Question 1: The application of core competencies is one way in which firms create sustainable competitive advantage.

Analyse these can be brought in as short term solution; or do they need to be developed over long term. You should provide suitable answers for your solutions (30 marks) Question 2: In a study of the 50 best-performing SMEs (Small and Medium Enterprises), it was found that one of their main strengths and key success factors is the close and harmonious relationship between top management and their employees. This extends not only to direct subordinates, but also to employees at the lowest hierarchical ranks of the company. For example, even if an employee performs below the performance target set in the annual goalsetting exercise, she still receives the bonus she would have received if she had achieved the target. Senior management says that this is useful to keep employees happy and make them feel secure about their role in the firm. (a) Which group of distinctive capabilities would the main strength mentioned above belong to? Justify your choice in detail. (15 marks) (b) Name three disadvantages of focusing on this distinctive capability only. (10 marks) (c) Suppose you are managing an SME that delivers lunchboxes to government agencies and large firms in Singapore. Which other distinctive capability or capabilities would you want to develop to reinforce the benefits of the one identified above? Explain in detail how the capabilities reinforce each other. (15 marks) Question 3: In 2007, Britannia, one of the Indias largest biscuit brands held a market share of 38% in terms of value. Indian biscuit industry, the third largest producer of the biscuits in the world was highly under-penetrated. This presented numerous growth opportunities to new as well as existing players. Apart from the presence of big players like ITC Foods and Parle, the local manufacturers of biscuits and other Indian snacks had been raising concerns for Britannia. Besides competition, Britannia faced critical challenges due to declining margins in the biscuit industry due to the increasing costs of raw materials. Its profit had been on a decline since 2005. Though Britannia had forayed into dairy and bakery products, 90% of its revenues still came from its core business in biscuits category which was largely driven by product innovation. Explain the growth strategies that you would recommend to Britannia. ( 30 marks)

Question 4: Rising fuel costs, a slowing economy and a weak dollar is putting pressure on the US airline industry into embarking on shotgun weddings. In an industry too fragmented to yield a decent return for any carrier, Continental and United Airlines formed an alliance on 19 June 2008. Under this agreement, passengers could book tickets on either carrier, earn credit in each others frequent-flier programmes and redeem miles on each carrier. Though alliances allow airlines to work together without going through the regulatory hassles of a merger, not all are truly strategic. The case highlights the effects of both mergers and alliances in the airline industry and analyses the reasons why Continental chose an alliance instead of a merger. Critically analyse how internal growth strategies can be a better option to grow a business than external growth. Your answer need to make reference to strategic objectives and the business environment.

(Total 30 marks)

Question 5: Barney and Hesterly (2006) set out the VRIO framework for accomplishing the internal analysis of a firms resources and capabilities. Explain how the framework helps to analyse a firms internal resources.