WINTER 2015
Exam APRIL/MAY 2016
Masters of Business Administration
Semester 4
SUBJECT CODE & NAME - MB0052 STRATEGIC MANAGEMENT AND BUSINESS
POLICY
Assignments
BK ID - B1699
Q1. Illustrate the Strategic Management Model (SMP) Explain the levels in SMP.
Answer:
Strategic Management Model:
The strategic management process consists of four distinct steps or stages:
(a) Defining organizational mission, objectives or goals
(b) Formulation of strategy/strategic plan
(c) Implementation of strategies
(d) Strategy evaluation and control
For understanding these four stages, a company has to consider a number of other factors like
organizational competence and resources, the environment, various strategy alternatives
available, strategy selection criteria, etc. All these are internal parts of SMP. The strategic
management process may best be illustrated in the form of a model. We can call this the
strategic management model. Relationships among the major components of the strategic
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management process are shown in the model. Companies may or may not follow the strategic
management process as rigidly as shown in the model. Generally, application of SMP is more
formal and model driven in large, well-structured organizations with many divisions, products,
markets, different priorities for investment, etc. Smaller businesses or companies tend to be
less formal. In other words, formality in SMP refers to the extent to which participants in SMP,
their responsibilities, authority and roles/ duties are clearly specified. Also, in practice,
strategists may not always follow the strategic management model as rigid steps or chains in
the management process. Situations may not always warrant this. It would also depend on a
Company’s approach to SMP.
Levels in SMP:
A strategic business unit is a division or a product/product group unit which operates as a
separate profit centre having its own set of market and competitors and its own marketing
strategies. The company or the corporate organization consists of related businesses and/or
products grouped into different SBUs. The SBUs are homogeneous enough to manage and
control most factors which affect their performance. Resources are allocated to SBUs in relation
to their contributions to the corporate objectives, growth and profitability. Three levels in the
strategic management process, are: the corporate level, the business unit or SBU level and the
functional level. These three levels of strategy distinctly exist only in multiple SBU firms. For
single-business companies, corporate-level strategy and SBU-level strategy are not really
distinguishable because all the organizational level strategies for resource allocation or growth
or market diversification are formulated with respect to the particular product or business of
the company (only in the case of product diversification, corporate-level strategy and single
business unit-level strategy may/would be different).
We can also call these alternative strategic management structures. Relationships among
corporate level, business unit level and functional-level strategies in single SBU and multiple
SBU firms are
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shown in Figures.
Q2. “Business need to be planned not only for today but also for future. This implies the
continuity and the need for sustainability”
Answer:
Planning for Business Continuity:
Businesses need to be planned not only for today, but also for tomorrow, that is, for the future.
This implies business continuity and the need for sustainability. Sustainability requires
understanding and analyzing the environment. Besides business fluctuations or business cycles,
business interruptions occur because of natural disasters like floods, earthquakes, cyclones, etc.
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To safeguard against such threats or disasters, planning for business continuity is essential.
Business continuity planning means proactively working out a means or method of preventing
or mitigating the consequences of a disaster—natural or manmade (sabotage or terrorism) –
and managing it to limit to the level or degree that a business unit can afford.
Need or Importance of Business Continuity Planning (BCP): As indicated in the definition,
businesses today can be exposed to different types of threats – natural or man-made. Major
threats are:
• Natural disasters such as floods or earthquakes or accidents
• Man-made threats like sabotage or terrorism
• Financial crisis or disaster can be partly man-made and partly due to environmental factors.
Business Impact Analysis: Business impact analysis is the process of identifying major functions
in an organization which have impacts of different degrees on the business of the Organization.
Strategies for Business Continuity Planning: Because of the possibility of different kinds of
impacts, and depending on the nature of damage or disaster, appropriate strategies should be
developed and used to deal with particular situations. Five different strategies should be
developed for five different situations/actions. These are:
1. Prevention
2. Response
3. Resumption
4. Recovery
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5. Restoration
Developing a Business Continuity Plan and Implementation; Plans and strategies work
together. A plan is also essential for implementation of a strategy or strategies. A separate plan
can be made for each of the five strategies, i.e., prevention, response, resumption, recovery
and restoration or an integrated plan can be prepared incorporating or dealing with all the
strategies.
Implementation:
Implementation of business continuity plans are mostly technology driven. Implementation
involves development and testing of IT system or solution. The software and/or hardware
elements are built into the systems. This is ensured through planning or building ‘redundancy’,
i.e., incorporating back-up service elements which may be redundant during normal course of
business
Q3. Explain the following:
(a) Core competence
(b) Value chain analysis
Answer:
Core Competence:
Core competence of a company is one of its special or unique internal competence. Core
competence is not just a single strength or skill or capability of a company; it is ‘interwoven
resources, technology and skill’ or synergy culminating into a special or core competence.
Value Chain Analysis:
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Various competences and resources of an organization can be integrated into a chain of
activities which an organization performs to meet customer demand. Since each of these
activities is expected to create value when it is performed, the chain can appropriately be called
a value chain. Michael Porter (1985) introduced the concept of value chain analysis. Now, it has
become common for professional companies to do this analysis.
Inbound logistics
Operations
Outbound logistics
Marketing and sales
Service
Q4. Write a brief note on Turnaround strategy.
Q5. What is Stability Strategy? Explain the BCG (Boston Consulting Group) Portfolio Model.
Q6. Define the term ‘Strategic alliance’. Enumerate its characteristics and objectives.
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