixes with the blue ocean (New Untouched
Markets / New Business Categories). The Purple Ocean strategy claims that in today’s
business world, organizations need both innovative ideas and a series of strategies in
order to compete and remain functional in the long run.

Example of Purple Ocean Strategy;

Samsung has been cited by Barwise and Meehan (2012) as a classic example of where
the blue ocean value innovation strategy has been executed successfully in the Purple
Ocean. In the late 1990s, Nokia attained market leadership at the expense of
Motorola and now, Samsung has reproduced the move by doing the same to Nokia.
Barwise and Meehan (2012) underscore that whilst Samsung put into practice Kim and
Maubournge’s value innovation framework in the 1990s, the aim was not to create (nor
was Nokia) an untapped market space which could make the competition irrelevant. In
1994, the global mobile handset market leader was Motorola with a 45% share,
outperforming its closest rival Nokia that was gaining about 20% market share.
Nonetheless, Nokia took the lead after six years becoming the market leader with
31% and continued to lead the market until the arrival of Samsung. The rhetoric of
the blue ocean strategy, and the contemptuous reference to companies trapped in a red
ocean seriously diminish the importance of keeping the promise, reliably delivering
it and relentlessly improving through progressive innovation. Realistically, the ocean
varies from red to various shades of purple and as such, companies need to constantly
improve on the basics to circumvent the fate of Motorola – whilst occasionally
innovating beyond the familiar to avoid that of Nokia. Apple and Samsung have
successfully applied elements of the purple ocean in order to defend their gained market
share
25. Distinguish Between Red and Blue Ocean Strategy

Red Ocean Strategy Blue Ocean Strategy

The contest is in the same market. Create an uncontested new market.

Many Companies compete with each

One Company dominates the new Market.
other in the existing market.

Beats competitors. Competitors are irrelevant.

The company pursues both cost and The company chooses between cost and
differentiation. differentiation.

Make the value-cost trade-off. Break the value-cost trade-off.

Capture new demand. Exploit existing demand.

Focus on rivals within its industry. Focus across the alternative industry.

Intend to provide better service to

Redefine the buyer group.
buyers.

Focus on current customers. Focus on new customers.

The market is already established. Need to make the new market.

For example, Ryanair and Air Asia

For example, Netflix, Canon, and iTunes.
Airlines.
 26. How to manage change at micro and macro level?

Change management is an essential part of any organization, as it ensures that change

is effectively implemented and that the organization is able to adapt to its environment.
Change can occur at both the micro and macro level, and it is important for
organizations to have strategies in place for managing change at both levels.

At the micro level, change management focuses on individual employees and their roles
within the organization. It involves creating an environment that is conducive to
learning and growth, and providing employees with the skills and knowledge they need
to successfully adapt to change. This includes providing training and feedback, as well
as supporting employees in developing new skills.

At the macro level, change management focuses on the organization. This involves
creating a change strategy that will enable the organization to successfully navigate
changes in its environment. This strategy should include an analysis of the
organization's current state, a plan for the desired future state, and an analysis of the
resources and capabilities needed to achieve that future state.

Change management is an essential part of any successful organization. By having

strategies in place to manage change at both the micro and macro level, organizations
can ensure that they are prepared to face any changes that come their way.
 27. Importance of Ethical Business

Business ethics involve a guiding standard for values, behaviours, and decision-
making. Ethics for business have changed over time but they are important for every
company. Running a business with ethics at its core from the top down is essential for
company-wide integrity. Behaving in a consistently ethical manner can lock in a solid
reputation and long-term financial rewards for companies. Employees tend to remain
loyal to, and perform more effectively for, a company with a high standard of ethics.

Importance of Ethical Business:

1. Control Business Malpractices: Business ethics directly influence the operations

of the business. It is the one which helps business in deciding what is wrong and what
is right. These ethics set certain rules and principles to be followed strictly by
business, and their violation leads to a penalty. Implementation of these principles
ensures that business does not indulge in any unfair practices like black marketing,
providing misleading advertisement, frauds in measures and weight, adulteration, etc.
Through business, ethics works on providing better products to its customers at
reasonable prices.
2. Better Relation with Employees: Employees are an important part of the business
and necessary for the survival of the business. Business ethics ensures that business
works for the welfare of its employees working with it. The business should not only
work for the achievement of its objectives like profit maximization and higher growth
but should also focus on peoples working with it. These ethics ensures that business
provides better monetary compensation and good working conditions to its
employees, active participation in decision making, addressing complaints, and
providing promotions as per their progress. This helps in maintaining a good
relationship with employees.
3. Improves Customer Satisfaction: The consumer is termed as king in the market
and is the one who decides the success or failure of every business. It is important that
the business fulfils the needs of its customers. Business ethics provides principles for
 business operations under which it is required to provide better quality products at
reasonable prices. It ensures that the business provides better customer support and
redressal of all complaints. This helps businesses in improving the satisfaction levels
of its customers.
4. Increase Profitability: Business ethics improve the productivity and profitability of
every business. It sets certain rules to be followed by every person working with the
business. Every employee is required to adhere to these rules and should focus on its
duties with sincerity. These ethics ensure that there is no wastage of resources, and
every resource is efficiently utilized. This eventually leads to an increase in business
profit in the long run.
5. Improves Business Goodwill: Business goodwill has an important effect on
capturing the market. Better goodwill businesses are able to attract more and more
customers. By implementing ethics in its operations business aims at providing better
service to the market. Businesses that work ethically operate at the low-profit base
and with honesty. This develops a better image in front of the public and is easily
accepted by customers with fewer efforts.
6. Better Decision Making: Ethics in business helps them in making better decisions
timely. It provides certain rules and guidelines that every business needs to follow in
its operations. Every decision is taken in light of the moral principles and social values
provide through these ethics. It helps businesses in deciding what is right and what is
wrong. Every person working within the business is required to respect these ethics,
violation of which would lead to the penalty.
7. Protection of Society: Society is very important for the success of every business.
If a business does not consider the interests of its society, then it will harm its survival.
Business ethics direct that business should work for the welfare of its society and take
part in various infrastructural development programs.
It ensures that business contributes actively to its corporate social responsibility. A
business should not perform any activity that creates a problem for the society in
which business exists.
28. Organisational Culture

The importance of organizational culture and its impacts in strategic management is

very essential. As organizational culture and strategies are both social processes,
many strategists argue that culture and strategies are connected. Cultural
dimension plays a vital role in all aspects of an organization. It is so impacting that it
can determine the success and failure of an organization. In leadership concept,
organizational culture has been identified as one the important components that
strategic leaders can use to develop dynamic organization. Culture reflects the way in
which people in an organization set objectives, manage their resources, and perform
their tasks. Culture also affects people behaviour unconsciously. Even in those
organizations where the ideal of organizational culture do not receive much explicit
attention, how people think, feel, value, believe and behave in a company are
generally influenced by ideas, beliefs and perception of a cultural nature.
Organizational leaders achieve success by constantly sending clear signals about their
priorities, beliefs and values. Once culture is established and accepted, they become
a strong management tool for leaders to communicate and energize their members
with beliefs and values to do their jobs in a strategy supportive manner. When leaders
succeed in promotion ethical culture in the organization, they will also become
successful in organizational growth and consequently are competitive to their rivals.

Therefore, it is very important to develop a strong culture in the organization as well

as strategies that are suitable to the culture in order to be strengthened by it. If a
particular strategy does not match with the organization culture, it could be almost
impossible to accomplish expected outcome from the planned strategy.
29. TWO’s Model

A TOWS analysis is very similar to SWOT. However, there is a key difference

between the two, other than a reshuffling of a few letters!

While SWOT analysis, puts the emphasis on the internal environment (your
strengths and weaknesses), TOWS forces you to look at
your external environment first (your threats and opportunities).

Doing this allows you to gain a better understanding of the strategic choices
that you face. (Remember that "strategy" is the art of determining how you'll
"win" in business and life.)

1) Strengths and Opportunities in TOWS Matrix / SO

The first and foremost strategy of the TOWS Matrix involves the using of internal
strengths of the company to make optimum use of the external opportunities available
to the company. Example: If the company has developed a niche and distinct brand
image in the market and minds of the consumers and there is an opportunity to tap the
new market locations or coming up with the new line of products and services for the
same target market, it is one of the best options for the growth of the firm.

2) Weakness and Opportunities in TOWS Matrix / WO

The second strategy in the line of TOWS Matrix indicates that the management of the
company will find various options and alternatives to overcome the weaknesses and
take advantage of the opportunities that are coming in the way. It is the best way to
diminish the weakness and exploit the opportunities. Example: If the company is not
an expert in any of the business facet that is required for the growth and success and
is presented with the opportunity for an alliance with the other company that has the
required expertise, it works as a win-win situation for both the parties involved.
 3) Strengths and Threats in TOWS Matrix / ST

This strategy of the TOWS Matrix implies that the management of the company
would exploit all the internal strengths to overcome any of the potential threats that
in the way of the business to accomplish the desired goals and objectives. Example:
If the company is facing the astute competition for the existing players in the market
or from the new entrants that are offering the new and innovative range of the products
that are similar to the ones offered by the company, the company needs to harp on the
internal strengths such as quality of the offerings, authentic manufacturing
techniques, customer service, and rich legacy of the brand amongst others.

4) Weaknesses and Threats in TOWS Matrix / WT

This one is the least appealing strategy of the TOWS Matrix as which company would
harp on its weaknesses to overcome the external threats on the business. It is always
advisable to minimize the weaknesses to avoid the possible threats.

Example of TWOS Model:

Nokia

SO Strategies: Increase the market share and the overall presence in the country of
Germany by offering the innovative and reliable range of products. Elevate the
presence in Asia-Pacific regions by having a customer-driven approach. Penetrate
new markets with business alliances and new product lines.

ST Strategies: Reduce the cost of the products due to the factor of the high level of
competition in the market Offer customer-oriented products

WO Strategies: Work on the customer service experience and offer competitive

prices Improve the brand position in Japan with paid partnerships Focus on the US
market with a new line of products availing the joint venture opportunities
Increase profit margins by penetrating in different markets offering customer-driven
products