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1. What are the concerns of Strategic Management (In Detail)?

Strategic Management is mainly concernedwith 3 factors which are the Strategic Position, Strategic Choices and Strategy in Action.

Strategic Positioning of an organizationis how the external environment (Opportunities and Threats) will impact the organization and how the strategic capabilities (Strengths and Weaknesses) can obtain competitive advantage over the organization competitors and how the expectations of stakeholders are managed and how the organization culture would influence in the development of organizational strategies. The Strategic Choices involve understanding the underlying bases for future strategy at both the business unit which will consider the competitive advantage arising by understanding the customer and the market and also the strategic capabilities within and at the corporate levels which will give more concern on the scope of the strategy. And the Strategic Choice is also involved in developing strategy in terms of both the direction where there will be an extension from the current product and customer base, to the method of development which could be either organic or in-organic.

Strategy in Action is all about ensuring whether the strategy is working In practice in order to achieve the organizational objectives. Structuring the organization in order to ensure the activities in all business units are coordinated, Enabling success through support strategies such as People, Technology, Information and Finance. And finally adopting and managing Change in order for the strategies to be effective in action.

Therefore we can conclude that Strategic management is concerned with complexity arising out of ambiguous and non-routine situations rather than operation-specific implications.

2. List out few examples of strategic decision?

Characteristics of a Strategic Decision would be Long term direction, Scope of an organizations activities, Competitive advantage, Strategic fit with the business environment, Organizational Resources and Competencies, Values & Expectations of Power Players.

Acquisition of a competitor Going in to a new market Focusing on a new market segment Increasing productivity. Changing the organizational structure.

3. What is meant by an organizations strategic capability?

Strategic Capability is the combination of Resources and Competencies which are crucial for the success of an organization. Unique resources and Core competencies will bring about Competitive Advantage over competitors (resource based view of strategy) and make the organization a market leader.

When making strategic decisions by an organization one of the main factors to be considered is the strategic capabilities within the organization. It is essential to identify the organizational capabilities within as competitive advantage can only be obtained through the organizational unique resources and core competencies that are difficult to be imitated or obtained by competitors.

It is important to gain competitive advantage over your competitors but it is also vital to sustain the competitive advantage. Thus the organizational inimitable strategic capabilities will facilitate in sustaining competitive advantage. Therefore these capabilities would be, adding unmatched value to the customers, making it rare and inimitable (complex, ambiguous, culture & history) and Dynamic for others to imitate and obtain and ensuring that there are no substitutes for the customers to fall in to.

4. Types of Strategies and their Concerns? There are 3 types of strategies and they are Corporate Level, Business Level and Operational Level Strategies.

Corporate-level is the top/firstlevel of the pyramid, and hence the corporate level strategies need to be broad and relevant which would capture strategies at all levels in the organization. These level decisions will be taken by considering the organizationas a whole. Hence being clear about corporatelevel strategy is important as it is a basis of otherstrategic decisions.

When generating corporate level strategies certain factors need to be considered;thesefactors are,

The overall scope of an organizationand how value will be added to the different business units of the organization. This includes issues of geographical coverage, diversity of products/services or business units, and how resources are to be allocated between thedifferent business units of the organization. In general, corporate level strategy is also likely to be concerned with the expectationsof owners the shareholders and the stock market. It may well take form in an explicit or implicit statement of the organization mission that reflects such expectations.

The second level is the business level. Business level strategy isabout how to compete successfully in particular markets and to obtain competitive advantage. Strategic decisions at this level need to be related and specific to each strategic business unit.

These level strategies are mainly concerned with which products or services should be developed in which markets and how advantage over competitors can be achieved in order to achieve the overall objectives of the organization perhaps long term profitability or market share growth.

There should clearly be a link between strategies at an SBU level and corporatelevelstrategies that both assist and constrain these business-level strategies.

The third and the last level of the pyramid is the operational level and the strategies formulated at this level are for the organizational operation. In most

businesses,successful business strategies depend to a large extent on decisions that are taken,or activities that occur, at the operational level. Hence the integration of operationaldecisions and strategy is therefore of great importance,

When formulating operational strategies the main emphasis is on how the component parts ofan organization could deliver effectively the corporate and business level strategies interms of resources, processes and people.

5. What factors are part of the analysis of the macro environment?

When analyzing the macro environment by an organization there are 5 main factors that should be given an elevated importance. A macro environmental analysis is mainly done by organizations in order to identify how these main features of the macro environment would affect or impact the organization in its growthand competitive strategies. The factors mainly are Political, Economy, Social, Technology and Legal (PESTL).

When an organization is in the process of making a strategic decision to globalize it is crucial that a macro environmental analysis on the country planning on going in to,is done thoroughly. Depending on the product to be sold in the new global market the PESTL analysis should be done. Any organization would prefer moving to a stable political environment as a volatile political environment would lead to changes in policies and regulations on Foreign Direct Investments, Repatriation of Profits, Taxes, Holdings etc. on regular time periods which would have a negative impact on the organization investment and its returns. Economy of the country going in to should be at a growth stage where the organization is able to make an impact on the market they choose. The

Monetary, Fiscal and the Growth policies of the country should be at a positive level in order for the organization to make profits. The Social level of the country would also highly influence the decision to globalize as a country with a sophisticated and dynamic society would create market demand where as a country with a laid back reserved society would not. It is also important that the technology in the country should be at an advanced level and there would be readily available IT people in order for innovations and proper Information Systems. Finally it is crucial to know the countrys legal system and all the related laws and regulations when entering in to a new nation as lack of knowing the proper legal aspects could lead to an organization being sued at court for unlawful practices and procedures.

Therefore it is vital that the PESTL factors in a macro environment are considered when an organization is making a strategic decision on going global.

6. What is a SWOT Analysis?

A SWOT Analysis is generally done by an organization to identify the Key issues and opportunities faced by an organization. By identifying the strategic capabilities and incapabilitys of a company through their Strengths and Weaknesses within and by Indentifying the organizations strategic opportunities and Threats by industry wide market research an organization can determine its current strategic position and their potential for growth. It is crucial for an organization to know the company strengths and weakness against the market opportunities and threats in order to match the company strengths with the market opportunities for growth and competitive strategies and also to improve

on the company weaknesses in order to make them strengths and to avoid or mitigate the threats faced by an organization.

7. Which of the 5 forces is most important during the different stages of the

Industry Life Cycle (ILC)?

Industry Life Cycle Property Developmen t Initiation Growth Maturity Recession Depression

Buyer Power


Important factor of the 5 forces Competi Threat of Threat of Supplier tor Substitut New Power Rivalry es Entrants L L L L H M M H H H H M H M M L H H M L

Initiation Buyer Power At the initial stage of a ILC when the market is considered a potential profit creating industry the organizations which have strategic capabilities which matches the industry would want to invest in favour of high returns due to the perceived expectations of soaring growth.But with the industry being new organizations will have to attract consumers to buy the product which will be challenging as at an initiation stage since the product is new to the consumer they may be reluctant to purchase the product therefore a high level of conviction through marketing will be needed to pursue the consumer. Hence at the initiation stage the Buying power of Consumers will be high

Growth Threat of New Entrants

At the growth stage of a ILC the competitors will be at their peak and thus this stage would create a situation of high competition. This is the era where fresh new entrants start entering the market as the industry has come out of the risky era and is looking attractive to the outsiders, hence the threat of new entrants will be high. Thus at this stage the existing players will use aggressive marketing approaches to sustain their market share. Maturity Competitor Rivalry At the maturity stage of the ILC Rivalry amongst the Competitors will increase.Industry market leaders initiate on innovation of new products using their unique resources and capabilities in order to create differentiated products to sustain and enhance the customer base and improve its market share. Recession High bargaining power of suppliers - no When the ILC falls in to the stage of recession the bargaining power of suppliers will be high due to market players trying to reduce their cost structure with attempt of further economies of scales through their supplies. Hence the supplier will have the upper hand and further due to the large number of other substitutes. The market players who survive at this era would be the players who have the highest competitive advantage over the product and also who are exceedingly financially stable. Depression Threat of Substitutes At the last stage of an ILC the depression stage the market players are at its weakest stance. This stage would create further ground to their substitutes. This will create a low profile to the current market players leading to become non existent. When major market players come to a conclusion that there is no further potential being at the current industry, at early depression stagethese players will check on the feasibility of going in to other new industries to invest and make a high return.

8. What is Benchmarking? Benchmarking is a tool used by established organizations to compare the company performance financially, process wise, culture wise, systems wise etc. against the best in the related industry and/or in unrelated industries and to improve the company performance to be one the key players in the industry.

Many organizations benchmark their own performance with past year performances which is vital to improve on the future performances but benchmarking against past performance only will not holistically help the company as the company would perceive when the current performances keep on improving against the past that the company is at its best level, which would not be the case. Hence in order to grasp the big and the broad view of the company performances, out side benchmarking is quite essential.

9. Identify the primary and support activities in the value chain?

Value Chain is a tool to identify the value creating activities of an organization. It is important to identify and analyze these activities as optimizing these value creating activities could lead to competitive advantage. The generic primary activities of a value chain in a product manufacturing organization would be Inbound Logistics, Operations, Outbound Logistics, Sales & Marketing and Services.

Inbound Logistics refer to logistic for the receipt, warehousingand inventory control of raw materials, which are used as inputs for the creation of the product. Operationsrefer to processes or activities that would transform the input Raw material in to a Finished good as an output. Outbound Logisticsrefer to the warehousingandtransportation of the finished good to the consumer. Sales & Marketingrefer to activities which would pursue the consumer to buy the finished product such as Advertising, Positioning, Channel distribution and including pricing. Servicesrefer to activities of after sales services and maintenance provided to the consumers after selling the product.

By looking at the primary activities of a product manufacturing company we can see that each of these activities creates a value to the final product hence optimizing on these value generating activities will lead to developing a competitive advantage over its competitors.

In a value chain there are activities which are known asSupporting activities which assist the Primary activities of an organization. These are Procurement, Technology infrastructure. development, Human Resource development and Firm

Procurementrefers to purchasing of raw materials which assists the inbound logistic activity.

Technology developmentrefers to research & development, IT development, process automations etc. which would assist at all stages of the primary activities. Human Resource Managementrefers to the Recruitment and Training & Development of employees required at each stage of the value creating activities. Firm infrastructure refers to Finance, Legal, Quality management aspects in relation to all primary activities.

Therefore it can be concluded that primary activities of an organization cannot create value on its own, the assistance of supporting activities are required in order to create competitive advantage.

10. What do you mean by core competencies? Core competencies in an organization are the value creating expertise and activities which are distinctive compared to its competitors and which would ultimately gain competitive advantage by either product development through differentiation or Cost efficiencies through reduced cost structuresleading to long term growth. Competencies which are standardized and non-exceptional cannot be

considered as Core competencies as these will not create differentiation or any cost efficiencies that would gain the company competitive advantage over the their competitors.

11. Identify the difference between product categories?

Products can be mainly categorized in to 2 areas namely Consumer and Business products. These Product categories could be further categorized and the difference between the consumer and business product categories are as mentioned below.
Consumer Product Categories Conveni ent Price Market Size Purchase Volume Importanc e to Consumer Purchase Frequency Profit margins to Seller L H H H H L Shopp ing M M M M M M Specia lty H L L L L H Emerge ncy M L L L L M Unsoug ht M L L L L L

Raw Mater ial Price Market Size Purchase Volume L H H

Business Product Categories Process ed Basic Advan Materia Equipm Comp ced l ent . Comp. M M M H M L L H H H M L

Produ ct Comp . M L L

Importan ce to Consume r Purchase Frequenc y Profit margins to Seller







12. Explain the term competitive advantage and explain how organizations could sustain their competitive advantage? Competitive Advantage is when an organization is able to make profits exceeding the other industry players. In order to do this an organization should be able to combine its unique resources and core competencies in the most optimizing approach where the product or the service provided to the customer will have asuperior value (Differentiation) or the company should be able to offer at a lower cost due to cost advantages (Cost Leadership)over and above the company competitors.

It is important to sustain competitive advantage In orderto maintain and improve the organizations competitive position in the market in the long run.Thus sustainable competitive advantage should be built upon the company distinctive capabilities which are Effective Leadership, Patents & strong Brands and Team work etc. Due to the dynamic changing nature of the market and economy it is becoming a huge challenge to sustain competitiveness therefore the distinctive capabilities mentioned above combined with the company inherent unique resources will contribute to sustainable competitive advantage.

13. What is the benefit and disadvantages to the organizations adapting Kaizen and Business Process Re-engineering (BPR) as their organizational improvement tools?

BPR is the fundamental rethinking and the radical redesign of business process to achieve dramatic improvements in critical measures of performances such as cost, quality, speed and service. Kaizen is all about continuous improvement. Small continuous changes based on ideas suggested by the workers themselves leading to continuous process improvements plus the performance of the employees as well.
BPR Advantages 1. Radical Changes & Redesign 2. Improvements in Cost, Quality, Speed & Services Disadvantages 1. High investment KAIZEN Advantages Disadvantages 1. Small 1. Where & how incremental to start is changes questionable 2. Improvements in Cost, Quality, Speed & Services 3. People focus, gives the employees a sense of purpose leading to increased motivation. 2. How can the company change the attitude of employees

2. High allocation of resources

3. People & Technology focus 4. Employee satisfaction is greater due to achievement of the job 5. Employee growth in knowledge and team work 6. Employee concentration more on value adding activities

3. Resistance to change by the employees 4. Lack of proper commitment by the management 5. Need to look for self sufficient employees

3. Takes a lot of time 4. High level of management commitment expected

4. Low investment 5. Improved customer satisfaction 6. Active problem solving method.

7. Empowerment to employees leading to increased motivation.

14. Identify the major categories of Resources in an organization and identify the differences between them? Resources of an organization can be mainly divided in to 2 categories namely Threshold & Unique resources.
Resources Threshold 1. Resources required to meet customer minimum requirements 2. Easy for Competitors to imitate. 3. Resources required for supporting activities Unique 1. Resources required to add value to customer sophisticated requirements 2. Difficult for Competitors to imitate. 3. Resources required to underpin Competitive Advantage

15. Using Porters 5 forces model explain whether firms compete with their customers and suppliers? 5 forces model is mainly used as a tool by organizations to understand the strengths and weaknesses of the current competitive position of the company.By doing a detailed analysis on each of the forces the company can clearly identify where the power lies in the industry the company is in and how the company can affect/influence these powers to make it more advantages to them. By doing this an organization would be able to make sustainable profit. An example on how companies compete with the 5 forces. Introduction of a new product to the market.

Bargaining power of Customer At the introduction stage of a product the customer power is high due to the product being new hence the company will have to use aggressive marketing techniques to pursue the customers to try the product.If the industry is established and at a growth stage there would be many stable players in the market who would have captured a significant amount of market share. Therefore the company from the initial stage of a product introduction competes with the customer to sell their product and make sufficient returns.

Bargaining power of Supplier In general most organizations enter established industries which would comprise of many competitive players. Hence at this stage the suppliers have established revenue streams by selling their raw material to the existing players and would not consider much in negotiating prices with the new players. Therefore to get them supplying to your company at a lower price ishard due to bargaining power of suppliers beinghigh hence getting a competitive advantage over the cost structure will be a major challenge.

Competitor Rivalry When a company introduces a new product to an established industry the existing competition would be at its peak. Hence it is crucial that the product introduced be unique in its nature in order to attract the customer and capture the market share.

Threat of Substitutes

In the long run the organization would face many substitutes to the product they introduced and may face with declining market share due to customers going for other alternatives. Customer needs and tastes change frequently depending on the value for the money they get they change their products. Hence an organization should be fast to clench the changing needs and the environment and should meet the requirements before any other competitor in order to get the first advantage.

Threat of New Entrants There is always a risk of new entrants coming in and if they are financially stable and has distinctive resources they are more likely to stay in the market in the long run compared to other entrants. Hence it is vital that the product put to the market is kept in the minds of the consumer continuously in different ways in order to sustain the market share and may be further increase it.

It can be concluded that organizations are at a constant fight with the 5 forces to be sustainable in the market they are in. An organization who is lethargic and not dynamic in nature may find it hard to survive in the industry in the long run as the vigorous changes in the environment may slow the processes of the organization where in a short time period the company will be lagging behind the dynamic organizations leading to being pushed out of the industry.

16. What is Transfer Pricing and explain the issues to be considered before setting it? The transfer priceis the price that one division of a company charges another division of thesame company for a product transferred between the two divisions, in order to calculate each division's profit and loss separately.

There are many methods to calculate the transfer price which has its own separate concerns. Market-based Transfer Pricing When the outside market for the good is well-defined, competitive, and stable, organizations often use the market price as an upper bound for the transferprice. Concerns are mainly, When the outside market is neither competitive nor stable, internal

decision making may be distorted by relying on this method.


Competitors selling at distress prices or if they use special pricing strategies will also lead to ineffective decision making.

Reliance on market prices makes it difficult to protectinfant segments.

Negotiated Transfer Pricing The company does not specify rules for the determination of transfer prices. Divisional managers are encouraged to negotiate a mutually agreeable transfer price. Concerns are mainly, Negotiated transfer pricing is typically combined with free Sourcing, hence the organization may have to intervene and mediate the negotiation process and impose an arbitrated solution which would be fruitful for both divisions.

Cost-based Transfer Pricing In the absence of an established market price many companies base the transfer price on the production cost of the supplying division. The most common methods are: Full Cost Concerns: Full actual cost would have inefficiencies better to use standard costing. Buying division will take all the gains and the selling division will receive none.

Cost-plus: To avoid inefficiencies of full cost the sellers will add a mark-up on the cost to make a profit.

Variable Cost plus Lump Sum charge: In order to motivate the buying division to make proper purchasing

decisions, the transfer price could be set equal to standard/variable cost plus a lump-sum periodical charge covering the supplying divisions related fixed costs.

17. What are the factors those create competitive advantage for a nation? As per Porter's diamond model there are inherent reasons why some nations are more competitive than others on a global scale. The reason is that the national home base of an organization provides organizations with specific factors, which will create competitive advantages in the global market. These factors are,

Factor Conditions These factors are, which can be exploited by companies in a given nation. These factors can be seen as advantageous when a company subsequently builds upon its competencies in creating more advanced factors of competition.Highly skilled workforce, Multi abilities of workforces, Rich amount of raw materials and Workforce shortage are examples of factor conditions. Factors like workforce shortages can also be seen as a factor strengthening competitiveness, because this factor may improve companies focus on automation. Demand Conditions If the

local market for a product is large and more demanding at home than in foreign markets, local firms potentially put more emphasis on improvements than foreign companies. This will potentially increase the global competitiveness of local exporting companies. A more demanding home market can thus be seen as a driver of growth, innovation and quality improvements. Eg: Japanese Electronics market Related and Supporting Industries When local supporting industries and suppliers are competitive, home country companies will potentially get more cost efficient and receive more innovative parts and products. This will potentially lead to greater competitiveness for national firms. Eg: Italian Shoe market. Firm Strategy, Structure, and Rivalry The structure and management systems of organizations in different countries can potentially affect competitiveness. Eg: German organizations are very hierarchical resulted in advantages within industries such as engineering. Danish organizations are more flat and organic leading to advantages within industries such as biochemistry and design. If Rivalry in the domestic market is very fierce, companies may build up capabilities that can act as competitive advantages on a global scale. Home markets with less

rivalry may therefore be counterproductive, and act as a barrier in the generating of global competitive advantages such as innovation and development. Many organizations use the diamond model to analyze which competitive factors may reside in the organizations home country, and which of these factors may be exploited to gain global competitive advantages. Hence organizations going global will have a better view on how they are able to create competitive advantage in order to sustain growth and development globally.