DRIVE

PROGRAM
SEMESTER
SUBJECT NAME
SUBJECT CODE
STUDENT NAME
ROLL NO.

ASSIGNMENT
WINTER 2015
MBA
FOURTH
MB0052
STRATEGIC MANAGEMENT AND
BUSINESS POLICY
CHETAN ANAND
1405003452

Q1. Illustrate the strategic management model (smp) explain the levels in
smp.
Answer:
strategic management model:
the strategic management process consists of four distinct steps or stages:
(a) defining organizational mission, objectives or goals
(b) formulation of strategy/strategic plan
(c) implementation of strategies
(d) strategy evaluation and control
for understanding these four stages, a company has to consider a number of other
factors like organizational competence and resources, the environment, various
strategy alternatives available, strategy selection criteria, etc. All these are internal
parts of smp. The strategic management process may best be illustrated in the form
of a model. We can call this the strategic management model. Relationships among
the major components of the strategic management process are shown in the
model. Companies may or may not follow the strategic management process as
rigidly as shown in the model. Generally, application of smp is more formal and
model driven in large, well-structured organizations with many divisions, products,
markets, different priorities for investment, etc. Smaller businesses or companies
tend to be less formal. In other words, formality in smp refers to the extent to which
participants in smp, their responsibilities, authority and roles/ duties are clearly
specified. Also, in practice, strategists may not always follow the strategic
management model as rigid steps or chains in the management process. Situations
may not always warrant this. It would also depend on a company approach to smp.
Levels in smp:
a strategic business unit is a division or a product/product group unit which operates
as a separate profit centre having its own set of market and competitors and its own
marketing strategies. The company or the corporate organization consists of related
businesses and/or products grouped into different sbus. The sbus are homogeneous
enough to manage and control most factors which affect their performance.
Resources are allocated to sbus in relation to their contributions to the corporate
objectives, growth and profitability. Three levels in the strategic management
process, are: the corporate level, the business unit or sbu level and the functional
level. These three levels of strategy distinctly exist only in multiple sbu firms. For
single-business companies, corporate-level strategy and sbu-level strategy are not
really distinguishable because all the organizational level strategies for resource
allocation or growth or market diversification are formulated with respect to the
particular product or business of the company (only in the case of product

diversification, corporate-level strategy and single business unit-level strategy

may/would be different).
Q2. A business need to be planned not only for today but also for future.
This implies the continuity and the need for sustainability.
Answer:
Planning for business continuity:
businesses need to be planned not only for today, but also for tomorrow, that is, for
the future. This implies business continuity and the need for sustainability.
Sustainability requires understanding and analyzing the environment. Besides
business fluctuations or business cycles, business interruptions occur because of
natural disasters like floods, earthquakes, cyclones, etc. To safeguard against such
threats or disasters, planning for business continuity is essential. Business
continuity planning means proactively working out a means or method of
preventing or mitigating the consequences of a disaster natural or manmade
(sabotage or terrorism) and managing it to limit to the level or degree that a
business unit can afford.
Need or importance of business continuity planning (bcp): as indicated in the
definition, businesses today can be exposed to different types of threats natural or
man-made. Major threats are:
1. natural disasters such as floods or earthquakes or accidents
2. man-made threats like sabotage or terrorism
3. financial crisis or disaster can be partly man-made and partly due to
environmental factors.
Business impact analysis: business impact analysis is the process of identifying
major functions in an organization which have impacts of different degrees on the
business of the organization.
Strategies for business continuity planning: because of the possibility of different
kinds of impacts, and depending on the nature of damage or disaster, appropriate
strategies should be developed and used to deal with particular situations. Five
different strategies should be developed for five different situations/actions. These
are:
1. Prevention
2. Response
3. Resumption
4. Recovery
5. Restoration
Developing a business continuity plan and implementation; plans and strategies
work together. A plan is also essential for implementation of a strategy or
strategies. A separate plan can be made for each of the five strategies, i.e.,
prevention, response, resumption, recovery and restoration or an integrated plan
can be prepared incorporating or dealing with all the strategies.
Implementation:

implementation of business continuity plans are mostly technology driven.

Implementation involves development and testing of it system or solution. The
software and/or hardware elements are built into the systems. This is ensured
through planning or building redundancy, i.e., incorporating back-up service
elements which may be redundant during normal course of business
Q3. Explain the following:
(a) core competence
(b) value chain analysis
Answer:
Core competence:
core competence of a company is one of its special or unique internal competence.
Core competence is not just a single strength or skill or capability of a company; it is
interwoven resources, technology and skill or synergy culminating into a special or
core competence.
Value chain analysis:
various competences and resources of an organization can be integrated into a
chain of activities which an organization performs to meet customer demand. Since
each of these activities is expected to create value when it is performed, the chain
can appropriately be called a value chain. Michael porter (1985) introduced the
concept of value chain analysis. Now, it has become common for professional
companies to do this analysis.
Inbound logistics
operations
outbound logistics
marketing and sales
service
Q4. Write a brief note on Turnaround strategy. Brief note on Turnaround
strategy.
Answer:
Turnaround strategy is a corporate practice designed and planned to protect (save)
a loss-making company and transform it into a profit-making one.
In financial, commercial, corporate or from a business perspective, the turnaround
strategy can be defined as follows.
Turnaround Strategy is a corporate action that is taken (performed) to deal with
issues of a loss-making (sick) company like increasing losses, lower return
on capital employed, and continuous decrease in the value of its shares.
Finally, from an academic point of view, its definition can be stated as under.
Turnaround strategy is an analytical approach to solve the root cause failure of a
loss-making company to decide the most crucial reasons behind its failure. Here, a

long-term strategic plan and restructuring plans are designed and implemented to
solve the issues of a sick company.
Consider following examples of turnaround strategy:
Financial Institution, for example, some bank A is suffering from losses due to nonperforming assets (NPA). NPA is loan given but not yet recovered. This bank A will
follow turnaround strategy and try to recover its loans by appointing recovery
agents.
Manufacturing company say XYZ is suffering from losses due to excess idle time
taken by labour to complete their jobs. The manufacturing company XYZ will follow
turnaround strategy to reduce labour inactivity by installing modern machines
(automation) to carry on the same work or job.
Educational institution, for example, C is suffering from losses due to nonregistration of students in their courses. This institution C will follow turnaround
strategy to reduce losses by providing facilities like e-Registration, conducting
online classes, etc. to attract student.
Q5. What is Stability Strategy? Explain the BCG (Boston Consulting Group)
Portfolio Model.
Stability Strategy
BCG Portfolio Model
Answer:
Stability Strategy:
The basic approach of the stability strategy is to maintain the present status of the
organization. In
aneffective stability strategy, the organization tries to maintain consistency by conc
entrating on their present resources and rapidly develops a meaningful
competitiveness with the market requirements. Further classifications of stability
strategy are as follows:
No change strategy
No change strategy is the process of continuing the current operation and creating
nothing new. Usually small business organizations follow no change strategy with
an intention to maintain the same level of operations for a long period.
Pause/Proceed with caution strategy
Pause/Proceed with caution strategy provides an opportunity to halt the growth
strategy. It analyses the advantages and disadvantages before processing the
growth strategy. Hence it is termed as pause/proceed with caution strategy.
Profit strategy
Profit strategy is the process of reducing the amount of investments and short
term discretionary expenditures in the organization.
BCG Portfolio Model:
Strategic Advantage Profile (SAP) shows the strength and weakness of an
organisation. Preparation of SAP is very similar to ETOP analysis. The five functional
areas in most organisations are production or operation, finance or accounting,
marketing or distribution, human resource and corporate planning, and research
and development. These functional areas are listed to identify their
relative strengths and weaknesses in SAP. Very similar to the ETOP analysis,
positive, neutral, and negative signs are denoted and brief description is written in

SAP profile. Each functional area is very broad and has many constituents.
BCG Matrix
The BCG matrix is a portfolio management tool used in product life cycle. BCG
matrix is often used to highlight the products which get more funding and attention
within the company. During a products life cycle, it is categorised into one of four
types for the purpose of funding decisions. Figure 1 below depicts the BCG matrix.

Figure 1, BCG Growth Share Matrix

Question Marks (high growth, low market share) are new products with potential
success, but they need a lot of cash for development. If such a product gains
enough market shares to become a market leader, which is categorised under Stars,
the organisation takes money from more mature products and spends it on Question
Marks.
Stars (high growth, high market share) are products at the peak of their product life
cycle and they are in a growing market. When their market rate grows, they become
Cash Cows.
Cash Cows (low growth, high market share) are typically products that bring in far
more money than is needed to maintain their market share. In this declining stage
of their life cycle, these products are milked for cash that can be invested in new
Question Marks.
Dogs (low growth, low market share) are products that have low market share and
do not have the potential to bring in much cash. According to BCG matrix, Dogs
have to be sold off or be managed carefully for the small amount of cash they
guarantee.
The key to success is assumed to be the market share. Firms with the highest
market share tend to have a cost leadership position based on economies of scale
among other things. If a company is able to apply the experience curve to its
advantage, it should able to produce and sell new products at low price, enough to
garner early market share leadership.
Q6. Define the term Strategic alliance. Enumerate its characteristics and
objectives.
Answer:

Strategic alliances constitute a viable alternative in addition to Strategic

Alternatives. Companies can develop alliances with the members of the strategic
group and perform more effectively. These alliances may take any of the following
forms. Following are the different types of strategic Alliances:
1. Product and/or service alliance:
Two or more companies may get together to synergies their operations, seeking
alliance for their products and/or services.
Amanufacturing Company may grant license to another company to produce itsprod
ucts. The necessary market and product support, including technical know-how,
is provided as part of the alliance. Example
:- Coca-cola initially provided such support to
ThumsUp.Two companies may jointly market their products which are complementa
ry innature. Example:1) Chocolate companies more often tie up with toy companies.
2) TV Channels tie-up with Cricket boards to telecast entire series of cricket matches
live. Two companies, who come together in such an alliance, may produce a new
product altogether. Example:Sony Music created a retail corner for itself in the ice-cream parlors of BaskinRobbins.
2. Promotional alliance:
Two or more companies may come together to promote their products and services.
A company may agree to carry out a promotion
campaignduring a given period for the products and/or services of another company
. Example:The Cricket Board may permit Cokes products to be displayed during the cricket
matches for a period of one year.
3. Logistic alliance:
Here the focus is on developing or extending logistics Support. One
Company extends logistics support for another companys products andservices.
Example:- The outlets of Pizza Hut, Kolkata entered into a logistic alliance with TDK
Logistics Ltd., Hyderabad, to outsource the requirements of these outlets from more
than 30 vendors all over India for instance, meat and eggs from Hyderabad etc.
4. Pricing collaborations:
Companies may join together for special pricingcollaborations. Example:It is customary to find that hardware and softwarecompanies in information technol
ogy sector offer each other price discounts.Companies should be very careful in sele
cting strategic partners. The strategyshould be to select such a partner who has
complementary strengths and who can offset the present weaknesses