1. 1. Definitions :
Strategy is a plan of action designed to achieve a long-term or overall aim. A company’sstrategy is
the action plan for outperforming its competitor and for gaining superior profitability.
Strategic Planning is that apply to the entire organization, establishes the organization’s overall
objectives and seek to positions an organization in terms of its environment is called strategic
planning. It takes place at the highest level of the organization
Decision making is the process of selecting a course of action or alternative among different
alternatives.
Tactical PlanningIt isthe technique of determininghow strategicobjectiveswill be accomplished.It
is usually the job of Middle level Managers.
Barrier to entry is a high cost or othertype of barrier that preventsabusinessstartupfromentering
a marketandcompetingwithotherbusinesses. Barrierstoentry caninclude governmentregulations,
the need for licenses, and having to compete with a large corporation as a small business startup.
Absolute cost advantage refers to the ability of a business to produce more, sell more of a good or
service than competitors, using the same amount of resources.
Economies of scale are cost savings that occur as a result of making more of a product. ... In other
words, a company can increase its profits by making its production processesmore efficient, rather
than by increasing the price of a product.
Industry is a sector that produces goods or related services within an economy. Industry is nothing
but customer needs.
Superior profitability is earning a profit rate which is industry average profit rate. Profitability is a
business'sabilitytoproduce areturn on an investmentbasedonitsresourcesincomparisonwithan
alternative investment.
Comparative advantage is the ability of an individual or group to carry out a particular economic
activity (such as making a specific product) more efficiently than another activity. Comparative
advantage isaneconomictermthatreferstoan economy'sabilitytoproduce goodsandservicesata
lower opportunity cost than that of trade partners. A comparative advantage gives a company the
ability to sell goods and services at a lower price than its competitors and realize stronger sales
margins.
Critical success factor (CSF) is an elementthatis necessaryfor an organizationor projectto achieve
its mission. To achieve their goals they need to be aware about each key success factor.
2. Key success factors are those key elementswhichare requiredfor an organizationto accomplishor
exceed their desired goals. It is imperative that these factors be given proper attention and are
adhered so as to attain the desired objective.
External environment includes a combination of all factors coming from the outside of the
organization that affect its performance. External environmental factors are events that take place
outside of the organization and are harder to predict and control. External environment factors are
climate, economy, technology, political and legal, media, Fashion etc.
Internal environmental factors are events that occur within an organization. Internal environment
factors have a more direct impact on the daily activities of the company. The main factors in the
internal environment are: Human resource, organization culture, organization assets customers,
suppliers, competitors, shareholders, financial institutions, and employees.
2. Discuss the Similaritiesanddifference betweenbusiness strategy and
military strategy?
3. A company Strategy Is Partly Proactive andPartly Reactive Explainthis
model?
A company’sstrategyis typicallya blendof (1) proactive actionson the part of managersto improve
the company’s market position and financial performance and (2) as-needed reactions to
unanticipated developments and fresh market conditions.
3. The biggest portion of a company’s current strategy flows from previously initiated actions and
business approaches that are working well enough to merit continuation and newly launched
managerial initiativesto strengthen the company’s overall position and performance. This part of
management’s game plan is deliberate and proactive.
Noteverystrategicmoveisthe resultof proactiveplottinganddeliberate managementdesign.Things
do happen that cannot be fully anticipated or planned for.
A portion of a company’s strategy is always developed on the fly. It comes about as a reasoned
response to unforeseen developments.
Crafting a strategy involves stitching together a proactive/intended strategy and then adapting first
one piece and then anotheras circumstancessurroundingthe company’ssituationchange or better
options emerge – a reactive/adaptive strategy.
4. What is strategy and its purpose? What are the common elements of
successful strategy?
Strategy is a plan of action designed to achieve a long-term or overall aim.A company’s strategy is the
actionplan foroutperformingitscompetitorandforgainingsuperiorprofitability. Strategicplanningisa
systematic process that helps you set an ambitionfor your business' future and determine how best to
achieve it. Its primary purpose is to connect three key areas:
Mission - defining business' purpose
Vision - describing what one want to achieve
Plan - outlining how one want to achieve ultimate goals
4. 5. What are the strategically relevant factors in macro environment?
PESTEL analysis
A PESTELanalysis is a frameworkor tool used by marketers to analyses and monitor the macro-
environmental (external marketing environment) factorsthathave an impacton an organization.
The result of which is used to identify threats and weaknesses whichis used in a SWOT analysis.
Political Factor: These are all about how and to what degree a government intervenes in the
economy. This can include – government policy, political stability or instability in overseas
markets, foreign trade policy,tax policy, labor law, environmental law, trade restrictions and so
on.
Economic Factor: Economic factors have a significant impact on how an organization does
business and also how profitable they are. Factors include – economic growth, interest rates,
exchange rates, inflation, disposable income of consumers and businesses and so on.
Social Factor: Also known as socio-cultural factors, are the areas that involve the shared belief
and attitudes of the population. These factors include – population structures and growth, age
distribution, health consciousness, career attitudes and so on. These factors are of particular
interest as they have a direct effect on how marketers understand customers and what drives
them.
Technological Factor: We all know how fast the technological landscape changes and how this
impacts the way we market our products. Technological factors affect marketing and the
management thereof in three distinct ways:
a) New ways of producing goods and services
b) New ways of distributing goods and services
c) New ways of communicating with target markets
Environmental Factor: These factorshaveonly really come tothe forefrontin the last fifteenyears
or so. They have become important due to the increasing scarcity of raw materials, pollution
5. targets, doing business as an ethical and sustainable company, carbon footprint targets set by
governments (this is a good example were one factor could be classes as political and
environmental at the same time). These are just some of the issues marketers are facing within
this factor. More and more consumers are demanding that the products they buy are sourced
ethically and if possible from a sustainable source.
Legal Factors: Legal factors include - health and safety, equal opportunities, advertising standards,
consumer rights and laws, product labelling and product safety. It is clear that companies need to
knowwhatisandwhatisnotlegal inordertotrade successfully.If anorganizationtradesgloballythis
becomesa verytrickyarea to getright as each countryhas itsown setof rulesand regulations.After
youhave completedaPESTELanalysisyoushouldbe abletouse thistohelpyouidentifythestrengths
and weaknesses for a SWOT analysis.
6. What factors are driving industry changes and what impact will they
have?
A. Identificationofthe drivingforces.
These factorsare following:
1. National level forces:
a. ChangingGovernmentregulationandpolicies
b. Changingsocietal concern,attitudesandlifestyles
c. Changingtype of buyersand theirmode of use
2. Industry and firm level
a. Changesinbusinessenvironmentregardingglobalizationpressure
b. Long termgrowthrequirement
c. Entry or exitof a major firm
d. Reductioninuncertaintyandrisks
e.Diffusionof managerial know-how acrosscompanies
3. Technological Trend
a. Internetandapps
b. Innovationintechnologyandmanufacturingprocess
c. Innovationinproductandmarketingprocess
d. Diffusionof technical know-how acrossthe companiesandcountries
B. Assessingthe impact of the driving forceson the attractivenessof the industry
It isassessedbymeasuringthe collective effectof all drivingforcesonthe demandof the productof
industry,the intensityof rivalrywithinindustryandthe profitabilityof the industry.
C. Adjustmentof the strategiesto prepare for the impact of drivingforces
6. 7. What are the difference betweenStrategy vs Tactics?
o Strategy is the larger overall plan that comprise severaltactics; on the other hand tactics are part of
strategies to perform a particular task.
o Strategies are long term plan to establish a favorable position; a tactic is a shorter scheme for a
specific action.
o Strategies focus on future and tactics focuses on immediate actions.
o Strategies are oriented to vision, tactics are oriented to goals and objectives
o Example:
Strategy- where to send troops to win battle?
Tactics- how should soldiers run in zigzag pattern to reduce the chance of being shot.
8. How to understand what strategic moves rival are likely to make next.
Explain?
It isdeterminedbyfollowingacts:
Analysisof currentstrength,weakness,capabilitiesandstrategiesof rivals
Analysisof rival’scurrentassumptionaboutself andindustry.
Analysisandobjectiveappraisal of currentobjectivesof rivalsforfinancial and
performance targetwhethertheyhave metthose ornot.A financial targetachieverrival
islesslike tomove to a new strategythana non-achiever.
9. Difference betweena global, transnational, Multi domestic and
Multinational company?
Global companies have investedandare presentin manycountries.Theymarkettheirproducts
through the use of the same coordinated image/brand in all markets. Generally one corporate
office that is responsible for global strategy. Emphasis on volume, cost management and
efficiency. Example Lenovo, Microsoft, Coca-Cola.
7. Transnational companies are much more complex organizations. They have investedin foreign
operations,haveacentral corporate facilitybutgivedecision-making,R&Dandmarketingpowers
to each individual foreign market. Example Nokia, Ford, BMW.
Multi domesticisamultinationalcorporationthatoperatesonalocalizedmanagementstructure.
Instead of centralizing and making all decisions from one primary location, the multinational
corporationdecentralizes.Productscustomizedforeachmarket.Example,McDonald,KFC,Heinz,
Lays.
Multinational companies have investment in other countries, but do not have coordinated
product offerings in each country.More focused on adapting their products and service to each
individual local market. Example, General motors, Intuit, MGH,P&G.
10.What are the differences betweenPlanning andstrategy?
Planning is thinking in advance, for the actions which are going to take place in the future.
Planningisaroadmapforaccomplishinganytask. Strategyisaplanof actiondesignedtoachieve
a long-term or overall aim.
The major differencesbetweenPlanningandStrategyare givenbelow;
1) Planning is anticipation and preparation in advance, for the uncertain future
events. The strategy is the best plan chosen among the various alternatives for the
accomplishment of objectives.
2) Planning is like a map for guidance while strategy is the path which takes you to
your destination.
3) Strategy leads to planning and planning leads to programs.
4) Planning is future oriented, whereas Strategy is action oriented.
5) Planning takes assumptions, but Strategy is based on practical experiences.
6) Planning can be for short term or long term depending upon the circumstances.
Unlike Strategy, which is for the long term.
8. 7) Planning is a part of the managerial process. Conversely, Strategy is a part of
decision-making.
11. What is strategic winner /what’s makes a strategy winner?
A winning strategy must pass three tests:
● The fit test- How well does the strategy fit the company’s situation?
● The competitive advantage test- Is the strategy helping the company achieve a
sustainable competitive advantage?
● The performance test – Is the strategy resulting in better company performance?
12. What are the five major competitive forcesof the industry?
Analyzingcompetitionisone of the bestwaysto identifythreatstobusinessandfigure outhow
to addressthem.Knowingwhomwiththe competition,how theiractionswill affectaswell asin
whatways iscritical to bottomline andfuture planning.
One way toanalyze yourcompetitionisbyusingPorter'sFive Forcesmodel tobreakthemdown
intofive distinctcategories,designedtoreveal insights. OriginallydevelopedbyHarvard
BusinessSchool'sMichael E.Porter in1979, the five forcesmodel looksatfive specificfactors
that determine whetherornota businesscanbe profitable,basedonotherbusinessesinthe
industry.
In Porter'smodel,the five forcesthatshape industrycompetitionare givenbelow;
Competitive rivalry: This force examines how intense the competition currently is in the
marketplace,whichisdeterminedbythe numberof existingcompetitorsand what each can do.
Bargaining power of suppliers: This force analyzes how much power a business's supplier has
and how much control it has over the potential to raise its prices,which,in turn, wouldlower a
business's profitability.
9. Bargaining power ofcustomers: Thisforce examinesthe powerof the consumerandtheireffect
on pricing and quality. Consumers have power when there aren't many of them but there are
plentiful sellers,as well as when it is easy for customers to switch from one business's products
or services to another's.
Threat of new entrants: Thisforce considershow easyor difficultitisforcompetitorstojointhe
marketplace in the industry being examined.
Threat ofsubstitute productsorservices: Thisforce studieshoweasyitisforconsumerstoswitch
fromabusiness'sproductorservice tothatof acompetitor.Itlooksat the numberof competitors,
how their prices and qualitycompare to the business being examined and how much of a profit
those competitorsare earning,whichwoulddetermineif theycan lower their costs even more.
13.Define deliberate andemergent strategy? Whichone is more important in
achieving competitive advantage?
Deliberative strategy (or proactive strategy elements) includes new planned initiatives plus
ongoing strategy elements continued from prior periods. Plan and think before you act.
Emergent strategy (or reactive strategy elements) includes new strategy elements that
emerge as managers react adaptively to changing circumstances.
14. Why do you think environment analysis is important for strategy
formulation?
Environmental Analysis is the process by which corporate planners monitor the economic,
governmental,suppliertechnological andmarketsettingstodeterminethe opportunitiesforand
threats to their enterprise. The importance of Environmental Analysis lies in its usefulness for
evaluating the present strategy, setting strategic objectives and formulating strategies.
Environmental Analysisgivesthe strategicmanagertime to anticipate opportunitiesandto plan
alternative responses to those opportunities. It also helps them to develop an early warning
system to present threats or develop strategies, which can turn a threat to the organizations
advantage.Here we will take examplesof someAmericafirms.Inthe lastfew decadesalmosthalf
of the 100 largestAmericanfirmsbecame significantlylessimportanttothe societydue to their
failure inanticipatingenvironmental changes.StandardcharteredBankisthe oldestforeignbank
operating in India missed the bus in exploiting the opportunities that suddenly opened up for
10. MNC BanksinIndiainthe eighties.Inaninterviewto“BusinessIndia”the ChiefOfficerof theBank
statedthat, “a lack of direction,alack of focus and the absence of a clearperceptionof business
opportunities available in the environment has left the bank behind”.
15. What are the five major task of Strategic manager?
The strategicmanagementprocessiscomprisedof five taskswhichare:
1. Developingastrategicvisionandmission.
2. Settingobjectives
3. Craftinga strategyto achieve the objectivesandvision.
4. Implementingandexecutingthe strategy.
5. Evaluatingperformance andmakingcorrective adjustments.
16.What do you think be the lowcost provider or market leader’, ‘tocompete
withcustomer’,‘toearnprofit’and‘tobe global’or ‘always first’-are these
considered as strategy?
In fact Strategy is all about How to attract and please customers, How to compete against rivals,
How to position the firm in the marketplace or best to respond to changing economic and market
conditions orto capitalize on attractiveopportunities to grow the business or How to achievethe
firm’s performance targets.
‘Be the low cost provider’ it’s a goal, at highest it may be an approach of strategy, even it is not
even an objective due its vague appeal; moreover, it may be set for pleasing customer, or to
competing withcompetitorsor evencapturing market share. However,this has not toldus “how”.
For this reason this sentence is not a strategy. BUT, if it is said “After capturing the distribution
channel we willbe the low cost provider’- then it is somehow will be a strategy, it will be labelled
as corporate level’s vertical growth strategy. OR, it may be joined with other words to become
strategy of different level.
Next the ‘toearn profit’-it may be an ‘objective’whichhas something morein frontof it toexplain
how it could be. It may be a strategy after joining with “Providing low cost” or ‘serving more
customer’. Inthis sense, itis labeled as ‘Cost leadership strategy’- atypeof Business levelstrategy.
In the same way, if I say, “I will go for differentiation to earn profit’- it will be ‘Differentiation
Strategy’.
Well,what about‘to compete withcustomer’? Wehave heard about compete withcompetitorbut
here it is said that with customer. Interesting but it’s true according to Michel E porter. He said
that competing withcustomer is the integral part of the business. From Porter’s fiveforcemodel
we already knownthat Customer power is one of the competitive force.The explosion of digital
11. technologies overthe past decade has created “empowered” consumers so expert in their use of
tools and information that they can call the shots, hunting downwhat they want when they want
it and getting it delivered to their doorsteps at a rock-bottom price. In response, retailers and
service providers have scrambled to develop big data and analytics capabilities in order to
understand their customers and wrest back control.For much of this time, companies have been
reacting to customers, trying toanticipate their next moves and position themselves in shoppers’
paths as they navigate the decision journey from consideration to purchase. Hence, it may be a
great OBJECTIVE ‘to compete with customers’ but for being a strategy we may add other words
like ‘Providing technological advantages to compete with customers’- a differentiation business
level strategy.
Finally “To be global’ is a part of vision, or strategic vision that where company want to headed.
It is a part of Crafting strategy but not a strategy. Subsequently to give birth of a strategy on the
basis of these words wemust see at corporate level growthstrategy- Horizontalgrowth strategy
for Global expansion.
17.Which company is consideredas a diversifiedcompany? Give example?
A diversifiedcompanyownsoroperatesinseveral unrelated business segments. Companiesmay
become diversified byenteringintonew businessesonitsownbymergingwithanother company
or by acquiring a company operating in another field or service sector. Conglomerates are one
common form of a diversified company.
One of the benefits of being a diversified company is that it buffers a business from dramatic
fluctuations in any one industry sector.
Some of the historicallybest-knowndiversifiedcompaniesare JnJ,General Electric,3M,Sara Lee,
and Motorola.
Johnson& Johnsonas the maker of Band-Aids,babyshampoo,andotherhome healthproducts,
but thiscompany doesso much more.In additionto producinga wide range of prescriptionand
over-the-counter drugs, it has a robust medical device segmentfeaturing instruments used in
majorsurgeries.Johnson&Johnsonalsohasasportsperformance researchinstituteforathletes.
It’s no wonderthe companyhas beenone of the most consistentlysolidperformersonthe New
York Stock Exchange,increasingitsdividendtoshareholderseveryyearfor55 consecutive years.
12. 18. Explain the strategic option for entering and competing in the
international Market?
There are five basic options available:
exporting,
creating a wholly owned subsidiary,
franchising,
licensing,
Creating a joint venture or strategic alliance .
These options vary in terms of how much control a firm has over its operation, initial cost of entry,
how much risk is involved, and what share of the operation’s profits the firm gets to keep.
Exporting involves creating goods within a firm’s home country and then shipping them to another
country. Once the goods reach foreign shores, the exporter’s role is over. A local firmthen sellsthe
goodsto local customers.Manyfirmsthat expandoverseasstartout as exportersbecause exporting
offers a low-cost method to findout whether a firm’s products are appealing to customersin other
lands.
Licensingis most frequently used in manufacturing industries. Licensing involves granting a foreign
companythe righttocreate acompany’sproductwithinaforeigncountryinexchangeforafee.These
relationshipsoftencenteronpatentedtechnology.A firmthatgrants a license avoidsabsorbingalot
of startup costs, but typically loses some control over how its technology is used, including quality
control.Profitsare limitedtothe feesthat it collectsfromthe local firm and firmsmust be aware of
the degree of risk to intellectual property loss.
Franchisingisanattractive waytoenterforeignmarketsbecauseitrequireslittlefinancialinvestment
by the franchisor. Indeed, local franchisees must pay the vast majority of the expenses associated
withgettingtheirbusinessesupandrunning.Onthe downside,the decisiontofranchise meansthat
a firm will get to enjoy only a small portion of the profits made under its brand name. Also, local
franchiseesmaybehaveinwaysthatthe franchisordoesnotapprove.Forexample,KFCwasangered
by some of its franchisees in Asia when they started selling fish dishes without KFC’s approval.
In a joint venture, two or more organizations each contribute to the creation of a new entity. In a
strategicalliance,firmsworktogethercooperatively,butnonew organizationisformed.Inbothcases,
the firm and its local partner or partners share decision-making authority, control of the operation,
and any profits that the relationship creates.
A whollyowned subsidiaryis a businessoperationina foreigncountrythat a firmfullyowns.A firm
can developawhollyownedsubsidiarythrougha Greenfieldventure,meaningthatthe firmcreates
the entire operation itself. Another possibility is purchasing an existing operation from a local
company or another foreign operator.
13. 19.What are the differences between a manager and a leader?
Leaders create a vision, managers create goals.
Leaders are change agents, managers maintain the status quo.
Leaders are unique, manager’s copy.
Leaders take risks, managers control risk.
14. Leaders are in it for the long haul, managers think short-term.
Leaders grow personally, managers rely on existing, proven skills.
Leaders build relationships, managers build systems and processes.
Leaders coach, managers direct.
Leaders create fans, managers have employees.
Leaders ask question, manager’s gives directions.
Leaders develop power with people, managers exercise power over people.
20.What is strategy? Why do you need to have strategy?
Strategy is a planof actiondesignedtoachieve along-termoroverall aim.A company’sstrategyis
the action planforoutperformingitscompetitorandforgainingsuperiorprofitability.
Effective strategicmanagementcanbringmanybenefitstoanybusiness.
It outlinesaclearpathfor your company
It bringsa sense of focus
It improvesyourbusiness’sself-awareness
It givesyouremployeessomethingtoworktowards
21.What are the factors that determinesit’s athreat or opportunity?
Capability
Resources
Profitabilitytargetsetbythe company
This3 factors definessomethingasitcan be threat or opportunity.
22.Identify the way how strong are the industry competitive forces?
Porter's Five Forces is a simple but powerful tool for understanding the competitiveness of your
business environment, and for identifying your strategy's potential profitability. This is useful,
because, when you understand the forces in your environment or industry that can affect your
profitability, you'll be able to adjust your strategy accordingly. For example, you could take fair
advantage of a strong position or improve a weak one, and avoid taking wrong steps in future.
15. The tool was created by Harvard Business School professor Michael Porter, to analyze an industry's
attractiveness and likely profitability.it has become one of the most popular and highly regarded
business strategy tools.
Competitive Rivalry:Thislooksat the numberandstrengthof your competitors.How manyrivalsdo
youhave?Whoare they,andhowdoesthe qualityof theirproductsandservicescompare withyours?
SupplierPower. This is determinedbyhow easy it is for your supplierstoincrease theirprices.How
many potential suppliers do you have? How unique is the product or service that they provide, and
how expensive would it be to switch from one supplier to another?
Buyer Power. Here, you ask yourself how easyit is for buyersto drive your pricesdown.How many
buyers are there, and how big are their orders? How much would it cost them to switch from your
products and services to those of a rival? Are your buyers strong enough to dictate terms to you?
Threat ofSubstitution. Thisreferstothe likelihoodof yourcustomersfindingadifferentwayof doing
what you do. For example, if you supply a unique software product that automates an important
process, people may substitute it by doing the processmanually or by outsourcing it.A substitution
that is easy and cheap to make can weaken your position and threaten your profitability.
Threat of NewEntry. Yourpositioncanbe affectedbypeople'sabilitytoenteryourmarket.So,think
abouthoweasilythiscouldbe done.How easyisittoget a footholdinyourindustryormarket?How
much would it cost, and how tightly is your sector regulated?
