C M S College of Engineering, Namakkal 637 003 Department of Management Studies BA9210 Strategic Management [Link] Unit I 1. Define strategy.
A strategy is a set of actions that managers take to increase their companys performance relative to rivals. If a companys strategy does result in superior performance, it is said to have a competitive advantage.
2. Define Strategic Management
Strategic management is a set of managerial decisions and actions that determines the long run performance of a corporation. It includes environmental scanning (both external and internal), strategy formulation (strategic or long-range planning), strategy implementation, and evaluation and control.
3. What is corporate social responsibility?
The concept of social responsibility proposes that a private corporation has responsibilities to society that extend beyond making a profit. Social responsibility, therefore, includes both ethical and discretionary, but not economic and legal, responsibilities
4. What do you mean by corporate governance?
The term corporate governance refers to the relationship among these three groups in determining the direction and performance of the corporation.
5. What is environmental scanning?
Environmental scanning is the monitoring, evaluating, and disseminating of information from the external and internal environments to key people within the corporation. Its purpose is to identify strategic factorsthose external and internal elements that will determine the future of the corporation. The simplest way to conduct environmental scanning is through SWOT analysis.
6. What is mission and vision? Give Examples
An organizations mission is the purpose or reason for the organizations existence. It tells what the company is providing to societyeither a service such as housecleaning or a product such as automobiles. A well-conceived mission statement defines the fundamental, unique purpose that sets a company apart from other firms of its type and identifies the scope or domain of the companys operations in terms of products (including services) offered and markets served. Eg: One example of a mission statement is that of Google:
To organize the worlds information and make it universally accessible and useful.
The vision of a company lays out some desired future state; it articulates, often in bold terms, what the company would like to achieve. For example, the vision of RS Information Systems, a company specializing in information systems integration for federal and state government agencies, is to become the leading African-American owned information
technology (IT), scientific support, engineering services, and management consulting provider in the United States.
7. What is strategic planning?
Strategic planning, often referred to as strategy formulation or long-range planning, is concerned with developing a corporations mission, objectives, strategies, and policies.
8. Difference between intended and emergent strategies.
Emergent strategies are the unplanned responses to unforeseen circumstances. They often arise from autonomous action by individual managers deep within the organization or from discoveries or events. They are not the product of formal top-down planning mechanisms. An emergent strategy is a strategy that emerges over time or that has been radically reshaped once implemented. In emergent strategy, the strategy is not known ahead of time, but through the rough and tumble of everyday work, a strategy emerges and it is senior managements job to bolt these things together into a system that drives the company forward. Ex: In Toyota Motor Manufacturing Australia Ltd., a strategy of overseas manufacturing capability-building and global networking of managerial resources has emerged as a result of inevitable responses to intensifying local competition in Australia.
An Intended strategy is the strategy a firm thought it was going to pursue. It is a planned strategy and put into action. Intended strategy is strategy as conceived by the top management team. It is the result of a process of negotiation, bargaining and compromise, involving many individuals and groups within the organization. It is the set of intentional acts that is contemplated and planned to accomplish a goal. An intended strategy is also sometimes called a deliberate strategy. Ex: Research cooperations in America, are not explicitly stated on either of the intended strategies for Ciba or Sandoz.
9. Differentiate between realized and unrealized strategy.
Realized strategy: Realized Strategy is the result of a combination of purely deliberate and purely emergent strategies. It is the strategy a firm is actually pursuing. For example, rather than pursuing a strategy (read plan) of diversification, a company simply makes diversification decisions one by one, in effect testing the market. First it buys an urban hotel, next a restaurant, then a resort hotel, then another urban hotel with restaurant, and then another of these, etc., until the strategy (pattern) of diversifying into urban hotels with restaurants finally emerges.
Unrealized strategy: An unrealized strategy is an intended strategy a firm does not actually implement. Unrealized strategies are strategies that do not become realized.
10. What are the elements of strategic management?
Strategic management consists of four basic elements: _ Environmental scanning _ Strategy formulation _ Strategy implementation _ Evaluation and control
11. What are planned and reactive strategies? 12. What are the different levels of strategy?
Functional-level strategy, Business-level strategy, Global strategy, Corporate-level strategy
13. What are the phases of strategic management?
four phases of strategic management are: Phase 1Basic financial planning Phase 2Forecast-based planning Phase 3Externally oriented (strategic) planning Phase 4Strategic management
14. What is a triggering event?
A Triggering event is something that acts as a stimulus for a change in strategy. Some possible triggering events are: New CEO External Intervention of a customer or lender Threat of change in ownership Performance gap and Change in customers values or customers preference.
15. What is strategic decision making?
The distinguishing characteristic of strategic management is its emphasis on strategic decision making. As organizations grow larger and more complex, with more uncertain environments, decisions become increasingly complicated and difficult to make. In agreement with the strategic choice a strategic decision-making framework that can help people make these decisions regardless of their level and function in the corporation. Unlike many
other decisions, strategic decisions deal with the long-run future of the entire organization and have three characteristics: Rare Strategic decisions are unusual and typically have no precedent to be followed Consequential Strategic decisions commit substantial resources and demand a great deal of commitment from people at all levels. Directive Strategic decisions set precedents for lesser decisions and future actions throughout the organization.
16. What is Economies of scale?
Economies of scale arise when unit costs fall as a firm expands its output. Sources of scale economies include (1) cost reductions gained through mass-producing a standardized output, (2) discounts on bulk purchases of raw material inputs and component parts, (3) the advantages gained by spreading fixed production costs over a large production volume, and (4) the cost savings associated with spreading marketing and advertising costs over a large volume of output.
17. Define objectives and goals.
Objectives are the end results of planned activity. They should be stated as action verbs and tell what is to be accomplished by when and quantified if possible. The achievement of corporate objectives should result in the fulfillment of a corporations mission. The term goal is often used interchangeably with the term objective. In this book, we prefer to differentiate the two terms. In contrast to an objective, we consider a goal as an openended statement of what one wants to accomplish, with no quantification of what is to be achieved and no time criteria for completion. For example, a simple statement of increased profitability is thus a goal, not an objective, because it does not state how much profit the firm wants to make the next year
18. Who are Stakeholders in business?
A companys stakeholders are individuals or groups with an interest, claim, or stake in the company, in what it does, and in how well it performs. A companys stakeholders can be divided into internal stakeholders and external stakeholders. Internal stakeholders are stockholders and employees, including executive officers, other managers, and board members. External stakeholders are all other individuals and groups that have some claim on the company. Typically, this group comprises customers, suppliers, creditors (including banks and bondholders), governments, unions, local communities, and the general public.
19. Define ethics in business.
The term ethics refers to accepted principles of right or wrong that govern the conduct of a person, the behavior of members of a profession, or the actions of an organization. Business ethics are the accepted principles of right or wrong governing the conduct of businesspeople. Ethical decisions are those that are in accordance with accepted principles of right and wrong, whereas an unethical decision is one that violates accepted principles.
Unit II 1. What is competitive advantage?
A company is said to have a competitive advantage over its rivals when its profitability is greater than the average profitability for all firms in its industry. The greater the extent to which a companys profitability exceeds the average profitability for its industry, the greater is its competitive advantage. A company is said to have a
sustained competitive advantage when it is able to maintain above-average profitability for a number of years. Companies like Wal-Mart, Southwest, and Dell have had a significant and sustained competitive advantage because they have pursued firm-specific strategies that result in superior performance.
2. What is competitive intelligence?
Competitive intelligence is a formal program of gathering information on a companys competitors. Often called business intelligence, it is one of the fastest growing fields within strategic management.
3. What is meant by differentiation strategy?
differentiation strategy is a strategy of trying to achieve a competitive advantage by creating a product that is perceived by customers to be unique in some important way. The differentiated products ability to satisfy a customers need in a way that its competitors cannot means that the company can charge a premium pricea price considerably above the industry average. The ability to increase revenues by charging premium prices (rather than by reducing costs as the cost leader does) allows the differentiator to outperform its competitors and gain above-average profits. Ex: Mercedes and BMW have successfully pursued differentiation strategies.
4. What are the components of five forces model of industry structure?
a. Risk of Entry by Potential Competitors b. Rivalry Among Established Companies c. The Bargaining Power of Buyers d. The Bargaining Power of Suppliers e. Threat of Substitute Products
5. What are first movers and late movers?
Atiming tactic deals with when a company implements a strategy. The first company to manufacture and sell a new product or service is called the first mover (or pioneer). Some of the advantages of being a first mover are that the company is able to establish a reputation as an industry leader, move down the learning curve to assume the cost-leader position, and earn temporarily high profits from buyers who value the product or service very highly. Being a first mover does, however, have its disadvantages. These disadvantages can be, conversely, advantages enjoyed by late-mover firms. Late movers may be able to imitate the technological advances of others (and thus keep R&D costs low), keep risks down by waiting until a new technological standard or market is established, and take advantage of the first movers natural inclination to ignore market segments.
6. What is meant by core competency?
A core competency is a collection of competencies that crosses divisional boundaries, is widespread within the corporation, and is something that the corporation can do exceedingly well. Thus, new product development is a core competency if it goes beyond one division.4 For example, a core competency of Avon Products is its expertise in door-to-door
selling. FedEx has a core competency in its application of information technology to all its operations.
7. Mention the importance of core competencies.
A company must continually reinvest in a core competency or risk its becoming a core rigidity or deficiency, that is, a strength that over time matures and may become a weakness. 5 Although it is typically not an asset in the accounting sense, a core competency is a very valuable resourceit does not wear out with use. In general, the more core competencies are used, the more refined they get, and the more valuable they become.
8. What is distinctive competency?
When core competencies are superior to those of the competition, they are called distinctive competencies. For example, General Electric is well known for its distinctive competency in management development. Its executives are sought out by other companies hiring top managers
9. Define strategic business units.
Strategic business units (SBUs) are a modification of the divisional structure. Strategic business units are divisions or groups of divisions composed of independent productmarket segments that are given primary responsibility and authority for the management of their own functional areas. An SBU may be of any size or level, but it must have (1) a unique mission, (2) identifiable competitors, (3) an external market focus, and (4) control of its business functions
10. What is strategic group?
Strategic groups are groups of companies in which each company follows a strategy that is similar to that pursued by other companies in the group but different from the strategies followed by companies in other groups. A strategic group is a set of business units or firms that pursue similar
strategies with similar resources.
11. What are complementors?
According to Andy Grove, Chairman and past CEO of Intel, a complementor is a company (e.g., Microsoft) or an industry whose product works well with a firms (e.g., Intels) product and without which the product would lose much of its value.51 An example of complementary industries is the tire and automobile industries.
12. What do you mean by strategic myopia?
This willingness to reject unfamiliar as well as negative information is called strategic myopia. If a firm needs to change its strategy, it might not be gathering the appropriate external information to change strategies successfully
13. What is PEST analysis?
PEST analysis is merely a framework that categorizes environmental influences as political, economic, social and technological forces. It is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations. In conducting PEST analysis, it is required to consider each PEST factor as they all play a part in determining the overall business environment. Some f the factors are: Political: (includes legal and regulatory): elections, employment law, consumer protection, environmental regulations, industry-specific regulations, competitive regulations, inter-country relationships/attitudes, war, terrorism, political trends, governmental leadership, taxes, and government structures. Economic: economic growth trends (various countries), taxation, government spending levels, disposable income, job growth/unemployment, exchange rates, tariffs, inflation, consumer confidence index, import/export ratios, and production levels. Social: demographics (age, gender, race, family size, etc.), lifestyle changes, population shifts, education, trends, fads, diversity, immigration/emigration, health, living standards, housing trends, fashion, attitudes to work, leisure activities, occupations, and earning capacity. Technological: inventions, new discoveries, research, energy uses/sources/fuels, communications, rates of obsolescence, health (pharmaceutical, equipment, etc.), manufacturing advances, information technology, internet, transportation, bio-tech, genetics, agri-tech, waste removal/recycling, and so on.
14. What is strategic fit?
Strategic intent is more internally focused and is concerned with building new resources and capabilities. Strategic fit focuses more on matching existing resources and capabilities to the external environment.
15. Differentiate TOWS matrix and SWOT analysis?
The TOWS matrix (TOWS is just another way of saying SWOT) illustrates how the external opportunities and threats facing a particular corporation can be matched with that companys internal strengths and weakness to result in four sets of possible strategic alternatives. This is a good way to use brainstorming to create alternative strategies that might not otherwise be considered .It forces strategic managers to create various kinds of growth as well as retrenchment strategies. It can be used to generate corporate as well as business strategies. Strengths (S) denote all the good and advantageous aspects of the firm; Weaknesses (W) represent retarding influences on the success of the organization; Opportunities (O) may come about fortuitously or by undertaking some research; and Threats (T) are adverse repercussions on the organization;
as involved in a project or in a business venture or in any other situation of an organization or individual requiring a decision in pursuit of an objective. It involves monitoring the marketing environment internal and external to the organization or individual.
The comparison of strengths, weaknesses, opportunities, and threats is normally referred to as a SWOT analysis.6 Its central purpose is to identify the strategies that will create a company-specific business model that will best align, fit, or match a companys resources and capabilities to the demands of the environment in which it operates. Managers compare and contrast the various alternative possible strategies against each other with respect to their ability to achieve a competitive advantage.
16. What is meant by competitive positioning?
Competitive positioning is about defining how youll differentiate your offering and create value for your market. Its about carving out a spot in the competitive landscape and focusing your company to deliver on that strategy. This competitive analysis helps them determine how to modify their competitive positioning to maintain and build their competitive advantage. At the same time, however, they also know that if they move aggressively to change their strategies to attack competitors, this will stimulate a competitive response from rivals threatened by the change in strategy.
17. What is flanking maneur?
Flanking Maneuver is an offensive market location tactic which usually takes place in an established competitors market location. Rather than going straight for a competitors position of strength with a frontal assault, a firm may attack a part of the market where the competitor is weak. Texas Instruments, for example, avoided competing directly with Intel by developing microprocessors for consumer electronics, cell phones, and medical devices instead of computers. Taken together, these other applications are worth more in terms of dollars and influence than are computers, where Intel dominates
18. What is turnaround strategy and mention its uses.
Turnaround strategy emphasizes the improvement of operational efficiency and is probably most appropriate when a corporations problems are pervasive but not yet critical. Research shows that poorly performing firms in mature industries have been able to improve their performance by cutting costs and expenses and by selling off assets.
19. What is value chain in strategic management?
The term value chain refers to the idea that a company is a chain of activities for transforming inputs into outputs customers value. The process of transforming inputs into outputs is composed of a number of primary activities and support activities. Each activity adds value to the product.
20. What is intellectual property?
Unit III
1. What is balanced scorecard? 2. What is strategic alliance? 3. Differentiate between concentric and conglomerate diversification. 4. Differences between forward vertical integration and backward vertical integration. 5. What is related diversification? 6. Explain different functional level strategies 7. What do you mean by conglomerate diversification? Give examples. 8. Mention the 7s in Mckinsey Framework 9. Define joint ventures. 10. What is vertical integration? 11. Differentiate between TQM and Reengineering. 12. Differentiate between mergers and acquisitions. 13. Differences between vertical integration and horizontal integration. 14. Differentiate forward and backward integration. 15. Mention any two advantages of corporate strategy. 16. What is transnational strategy?
Unit IV 1. What is virtual organization? 2. What is strategic audit? 3. List any three most commonly adopted outsourcing options. 4. What is organizational life cycle? 5. What is meant by strategic control? Mention its types. 6. What is politics? 7. What is power and conflict? 8. What is organization structure? 9. What do you mean by strategy implementation? 10. Define organization culture. 11. What is strategic coherence? 12. What is meant by premise control? 13. What is job enrichment? 14. What are the primary measures of corporate performance? 15. What are adaptive cultures? Give examples. 16. What is strategy-culture compatibility? 17. What do you mean by cross culture management? 18. What is exit strategy? 19. Define restructuring. 20. What is strategic outsourcing? 21. What is meant by turnkey operations?
22. Define strategic choice.
Unit V 1. Write a note on technology life cycle? 2. Explain entrepreneurial venture? 3. What are NPOs? 4. What is Intrapreneurship? 5. Highlight any four strategic issues in NPO. 6. What is strategic piggybacking? 7. Define corporate entrepreneurship. 8. Give the salient features of NPO. 9. Mention the sources of innovation. 10. List out the strategies suitable for internet economy. 11. Does small business require strategic planning? 12. What are the issues in alliances with foreign companies? 13. What is brick and click strategy? 14. Give the characteristics of innovative entrepreneurial culture. 15. Mention the role of technology in strategy development. 16. What is technological competence? 17. Who are lead users? 18. Who is product champion?