STRATEGIC MANAGEMENT MAY/JUNE (2010)PART - A1.Statergic Management. Strategic management is a level of managerial activity below setting goals and abovetactics. Strategic management provides overall direction to the enterprise and is closely related to the field ofOrganization Studies. In the field of business administration it is useful to talk about "strategic consistency" between the organization and its environment or "strategic consistency."2. Corporate Governance. Corporate governance refers to the rules procedures of law by which the business is operated regulated and control. It refers to the relationship among three groups in delivering direction and performance of a company.i. Setting corporate strategy.ii. Mission and vision.iii. Approving, previewing the policies budgets.iv. Monitor role.

3. Core competency. A uniqueabilitythat acompanyacquires from itsfoundersordevelopsand that cannot be easily imitated. Core competencies are what give a company one or morecompetitive advantages, in creating and deliveringvalueto itscustomersin its chosenfield. Alsocalledcore capabilitiesordistinctive competencies. See alsocore rigidities.4. Micro-Environment.Factors or elements in an organization's immediate area of operations that affect its performance anddecision makingfreedom. These factors include competitors,customers,distribution channels, suppliers, and the general public.

5. Balance score card. Balanced scorecard combines financial measures that tell the results of actions already taken with operational measures on customer satisfaction, internal processes and the corporations innovation and improvement activities the drivers of futures financial performance.

6. Conglomerate diversification. Conglomerate diversification (or lateral diversification)The company markets new products or services that have no technological or commercial synergies with current products but that may appeal to new groups of customers. The conglomerate diversification has very little relationship with the firm's current business. Therefore, the main reasons for adopting such a strategy are first to improve the profitability and the flexibility of the company, and second to get a better reception in capital markets as the company gets bigger. Though this strategy is very risky, it could also, if successful, provide increased growth and profitability.

7. Politics. Politics is the practices and theory of influencing other people on a civic or individual level. More narrowly, it refers to achieving and exercising positions of governance organized control over a human community, particularly a state. A variety of methods is employed in politics, which include promoting its own political views among people.8. Cross culture management. Cross cultural management refers to a system designed to train people in the global business about the variations of cultures, practices and preferences of consumers around the globe. As time lapses, the diversity in culture, practices and preferences significantly increase, and so is the need for cross-cultural management, to be able to bridge the communication gaps for every culture.9. Intrapreneurship. It is defined by Guth and Ginsburg as the birth of new businesses within existing organizations, that is , internal innovation or venturing; and the transformation of organizaitons through renewal of the key ideas on which they are built, that is strategic renewal.

10. Not for-Profit organization. Non-Profit Organizations are such as government agencies, universities and charities are not in business to make profits.

PART-B11. (a) Explain the steps involved in formal Strategic Planning Process.

MISSION AndGOALS

International Analysis STRENGTHS & WEAKNESSSWOT AnalysisExternal Analysis OPPORTUNITIES & THREATS

International Analysis STRENGTHS & WEAKNESSDesigning Control SystemsDesigning Organization StructureMatching Strategy Structure And ControlCorporate LevelGlobal Level Business Level StrategyFunctional Level

11. (b) Elaborate the concept of corporate governance and social responsibility with reference to Indian Scenario. Corporate governance is the mechanism established to allow different parties to contribute capital, expertise and labor for their mutual benefit. The investor/shareholder participates in the profits of the enterprise without taking responsibility for the operations. That involvement does include, however, the right to elect directors who have a legal duty to represent the shareholders and protect their interests. As representatives of the shareholders, directors have both the authority and the responsibility to establish basic corporate policies and to ensure that they are followed. The term corporate governance refers to the relationship among these three groups in determining the direction and performance of the corporation.Responsibilities of the board:1. Setting corporate strategy overall direction,mission, or vision2. Hiring and firing the CEO and top management3. Controlling, monitoring, or supervising top management4. Reviewing and approving the use of resources5. Caring for shareholder interestsReference to Indian Scenario:In India, Section 291 of the Indian Companies Act, 1956 enlists the general powers of the Board, as follows:1. Subject to the provisions of this act, the board of directors of a company shall be entitled to exercise all such powers, and to do all such acts and things, as the company is authorized to exercise and do: Provided that the Board shall be entitled to exercise all such powers, and to do all such acts and things, as the company is authorized or done by the company in general meeting: Provided further that in exercising any such power doing any such act or thing, the board shall be subject to the provisions contained in that behalf in this or any other Act, or in the memorandum or articles of the company, or in any regulations not inconsistent therewith and duly made thereunder, including regulations made by the company in general meeting.2. No regulation made by the company in general meeting shall invalidate any prior act of the Board which would have been valid if that regulation had not been made.

Role of the Board Strategic ManagementHow does a board of directors fulfill these many responsibilities? The role of the board of directors Monitor Evaluate and influence Intiate and determineBoard of Directors Continuum Aboard of directors is involved in strategic management to te extent that it carries out the three tasks of monitoring, evaluating and influencing, and initiating and determining.

12.(a) Describe the forces for driving industry competitions as per Michael E.Porter model.

Potential EntrantsThreat of new Entrants

Industry CompetitorsRivalry Among Existing FirmsRelative Power of

BuyersRivalry Among Existing FirmsOther Stake holdersRivalry Among Existing Firms Union govt.etcBargaining Power Of Buyers.

SuppliersRivalry Among Existing Firms

Bargaining power of suppliers.Threat of substitute Products or services

SuppliersRivalry Among Existing Firms12.(b) Discuss the meaning and types of competitive strategies and Tactics. Competitive Strategies and tactics are used to gain competitive advantage within an industry by battling against other firms. These are not, however, the only business strategy options available to a company or business unit for competing successfully within an industry. Cooperative strategies can also be used to gain competitive advantage within an industry by working with other firms.Business strategies are usually rooted either directly or indirectly in Porters generic competitive strategy framework. Porter's framework is taught in many university business and economics courses as a primary method of categorizing overall competitive strategy. Porter's generic competitive strategies build on the themes of competitive advantage and competitive scope to achieve one of four primary competitive models.Lower-Cost, Broad-Target StrategyThe lower-cost, broad-target strategy is the business strategy most commonly associated with large retail chains such as grocery stores and department retailers. Businesses adopting this strategy strive to set their place in the market as the lowest-cost producer or distributor of a given product or class of products. The broad-target aspect of the strategy means the business offers a wide range of products, attempting to tap into the largest possible customer base. These businesses obtain preferential access to products in the form of discounted bulk purchasing. The downside to this strategy is that when two companies are using this model, a price war ensues, diminishing profits for both lower-cost, broad-target businesses.Lower-Cost, Narrow-Target StrategyThe lower-cost, narrow-target strategy is typically found in genre-specific retailers. These retailers use the same bulk-purchasing and cost-reduction technique as larger generalist stores, but focus their inventory selection and marketing efforts on a more specialized market segment. A store focusing exclusively on audio and video equipment would be an example of a lower-cost, narrow-target strategy endeavor. The chief advantage of this strategy is it makes the business a premier destination for obtaining goods of that particular category, but at the cost of excluding all other types of business.Broad-Target, Differentiation StrategyA broad-target, differentiation strategy focuses on building brand power and prestige for the company and its broadly appealing product lines. An example of a business using a broad-target differentiation strategy could be a designer electronics store specializing in a single brand name. The marketing focus and differentiation aspect of the company is placed on the uniquely valued attributes on which the retailer places special emphasis when compared with the broader competition. Some businesses using a broad-target differentiation strategy focus on the aesthetic qualities of their product, while others focus on performance and engineering.Narrow-Target, Differentiation StrategyA narrow-target, differentiation strategy also focuses on building brand prestige, but taps a more select niche of the overall market. An example of a narrow-target, differentiation strategy-based business would be a premium handcrafted furniture showroom or a premium-quality jewelery store. This business model focuses on building a small base of elite clientele to whom they offer the best available products in their given specialization. The chief advantage to a narrow-strategy business is that it can command the highest prices, and therefore often the highest markup in its niche. The downside is a smaller, more defined customer base. A major economic shift in a region, such as a recession or natural disaster, can cause great difficulty for narrow-target, differentiation strategy-based businesses, as such hardships might neutralize demand for their premium goods.13.(a) Explain the concept of BCG Matrix and GE Business.BCG MatrixSTARSQUESTION MARKS

CASHCOWS DOGS

HIGH 20% 15%INDUSTRIAL 10% GROWTH 5%RATE LOW 0% HIGH LOW

MARKET SHAREGE Nine-Cell MatrixGENERAL ELECTRIC (GE) NINE CELL MATRIXINVESTSELECTIVE GROWTHGROW OR LET GO

SELECTIVE GROWTHGROW OR LET GO

GROW OR LET GO

HIGH

INDUSTRYMEDIUMATTRACTIVENESS LOW STRONG AVERAGE WEAK ZONE STRATEGIC SINGAL

GROW OR LET GO Invest / Expand Select/ Growth Harvest/ Diverst13.(b) Describe the detailed features of Corporate directional strategies with example. Directional strategy is the firms overall orientation toward growth, stability, or retrenchment.1. Should we expand, cutback, or continure oru operations unchanged?2. Should we concentrate our activities within our current industry or should we diversify into other industries?3. If we want to grow and expand nationally and /or globally, should we do so through internal development or through acquisitions, merges or strategic alliances?

Features of Corporate directional strategies:A corporations directional strategy is composed of three general orientations (sometimes called grand strategies): Growth strategies expand the companys activities. Stability strategies make no change to the companys current activities. Retrenchment strategies reduce the companys level of activities.

Growth strategies:Expand the companys activities.Concentration: Vertical Integration Backward & Forward Integration.Horizontal Integration.Diversification:Concentric Diversification.Conglomerate Diversification.International Entry Options:Exporting.Licensing.Franchising.Joint Ventures.Acquisitions.Green-Field Development.Production Sharing. Stability strategies:Make no change to the companys current activities.Pause/Proceed with Caution StrategyNo Change StrategyProfit Strategy

Retrenchment strategies:Reduce the companys level of activities.

Turnaround Strategy.Captive company Strategy.Sellout / divestment Strategy.Bankruptcy / Liquidation Strategy.

14.(a) Enumerate the different stages of organizational life cycle and highlight the suitable strategies in each stage.

Stage IStage IIStage IIIStage IVStage V

Dominant IssueBirthGrowthMaturityDeclineDeath

Popular StrategiesConcentration in NicheHorizontal and vertical IntegrationConcentric and Conglometrate diversificationProfit Strategy followed by RetrenchmentLiquidation or bankruptcy

Likely StructureEntrepreneur dominatedFunctional management emphasizedDecentralization into profit or investment centresStructural surgeryDismemberment of structure

LIFE CYCLE OF AN ORGANISATION

14.(b) Explain the steps involved in managing corporate culture. Corporate culture is the collection of beliefs expectation and values learned and shared by corporations members and transmitted from one generation of employees to another. The corporate culture generally reflects the values of the founder and the mission of the firm. It gives a company a sense of identity.

In the planned strategy compatible with the current culture?

Yes NoThe Changes into the Culture.

Can the culture be modified to make it more compatible with the new strategy? Yes

The Changes into the Culture. No

Is management willing and able to make major organizational changes and accept probable delays and a likely increase in costs?

No

Is management still committed to implementing the strategy?Manage around the culture by establishing a new structural unit to implement the strategy. Yes

Formulate a different strategyFind a joint-venture partner or contract with another company to carry out the strategy. Yes No

15.(a) Discuss the sub stages in small business development.The implementation problems of a small business change as the company grows and develops over time. Just as the decision-making process for entrepreneurial ventures is different from that of established businesses, the managerial systems in small companies often vary from those of large corporations. Those variations are based on their stage of development. The stages corporate growth and development in that all small businesses are either in stage I or trying to move into stage II. These models imply that all successful new ventures eventually become stage II, functionally organized companies. This is not always true, however. In attempting to show clearly how small businesses develop, Chruchill and Levwis propose five substages of small business. STAGE A: ExistenceAt this point, the entrepreneurial venture faces the problems of obtaining customers and delivering the promised product or service. The organizational structure is simple. The entrepreneur does everything and directly supervises subordinates. Systems are minimal. The owner is the business.STAGE B: SurvivalThose ventures able to satisfy a sufficient number of customers enter this stage; the rest close when their owners run out of start-up capital. Those reaching the survival stage are concerned about generating the cash flow needed to repair and replace capital assets as they wear out and to finance the growth to continue satisfying the market segment they have found.STAGE C: SuccessBy this point, the companys ales have reached a level where the firm is not only profitable, but also has sufficient cash flow to reinvest in itself. The key issue at this stage is whether the company should be used as a platform for growth or as a means of support for the owners as they completely or partially disengage from the company. The company is transforming into a functionally structured organization, but it still relies on the entrepreneur for all key decisions. The two options are disengagement and growth.C1: DisengagementThe company can now successfully follow a stability strategy and remain at this stage almost indefinitely provided that environment change does not destroy its niche or poor management reduce its competitive abilities. By now functional managers have taken over some of the entrepreneurs duties. The company at this stage may be incorporated, but it is still primarily owned by the founder or founders family. Consequently the board of directors is either a rubber stamp for the entrepreneur or a forum for family squabbles.C2: GrowthThe entrepreneur risks all available cash and the established borrowing power of the company in financing further growth. Strategic as well as operational planning is extensive and deeply involves the owner. Manger with an eye to the companys future rather than for its current situation are hired.STAGE D: Take-OffThe key problems in this stage are how to grow rapidly and how to finance that growth. By now the firm is incorporated and has sold or is planning to sell stock in its company via an initial public offering (IPO) or via a direct public offering (DPO). The entrepreneur must learn to delegate to specialized professional managers or to a team of managers who now from the top management of the company. A functional structure of the organization should now be solidly in place. Operational and strategic planning greatly involve the hired managers, but the company is still dominated by the entrepreneurs presence and stock control..15.(b) Explain how can a company develop a corporate Entrepreneurship culture.Organizational Designs for corporate entrepreneurship.ORGANISATIONAL DESIGN FOR CORPORATE ENTERPRENEURSHIP STRATEGIC IMPORTANCEVery ImportantUncertainNot Important

Unrelated3Special Business Units6Independent Business Units9Complete Spin-Off

Partly Related2New Product Business Department5New Venture Division8

Contracting

Strongly Related1Direct Integration2 Macro New Ventures Department7NurturingAndContracting

OPERATIONAL RELATEDNESS