Question 1

i. Strategic management is the process where managers establish an organization’s long-

term direction, set the specific performance objectives. Strategic management involves
setting objectives, analysing the competitive environment, analysing the internal
organization, evaluating strategies, and ensuring that management rolls out the
strategies across the organization.

ii. • it is the highest level of managerial activity.

• it is performed by an organization’s chief executive officer and executive team.
• it provides overall direction to the enterprise.
• it is a combination of strategy formulation and strategy implementation;

iii. The strategic management function directly involves all managers with line authority at
the corporate, line-of-business, functional area, and major operating department
levels.

iv. • specifying an organization’s objectives.

• developing policies and plans to achieve these objectives.
• allocating resources to implement the policies.

v. • determining where you are now.

• determining where you want to go.
• determining how you get there.

Question 2
A. • defining the organization’s business and developing a strategic mission.
• establishing strategic objectives and performance targets.
• formulating a strategy to achieve the objectives.
• implementing an executing the chosen strategic plan.
• evaluating strategic performance and making corrective adjustments.

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 B. the management’s view of what the organization seek to do and to become over the long-
term is the organization’s strategic management.

C. Formulating a strategy reveals how the targeted results will be accomplished, a detailed
action plan is necessary to achieve both short-run and long-run results.

D. • the market position and competitive standing the organization aims to achieve.
• the annual profitability targets.
• key financial and operating results to be achieved through the chosen activities.
• any other milestones by which strategic success will be measured.

E. Strategy formulation involves doing a situation analysis: both internal and external; both
micro-environmental and macro-environmental, setting the objectives by crafting vision
statements, mission statements, overall corporate objectives, strategic business unit
objectives and tactical objectives that suggest the strategic plan.

QUESTION 3
i. Environmental Analysis is described as the process which examines all the components,
internal or external, that has an influence on the performance of the organization. The
internal components indicate the strengths and weakness of the business entity
whereas the external components represent the opportunities and threats outside the
organization. To perform environmental analysis, a constant stream of relevant
information is required to find out the best course of action. Strategic Planners use the
information gathered from the environmental analysis for forecasting trends for future
in advance. The information can also be used to assess operating environment and set
up organizational goals. It ascertains whether the goals defined by the organization are
achievable or not, with the present strategies. If is not possible to reach those goals
with the existing strategies, then new strategies are devised or old ones are modified
accordingly.

Advantages of Environmental Analysis

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 The internal insights provided by the environmental analysis are used to assess
employee’s performance, customer satisfaction, maintenance cost, etc. to take
corrective action wherever required. Further, the external metrics help in responding
to the environment in a positive manner and also aligning the strategies according to
the objectives of the organization.
Environmental analysis helps in the detection of threats at an early stage, that assist
the organization in developing strategies for its survival. Add to that, it identifies
opportunities, such as prospective customers, new product, segment and technology,
to occupy a maximum share of the market than its competitors.

ii. Organizations must operate within a competitive industry environment. They do not
exist in vacuum. Analysing organization’s competitors helps an organization to discover
its weaknesses, to identify opportunities for and threats to the organization from the
industrial environment. While formulating an organization’s strategy, managers must
consider the strategies of organization’s competitors. Competitor analysis is a driver of
an organization’s strategy and effects on how firms act or react in their sectors. The
organization does a competitor analysis to measure/assess its standing amongst the
competitors. Competitor analysis begins with identifying present as well as potential
competitors. It portrays an essential appendage to conduct an industry analysis. An
industry analysis gives information regarding probable sources of competition
(including all the possible strategic actions and reactions and effects on profitability for
all the organizations competing in the industry). However, a well-thought competitor
analysis permits an organization to concentrate on those organizations with which it
will be in direct competition, and it is especially important when an organization faces
a few potential competitors. Michael Porter in Porter’s Five Forces Model has assumed
that the competitive environment within an industry depends on five forces- Threat of
new potential entrants, Threat of substitute product/services, bargaining power of
suppliers, bargaining power of buyers, Rivalry among current competitors. These five
forces should be used as a conceptual background for identifying an organization’s
competitive strengths and weaknesses and threats to and opportunities for the
organization from its competitive environment.

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 iii. Porter’s five forces model, refers to a framework based on the competitive analysis,
introduced by Harvard Business School Prof. Michael E. Porter. The model determines
the intensity of competition in any industry is a mix of five competitive factors
operating in different areas of the whole market. The framework is an outside-in
strategy tool for the business unit that evaluates the attractiveness (profitability) of an
industry. Thus, helps the business-persons to identify existing and potential lines of
business. It is a useful tool for accurately diagnosing important competitive elements in
the market, as well as determining the strength and significance of each five forces.

Porter’s Five Forces Model

1. Threat of new entrants: Potential entrant is the major source of competition in the
industry. The product range, quality, capacity, etc. brought by them, increases competition. The
size of the new entrant plays a major role here, i.e. the bigger the entrant, the more intense is the
competition. Moreover, the prices are slashed, and the overall profitability of existing players is
also affected, by the new entry.

It analyses the ease of entry to the new market, i.e. if the entry is easy, then the level of
competition in the industry is severe.

2. Bargaining power of suppliers: Suppliers, also exert substantial bargaining power over the
firms, by threatening to increase prices or degrade quality. They are likely to exercise power if:

o The number of suppliers in the industry is limited in number.

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 o They offer the specialised product.

o The supplier’s product is an important input, to the buyer’s product.

o The product has a few substitutes.

Thus, the factor analyses bargaining power of industry suppliers, which directly affects the
profitability, i.e. the higher the cost, the lesser is the profitability.

 Bargaining power of customers: The market of outputs, i.e. the customers have the
ability to compete with the supplying industry and put the companies under pressure, by forming
groups or cartels. This force not only affects the prices but also influences the producer’s cost and
investments in certain circumstances, as the powerful buyers influence producers to offer better
quality which involves cost and investment.

Buyer groups are likely to exercise power if, they are concentrated, products are homogeneous,
the switching cost is low, and full information is available.

 Threat from substitutes: It is the quiescent source of competition, present in the

industry. They are the key cause of competition in many industries. Substitute products are
offered at reasonable prices along with high quality, to the customers can radically change the
competitive scenario of industry, especially, when the introduction is sudden.
 Rivalry among current players: Last but not the least, is the rivalry among current
players, which is all that is known as competition. It can be shown in a number of ways such as:

o Price competition

o Advertising battles

o New introductions

o Improving quality

o Increasing consumer warranties.

So, this factor analyses, how ruthless the competition is, by identifying the existing player and
marketing down their moves and activities. The competition is said to be acute when, there are a
few sellers, offering similar products to the customers because it is easy for buyers to switch to

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 the one offering product at low prices. Therefore, the model is all about taking offensive and
defensive actions, to create and maintain a competitive position in the market and to cope with
the challenges (five forces) successfully.

iv. SWOT Analysis is a strategic management tool that assists an enterprise in discerning their
internal Strengths, and Weaknesses, and external Opportunities, and Threats, to determine its
competitive position in the market. The SWOT Analysis helps in ascertaining the factors that
influences the efficiency and effectiveness of any product, project, or business entity. These
are explained as under:

1. Strengths: The strengths of a company are the core competencies, in which the business
has an edge over its competitors. It covers aspects such as:

o Strong financial condition

o A large customer base.

o Strong brand name or a unique product

o Latest technology or patents

o Influential advertising and promotion.

o Cost Advantage

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 o Quality in product and customer service.

 Weaknesses: Weaknesses can be described as the areas of limitations of the

business, that hinders the growth of the company and even leads to a strategic disadvantage.
These are the areas which need improvement to perform competitively. It encompasses:

o Obsolete facilities and outdated technology.

o The unit cost of a product is higher than the competitors.

o No or less internal control.

o Less quality in products and services offered.

o Weak brand image.

o Financial condition is not very sound.

o Underutilization of plant capacity.

o Lack of major skills or competencies, and intellectual capital.

 Opportunities: Opportunities can be understood as the condition, which is

favourable or beneficial to the organization in the business environment, that the business could
exploit to gain an advantage. These are:

o Looking for areas of development, by utilizing skills and technology to enter new
markets

o Adding new products to the existing product line to increase customer base.

o Forward and backward integration.

o Acquiring rivals businesses.

o Joint ventures, mergers and alliances to increase market coverage.

 Threats: Threat implies an adverse condition which can lead the business enterprise
to losses, and can also harm the overall position and reputation of the enterprise. It entails:

o A downtrend in market growth.

o A new entrant to the market.

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o Substitute products that can decrease sales.

o Increasing the bargaining power of customers and suppliers.

o New regulatory requirements

o Changes in a demographic environment that will decrease demand for firm’s

product.

Importance of SWOT Analysis

 Logical framework of analysis: SWOT Analysis equips the management with an insightful
framework for eliminating issues in a systematic manner, that can influence the condition of
business, formulation of various strategies and their selection.

 Presents a comparative report: The analysis facilitates in presenting systematic information

about the internal and external environment. This helps in making a comparison of external
opportunities and threats with internal strengths and weaknesses, as well as reconciling the
internal and external business environment, to help the managers in choosing the best
strategy, by considering various patterns.

 Strategy Identification: Every organization has its strengths weakness, opportunities and
threats. So, the SWOT Analysis acts as a guide to the strategist to reckon the exact position, i.e.
where the business stands, so as to identify the primary objective of the strategy under
consideration.

SWOT Analysis helps the company’s management in designing a business model specific to the
firm. The model perfectly suits or aligns the company’s resources or competencies, as per the
needs of the business environment, wherein the organization operates and helps in gaining a
competitive advantage over the rivals. This will increase the profitability, market share and the
chances to survive in the dynamic competitive business environment.

QUESTION 4
a. GE nine-cell matrix is a strategy tool that offers a systematic approach for the multi business
enterprises to prioritize their investments among the various business units. It is a
framework that evaluates business portfolio and provides further strategic implications.
Each business is appraised in terms of two major dimensions. Market Attractiveness and

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 Business Strength. If one of these factors is missing, then the business will not produce
desired results. Neither a strong company operating in an unattractive market, nor a weak
company operating in an attractive market will do very well.

b.
c. 1. Competitive Strategy:
Firstly, competitive strategy is the first of the kinds of strategies in strategic management. It refers
to a plan that combines the clout of the external situation. Along with the integrative concerns of
the personal status of an organization. The competitive strategy aims at gaining a competitive
advantage in the marketplace against competitors. Competitive advantage comes from strategies
that lead to some uniqueness in the market. Winning a competitive strategy is grounded in
sustainable competitive advantage. Examples of the competitive strategy include contrast
strategy, low-cost strategy, and focus or market-niche strategy. The competitive strategy consists
of business approaches and initiatives. It undertakes a company to attract clients and deliver.
Superior values to them through fulfilling their looking forward as well as to strengthen its market
position. This definition of Thompson and Strickland emphasizes the ‘tactics and ingenuities’ of
directors in outlining the strategy. It means that competitive strategy is concerned with actions.
It’s managers undertake to improve the company’s market position by satisfying the customers.

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The enlightening market situation infers undertaking actions contrary to competitors in the
industry. Therefore, the notion of competitive strategy has a competitor-angle. The competitive
strategy includes those tactics that lay down various ways to build a liveable, competitive
advantage. Management’s action plan is the focus of the competitive strategy. The objective of
the competitive strategy is to win the customer’s heart by satisfying their needs. Finally, it is to
outcompete competitors and attain competitive advantages.
2. Corporate Strategy:
Secondly, corporate strategy is a type of strategy in strategic management. It draws up at the top
level by the senior management of a diversified company. A diversified company is known as a
‘group of companies’, such as Trade kings group. Such a strategy describes the company’s overall
corporate strategy. As well, corporate strategy defines the long-term objectives and generally
affects all the business-nits under its umbrella.
3. Business Strategy:
Thirdly, types of strategies in strategic management’s third one is a business strategy. Business
strategy formulates at the business-unit level. It is popularly known as ‘business-unit strategy.’
This strategy emphasizes the building up of the company’s competitive position of products or
services. Business strategies compos of a competitive and cooperative approach. The business
strategy covers all the activities and tactics for competing in denial of the competitors. And
behaviour management addresses various strategic matters. As Hill and Jones have remarked, the
business strategy consists of plans of action. It’s strategic managers adapt to use a company’s
resources. Additionally, managers change distinctive attitudes to gain a competitive advantage
over its rivals in a market. The business strategy usually formulates in line with the corporate
strategy. The business strategy’s main focus is product development, innovation, integration,
market development, diversification, and the like. In doing business, companies confront a lot of
strategic issues. Management has to address all these issues effectively to survive in the
marketplace. Business strategy deals with these issues, in addition to ‘how to compete.’
4. Functional Strategy:
Fourthly, the functional strategy is a type of strategy in strategic management. A functional
strategy refers to an approach that points up a particular functional area of an organization. It sets
down to achieve some objectives of a business unit by maximizing resource productivity. Once in a
blue moon, functional strategy names departmental strategy since each business function
frequently devolves with a section. Examples of functional strategy comprise production strategy,

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marketing strategy, human resource strategy, and financial strategy. The functional strategy is
concerned with developing the right stuff to provide a business unit with a competitive advantage.
Each business unit has its own set of departments, and every department has a functional
strategy. Functional strategies adapt to support a competitive strategy. For example, a company
following a low-cost competitive strategy needs a production strategy. It insists on reduction cost
operation and also a human resource strategy. Furthermore, It insists on retaining the lowest
possible number of employees. These employees are highly qualified to work for the organization.
Other functional strategies such as marketing strategy, advertising strategy, and financial strategy
must also be formulated to support the business-level competitive strategy. The organizational
plans become more and more detailed. Likewise, it becomes specific when managers move from
corporate business to functional-level strategies.
5. Operating Strategy:
Finally, the operating strategy is the fifth type of strategy in strategic management. It gives form
to the operating units of an organization. A company may develop an operating strategy. As an
instance, for its sales zones. An operating strategy is put across at the field level, usually to achieve
on-hand objectives. In some companies, managers develop an operating strategy for each set of
annual goals in the divisions.

d. BCG Matrix is a tool used in corporate strategy to analyse business units or product lines

based on two variables: relative market share and the market growth rate. By combining
these two variables into a matrix, a corporation can plot their business units accordingly and
determine where to allocate extra resources, where to cash out and where to divest. The
main purpose of the BCG Matrix is therefore to make investment decisions on a corporate
level. For example, Samsung is a conglomerate consisting of multiple strategic business units
with a diverse set of products. Samsung sells phones, cameras, TVs, microwaves,
refrigerators, laundry machines, and even chemicals and insurances. This is a smart corporate
strategy to have because it spreads risk among a large variety of business units. In case
something might happen to the camera industry for instance, Samsung is still likely to have
positive cash flows from other business units in other product categories. This helps Samsung
to cope with the financial setback elsewhere. However even in a well-balanced product
portfolio, corporate strategists will have to make decisions on allocating money to and
distributing money across all of those business units. Where do you put most of the money

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 and where should you perhaps divest? The BCG Matrix uses Relative Market Share and the
Market Growth Rate to determine that.

e. GE nine-cell matrix is a strategy tool that offers a systematic approach for the multi business
enterprises to prioritize their investments among the various business units. It is a framework
that evaluates business portfolio and provides further strategic implications. Each business is
appraised in terms of two major dimensions. Market Attractiveness and Business Strength. If
one of these factors is missing, then the business will not produce desired results. Neither a
strong company operating in an unattractive market, nor a weak company operating in an
attractive market will do very well.

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REFERENCES
Porter, M. (1998). Competitive Strategy. New York: Free Press, pp. 3-5.

Porter, Michael (January 1, 2008). "The Five Competitive Forces That Shape Strategy". Harvard
Business Review.

Azhar Kazmi., Business Policy and Strategic Management. Tata McGraw Hill. 2008.

Fred R. David., Strategic Management. Prentice Hall. New Delhi: 2007.

Aktouf, Omar (January 24, 2008). "THE FALSE EXPECTATIONS OF MICHAEL PORTER'S STRATEGIC
MANAGEMENT FRAMEWORK". Gestão & Planejamento - G&P. 1 (11). Retrieved January 27, 2019
via revistas.unifacs.br.

Ansoff, H.I. 1980. ‘Strategic issue management’. Strategic Management Journal, 1:131-148.

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