Q1 Strategy Why Strategic decisions are important

• DEFINITION

It consists of the analysis, decisions, and actions an organization

undertakes in order to create and sustain competitive advantages.
why strategic decision making is important for any organization.

Strategic decisions are basically long term decisions, which affect the way the
company moves forward. So for example, a business makes a strategic decision
to become the top productmanufactures; in such a case the company is likely to
concentrate on making consumer focused products. On the other hand, if the
company decides to become the top supplier to OEM’s, then it will have its focus
on mass manufacturing and supplying the maximum products to the OEM.

To summarise, strategic decision making involves the following 3 things

1. The long term way forward for the company

2. Selection of proper markets for the company
3. The products and tactics needed to succeed in the targeted market.

Overall, a firm can move forward only if it has taken the necessary strategic
decisions. Furthermore, whether the decisions were right or wrong, can only be
proved only over a long period of time. If these decisions were right, and had
great insight in the future, then the company can be very successful. However, if
these strategic decisions did not consider empirical evidence of the current
market conditions, then the firm can fail badly.

These are important features of strategic decision making.

1) Strategy is at many times at tangent with marketing

decisions
Where marketing decisions are short term, strategic decision making might
consider a long term initiative, such as launching a very new and innovative
product, or changing the existing product lines
radically. Technology or innovation is at the crux of strategic decision making.
The reason that marketing decisions and strategy decisions are difference is
because marketing is focused on retaining the existing customer base with the
existing technologies. But the customer base is sure to get tired soon of the
existing products and the innovators and adopters will keep searching for new
products in the market. And hence, through strategic decisions, the firm has to
stay in a place of continuous development.

2) There is immense risk involved while taking

strategic decisions
Naturally, when you are implementing plans which will show positive or negative
results only after 4-5 years, the risk in strategic decision making is huge. Think
about the time and energy, not to say natural resources wasted to implement a
plan which failed after 4-5 years.

Yet, even after the risk involved, companies have to implement risky strategic
decisions from time to time just because the directors thought a unique product
had demand in the market, or that another product is required in the market.
Strategic decisions involve necessary risk and success is not guaranteed.

3) Strategic decisions involve a lot of Ifs and Buts

Think of a mind map and the number of branches and nodes that can form the
complete mind map. When a brain starts thinking, the central thought might have
further branches, and these branches will have even more nodes (or sub
branches if you want to call them)

Similar to the mind map, a business can face many problems in the course of its
run. A competitor can crop up, the market can become penetrative, the
external environment can change, and many other unforeseen situations can
happen. The strategic decision making has to consider all these alternatives,
whether positive or negative. And the plan has to also include the action that the
firm will take, if any of the above business problems or factors come into play.

4) Strategy implementation timelines

Whenever we make a schedule in our personal lives, we always start things

when we have enough time in our hand. For example – you will plan a holiday,
when office work is not hectic. You will not plan it when there is a product launch
nearby. Similarly, when in business, timelines are very important.
If a product is to be launched, the launch date is decided at least a year back, the
sales phase has to be implemented at least 2 months before the actual launch so
that you have sellers in place when the product is launch. Moreover, the service
network is also to be planned before the launch, so that service issues are sorted
out when there are problems after the product launch. If these concepts are not
implemented, the marketing strategy and hence the product can fail miserably.

5) Preparing for the competition’s response

Whenever you change the market equilibrium, the competitors, whose

businesses you have directly challenged, are sure to respond. When they
respond, the market changes and you have to change your strategy accordingly.

In general there are 2 ways that a company directly affects the competition and
the market.

a) The company creates a completely new operating norm in the market itself.

b) It raises customer expectations and thereby changes the market equilibrium.

Most strategic decisions will call for radical changes in the way the company
operates in the existing market. Accordingly, the perception of competitors and
customers will change for the company. The company has to in turn be prepared
for the response of competitors in such a case.
Q2 Roles and task for strategy manager ?
Strategic Management - An Introduction

Strategic Management is all about identification and description of the strategies that
managers can carry so as to achieve better performance and a competitive advantage
for their organization. An organization is said to have competitive advantage if its
profitability is higher than the average profitability for all companies in its industry.

Strategic management can also be defined as a bundle of decisions and acts which a
manager undertakes and which decides the result of the firm’s performance. The
manager must have a thorough knowledge and analysis of the general and competitive
organizational environment so as to take right decisions. They should conduct a SWOT
Analysis (Strengths, Weaknesses, Opportunities, and Threats), i.e., they should make
best possible utilization of strengths, minimize the organizational weaknesses, make
use of arising opportunities from the business environment and shouldn’t ignore the
threats.

Strategic management is nothing but planning for both predictable as well as unfeasible
contingencies. It is applicable to both small as well as large organizations as even the
smallest organization face competition and, by formulating and implementing
appropriate strategies, they can attain sustainable competitive advantage.

It is a way in which strategists set the objectives and proceed about attaining them. It
deals with making and implementing decisions about future direction of an organization.
It helps us to identify the direction in which an organization is moving.

Strategic management is a continuous process that evaluates and controls the business
and the industries in which an organization is involved; evaluates its competitors and
sets goals and strategies to meet all existing and potential competitors; and then
reevaluates strategies on a regular basis to determine how it has been implemented
and whether it was successful or does it needs replacement.

Strategic Management gives a broader perspective to the employees of an

organization and they can better understand how their job fits into the entire
organizational plan and how it is co-related to other organizational members. It is
nothing but the art of managing employees in a manner which maximizes the ability of
achieving business objectives. The employees become more trustworthy, more
committed and more satisfied as they can co-relate themselves very well with each
organizational task. They can understand the reaction of environmental changes on the
organization and the probable response of the organization with the help of strategic
management. Thus the employees can judge the impact of such changes on their own
job and can effectively face the changes. The managers and employees must do
appropriate things in appropriate manner. They need to be both effective as well as
efficient.
THE FIVE TASKS OF STRATEGIC
MANAGEMENT
The strategy-making, strategy-implementing process consists of five inter-
related managerial tasks:

1. Deciding what business the company will be in and forming a strategic vision
of where the organization needs to be headed - in effect, setting the
organization with a sense of purpose, providing long-term direction, and
establishing a clear mission to be achieved.
2. Converting the strategic vision and mission into measurable objectives and
performance targets.
3. Crafting a strategy to achieve the desired results.
4. Implementing and executing the chosen strategy efficiently and effectively.
5. Evaluating performance, reviewing new developments, and initiating corrective
adjustments in long-term direction, objectives, strategy, or implementation in
the light of actual experience, changing conditions, new ideas, and new
opportunities.

1. Developing a Strategic Vision and Business Mission

The foremost direction-the very first question that senior managers need to ask
is "What is our vision for the company—what are we trying to do and to become?
" Developing a carefully reasoned answer to this question pushes managers to
consider what the company's business character is and should be and to develop a
clear picture of where the company needs to be headed over the next 5 to 10
years. Management's answer to "who we are, what we do, and where we're headed"
shapes a course for the organization to take and helps establish a strong
organizational identity. What a company seeks to do and to become is commonly
termed the company's mission. A mission statement defines a company's
business and provides a clear view of what the company is trying to
accomplish for its customers. But managers also have to think strategically
about where they are trying to take the company.
2. Setting Objectives

The purpose of setting objectives is to convert managerial statements of business

mission and company direction into specific performance targets, something the
organization's progress can be measured by. Objective-setting implies challenge,
establishing performance targets that require stretch and disciplined effort. The
challenge of trying to close the gap between actual and desired performance
pushes an organization to be more inventive, to exhibit some urgency in
improving both its financial performance and its business position, and to be
more intentional and focused on its actions. Setting objectives that are
challenging but achievable can help guard against self-satisfied, non-directed and
internal confusion over what to accomplish. As Mitchell Leibovitz, CEO of Pep
Boys—Manny, Moe, and Jack, puts it, "If you want to have ho-hum results, have
ho-hum objectives."
3. Crafting a Strategy

Strategy-making brings into play the critical managerial issue of how to achieve
the targeted results in light of the organization's situation and prospects.
Objectives are the "ends," and strategy is the "means" of achieving them. In effect,
strategy is the pattern of actions managers employ to achieve strategic and
financial performance targets. The task of crafting a strategy starts with solid
analyses of the company's internal and external situation. Only when armed
with hard analysis of the big picture are managers prepared to make a sound
strategy to achieve targeted strategic and financial results. Why?- Because
misanalysis of the situation greatly raises the risk of pursuing ill-awarded
strategic actions.
4. Strategy Implementation and Execution

The strategy-implementing function consists of seeing what it will take to make

the strategy work and to reach the targeted performance on schedule — the skill
here is being good at figuring out what must be done to put the strategy on
schedule, execute it excellently, and produce good results. The job of
implementing strategy is mainly a practice, close to-the-scene administrative
task that includes the following principal aspects:
1. Building an organization capable of carrying out the strategy
successfully.
2. Developing budgets that steer resources into those internal activities
critical to strategic success.
3. Establishing strategy-supportive policies.
4. Motivating people in ways that stimulate them to pursue the target
objectives energetically and, if need be, modifying their duties and job
behavior to better fit the requirements of successful strategy execution.
5. Tying the reward structure to the achievement of targeted results.
6. Creating a company culture and work climate useful for successful
strategy implementation.
7. Installing internal support systems that enable company personnel to
carry out their strategic roles effectively day in and day out.
8. Performing best practices and programs for continuous improvement.
9. Applying the internal leadership needed to drive implementation
forward and to keep improving on how the strategy is being executed
5. Evaluating Performance, Reviewing New Developments,
and Initiating Corrective Adjustments
None of the previous four tasks are one-time exercises. New circumstances call
for corrective adjustments. Long-term direction may need to be altered, the
business redefined, and management's vision of the organization's future course
narrowed or broadened. Performance targets may need raising or lowering in
light of past experience and future prospects. Strategy may need to be modified
because of shifts in long-term direction, because new objectives have been set,
or because of changing conditions in the environment

Q3 Importance of strategy formulation implementation and evaluation ?

strategy formulation
The formulation of a sound strategy facilitates a number of actions and desired results
that would be difficult otherwise. A strategic plan, when communicated to all members
of an organization, provides employees with a clear vision of what the purposes and
objectives of the firm are. The formulation of strategy forces organizations to examine
the prospect of change in the foreseeable future and to prepare for change rather than
to wait passively until market forces compel it. Strategic formulation allows the firm to
plan its capital budgeting. Companies have limited funds to invest and must allocate
capital funds where they will be most effective and derive the highest returns on their
investments.
On the other hand, a firm without a clear strategic plan gives its decision makers no
direction other than the maintenance of the status quo. The firm becomes purely
reactive to external pressures and less effective at dealing with change. In highly
competitive markets, a firm without a coherent strategy is likely to be outmaneuvered by
its rivals and face declining market share or even declining sales.
The formulation of sound strategy may be seen as having six important steps:

1. The company or organization must first choose the business or businesses in

which it wishes to engage—in other words, the corporate strategy.
2. The company should then articulate a "mission statement" consistent with its
business definition.
3. The company must develop strategic objectives or goals and set performance
objectives (e.g., at least 15 percent sales growth each year).
4. Based on its overall objectives and an analysis of both internal and external
factors, the company must create a specific business or competitive strategy that
will fulfill its corporate goals (e.g., pursuing a market niche strategy, being a low-
cost, high-volume producer).
5. The company then implements the business strategy by taking specific steps
(e.g., lowering prices, forging partnerships, entering new distribution channels).
6. Finally, the company needs to review its strategy's effectiveness, measure its
own performance, and possibly change its strategy by repeating some or all of
the above steps.
Strategic implementation is a fundamental step in turning a company’s vision of a
project into reality. Through a series of action-based phases and tasks, the implementation
process maps out the life cycle of a project.

Function
Without strategic implementation, a project would not be able to get off the ground,
since strategic implementation functions as a project’s blueprint. The implementation
process identifies what tasks need to be completed, and when. Strategic
implementation is action-based and uses a variety of tools to keep the project team on
track.

Work Breakdown Structure

A work breakdown structure is an asset to any project team because it illustrates the
order of operations for project implementation. Work breakdown structures identify all
the steps that need to be taken to get from one implementation phase to the next.
According to Net MBA, work breakdown structures are designed in a hierarchal
structure, and break a project down into smaller, and more manageable, components.

Implementation Schedule
Another valuable application that strategic implementation is responsible for is
developing an implementation schedule. Implementation schedules are similar to time
lines in that they dictate start and end dates for when project tasks and phases should
be completed. According to the U.S. Army Corps of Engineers, project implementation
schedules are often broken down into charts that map out the duration of how long a
task should be performed before it’s on to the next phase.

Cost Allocation
Strategic implementation is important because it evaluates project costs and determines
cost allocation to fund the project from start to finish. By planning ahead, and
conducting financial studies and projections, the strategic implementation process can
save projects money in the end, because unforeseen costs can be reduced or
eliminated.

Evaluation Methodology
The strategic implementation process will determine the evaluation methodology for a
project. Evaluations are done to study how close a project is to being completed, and if
the project team has met important milestones. Evaluations consist of measuring a
project’s progress, and comparing that against what the targeted goal is. This will tell
the project team whether or not they are on track with the projected time frames and
projected funding.

Strategy Evaluation is as significant as strategy formulation because it throws

light on the efficiency and effectiveness of the comprehensive plans in achieving the
desired results. The managers can also assess the appropriateness of the current
strategy in todays dynamic world with socio-economic, political and technological
innovations. Strategic Evaluation is the final phase of strategic management.

The significance of strategy evaluation lies in its capacity to co-ordinate the task
performed by managers, groups, departments etc, through control of
performance. Strategic Evaluation is significant because of various factors such as -
developing inputs for new strategic planning, the urge for feedback, appraisal and
reward, development of the strategic management process, judging the validity of
strategic choice etc.

The process of Strategy Evaluation consists of following steps-

1. Fixing benchmark of performance - While fixing the benchmark, strategists
encounter questions such as - what benchmarks to set, how to set them and how
to express them. In order to determine the benchmark performance to be set, it is
essential to discover the special requirements for performing the main task. The
performance indicator that best identify and express the special requirements
might then be determined to be used for evaluation. The organization can use
both quantitative and qualitative criteria for comprehensive assessment of
performance. Quantitative criteria includes determination of net profit, ROI,
earning per share, cost of production, rate of employee turnover etc. Among the
Qualitative factors are subjective evaluation of factors such as - skills and
competencies, risk taking potential, flexibility etc.
2. Measurement of performance - The standard performance is a bench mark
with which the actual performance is to be compared. The reporting and
communication system help in measuring the performance. If appropriate means
are available for measuring the performance and if the standards are set in the
right manner, strategy evaluation becomes easier. But various factors such as
managers contribution are difficult to measure. Similarly divisional performance is
sometimes difficult to measure as compared to individual performance. Thus,
variable objectives must be created against which measurement of performance
can be done. The measurement must be done at right time else evaluation will
not meet its purpose. For measuring the performance, financial statements like -
balance sheet, profit and loss account must be prepared on an annual basis.
3. Analyzing Variance - While measuring the actual performance and comparing it
with standard performance there may be variances which must be analyzed. The
strategists must mention the degree of tolerance limits between which the
variance between actual and standard performance may be accepted. The
positive deviation indicates a better performance but it is quite unusual exceeding
the target always. The negative deviation is an issue of concern because it
 indicates a shortfall in performance. Thus in this case the strategists must
discover the causes of deviation and must take corrective action to overcome it.
4. Taking Corrective Action - Once the deviation in performance is identified, it is
essential to plan for a corrective action. If the performance is consistently less
than the desired performance, the strategists must carry a detailed analysis of
the factors responsible for such performance. If the strategists discover that the
organizational potential does not match with the performance requirements, then
the standards must be lowered. Another rare and drastic corrective action is
reformulating the strategy which requires going back to the process of strategic
management, reframing of plans according to new resource allocation trend and
consequent means going to the beginning point of strategic management
process.

Q4 strategic evaluation its framework and its characteristics

Characteristics of Effective Strategy Evaluation

System
Strategy evaluation can also be a sensitive process because of the human factor involved. Too
much or too rigorous evaluation and control may be expensive and, sometimes
counterproductive also—authority and flexibility may be challenged, minimized or even
eliminated.
Too little or no evaluation may create the opposite effect—lack of responsibility and
accountability. In some companies, strategy evaluation simply means performance appraisal
of the organization. This is also not correct. The evaluation system should be balanced and
follow some norms and standards.
Strategic analysts have laid down certain basic requirements which evaluation should comply
with to be effective.

First
Strategy evaluation process or measures should be meaningful. These should specifically
relate to the objectives/targets and the plan. There should be clear focus and no ambiguity.

Second
Strategy evaluation and control process should be economical. This means that the process
should not be made unnecessarily elaborate and incurs too much cost on evaluation itself.

Third
The evaluation process should conform to a proper time dimension for control and
information retrieval or dissemination. Time dimension of control should coincide with the
time span of the activity or the implementation phase. Also, information on developments or
feedback should be timely to make evaluation and control more appropriate.

Fourth
Strategy evaluation system should give a true picture of what is actually happening. The
objective of evaluation is not fault finding. Sometimes, performance may be overshadowed by
external factors or the environment. For example, during a severe slump in
economic/business activity, productivity and profitability may decline in spite of best efforts
by the managers to implement strategy.

Fifth
Strategy evaluation process should not dominate or curb decisions; it should promote mutual
understanding, trust and common cause. All functional and operational areas should
cooperate with each other in evaluating and controlling strategies. Strategy evaluation
process should be simple and not too complex or restrictive.
It is true that there may not be any ideal or the only strategy evaluation system. All
organizations are unique in themselves in terms of vision/mission, objectives, size,
management style, strengths, weaknesses, organizational culture, etc.
All these together determine the exact nature of the evaluation system, as also the
implementation process, which is most suitable for the organization. Waterman (1987) has
made some useful observations about strategy evaluation system of successful organizations.

Q5 Importance of external environment and its types general and specific

environment

It is important for managers to understand the external environment for five main
reasons, as discussed below:

1. To understand how competition affects their business

Managers must be aware of, and understand, the competition in their business
sector. This is vital because their competitors are seeking to gain market share at
their expense. Likewise, managers must look for ways to increase their respective
businesses' market share. Knowledge of what the competition is doing in terms of
sales promotions, product mix, general pricing, customer service initiatives, and
more, will help a business ensure that they have programs and policies in place to
compete with their competition. Consequently, they are protecting their market
share as best they can and even working to increase their market share by trying
to stay one step ahead of their competition.

2. To understand how government regulations affect their business

Laws of the land affect businesses and managers must be aware of how these
laws affect their operations. An example of this is the increasing environmental
legislation that affect companies. To adhere to these laws and regulations,
businesses must budget properly and ensure that they have knowledgeable and
trained employees who can oversee the administration of these laws and
regulations in the workplace. Furthermore, businesses must understand how
government regulations affect their bottom line (profits) as there is always a cost
to putting into place policies and procedures required to adhere to government
laws and regulations.

3. To understand how technological advances affect their operations

Managers must be aware of technological innovation that can help them run their
businesses more efficiently. Conversely, they must have the knowledge and
courage to make a decision against succumbing to all the technological
innovations out there. In essence, any technology that can reduce costs and
increase production and efficiency should be seriously considered. However,
changing to a new technology just because it is the "new flavor of the month",
when changing will not advance their competitiveness or efficiency, or grow
revenues and profits, may have to be avoided. Everything new when it comes to
technology is not for every business and managers must do a "cost-benefit'
analysis before putting out money for any new technology.

4. To understand how geopolitical and economic concerns can affect their

business

Managers must follow the news more so than ever as worldwide turmoil, with
tensions and sanctions abounding are able to directly and indirectly affect their
operations. A perfect example is the Ukraine crisis and the sanctions imposed on
trade with Russia. Another is the Cuba issue and some of its trade sanctions still in
place. Furthermore, businesses that require capital and that are on the major
markets must understand how geopolitical concerns affect investors, who may
shy away from investing in a business that is at the whim of geopolitical turmoil. A
current perfect example of this is the drop in oil prices and how it is affecting
companies in the oil patch. Many are suspending new exploration and laying off
staff until oil prices rebound and stabilize. Some investors are shying away from
investing in the oil patch presently.

5. To understand the labor force

Managers must understand what skilled labor is available to help them run their
businesses properly. They must know what their competition is willing to pay
qualified personnel, and they must be ready to do the same so they can attract
first-rate candidates to their enterprises. Managers must be aware of college and
university programs that are training suitable candidates to populate their
businesses. They must aggressively recruit from these colleges and universities or
else their competitors will beat them to the punch and have an edge when it
comes to knowledgeable and business savvy employees.

General environment: The factors and conditions (such as economic, legal, political, and
social circumstances) that generally affect everyone in an industry or market in more or
less similar manner.
Specific environment: The part of the environment that is directly relevant to the
achievement of an organization's goals.
General environment:
Economic conditions: It includes the impact of economic factors like Interest
rates,inflation,changes in disposable income and the stage of general business cycle.
Political/legal conditions: Federal,state and local government influence what organization
can and can not do.
Socio-cultural conditions:Managers must adapt their practices to the changing
expectations of the society and their life style.
Demographic Conditions: Trends in the physical characteristics of population such as
gender,age,level of education,income,geographical location.
Technological: It is changing the ways the organization are operating, so businesses must
address this issue and its impact on performance of organization.
Ecological: Aspects such as weather, climate, and climate change, which may especially
affect industries such as tourism, farming, and insurance. Furthermore, growing
awareness of the potential impacts of climate change is affecting how companies operate
and the products they offer, both creating new markets and diminishing or destroying
existing ones.
Specific environment:

That is directly relevant to achievement a goal

1) Customers. They represent potential uncertainty to an organization.

Their taste can change,they can become dissatisfied with organization’s product or
service.

2) Competitors: Organizations can not ignore its competitors.

Managers must be prepared to respond to competitors policies regarding pricing new
products, services offered and so on.
3) Suppliers: Any party that provides input for the business. E.g financial institutions are
provider of money
Managers need to have steady and and reliable flow of inputs to meet the goals

4) Pressure groups: Managers must recognize the special interest groups that attempt to
influence organization
Environmental Uncertainty:
The degree of change and complexity in an organizations environment.

Q6 Does having a comprehensive mission cause high performance Mission vs

vision component of mission statement

: Having a comprehensive mission statement does not guarantee or cause high performance. However,
a comprehensive mission statement can contribute significantly to high performance. As described in
the chapter, a comprehensive mission statement provides numerous benefits that usually translate into
high performance.

Mission Vision

Answers Why? What?

Definition Statement Snapshot

Length Short Long

Purpose Informs Inspires

Activity Doing Seeing

Source Head Heart

Order First Second

Effect Clarifies Challenges

COMPONENTS OF AN EFFECTIVE MISSION STATEMENT

Mission statements can and do vary in length, content, format and specificity. Most practitioners
and academicians of strategic management consider an effectively written mission statement to
exhibit nine characteristics or mission statement components. Since a mission statement is
often the most visible and public part of the strategic management process, it is important that it
include most, if not all, of these essential components. Components and corresponding
questions that a mission statement should answer are given here.

1. Customers: Who are the enterprise's customers?

2. Products or services: What are the firm's major products or services?
3. Markets: Where does the firm compete?
4. Technology: What is the firm's basic technology?
5. Concern for survival, growth, and profitability: What is the firm's commitment towards
economic objectives?
6. Philosophy: What are the basic beliefs, core values, aspirations and philosophical priorities of
the firm?
7. Self-concept: What are the firm's major strengths and competitive advantages?
8. Concern for public image: What is the firm's public image?
9. Concern for employees: What is the firm's attitude/orientation towards employees?

Ansoff product grid

The four main categories

Market Penetration (existing markets, existing products):

Here we market our existing products to our existing customers. This means
increasing our revenue by, for example, promoting the product, repositioning
the brand, and so on. However, the product is not altered and we do not seek
any new customers.

Market penetration seeks to achieve four main objectives:

 Maintain or increase the market share of current products – this can be

achieved by a combination of competitive pricing strategies, advertising,
sales promotion and perhaps more resources dedicated to personal
selling
 Secure dominance of growth markets
 Restructure a mature market by driving out competitors; this would require
a much more aggressive promotional campaign, supported by a pricing
strategy designed to make the market unattractive for competitors
 Increase usage by existing customers. For example by introducing loyalty
schemes.
Market Development (new markets, existing products):
Here we market our existing product range in a new market. This means that
the product remains the same, but it is marketed to a new audience. Exporting
the product, or marketing it in a new region, are examples of market
development.
Market development is the name given to a growth strategy where the
business seeks to sell its existing products into new markets.

There are many possible ways of approaching this strategy, including:

 New geographical markets; for example exporting the product to a new

country
 New product dimensions or packaging: for example
o New distribution channels
o Different pricing policies to attract different customers or create new
market segments
Product Development (existing markets, new products):
This is a new product to be marketed to our existing customers. Here we
develop and innovate new product offerings to replace existing ones. Such
products are then marketed to our existing customers. This often happens
with the auto markets where existing models are updated or replaced and
then marketed to existing customers.

Business Diversification (new markets, new products):

This is where we market completely new products to new customers. There
are two types of diversification, namely related and unrelated diversification.
Related diversification means that we remain in a market or industry with
which we are familiar.

Q7) Parts of strategic management process and how its part interrelated with strategic
management process diagram? Framework of strategy

Strategic Management Process

Before talking about the stages of strategic management process, it is important to

know what is Strategic management process? Strategic management is that art &
science which is related to formulate, implement and evaluate cross functional decisions
is helpful in the accomplishment of objectives of the organization. In other words the
on-going process, in which broad plans are formulated, implemented & controlled in
order to lead the organization towards the achievement of its strategic goals under the
provision of its internal & external environment.

Stages of Strategic Management Process

There are three stages of strategic management process which are as follow:-

1. Strategy Formulation
 2. Strategy Implementation
3. Strategy Evaluation

Each one is discussed below

1. Strategic Formulation:

The stages of strategic management process start with the strategic

implementation. Business activities are executed by the formulation of strategy which is
referred to as Strategy Formulation. Following elements are developed in the
strategy formulation stage

Vision & Mission: Include the target of the business

Strengths & Weaknesses: Strong & weak points of business

Opportunities & Threats: Associated with the external business environment

Besides the above elements, long term goals & objectives are also set in the strategy
formulation. Alternative Strategies are generated to accomplish long term goals &
particular strategy is selected to be pursued.

Strategy Implementation is the second stage of strategic management process,

annual objectives are established along with the devising of policies. Moreover the
employees of the organization are motivated & resources are allocated in order to
execute formulated strategies. Strategy implementation further includes the following.

 Development of culture that is supportive to the strategy

 Development of potential organizational culture
 Re-direction of the efforts of marketing
 Preparation of budgets
 Preparation & usage of information
 Connecting compensation of employees with the organizational performance
 Strategy Evaluation:

Strategy evaluation is the last step of the stages of strategic management process. The
final stage of the strategic management process is the strategy evaluation. It is the
duty of the managers to have sufficient know-how about the problems and improper
working of strategies. This task of the management is better accomplished through
strategy evaluation which provides needful information to the managers in this regard.
Moreover forces of external & internal environment changes with the passage of time
therefore all the strategies also require modifications
Q8) Growth strategies?
Most small companies have plans to grow their business and increase sales and profits. However,
there are certain methods companies must use for implementing a growth strategy. The method a
company uses to expand its business is largely contingent upon its financial situation, the
competition and even government regulation.

Four types of growth strategies are proposed on this basis. The four main growth
strategies are as follows:

 Market penetration
The aim of this strategy is to increase sales of existing products or services on
existing markets, and thus to increase your market share. To do this, you can
attract customers away from your competitors and/or make sure that your own
customers buy your existing products or services more often. This can be
accomplished by a price decrease, an increase in promotion and distribution
support; the acquisition of a rival in the same market or modest product
refinements.

 Market development
This means increasing sales of existing products or services on previously
unexplored markets. Market expansion involves an analysis of the way in which a
company's existing offer can be sold on new markets, or how to grow the existing
market. This can be accomplished by different customer segments ; industrial
buyers for a good that was previously sold only to the households; New areas or
regions about of the country ; Foreign markets

 Product development
The objective is to launch new products or services on existing markets. Product
development may be used to extend the offer proposed to current customers with
the aim of increasing their turnover. These products may be obtained by:
Investment in research and development of additional products; Acquisition of
rights to produce someone else's product; Buying in the product and "branding"
it; Joint development with ownership of another company who need access to the
firm's distribution channels or brands.
  Diversification
This means launching new products or services on previously unexplored markets.
Diversification is the riskiest strategy. It involves the marketing, by the company,
of completely new products and services on a completely unknown market.

Q9) Socio cultural environment and its factor ?

What is Socio-cultural
Environment?
Socio-cultural environment is a collection of social factors affecting a
business and includes social traditions, values and beliefs, level of
literacy and education, the ethical standards and state of society, the
extent of social stratification, conflict and cohesiveness, and so forth.

Socio-cultural environment consists of factors related to human

relationships and the impact of social attitudes and cultural values on
the business of the organization.

The beliefs, values and norms of a society determine how individuals

and organizations should be inter-related.

Changing Preferences

A major socio-cultural factor influencing businesses and business decisions is changing consumer preferences.
What was popular and fashionable 20 years ago may not be popular today or 10 years down the road. Different
styles and priorities can undermine long successful products and services. For example, a clothing company
must constantly be aware of changing preferences when creating new products or it will quickly become
outdated.

Demographics
Changes in demographics are also a significant factor in the business world. As populations age, for
example, markets for popular music and fashions may shrink while markets for luxury goods and
health products may increase. Additionally, changes in the proportion of genders and different racial,
religious and ethnic groups within a society may also have a significant impact on the way a
company does business.
Advertising Techniques

Advertising is perhaps the area of business most closely in touch with socio-cultural changes. Advertising
often seeks to be hip and trendsetting, and to do this, advertising agencies and departments cannot lose track of
the pulse of the societies in which they engage in business. Changes in morals, values and fashions must all be
considered when creating outward facing advertising.

Internal Environment

In addition to a company's interactions with the market and its customers, socio-cultural factors also impact a
company's internal decision-making process. For example, changing gender roles and increasing emphasis on
family life have led to increased respect for maternity and even paternity leave with organizations.
Additionally, attitudes towards racial discrimination and sexual harassment have changed drastically over the
years as a result of socio-cultural change

Q10) Strategies alliance ?

BREAKING DOWN 'Strategic Alliance'

A strategic alliance agreement could help a company develop a more effective process, expand into a
new market or develop an advantage over a competitor, among other possibilities.

Purpose of Strategic Alliances

Strategic alliances allow two organizations, individuals or other entities to work toward common or
correlating goals. The idea is for all parties to benefit, in the short-term, long-term or both. The
agreement may be formal or informal in nature, but each party’s responsibilities must be clear.
Further, they may be in place for short or long periods of time depending on the needs and goals of
those involved.

Often, strategic alliances allow involved organizations to pursue opportunities at a faster rate than if
they functioned alone. It provides access to additional knowledge and resources that are held by the
other party, which may ease the learning curve for the new pursuit, along with providing setup time
and costs.

This strategy provides more flexibility than joint ventures, as the involved parties do not need to
merge any assets or funds in order to proceed. Instead, they each remain autonomous in nature,
which can help ease the function of the agreement when the two entity’s business practices are highly
varied.

Risks of Strategic Alliances

Though the arrangement is generally spelled out clearly, the differences in how the businesses
operate can cause some struggles. Further, if the alliance requires informing one party of the other
party’s proprietary information, there may be a level of distrust within the corresponding leadership.

In cases of long-term strategic alliances, the involved parties may become dependent on one another.
While the risk is lower if the dependency is experienced by both parties, the risk can increase
significantly if the dependence becomes one sided, as this puts an advantage to one side.

Example of Strategic Alliances

An oil and natural gas company might form a strategic alliance with a research laboratory to develop
more commercially viable recovery processes. A clothing retailer might form a strategic alliance with a
single clothing manufacturer to ensure consistent quality and sizing. A major website could form a
strategic alliance with an analytics company to improve its marketing efforts.

Q11) Turn around management and its implementation ?

The 5 Step Process for Turnaround Management

Turnaround Management is about business restructure and renewal. Often, a turnaround
management strategy is employed when the business is under financial stress. However, it is not
necessary to wait until the situation becomes too dire to commence a turnaround strategy. In fact it
is preferable to commence the processbefore it could be too late.
To help understand how turnaround management works, below is an outline of the 5 step process
involved. Having a good understanding of this process will make it easier to identify if and when, it
should be applied.
Step 1 – Define & Analyse
During this stage the definition of performance problems within the business are clearly outlined. It
is particularly important during this step that any areas of financial stress within the business are
identified and a thorough analysis undertaken.
The objective of this is to arrest any further decline in the business while continuing to trade and
avoid insolvency.
Step 2 – Scope & Strategy
Once the business has been estabilised, it is now time to commence a strategic planning
process. The first part of this is to scope the strengths, weaknesses, opportunities and threats of the
business. It is important during this stage to not only look internally (strengths and weaknesses) but
to strategically analyse the external environment (opportunities and threats) as well.
From the SWOT analysis, the long term vision, mission and objectives for the business can be
defined. Knowing where the business is heading then allows the development of a strategic plan.
Step 3 – Link & Action
Now it is time to take the strategic plan and develop an action plan. This is a list of actions and tasks
complete with time frames that must be undertaken to ultimately achieve the business objectives.
The tasks are the daily, weekly and monthly activities to be done and with this strategic planning
process, each one will be contributing to the overall mission.
Step 4 – Implement
This step is not just about implementing the action plan, but also ensuring coaching and support of
all staff. Without this critical step, all the planning can go to waste.
It is important that employees are aligned with the overall vision for the business. This is achieved
through communication, consultation and coaching on a regular basis.
Step 5 – Review
With all the planning and implementation in place, it is now time to conduct regular reviews. This
ensures not only that continual improvement is achieved but also helps to identify any corrective
actions that may be needed.
In effect, turnaround management is very similar to the strategic planning process; however the first
step of identifying areas of stress in the business is critical. For any business where this stress is
already occurring, applying the above process, in consultation with a turnaround management
expert, will not only ensure the business turnaround but also the opportunity to improve and develop
well into the future.
Q12) Richard rumelt and its four criteria ?
The Rumelt evaluation method is a type of business strategy evaluation, which is a systematic
analysis of a business strategy to assess alignment with organizational interests as well as gauge
effectiveness and efficiency of the business strategy under evaluation. Richard Rumelt, a professor
at the UCLA Anderson School of Business, developed the Rumelt evaluation method. In it, he
categorized four key areas of evaluation criteria to appraise a business strategy.

Consistency
Appraise the consistency of the business strategy. This includes reviewing organizational goals and
objectives, and assuring they align, instead of contradict or work against each other. Compare
separate departments to guarantee unity. Your business strategy should be directing all business
workings of your company. This entails all staff, operations and policies. Power struggles between
conflicting departments or inconsistent procedures erode the structural integrity of your business
strategy, challenging its effectiveness.

Consonance
Evaluate the synchronization of the business strategy with both internal and external factors and
influences. Fundamentally, consonance is harmony and entails an environmental balance. This is
essential for your business strategy. In his work “Evaluating Business Strategy,” Rumelt identifies
two aspects to assess. The first consists of evaluating the company mission, or reason for existence.
The second requires examining the competitive edge of your company. Appraise the scope of the
company for validation of agreement with internal or external influences. These may be economic
trends or legislative enactments that can affect your business strategy.

Advantages
Analyze the advantages of your business strategy by evaluating how well your business
distinguishes itself from others in the same market. This includes determining and isolating those
products or services that are only offered by your company. It is imperative to generate and sustain
those attributes distinctive to your business. Analyze your business strategy to ensure it allows for
proper cultivation and exploitation of your company’s competitive advantages.

Feasibility
Determine the feasibility of the business strategy as a whole. Evaluate whether your business
strategy can reasonably be achieved. Examine financial resources to define limitations. Assess
staffing for not only sheer numbers required for accomplishing the business strategy, but also to
decide whether current or prospective staff have the skill base or potential skill set for the
undertaking. Additionally, consider whether key stakeholders are willing and able to comply and
contribute to the direction the business strategy is taking your company.
Q13) Not managing by objective and its alternative ?

1: Use the quality tools to assess the capability of the organization

The setting of objectives does not assess capability. If the capability does not match the
need, take actions to increase the capability. Further, the quality tools help us hear the
voice of the process and the voice of the customers –and show us the way to get better
outcomes. By focusing on analysis, synthesis, and methods –rather than on quotas and
objectives virtually everything improves. Quality goes up, productivity goes up, employee
turnover goes down, and costs go down.

Managing on empty? How far you want to go and how far you actually can go might be
different things.

So: simply stop managing via objectives. Why? Because assessing capability is different
from setting objectives. Objectives are almost always disconnected from demonstrated
capability, and as a result they manipulate people (who in turn manipulate processes,
resources, numbers, and other people). Stop using objectives to rate and rank people and
departments, and to set pay raises, bonuses and the like.

Instead, take actions to increase the capability of people and processes; those actions
usually involve training, more collaboration, and more communications about inputs,
outputs, methods and tools.

I know that may sound too easy to be effective, but it is effective. Replace hands-off
objective-based management with hands-on understanding of how to improve capability. It
really is that easy as a first step.

Alternative #2: Apply the quality tools and thinking to strategy and planning

You want to create an organization that works as a system rather than as independent silos
that compete for attention, resources, and rewards. Alas, analysis of causes, capability
studies, force-field analysis, and the other tools are usually applied to production and
service processes, not to strategy and improving the insight of senior leaders about the
capabilities of the business. And, as every quality/productivity practitioner knows, the tools
don’t convince senior leaders to abolish MBO.

There are many reasons for this, but one is that executives have been taught that the
quality tools are the tools the Quality Department uses, and that "MBO" (and its cousins:
quotas, incentives, punishments, pay-for-performance) are the tools the "leadership
department" uses. If you are a leader who uses MBO or its cousins then you have a
gigantic opportunity to help your organization leap ahead of competitors. Specifically: a)
abolish MBO and its cousins in your organization and have managers focus on suggestion
#1 to increase capability, and b) use the quality tools in strategy and planning activities.
You’ll get better insights and better results.

Alternative #3: Learn Deming’s Management Method of the System of Profound

Knowledge (SoPK)

If you want to make REALLY big leaps forward in productivity, innovation, and
competitiveness, you need to get exposure to the Deming management method of the
System of Profound Knowledge (SoPK). We must move beyond the quality tools alone and
start really understanding Deming’s SoPK. Most people know of Deming-based quality but
80% or so of the power of Deming’s overall approach which is embedded in SoPK is
unknown by 99% of leaders.

SoPK is virtually an untapped source of incredible insight about much simpler and more
effective ways to manage. MBO looks simple on the surface, but the unintended
consequences of achieving short-term numerical objectives through soul-destroying means
causes most everyone to hate it. However, using the elements of SoPK is not only humane
but truly straightforward –and the results are sustainable and well-above that which is
obtainable without the insights from SoPK.

Q14) Swot analysis vs portfolio analysis ?

Business analysis methods aren’t just for corporate giants. Companies of all sizes and stages of
maturity can benefit from informed strategies for moving forward. Small businesses in particular
need to be sharp in mapping paths to their goals. Two popular analysis models in our contemporary
business world are SWOT analysis and portfolio analysis. Comparing these two methods can help
identify the analysis model that’s best for your business.

Terminology
SWOT is an acronym for strengths, weaknesses, opportunities and threats. This model analyzes
internal and external factors facing a company at the level of broad concepts. Meanwhile, portfolio
analysis is an examination of the performance of an investment portfolio. The contrast is that SWOT
examines the conceptual standing of one particular company while portfolio analysis focuses on the
performance of investments in other companies.

Methodology
The primary difference in the SWOT and portfolio analysis methods is the role of interpretation.
SWOT analysis is highly interpretive throughout, while portfolio analysis relies on financial figures
and economics. SWOT is heavy on assumptions and judgments by the analyst, while most of the
portfolio analysis process consists of number-crunching.
Scalability
Matters of scale make SWOT analysis useful to a wider spectrum of businesses than portfolio
analysis. From corporate giants down to a start-up that has yet to launch, SWOT analysis is
applicable and can be very insightful. Portfolio analysis, on the other hand, is only useful to
businesses that have developed to the point of owning stock and investments in other organizations.
SWOT isn’t suited to the meticulous accounting that portfolio analysis entails, but it has a strong
orientation toward strategic ideas for business growth

Benefits
A SWOT analysis benefits a firm by allowing it to find potential opportunities in the market that can
be exploited using its strengths. It is, therefore, a very beneficial tool for small businesses that are
looking to expand. Portfolio analysis is generally used by investors and fund managers, but it can
also be used by businesses to determine their own investments; for example, it can be used to
select a portfolio of projects or external businesses to invest in.

Q15) Importance of differentiation strategy merit and demerit ?

In the process of business development, differentiation of products and services is really important. It allows to stand out in a
market, differentiating the company from its competitors. The differentiation of a product or service is particularly important
nowadays, since the markets are extremely competitive, due to the limited number of customers to offer more increasingly
important.

The differentiation of a product or service is done at the time of the development of the marketing strategy.

The market analysis enables you to collect the information needed to differentiate you from the competition. To perform an
analysis of the effective market, you need to work on two aspects: the first is that the main players in the market are, the second
that you could do differently. From these two elements, you will develop your strategy.

The markets are more dynamic, differentiate your company from your competitors is a continuous process. And that is what the
customer relationship approach brings you. It allows you to be innovative and provide products and services more attractive and
efficient than those of your competitors. However, if you stop the customer relationship process, you you will catch up by the
competition.

A company that wants to stay long in its market and a dominant position, must integrate the customer relationship approach to
develop new products and move forward in order to maintain its position in its market and maintain a lead on its competitors over
a long period.

Advantages and Disadvantages of Product Differentiation

Product differentiation means that your product has one or more distinct attributes that separate it
from competitors. While having a quality product is good, being able to develop and articulate the
qualities or features that clearly make one product better than the competition is important to
attracting value-oriented consumers. A product differentiation approach does have some drawbacks,
though, relative to other business strategies.

Marketing Advantages
Marketing is intended to help convey to target customers your brand and your product's unique value
proposition. For some companies, elite services or low prices are emphasized. With a product
differentiation strategy, though, explaining and demonstrating why your brand is the best option and
value is key. By successfully delineating your product's uniqueness, and the benefits of such
features, you can make it easy for your customers to perceive the value.

Better Margins
A distinguished, better-quality product also offers greater profit margin opportunities than selling with
a low-cost or alternative approach. Your target customers in this case are more discerning, and
willing to pay extra for better value or top quality. Higher margins make it easier for you to cover
fixed costs and operate a profitable business. With a stellar product that demands top dollars, you
also don't need to sell as much product to generate high revenue and profits.

Costs
A concern with a product differentiation strategy is the investment you typically have to make to
produce or acquire a top-notch product. This creates more pressure to stimulate customer demand
and to maintain a reasonable sales price to drive revenue and profit. Because of this, your
marketing, sales and service costs are often higher as well. If you succeed, you can make up for
these costs in higher revenue, but the downside risks of steep losses are present.

Lost Customer Opportunities

Additionally, by going for product differentiation rather than a low cost, you effectively eliminate
budget-conscious buyers who can't afford your higher prices. This is part of the reality of target
marketing. Especially in a tough economy, you have to really succeed with more affluent customers
if you price your products above what a significant segment of the population can afford. If you do
lower your prices to attract cash-strapped buyers, you run the risk of creating a price orientation and
devaluing your product over time.
Q16) Environmental scanning and its ongoing or one time activity ?

Environmental Scanning
Every organisation is responsible for the environment that it creates. The organisation's operation
and structure all directly affected by the environment. Organisation's environment impacts on
resources and opportunities that how they can be treated? It is primary objective of the organisation
to take care of the company's operations that how they are affecting the environment. For the
successful growth and development of business it is important to develop such a strategies those
can be assist operate the business operations. [1] To understand the environmental scanning it is
important to identify the business and how it can affect the environment business around. The
definition of Environmental scanning is "Environmental scanning is a process of gathering,
analyzing, and dispensing information for tactical or strategic purposes. The environmental scanning
process entails obtaining both factual and subjective information on the business environments in
which a company is operating or considering entering". The environmental scanning can be
achieved by several ways but three important ways of scanning environment are given below:
Ad-hoc Scanning: Very unpredicted and short-term, mostly used in emergencies or crisis.
Regular Scanning: This scanning process being done after a certain period but regularly (e.g once in
a quarter or once in a year)
Continuous Scanning: This is an ongoing process and remains in continuous state, have broad
range of spectrum.
The work of researcher through many studies, surveys and researches shows, now a day's most of
the business likes to implement the continuous scanning. The continuous scanning allows
businesses to take actions very quickly and effectively with keep tracking the work.

Importance of Environmental Scanning

Environmental scanning is important for the organisation to step out or find the exact solution for
company's procedure. Environmental scanning helps organisations to improve or enhance the ability
of working for changing environment in stable means. The following highlighted points are given
below:
It enables organisation to gain capitalise of the business in early stages of the business as compare
to their competitor.
Environmental scanning give alerts to the organisation well before time for the impending problems.
These problems can be handled and solutions can be found well before time if they are noticed well
before time.
This process sensitises the company's exact time of changing in environment process to meet the
wishes and desire of their potential customers.
This scanning process helps to find out the qualitative information in regards to the environment to
assist the strategist to find the best suitable strategies for the company.
It helps to strategy making bodies in their decision making process by providing them the simulation
of the resource and risks.
Give more opportunities to increase the business and adds extra points in the good will of the
company by adding the ability of environment scanning person.
It provides opportunity to company's executive in continuing the broad based studies.
Helps the strategy developers in finding the latest and up-to date strategies for the organisation.

Q17) Portfolio analysis and its impact ?

PORTFOLIO ANALYSIS
Looking at your portfolio of non profit products and services through a
different lens.
Portfolio analysis (sometimes called the Boston Grid after the Boston Consultancy
Group who developed it) helps you look in a different way at your portfolio of products
and services. It can help you make decisions on where to invest more or less time and
money, or to help you decide if you should remove a product or service from the
portfolio.
It is often useful to use this tool after SWOT and Other Player Analysis, particularly if
you feel your organisation is spreading itself too thinly or if you feel that your portfolio of
products and services needs some revitalisation.

Benefits
The Portfolio analysis can help you resist the urge to keep adding new products and
services before the previous ones have fulfilled their potential. The tool introduces logic
to the decision making process. Some organisations also use the tool very successfully
to help them gauge distance travelled – if you repeat the exercise every three or four
years, you will see how your organisation has shifted emphasis, adjusted to meet need
or context and so on.

Limitations
Portfolio analysis was developed with an assumption that long-term profitability is the
dominant goal, and responsibility to existing customers secondary - a balance of
assumptions which does not sit easily for the charities, social enterprises and others in
the voluntary and community sector. But provided one recognises this, it is still very
useful, primarily for products/offerings which break even or have the potential to break
even.
Description of the diagram

The diagram show a square divided into quadrants with each quadrant shaded a
different colour. The x-axis shows the 'Relative market share' whilst the y-axis shows
the 'Market growth rate'.

Explaining the portfolio analysis diagram

1. The best place for your offering to be is bottom right. You have all the advantages
of the highest volume provider (that is, economies of scale) and although continuing
investment is necessary it will not be as high relatively as in two of the other quadrants.
Action: Invest significant time and money and defend at all costs.
2. The next best place to be is top right where once again you are market leader but
the advantage is that the market is expanding rapidly so expansion is possible. This
position has the disadvantage that you need to invest more heavily to make sure you
get the majority of the new customers coming into the market (in order to stay market
leader), so the investment cost per customer is higher than in 1 above.
Action: Invest as heavily as possible.
3. Top left is where you are in a rapidly growing market (and therefore have to invest
heavily) but you are not market leader. You may invest a lot of money and get
nowhere.
Action: Assess carefully to see if heavy investment can get you to top slot. If your
relative market share is low, you will need some very good reasons not to exit/divest.
4. Apparently the worst position to be in is bottom left where you have low relative
market share. Because these offerings have been around a long time, the organisation
could be over loyal to them when exiting might be the best answer. If such action is not
always clear in the commercial world, it is even less obvious in the nonprofit world
where exiting may leave a cohort of vulnerable customers without help. Also the offering
may be popular with donors. Therefore careful exit strategies are necessary.
Q18) Internal analysis and how its different form external analysis ?
A SWOT analysis is a strategic management tool meant to help a business conceptualize
different facets of its own operations. The term SWOT is an acronym for strengths, weaknesses,
opportunities and threats. The four categories are divided into external and internal analysis:
strengths and weaknesses are considered internal and opportunities and threats are external.

Function
A SWOT analysis is a way for business managers to brainstorm and think about various
important elements of a business in an organized framework. A SWOT analysis can be
carried out by having a brainstorming session where managers meet and make a list of
all the companies’ perceived strengths and weaknesses and then opportunities and
threats.

Features
A SWOT analysis typically consists of a list of the four elements that make up its name
in a side by side or box orientation for ease of comparison and analysis. In a SWOT,
strengths are things that the company does well or assets that the company has such
as strong customer relationships or a great product. Weaknesses are areas where the
company could use improvement, for instance low consumer awareness about the
company or inadequate access to loans could be weaknesses. Opportunities are
external factors which the company may be able to harness and turn to an advantage.
For instance, a government grant program from green energy could be an opportunity
for a startup company dealing with producing green energy. Threats are external factors
that could harm a business. Examples of threats are new legislation or taxes that limit
profits or new sources of competition.

Benefits
A SWOT analysis is a relatively simple and quick way for managers to think about and
discuss broad issues about the company. It allows for creativity and idea generation
which can bring new markets, investments to light. For instance, if a SWOT shows that
a company weakness is poor consumer knowledge about the company's products, an
external opportunity such as a fair frequented by the company's target customer might
present a good way to break down that weakness.
Potential
The ultimate goal of a SWOT analysis is to capitalize on strengths and opportunities
while diminishing or overcoming weaknesses and threats. Ideally, a SWOT analysis
would lead to ideas to turn weaknesses into strengths and turn threats into
opportunities. For instance, if a new competitor is gaining market share and is seen as a
threat, a partnership with the new company or buying out the new company might turn
the threat into an opportunity.

Considerations
Since a SWOT analysis can deal with a wide range of issues it is important to include
managers from different departments in the brainstorming process. A team of people
from a certain department might know many strengths and weaknesses that are specific
to their area, but they might not be as aware of issues that lie outside their area of
expertise.

Q19) BCG matrix and advantages and disadvantages how its used ?

BREAKING DOWN 'BCG Growth Share Matrix'

The BCG growth share matrix breaks down products into four categories: dogs, cash cows, stars and
“question marks.” If a company’s product has low market share and is in a low rate of growth market, it is
considered a “dog” and should be sold. Products that are in low growth areas but which the company has
a large market share are considered “cash cows,” meaning that the company should milk the cash cow for
as long as it can. Products that are both in high growth markets and make up a sizable portion of that
market are considered “stars” and should be invested in more. Questionable opportunities are those in
high growth rate markets but in which the company doesn’t maintain a large market share. Products in
this quadrant are to be analyzed more.

The matrix is a decision making tool, and it does not necessarily take into account all the factors
that a business ultimately must face. For example, increasing market share may be more
expensive than the additional revenue gain from new sales. The matrix is not a predictive tool; it
neither takes into account new, disruptive products entering the market or rapid shifts in
consumer demand. Because product development may take years, businesses must plan
for contingencies carefully.

How to use the BCG Matrix?

To look at each of these quadrants, here are some tips:

 Dogs: The usual marketing advice is to remove any dogs from your product
portfolio as they are a drain on resources.
 However, some can generate ongoing revenue with little cost.

For example, in the automotive sector, when a car line ends, there is still a
need for spare parts. As SAAB ceased trading and producing new cars, a
whole business has emerged providing SAAB parts.

 Question marks: Named this, as it’s not known if they will become a star
or drop into the dog quadrant. These products often require significant
investment to push them into the star quadrant. The challenge is that a lot
of investment may be required to get a return. For example, Rovio, creators
of the very successful Angry Birds game has developed many other games
you may not have heard of. Computer games companies often develop
hundreds of games before gaining one successful game. It’s not always
easy to spot the future star and this can result in potentially wasted funds.

 Stars: Can be the market leader though require ongoing investment to

sustain. They generate more ROI than other product categories.

 Cash cows: ‘Milk these products as much as possible without killing the
cow!. Often mature, well established products.The company Procter &
Gamble which manufactures Pampers nappies to Lynx deodorants has
often been described as a ‘cash cow company’.

Use the model as an overview of your products, rather than detailed analysis.
If market share is small, use the 'relevant market share' axis is based on your
competitors rather than entire market.

Advantages

 The BCG-Matrix is helpful for managers to evaluate balance in the companies’s

current portfolio of Stars, Cash Cows, Question Marks and Dogs.
 BCG-Matrix is applicable to large companies that seek volume and experience
effects.
 The model is simple and easy to understand.
 It provides a base for management to decide and prepare for future actions.
 If a company is able to use the experience curve to its advantage, it should be
able to manufacture and sell new products at a price that is low enough to get
early market share leadership. Once it becomes a star, it is destined to be
profitable.

Limitations of the BCG-Matrix:

 It neglects the effects of synergies between business units.

 High market share is not the only success factor.
 Market growth is not the only indicator for attractiveness of a market.
 Sometimes Dogs can earn even more cash as Cash Cows.
 The problems of getting data on the market share and market growth.
 There is no clear definition of what constitutes a “market”.
 A high market share does not necessarily lead to profitability all the time.
 The model uses only two dimensions – market share and growth rate. This may
tempt management to emphasize a particular product, or todivest prematurely.
 A business with a low market share can be profitable too.
 The model neglects small competitors that have fast growing market shares.

Q20) Competitive advantages and its important and its impact ?

A competitive advantage in a marketplace is a distinguishing factor that drives a company's
profit. Building and maintaining competitive advantages attracts customers, contributes to fair
prices and generates loyalty.

The Importance of Competitive Advantage in Strategic Management

Labor
A quality labor force assists management, part of which is gained by achieving a
competitive advantage. Companies carve a niche and differentiate themselves from
competitors through the development of corporate culture, a quality human resources
department and a mission statement. Job benefits such as the option of telecommuting
and bringing pets to work is another way corporations establish a competitive edge.

Businesses benefit by hiring and retaining top talent. Job turnover is costly: Robert
Mathis, author of the book, “Human Resource Management,” says job turnover could
cost one-third of the annual salary for a low-level worker, but as much as two times the
salary for a highly skilled professional worker.

Resource Allocation
Companies that gain a competitive advantage with resource allocation can buy
materials for less money than competitors. Managers procure items at a cheaper cost
using a variety of methods: buying in bulk, using a vendor overseas, entering into long-
term contracts and negotiating for a lower price are just a few. Managers also identify
regions that generate the greatest cost savings.

Logistics
Logistics of a company's supply chain management strategy pertain to how businesses
transport and manage its operations. In most cases, large multinational companies
establish this advantage with greater ease than smaller businesses. For instance, a big-
box retail store can get discounts on shipping, inventory and the production of goods.
Strategy regarding logistics also pertains to stock updates, space allocation in
warehouses and corporate offices, order processing and returns.

Marketing
Brand development--the design of a logo, the colors used for packaging and the
aesthetics of a product--is used businesses to develop strong brand recognition and,
therefore, bolstered competitive advantage. The branding efforts are the reasons
individuals spend more resources to acquire a similar product that is identical in
function. Stores go through great lengths to differentiate their businesses from
competitors. For instance, Karl Moore and Niketh Pareek explain in their book,
"Marketing: The Basics," that some stores including Abercrombie & Fitch, Hallmark and
Bloomingdale's use store fragrances to enhance the shopping experience: Some smells
increase the amount of time spent in the store by 40 percent.

Impact

Price versus Quality

Quick MBA indicates that a business can create a competitive advantage through low
prices or differentiation. While low prices attract a large percentage of a typical target
market, only one company in an industry succeeds in the long run with a profitable
lowest-price strategy. Most companies must come up with differentiation in their
products or services. These points of difference cause more discerning buyers to pay
more money for a better overall solution.

Offering Superior Value

Competitive advantages present your business from engaging in a very arbitrary and
expensive battle for customers. If you can't clearly state to customers why your brand is
superior, you leave revenue to chance. A customer analyzing a shelf with 10 brands
would have no compelling reason to buy yours. When you do establish excellence in
product quality, organic production or consistent experiences, you help a customer
recognize the superior value. Fans of Apple technology typically desire their innovative,
cutting edge and cool technology solutions.

Generating Repeat Business and Loyalty

Your competitive advantage keeps customers coming back over and over again. A
customer who perceives that a certain restaurant offers the best mix of food, ambiance
and value would likely return often for meals. Eventually, repeat customers develop a
loyal relationship when they have several positive experiences in a row. This loyalty not
only strengthens your revenue potential with those customers, but it is more likely that
they will recommend your company to friends who want the same benefits.

Economies of Scale
When you have clear, sustainable competitive advantages, you gain the benefits of
economies of scale. You don't have to invest as much in developing short-term
advantages to get customers in the door. A sustainable advantage becomes your
company's cash cow. You can fine tune advantages or add to them over time, but you
don't have to consistently throw money at research and development and promotion. As
your initial marketing succeeds in communicating distinct benefits, the customers you
attract will help spread the word through social media and word-of-mouth.

Q21) Defensive strategy ?

Defensive Strategies in Strategic Management

Competition is inevitable in the business world. The threat of competitors swooping in to steal your
customers or your share of the market can sometimes seem overwhelming for a small-business
owner. There are steps you can take, however, to defend your products and your share of the
market from competition.

Understanding Strategy

Defensive strategies are management tools that can be used to fend off an attack from a potential
competitor. Think of it as a battleground: You have to protect your share of the market in order to
keep your customers happy and your profits stable. Defending your business strategically is about
knowing the market you're best equipped to operate in and about knowing when to widen your
appeal to enter into new markets. In contrast to offensive strategies -- which are aimed to attack your
market competition -- defensive strategies are about holding onto what you have and about using
your competitive advantage to keep competitors at bay.
Approaches to Defensive Strategy

There are two approaches to defensive strategy in strategic management. The first approach is
aimed at blocking competitors who are attempting to take over part of your business's market share.
Cutting the price of your products, adding incentives or discounts to encourage customers to buy
from you or increasing your advertising and marketing campaigns are the best common ways of
going about this. The second approach is more passive. Here, you announce new product
innovations, plan a company expansion by opening a new chain or reconnect with old customers to
encourage them to buy from you. This is still a method to prevent the competition from taking away
your customers and earning, but it is done in a more relaxed and less-aggressive manner, whereas
the first approach is active and direct.

Advantages of Defensive Strategy

Employing a defensive strategy in your business can have many perceived and real benefits. First, you are
increasing your marketing and advertising, which can be an effective way of getting both old and new
customers through the door. Second, defensive strategies are typically less risk-laden than offensive strategies.
You have the option to take passive measures to ensure your share of the market and you don't have to
necessarily feel threatened at every turn. The third benefit of defensive strategy is that you are working to
enhance the value of your products or services. By emphasizing the benefits of your brand, you are
simultaneously devaluing the value of your competitors. This can be an effective long-term strategy in
securing a niche market for your products and services.

Disadvantages to Defensive Strategy

The biggest disadvantage to defensive strategy comes when a business does not understand its target market.
All products and services should be aimed at particular demographics of the broader marketplace. If you sell
children's bicycles, for instance, aim your marketing at the demographic most likely to buy from you: probably
young to middle-aged adults with children. It wouldn't make sense to target your children's bicycles to older
adults without children or to teenagers who are no longer interested in riding children's sized bikes. The key is
to know your share of the market and to work hard to hold onto that piece of the pie. Along with this major
disadvantage comes the risk that you may rest on your laurels when it comes to innovation and product
development. Successful businesses also keep their eyes open for opportunities to engage in new markets, to
sell cutting-edge products and to reach new customers. Thus any defensive strategy you employ should be
balanced with a long-term strategy for growing your business.
Q22) Organizational Structure and Culture Change
Examining the relationship between organizational structure and culture change hinges on two
premises: First, an organizational culture develops around the organizational structure, and a culture
change will be required to change the firm's structure. Second, an organizational structure can
remain, but the organizational culture can change if management changes how workers are
assigned to roles in the same structure.

is relationship as one of the forest and the trees. The organisational culture is the
big picture of the entity. It is how the company does business, both internally and
externally. Just as a forest cannot exist without its timber, the organisational
culture will not stand without structure. The organisational structure is how
communication moves from one area to the other, the reporting procedures
where one person has decision-making powers over subordinates, and ultimately
how the company gathers its resources to achieve objectives. The culture of the
organisation matures and spreads out from the support beams brought on by the
structure.

Change the Structure at All Levels

Taco Bell offers a good example of how changing the organizational structure at every level of the
organization can lead to culture change. In a customer-service-driven model, Taco Bell eliminated
layers of management and changed the roles of managers at all levels. For example, a supervisor
went from managing five or more stores in 1988 to 20 or more stores in 1991. Managers also
focused on coaching and support

Change Role Assignments

Another way to change the culture of an organization is to reassign technical specialists in existing
departments. For example, you can decentralize the HR department and move an HR professional
into each major department. As an HR expert, the professional could handle all affairs for the staff in
that department in consultation with the manager.

Employee Involvement

Some management teams bring the need for culture change to workers, using a grassroots approach to
changing the structure of the company. Managers might present the problem of wanting to make the company
more responsive to the market's changing conditions and then use town hall meetings and other methods to get
employee input for restructuring the company. This is a multidisciplinary approach, but it succeeds if
employees change their attitudes by collaborating with management.
Strong Culture

A company with a strong organizational culture can effectively change its culture because its employees are
responsive to their organizational structure. For example, if employees are highly committed to a work-team
structure and their teams desire to shift the culture to focus on new products or services, they might follow the
team. They will have to adjust to new ways that the company will organize itself and position itself in the
market to be successful.

Q23) merit and demerits of integrative strategies ?

Having a sense of integrity in the way you run your small business has numerous advantages. Not
only do you avoid the potential legal and ethical pitfalls associated with running a business
dishonestly, you also have the opportunity to set the standard for excellence in your industry. In this
sense, you have the opportunity to earn the long-term respect of customers, vendors, staffers and
even competitor

Good Reputation
Operating your business with integrity will give you a positive reputation in your industry and in your
local business community. This is especially vital if your small business relies on long-term or repeat
business, or provides business-to-business products or services. A sense of integrity is also very
important to small businesses that work with confidential or sensitive customer information, or that
are charged with overseeing the financial or personal affairs of their customers.

Loyal Customers
When customers trust you, they are likely to continue patronizing your business over the long term.
No one wants to knowingly do business with a company that has a bad reputation, has been caught
in lies, or has been involved with scandals or other acts of corruption. The advantage of running your
business with integrity is that you keep existing customers, and also have the potential of good word-
of-mouth advertising that will bring in more customers.

Ethical Employees
Employees with high standards are often attracted to companies with high integrity. Employees who
share your same business ethics and values are likely to be good representatives of your company,
and perform in a trustworthy manner. This will help your small business attract and retain top talent
in your field. Employees who are confident that their company won’t cheat or mislead customers are
typically confident they will be treated fairly by management as well. This can lead to reduced
employee turnover and a highly qualified workforce.
Advanced Earning Potential
Perhaps one of the greatest advantages of running a small business with a sense of integrity is the
potential for increased earnings. Businesses embroiled in controversy often lose big clients, and
have a hard time attracting customers and employees. Honest and forthright companies have a
greater likelihood of gaining respect in their industry and capturing a greater-than-average market
share. Companies with stellar reputations may also find it easier to get business financing and
attract investors.

Disadvantages

Lack of Management Support

One of the disadvantages of an ethical compliance program is that it requires the comprehensive support of
management to be effective. If members of the management team decide to apply their own version of
corporate ethics to the way they manage their departments, then this clash of principles can cause confusion in
the workplace. For example, a manager who tends to look the other way when his employees are committing
sexual harassment sets a precedent that can start to undermine the entire corporate culture.

Costly

Developing, implementing and maintaining an ethics compliance program within your organization can be
expensive and time-consuming, according to attorney Michael G. Daigneault, writing for the Maryland
Association of CPAs. Ethics policies need to be continually updated to reflect changes in workplace laws and
changes in your company culture as the organization grows. Proper administration of an ethics program often
requires the hiring of an ethics officer and the commitment of company financial and personnel resources.