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Subject Name: STRATEGIC

Subject Code : IMT-56


1. (a) What do you understand by the term strategy?

Ans : A strategy is a long term plan of action designed to achieve a particular goal, most often "winning". Strategy is differentiated from tactics or immediate actions with resources at hand by its nature of being extensively premeditated, and often practically rehearsed. Strategies are used to make the problem easier to understand and solve. Strategy is about choice, which affects outcomes. Organizations can often survive -- indeed do well -- for periods of time in conditions of relative stability, low environmental turbulence and little competition for resources. Virtually none of these conditions prevail in the modern world for great lengths of time for any organization or sector, public or private. Hence, the rationale for strategic management. The nature of the strategy adopted and implemented emerges from a combination of the structure of the organization (loosely coupled or tightly coupled), the type of resources available and the nature of the coupling it has with environment and the strategic objective being pursued. Strategy is adaptable by nature rather than rigid set of instructions. In some situations it takes the nature of emergent strategy.
(b) What are the constituents of a strategy statement?

Ans : In strategic planning it is critical to formally consider how your organization will accomplish its goals. The answer to this question is a strategy. There are a variety of formal definitions for strategies, but everyone fundamentally agrees that a strategy is the answer to the question, "How?" "Strategies are simply a set of actions that enable an organization to achieve results." MAP for Nonprofits, St. Paul, MN "Strategy is a way of comparing your organization's strengths with the changing environment in order to get an idea of how best to complete or serve client needs." Jim Fisk & Robert Barron, Essentially, there are three different categories of strategies: organizational, programmatic, and functional. The difference among the categories is the focus of the strategy: Organizational strategy outlines the planned avenue for organizational development (e.g., collaborations, earned income, selection of businesses, mergers, etc.). Programmatic strategy addresses how to develop, manage and deliver programs (e.g., market a prenatal care service to disadvantaged expectant mothers by providing information and intake services in welfare offices).
2. Economic and environmental changes have created new demands on firms. Discuss this statement in the light of the need and importance of strategic planning for a firm in the current and emerging business environment.

Ans : This how changes in macroeconomy environment and employment situation affected the workaholism trend among Japanese workers. Results of the analysis indicated that the driven component of workaholism remained high from the beginning of the 1990s when the bubble economy collapsed and throughout the 1990s. However, the enjoyment of work component has decreased for this period, causing the workaholic tendencies to be more serious in the worsening economic and employment circumstances. Moreover, the level of work overload actually increased for engineers and workers in their 30s and 40s in the middle of the economic depression. Based on these results, economic changes vs job demand interaction mechanism was presented and needed employeesupport policy directions were presented.

3. Distinguish between strategic decisions, administrative decisions and operational decisions. Explain how strategic planning accomplishes its purpose by providing a firm with an objective-strategy design.

Ans : From a decision viewpoint the overall problem of the business of the firm is to configure and direct the resources-conversion process in such way as to optimize the attainment of its objectives. Since this calls for a great many distinct and different decisions, dividing the total decision space into several distinct categories can facilitate a study of the overall decision process. One approach is to construct three categories: Strategic-, Administrative-, and Operating decisions. Each related to a different aspect of the resources-conversion process.

Operating decisions usually absorb the bulk of the firms energy and attention. The object is to maximize the efficiency of the firms resources-conversion process, or, in other words, to maximize profitability of current operations. The major decision areas are resource allocation (budgeting) among functional areas and product lines, scheduling of operations, supervision of performance, and applying control actions. The key decisions involve pricing, establishing marketing strategy, setting production schedules and inventory levels, and deciding on relative expenditures in support of R&D, marketing, and operations.
4. How should a company define its business? Give the attributes of a good business definition.

Ans : The term business model describes a broad range of informal and formal models that are used by enterprises to represent various aspects of business, including its purpose, offerings, strategies, infrastructure, organizational structures, trading practices and operational processes and policies. Although the term can be traced to the 1950s, it achieved mainstream usage only in the 1990s. Many informal definitions of the term can be found in popular business literature, such as the following: A business model is a conceptual tool that contains a big set of elements and their relationships and allows expressing the business logic of a specific firm. It is a description of the value a company offers to one or several segments of customers and of the architecture of the firm and its network of partners for creating, marketing, and delivering this value and relationship capital, to generate profitable and sustainable revenue streams. A brief history of the development of business models might run as follows. The oldest and most basic business model is the shop keeper model. This involves setting up a store in a location where potential customers are likely to be and displaying a product or service. Over the years, business models have become much more sophisticated. The bait and hook business model (also referred to as the "razor and blades business model" or the "tied products business model") was introduced in the early 20th century.
5. Do you view Vision and Mission as distinct guidelines for strategic planning? If so, discuss the subtle differences with examples.

Ans : Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people. Various business analysis techniques can be used in strategic planning, including SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats ) and PEST analysis (Political, Economic, Social, and Technological analysis). Strategies are different from tactics in that: 1. They are proactive and not re-active as tactics are. 2. They are internal in source and the business venture has absolute control over its application. 3. Strategy can only be applied once, after that it is process of application with no unique element remaining. 2

4. The outcome is normally a strategic plan which is used as guidance to define functional and divisional plans, including Technology, Marketing, etc. In business strategic planning, the third question is better phrased "How can we beat or avoid competition?". (Bradford and Duncan, page 1). In many organizations, this is viewed as a process for determining where an organization is going over the next year or more -typically 3 to 5 years, although some extend their vision to 20 years. In order to determine where it is going, the organization needs to know exactly where it stands, then determine where it wants to go and how it will get there. The resulting document is called the "strategic plan".

1. In a competitive business environment, a strategic planner needs to survey the business environment continuously. With the help of examples, explain the role and importance of environmental scanning on a continuous basis in strategic planning.

Ans : If there's one word that describes the new economy, it's speed, or specifically, the faster reallocation/rationalization of human, financial and physical resources. Due to the easy and affordable availability of more, better and more timely information, businesses must now act in hours, days and weeks - not months or years - to reverse bad decisions, correct mistakes, abandon bad investments. As evidence of this revolution, consider the thousands of businesses that now conduct inventory reports on an ongoing basis in real time, in contrast to the quarterly inventory reports that once were the norm. The requirement of survey the business environment continuously (1) to evaluate current requirements for certification of teachers in business/office and marketing education in Louisiana; (2) to survey teacher educators on their attitudes toward certification requirements in these two areas; (3) to survey teachers in business/office and marketing education to determine their perceptions of preparation for teaching in the area of their certification; (4) to survey the states for certification requirements; and (5) to determine what changes in Louisiana's certification requirements should be made and make recommendations to the State Department of Education. Data from the survey are displayed on tables and the instruments used for data collection in the study are appended.
2. A strategic planner must make integral appraisal of a firm from time to time. Explain how SWOT analysis can help a firm to achieve competitive advantage.

Ans: It is often suggested that layoffs or "rightsizing" in firms create such a negative atmosphere that the people who are retained in the company feel as though they are "survivors of a slaughter" (Caudron, 1996). How one views the actions of rightsizing, however, is not as important as the realities it carries with it, which is that some people lose their jobs and others are left behind to carry a heavier workload. Is it all negative? It does not have to be. It can be a time to "discover your unique qualities" (Mallory, 2000). One way that the survivors, or associates (employees), remaining in the workplace can turn rightsizing into an opportunity to effectively market themselves as assets is by conducting a personal SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis to evaluate their career technical skills, management skills, specific career goals, and career management strategies. Associates may be wondering what assistance is available to compensate for the additional workload as a result of rightsizing. It is in the best interest of all for management to anticipate associates' questions and for the surviving associates to begin developing a personal competitive advantage, starting with a personal SWOT analysis.
3. (a) What do you understand by the term industry?

Ans : An industry or sector (from Latin industrius, "diligent, industrious") is the manufacturing of a good or service within a category.There are four key sectors of industry: the primary sector, largely raw material extraction industries such as mining and farming; the secondary sector, involving refining and manufacturing; the tertiary sector, which deals with services (such as law and medicine) and distribution of manufactured goods; and the quaternary sector, a relatively new type of industry focussing on technological research, design and development such as computer programming and biochemistry. 3

In economics and urban planning, industry is a synonym for the secondary sector, which is a type of economic activity involved in the manufacturing of raw materials into goods and products.
(b) Explain with examples what is meant by fragmented industry, maturing industry, sunrise industry and declining industry.

Ans : Fragmented industries have many small competitors and have structural factors that inhibit concentration. The reasons for the fragmentation may include: 1. Low barriers to entry. 2. Highly specialized market for goods and services requires extreme specialization by firms. 3. High transportation costs. 4. Lack of standardization, or lack of need for it. 5. High need for trust and local firms often inspire more trust in their customers. Strategy options include: Decentralize operations and hire professional local managers; Construct and operate formula facilities; Become a low-cost producer; Provide more service with the sale and add value to the customer; Increase customer value via vertical integration; Specialize by product type; Specialize by customer type; Operate "bare bones/no frills" business; Focus on a limited geographic area.
4. What is meant by the core competence of an organization? Should it be treated as a constraint to enter into new business areas?

Ans : A core competency is something that a firm can do well and that meets the following three conditions:[1] 1. It provides consumer benefits 2. It is not easy for competitors to imitate 3. It can be leveraged widely to many products and markets. A core competency can take various forms, including technical/subject matter know how, a reliable process, and/or close relationships with customers and suppliers (Mascarenhas et al. 1998). It may also include product development or culture such as employee dedication. Core Competency includes services that an organization must do to be in an industry, like Banks must clear checks. No real advantage to keeping this in-house - outsourced is a clear option. Competitive Advantage are services that are unique, like a special form of loan offered only by that bank . . . That kind of service would be kept in-house. Another example is in the Brokerage Industry: Settlement services are a commodity, but algorithmic trading is competitive advantage. There are instances where Core Competency can be Competitive Advantage - That being the case where a product is superior. Black & Decker may build lawn mowers like many other companies, but if they build a superior model, that is competitive advantage as well.
5. Explain how the concept of grouping businesses into strategic business units (SBUs) is useful in multi-product, multi-business enterprises. Discuss how the BCG growth matrix helps a firm to analyse its product portfolio.

Ans : Much of the marketing and management literature emphasizes the importance of Strategic Business Units (SBUs) as an organizational unit in developing market power or competitive advantage. On the other hand, the accounting literature puts special emphasis on Profit Centers (PCs) as an organizational unit. Are these two organizational units related? If so, how? This article makes a critical distinction between the two concepts. In this analysis, SBUs are based on a long-term, outward-looking market orientation for achieving profitability, whereas PCs focus on a short-term, inward-looking cost reduction approach to achieve profits. It is posited that distinguishing between the two and managing SBUs and PC strategically is likely to generate a synergistic impact for the firm. This impact will both enhance its competitive position in the market and its profit picture. The BCG Growth-Share Matrix is a portfolio planning model developed by Bruce Henderson of the Boston Consulting Group in the early 1970's. It is based on the observation that a company's business units can be classified into four categories based on combinations of market growth and market share. 4

1. Critically analyse the relevance of Porters five forces model that shape competition and determine profitability in an industry. Give examples in your analysis.

Ans : Porter's 5 forces analysis is a framework for the industry analysis and business strategy development developed by Michael E. Porter of Harvard Business School in 1979 . It uses concepts developed in Industrial Organization (IO) economics to derive 5 forces that determine the competitive intensity and therefore attractiveness of a market. Porter referred to these forces as the microenvironment, to contrast it with the more general term macroenvironment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the marketplace. Strategy consultants use Porter's five forces framework when making a qualitative evaluation of a firm's strategic position. The framework is textbook material for modern business studies and therefore widely known. Porter's Five Forces include three forces from 'horizontal' competition: threat of substitute products, the threat of established rivals, and the threat of new entrants; and two forces from 'vertical' competition: the bargaining power of suppliers, bargaining power of customers. The threat of substitute products The existence of close substitute products increases the propensity of customers to switch to alternatives in response to price increases (high elasticity of demand). buyer propensity to substitute relative price performance of substitutes buyer switching costs perceived level of product differentiation
2. (a) Identify and describe the 3 generic strategies as per Michael Porter.

Ans : Porters generic strategies framework constitutes a major contribution to the development of the strategic management literature. Generic strategies were first presented in two books by Professor Michael Porter of the Harvard Business School (Porter, 1980, 1985). Porter (1980, 1985) suggested that some of the most basic choices faced by companies are essentially the scope of the markets that the company would serve and how the company would compete in the selected markets. Competitive strategies focus on ways in which a company can achieve the most advantageous position that it possibly can in its industry (Pearson, 1999). The profit of a company is essentially the difference between its revenues and costs. Therefore high profitability can be achieved through achieving the lowest costs or the highest prices vis--vis the competition. Porter used the terms cost leadership and differentiation, wherein the latter is the way in which companies can earn a price premium.
(b) Describe organisational requirements as well as the risks while implementing these in practice?

Ans : The companies that attempt to become the lowest-cost producers in an industry can be referred to as those following a cost leadership strategy. The company with the lowest costs would earn the highest profits in the event when the competing products are essentially undifferentiated, and selling at a standard market price. Companies following this strategy place emphasis on cost reduction in every activity in the value chain. It is important to note that a company might be a cost leader but that does not necessarily imply that the companys products would have a low price. In certain instances, the company can for instance charge an average price while following the low cost leadership strategy and reinvest the extra profits into the business (Lynch, 2003). Examples of companies following a cost leadership strategy include RyanAir, and easyJet, in airlines, and ASDA and Tesco, in superstores. The risk of following the cost leadership strategy is that the companys focus on reducing costs, even sometimes at the expense of other vital factors, may become so dominant that the company loses vision of why it embarked on one such strategy in the first place. 5

3. Briefly describe the framework firms use to analyse its value chain. Why is value chain analysis important? How does it impact firms outsourcing decisions?

Ans : The value chain, also known as value chain analysis, is a concept from business management that was first described and popularized by Michael Porter in his 1985 best-seller, Competitive Advantage: Creating and Sustaining Superior Performance. A value chain is a chain of activities. Products pass through all activities of the chain in order and at each activity the product gains some value. The chain of activities gives the products more added value than the sum of added values of all activities. It is important not to mix the concept of the value chain with the costs occurring throughout the activities. A diamond cutter can be used as an example of the difference. The cutting activity may have a low cost, but the activity adds to much of the value of the end product, since a rough diamond is a lot less valuable than a cut diamond. The value chain categorizes the generic value-adding activities of an organization. The "primary activities" include: inbound logistics, operations (production), outbound logistics, marketing and sales, and services (maintenance). The "support activities" include: administrative infrastructure management, human resource management, information technology, and procurement. The costs and value drivers are identified for each value activity. The value chain framework quickly made its way to the forefront of management thought as a powerful analysis tool for strategic planning. Its ultimate goal is to maximize value creation while minimizing costs 4. (b) Can an organization survive in long term if it does not have growth as an objective? Ans : IN RECENT YEARS, business economists and corporate strategic planners have been under fire because of the irrelevancy of the output of many as far as the business world is concerned. One intellectual sin committed all too often is the failure to base corporate strategic plans upon a foundation of solid economic information. Another no less frequent intellectual sin is the preparation of economic analyses and forecasts that make little or no contribution to corporate strategic planning and decision-making. Business economics can be fruitful only if it becomes an integral part of corporate strategic planning and serves as a foundation for the short-term and longterm business decisions associated with that process.
5. What are the four grand strategies? When do company go for expansion over stability?

Ans : The high rate of sequence divergence in nuclear ribosomal RNA (rRNA) expansion segments offers a unique opportunity to study the importance of natural selection in their evolution. To this end, we polymerase chain reaction amplified and cloned a 589-nt fragment of the 18S rRNA gene containing expansion segments 43/e1 and 43/e4 from six individual Daphnia obtusa from four populations. We screened 2,588 clones using single-stranded conformation polymorphism analysis and identified 103 unique haplotype sequences. We detected two pairs of indel sites in segment 43/e4 that complement each other when the secondary structure of the linear sequence is formed. Seven of the 12 observed combinations of length variants at these four sites (haplotypes) are shared between individuals from different populations, which may suggest that some of the length variation was present in their common ancestor.

1. A business organization cannot remain in business with out being socially relevant and responsible. Discuss and comment upon above mentioned statement?

Ans : In July 2001, the Commission presented a Green Paper Promoting a European Framework for
Corporate Social Responsibility" (1). The aims of this document were, firstly, to launch a debate about the concept of corporate social responsibility (CSR) and, secondly, to identify how to build a partnership for the development of a European framework for the promotion of CSR. The Green paper defined CSR as a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis as they are increasingly aware that responsible behaviour leads to sustainable business success. CSR is also about managing change at company level in a socially responsible manner. This happens when a company seeks to set the trade-offs between the requirements and the needs of the various stakeholders into a balance, which is acceptable to all parties. If companies succeed in managing change in a socially responsible manner, this will have a positive impact at the macroeconomic level.
2. (a) Does a diversification involve a change in the business of a company? Yes or no and why?

Ans : Diversification is a form of growth strategy. Growth strategies involve a significant increase in performance objectives (usually sales or market share) beyond past levels of performance. Many organizations pursue one or more types of growth strategies. One of the primary reasons is the view held by many investors and executives that "bigger is better." Growth in sales is often used as a measure of performance. Even if profits remain stable or decline, an increase in sales satisfies many people. The assumption is often made that if sales increase, profits will eventually follow. Rewards for managers are usually greater when a firm is pursuing a growth strategy. Managers are often paid a commission based on sales. The higher the sales level, the larger the compensation received. Recognition and power also accrue to managers of growing companies.
(b) Why organization resort to diversification?

Ans : A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique contends that a portfolio of different kinds of investments will, on average, yield higher returns and pose a lower risk than any individual investment found within the portfolio. Diversification strives to smooth out unsystematic risk events in a portfolio so that the positive performance of some investments will neutralize the negative performance of others. Therefore, the benefits of diversification will hold only if the securities in the portfolio are not perfectly correlated.
(c) What is the difference between horizontal and vertical integration?

Ans : In microeconomics and strategic management, the term horizontal integration describes a type of ownership and control. It is a strategy used by a business or corporation that seeks to sell a type of product in numerous markets. Horizontal integration in marketing is much more common than horizontal integration in production. It is contrasted with vertical integration. A monopoly created through horizontal integration is called a horizontal monopoly[citation needed]. Usually a monopoly is created through both horizontal and vertical integration. The situation in which a company takes over another in the same business, thus eliminating a competitor (competition) and achieving both a broader market, and greater economies of scale, but also takes over its upstream suppliers and its downstream buyers, therefore reducing production costs, is called horizontal integration.
3. (a) What do you mean by globalization?

Ans : Globalization in its literal sense is the process of globalizing, transformation of some things or phenomena into global ones. It can be described as a process by which the people of the world are unified into a single society and functioning together. This process is a combination of economic, technological, sociocultural and political forces. Globalization is very often used to refer to economic globalization, that is integration of national 7

economies into the international economy through trade, foreign direct investment, capital flows, migration, and the spread of technology. The word globalization is also used, in a doctrinal sense to describe the neoliberal form of economic globalization.[3] Thomas L. Friedman "examines the impact of the 'flattening' of the globe", and argues that globalized trade, outsourcing, supply-chaining, and political forces have changed the world permanently, for both better and worse. He also argues that the pace of globalization is quickening and will continue to have a growing impact on business organization and practice.
(b) Is it imperative for the Indian companies to go global? What will be the consequences if they dont become global?

Ans : The full-fledged entry of Indian producers into the pharmaceutical chemicals business is converging with the exit of Western chemical companies from the sector after steadily losing money in it since the late 1990s. The result is that low-cost Indian producers are grabbing up beleaguered, high-cost assets in the Western firms' wake. Although other Western contract manufacturers were unlikely to buy these businesses, many in the industry are asking why well-established Indian firms would want to graft the world's most expensive operating sites onto their low-cost businesses. To some, it points out the extent to which Indian firms realize that major drug companies are still skittish about doing business in India. Others see a replay of the rush into the fine chemicals sector that got Avecia, Solutia, Rhodia, and others in trouble in the first place.
4. What is strategic leadership? The exercise of strategic leadership is exemplified by several actions. What are the most critical actions that strategic leaders must perform?

Ans : Objectives of Strategic Leadership Strategic leadership provides the vision, direction, the purpose for growth, and context for the success of the corporation. It also initiates "outside-the-box" thinking to generate future growth. Strategic leadership is not about micromanaging business strategies. Rather, it provides the umbrella under which businesses devise appropriate strategies and create value.2 In short, strategic leadership answers two questions: What by providing the vision and direction, creating the context for growth, and How by sketching out a road map for the organization that will allow it to unleash its full potential; by crafting the corporation's portfolio, determining what businesses should be there, what the performance requirements of the business are, and what types of alliances make sense; and by defining the means (the culture, values, and way of working together) needed to achieve corporate goals.
3 Strategies of Market Leaders
The market leader is dominant in its industry and has substantial market share. If you want to lead the market, you must be the industry leader in developing new business models and new products or services. You must be on the cutting edge of new technologies and innovative business processes. Your customer value proposition must offer a superior solution to a customers' problem, and your product must be well differentiated

(b) Explain how it is possible to reconcile the diverse and conflicting interests of various stakeholders in an organization through having shared and empowering vision and mission statement?

Ans : A CHAMBER of Commerce set up exclusively to lobby for the domestic agri-business industry? Well, if Mr Sharad Pawar were to have his way, this is precisely the role that his Centre for International Trade in Agriculture and Agro-based Industries (CITA) w ould be performing. The Maratha strongman is the brain behind the formation of the Centre, which seeks to ``keep the farming community, its associations and agro-based industries informed about the latest developments and trends in the World Trade Organisation (WTO) regime and obtain their feedback'' and, more importantly, ``to liaison with the Government and other policymaking bodies in respect of agricultural policies and programmes with reference to WTO developments''.
(c) Are societal strategies and mission statements identical?

Ans : The fact is, human evolution didn't grind to a halt at the beginning of the 20th century. Just as history marches on indefinitely into the future, so does evolution. Reproductive patterns of each generation shape the 8

innate character of successive generations--for better, or for worse. Future Generations wants to insure that we evolve in a favorable direction, for the good of all who come after us. It's natural to want to give our children the same legacy our parents gave us, or, if at all possible, a better legacy. We want to leave them the rain forest, pure air and water, and a sound economy. However, the most important legacy we can leave to our descendants is the innate ability to maintain and advance civilization, for without civilization, chaos reigns, "might makes right," and suffering abounds.


1 1. What do you understand by the term Synergy? Ans : synergy: [noun] a mutually advantageous conjunction of distinct elements Synergy lets you easily share a single mouse and keyboard between multiple computers with different operating systems, each with its own display, without special hardware. It's intended for users with multiple computers on their desk since each system uses its own monitor(s). Redirecting the mouse and keyboard is as simple as moving the mouse off the edge of your screen. Synergy also merges the clipboards of all the systems into one, allowing cut-and-paste between systems. Furthermore, it synchronizes screen savers so they all start and stop together and, if screen locking is enabled, only one screen requires a password to unlock them all. 1 2. Differentiate between External and Internal components of environment.

Environmental Restoration works from a basis of understanding the interaction between people and the biological and physical environment. Landscape degradation is a widespread problem in Australia and many overseas countries and relates to a breakdown of biological systems. Knowledge about how these systems are related to the physical components of the environment and the interactions within the systems which need to be reinstated assists in the reconstruction of a successfully functioning landscape. However knowledge of only the physical and biotic components is insufficient and the importance of social elements in causing problems is also covered. The necessity for awareness of environmental processes amongst people in the community is essential for solving environmental problems and this course examines this aspect in the context of a strong scientific background.
Ans : 1 3. What is the purpose of doing competitor analysis?

Competitor analysis in marketing and strategic management is an assessment of the strengths and weaknesses of current and potential competitors. This analysis provides both an offensive and defensive strategic context through which to identify opportunities and threats. Competitor profiling coalesces all of the relevant sources of competitor analysis into one framework in the support of efficient and effective strategy formulation, implementation, monitoring and adjustment.
Ans : 1 4. What do you understand by a turnaround strategy adopted by a firm? Ans : Turnaround strategy enables senior managers of underperforming companies to understand the critical causes of poor results, in order to stem losses and restore growth. A well-crafted turnaround strategy leads clients to quickly achieve their full potential. Typically, this involves removing costs, restructuring finances and redefining strategic objectives. Turnarounds often call for building a stronger management team, making acquisitions or devising an exit strategy. 1 5. Distinguish between merger, acquisition and takeover.

"Acquisition" redirects here. For the software, see Acquisition (software). For the episode of Star Trek: Enterprise, see Acquisition (Enterprise).
Ans :

For other uses, see Merge. The phrase mergers and acquisitions (abbreviated M&A) refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling and combining of different companies that can aid, finance, or help a growing company in a given industry grow rapidly without having to create another business entity.
1 6. What are the four generic strategy routes a firm can take? Ans : Michael Porter has described a category scheme consisting of three general types of strategies that are commonly used by businesses. These three generic strategies are defined along two dimensions: strategic scope and strategic

strength. Strategic scope is a demand-side dimension (Porter was originally an engineer, then an economist before he specialized in strategy) and looks at the size and composition of the market you intend to target. 1 8. Stability strategy is best followed after a period of rapid expansion. Why?

Ans : The sudden devaluation of the franc last month won wide admiration as a model of deft financial maneuvering. But its ultimate success depends on the follow-throughwhether or not France can curb inflation before the trade ad vantages of a cheaper franc are frittered away in rising prices. Last week, as Frenchmen returned to work after their August holiday, the Pompidou government greeted them with news of austerity to come. Finance Minister Valery Giscard d'Estaing announced an at tack on inflation that will employ nearly every fiscal and monetary weapon available to modern governments. 1 9. How can takeovers be used as an effective external expansion strategy?

Often a company acquiring another pays a specified amount for it. This money can be raised in a number of ways. The company may have sufficient funds available in its account, but this is unusual. More often, it will be borrowed from a bank, or raised by an issue of bonds. Acquisitions financed through debt are known as leveraged buyouts, and the debt will often be moved down onto the balance sheet of the acquired company. The acquired company then has to pay back the debt. This is a technique often used by private equity companies. The debt ratio of financing can go as high as 80% in some cases. In such a case, the acquiring company would only need to raise 20% of the purchase price.
Ans : 1 10. Differentiate between strategy, goals and targets. Ans : Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people. Various business analysis techniques can be used in strategic planning, including SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats ) and PEST analysis (Political, Economic, Social, and Technological analysis). 1 11. Is strategic decision making the same as conventional decision making? Explain.

Participants in the April 1996 Cantigny Leadership Conference identified "Decision-making" as a critical leadership competency. The purpose of this workshop was to explore decision-making models optimized for information-age strategic leaders with a view toward the future 21st century environment. The strategic decisionmaking landscape has changed with the maturation of the information age (paradigm shift). This workshop brought together 35 participants from academia, businesses and corporations as well as military practitioners to conduct an intense, two days discussion of decision-making at the Army War College in Carlisle, Pennsylvania
Ans : 1 12. Under what conditions should a firm go in for a diversification spree?

Pharmalab, a leading manufacturer of pharmaceutical machineries for four decades has acclaimed the name in the market for its quality, workmanship and services. Today the Pharmaceutical Industry in India is looking ahead of the time and wanting to capture world market for its products. The trade barriers in various countries being removed by 2005 and the GATT Agreement in place, the Indian Pharmaceutical industry has started revamping its existing manufacturing set up to match world class production facilities to meet US FDA, UK MCA standards.
Ans : 1 13. Why is disinvestment strategy adopted?

Disinvestment, sometimes referred to as divestment, refers to the use of a concerted economic boycott, with specific emphasis on liquidating stock, to pressure a government, industry, or company towards a change in policy, or in the case of govennments, even regime change. The term was first used in the 1980s, most commonly in the United States, to refer to the use of a concerted economic boycott designed to pressure the government of South Africa into abolishing its policy of apartheid
Ans : 1 14. Explain, what is concentric diversification?

Concentric diversification A process that occurs when new products related to current products are introduced into new markets. p. 664 Concept testing Seeking potential buyers' responses to a product idea
Ans : Conglomerate Diversification. Horizontal Integrationa strategy for growth in which a company develops by seeking ownership of, or some measure of control over, some of its competitors 1 15. Explain what is backward and forward integration.


In microeconomics and management, the term vertical integration describes a style of control. Vertically integrated companies are united through a hierarchy and share a common owner. Usually each member of the hierarchy produces a different product or service, and the products combine to satisfy a common need. It is contrasted with horizontal integration. Vertical integration is one method of avoiding the hold-up problem. A monopoly produced through vertical integration is called a vertical monopoly, although it might be more appropriate to speak of this as some form of cartel
Ans : 1 16. How can the concept of experience curve help in exercising strategic choice?

The learning curve effect and the closely related experience curve effect express the relationship between experience and efficiency. As individuals and/or organizations get more experienced at a task, they usually become more efficient at it. Both concepts originate in the adage, "practice makes perfect", and both concepts are opposite to the popular misapprehension that a "steep" learning curve means that something is hard to learn. In fact, a "steep" learning curve implies that something gets easier quickly. (For other uses of the expression "steep learning curve"
Ans : 1 17. List the techniques used to conduct environmental surveys.

A Phase I environmental survey is a visual survey designed to disclose to a prospective purchaser some of the environmental risks associated with a building purchase. Phase I environmental surveys are often required by banks before they will grant a mortgage on commercial properties. The banks are concerned that past environmental problems have contaminated the property, and want to be sure there are no environmental liabilities associated with the property before they grant a mortgage.
Ans: 1 18. Explain how objectives and strategy together constitute the firms concept of business.

2 Ans : Most competence for action in the field of health is held by Member States, but the EU has the responsibility, set out in the Treaty, to undertake certain actions which complement the work done by Member States, for example in relation to cross border health threats, patient mobility,and reducing health inequalities.
19. Under what conditions is market penetration the main strategy of a firm?

Market penetration is one of the four growth strategies of the Product-Market Growth Matrix defined by Ansoff. Market penetration occurs when a company enters/penetrates a market with current products. The best way to achieve this is by gaining competitors' customers (part of their market share). Other ways include attracting non-users of your product or convincing current clients to use more of your product/service (by advertising etc). Ansoff developed the Product-Market Growth Matrix to help firms recognise if there was any advantage of entering a market.
Ans : 1 20. Explain how Value-chain analysis help identify a companys strength or weakness.

Value Chain Analysis describes the activities that take place in a business and relates them to an analysis of the competitive strength of the business. Influential work by Michael Porter suggested that the activities of a business could be grouped under two headings:
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