Here are short notes on the Economic Environment: (a) Rates: Interest rates, inflation rates, exchange rates which impact costs and demand. (b) GDP Aspects: GDP growth rate, per capita income, income distribution which indicate market potential. (c) Customer related: Disposable income, spending patterns, debt levels affect demand for products/services. (d) External Trade: Export/import policies, trade barriers, trade agreements affect competitiveness. (e) General: Economic conditions, economic policies, business cycles influence overall business environment. The economic environment analysis helps understand market opportunities and threats from macroeconomic forces. It is important for effective strategic planning and decision making

1. Question paper pattern
NOV. 2011
In all 7 Questions – 50 marks
(Q. Nos. 8 to Q. No 14)
Question no 8 Compulsory + Attempt any 5 more
Q. No 8 a. ………………………… 3 Marks 3 X 5 = 15
b. ………………………… 3 Marks
c. ………………………… 3 Marks
d. ………………………… 3 Marks
e. ………………………… 3 Marks
Q. No 9 4+3=7
a True or false / reasons 4
1. ………………………… 2 marks
2. ………………………… 2 marks
b Fill in the blanks 3
1. ………………………… 1 marks
2. ………………………… 1 marks
3. ………………………… 1 marks

2. Q. No 10 Explain concepts 1X7=7
1. ………………………… 1 Mark
2. ………………………… 1 Mark
3. ………………………… 1 Mark
4. ………………………… 1 Mark
5. ………………………… 1 Mark
6. ………………………… 1 Mark
7. ………………………… 1 Mark
Q. No 11 Explain concepts 1X7=7
a 1. ………………………… 1 marks 4
2. ………………………… 1 marks
3. ………………………… 1 marks
4. ………………………… 1 marks
b 1. ………………………… 1 marks 3
2. ………………………… 1 marks
3. ………………………… 1 marks

3. Q. No 12 4+3=7
a ………………………… 4 Marks
b. ………………………… 3 Marks
Q. No 13 Distinguish between 4+3=7
a. ………………………… 4 marks
b. ………………………… 3 marks
Q. No 14 Short note 4+3=7
a. ………………………… 4 marks
b. ………………………… 3 marks

4. Question Number 8 is compulsory.
Answer any five questions from the rest. Marks
8. (a) Elaborate the characteristics of Business Environment with reference to
decision Making. 3
(b) Industry is a composite of competitive pressures in five areas of the overall
market. Briefly explain the competitive pressures. 3
(c) You are appointed as a Strategic Manager by XYZ Co. Ltd. Being a Strategic
Manager what should be your tasks to perform? 3
(d) Successful implementation of any project needs additional funds. What are the
different sources of raising funds and their impact on the financial strategy which
you as a Financial Manager consider? 3
(e) Describe briefly the use of Strategic Management techniques in Educational
Institutions. 3
9. (a) State with reasons which of the following statements is correct of incorrect: 2x2=4
(i) The process of strategy avoids matching potential of the organization with the
environment opportunities.
(ii) The role of human resource manager is significant in building up core
competency of the firm.
(b) Fill in the blanks in the following statements with the most appropriate word: 3x1=3
(i) Strategic Management is not a box of tricks or a handle of techniques is
analytical thinking and _______ of resources to action.
(ii) Benchmarking is a process of continuous improvement in search for _______
advantage.
(iii) Divestment is a part of rehabilitation and is adopted when a ______ has been
attempted but has proved to be unsuccessful.

5. 10. Explain the meaning of the following concepts: 7x1=7
(i) Joint Venture
(ii) Service Marketing
(iii) Value Chain Analysis
(iv) Enlightened Marketing
(v) Strategic Vision
(vi) Person Marketing
(vii)Logistic Strategic
11. (a) In the light of BCG Growth Matrix state the situation under which the
following strategic under which the following strategic options are
suitable 4x1=4
(i) Build
(ii)Hold
(iii)Harvest
(iv)Divest
(b) Explain the strategic role of Human Resources Management in the
following areas: 3x1=3
(i) Facilitation of Change
(ii) Building Core Competency
(iii) Development of Work Ethics and Culture.

6. 12. (a) What is Strategic Decision Making? Briefly explain the major
dimensions of strategic decisions. 1+3=4
(b)What are the requirements for the successful implementation of supply
chain management system? Discuss. 3
13. Distinguish between the following:
(a) Micro Environment and macro Environment. 4
(b) Concentric Diversification and Conglomerate Diversification. 3
14. Write short notes on the following: 4+3=7
(a)Role of It in Business Process reengineering.
(b)Importance of Corporate Culture.

7. 2
CHAPTERS
1. Business Environment
2. Business Policy & Strategic Management
3. Strategic Analysis
4. Strategic Policy
5. Formulation of Strategy
6. Strategic implementation & control
7. Reaching Strategic Edge

8. CONTENTS 3
CHAPTER 1 : BUSINESS ENVIRONMENT
1. Introduction
2. Business
3. Objectives of a Business (Eco & Soc.)
4. Environmental Influences on Business
5. Why Environmental Analysis?
6. Characteristics of Business Environment
8. Relationship between Organization and its Environment
9. The Micro and Micro Environment
10. Elements of Macro Environment
11. Elements of Macro Environment
12. Strategic Responses to the Environment (3 types)
13. Competitive Environment (Porter)
14. Porter’s Five Forces Model – Competitive Analysis

9. 4
CHAPTER 2
BUSINESS POLICY AND STRATEGIC MANAGEMENT
1. Introduction
2. Business Policy as a Discipline (1911-Harward)
3. What is a Strategy (s-s)
4. Generic strategic alternatives (4 types)
5. The Dynamics of Competitive Strategy (5 factors)
6. Strategic Management (start – vision- end- edge)
7. Strategic Decision Making
8. The Task of Strategic Management
9. Vision, Mission and Objectives
10. Strategic Levels in Organizations (3 levels)

10. 5
CHAPTER 3
STRATEGIC ANALYSIS
1. Introduction
2. Strategic Analyses
3. Situational Analysis
4. The Methods of Industry and Competitive Analysis
5. Swot Analysis
6. Tows Matrix
7. Portfolio Analysis (BCG,Ansoff’s,GEC,portfolio)
CHAPTER 4
STRATEGIC PLANNING
1. Introduction
2. Corporate Strategy
3. The Stages of Corporate Strategy Formulation
Implementation (whole story)
4. Strategic Alternatives (Cost leadership, generic)

11. 6
CHAPTER 5
FORMULATION OF FUNCTIONAL STRATECY
1. Introduction (facilitate flow of SM to all depts)
2. Marketing Strategy Formulation
3. Financial Strategy Formulation
4. Production Strategy Formulation
5. Logistics Strategy
6. Research and Development
7. Human Resource Strategy Formulation

12. 7
CHAPTER 6
STRATEGIC IMPLEMENTATION AND CONTROL
1. Introduction
2. Interrelationships between Strategy Formulation
and implementation
3. Issues in Strategy Implementation
4. Organization and Strategy Implementation
5. Strategic Business Units & Core Competence
6. Leadership and Strategic Implementation
7. Building a Strategy-Supportive Corporate Culture

13. 8
CHAPTER 7
REACHING STRATEGIC EDGE
1. Introduction
2. Business Process Reengineering
3. Benchmarking
4. Total Quality Management (TQM)
5. Six Sigma and Management
6. Contemporary Strategic Issues

14. 9
Chapter 1
BUSINESS
ENVIRONMENT

15. 10
DEFINITION OF BUSINESS
1. B. O. Wheeler
“Business is an institution organised & operated to provide goods &
services to society under the incentive of private gain.”
2. L. H. Haney
“Business is a human activity directed towards producing or
acquiring wealth through buying and selling activities.”
MEANING OF BUSINESS
Entity View Work View
(occ/profession) Process
Company /
(Buy/sell/produce)
corporation

16. 11
Objectives of Business
Basic objective
1. Survival Will & anxiety to remain in Business
Depends upon nature of business /
competence / Financial strength / Eco.
conditions
Smooth workflow
2. Stability Least resistance in hostile environment
Conservative & cautious objective
Dynamic response

17. 12
3. Growth Qualitative- Image / product innovation
/ Brand image / ISO 9000 / HR / Foreign Entry
Quantitative – Net worth (Total cap. + Res. + )
value / volume / assets / sales/ output / no. of
people / capacity / power - R/W mat.
Operational objective
4. Efficiency Productivity - Input - output ratios
Utilise resources efficiently

18. 13
Survival
5. Profitability Main objective
Creation of wealth for shareholders
Self – reliance
Competitive strength
Qly. Product to customer
6. Others Employee welfare
Compliance of laws
Societal welfare
Stakeholders satisfaction

19. 14
Business does not function in an isolated vacuum
OR
What are the interactions / exchanges between
organizations & environment ?
Exchange of information Exchange of resources Exchange of influence
& power
Inflow Outflow Men materials Other Inputs Inflow Outflow
machines etc.

20. 15
Business does not function in an isolated vacuum
OR
What are the interactions / exchanges between organizations
& environment ?
Exchange of information Exchange of resources Exchange of influence
& power
Inflow Outflow
Adverisements
Market condition
Annual Reports
Technological Press releases
Demographical Stock exchanges
Govt. policies Trade unions
Govt. agencies
Activities of other co’s
Employees

21. 16
Exchange of information Exchange of resources Exchange of influence
& power
Outflow
Inflow Inflow Outflow
outflow
Inflow Govt.
If a firm has
5M’s Goods & services Other comand over
M organisation resources, it
M Values & interests can dictate terms
M Suppler Eg. Monopoly
M Eg. Qly. Managers
M Investor (Infosys)
21
Customers

22. 17
Brief Note on Environmental Influence on Business
1. Does not exist in vacuum.
2. Buss. will thrive only if it interacts with environment.
3. Passive to environment will fade away.
4. Givers and takers
5. Opportunities and threats
6. Identity, appraise and respond
7. Monitor the environment for growth/survival and prosperity

23. 18
Characteristic of Business Environment
1. Complex - factors / events / conditions
2. Dynamic - Fast changing
3. Multifaceted - Depends upon the perception of the observer
4. Far - reaching impact opportunities / threats
Why ? Environmental Analysis ?
(a) Study current environment
(b) Study change in environment
(c) Inputs for strategic Decision making
(d) Strategic thinking for fresh view points

24. 19
Problems in understanding environment
1. Diversity - All factors cannot be studied
2. Uncertainty - Technological changes
3. Complexity - Don’t rely on past
4. Take source - risk - Don’t be overcautious
Framework for understanding environment
1. Monitor - Gather info.
2. Audit - Static or dynamic
3. Evaluate - Eco / political / social / cultural
4. Review Task

25. 20
Problems in understanding environment
1. Diversity - All factors cannot be studied
2. Uncertainty - Technological changes
3. Complexity - Don’t rely on past
Strategic responses to Env.
1. Env. - Stable – least resistance – non-ambitious
2. Env. - Dynamic – approach with caution - anticipate
3. Env. - Hostile or turbulent - dynamic response - proactive
25

26. What are the various environmental influences on business? (SWOT Analysis) 21
Item Description Example
1. Opportunity Opportunity is a favorable Increase in consumer income, and growing
condition in the Firms demand for the products or services that a
‘environments which company provides.
enables it to consolidate and
strengthen its position.
2. Threat Threat is an Unfavorable Emergence of strong new competitors who
condition in the Firms are likely to offer stiff competition to the
environment which creates a existing companies
risk for, or causes damage to
the Firm
3. Strength Strength is an inherent Superior R& D skills which can be used
capacity which a Firm can for new product development so that the
use to gain strategic company gains competitive advantage
advantage over its Huge production infrastructure leading to
competitors mass production & economies of scale.
4. Weakness Weakness is an inherent Over dependence on a single product line or
limitation or constraint single Customer or Supplier which is
which creates a strategic potentially risky for a Firm in times of
disadvantage. crisis

27. 22
Q. What are the board categories or components of
environment ?
 MICRO ENVIRONMENT
1. Micro Environment is the immediate environment
2. Internal Environment Task Environment
3. Micro Environment is related to small area or
immediate periphrey of an Firm
4. Micro-Environment affects business and
marketing in the daily operating level
5. Some of the issues relating to micro env. are
PTO

28. 23
A. Employees of the firm
B. Customer base
C. Way of raising finance
D. Link between the firm and supplier
E. Competitors
F. Intermediaries
MACRO-ENVIRONMENT
A. General Env.
B. External to the firm
B. External to the firm
C. Consists of individuals, groups, agencies, organisation etc
D. Some of the issues of macro env. are

29. 24
A. Threats due to competition
B. New technology which is a threats to the products
C. Bargaining power of suppliers
D. Bargaining power of consumers

30. 25
Q. Explain the elements of Micro Environment ?
 Micro Environment Elements
 Competitors :
 Organization Itself
a) Objectives, goals, strengths
b) Owners:
c) Governing Body:
d) Employees:
 Suppliers :
 Market :
 Intermediaries :
 Consumers/Customers :

31. 26
Macro Environment Elements
Socio cultural Economic Legal & Political Global
Env. Env. Env. Env.
Population & Technological
Env. Env.

32. 27
Q. Explain the factors Socio-Cultural environment which have
an impact on business.
1. Like social traditions, values and beliefs, level and standards of
literacy and education,
2. Mission, objective setting
3. Factors in this environment that influence
(a) Social concerns
(b) Social attitudes and values
(c) Family structure
(d) Role of women
(e) Educational levels

33. 28
Q. Write short notes on Demographic environment.
(a) Population Size :
(b) Geographic Distribution :
(c) Ethnic Mix :
(d) Income Distribution :

34. 29
Q. Write short notes on Economic Environment.
1. General situation in the region and the nation
2. Strength and size of the market
3. Key economic factors to be considered are -
(a) Rates :
(b) GDP Aspects :
(c) Customer related :
(d) External Trade :
(e) General :
4. Level of political morality,
5. Law and Order situation,
Continue….

35. 30
6. Public attitude towards business,
7. Specific legal enactments and framework in which the
enterprise has to function,
8. Specific legal enactments and framework in which the
enterprise has to function,
9. Degree of effectiveness with which laws are implemented,
10. Government policies (fiscal, monetary, industrial, labour
and export-import policies),
11. Extent and nature of governmental intervention in the
economy and the industry.
12. Purposefulness and efficiency of Governmental agencies.

36. 31
Q. Explain the various aspects of Technological Environment.
1. Technology and Business are highly inter-related.
2. Technology influences the business operations.
3. Factors to be considered in the Technological
Environment are -
(a) Pull effect of technological change,
(b) Opportunities arising out of technological inventions,
(c) Risk and uncertainty of technological development,

37. 32
(d) Role of R & D in a country and Government’s R & D budget,
(e) Technologies used by the Company (Manufacturing and
Information Technologies),
(f) Role of technology i.e. its Criticality,
(g) Sources of Technology (Internal or External),
(h) Investment in Technology,
(i) Areas of utilization of Technology and Requirement of
additional technology.

38. 33
Technology
Rise &
Resaches Expectation
Increased Spend Changing Decline
People Of
productivity R&D technology of
Through Consumers
products
people
Business
Social
change
Jobs
Profession Regulation Demand
Become Techno- System
al & For
More structure complexity
managers opposition capital
intellectual
Figure showing : Interference between Business & Technology

39. 34
Q. What are the reasons for Globalization ? [or]
What are the advantages of Globalization ?
1. Rapid shrinking of time and distance
2. Global Market
3. Cheaper source of Raw Materials
4. Foreign investment
5. Lower Transportation Costs
6. Global Technology
7. Increasing emphasis
8. The rise of service - oriented

40. 35
Q. What are the effects / manifestations of Globalization?
1. Global locations :
2. Inter-linked and inter-dependent economies :
3. Lower Trade barriers :
4. Infrastructure :
5. Privatization :
6. Entrepreneurship :
7. Mobility of skilled resources :
8. Efficiency and Quality :
9. Regional Blocks :

41. MAICHAEL PORTER’S FIVE FORCES MODEL FOR COMPETITIVE ANALYSIS38
Potential development of substitute products
Bargaining power of suppliers Rivalry among Bargaining power of consumers
Competing firms
Prof.MAICHAEL
PORTER
Potential entry of new competitors
Harvard Business
School

42. Rivalry among competing firms
39
(1)
1) Most powerful
2) Everyone has strategy to compete
3) Your Strategy must have competitive advantage
4) Tool is Retaliatory or Counter moves such as : -
a) Lowering Price ( MTNL)
b) Add on features (Airline - Hotel)
c) Extended warranty (3 year on Spark, G.Motors)
b) Increased Advertising (“What an Idea sir ji”)
e) Set up E- commerce ( Make My Trip/Foreign
sites Tour Amazon watches)
5) Intensity is higher as competitors increase
6) Rivalry increases when consumers can switch over easily
(cell phone – number portability)
7) Paves the way for more Mergers and Acquisitions
8) Else, Profit declines
9) Industry becomes un attractive

43. (2) Potential entry of new competitors 40
Intensity of competition increases when
a) Ind. Attractiveness increases
(e.g. 1. cellular phones
b) When new entrants appear 2. shopping malls)
What Prevents Competitors ?
1) Technology [ Barriers to entry]
2) Economies of scale
3) Experiences
4) Customer loyalty
5) Brand image
6) Huge capital
7) Distribution channels
8) Raw materials
9) Potential Saturation of Market
Rule : - Strategists have to watch out for new entrants and their strategies
that we can make counter attacks.

44. (3) Potential development of substitute products
41
Plastic containers Vs Glass and Aluminum
Paper glasses / cups Vs Glass / plastic/cups
PVC Vs steel
Disposable Vs Conventional Durable
Soft squeeze tubes Vs Metal tubes
1) So, be conscious about your pricing
2) Else, consumer may switch over
3) Be serious about your firm’s Market
4) Penetration or increased capacity.

45. 42
(4) Bargaining power of suppliers
1) Concentration on suppliers
(without cartel)
2) Alternate source of supply
(Indian Oil)
3) Switching over cost is cheap/less.
(because of specialization)
4) supplier resorting to forward integration
(Raymond wollen Mills Ltd.)
5) Customer is least important to the supplier.

46. 43
(5) Bargaining power of consumers
1) Concentration of Buyers (Opp. Of 4 - 1)
2) Alternate sources of supply.
3) Switching over cost is cheap/less (Opp. Of 4 - 3)
4) Threat of backward integration (Opp. Of 4 - 4)
5) Availability of substitutes
What did you learn from Michal Porter ?
Collective strength of the above 5 forces to determine
Weather current business is attractive or not ?

47. Concept of co-operation 44
1. Individually
2. Collectively (OPEC)
3. Forms 1. cartel
2. Same family control / Tatas / Birlas
3. Brand Tie - ups Godrej - HUL
Colgate - HUL
ITC Agarbatti - Match Box (Ship)
4. KIERETSUS 1. Co-operative Networks
2. Related Industries
3. Allow competition
4. Interlocking of Capital
5. Common Board of Directors (ITC - Oberoi)
6. Independent Companies
7. Preference for members in business
8. Different from Coglomerates
9. No Agreement to share information
10. But share activities such as purchases, distribution, etc.

48. Political and Legal Environment
45
1) State of political development
2) Degree of politicalisation of business issues
(1. Valentine Day
2. Coke controversy
3. sons of the soil
4. language issues)
3) Level of Political Morality
( Nano – in west Bengal)
4) Law and order situation
5) Political stability
( Industrial Revolution in England)
6) Political ideology of the Ruling Party
7) Efficiency of government Agencies
8) Government policies – Industrial, Monetary, Export-Import policies