The document outlines key concepts in strategic management, including the definitions of strategy, vision, and mission, emphasizing their importance for organizational success. It further explains critical frameworks such as Mintzberg's 5 Ps, McKinsey's 7S model, and Porter's Five Forces, which help organizations structure their strategies and assess competitive environments. Additionally, it discusses Ansoff's matrix for market growth strategies and the significance of environmental scanning, SWOT analysis, and core competencies in creating organizational value.

1. 1) Define strategy. What is vision? What is mission? How it is important for the
organization?
Ans:
Strategy: Strategy is an action that managers take to attain one or more of the organization’s
goals. Strategy can also be defined as “A general direction set for the company and its
various components to achieve a desired state in the future.
While planning a strategy it is essential to consider that decisions are not taken in a vaccum
and that any act taken by a firm is likely to be met by a reaction from those affected,
competitors, customers, employees or suppliers.
A vision statement is a declaration of an organization's objectives, intended to guide its
internal decision-making. A vision statement is not limited to business organizations and may
also be used by non-profit or governmental entities.
A mission statement is a short statement of an organization's purpose, identifying the goal of
its operations: what kind of product or service it provides, its primary customers or market,
and its geographical region of operation.
Importance:
- It has been found in studies that organizations that have lucid, coherent, and meaningful
vision and mission statements return more than double the numbers in shareholder
benefits when compared to the organizations that do not have vision and mission
statements.
- vision and mission statements are embodiments of organizational identity and carry the
organizations creed and motto
- The vision and mission statements help to translate the objectives of the organization into
work structures
- vision and mission statements provide a philosophy of existence to the employees, which
is very crucial because as humans, we need meaning from the work to do
2) What is strategic management process? Explain each elements with details.
Ans: The strategic management process means defining the organization’s strategy. It is also
defined as the process by which managers make a choice of a set of strategies for the
organization that will enable it to achieve better performance.
Strategic management is a continuous process that appraises the business and industries in
which the organization is involved; appraises it’s competitors; and fixes goals to meet all the
present and future competitor.
Environmental Scanning- Environmental scanning refers to a process of collecting, scrutinizing
and providing information for strategic purposes. It helps in analyzing the internal and external
factors influencing an organization. After executing the environmental analysis process,
management should evaluate it on a continuous basis and strive to improve it
Strategy Formulation- Strategy formulation is the process of deciding best course of action for
accomplishing organizational objectives and hence achieving organizational purpose. After

2. conducting environment scanning, managers formulate corporate, business and functional
strategies.
Strategy Implementation- Strategy implementation implies making the strategy work as
intended or putting the organization’s chosen strategy into action. Strategy implementation
includes designing the organization’s structure, distributing resources, developing decision
making process, and managing human resources.
Strategy Evaluation- Strategy evaluation is the final step of strategy management process. The
key strategy evaluation activities are: appraising internal and external factors that are the root
of present strategies, measuring performance, and taking remedial / corrective actions.
Evaluation makes sure that the organizational strategy as well as it’s implementation meets the
organizational objectives.
3) Explain Mintzberg's 5 P's for strategy

3. Plan
This is probably where you will naturally start out when thinking about strategy. You will think
about producing a plan for your company, which is going to take you from where you are now to
where you would like to be in the future. For instance, your strategic plan could include such
basics as the products you are going to sell, how you are going to produce those products, and
how much they will cost at market. Basic business planning can be thought of as the foundation
of a good strategy
Ploy
In this part of strategy, your thinking is going to turn to your competition. There is no way to
ignore competition in business – it is always going to be there. Mintzberg says that getting the
better of competitors, by plotting to disrupt, dissuade, discourage, or otherwise influence them,
can be part of a strategy. This is where strategy can be a ploy, as well as a plan.
Pattern
The pattern part of this strategic model is all about noticing what is going on in your business
currently so that you can leverage those patterns into future success. In other words, you are
going to figure out exactly what has been working for you by looking to the past, and then you
are going to think of ways to continue (or even enhance) those patterns. Often, this kind of
strategy isn’t so much intentional as it is accidental. You might be surprised by a pattern that
develops in the market, but you can do your best to take advantage of that pattern once it has
revealed itself.
Position
"Position" is another way to define strategy – that is, how you decide to position yourself in the
marketplace. In this way, strategy helps you explore the fit between your organization and your
environment, and it helps you develop a sustainable competitive advantage.
Perspective
Every business comes at the market from their own unique perspective. For example, you might
run a business that is focused on making a classic product that has been for sale for many years –
meaning rather than innovation, your perspective on business is one of quality, execution, and
cost control. On the other hand, if you are trying to bring new ideas to the market, you will have
a perspective and culture that is geared in that direction instead.

4. 4) Explain McKinsey's 7 S of strategy
Ans: McKinsey 7s modelis a tool that analyzes firm’s organizational design by looking at 7
key internal elements: strategy, structure, systems, shared values, style, staff and skills, in order
to identify if they are effectively aligned and allow organization to achieve its objectives.
The model can be applied to many situations and is a valuable tool when organizational design is
at question. The most common uses of the framework are:
 To facilitate organizational change.
 To help implement new strategy.
 To identify how each area may change in a future.
 To facilitate the merger of organizations.
Strategy is a plan developed by a firm to achieve sustained competitive advantage and
successfully compete in the market. A sound strategy is the one that’s clearly articulated, is long-
term, helps to achieve competitive advantage and is reinforced by strong vision, mission and
values.
Structure represents the way business divisions and units are organized and includes the
information of who is accountable to whom. In other words, structure is the organizational chart
of the firm. It is also one of the most visible and easy to change elements of the framework.

5. Systems are the processes and procedures of the company, which reveal business’ daily activities
and how decisions are made. Systems are the area of the firm that determines how business is
done and it should be the main focus for managers during organizational change.
Skills are the abilities that firm’s employees perform very well. They also include capabilities
and competences. During organizational change, the question often arises of what skills the
company will really need to reinforce its new strategy or new structure.
Staff element is concerned with what type and how many employees an organization will need
and how they will be recruited, trained, motivated and rewarded.
Style represents the way the company is managed by top-level managers, how they interact, what
actions do they take and their symbolic value. In other words, it is the management style of
company’s leaders.
Shared Values are at the core of McKinsey 7s model. They are the norms and standards that
guide employee behavior and company actions and thus, are the foundation of every
organization.
5) Elaborate on business level and corporate level strategy? Explain SWOT analysis?
What is core competency? How can organization create values?
Ans: Corporate level Strategy: we can simply say that corporate level strategies are
concerned with questions about what business to compete in. Corporate Strategy involves the
careful analysis of the selection of businesses the company can successful compete in.
Corporate level strategies affect the entire organization and are considered delicate in the
strategic planning process.
- Types:
 Growth Strategy
 Diversification Strategy
 Stability Strategy
 Retrenchment Strategy
Business level Strategy: An organization's core competencies should be focused on
satisfying customer needs or preferences in order to achieve above average returns. This is done
through Business-level strategies. Business level strategies detail actions taken to provide value
to customers and gain a competitive advantage by exploiting core competencies in specific,
individual product or service markets. Business-level strategy is concerned with a firm's position
in an industry, relative to competitors and to the five forces of competition.
- Types:
 Cost Leadership
 Differentiation
 Focus

6. SWOT Analysis is the most renowned tool for audit and analysis of the overall strategic
position of the business and its environment. Its key purpose is to identify the strategies that will
create a firm specific business model that will best align an organization’s resources and
capabilities to the requirements of the environment in which the firm operates.
Strengths - Strengths are the qualities that enable us to accomplish the organization’s mission.
These are the basis on which continued success can be made and continued/sustained.
Weaknesses - Weaknesses are the qualities that prevent us from accomplishing our mission and
achieving our full potential.
Opportunities - Opportunities are presented by the environment within which our organization
operates. These arise when an organization can take benefit of conditions in its environment to
plan and execute strategies
Threats - Threats arise when conditions in external environment jeopardize the reliability and
profitability of the organization’s business.
Core Competence: A unique ability that a company acquires from its founders or develops and
that cannot be easily imitated. Core competencies are what give a company one or more
competitive advantages, in creating and delivering value to its customers in its chosen field.

7. 6) Mike Porter’s Five Forces Model?
Ans:

8. Risk of entry by potential competitors: Potential competitors refer to the firms which are not
currently competing in the industry but have the potential to do so if given a choice. Entry of
new players increases the industry capacity, begins a competition for market share and lowers
the current costs. The threat of entry by potential competitors is partially a function of extent of
barriers to entry. The various barriers to entry are-
 Economies of scale
 Brand loyalty
 Government Regulation
 Customer Switching Costs
 Absolute Cost Advantage
 Ease in distribution
 Strong Capital base
Rivalry among current competitors: Rivalry refers to the competitive struggle for market share
between firms in an industry. Extreme rivalry among established firms poses a strong threat to
profitability. The strength of rivalry among established firms within an industry is a function of
following factors:
 Extent of exit barriers
 Amount of fixed cost
 Competitive structure of industry
 Presence of global customers
 Absence of switching costs
 Growth Rate of industry
 Demand conditions
Bargaining Power of Buyers: Buyers refer to the customers who finally consume the product or
the firms who distribute the industry’s product to the final consumers. Bargaining power of
buyers refer to the potential of buyers to bargain down the prices charged by the firms in the
industry or to increase the firms cost in the industry by demanding better quality and service of
product. Strong buyers can extract profits out of an industry by lowering the prices and
increasing the costs. They purchase in large quantities. They have full information about the
product and the market. They emphasize upon quality products. They pose credible threat of
backward integration. In this way, they are regarded as a threat.
Bargaining Power of Suppliers: Suppliers refer to the firms that provide inputs to the industry.
Bargaining power of the suppliers refer to the potential of the suppliers to increase the prices of
inputs( labour, raw materials, services, etc) or the costs of industry in other ways. Strong
suppliers can extract profits out of an industry by increasing costs of firms in the industry.
Suppliers products have a few substitutes. Strong suppliers’ products are unique. They have high
switching cost. Their product is an important input to buyer’s product. They pose credible threat
of forward integration. Buyers are not significant to strong suppliers. In this way, they are
regarded as a threat.

9. Threat of Substitute products: Substitute products refer to the products having ability of
satisfying customers needs effectively. Substitutes pose a ceiling (upper limit) on the potential
returns of an industry by putting a setting a limit on the price that firms can charge for their
product in an industry. Lesser the number of close substitutes a product has, greater is the
opportunity for the firms in industry to raise their product prices and earn greater profits (other
things being equal).
7) Mike Poter's Generic chain model
Ans: Porters’ value chain is very important from view of developing on info. system/IT
strategy, because the value chain framework helps to build a relative competitive advantages
in terms of software in which each of organization are using. It also can be seen as one of two
dimension in maximizing corporate value creation when dealing with customers.
This model can be used to assess the effectiveness and efficiency of resource use within each
activity in the chain.
(a)Value activity describes the activities within and around an organization, and relates them
to an analysis of the competitive strength of the organization. Therefore, it evaluates which
value each particular activity adds to the organizations products or services.
(b)Primary activities- Primary activities are directly concerned with the creation or delivery
of a product or service. They can be grouped into five main areas: inbound logistics,
operations, outbound logistics, marketing and sales, and service.

10. Support activities - support activities which help to improve their effectiveness or efficiency
in those Primary activities. There are four main areas of support activities: procurement,
technology development (including R&D), human resource management, and infrastructure.
Any or all of these primary activities are vital in developing a competitive advantage.
(c) Inbound logistics: Refers to goods being obtained from the organisations suppliers ready
to be used for producing the end product.
Operations – Value creating activities that transform the input into final product.
Outbound logistics – Activities required to get the finished product to the customer, including
warehousing, order fulfillment, etc
Marketing and Sales – Activities that associates with getting buyers to purchase the product,
including channel selection, advertising, pricing, etc.
Services – Activities that maintain and enhance product value, including customer support,
repair service, etc.
Procurement – process for acquiring the various resource inputs to the primarily activities.
Technology development – Development of machines, computers, processes and system
expertise of staff.
Human resource – Activities to train develop and provide remuneration, recruiting staff.
Infrastructure – Maintenance of the general infrastructures of the organization including
management, finance and planning.
8) Mike Poter's National Competetive Model
Ans: Michael Porter developed an economic diamond model for (small-sized) businesses to
help them understand their competitive position in global markets. This Porter Diamond
Model, also known as the Porter Diamond theory of National Advantage or Porters double
diamond model, has been given this name because all factors that are important in global
business competition resemble the points of a diamond. Michael Porter assumes that the
competitiveness of businesses is related to the performance of other businesses. Furthermore,
other factors are tied together in the value-added chain in a long distance relation or a local or
regional context.

12. 9) Mike Poter's National Competetive Advantage Model for structure
Ans: Michael Porter introduced a model that allows analyzing why some nations are
more competitive than others are, and why some industries within nations are more
competitive than others are, in his book The Competitive Advantage of Nations. This
model of determining factors of national advantage has become known as Porters
Diamond. It suggests that the national home base of an organization plays an
important role in shaping the extent to which it is likely to achieve
advantage on a global scale. This home base provides basic factors, which support or
hinder organizations from building advantages in global competition. Porter
distinguishes four determinants:
Factor Conditions
The situation in a country regarding production factors, like skilled labor,
infrastructure, etc., which are relevant
for competition in particular industries. These factors can be grouped into human
resources (qualification level, cost of labor, commitment etc.), material resources
(natural resources, vegetation, space etc.), knowledge
resources, capital resources, and infrastructure. They also include factors like quality
of research on universities, deregulation of labor markets, or liquidity of national
stock markets. These national factors often provide initial
advantages, which are subsequently built upon.
Home Demand Conditions
Describes the state of home demand for products and services produced in a country.
Home demand conditions influence the shaping of particular factor conditions. They
have impact on the pace and direction of innovation and product development.
Related and Supporting Industries
The existence or non-existence of internationally competitive supplying industries
and supporting industries. One internationally successful industry may lead to
advantages in other related or supporting industries. Competitive supplying
industries will reinforce innovation and internationalization in industries at later
stages in the value system.
Firm Strategy, Structure, and Rivalry
The conditions in a country that determine how companies are established, are
organized and are managed, and that determine the characteristics of domestic
competition Here, cultural aspects play an important role. In different nations, factors
like management structures, working morale, or interactions between companies are
shaped differently.

13. 10) Explain Ansoff model? Explain expansion by concentration and integration?
Ans: Definition: Ansoff Matrix, or otherwise known as Product-Market Expansion
Grid, is a strategic planning tool, developed by Igor Ansoff, to help firms chalk out
strategy for product and market growth. It is a business analysis technique that is very
useful in identifying growth opportunities.
The matrix best exemplifies, the business gets an idea of how the success of the firm
relies on its existing and potential market and products. The product and market are
two dimensions of the grid, which when combined, gives birth to four growth
strategies.

14. Market Penetration: A growth strategy wherein the firm seeks to sell existing product
into existing market, with the aim of increasing overall market share. This can only be
possible when the company makes more sales to the present customers or by
discovering new customers within the established market, without significantly
changing the products
Market Development: The second quadrant in the Ansoff Matrix, is market
development. The strategy is adopted by the firms when they decide to sell their
existing product in the new markets. It is a growth strategy in which the firms identify
and develop new markets for the company’s current products. This strategy is more
riskier than the market penetration strategy
Product Development: A strategy in which firm seeks growth by introducing a new
product in the established market. The firm stays in the existing market but increases
the range of products offered by the company
Diversification: Diversification, as the name suggest, it is a business strategy in which
the company enters the new market with new product. In this strategy, the company
either commences or acquires a business, which is unrelated to existing product line
and market
Expansion through Integration
Definition: The Expansion through Integration means combining one or more present
operation of the business with no change in the customer groups. This combination can be done
through a value chain.

15. Vertical integration: The vertical integration is of two types: forward and backward. When an
organization moves close to the ultimate customers, i.e. facilitate the sale of the finished goods is
said to have made a forward integration. Example, the manufacturing firm open up its retail
outlet.Horizontal Integration: A firm is said to have made a horizontal integration when it takes
over the same kind of product with similar marketing and production levels. Example, the
pharmaceutical company takes over its rival pharmaceutical company.
Expansion through Concentration
Definition: The Expansion through Concentration is the first level form of Expansion Grand
strategy that involves the investment of resources in the product line, catering to the needs of the
identified market with the help of proven and tested technology.
 Market penetration strategy: The firm focusing intensely on the existing market with
its present product.
 Market Development type of concentration: Attracting new customers for the existing
product.
 Product Development type of Concentration: Introducing new products in the existing
market.
11) Expansion through diversification and internationalisation
Expansion through diversification
• Diversification
Diversification involves substantial change in business definition – singly or jointly – in terms of
customer functions, customer groups or alternative technologies of one or more of a firm’s

16. businesses. When new products are made for new markets then diversification takes place. The
notion of diversifying is therefore related to the newness of products or markets or both. By
adopting diversification, an organisation does something novel in terms of making new products
or serving new markets or doing both simultaneously.
1. Concentric or Related diversification
a. Marketing related concentric diversification
ex. Company in sewing machine biz entering into household appliances biz.
b. Technology related concentric diversification
ex. A leasing firm offering hire-purchase services to institutional customers also starts
consumer financing for purchase of durables to individual customers.
Marketing and technology related concentric diversification
ex. A synthetic water tank manufacturer makes other synthetic items such as pre-
fabricated doors and windows, while the technology relatedness is in the common technology of
plastic processing and engineering required for manufacturing these products.
1. Conglomerate or unrelated diversification
When an organisation adopts a strategy, which requires taking up those activities which are
unrelated to the existing business definition of any of its businesses, either in terms of their
consumer groups, customer functions or alternative technologies, it is conglomerate
diversification.
Reasons for Conglomerate Diversification
1. Spreading business risks by investing in different industries.
2. Maximising returns by investing in profitable businesses and selling out unprofitable ones.
3. Leveraging competancies in corporate restructuring by turning around loss making
companies.
4. Stabilising returns by avoiding economic upswings and downswings through having stakes
in different industries.
5. Taking advantage of emerging opportunities afforded by an expanding economy and
encouraging government policies.
6. Migrating from businesses under threat from the business environment.
7. Exercising of personal choice by industrialists and managers to create industrial empires
by owning businesses in diverse sectors.

17. Risks of Diversification
1. Diversification, especially unrelated, is a complex strategy to formulate and implement. It
demands a very high level of managerial, operational and financial competence to be
successful.
2. Diversification strategies demand a wide variety of skills. Different businesses operating
in diverse industries would require dissimilar sets of skills to manage them successfully.
3. Diversification results in decreasing commitment to a single or few businesses and
diverting it to several of them at the same time. This phenomenon often results in a situation
where businesses that need more attention get less and the ones needing little get more.
Imbalance of commitment does not help to realise the many benefits of diversification such
as maximum returns.
4. Diversification often does not result in the promised rewards. Experience around the world
shows that it is easy to be lured by the glamour of diversification and not be able to reap
the benefits of synergies and strategic advantage
5. Ultimately, In fact, cases are legion where the shareholders’ value instead of being
enhanced, has been lost due to diversification.
6. Diversification increases the administrative costs of managing, integrating and controlling
a wide portfolio of businesses. This can often offset the savings expected through synergies
in the case of related diversification or decreasing risks anticipated in unrelated
diversification.
Expansion through Internationalisation
International strategies are a type of expansion strategies that require orgnisations to market
their products or services beyond the domestic or national market. For doing so, an
organisation would have to assess the international environment, evaluate its own capabilities
and devise strategies to enter foreign markets.
12) Explain M&A as expansion strategy with examples. Advantages and disadvantages
M & A involve the combination of two organisations. The term merger refers to the integration
of two previously independent organisations into a completely new organization; Acquisition
involves the purchase of one organisation by another for integration into the acquiring
organisation. Organisations have a number of reasons for wanting to acquire or merge with other
firms, including horizontal or vertical integration, diversification; gaining access to global
markets, technology, or other resources; and achieving operational efficiencies, improved
innovation, or resource sharing. As a result, M&A have become a preferred method for rapid
growth and strategic change.

18. Types of Mergers & acquisitions
1. Horizontal mergers - Tata Steel acquiring Corus, Bridgestone and Firestone
2. Vertical mergers - Tata Power acquiring Boomi coalmines
3. Concentric mergers - Footware co merging with Hosiery co making socks.
4. Conglomerate mergers - Reliance Textiles to petrochemicals or Mobile Telephony
Domestic and Cross Border Mergers & acquisitions
M & A have been a very important market entry strategy as well as expansion strategy. It may be noted
that the major part of the recent FDI has been driven by cross border M&As. Between 1980 and 2000,
the value of cross border M&As grew at an average annual rate of over 40%. It continues to be a
powerful driver of international investment and globalisation. Several industries, such as automobiles,
pharmaceuticals, banking, telecom, etc. have undergone a global restructuring as a result of cross
border M&As.
Advantages of M&As
 Market entry
 Possession of marketing infrastructure
 Achieving economies of scale
 Increasing the market power
 Diversification
 Acquisition of technology
 Use of surplus funds
 Optimum utilization of resources and facilities
 Product mix optimisation
 Pre-emptive strategy (to block competitor from acquisition)
 Horizontal or Vertical integration
 Tax benefits
 Logistical factors
 Acquisition of brands
 Minimisation of Risk
 Regulatory factors
Ex. Asian Paints takeover of Singapore based Berger paints – entry to 11 countries incl China.
Tata Steel – Corus – entry to Europe and Latin America.
Disadvantages of M&As
 Indiscriminate acquisitions land several companies in financial and other problems
 When company is taken over, its problems are also often inherited

19.  If adequate homework was not done and the evaluation was not right, the acquisition
decision could be wrong.
 Some of the units acquired would have problems such as old plant, obsolete technology,
surplus or demoralised labour
 The company may not have the experience and expertise to manage the unit taken over if
it is in an entirely new field.

13) Balance Score card and how it is used as strategic tool in today’s modern
business
 The Balanced Scorecard is a management tool that provides stakeholders with a
comprehensive measure of how the organization is progressing towards the achievement
of its strategic goals.
 The balanced scorecard is a strategic planning and management system that is used
extensively in business and industry, government, and non-profit organizations worldwide
 It helps to align business activities to the vision and strategy of the organization,
improve internal and external communications, and monitor organization performance
against strategic goals.
NEED for BSC –
 “What you measure is what you get”. To cite an example, a company with accurate time
keeping system will have a better record of timely attendance of employees than the
company without it.
 It is a future oriented management system. It helps organizations to first formulate their
vision and strategy and then to translate them into action.
 It provides feedback around both the internal business processes and external
outcomes in order to continuously improve strategic performance and results.
Kaplan and Norton describe the innovation of the balanced scorecard as follows:
 "The balanced scorecard retains traditional financial measures. But financial measures tell
the story of past events, an adequate story for industrial age companies for which
investments in long-term capabilities and customer relationships were not critical for
success.
 These financial measures are inadequate, however, for guiding and evaluating the journey
that information age companies must make to create future value through investment in
customers, suppliers, employees, processes, technology, and innovation."
The balanced scorecard suggests that we view the organization from four perspectives, and to
develop metrics, collect data and analyze it relative to each of these perspectives:
1. Financial Perspective
2. Customer Perspective
3. Internal Business Process Perspective
4. Learning and Growth Perspective

20. Financial Perspective –
 Measures which reflect financial performance, for example, number of debtors, cash
flow or return on investment. Financial performance of an organization is fundamental
to its success. Financial figures suffer from two major drawbacks:
(a) They are historical. Whilst they tell us what has happened to the organization they may not
tell us what is currently happening, or be a good indicator of future performance.
(b) It is common for the current market value of an organization to exceed the market
value of its assets. The excess value can be thought of as intangible assets. These figures are not
measured by normal financial reporting.
 Financial perspective becomes useful when our figures are benchmarked against
competitors’ and segment/industry leader’s figures. Such comparison throws questions
like, why is our credit period higher than our competitors. It gives us a clue as to what we
are not doing as on date and what can be done in future.
Customer Perspective –
 Measures having a direct impact on customers, for example time taken to process a phone
call, results of customer surveys, number of complaints or competitive rankings.
 There is an increasing realization of the importance of customer focus and customer
satisfaction in every business.
 These are leading indicators: if customers are not satisfied, they will eventually find other
suppliers who will meet their needs. Poor performance from this perspective is thus a

21. leading indicator of future decline, even though the current financial picture may look
good.
 In developing metrics for satisfaction, customers should be analyzed in terms of kinds of
customers. If percentage of repeat orders or business from existing customer is
declining, it is a sign of dissatisfaction among the customers and a warning of business
moving downhill in near future.
International business process perspective –
 Measures which reflect the performance of key business processes, for example the time
spent prospecting (searching, analysing), number of units that required rework or
process cost.
 In simple terms, it is analysis of the core business performance like quality of product,
cost, availability, etc.
Learning and growth perspective –
 Measures describing the companies’ learning curve, for example number of employee
suggestions or total hours spent on staff training, in-house process improvements,
etc.
 The specific measures within each of the perspectives will be chosen to reflect the
drivers of the particular business. Ideally, there should be about 3 goals/measures in
each of the perspectives for a single year.
 Even when there are 10 goals, only 3 should be chosen in a year. Often there is a spill
over effect of improvement in those three areas on to other desired areas.
Purpose of BSC –
a) Clarify and update strategy
b) Identify and align strategic initiatives
c) Link strategic objectives to long term targets and annual budgets
d) Communicate strategy throughout the company
e) Align unit and individual goals with strategy
f) Conduct periodic performance reviews to learn about and improve strategy
Advantages –
a) Focus from generalities to specifics
b) Focus on few critical parameters
c) It shifts focus from finance and accounts to entire operations
d) It guards against sub-optimisation
e) Looks at complete picture rather than parts of it in isolation.
f) It is not control oriented but goal oriented.
g) It assumes that what you measure is what you get.
h) It promotes cross functional management
i) It establishes partnership models
j) It is team oriented and not individual oriented
k) It helps understand interdependencies and intra-relations

22. 14. BGG Model and GE nine cell model
• The BCG matrix or also called BCG model relates to marketing.
• The BCG model is a well-known portfolio management tool used in product life cycle
theory. BCG matrix is often used to prioritize which products within company product
mix get more funding and attention.
• The BCG matrix model is a portfolio planning model developed by Bruce Henderson of
the Boston Consulting Group in the early 1970's.
• The BCG model is based on classification of products (and implicitly also company
business units) into four categories based on combinations of market growth and
market share relative to the largest competitor.
When to use the BCG Model?
• Each product has its product life cycle, and each stage in product's life-cycle represents a
different profile of risk and return. In general, a company should maintain a balanced
portfolio of products.
• Having a balanced product portfolio includes both high-growth products as well as low-
growth products.
• A high-growth product is for example a new one that we are trying to get to some market.
• It takes some effort and resources to market it, to build distribution channels, and to build
sales infrastructure, but it is a product that is expected to bring the gold in the future.
• An example of this product would be an iPod or Iphone.
• A low-growth product is for example an established product known by the market.
Characteristics of this product do not change much, customers know what they are
getting, and the price does not change much either.

23. • This product has only limited budget for marketing. It is the milking cow that brings in
the constant flow of cash. An example of this product would be a regular Colgate
toothpaste.
• But the question is, how do we exactly find out what phase our product is in, and how do
we classify what we sell? Furthermore, we also ask, where does each of our products fit
into our product mix? Should we promote one product more than the other one? The
BCG matrix can help with this.
• The BCG matrix reaches further behind product mix. Knowing what we are selling helps
managers to make decisions about what priorities to assign to not only products but also
company departments and business units.
Placing products in the BCG matrix results in 4 categories in a portfolio of a company:
BCG STARS (high growth, high market share)
 Stars are defined by having high market share in a growing market.
 Stars are the leaders in the business but still need a lot of support for promotion a
placement.
 If market share is kept, Stars are likely to grow into cash cows.
BCG QUESTION MARKS (high growth, low market share)
 These products are in growing markets but have low market share.
 Question marks are essentially new products where buyers have yet to discover them.
 The marketing strategy is to get markets to adopt these products.
 Question marks have high demands and low returns due to low market share.
 These products need to increase their market share quickly or they become dogs.
 The best way to handle Question marks is to either invest heavily in them to gain market
share or to sell them.
BCG CASH COWS (low growth, high market share)
 Cash cows are in a position of high market share in a mature market.
 If competitive advantage has been achieved, cash cows have high profit margins and
generate a lot of cash flow.
 Because of the low growth, promotion and placement investments are low.
 Investments into supporting infrastructure can improve efficiency and increase cash flow
more.
 Cash cows are the products that businesses strive for.
BCG DOGS (low growth, low market share)
 Dogs are in low growth markets and have low market share
 Dogs should be avoided and minimized
 Expensive turn-around plans usually do not help
LIMITATIONS OF THE BCG MATRIX MODEL

24.  The first problem can be how we define market and how we get data about market share
 A high market share does not necessarily lead to profitability at all times
 The model employs only two dimensions – market share and product or service growth
rate
 Low share or niche businesses can be profitable too (some Dogs can be more profitable
than cash Cows)
 The model does not reflect growth rates of the overall market
 The model neglects the effects of synergy between business units
 Market growth is not the only indicator for attractiveness of a market
GE Nine cell Matrix
 This is a form of portfolio analysis used for classifying product lines or strategic business
units within a large company
 It was developed by McKinsey for the General Electric Company
 It assesses areas of the business in terms of two criteria:
The attractiveness of the industry/market concerned
The strength of the business
Difference between BCG and GE –
 The GE matrix involves a wider analysis of the firm’s operations
 The dimensions of the GE matrix are industry attractiveness and business strength (rather
than market share and market growth)
 There are nine cells and a wider choice of strategies
 The Boston Matrix focuses on products within the firm’s product range. The GE matrix
can be extended to look at strategic business units.
Strategic Business Units (SBUs) –
 A particular product market combination that typically requires its own business plan.
 A part of a company that is large enough to have its own well-defined markets, attract its
own set of competitors and demand tangible resources and capabilities from the overall
corporation.
 A discrete grouping within an organisation with delegated responsibility for strategically
managing a product/ service or group of products of services.
 A division within a large national or multinational company is an SBU.
Industry attractiveness
 The vertical axis of the matrix is industry attractiveness.

25.  This concerns the attractiveness to a firm of entering, or remaining, in a particular
industry.
 Industry attractiveness is assessed by considering a range of factors each of which is
given a weighting to produce a composite picture.
Criteria which makes a market attractive
• Market size
• Growth rate
• Overall returns in the industry
• Industry profitability
• Intensity of competition
• Profit margins
• Differentiation
• Industry fluctuations
• Customer/supplier relations
Business unit strength
• The horizontal axis of the matrix is the strength of the business unit.
• This refers to how strong the firm or SBU is in terms of the market.
• A market might be very attractive but the firm lacks strengths in terms of supplying the market.
• As with industry attractiveness a composite of industry strength is based on weighting a range
of factors.
• Notice that the Boston Matrix dimensions are included in the GE matrix - market growth is an
element of industry attractive and market share is an element in business strength.
The Matrix arranges the company’s SBUs in three bands and nine boxes
 Band X - Successful SBUs – in which the business is strong and the industry is attractive
 Band Y - Mediocre SBUs – in which either the industry is less attractive and/or the
business is lacks strengths
 Band Z - Disappointing SBUs - in which the business is weak and the industry unattractive
Invest for CELL 1 –
 This is a very attractive market in which the firm has great strength
 Distinctive competences can be harnesses to good advantages
 Recommended strategies:
 Invest for growth
• Variability of demand
• Rate of technological change
• Volatility
• Availability of market
intelligence
• Availability of work force
• Global opportunities
• PEST factors
• Entry and exit barrier
• Government regulation

26.  search for global opportunities
 maximise market share
 seek dominance
 concentrate on building up strength in this area
Manage selectively (cells 2 and 4) –
 These two cells record a high rating in either business strength or industry attractiveness
and a medium rating in the other This suggests that these SBUs show some promise
 Recommended strategy:
 Investment for growth
 Invest to expand existing segments
 Search for new segments
 Build on existing strengths in order maintain competitive ability and even to
challenge for leadership
Manage selectively (cells 3,5,7) –
 In each case the SBU has certain positive features
 High in one of the dimensions or middling in both
 Recommended strategy:
 Invest for earnings
 Maintain/defend market position
 Concentrate on selected segments
 Specialise in niches where strengths could be built on
 Invest selectively
Harvest (cells 6 and 8) –
 In each case either market attractiveness or business strength is low and other one is
only medium
 Recommended strategies:
 Manage for cash
 Avoid unnecessary investment
 Move to the most profitable segments
 Prune product lines
 Specialise in profitable niches
 Consider exit
Divest (Cell 9) –
 This is an unattractive market in which the firm has no strength
 Recommended strategy:
 Exit the market.

27.  Time the exit in order to sell at a time that will maximize cash value.
 In the meantime, cut fixed costs and avoid investment.
 VUCA env and how develop a sustainable business in it?
Volatility, Uncertainty, Complexity and Ambiguity.
• The deeper meaning of each element of VUCA serves to enhance the strategic significance
of VUCA foresight and insight as well as the behaviour of groups and individuals in
organizations. It discusses systemic failures and behavioural failures, which are
characteristic of organisational failure.
• V = Volatility. The nature and dynamics of change, and the nature and speed of change
forces and change catalysts.
• U = Uncertainty. The lack of predictability, the prospects for surprise, and the sense of
awareness and understanding of issues and events.
• C = Complexity. The multiplex of forces, the confounding of issues, no cause-and-effect
chain and confusion that surrounds organization.
• A = Ambiguity. The haziness of reality, the potential for misreads, and the mixed meanings
of conditions; cause-and-effect confusion.
These elements present the context in which organizations view their current and future state.
They present boundaries for planning and policy management. They come together in ways
that either confound decisions or sharpen the capacity to look ahead, plan ahead and move
ahead. VUCA sets the stage for managing and leading. The particular meaning and relevance
of VUCA often relates to how people view the conditions under which they make decisions,
plan forward, manage risks, foster change and solve problems. In general, the premises of
VUCA tend to shape an organization's capacity to:
• Anticipate the Issues that Shape Conditions
• Understand the Consequences of Issues and Actions
• Appreciate the Interdependence of Variables
• Prepare for Alternative Realities and Challenges
• Interpret and Address Relevant Opportunities
15) Turnaround strategy and symptoms of an organisation sliding down. How to revive
stagnating organisations?
Danger Signals
• Deteriorating performance Indicators:
1) Decreasing Market share

28. 2) Decreasing constant rupee sales:
3) Decreasing Profitability
• Deteriorating Financing Problems:
1) Increasing reliance on debt: A substantial rise in the amount of debt , a lopsided debt-to-equity
ratio and a lowered credit rating may cause banks and other lenders to apply restrictions which
would further compound the financial problems.
2) restrictive dividend policy: to conserve cash is a danger signal.
• Investment Policies:
1) Inadequate Reinvestment in Business: Adequate reinvestment in plants, machinery and
maintenance is necessary for a company to stay competitive.
2) Proliferation of New ventures at the expense of the priority business:
A common policy in troubled companies is to ignore the basic business and rely on new
ventures.
• Lack of Planning
• Problems at Top Management Levels:
1) Lack of receptiveness of CEO
2) Management succession problem
3) Ineffective directors/management team
Dysfunctional consequences of organizational decline
• Centralization: DM passed upwards, less participation, control is emphasized (DM =
Decision Making)
• No long term planning
• Innovation curtailed
• Scapegoating: Blamegame
• Resistance to new alternatives
• Turnover
• Low morale, Conflicts
• Loss of slack; uncommitted resources are used to cover operating expenses
• Fragmented pluralism; special interest groups organize and become more vocal
Loss of credibility, Nonprioritized cuts.
• Managers caught in the middle
• Reducing organizational size / delayering for avoiding takeovers
What is the Solution?

29. • Meet the challenge upfront
• Increase communication
• Increase participation for redefining strategy and goals
• Look innovative ways to deal with the problem.
Turnaround Management refers to the management measures that reverse the negative trends in
the performance indicators of the company. In other words TM refers to the management measures
which turn a sick company back to a healthy one or those measures which reverse the deteriorating
trends of the performance indicators such as falling market share, sales or worsening debt-equity
ratio.
The important factors employed in turnaround management are as follows:
• Management factor: appoint a new CEO (Motorola)
• Human Resource factor: shed surplus manpower, recruit competent people
• Production Facilities: Modernize the plants which improves efficiencies at the shop floor.
• Financial Management: Arranging cheaper finance, cost cutting etc.
• Product Mix modification: Unprofitable products needs to be dropped, some current
products need quality improvements, new models need to be introduced.
• Marketing Strategy: enter new markets/segments etc.
• Miscellaneous: liquidation in assets, close down some divisions, restraints on emoluments
of employees, better raw material procurement etc.
Restructuring (M&As, sell offs etc) may be resorted in the following cases:
• To turnaround a sick unit.
• To prevent a unit from becoming sick.
• To further improve the vitality and performance of units which are doing well.
• To facilitate growth and expansion.
• To improve the organizational efficiency.
• To influence management control.
16) TQM and BPR and how is it being practiced in industries to make them competitive
in current global scenario?
Total Quality Management (TQM)
TQM is a technique developed by Edward Deming to improve the efficiency of flexible work
teams. “Total quality management is defined as an integrated approach in delighting customers
(both internal and external) by meeting their expectations on a continuous basis, through
everyone involved with the organization, working on continuous improvement along with
proper problem solving methodology.”

30. Pillars of TQM
1. Customer Satisfaction
2. Continuous improvement
3. Company-wide quality culture
4. Leadership & strategic planning
5. Employee involvement and focus
6. Stakeholder involvement and Focus
7. Top management committment
 Broad Goal of TQM is continuous improvement.
 Aims to impress upon workers the importance of continuously improving the efficiency of the
production process in order to
a) Reduce Cost b) Improve Quality c) Reduce Waste
Workers in a TQM system are expected to make suggestions for improving all aspects of the work
process and are expected to share their specialized knowledge with management so that it can be
communicated throughout the organization. TQM is a rational technique which is driven by hard
statistical data on the need for improvement. TQM seeks to introduce improvements through four
key components.
1. Systems
The need for improvement in the system is revealed by statistical process control and
benchmarking. Statistical process control is the accurate and continuous measurement of quality
and is typified by the measurement of frequency of failures – how often and where failures are
concentrated and the analysis of cause and effect. Benchmarking is the activity of using the
achievements of some other organization that is very successful in delivering quality as a model
of what company can achieve. TQM demands constant monitoring and awareness of best practices.
After improvement has taken place in the system, TQM ensures the quality of operations through
constant quality assurance and quality control.
2. Processes
TQM regards every activity of the organization as a point of a process. In so doing, it
encourages the constant review of processes through project improvement, waste elimination, and
process chain re-engineering. (revisiting the process from improvement angle)
3. People
Yet another component of TQM is people. TQM organizations value their employees both
as individuals as well as for their contribution to the growth of the organization. The value placed
on the quality of individuals is demonstrated through hiring the best, enabling life-long learning,
elimination of specialization, instituting suggestion schemes, and establishing quality circles.
4. Management
TQM requires at the top management vision and mission for the organization, commitment
for quality, empowering employees, and open mind for recognizing and appreciating achievers.
Business Process Reengineering (BPR)

31. Definition by M Hammer.
BPR is defined as the critical analysis or fundamental rethinking and radical redesign of existing
business processes to achieve breakthrough or dramatic improvements in performance measures
such as cost, quality, service and speed. BPR has often been confused with the quality movement.
Quality specialists tend to focus on incremental change and gradual improvement of processes,
while proponents of reengineering seek radical redesign and drastic improvement of processes.
It is based on four key words:
1. Fundamental
Why do we do what we do? And Why do we do it the way we do?
Why the old rules and assumptions exist?
2. Radical
Disregard all existing structures and procedures, and inventing completely new ways of
accomplishing work.
3. Dramatic
Not about making marginal improvements.
4. Processes
a. Dysfunctional b. Importance c. Feasibility
17) “Innovate or Perish” is the biggest challenge faced by any organisation. What are
the strategies being implemented to make the org sustainable?
Innovate or Perish
1. Incremental Vs Radical change
2. Strategic type of change
3. Technological change
4. New Product and Services
5. Learning organisation
Continuous Improvement for Sustainable Business
• Product Quality
• Technology
• Productivity
• Processes
• Organisational Culture
• Leadership
• Safety
Approach towards Market Maximisation

32.  “Adopt stability and safety first policy, rest leave to emerging markets”. Do you
believe in this strategy? Why? or why not?
18) Red, blue and purple ocean with industry examples.
The modern masterpiece of "Blue Ocean Strategy" puts forward the classic business concepts
of "Red Oceans" and "Blue Oceans", which have helped thousands of companies to go beyond
keen competitions, create new markets in their corresponding industries.
To compete in the bloody "Red Oceans", enterprises end up with very thin or even no profits;
nevertheless, to create the brand-new "Blue Oceans", enterprises have to bear heavy cost and
involve unforeseeable risks. In light of helping enterprises to search and redefine their
competitive edges in the ever-fiercely-competitive business arena, Mr Jeffrey Hui, "The Father
of Purple Oceans", suggests enterprises to leverage the "Purple Oceans", the most value-
adding dynamic opportunity, lies between the "Red Ocean" and "Blue Oceans".
"Purple Ocean Strategy", synergizing the Western business wisdom of strategic marketing
and brand management with the Chinese wisdom of traditional and management philosophies,
presents business owners and practitioners with vaster horizons about the business world in the
new era.
Red Ocean
• Compete in existing market place, overcrowded and with limited growth shared by all.
• Beat the competition on quality and cost – two dimensional
• Exploit existing demand
• Align the whole system to make value – cost trade off
Blue Ocean
• Create uncontested market place
• Make the competition irrelevant

33. • Create and capture new demand
• Break the value-cost trade off / Create a switching cost
• Create complete paradigm shift
• Align firm’s activities in pursuit of Innovation.
Purple Ocean
Just as Blue Ocean Strategy states that a Red ocean Strategy (Competitive Strategy) does
not guarantee success for the firm. Purple Ocean strategy also claims that Blue Ocean
Strategy cannot guarantee the business success in the long run since the Blue Ocean strategy
will finally turn Red.