Jagannath university
Assignment on
DISCUSSION Questions
& SMALL GROUP EXERCISE
Submitted to:
Ayesha Akhter
Assistant Professor
Department of Finance
Jagannath University
Course Title: Corporate
Strategy and Ethics
Submitted by:
Course Code: FIN-4204
Akhi Akter
ID: B160203070
Department of Finance
Submission Date: 11 Dec, 2020
Contents
CHAPTER 2......................................................................................................................................................................................................... 3
DISCUSSION QUESTION ANSWER ................................................................................................................................................................ 3
Small Group Exercise..................................................................................................................................................................................... 4
CHAPTER 3......................................................................................................................................................................................................... 6
DISCUSSION QUESTIONS ANSWER .............................................................................................................................................................. 6
Small Group Exercise..................................................................................................................................................................................... 7
CHAPTER 4......................................................................................................................................................................................................... 8
DISCUSSION QUESTIONS ANSWER .............................................................................................................................................................. 8
Small Group Exercise................................................................................................................................................................................... 10
CHAPTER 5....................................................................................................................................................................................................... 11
DISCUSSION QUESTIONS ANSWER ............................................................................................................................................................ 11
Small Group Exercise................................................................................................................................................................................... 13
CHAPTER 2
External Analysis:
The Identification of Opportunities and Threats
DISCUSSION QUESTION ANSWER
QUE. 1: Under what environmental conditions are price wars most likely to occur in an
industry? What are the implications of price wars for a company? How should a company
try to deal with the threat of a price war?
Solution:
Price wars are generally generated with environmental situation where supply exceeds demand.
As the price war rages on, the profit of the company drops with the downward movement of the selling price.
In the event of a price war, a company should curb wastage, curtail unnecessary expenses, reduce selling and
distribution expenses like moving from road to rail, bargain harder with raw material suppliers for better prices,
enjoy supplier’s credit for a longer period in order to make it more efficient and so on. As far as the products
that could face price war are concerned, a company should always endeavour to upgrade the product quality
and improve the performance. Also the company tries to make the different from other competitive products
to attracts more customer.
QUE. 2: Discuss the competitive forces model with reference to what you know about the
global market for commercial jet aircraft (see the Opening Case). What does the model
tell you about the level of competition in this industry?
Solution: The five forces models are:
1.
2.
3.
4.
5.
Threat of new entry
Rivalry among established firms
Bargaining powers of buyers
Bargaining powers of suppliers
Threat of substitute products
These five forces all play a significant roll in the beer industry. There is always a threat of new entry in the
beer industry. Every day they are testing new ideas for new products. Bargaining powers of suppliers and
customers is always something to be aware of in any industry. Looking at these forces, I would say that the
more powerful each force gets, the lower rate of return that can be earned.
QUE. 3: Identify a growth industry, a mature industry, and a declining industry. For each
industry, identify the following: (a) the number and size distribution of companies, (b)
the nature of barriers to entry, (c) the height of barriers to entry, and (d) the extent of
product differentiation. What do these factors tell you about the nature of competition in
each industry? What are the implications for the company in terms of opportunities and
threats?
Solution: For example, growth industries might include personal computer industry. Mature industries include
the auto industry, airline industry. Declining industry include sugar, steel, tobacco industry.
Growth industries are tend to be many firms and fragmented. Barriers to entry on access on technological
know-how, but low. Product differentiation are also relatively low.
Mature and declining industries have fewer firms and more consolidated than growth industries. They have
much higher barriers to entry, in the form of cost economics and brand loyalty. They have much product
differentiation than growth industries.
These changes reveal the nature of competition in an industry also change the industry level from growth to
maturity and declining. A growth industry is characterized by relatively benign competitive pressure. Mature
industries are characterized by an emphasis on non-price competition as a means of avoiding damaging price
wars, although price war break down from time to time. Competition in declining industry depends on the
speed of the decline and the height of exit barriers. The faster the decline and the higher the exit barriers, the
more intense is the competition within a declining industry.
QUE. 4: Assess the impact of macro-environmental factors on the likely level of
enrollment at your university over the next decade. What are the implications of these
factors for the job security and salary level of your professors?
Solution: The most significant macro-environmental factor on the likely level of enrollment at a university is
to be found in the demographical environment. In the 1980s and early 1990s, many universities experienced
in enrollments due to declining birth rate in the 1960s and 1970s. Universities are now able to increase their
admission standards and smaller, regional schools are absorbing some of the excess demand. In addition the
downturn has led to an increasing in older students returning to schools for degrees. On the negative sides,
legislative spending is lower, because state tax are lower. University are struck in the position of trying to
increase offering while also reducing cost. Many collage are responding hiring more faculty but paying less,
which they can accomplished by increasing the number of temporary, adjunct or graduate student faculty
members.
Small Group Exercise
QUE. 1: Analyze the competitive structure of the market for personal computer operating systems. On the
basis of this analysis, identify what factors might inhibit adoption of your operating system by customers.
Solution: The market for personal computer operating system belongs to the consolidated industry structure
where the market is dominated by a small number of companies or only one company.
In the world personal computer operating system market, Microsoft’s Windows has grabbed the 77.74%
market share, rests are grabbed by Linux, MacOS, and Unix. It can be said that Windows has the monopoly in
the market. It’s severely hostile environment for new companies to enter into this industry. According to the
Porter’s Five Forces Model, two factors are said to have positive impacts on the entry of new companies. These
are – low power of buyers and lack of substitutes. These attracts new entrants. But other forces are extremely
negative, such as the very high barriers to entry and the intense rivalry. However, the most important factor
that inhibit adoption of our computer operating system is the lack of complements. Even though the innovative
operating system is superior to Microsoft’s Windows, without complementing software (e.g. word processing,
spreadsheet, etc.), the new operating system will have no chance to succeed. Software developers will have no
incentive to write for this new operating system, and without sufficient software, the product will fail to gain
a foothold in the industry.
QUE. 2: Can you think of a strategy that your company might pursue, either alone or in conjunction with other
enterprises, in order to “beat Microsoft”? What will it take to execute that strategy successfully?
Solution: Our company can pursue some strategies in order to enter into the market. It can create an installed
base of computers using its operating system. The start-up can either decide to give the operating system away
for free or sell it for a nominal fee to original equipment manufacturers like Compaq in the hope that software
developers will start writing software for this new operating system.
On the other hand, given that Microsoft has all the necessary complementary assets in house, it might be wiser
for the start-up to cooperate with Microsoft.
CHAPTER 3
Internal Analysis
DISCUSSION QUESTIONS ANSWER
QUE. 1: What are the primary implications of the material discussed in this chapter for
strategy formulation?
Solution: Basic part fight by proficiency, quality, advancement in building an competitive. An organization
ought to direct its system toward accomplishing brilliance in everything about zones and it ought to do
consequently not just with utilitarian level techniques, but rather also with business, worldwide and corporate
methodology. Barriers to imitation are higher and competitive advantage is a considerable measure of strong
once that measure of strong once that favorable position is construct for the most part in light of structure
abilities. A premium ought to be put on techniques and structures that support structure adaptability and
addictiveness.
QUE. 2: When is a company’s competitive advantage most likely to endure over time?
Solution: A company’s competitive advantage is most likely to endure over time when the company has
built barriers to imitation, which make it difficult for a competitor to copy the company’s distinctive
competencies. Another element needed is the ability to change in customers needs and have a high absorptive
capacity in order to identify, value, assimilate, and use new knowledge. Lastly the company needs to have
industry dynamism and be able to keep up with the rapidly changing environment with new innovative
products.
QUE. 3: it is possible for a company to be the lowest cost producer in its industry and
simultaneously have an output that is the most valued by customers. Discuss this
statement.
Solution: Yes, in fact it is most beneficial position for a company to deliver a product that is most valued by
customer and at the same time, produce it at a lower price. This situation boils down to the understanding of
the relationship between value, price, cost and demand. When the company utilizes its valuable, rare, limitable
resources to deliver a product that it more value by customer then a product by other competitor. It will initially
cost more money. But in the long ran, it may boost the profitability and allow the company to gain a competitive
advantage. The high demand created when the product will different from others. When the company enjoys
high demand, it can achieve increasing economic of scale that drive down the average unit cost. Consequently
the company is able to charge higher price and has lower cost than rivals.
QUE. 4: Why is it important to understand the drivers of profitability, as measured by the
return on invested capital?
Solution: It is important to understanding the driver of profitability in order to identify its strengths and
weakness and compare the performance against the competitors, as well as the historical data of the company.
That should allow the companies to determine their financial position other whether they are improving or
deteriorating. Whether the company strategies are bringing the desire result; whether their cost structure reflect
industry standards and whether they are using their resources effectively.
QUE. 5: Which is more important in explaining the success and failure of companies:
strategizing or luck?
Solution: Both strategy and luck are important in explaining success and failure. A company may be lucky
to have a good chance and good resources to get once succeed. But it is not enough the company need to
develop sustainable competitive advantage by some strategy to achieve high sustainable growth. To ensure the
growth and position of the company the company must make its strategies better than other competitors. Like:
producing same products at lower cost, add more quality in product at same price, or producing some different
products. So, a company’s success and failure are not only depends on luck but also depends on strategies.
Small Group Exercise
QUE. 1: Does your business school have a competitive advantage?
Solution: Yes, Our business school has competitive advantage.
QUE. 2: If so, upon what is this advantage based, and is this advantage sustainable?
Solution: The competitive advantage of our business school is based on superior quality, and efficiency.
This advantage, as appeared is not sustainable, innovation and customer responsiveness should be developed
for achieving sustainable competitive advantage.
QUE. 3: If your school does not have a competitive advantage in the market for business education,
identify the inhibiting factors that are holding it back.
Solution: Our business school has competitive advantage in the market for business education.
QUE. 4: How might the internet change the way in which business education is delivered?
Solution: Internet has revolutionarily changed the way in which business education is delivered. E-learning
offers customized learning experience. Tele-learning has made it possible for business students to connect with
teachers from long distance. Lectures are delivered from distant place through different teleconferencing
applications. With the help of internet, the education got a broad way to be delivered.
QUE. 5: Does the internet pose a threat to the competitive position of your school in the market for
business education, or is it an opportunity for your school to enhance its competitive position?
Solution: Internet can be opportunity for our business school to enhance its competitive advantage.
Competitive advantage increases by different innovative ways. Using internet we can make many innovative
way like we can offer online courses for students throughout the world, etc through which business education
can be delivered in more smooth way. Also it helps the students to be more efficient in the technology systems.
By doing this, it helps the business school create more value for the students or its customers than its rivals. In
this case internet strengthen the opportunity for our business school to enhance its competitive positions.
CHAPTER 4
Building Competitive Advantage through
Functional Level Strategies
DISCUSSION QUESTIONS ANSWER
QUE. 1: How are the four generic building blocks of competitive advantage related to each
other?
Solution: The four generic building blocks are:




Efficiency
Quality
Innovation
Responsiveness to customers
The four building blocks are firmly associated with each other. Since it reduces waste, the time spent settling
imperfections, and the expenses of after deals administration and support, accomplishing prevalent quality has
a key positive effect on potency. Moreover, seeing that superior quality is esteemed by clients, it builds the
company’s customers responsiveness. Also, advancement in. Correspondingly, the capacity to rapidly develop
inventive new items will builds an organization’s capacity to serves its customers. At last it is critical to stay
as a primary concern that accomplishing predominant potency, quality, and responsiveness of customers.
QUE. 2: What role can top management play in helping a company achieve superior
efficiency, quality, innovation, and responsiveness to customers?
Solution: An organization can increase efficiency through assortment of steps: 1. Abusing economics of
scale and learning impacts 2. Receiving adaptable delivering advancement 3. Executing without a moment to
spare framework.
To accomplishing quality top management gives a procedure to following imperfections to their supply that
create them a defense of the organizations supply base. To accomplishing innovation, top management ought
to assemble aptitudes in fundamental analysis connected examination, accomplish close joining between the
very surprising elements of their organizations, principally through appropriation of cross-practical product
improvement groups and part parallel improvement forms. To accomplishing better responsiveness to clients,
top administration gives clients what they require, when they require. It must ensure a hearty customer center,
which will be earned by highlight customer center through administration.
QUE. 3: Over time, will the adoption of Six Sigma quality improvement processes give a
company a competitive advantage, or will it be required only to achieve parity with
competitors?
Solution: The principle tool that most administrators now use to amplify the reliability, reduce imperfections,
support efficiency, dispose of waste and slice expenses of their item through six sigma quality change
methodology. Six sigma is intended to diminish variety inside the producing method and is for the most part
connected to one technique beginning with an underlying driver investigation.
It enhanced the quality, diminishing cost and better utilization of time and materials. As the outcomes
improves, it promotes higher price of the overall industry and the organization to support cost. Higher cost
expands the firm’s benefit and empower it to stay in business. At the end the six sigma improvement process
gives a company competitive advantage.
QUE. 4: From what perspective might innovation be called “the single most important
building block” of competitive advantage?
Solution: In the business world, no point of preference keeps going forever. The best way to keep before the
opposition is through consistent advancement in item and procedures. Just through development will an
organization produce one thing unmistakable and just particular and important product and procedure empower
companies to produce high benefit. In the way, undeniably, innovation is the absolute most critical building
block of competitive advantage. Having said this, one must include that development alone couldn’t be
sufficient to concoct exceptional yields. It is the joining alone of development with efficiency, quality and
responsiveness to clients that is especially profitable.
Small Group Exercise
QUE. 1: In this industry, what functional competencies are the most important for you to build?
Solution: Production, marketing, research and development, information system functional competencies are
most important to build in this industry.
As this industry is characterized by rapid technological change, product life cycles of only 6 to 9 months,
intense price competition, high fixed costs for manufacturing equipment, and substantial manufacturing
economies of scale, most effective R&D , information system function are needed to cope up with rapid
changes and a substantially short product lifecycle. Effective production and marketing competencies are
needed to achieve efficiency through lowering cost to face intense price competition.
QUE. 2: How will you design your internal processes to ensure that those competencies are built within
the company?
Solution: Internal process should be developed in such a way that it ensures the competencies be achieved.
The internal process will include Review information, Define tasks, Write knowledge, skill, ability, personal
characteristics (KSAPs), Sort KSAPs, Write competencies.
Review
information
Define Task
Write knowledge
Write KSAPs
Sort KSAPs
Write
competencies
CHAPTER 5
Business-Level Strategy
DISCUSSION QUESTIONS ANSWER
QUE. 1: What are the main differences between a lower cost strategy and a differentiation
strategy?
Solution: The difference between low-cost and differentiation strategy:
Low-cost strategy
1. Involves complex operation management
schemes, outsourcing to third world
countries, or limiting employee advantages
like health care.
Differentiation strategy
Requires force and advancements with a
specific end goal to build up a separating
quality.
2. Company must have a thorough
understanding of price and the way to
continually back them
3. Example: Walmart, Dell
4. Low cost will additionally enable an
organization to undercut rivals on wealth,
gain market share, and maintain or even
increase profitability
The company must whole perceive its
customers wants and preference
Example: Apple, BMW
Product can be separated by unrivaled
responsiveness better style, prevalent
capacities and components, better product
offer administration, better when deal
administration
and
bolster,
better
stigmatization.
QUE. 2: Why is market segmentation such an important step in the process of formulating
a business level strategy?
Solution: The consumers are divided into sub groups with similar wants, needs and demand as every client
has their own desires. The company does market segmentation before commercialism the merchandise within
the market through market survey and analysis. Market segmentation is important as a result of while not it
the business won’t realize the right audience. Market segmentation is a vital step within the method of
formulating a business strategy. Well develop business level methodology can give a company an advantage
over genuine and potential adversaries. Market segmentation helps to diminish hazard when choosing where
ever, when, how, and whom to an item administration can be advertised. Also build advertising productivity
by directional exertion particularly toward the choose section amid a way with regard to that portions attributes.
QUE. 3: How can a business-level strategy of (a) low cost and (b) differentiation offer some
protection against competitive forces in a company’s industry?
Solution:
Low cost:
1. A low-cost position and the capacity to charge low expenses and still make benefits conjointly gives an
organization assurance against substitute item or administration.
2. Low cost will encourage an organization to assimilate expenses will increment which will be gone on
downstream by intense supplier.
3. The low cost organization is generally best situated to survive esteem rivalry in its business.
4. A low cost organization may intentionally start a quality war in order to develop volume and drive its weaker
opponent out of the business.
Differentiate:
1. Differentiation permits the organization to change a premium worth for its brilliant or administration, if it
choose to do consequently.
2. Differentiation help the organization to develop general request and catch piece of the overall the industries.
3. Differentiation gives prevalent unwavering quality, better style, unrivaled capacities and elements, better
purpose of-offer administration, better once deal administration and bolster better making.
QUE. 4: What is required to transform a business-level strategy from an idea into reality?
Solution: Financial strategies and organizational courses of action required to actualize the business level
procedures of minimal effort and separation.
Lowering cost through functional strategy and organization:
Seeking after those useful level methodology that outcome in unrivaled effectiveness and predominant item
unwavering quality.
1. Quality of the item ought to be kept up and a comparative time the exertion mustn’t be wasted.
2. The waste item should be changed or vital correction should be made
3. Check the entire procedure of the production to cleave down unneeded strides in the middle of the underlying
and consummation of first state creation.
4. Implementation in just in time inventory control frameworks.
Differentiation through functional-level strategy and organization:
An organization can with achievement differentiate themselves by taking after right activities at the deliberate
and it ought to short out itself appropriately. Other than that, there are particular deliberate techniques that are
intended to enhance differentiation.
1. Market section should be done appropriately: right quality and measure of the item ought presented at the right
portions.
2. Plan item that have high seen quality regarding capacities, elements and trustworthiness.
3. A well created customer administers to rapidly reacting and handling to the customer enquiries and issues.
4. New showcasing strategies that would arranged according to the business sector changes.
QUE. 5: What do we mean by the term value innovation? Can you identify a company not
discussed in the text that has established a strong competitive position through value
innovation?
Solution: Value innovation is the process in which a company introduce new technologies or upgrades that
designed to achieve both product differentiation and low costs. The changes implemented through the value
innovation create new or improve elements for the products or services but also result in cost saving by
reducing the unnecessary aspects during the product life cycles. Value innovation does not need to create a
completely new product or technology. Those type of innovation can improve on existing service for both the
company and its customer. The goal of value innovation is to create new demand and change the market enough
to render the competition irrelevant in that market.
“TOYOTA” company that has established a strong competitive position through value innovation.
Small Group Exercise
Walmart is a company that has gained a competitive advantage by being a value innovator within its industry.
QUE. A: How this company has created more value that rivals in its industry?
Solution: Walmart has created more value by efficiency that is lowering the operating costs. Thus decreasing
the prices and offering the product cheaper than its rivals which leads to greater scale of sales and increased
profit. Thus Walmart created more value.
QUE. B: How has this company simultaneously been able to drive down its cost structure. How secure
do you think this company’s competitive advantage is?
Solution: Since opening in the early 1960s, Walmart has followed the guidance to keep operations costs low,
the store keeping cost low by using sophisticated and largely automated supply-chain management system, by
keeping in-store design basic, by having executives using budget travel options, and paying hourly employees
less than competitors.
Walmart’s competitive advantage is secured and sustainable in terms of its supply-chain management, cost
management and many other recently invented strategies. In recent years, it has launched RFID through which
it can be able to keep track of merchandise from distance, thus inventories can be handled by both suppliers
and Walmart. More recently is has launched smart tags so that employees can quickly learn that which products
to be replaced on the shelves.
Walmart has also started e-commerce and has already been world’s third largest online store. Recently it has
made a genius move to beat e-commerce giant Amazon.