1. What is meant by term Strategy?

Elaborate the Difference

between management and strategic management and
highlight their relative importance through an example?

Strategy is the, "art of troop leader; office of general, command, generalship" [) is a high
level plan to achieve one or more goals under conditions of uncertainty. Strategy is
important because the resources available to achieve these goals are usually limited.
Strategy generally involves setting goals, determining actions to achieve the goals, and
mobilizing resources to execute the actions. A strategy describes how the ends (goals) will
be achieved by the means (resources).
 The management, is the day to day job of the manager. It consists of five functions
as below.
 Planning
 Organizing
 Leading
 Controlling
 Assuming
 This means that typically, an operation manager is deals with the quality of the
production.
 Within it, we have buying of raw materials, various kinds of job approvals, machinery,
inventory management and much more.
However, the manager of the marketing department is focused on the promotion of
the product. Thus, management consists of jobs cut into smaller portions. They fall
under tactical planning, a process connected to strategic implementation.
 The overall work of strategic management is the responsibility of the top executives
of the company. Meanwhile, tactical planning is the responsibility of the managers at
mid-level and that is also in several forms. As we saw earlier, a company can have both
operational and marketing managers. This should hint that the management takes a
narrow path. Its counterpart, on the contrary, is all-encompassing. In other words, it
takes into account all parts of the business.
Additionally, management decisions are usually short lived and based on general
guidelines. But strategic management is continues and its decisions are designed to
live for three to five years. Of course, change is permissible simply because of the
volatility of the environment.
 Management: "Getting work done through people."
 Strategic Management: "Setting goals and objectives for an enterprise (a business or
company in most cases)."
Importance of Management
1. It helps in Achieving Group Goals - It arranges the factors of production, assembles
and organizes the resources, integrates the resources in effective manner to
achieve goals. It directs group efforts towards achievement of pre-determined
goals. By defining objective of organization clearly there would be no wastage of
time, money and effort. Management converts disorganized resources of men,
machines, money etc. into useful enterprise. These resources are coordinated,
directed and controlled in such a manner that enterprise work towards attainment
of goals.
2. Optimum Utilization of Resources - Management utilizes all the physical & human
resources productively. This leads to efficacy in management. Management
provides maximum utilization of scarce resources by selecting its best possible
alternate use in industry from out of various uses. It makes use of experts,
professional and these services leads to use of their skills, knowledge, and proper
utilization and avoids wastage. If employees and machines are producing its
maximum there is no under employment of any resources.
3. Reduces Costs - It gets maximum results through minimum input by proper
planning and by using minimum input & getting maximum output. Management
uses physical, human and financial resources in such a manner which results in best
combination. This helps in cost reduction.
4. Establishes Sound Organization - No overlapping of efforts (smooth and
coordinated functions). To establish sound organizational structure is one of the
objective of management which is in tune with objective of organization and for
fulfillment of this, it establishes effective authority & responsibility relationship i.e.
who is accountable to whom, who can give instructions to whom, who are
superiors & who are subordinates. Management fills up various positions with right
persons, having right skills, training and qualification. All jobs should be cleared to
everyone.
5. Establishes Equilibrium - It enables the organization to survive in changing
environment. It keeps in touch with the changing environment. With the change is
external environment, the initial co-ordination of organization must be changed.
So it adapts organization to changing demand of market / changing needs of
societies. It is responsible for growth and survival of organization.
6. Essentials for Prosperity of Society - Efficient management leads to better
economical production which helps in turn to increase the welfare of people. Good
management makes a difficult task easier by avoiding wastage of scarce resource.
It improves standard of living. It increases the profit which is beneficial to business
and society will get maximum output at minimum cost by creating employment
opportunities which generate income in hands. Organization comes with new
products and researches beneficial for society.
Importance of Strategic Management
1. Strategic management takes into account the future and anticipates for it.
2. A strategy is made on rational and logical manner, thus its efficiency and its success
are ensured.
3. Strategic management reduces frustration because it has been planned in such a way
that it follows a procedure.
4. It brings growth in the organization because it seeks opportunities.
5. Strategic management also adds to the reputation of the organization because of
consistency that results from organizations success.
6. Often companies draw to a close because of lack of proper strategy to run it. With
strategic management companies can foresee the events in future and that’s why
they can remain stable in the market.
7. Strategic management looks at the threats present in the external environment and
thus companies can either work to get rid of them or else neutralizes the threats in
such a way that they become an opportunity for their success.
8. Strategic management focuses on proactive approach which enables organization to
grasp every opportunity that is available in the market.
 2. What is the Role of Organizational Vision, Mission & Objectives in
setting its strategic Plan? Give Example?

Mission and vision statements play three critical roles: (1) communicate the purpose of
the organization to stakeholders, (2) inform strategy development, and (3) develop the
measurable goals and objectives by which to gauge the success of the organization’s
strategy. These interdependent, cascading roles, and the relationships among them, are
summarized in the figure.

First, mission and vision provide a vehicle for communicating an organization’s purpose
and values to all key stakeholders. Stakeholders are those key parties who have some
influence over the organization or stake in its future. You will learn more about
stakeholders and stakeholder analysis later in this chapter; however, for now, suffice it to
say that some key stakeholders are employees, customers, investors, suppliers, and
institutions such as governments. Typically, these statements would be widely circulated
and discussed often so that their meaning is widely understood, shared, and internalized.
The better employees understand an organization’s purpose, through its mission and
vision, the better able they will be to understand the strategy and its implementation.

Second, mission and vision create a target for strategy development. That is, one criterion
of a good strategy is how well it helps the firm achieve its mission and vision. To better
understand the relationship among mission, vision, and strategy, it is sometimes helpful
to visualize them collectively as a funnel. At the broadest part of the funnel, you find the
inputs into the mission statement. Toward the narrower part of the funnel, you find the
vision statement, which has distilled down the mission in a way that it can guide the
development of the strategy. In the narrowest part of the funnel you find the strategy —
it is clear and explicit about what the firm will do, and not do, to achieve the vision. Vision
statements also provide a bridge between the mission and the strategy. In that sense the
best vision statements create a tension and restlessness with regard to the status quo—
that is, they should foster a spirit of continuous innovation and improvement. Third,
mission and vision provide a high-level guide, and the strategy provides a specific guide,
to the goals and objectives showing success or failure of the strategy and satisfaction of
the larger set of objectives stated in the mission. In the cases of both Starbucks and
Toyota, you would expect to see profitability goals, in addition to metrics on customer
and employee satisfaction, and social and environmental responsibility.
For instance, in the case of Toyota, its “moving forward” vision urges managers to find
newer and more environmentally friendly ways of delighting the purchaser of their cars.
London Business School professors Gary Hamel and C. K. Prahalad describe this tense
relationship between vision and strategy as stretch and ambition. Indeed, in a study of
such able competitors as CNN, British Airways, and Sony, they found that these firms
displaced competitors with stronger reputations and deeper pockets through their
ambition to stretch their organizations in more innovative ways (Hamel & Prahalad,
1993).

Objectives
A measure of change in order to bring about the achievement of the goal. The
attainment of each goal may require a number of objectives to be reached (see figure
below).

There is often much confusion between goals and objectives. Whereas as a goal is a
description of a destination, an objective is a measure of the progress that is needed to
get to the destination. The following table serves to illustrate the difference between
goals and objectives. Objectives are one of the fundamental building blocks of
your strategic plan.

A few examples of objectives are:

 Expand sales to existing customers (build on a strength)
 Introduce existing products into a new market (build on a strength)
 Develop an incentive plan for research and development staff who are slow to
innovate (correct a weakness)
o Operating objectives direct activities toward key and specific performance
results.
o Typical operating objectives:
 Profitability
 Market share
 Human talent
 Financial health
 Cost efficiency
 Product quality
 Innovation
 Social responsibility
 3. Who Proposed a Five Forces Model? How can this model be
used in Strategic Management.
Porter Proposed Five Forces Model.

This model helps marketers and business managers to look at the ‘balance of power’ in a
market between different types of organizations, and to analyses the attractiveness and
potential profitability of an industry sector.

It’s a strategic tool designed to give a global overview, rather than a detailed business
analysis technique. It helps review the strengths of a market position, based on five key
forces.

Porter’s Five Forces works best when looking at an entire market sector, rather than your
own business and a few competitors
To apply Porter’s Five Forces, you need to work through these questions for each area:

 Force 1: Threat of New Entry?

 Force 2: Buyer Power?
 Force 3: Threat of Substitution?
 Force 4: Supplier Power?
 Force 5: Competitive Rivalry?
Threat of New Entry
If a new businesses can be easily started up in your sector without substantial
investment - then this is a threat. The Internet has made this a reality in many sectors,
especially publishing! So ask yourself the questions:
 What’s the threat of new businesses starting in this sector?
 How easy is it to start up in this business?
 What are the rules and regulations?
 What finance would be needed to start-up?
 Are there barriers to entry which give you greater power?
Buyer Power
Where there are fewer buyers, they often control the market. Questions here include:
 How powerful are the buyers?
 How many are there?
 Can the buyers get costs down?
 Do they have the power to dictate terms?
Threat of Substitution
If there are available alternatives then the threat of substitution increases.
 How easy is it to find an alternative to this product or service?
 Can it be outsourced? Or automated?
Supplier Power
Markets where there are few suppliers means the suppliers retain the power
 Examine how many suppliers are in the market?
 Are there a few who control prices?
 Or many so prices are lower?
 Do your suppliers hold the power?
 How easy is it to switch, what’s the cost?
Competitive Rivalry
Markets where there are few competitors are attractive but can be short-lived. These
are highly competitive markets with many companies chasing the same work reduce
your power in the market.
 What’s the level of competition in this sector?
 What’s the competitor situation? Many competitors and you’re all in a commodity
situation or a few?
 Examples of how Porter's five Forces can be applied to a business?
If your business is thinking about moving into new sectors or markets, or if your
business is stuck in a commodity situation, then Porter’s Five Forces enables you to see
the issues clearly.
Work through each of the forces to identify in your current sector and your potential
sectors, to see who has the power.
Here are some examples of where the balance of power lies in different markets
 1. Threat of New Entrants
An example is web design, as there are independents in every location. This is an easy
market to enter with few requirements, other than skills, initiative and relevant
hardware and software. This does mean there are many new entrants!
 2 . Buyer Power
An example is the grocery sector since supermarkets tend to retain power over suppliers
due to volume and price of contracts. They dictate terms, set prices and can possibly
end agreements at any time.
 3. Threat of Substitution
The substitute to all services is DIY. For example hairdressing or writing a will. Focus is
on expertise, customer service or added value.
 4. Supplier power
Some sectors have monopolistic (one) or oligopolistic (few) suppliers, such as utility
companies. Sometimes customers have little choice i.e. where to buy domestic water
suppliers though this is changing.
In the jeweler sector, diamond suppliers often hold the power and can set prices,
withhold supply and restrict sales.
 5. Competitive rivalry
These include Estate agents, web design and office stationary. Many competitors often
buy on price.
 4. What is the Influence of Environment in Setting Strategic Priorities of
an Organization? What factors constitute the external environment?

Organizational environment consists of both external and internal factors. Environment

must be scanned so as to determine development and forecasts of factors that will
influence organizational success. Environmental scanning refers to possession and
utilization of information about occasions, patterns, trends, and relationships within an
organization’s internal and external environment. It helps the managers to decide the
future path of the organization. Scanning must identify the threats and opportunities
existing in the environment. While strategy formulation, an organization must take
advantage of the opportunities and minimize the threats. A threat for one organization
may be an opportunity for another. Strategic plans are important for any business, and
they are never really complete. Business owners should consider strategic plans living
documents that direct the work of the organization but that are flexible enough to be
modified as changes in the environment require shifts in direction for the organization. It
is important to have a process to monitor changes and incorporate them into a company's
planning efforts. Strategic management has become progressively essential today for
business firms for sustaining and improving their performance. Traditional management
tended to emphasize the interior affairs of business firms. Contemporary management
extends this approach to take into consideration exterior changes and improvements.
Strategic management has thus grown from modest extensions of the planning functions
to more analytical and complex representations of organizational environmental
interaction.
Factors in the external environment and their effect on the business/organization

Factor Influence on the organization

Prevailing economic conditions of the nation will have an effect on

the spending patterns of citizens. Increases in interest rates and/or
a high level of unemployment will depress consumption of non-
essential goods and services. For example. When people
Economic conditions experience financial hardship, they will spend much less on sport
and recreation, holidays, new cars and luxury goods. Economic
conditions are global as well as national, and when there is a global
financial crisis as in 2007, changes in the external environment can
be dramatic.

The strength of business competition is a constantly changing

factor in the external business environment. Not only will
Market (competition) competitors come and go, but they will also change marketing
strategies, product lines and prices. Often such changes are not
heralded and business managers must be alert as to what
competitors are doing.

Technological change has been rapid in the last 50 years and is a

factor in the external environment that constantly exerts pressure
Technology on the business or organization. If businesses do not adapt
sufficiently quickly to technological change, they risk losing market
share. It's not just that technological change affects the design of
products, but even the delivery of services can change.

Climate change is an insidious threat because the pace of change

may be recognizable only if considered on a decade-by-decade
basis. The effect of climate change will not fall equally on all
nations and all businesses. Businesses that depend directly on a
Climate change good supply of water e.g. agriculture, field sports will be adversely
effected if climate change results in reduced rainfall. However the
flow on effects of drought will eventually work their way through
to all businesses in the effected community.

Taxation is one of most obvious changes in law through legislation.

Sometimes taxation changes occur overnight with little warning
Legal and sometimes there is plenty of time for the business to prepare.
Other law changes that commonly affect business include
Workplace Health and Safety, Industrial Relations, Consumer
Protection and Environmental Law,
 The media is undergoing rapid and significant change. The main
driver of this change is technology and the rise of the internet.
Media Newspapers once carried many pages of job adverts but now this
business is conducted by online recruitment companies such as
Seek.

Like law, changes in government policy can be well notified and

discussed, or without warning. As an example of how government
Political policy has an effect, is that many organizations depend on
government financial assistance. When there is a change of
government, such funding assistance can disappear in a short
space of time.

There is constant change in the make-up of the population. Some

of these changes include an increasing proportion of elderly
citizens, increasing number of two-income families, the age at
which people marry is increasing, increasing ethnic diversity, and
Demographic suburbs which were once dominated by young families now have
few. These demographic changes can have a significant effect
locally. For example, a sport club which once prospered can begin
to decline as the local area has less and less children.

Example:
 9/11 and the 2008 mortgage meltdown effects were obvious, with immeasurable
lost commerce, wages, and even lives resulting from them directly.
 Besides the physical devastation in Japan itself, there were less obvious effects to
business from the tsunami - but it did affect the market for computers and cell
phones as many of the microchips we rely on for our gadgets were destroyed,
causing fulfillment delays, product shortages, and lost sales.
 5. What is the Role of by "Sustainable Competitive Advantage" in
strategic Planning? How is it related to the concept of Core
competencies? Illustrate through Example.

What is Sustained Competitive Advantage?

We have defined what competitive advantage is as it relates to strategic management
and the sources of competitive advantage differing from firm to firm. However, a firm can
have a source of competitive advantage for only a certain period because the rival firms
imitate and copy the successful firms’ strategies leading to the original firm losing its
source of competitive advantage over the longer term. Hence, it is imperative for firms
to develop and nurture sustained competitive advantage.

This can be done by:

 Continually adapting to the changing external business landscape and matching

internal strengths and capabilities by channeling resources and competencies in a
fluid manner.
 By formulating, implementing, and evaluating strategies in an effective manner
which make use of the factors described above.

The fact that firms lose their sources of competitive advantage over the longer term is
borne out by statistics that show that the top three broadcast networks in the United
States had over 90 percent market share in 1978 which has now come down to less than
50 percent.

The Advent of the Internet and Competitive Advantage

With the advent of the internet, competitive advantage and the gaining of it has become
easier as firms directly sell to the consumers and interlink the suppliers, customers,
creditors, and other stakeholders into its value chain. Because of the removal of
intermediaries, firms can reduce costs and improve profitability. Essentially, the internet
has changed the rules of the game and hence sources of competitive advantage in this
digital era are now about how well firms utilize the digital platform and social media to
gain advantage over their rivals.

Closing Thoughts
Finally, competitive advantage has to be earned, gained, and defended as the preceding
discussion shows. Hence, those firms that are agile and responsive to changing market
conditions and whose internal capabilities are aligned with the external opportunities are
those who would survive in the brutal business landscape of the 21st century. As can be
seen from the characterization of competitive advantage, it is ethereal and subject to
change and hence firms must always been on the lookout for newer sources of
competitive advantage and be alert for competitors’ moves.
 Concept of Core competencies? Illustrate through Example.

A core competency is something that a firm can do well and that meets the following
three conditions specified by Hamel and Prahalad (1990):

1. It provides customer benefits

2. It is hard for competitors to imitate
3. It can be leveraged widely too 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. Modern business theories suggest that most activities that are not part of a
company's core competency should be outsourced.

If a core competency yields a long term advantage to the company, it is said to be a

sustainable competitive advantage.

As an example they gave Honda's expertise in engines. Honda was able to exploit this core
competency to develop a variety of quality products from lawn mowers and snow blowers
to trucks and automobiles. To take an example from the automotive industry, it has been
claimed that Volvo’s core competency is safety. This however is perhaps the end result of
their competency in terms of customer benefit. Their core competency might be more
about their ability to source and design high protection components, or to research and
respond to market demands concerning safety.
 6. SWOT Analysis is a process that identifies an organization's strengths,
weaknesses, opportunities and threats. Specifically, SWOT is a basic, analytical
framework that assesses what an entity (usually a business, though it can be used for a
place, industry or product) can and cannot do, for factors both internal (the strengths
and weaknesses) as well as external (the potential opportunities and threats). Using
environmental data to evaluate the position of a company, a SWOT analysis determines
what assists the firm in accomplishing its objectives, and what obstacles must be
overcome or minimized to achieve desired results: where the organization is today, and
where it may be positioned in the future.

 Strengths describe what an organization excels at and separates it from the

competition: things like a strong brand, loyal customer base, strong balance sheet,
unique technology and so on. For example, a hedge fund may have developed a
proprietary trading strategy that returns market-beating results; it must then
decide how to use those results to attract new investors.
 Weaknesses stop an organization from performing at its optimum level. They are
areas where the business needs to improve to remain competitive: things like
higher-than-industry average turnover, high levels of debt, an inadequate supply
chain or lack of capital.
 Opportunities refer to favorable external factors that an organization can use to
give it a competitive advantage. For example, a car manufacturer may be able to
export its cars into a new market, increasing sales and market share, if tariffs in a
country are substantially reduced – the "opportunity" in this case.
 Threats refers to factors that have the potential to harm an organization. For
example, a drought is a threat to a wheat-producing company, as it may destroy
or reduce the yield of the crop. Other common threats include things like rising
costs for inputs, increasing competition, tight labor supply and so on.
SWOT Analysis of Coca Cola
Strengths
Brand Awareness: The Coca-Cola Company is one of the most widely recognized brands across
the globe. Its signature logo, classic red & white colors, and world-famous jingle resonate with
consumers of all ages. There are two key players in this sector of the beverage business, one
being Coca-Cola, while the other remains PepsiCo, Inc. (PEP). That said, Coca-Cola maintains its
position in the top post as the clear-cut winner. Although both businesses constantly jockey for
increased market share, Coca-Cola has the edge here. The beverage producer also garners a core
following customers, as many consumers that deem themselves fans of its products tend not to
shift toward other brands. Going forward, the company’s vast financial resources ought to fuel
its sizable marketing efforts and increased product innovation, which should propel market-share
gains over the long haul.
Weaknesses
Water Management: Water is a main ingredient in substantially all of the company’s products. It
is vital to the production of the agricultural ingredients on which the business relies and is needed
in KO’s core manufacturing processes. Also, this resource is critical to the prosperity of the
communities Coca-Cola serves. Water is a limited resource in many parts of the world, facing
unprecedented challenges from overexploitation, as well as rising demand for food and other
consumer and industrial products whose manufacturing processes require water. These events
increase the risk of pollution, poor management, and effects stemming from climate change. As
the demand for water continues to climb around the world, and water becomes scarcer, the
overall quality of available water sources may very well deteriorate markedly, leaving the Coca-
Cola system to incur higher costs or face capacity constraints that could adversely affect its
profitability or net operating revenues in the long run.
Opportunities
Diversification: The Company has been hard at work utilizing its ample war chest to build a
presence in rapidly-growing beverage categories. Currently, it owns 16% of Keurig Green
Mountain and is developing a fresh Keurig Kold device that is set to debut this fall. Keurig, famous
for pod-based, hot drinks intends to feature Coke-branded products for its upcoming platform.
In addition, Coca-Cola recently finalized its purchase of a 17% stake in Monster Beverage. The
deal provides the company with access to a popular energy drink growth segment. All told, we
anticipate these transactions will bolster the top and bottom lines immediately. These joint
ventures also deliver Coca-Cola with established inroads to a younger customer base. Looking
ahead, KO will probably aim to forge increased relationships with coffee, energy, and health drink
businesses.
Threats
Nutritious Selections: It’s been no secret that soft drink providers have suffered some of late. A
cultural shift toward natural and organic products has led many to opt for nutritional waters,
smoothies, and various healthy beverage options. Thus, core soda offerings that include high
amounts of sugar, or diet items with artificial sweeteners, have fallen out of favor with buyers.
What’s more, this trend does not seem likely to abate, as consumers continue to boost their
knowledge of proper dietary requirements and exercise programs. Further, many health
professionals have called for the elimination of foods and beverages containing lofty amounts of
sugar, since these products place individuals at an elevated risk of becoming obese, developing
diabetes, and suffering from heart disease. Also, a negative perception of these beverages has
surged due to federal regulators’ desire to place excess taxes on sodas and sugary soft drinks.
STRENGTHS (NESTLE)
 Nestle is a highly-diversified company operating in many different markets and
sectors of those markets.
 The variety of brands gives Nestle a strong ability to weather economics because
it serves many different segments of the market.
 It has well-established relationships with other powerful brands, including Coca-
Cola, Colgate Palmolive and General Mills.
 Nestle owns some of the world’s most recognized and trusted brands. Some
families have used its products for generations. Gerber has historically been one
of the most trusted brands of baby food in the United States.
 It has strong research and development capabilities that are growing.
 Nestle has strong relationships with retailers.
 It includes well-established brands with a large amount of market share in some of
the largest national economies, including Europe and the United States.
WEAKNESSES
 Much of its sales depend upon a few well-recognized brands. This makes the
company vulnerable to any sudden changes in consumer behavior.
 Grocery sales in some major markets are increasingly concentrated in the hands of
a few giant retailers such as Walmart and Kroger in the United States and Tesco in
the United Kingdom. These companies have the ability to force sharp reductions
in price. Some of these retailers are intent on supplementing name brand products
with more-profitable house brands.
 Some of its brands, such as Carnation milk, are not tailored to modern lifestyles
and are seen as old-fashioned by some customers.
 The company is heavily dependent upon advertising to shape consumer opinion
and drive traditional sales. This can lead to high marketing costs with a
questionable return on investment.
 There is a high cost for launching new brands to supplement older, less-fashionable
food products.
OPPORTUNITIES
 Growth in online retail could open up new distribution channels such as Amazon
Prime that can bypass traditional retailers.
 Growing middle classes in nations such as China and India create larger and
broader markets for Nestlé’s products.
 Increased disposable income in countries like China could increase the demand for
luxury items like bottled water, ice cream and pet food.
 Changes in lifestyle, such as longer work hours, more women in the workforce, and
more single-person households, increase the demand for prepackaged foods.
 Increased mobility and car ownership increase the demand for candy, bottled
water and snack foods in nations like China.
 Increased interest in health and nutrition could increase demand for some Nestle
products, such as energy drinks.
THREATS
 Retailers such as Walmart, Kroger and Aldi are increasingly promoting house
brands, which are more profitable for them. House brands are often sold at a lower
price and given greater visibility on shelves. Some retailers such as Aldi and Trader
Joe’s emphasize house brands at the expense of traditional products.
 There is pressure from large retailers such as Walmart to cut prices.
 The growing use of new retail channels such as Amazon Prime and dollar stores
may not favor traditional retail products.
 They have experienced disruption of the traditional grocery industry in countries
like the United States by new players such as Whole Foods Market and online
retailers.
 There is a growing ineffectiveness of traditional advertising as new technologies
such as streaming video supplant traditional broadcast and print media.
 Consumers in some countries are eating fewer meals at home, which means less
demand for some Nestle products. Bloomberg reported that Americans’ spending
on restaurant meals overtook spending on groceries for the first in April 2015.[3]
 A growing suspicion of prepackaged foods as unnatural and unhealthy in Europe
and North America is becoming common. This increases the demand for fresh and
natural foods in some markets. It also increases the demand for organic and other
alternatives.
 There is a possibility of increased government oversight and regulations in some
markets, such as India. India’s government ordered billions of dollars of Maggi
instant noodles be pulled from the shelves in the summer of 2015 because of
allegations of excessive levels of lead in the product.
7. What is Value Chain? Elaborate the Importance of value chain
analysis for Strategy Formulation?
 Importance:
Value chain analysis (VCA) refers to the internal processes or activities a company
performs to design, produce, market, deliver and support its product. By defining the
value chain analysis, briefly describing the concept and analyzing the pros and cons we
will see the importance and relevance of utilizing the value chain analysis in strategic
decision making. A firm’s value chain and the way it performs individual activities are a
reflection of its history, its Strategy, its approach to implementing its strategy and
the underlying economics of the activities themselves. It aims to identify where low-cost
advantages or disadvantages exist anywhere along the value chain from raw material to
customer service activities. VCA can enable a firm to get a better idea of their own
strengths and weaknesses when comparing to their own data over time as well as
competitors’ value chain analyses, which is known as benchmarking. Benchmarking
involves measuring costs of value chain activities across an industry to determine the best
practices among competing firms for the purpose of replicating or even improving on
those best practices.
A company’s value chain show the linked set of activities, functions and business
processes. A company’s value chain consists of two types of activities: primary activities
and support activities. Primary activities are where most of the value for customers is
created. These include inbound logistics, outbound logistics, and marketing and sales,
customer service.
The support activities are those that are undertaken to aid the individuals and groupse
ngaged in doing the primary activities. These include procurement, technological
development, human resource management and firm infrastructure.
In conclusion, we can see how important the value chain analysis is to strategic decision-
making. The value chain aims to identify where low-cost advantages or disadvantages
exist anywhere along the value chain from raw material to customer service activities and
can also be used to scan for strengths and weaknesses and benchmarking to compare
with the competitors.

Value Chain Analysis is a three-step process:

1. Activity Analysis: First, you identify the activities you undertake to deliver your
product or service.
2. Value Analysis: Second, for each activity, you think through what you would do to
add the greatest value for your customer.
3. Evaluation and Planning: Thirdly, you evaluate whether it is worth making changes,
and then plan for action.
 8. Write Short Notes
Organizational Structure:
Tall Organizational Structure
Premise Control:
Premise control is necessary to identify the key assumptions, and keep track of any
change in them so as to assess their impact on strategy and its implementation.
 Premise control serves the purpose of continually testing the assumptions to find out
whether they are still valid or not.
 It helps in the strategists to take corrective action at right time.
 Premise control responsibility can be assigned to corporate planning staff.
Implementation Control:
The implementation of a strategy results in a series of plans, programs, and projects.
 Resource allocation plays important role.
 Implementation control may leads into strategic rethinking.
 Implementation control can be implemented by identifying and monitoring strategic
requirement with respect to market success. It also helps in determining whether to
go for diversification or not.
 It can also be carried out through identifying critical points in terms of events,
substantial resource allocation, or significant end-time.

Strategic Surveillance
It is generalized aimed at designed to monitor a board range of events inside and outside
the company that are likely to threaten the course of firm’s strategy.
 It can be done through a broad based, general monitoring on the basis of selected
information sources to uncover that are likely to affect the strategy of an organization .
Special Control
It is based on trigger mechanism for rapid response and immediate reassessment of
strategy in the light of sudden and unexpected events.
 Crises and critical situations that occur unexpectedly and threaten the course of a
strategy