RASHTRASANT TUKDOJI MAHARAJ NAGPUR UNIVERSITY

MBA
SEMESTER: 3

ALONG WITH ANSWERS

SUBJECT
STRATEGIC MANAGEMENT
- Jayanti R Pande
DGICM College, Nagpur
Copyright © 2023 Jayanti Rajdevendra Pande. All rights reserved.
 WINTER 2022

STRATEGIC MANAGEMENT

SOLVED QUESTION PAPER

Copyright © 2023 Jayanti Rajdevendra Pande. All rights reserved.

Q1. A] Explain the concepts of strategy. Discuss the various levels in an organisation at which strategy operates.

MEANING OF STRATEGY

• The term "strategy" originates from the Greek word "strategia," which meant "generalship" in ancient times, referring
to military planning by generals.
• Today, "strategy" is a plan of action for an organization, outlining its vision and mission.
• It guides decision-making, considering strengths and weaknesses compared to competitors, to achieve a balance
between objectives and resources for greater success.
• Strategy sets fundamental long-term goals, directing actions towards achieving them.

DEFINITION OF STRATEGY

Alfred D Chandler- Strategy is the determination of the basic long term purpose and objective of an enterprise & the
adoption of the courses of action & allocation of resources necessary for carrying out these goals.

William F Glueck – Strategy is a unified, comprehensive and integrated plan designed to assure that the basic objective of
enterprise are achieved.

Strategy is not as simple as it seems to be, but logical understanding of its theory helps to grasp it & work with ease.

Copyright © 2023 Jayanti Rajdevendra Pande. All rights reserved.


1 CORPORATE
STRATEGY
 Plans of Top Management for
supervising overall functioning
of firm & achieving expected
performance.
 Outlines org activities &
objectives in diff areas like
product lines, technologies,
consumers & their needs.
 Guides an org to become what
it wants, maximises
performance level
 Eg Nokia [alliance with
Microsoft]
LEVELS OF STRATEGY
2 BUSINESS
STRATEGY
 Strategic Business Unit SBU is based on
recognising separate market segment
created by the company.
 Formulated separately for each segment
due to differences in their environmental
condition
 Formulated to satisfy needs of customers  Eg Marketing strategy can be
of each segment thus increasing &
sustaining competitive advantage
 Dominos Pizza – Turnaround Strategy
3 FUNCTIONAL
STRATEGY
 Denotes operating division levels
& departments in an org like
marketing, finance, HR, R&D
 Business and Corporate strategy
depend on this strategy for info
regarding resources &
capabilities.
broken into functional levels like-
Pricing strategies
Distribution strategies
Promotion strategies
Sales strategies
Copyright © 2023 Jayanti Rajdevendra Pande. All rights reserved.
Q1. B] Explain Strategic Management. Discuss the elements involved in the Strategic Management process.

STRATEGIC MANAGEMENT is the process of formulating and implementing decisions that lead to the development of
effective strategies, ultimately helping organizations achieve their corporate objectives. It comprises several
interconnected elements.

1 2 STRATEGY 3 STRATEGY 4 EVALUATION &

ENVIRONMENTAL FORMULATION IMPLEMENTATION CONTROL
SCANNING

STRATEGIC MANAGEMENT PROCESS

Environmental Scanning: This involves analyzing both internal and external factors that will impact the organization's
future. SWOT analysis is commonly used to assess Strengths, Weaknesses, Opportunities, and Threats.
Strategy Formulation: Long-term plans are developed during this stage to guide organizational activities. It includes
establishing a vision, defining the mission, setting realistic objectives, and formulating strategies and policies.
Strategy Implementation: Putting the chosen strategies into action is crucial for success. This phase employs programs,
budgets, and procedures to execute strategies, usually managed by middle or lower-level management with top
management oversight.
Evaluation & Control: Regular evaluation is necessary to monitor the entire strategic management process. Managers
assess performance, compare expected and actual results, and make necessary adjustments. Feedback from subordinates
is vital for effective evaluation.
Copyright © 2023 Jayanti Rajdevendra Pande. All rights reserved.
Q2. A] Define a mission statement. Discuss in detail the steps involved in the preparation of mission statement.
Give examples of mission statement

MISSION STATEMENT is a concise declaration that defines an organization's fundamental purpose, encompassing its
values, core objectives, and target audience. It provides direction, identity, and focus to guide decision-making and
operations. The process of preparing a mission statement involves the following steps:

1. Key Decision Maker's Policy: The first step is identifying the guiding principles and policies of the key decision-makers
in the organization. Understanding their vision and values helps align the mission statement with their strategic goals.
2. Visionary Long-Term Concept: A forward-thinking, long-term concept is developed to envision the organization's
future direction. This involves considering where the organization wants to be in the long run and how it aims to impact its
stakeholders positively.
3. Organizational Mission: The final step is crafting a clear, concise, and purpose-driven mission statement that reflects
the organization's essence. It should be inspiring and communicate the organization's unique value proposition and
intended impact.

EXAMPLES OF MISSION STATEMENTS:

Google: "To organize the world's information and make it universally accessible and useful."
Oxfam: "To create lasting solutions to poverty, hunger, and social injustice."
Tesla: "To accelerate the world's transition to sustainable energy."
UNICEF: "To ensure every child has the right to survive, thrive, and fulfill their potential."
Microsoft: "To empower every person and every organization on the planet to achieve more."
Copyright © 2023 Jayanti Rajdevendra Pande. All rights reserved.
Q2. B] What is environmental analysis in Strategic Management? Explain various components of External
Environment

Environmental Analysis in Strategic Management refers to the process of assessing and understanding the
external factors that can impact an organization's performance and decision-making. It involves identifying
opportunities and threats presented by the external environment, enabling the organization to formulate effective
strategies to adapt and succeed. The external environment consists of-
a) Micro Environment:
 Suppliers: Entities providing goods or services to the organization.
 Customers: Individuals or organizations purchasing products or services from the organization.
 Competitors: Other organizations operating in the same industry and offering similar products or services.
 Public: Stakeholders, such as local communities, media, and interest groups, who have an interest in or are affected
by the organization's activities.

b) Macro Environment:
 Economic: Factors related to the overall economic conditions, such as GDP, inflation rates, employment levels, and
consumer spending patterns.
 Political: Government policies, regulations, political stability, and legal frameworks that impact the business
operations.
 Demographic: Population characteristics, such as age, gender, income levels, and cultural diversity, that influence
consumer behavior and market trends.
 Socio-cultural: Social attitudes, values, beliefs, and cultural norms prevailing in the society, which can shape
consumer preferences and business practices.
Copyright © 2023 Jayanti Rajdevendra Pande. All rights reserved.
Q3. A] What is growth strategy? Discuss in detail the types of concentration strategies

GROWTH STRATEGY is a plan to expand a business, increase market share, and achieve higher revenue and
profitability.
CONCENTRATION STRATEGIES focus on existing products and markets. Each strategy has its advantages and helps
businesses stay competitive while achieving growth. By implementing the right concentration strategy, companies can
maximize their potential within their current market segments and products.

TYPES OF CONCENTRATION STRATEGIES

1. Market Penetration: Increase market share with current products through aggressive marketing and promotions.
Example: Smartphone manufacturer lowers prices to attract more customers.

2. Market Development: Enter new markets with existing products, exploring untapped opportunities. Example:
Clothing retailer opens stores in new countries or launches an online store.

3. Product Development: Introduce new products or enhance existing ones to meet changing customer needs.
Example: Electronics company releases a line of smart home devices.

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Q3. B] What is an Integration Strategy? Discuss various types of Integration strategies with examples.

INTEGRATION STRATEGY involves a business expanding its operations or control over its supply chain through
mergers, acquisitions, or collaborations with other companies.
Integration strategies offer benefits such as strengthening market position, achieving economies of scale, and gaining
a competitive advantage. However, they also come with challenges, including integration costs, cultural differences,
and regulatory issues. Companies must carefully evaluate their resources, market conditions, and long-term objectives
before implementing integration strategies.

TYPES OF INTEGRATION STRATEGIES

1 Vertical Integration:
This occurs when a company extends its control backward (towards suppliers) or forward (towards distribution
channels or end-users) in the supply chain. For example, a car manufacturer acquiring a tire manufacturing company
(backward integration) or a shoe manufacturer opening its retail stores to have direct access to consumers (forward
integration).

2 Horizontal Integration:
This Involves a company merging or acquiring other firms operating in the same industry and at the same production or
distribution stage. For instance, one airline acquires another airline to expand its route network and customer base.

Copyright © 2023 Jayanti Rajdevendra Pande. All rights reserved.

Q4. A] What are resources? Discuss various sources of competitive advantages in a firm.

RESOURCES refer to the assets, capabilities, and attributes that a firm possesses and controls.
They play a crucial role in determining a company's competitiveness and ability to achieve its strategic objectives.
By leveraging both tangible and intangible resources strategically, firms can establish a competitive edge in the
marketplace, leading to growth, profitability, and long-term success.

TWO MAIN TYPES OF RESOURCES:

Tangible Resources:
These are physical assets that a company owns and controls, such as machinery, equipment, land, buildings, and
financial resources. Tangible resources can provide a competitive advantage if they are rare, difficult to obtain, or
utilized effectively to create value in the market. For example, modern manufacturing equipment can lead to cost
leadership through improved efficiency and lower production costs.

Intangible Resources:
These are non-physical assets, including intellectual property, patents, trademarks, brand reputation, organizational
culture, managerial expertise, and customer relationships. Intangible resources are difficult to replicate, making them
valuable for creating sustainable competitive advantages. A strong brand reputation, for instance, can foster customer
loyalty and higher willingness to pay premium prices.

Copyright © 2023 Jayanti Rajdevendra Pande. All rights reserved.

VARIOUS SOURCES OF COMPETITIVE ADVANTAGES IN A FIRM can contribute to its success and
differentiation in the market. Some key sources include:

1. Unique Products or Services: Offering products or services with distinct features or innovations that
competitors don't have can create a competitive advantage. This uniqueness can attract customers and foster
brand loyalty.

2. Cost Leadership: Being able to produce goods or services at a lower cost than competitors allows a firm to
offer competitive pricing, attracting cost-conscious customers.

3. Superior Quality: Providing products or services of higher quality than competitors can lead to customer
preference and positive word-of-mouth, giving the firm a competitive edge.

4. Strong Brand Image: A well-established and positive brand reputation can build trust with customers, making
them more likely to choose the firm's offerings over others.

5. Customer Service: Exceptional customer service and support can lead to higher customer satisfaction,
retention, and referrals, enhancing the firm's competitive position.

Copyright © 2023 Jayanti Rajdevendra Pande. All rights reserved.

Q4. B] Explain Michel Porter’s Five Forces model

MICHAEL PORTER'S FIVE FORCES MODEL is a strategic framework that analyzes the competitive forces within an
industry to assess its attractiveness and potential profitability. It helps businesses understand the competitive landscape
and make informed decisions.
The five forces in the model are:

1. Threat of New Entrants: This force examines the ease with which new competitors can enter the market. High
barriers, such as strong brand loyalty, patents, or high capital requirements, make it difficult for new entrants,
reducing the threat. Low barriers increase the likelihood of new competitors, intensifying competition.
2. Bargaining Power of Buyers: It assesses the influence buyers have over prices and terms. When buyers have many
choices or purchase large volumes, they gain bargaining power, affecting profitability. Strong buyer power can lead
to price pressure and reduced profits for firms.
3. Bargaining Power of Suppliers: This force looks at the influence suppliers have over the industry. When suppliers
have limited alternatives for their products or services, they gain bargaining power, allowing them to raise prices or
reduce the quality of inputs, impacting the industry's profitability.
4. Threat of Substitutes: The model evaluates the availability of substitute products or services. If there are many
substitutes, customers can easily switch, limiting the pricing power of firms within the industry.
5. Intensity of Competitive Rivalry: This force examines the degree of competition among existing firms in the
industry. High rivalry leads to price wars and reduced profits, while low rivalry allows firms to enjoy higher
profitability.

Copyright © 2023 Jayanti Rajdevendra Pande. All rights reserved.

Q5. A] Discuss functional strategies. Explain horizontal fit & Vertical fit of functional strategies.

INTRODUCTION TO FUNCTIONAL STRATEGY

Functional strategy involves managing specific functions within a company to achieve its overall strategic objectives.
For an organization to succeed, effective management of all functional areas is crucial. Hence, each area, such as
Production, Marketing, Finance, R&D, etc., requires a well-defined strategy. These individual functional strategies are
extensions of the organization's main business strategy. The respective heads of each functional area formulate and
execute these strategies, aligning them with the overall goals of the company.

Various types of functional strategies include financial, marketing, HR, production, R&D, operations, purchasing,
logistics, and information systems strategies, each focusing on specific aspects of business management to achieve
competitive advantage.

HORIZONTAL FIT
Horizontal fit of functional strategies refers to the alignment and coordination of different functional areas within a
company to achieve overall organizational goals. It ensures that departments work together harmoniously, avoiding
conflicts or duplications.

VERTICAL FIT
Vertical fit involves aligning functional strategies with the company's overall business strategy. It ensures that each
functional strategy supports and contributes to the achievement of the broader corporate objectives.
Copyright © 2023 Jayanti Rajdevendra Pande. All rights reserved.
Q5. B] Discuss in detail Value Chain Analysis of an organisation, give example.

VALUE CHAIN ANALYSIS, introduced by Michael Porter, is a method used to assess a company's capabilities and
resources, identifying its strengths and weaknesses. The analysis aims to determine activities that add value to a
product or service. The greater the difference between the organization's revenue and costs, the higher the value
added. By understanding the degree of value added by each activity, a company can enhance its value delivered to
consumers through re-engineering the entire value chain process. Moreover, a company's value chain interacts with
other organizations' value chains.
The value chain activities comprise primary activities (inbound logistics, operations, outbound logistics, marketing
and sales, after-sales service) and secondary activities (procurement, technology development, HR management,
firm infrastructure).

CONDUCTING VALUE CHAIN ANALYSIS

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STEP 1: IDENTIFICATION OF SUB-ACTIVITIES FOR EACH PRIMARY ACTIVITY
• Direct Activities: Add value directly to the firm.
• Indirect Activities: Support direct activities for proper functioning.
• Quality Assurance: Ensures that direct and indirect activities meet necessary quality standards.
Example: In a coffee company, direct activities involve coffee roasting and packaging, while indirect activities include
maintenance and logistics support. Quality assurance ensures that the roasting process meets quality standards.

STEP 2: IDENTIFICATION OF SUB-ACTIVITIES FOR EACH SUPPORT ACTIVITY

• Technology Development, HR Management, and Procurement determine sub-activities that create value for each
primary activity. These activities are cross-functional in nature.
Example: In the coffee company, technology development improves coffee roasting efficiency, HR management enhances
staff training, and procurement secures high-quality coffee beans.

STEP 3: IDENTIFY & ESTABLISH LINKS

• Identify relationships or links between value activities to increase competitive advantage.
Example: In the coffee company, there is a link between HR management and quality assurance. Well-trained staff ensures
quality coffee production, which enhances customer satisfaction and competitive advantage.

STEP 4: LOOK FOR OPPORTUNITIES TO ENHANCE VALUE

• Review all sub-activities and links to identify several ways to enhance the value offered to customers.
Example: By investing in advanced coffee roasting technology and staff training, the coffee company can improve product
quality and customer satisfaction, gaining a competitive edge in the market.
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 SUMMER 2023

STRATEGIC MANAGEMENT

EXTRA QUESTION PAPER

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Copyright © 2023 Jayanti Rajdevendra Pande.

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