K. S.

Group of Institutions, Bangalore-62

K.S. School of Engineering & Management
Solution and Scheme
First Internal Test
Department: MBA Semester: II
Subject: Strategic Management Sub Code: 17MBA25
Date:27 March 2018 Duration: 1Hr 30min Maximum Marks: 40
Name and Signature of the paper setter: Pradeep
Part Solution Scheme Marks C

Bloom’s
and Allotted O
QNo
1.a Strategy is a long term plan to achieve goals and objectives of a
company.
Or Definition 2 Marks Kn 1
Strategy is the determination of the basic long term goals and
objectives of an enterprise and the adoption of the course of
action and the allocation of resources necessary for carrying out
these goals
The nature and characteristics of business strategy
1.b
1. Goal/Objective oriented. Points 2M 6 Marks Cm 1
2. Strategy is Multidisciplinary oriented (Strategy affect on
& Explain
overall dept of firm)
3M
3. Strategy is Hierarchical (Corporate, Business, Functional
(2+4=6)
Level)
4. Future oriented.
5. Long-term implication
6. Strategic management is fundamental
7. Complex
8. Universal applicability.

Points 3M 8Marks Cm 1
& Explain
1.c 5M
1. Corporate Strategy (3+5=8)
2. Business level strategy
3. Functional level strategy
Corporate Strategy
 A corporate level strategy decides to stabilize, Diversify,
expand or retrench whereas an individual business needs
their own strategies in order to contribute to the
achievements.
 These corporate-level strategies basically involve taking
long term goals, business strategies, business decisions
about allocation of resources among different businesses of
the organization, transferring resources from one set of
business to other and also managing and nurturing a
portfolio of business in such a way that the overall corporate
objectives are achieved.
 Such as ITC a cigarette company diversified into the hotel
industry. Bombay Dyeing, a textile organization took
decision to enter into the readymade garment business.
 The corporate level strategies decide the investment
portfolio of an organization
 Corporate level strategy occupies the highest level of
strategic decision-making and covers actions dealing with
the objective of the firm, acquisition and allocation of
resources and coordination of strategies of various SBUs for
optimal performance. Top management of the organization
makes such decisions.
 The nature of strategic decisions tends to be value-oriented,
conceptual and less concrete than decisions at the business
or functional level.

Business level strategy

 The middle level or business-level is the level, which includes
business managers and corporate managers.
 Business strategies are the course of action adopted by an
organization for each of its businesses separately and aim at
developing competitive advantages in the individual
businesses that the company has in its portfolio and are also
aimed to use the resources, skills, and synergies to enhance its
 competitive advantages.
 Business strategy focuses on competitive positioning (where
to compete and how) in order to create an advantage over
competitors. Business managers should run the business in a
way that is in alignment with overall corporate strategy. The
framework for building a business strategy includes
developing the mission of the business, once again conducting
an environmental scan and examining the key activities of the
value chain. The action plan that results directs the business
strategy, programs and budget.
 Business strategy focuses on a firm's competitiveness in the
marketplace.
 This business strategy are Developed by the heads of
respective departments, and approved by the top management;
 These strategies are designed in response to the changing
environment and competitive conditions.
 Strategies formed at this level are comprehensive (complete)
plans providing objectives for SBUs, allocation of resources
and coordination of the SBUs for optimal performance.
 At this level the strategies decided at corporate level, are
translated into concrete objectives and strategies for
individual business.
 At this level the courses of action are adopted by an
organization for each of its business separately to serve
particular customer group or groups, for providing value to
the customers by satisfying their needs.

Functional level strategy

 This strategy or plans are more of a regular and short time,
which needs to be defined to ensure that the organization is
moving towards its goals. This is the bottom level of the
strategy pyramid but it is extremely crucial because it can
determine the final success.
 Functional strategy deals with plan providing objectives for
specific function, allocation of resources among different
operations within that functional area and coordination
 between them for optimal contribution to the achievement
of the SBU and corporate-level objectives.
 The operational strategy mainly includes production
strategies, marketing strategies, financial strategy and
human resources strategy.
 Below the functional-level strategy, there may be operations
level strategies as each function may be dividend into
several sub functions. For example, marketing strategy, a
functional strategy, can be subdivided into promotion, sales,
distribution, pricing strategies with each sub function
strategy contributing to functional strategy.
Business Model: It is important for business owners to develop
business strategies that show how they be going to achieve goals Meaning 2Marks Kn 1
and create value with customer. For many companies, strategic
management involves formulating a plan to generate profit. A
business model describes the basis of how an organization
creates, delivers, and captures value
Business Model -Concerns whether revenues and costs flowing
from the strategy demonstrate the business can be fully
profitable and viable.
In slightly more detail, it describes how a company competes,
2a uses it resources, structures its relationships, interfaces with
customers, and creates and captures value to sustain itself.
The key elements in a business model include the following:
 The customer value proposition – how will the company
create value, and for whom?
 The profit model – how will the company make money?
 The key resources needed to deliver the customer value
proposition.
 The company’s core competences – internal capabilities or
skill sets that enable the company to manage the business in
a way that delivers value.
 strategy Tactics
2.b Long term goals Short term goals Points for 6 Marks An 1
strategy is developed at the Tactics is employed at and each
highest level of management relates to lower levels of difference
management. (0.5*12=6)
The formulation of strategy Tactics is determined on a
is both continuous and periodic basis by various
irregular organizations.
Strategy has a long-term Time horizon of tactics is
perspective; short-run and definite
uncertainty is higher in the Tactical decisions are more
case of strategy certain
Strategies are most Tactics are of less
important factors of importance because they are
organization because they concerned with specific part
decide the future course of of the organization.
action for the organization
2.c Advantages Disadvantages
• Prevents  Problem in Points 4M 6 Marks Cm 1
problems(Strategic Implementation & Explain
management serves as a  Lack of Commitment of
4M
corporate defense Lower Level
 Problem in Analyzing (4+4=8)
mechanism against
Environment:
mistakes and pitfalls)  Problem of Internal
• Strategic management is
Politics
concerned with ensuring a  Prior bad experience
good future for the firm.  Fear of failure
• Better understanding of  Too expensive
 Waste of time
changing environment
• It results in better decisions  Lack of knowledge or
• Strengthens competitive experience in strategic
position planning
• It improves coordination,
delegation, co-ordination
monitoring, performance
evaluation and control
• Identification of the
 strengths and weaknesses
may help an organization to
take measures.
• It results future oriented
and dynamic.
• It allows for identification,
prioritization, and
exploitation of
opportunities.
• It provides an objective
view of management
problems.
• It represents a framework
for improved coordination
and control of activities.
• It minimizes the effects of
adverse conditions and
changes.
• It allows major decisions to
better support established
objectives.
• It allows more effective
allocation of time and
resources to identified
opportunities.
• It allows fewer resources
and less time to be devoted
to correcting erroneous or
ad hoc decisions.
• It creates a framework for
internal communication
among personnel.
• It helps integrate the
behavior of individuals into
a total effort.
• It provides a basis for
clarifying individual
 responsibilities.
• It encourages forward
thinking.
• It provides a cooperative,
integrated, and enthusiastic
approach to tackling
problems and
opportunities.
• It encourages a favorable
attitude toward change.
 It gives a degree of
discipline and formality to
the management of a
business.
A vision statement identifies where the organization wants or
3.a intends to be in future or where it should be to best meet the Meaning 2 Mark Kn 2
needs of the stakeholders. It describes dreams and aspirations for
future.
Example: Wal-Mart’s vision is to become worldwide leader in
retailing.
Example Company: Amazon
Vision: To become one of the topmost Earth’s most customer-
centric companies, where customers can find and discover
anything they might want to buy online.
Difference B/w Mission & Vision.
3 .b Mission Vision Each Point 6 Marks Cm 2
Purpose of the company in A vision statement is a clear, (0.5*12=6)
market definitive statement of what
you want to accomplish
Its present oriented Unlike the mission statement,
it is future oriented.
Mission statements often start Vision statements often start
with statements such as, "We with statements such as,
provide…" or "We offer…" "Where we want go or where
or "We are a…" we want to reach
It defines the day-to-day Its future achievable oriented
activities of the work they do, activities.
 and every person who works
Amazon Mission: We try hard Amazon
to offer our customers the Vision: To become one of the
lowest possible prices, the topmost Earth’s most
best available selection, and customer-centric companies,
the utmost convenience. where customers can find and
discover anything they might
want to buy online.

3.c Points 3M 8 Marks Cm 2

& Explain
5M
(3+5=8)

The Balanced Scorecard is a management tool that provides

stakeholders with a complete measure of how the organizations
performance or progress towards the achievement of its strategic
goals.
The four perspectives are:
1.Financial perspective - how does the firm look to
shareholders?
2.Customer perspective - how do customers see the firm?
3.Internal perspective - how well does it manage its operational
processes?
4.Innovation and learning perspective – can the firm continue to
improve and create value? This perspective also examines how
an organisation learns and grows
4.a It states the Purpose/reason for the existence of the organization.
It defines product, market and competitive scope for the long Meaning 2 Mark Kn 2
term.
The mission statement defines what an organization does and
includes tangible goals which the organization strives to
accomplish.
Example Company: Amazon
Mission: We try hard to offer our customers the lowest possible
prices, the best available selection, and the utmost convenience.
Nature of mission statement
4.b 1. It should be feasible Points 2M 6M Cm 2
2. It should be precise.
& Explain
3. It should be distinctive.
4. It should be motivating. 4M
5. It should indicate how objectives
(2+4=6)
6. It should be clear.
7. They Are Realistic
8. They Are Memorable
9. They Are Active
It should be feasible
A mission should always aim high but it should not be an
impossible statement. It should be realistic and achievable its
followers must find it to be credible. But feasibility depends on
the resources available to work towards a mission. In the sixties,
the US National Aeronautics and Space Administration (NASA)
had a mission to land on the moon. It was a feasible mission that
was ultimately realized.
It should be motivating.
A mission statement should be motivating for members of the
organization and of society, and they should feel it worthwhile
working for such an organization or being its customers. A bank,
which lays great emphasis on customer service, is likely to
motivate its employees to serve its customers well and to attract
clients. Customer service, therefore is an important purpose for a
banking institution.
It should be precise.
A mission statement should not be so narrow as to restrict the
organization’s activities nor should it be too broad to make itself
meaningless. For instance, ‘Manufacturing bicycles’ is a narrow
mission statement since it severely limits the organization’s
activities, while mobility business’ is too broad a term, as it does
not define the reasonable contour within which the organization
could operate.
It should be clear.
A mission should be clear enough to lead to action. It should not
be a high sounding set of platitudes meant for publicity
purposes. Many organizations do adopt such statements but
probably they do so for emphasizing their identity and character.
For example, Asian Paints stresses leadership through
excellence’, while India Today see itself as ‘the complete news
magazine’. The Administrative Staff College of India considers
itself as ‘the college for practicing managers’ and Bajaj Auto
believes in ‘Providing, value for money, for years’. To be useful,
a mission statement should be clear enough to lead to action.
The ITC’s stated corporate philosophy of aligning its
organizational activities with national priorities helps it in
choosing areas for diversification like the hotel, paper and agro
industry.
They Are Realistic
Some companies fall into the trap of crafting mission statements
that are so grandiose and philosophical that they lose all touch
with reality. Mission statements must be grounded in what your
company provides customers in the present. Save the
inspirational and future-based language for your vision
statement.
They Are Memorable
What are the key phrases and terminology you can use in your
mission statement to make it memorable? That doesn’t mean
that readers must be able to recite your mission statement in
whole as if it’s a catchphrase, but it does mean that people
should be able to associate key aspects of that statement with
your company.
It should be distinctive. A mission statement, which is
indiscriminate, is likely to have little impact. If all scooter
manufacturers defined their mission in a similar fashion, there
would not be much of a difference among them. But if one
defines it as providing scooters that would provide ‘value for
money, for years’ it will create an important distinction in the
public mind.
They Are Active
The word “active” in this context refers to active verbs that
make readers feel as if something is happening now rather than
in the past. For example, instead of writing, “These products are
made by our company to improve your life,” you should write,
“Our company makes these products to enhance your quality of
life.” Notice how the transition from passive to active verbs, and
substituting “enhance your quality of life” for “improve your
life” conveys a stronger message?
They Are Positive
It’s important that you avoid negative messages because mission
statements are all about how your business solves a problem,
fulfills a want or need, or makes life easier for your target
audience.
It should indicate how objectives are to be accomplished.
Besides indicating the broad strategies to be adopted a mission
statement should also provide clues regarding the manner in
which the objectives are to be accomplished.
They Are Adaptable
A strong mission statement is something that your marketing
and product development teams can also use for motivation and
direction. For example, eyeglass brand Warby Parker’s mission
statement is, "Warby Parker was founded with a rebellious spirit
and a lofty objective: to offer designer eyewear at a
revolutionary price, while leading the way for socially conscious
 businesses." The concepts of “rebellious spirit,” “revolutionary
price,” and “socially conscious businesses” are all a marketing
department’s dream because they are sellable concepts.

Objectives: The desired or needed result to be achieved by a Points 3M

4.c company in specific time. & Explain 8M Cm 2
2types of objectives 5M
1. Financial objectives
2. Strategic objective

Strategic objectives deal with the firm's position in the model.

You might do this, for example, by positioning the firm relative
to the external forces – bargaining power of customers,
bargaining power of suppliers, threat of new entrants, threat of
substitutes, and competition within the industry – that can
impact a business. Strategic objectives might include expanding
market share, changing market position or under-cutting a
competitor's costs.

A strategic objective focuses on

 winning additional market share,
 overtaking key competitors on product quality or customer
service or product innovation,
 achieving lower overall costs than rivals,
 boosting the company’s reputation with customers,
winning a stronger foothold in international markets,
exercising technological leadership,
 gaining a sustainable competitive advantage, and
 capturing attractive growth opportunities
Financial Objectives
Managers/ Firm use financial objectives to measure strategic
performance. For example, if the firm's strategic objective is to
 increase efficiency, the financial objective could be to increase
return on assets or return on capital. Financial objectives,
derived from management accounting, are more concrete.
Steps in Strategic Management Points 3M 8 Marks Cm 1
5 1. Environmental scanning & Explain
2. Strategy formulation
5M(3+5=8)
3. Strategy implementation
4. Strategy evaluation or control

Course Learning Outcomes: Bloom’s Taxonomy

Kn: Knowledge An: Analysis
After completing the course, the students will be able to,
Cm: Sy: Synthesis
1. Explain the concept of strategic management and business model.
Comprehension Ev: Evaluation
2.Discuss steps involved in strategy formulation, vision, mission,
Ap: Application
objectives, and hierarchy of strategic intent.
3. Explain the various components of External environment,
industry analysis, Porter’s model, KSF’s and industry driving forces.
4. Explain the concept of company resources and competitive
position, SWOT analysis, Value chain analysis, Benchmarking,
generic competitive strategies.
5. State & explain planning in different business environments, GE
nine cell and BCG matrix.
6. Discuss the strategy implementation process, objectives,
institutionalizing the strategy and leadership and culture.