Anna University, Chennai
SRINIVASAN ENGINEERING COLLEGE
DEPARTMENT OF MANAGEMENT STUDIES BA 9210 STRATEGIC MANAGEMENT
UNIT – 1 : STRATEGY AND PROCESS
1. What is business strategy?
“Strategy is the determination of the basic long goals and objectives of an enterprise and the adoption of the course of action and the allocation of the resources necessary for carrying out these goals”. It’s a comprehensive master plan stating how the corporation will achieve its mission and objectives of maximizes the competitive advantage and minimizes the competitive disadvantage.
2. What is strategic management?
Strategic management is that set of managerial decisions and actions that determine the long-run performance of a corporation of includes environmental Scanning, strategy formulation strategy implementation and evaluation and control. The study of strategic management therefore emphasizes the monitoring and evaluating of external opportunities and threats in the light of corporation’s
strengths and weaknesses.
3. What is corporate strategy?
Corporate strategy describes a company’s overall direction in terms of its
general altitude towards growth and the management of its various businesses and product lines. Corporate strategy is composed of directional strategy, portfolio analysis and parenting strategy, corporate strategies typically fit within the three main categories of stability, growth and retrenchment.
4. Define Ethics?
Ethics specify what is good, true, fair, just, right and proper in business. Businesses his relate to the behavior of a business man in a business situation. They are concerned primarily with the impacts of decisions on people with in and without the organization. Business ethical behavior is conduct that is fair and just over and above the various rules and regulations.
5. What do you mean by strategic myopia?
While identifying the external strategic factors, the managers sometimes miss or ignore crucial new developments. Personal values and functional experiences of a corporation’s manager as well as the success of current strategies bias both their perception of what they important to monitor in the external environment and the interpretations of what they perceive. This willingness to reject unfamiliar as well as negative information is called strategic myopia.
6. What is core- competency?
Core-competencies are the things that a corporation can do exceedingly
well. It is the combination of an organization’s resources and capabilities if the
core competency of an organization is superior to that of its competitors it is called distinctive competency.
7. What is Distinctive competency?
Distinctive competencies are firm’s specific strengths that allow a company
to differentiate its products and achieve substantially lower costs than its rivals and thus gain competitive advantage competencies arise from two complementary sources resources and capabilities.
8. Define joint venture?
Joint ventures are partnerships in which two or more firms carryout a
specific project or corporate in a selected area of business. Joint ventures can be temporary or long term. Ownership of the firm remains unchanged. Every joint venture has a scheduled life-cycle, which will end sooner or later every joint venture has to be dissolved when it has outlived its life-cycle. Changes in the environment forces joint ventures to be redesigned regularly.
9. What is conglomerate diversification?
When firms create new businesses that are unrelated to its original business, it is called conglomerates diversification. The benefits of conglomerate diversification are reductions of risks, economics of large scale operations, financial stability, increase in profits and attain managerial competence.
10. What are barriers to Entry?
An entry barrier is un obstruction that make it difficult for a company to
enter an industry Established companies already operating in an industry often attempt to discourage the potential competitors by creation. High Entry barriers, such as rand Loyalty, absolute cost advantages, economics of scale customer switching cost, product differentiation etc.
11.Distinguish between hostile takeover and friendly takeover?
Takeover can be defined the ownership or control over the other firm. Of one firm acquires the ownership against the wishes of hi others management it is called hostile takeover. Of the acquisition is through the mutual consent of both the parties it is called friendly takeover.
12. What is Horizontal Expansion?
It’s a growth strategy. Of a firm fries to expand its business by creating
other firms in their same line of business it is called horizontal expansion. The aim of horizontal expansion is to increase market shane. To reduce cost of production
through large scale economic, to take advantage of synergy and to promote products and services more efficiently to a larger audience.
13. Define strategic Group?
Strategic group is a set of business units or firms that pursue similar
strategies with similar resources. Categorizing the firms in an industry into a set of strategic groups is very useful for the better understanding of the competitive environment. Because a corporation’s structure and culture reflect the kinds of strategies it follow. Companies or Business units belonging to a particular strategic group with in the same industry tend to be strong rivals and tend be more similar to each other than to competitors in other strategic group within the same industry.
14. Define corporate governance
Corporate governance refers to the relationship between the board of
Directors, top management and the investors or shareholders in defer mining the direction and performance of the corporation.
15. What is Backward integration?
When a company or firm acquire or create another firm which provides raw material component parts or other input for the original firm, it is called backward integration.
16. Define strategic outsourcing
Strategic outsourcing refers to the separation of some the company’s value creation activities with in the business and as letting them be performed by a specialist in that activity strategic outsourcing will lower the cost-structure of the company and increase its profitability. Moreover strategic outsourcing of non-core activities helps the company to focus management attention on those activities that one most important for its long term competitive position.
17. Distinguish between programs and procedures.
A program is a statement of the activities or steps needed to accomplish
single use plan of makes the strategy action-oriented of my involve restructuring the corporation changing the companies internal structure or beginning a new
research effort. Procedures are a system of sequential steps or techniques set describe in detail how a particular job or task is to be done. They typically detail the various activities that must be carried out for completion of the corporations programs.
18. What is Entrepreurial mode?
It is a type of strategic decision making. In this mode, the strategy is
developed by one powerful individual. The focus is on opportunities and problems are secondary, strategy is guided by the founders own vision or direction and is exemplified by large, bold decisions. The dominant goal is growth of the corporation.
19. What is Adaptive mode?
This is a decision making mode sometimes refereed to as “muddling
through”. This is characters by reactive solutions to exiting problems rather than a proactive search for new opportunities strategy is fragmented and is developed to move the corporation forward in incremental steps.
20. What is planning mode?
This mode of strategic decision making the systematic gathering of
appropriate information for situation malice, the generation of feasible alternative strategies. And the rational selection of the most appropriate strategy. This mode includes both the pro-active search for new opportunities and the reactive solution of exiting problems.
UNIT – 2 : COMPETITIVE ADVANTAGE
1. What is strategic Business unit?
Strategic business units are divisions or group of divisions composed of independent product-market segments that are given primary responsibility and authority for the management of their own function areas. An SBU may be of any size or level but it must have a unique mission, identifiable comfitures, an external market fours and control of its business functions. The idea is to decentralize on the basis of strategy elements.
2. Define Tactics.
A tactic is a specific operating plan defiling how a strategy is to be Implemented in firms of when and where it is to he put in to action. By nature tactics are narrower. In their scope and shorter in their time horizon than strategies. It is a link between the formulation and implementation of state.
3. What do you mean by hypercompetitive?
Hyper competition is a business situation in which the frequency, boldness, and aggressiveness of dynamic movement by the players accelerate to create a condition of constant disequilibrium and change market sterility is threatened by short product life cycle new ethnologic frequent entry by unexpected outsiders and repositioning by incumbents in other words environment escalates towards higher
and bigger revels of uncertainty dynamism heterogeneity of the players and hostslily.
4. What is task Environment?
Task environment includes those elements that directly affect the
corporation and in turn are affected by it. A corporations task environment can be thought of the industry with in which it operates. This task environment includes government local communities suppliers competitors employees labor unions special interest groups and trade associations.
5. What is industry Analysis?
Industry analysis refers to the in depth examination of key factors with in a corporation task environment. Both the societal and task environment must he monitored so that strategic factors that have a strong impact on the corporate success or failure can be defected.
6. Define strategic Alliance?
Strategic Alliance are co-operative agreements between different companies
that are actual or potential competitors companies enter in to strategic alliance may be a way of facilitating entry in to a market. Second many companies enter in to strategic alliances to share the fixed costs and associated risk that arise from the development of new products or processes Many alliances can be seen as away of bringing together complementary skills and assets that can not be easily developed by the company on it own.
7. What is environment scanning?
Environment scanning is the monitoring evaluating and disseminating of information from the external and infernal environments to key people within the
corporation. The external environment consists of variables that one outside the organization these are the opportunities and threats. The infernal environment consists of variables that are with in the organization itself. These are the strengths and weaknesses of organization.
8. Write the name of factors in task environment?
· Special interest group
· Employees/ Labour unions
· Trade associations
9. What is societal Environment?
Societal environment includes the general forces that do not directly touch
on the short run activities of the organization but that can influence its long-run decisions. This include economic forces, technological forces, political legal forces and socio cultural forces Economic forces regulate the exchange of materials. Money, energy and information Technological forces generate problem solving Inventions political legal forces allocate power and provide constraining and protecting laws and regulations. Socio cultural forces regulate the values mores
and wisdoms of society.
10. What do you mean by strategy implementation?
Strategy implementation is the process by which strategies and policies one
put in to action through he developed of programs budgets and procedures. This process might involve changes with in the overall with the structure or management system of the entire organization or with in all of these areas.
11. What is an Entrepreneurial venture?
Entrepreneurial venture is any business whose primary goals profitability
and growth and that can be characterized by innovative strategic practices. The basic different between the small business from and the entrepreneurial venture not in the type of goods or services provided but in their fundamental views on growth and innovation. The key element of Entrepreneurial venture is a basic business
idea that has not yet been successfully tried and a gutsy entrepreneur who while working on borrowed capital and a shoestring budget creates a new business through a lot of trick and error and persistent hard work.
12. What do you mean by small business from?
Small business from is one that employs fewer than 500 people and that
generate sales of 20 million actually small business from is independently owned and operated not dominate in its field and does not concentrate in innovative
13. Who is an Entrepreneur?
Entrepreneur is defined a person who organizes and manages a business undertaking and who assumes risk for the sake if profit. He is the ultimate strategist and makes all the strategic as well as the operational decisions. Al the three levels of strategy-corporate, business and functional are the concerns of this founder and manager of a company.
14. What is Strategic piggybacking?
Strategic piggybacking refers to he development of a new activity for the
not-for-profit organization that would generate funds needed to make up the difference between revenues and expenses . its purpose is to help subsidize the primary service programs. It appears to be a form of concentric diversification but it is engaged in only for its money generating value
15. What is balanced score card?
The balance score card is a self of measures are directly half are directly
linked the company’s strategy allows managers to evaluate the company from four perspectives financial performance anisomery knowledge internal business processes learning growth.
16. Define Reengineering?
Reengineering is the fundamental re-thinking and radical redesign of
business processes to achieve dramatic improvements in critical, contemporary
measures of performance such as quality, cost service and sped. The aim of reengineering is to improve the corporate performance.
17. what is re-Structuring?
Restructuring means streamlining the hierarchy of authority and reducing
the number of levels in their hierarchy to a minimum and then downsizing the workforce by reducing the number of employees to reduce operating cost. The aim of restructuring is to improve the corporate performance.
18. What is corporate Culture?
Corporate culture is the corporation of belief. Expectations and values
learned and shared by a corporate is members and transmitted from one generation of employees to another. The tern corporate culture generally reflects the values of the founder and the mission of the form at givens a company a sense of identity. Corporate culture has two distinct attributes, intensity and integration.
19. What is strategic Leadership?
Strategic leadership refers to a manager’s ability to articulates a strategic vision for the company and motivate others to me into that vision. The few
characteristics of good strategic leaders are
· Vision, eloquence and consistency
· Being cell informed
· Willingness to delegate and empower
· Astute use of power and
· Emotional intelligence
20. What is Entrepreneurship?
When internal new venturing place in an organizational the corporate managers must that the internal new vesturing process as a form of Entrepreneurship and the people who are leading the new ventures as entrepreneurs. That organizational structure control and culture must be designed to encourage creativity and give new-venture managers autonomy and freedom to develop and champion new products. This is called entrepreneurship.
UNIT – 3: STRATEGIES
1. What is Emotional Intelligence?
Emotional intelligence is a mix of psychological attributes that many strong and effective leaders possess. They are
· Self Awareness- the ability to understand one’s own moods emotions and
drivers, as well as their effect on others.
· Self Regulation-the ability to control or re-direct disruptive impulses or moods, that is to think before acting.
· Motivation: a passion for work that goes beyond money or status and a propensity to pursue goals with energy and persistence.
· Empathy: understanding the feelings and view points of subordinates and taking those into account when making decisions.
· Social skills: Friendliness with a purpose.
2. What is Organizational inertia?
Organizational inertia is the inability of the organization to adapt in a timely manner to new circumstances. This is on of the major reason that companies are often so slow to respond to new competitive conditions organizational inertia is
complex and has a number of underlying causes. One source is he power and influence of individual managers another source is the existing allure of the organization.
3. What is Competitive intelligence?
Competitive intelligence means gathering of information about the competitors.
4. Define Policy?
A policy is a broad guideline for decision making that links the formulation
of strategy with its implementation. Companies use form make decisions and take actions that support the corporations missions, objectives and strategies.
5. What is Budget?
A budget is a statement of a corporations programs in terms of dollars. Ic, in monetary terns. On planning and control, a budge lists the detailed cost of each program.
6. What is strategy formulation?
Strategy formulation is the development of long range plans for the effective management of environment opportunities and threats, taking into consideration corporate strengths and weaknesses. It includes defining the corporate Mission, specifying achievable objectives developing strategic and
`scatting policy guide lines.
7. What is a Mission?
An organizations mission is its purpose or the reason for its existence a well conceived mission statement defines the fundamental unique purpose that sets a company apart from other forms of its type and identifies the scope of the company’s operation interns of products offered and markets served. It puts into words not only what the company is now but, what it wants to become.
8. What are objectives?
Objectives are the end results of planned activity they state what is to be accomplished by when and should be quantified of possible. The achievement of corporate objectives should result in the fulfillment of the corporations mission.
9. What is Evaluation and control?
Evaluation and control is the process by which corporate activities and performance results are monitored so that actual performances can be companied with desired performance. Manager at all levels use resulting information to take corrective action and resolve problems.
10. What are the Responsibilities of the Board of Directors?
· Setting corporate strategy, overall direction mission or vision
· Succession: baring and firing the CEO and top management
· Controlling, monitoring, or supervising top management.
· Reviewing and approving the use of resources.
· Caring for stockholder interests
11. What are the responsibilities of the CEO
· Provide exclusive leadership and a strategic vision
· Manage the strategic planning process CEO articulates a strategic vision for
the corporation. CEO not only communication high performance standards, but also shows,
· Confiding in the followers abilities to meet these standards.
12. What are the four responsibilities of business
· Economic responsibility
· Legal Responsibility
· Ethical Responsibility
· Discretionary Responsibility
13. What is a strategic type?
Strategic type is a category of firms based on a common strategic
orientation and a combination of structure, culture and processes consistent with that strategy. There are 4 strategic types. Defenders, prospectors, Analyzers and Reactors.
14. What is a defender?
Defenders are Romanics with a limited product line. That fours on
improving the officered of their existing operations they wont try to innovate in new areas.
15. What are prospectors?
Prospectors are companies with fairly broad product line that fours on
product innovation and market opportunities. This sales orientation makes them somewhat inefficient. They tend to emphasis inactivity over efficiency.
16. What are analyzers?
Analyzers are companies that operate in at least different product market
areas, one stable and one variable. In the stable area efficiency is emphasized. In the variable area innovation is emphasized.
17. What are reactors?
Reactors are companies that lack a consistent strategy-structure-culture relationship. Their responses to environment presumes fend to be piece-meal strategic changes.
18. How do resources determine competitive advantage?
· Identify and classify the firms resources in terms of strengths and weaknesses.
· Combine the firms strengths into specific capabilities-these are corecompetitive
· Appraise the profit potential of there resources and competencies in terms of their potential for sustainable. Competitive advantaged the ability to harvest the profits resulting from the use of these resources and capabilities.
· Select the strategy that best exploits the firms resources and competencies relative to external opportunities.
· Identify resource gaps and invest in upgrade weaknesses.
19. What is durability?
Durability is the rate at which a firms underlying resources and capabilities depreciate or become obsolete. New technology can make a companies are competency obsolete or irrelevant.
UNIT – 4: STRATEGY IMPLEMENTATION & CONTROL
1. What is limitability?
Limitability is the rate at which a firms underlying resources and
capabilities or cores competencies can be duplicated by others. To the extent that a firms distinctive competency gives it competitive advantage in the market place. Expatiators. Will do what they can to skills and capabilities. A core competency can be easily limited to the extent that it is transparent transferable and replicable.
2. What is transparency?
Transparency is the spared with which other firms can understand the relationship of resources and capabilities supporting a successful firms strategy.
3. What is Transferability?
The ability of competitors to gather the resources and capabilities necessary to support a competitive challenge.
4. What Reliability?
The ability of competitors to use duplicated resources and capabilities to imitate the other success.
5. What is Value –Chain?
A Value chain is a linked set of value enacting activities beginning with
basic raw materials coming from suppliers, moving on to a series of value-added activities involved in producing and marketing a product or service and ending with distributors getting the final goods into the hands of the ultimate customer.
6. What is a Marketing mix?
The marketing mix is the particular combination of they variables under the corporations control that it can use to affect demand and to gain competitive advantage. These variables are products, promotion price and place.
7. What is product life cycle?
Product Life cycle is a graph showing time plotted against sales of a
product as it moves from introduction through growth and maturity to decline.
8. Differentiate between economics of scope and economics of scale?
Economics of scope means common parts of the manufacturing activities of various products are combined to gain economics even through small numbers of
each product are made. Economic of scale means units costs are reduced by making large numbers of the same products.
9. What is propitious niche?
Propitious niche is a company’s specific competitive that is so well suited to
the firms internal and external environment that other corporations are not likely to challenge or dislodge it.
10. What is Flanking Maneuver?
Rather than going straight for a competitive position of strength with a
frontal assault a firm may attack a part of the market, where the competitor is weak. This is called flanking maneuver.
11. What is Organization Development or OD?
OD is a complex educational strategy designed to increase organizational effectiveness and wealth through planned inventions by a consultant using theory and techniques of applied behavioral science.
12. What is Job Enrichment?
Job enrichment is a conscious effort to build into jobs a higher sense of
challenge and achievement. In a job enrichment program, the worker decides how the job is performed, planned and controlled and makes more decision concerning
the entire process job. Employee decide how the job will be performed and receive less direct supervision on the job. Consequently the employee receives a greater sense of accomplishment as well as more authority and responsibility and job satisfaction. This in turn contributes for batten employee performance and higher productivity.
13. What is organization structure?
Organizational structure is an established pattern of relationships among the component parts of an organization. Structure is made up of three component parts. Complexity, formalization and centralization. Complexity refers horizontal differentiation vertical differentiation and
location differentiation. Formalization refers to the degree to which the jobs with in the organization are standardized. High standardization of jobs results in less freedom and discretion. Centralization refers to the degree to which decision making is
14. What is Band Loyalty?
It is the buyers preference for the products of any established company. A company can create brand loyalty by providing high quality products, goods after sales service continuous advertising of its brand name and company name, patent protection of product, product innovation achieved through company research and
15. What is Economics of Scale?
Economics scale another relative cost advantages associated with large
volumes of production that lower a company’s cost structure.
Sources of Scale Economics include.
· Cost reductions gained through mass producing a standardized output.
· Discounts on bulk purchases of raw materials and component parts.
· Advantages gained by spreading fixed phony cost over large production
16. What is customer switching cost?
The costs arise open a customer switches from one company’s product to
another company is called customer switching cost switching from one product to another, costs the customer, time, money and energy. When the switching costs is high, customers can be locked into the product offerings of established companies. E.g. Microsoft’s windows Operating System.
17. What is a Fragmented Industry?
Fragmented Industry consists of a large number of small or medium sized companies none of which is in a position is determine Industry price.
18. What is a Consolidated Industry?
A consolidated industry is dominated by a small number of large companies and they any in a position to determine industry prices.
19. What is Bargaining power of buyers?
Bargaining power of buyers refers to the ability of buyers to bargain down
prices charged by companies or raise the cost of the product by demanding better quality product.
20. What is bargaining power of suppliers?
Bargaining power of suppliers refers to the ability of suppliers to raise
input prices or to raise the cost of the industry by providing poor quality inputs.
UNIT – 5: OTHER STRATEGIC ISSUES
1. Differentiate between product innovation and process innovation?
Product innovation is the development of products that are new to the world
or have superior attributes to existing products. Process innovation it the development of a new process for producing products and delivering them to customers. Product innovation creates value by creating new products that customers perceive as more desirable this increasing the company’s pricing option. Process innovation often allows a company to create more value by lowering production costs.
2. What is bench marking?
The process of measuring the company against the products. Practices and services of some of its most efficient global competitors.
3. What is technological Myopia?
When a company gets blinded by the wizardry of a new technology and
fails to examine whether there is customer demand for the product, it is called
4. What is Product Proliferation?
Companies having broad product lines produce a range of products aimed at different in abet segment. Sometimes to reduce the threat of entry,they expand the range of products they make to fill a wide variety of riches. This creates a barrier to entry because potential competitors now find it harder to break into an industry in which all the riches are filled. This strategy of pursuing a broad product line to
Deter entry is known as product proliferation.
5. What is Location Economics?
Location economics are the economics benefits that arise from performing
a value creation activity in the optimal location for that activity wherever in the world that might be.
6. What is Licensing?
It is specialized from of licensing in which the franchisee not only sells intangible property to the franchisee but also insists that the franchises agree to abide by strict rules as to how it does business. The franchiser will also assist the franchisee to run the business on an on going basis and receives an royally payment.
7. What is a wholly owned subsidiary?
Wholly owned subsidiary is one in which the parent company owns 100 percent of the subsidiary stock. To establish a wholly owned subsidiary in a Foreign market. A company can either set up a completely now operation in that country or acquire an established host country company and use it to promote its products in the host market.
8. What is Full Integration?
A company achieves Full integration when it produces all of a particular
input needed for its process or disposes all of its output through its own operation.
9. What is Taper Integration?
Taper Integration occurs when a company buys from independent suppliers in addition to company owned suppliers or disposes of its output through independent outlets in addition to company owned outlets.
10. What is Diversification?
It is the process of adding new businesses to the company that are district
from its established operations. A diversified or multi business company is one that is involved in two or more district industries.
11. What is Economics of Scope?
That cost reductions associated with sharing resources across businesses.
12. What is bureaucratic cost?
The cost increases that arise in large complex organizations due to managerial in efficiencies. This is a function of 9i) no. of businesses in a company’s follows (ii) the extent of co-ordination required among the different businesses of the company in order to realize value from a diversification strategy.
13. What is bidding strategy?
The strategy adopted by the acquirer to reduce the price it must pay for the acquisition candidate. Hence the most effective thing an acquirer can do is make
only friendly take over bids.
14. What is mean by Management buyout (MBO) Selling of a business Unit to its management.
15. What do you mean by stakeholder?
Stakeholders are individuals of or groups with interest claim, or stake in the company in what it does and in how well it performs. They include stock holders, creditors, employees, customers the communities and the general public.
16. What are the different type of stakeholders?
Internal stakeholders are stakeholders and employees including executive officers, other managers and board members.
17. What is External stakeholders?
External stakeholders are all other individuals and group that have some claim on the company. Typically this group comprises customers, suppliers, oneditors, governments unions, local communities, and the general public.
18. What is PIMS?
It means profit impact on marketing strategy.
19. What is Standardization?
It refers to the degree to which a company specifies decision making and coordination processes so that employee behaviour becomes predictable.