MB0052

MB0052 - Strategic Management and
Business Policy
1.1
Define Strategic Management and strategic planning.
Strategic Management: The pattern of objectives, purpose, goals and the

major policies and plans for achieving these goals stated in such a way so as
to define what business the company is or is to be and the kind of company
it is or is to be
Strategic Planning:
In large businesses or companieswhether in the private sector, public
sector or multinationalsthe situation is entirely different. Both the internal
and the external environment and the organizational objectives and priorities
are different. For all large private sector enterprises, there is a clear growth
perspective, because the stakeholders want the companies to grow, increase
market share and generate more revenue and profit. For all such companies,
both strategic planning and strategic management play dominant roles.
2.
2.1Discuss the difference between defensive strategies and preemptive strategies.
The classic form of retaining existing (civil) territory is to mount a position
defense by constructing strong ramparts to keep out the enemy. In business,
position
defense is typically built by developing high levels of customer loyalty.
Counter-offensive strategy has a different advantage. It has the advantage of
not having to respond before one measures up the real nature of the
competitive threat
2.2 Example of Defensive and pre-emptive strategies.
One of the unfortunate examples of this situation is IBM.
The company built a big global business in the computer industry based on
unmatched customer loyalty. But, IBM ignored the threats, may be
unknowingly, posed by the advent of the networked PC and more powerful
operating systems.
The company realized, rather late in the 1990s, that customer loyalty had
been completely eroded by competitors who were more strongly committed
to fulfilling the changing needs of customers.
Xerox
Corporation is an example. Xerox had been forced to make large investments

in R&D, technology, manufacturing process and organizational structure
during the last few years to regain some of the lost ground in the
photocopier market to competitors such as Canon.
Retreat is sometimes a good
3.
3.1 Why Turnaround strategy is sometimes called as an extension of
restructuring strategy?
Turnaround strategies are usually required for crisis situations. If organizational decline
is not continuous or severe, corporate restructuring can provide the solutions. That is
why turnaround strategy may be said to be an extension of restructuring strategy. When
restructuring is very comprehensive
and leads to corporate recovery, it almost becomes a turnaround strategy
3.2 Differentiate between surgical and non-surgical turnaround. Give

examples.
The operations in surgical turnaround are like this: the first step is to replace the chief
executive of the ailing company by a new iron chief. The new chief promptly gets into
action; he asserts his authority. He issues pre-emptory orders, centralizes functions and
spears some convenient scapegoats
At British Leyland Air India, SPIC, BHEL and SAIL.
4.Write short notes on the following expansion strategies
4.1 Penetration strategy for growth in existing markets
A company has a number of ways for penetrating into the existing markets
and generating growth. The most obvious way to grow is to increase market
share.
Companies like Bajaj Auto have successfully penetrated the existing market
and sustained their market share. But, this generally happens in a high
growth market or industry (like two-wheelers). Also, one companys share
gain is another companys share loss. Therefore, market share battle
increases competitive pressures, and, market share gain may soon be
neutralized, or, in the least, may be difficult to sustain.
4.2 Expansion through diversification.
Diversification, as a strategy, may generate growth in a number of ways.
Product development and market development are two different methods to
diversify, and, we had discussed these two methods earlier. Diversification
can also take place through both new products and new markets. And, a
diversification strategy, whether through product development, market
development or both or any other way, may, mean a new business venture
of the company, a joint venture, etc.
We shall discuss here the related issues of diversification and their
implications
Related diversification means that the new business has commonalities with
the core business or core competence of the company; and, these
commonalities provide the basis or strength for generating synergies or
economies of scale or higher returns by exploiting existing resources and
skills in R&D, production process, distribution process, etc. Unrelated
diversification, on the other hand, is less related to the present business and
skills and resources (except financial) and, may mean venturing into an
entirely new area. The company may have to acquire new skills and
expertise for this.
5.Disuss the competitive strategy in
5.1 Emerging industry
Emerging industry
An emerging industry is a developing or newly formed industry in which
market for products initially exists in latent form, and, becomes visible later.
An emerging industry may be created by technological innovations, new
consumers or industrial needs for economic or sociological changes which
create the environment or potential market for a new product or service.
Emerging industries are being created all the time; or, to put it in other
words, most of the existing industries today were emerging industries at
some point of time or the other.
Examples are word processors, photocopiers, computers, VCR/VCP, CTV, etc.
Different emerging industries may have different structuresstructural
details always vary. But, most of the emerging industries exhibit some
common structural characteristics.
5.2 Declining Industry
A declining industry is one with negative growth, that is, an industry which
has registered absolute decline in sales over a sustained period of time. Such
decline in sales is not because of business cycles or any other short-term
factors like strike, lockouts or material shortages. Therefore, a declining
industry does not represent a short-term discontinuity, but, a trend
expressed in falling industry output, sales, profitability and dwindling number
of competitors. In industry life cycle, decline follows maturity. Decline sets in
generally because of product obsolescence or emergence of a strong
substitute product. For example, demand for oil-based laundry soaps for
cloth washing declined fast because of introduction of synthetic washing

materials.
6. Benchmarking is the process by which companies look at the
best in the industry and try to imitate their styles and processes
Evaluate the rationale for benchmarking exercises and discuss the
features and types of benchmarking. Please ensure to include an
example to support your answer.
6.1 Reasons of benchmarking
An organizations strategic capability or strategic choice is to be always
understood in relative terms because it involves comparison with
competitors or industry norms. This implies that organizations need to
understand and analyse performance standards, i.e., what constitutes good
and bad performance. Since performance is intrinsically related to strategy
formulation and implementation, the relativity factor should be kept in mind
during the process of selection of the strategy itself. A strategy, along with
resource base, should be so selected that it can deliver results of high
standards or standards which can compare with the best in the industry. This
necessitates an analysis of benchmarking and best practices.
6.2 Features of benchmarking
Benchmarking enables an organization to analyse where it stands in
comparison to other organizations, where it excels or lags behind.
So, benchmarking is a useful diagnostic tool.
(b) Benchmarking involves identification of two things: first, what is to be
compared, i.e., product, process, performance, etc.; and, second, whom to
compare with, i.e., competitors, organizations in the same industry,
organizations outside the industry, etc.
(c) Benchmarking is applicable to all facets of business products, processes,
services, methods, etc. It goes beyond traditional competitor analysis and
focusses on understanding what the best practices are? and, how the best
practices can be emulated, if not improved upon further.
(d) Benchmarking is not confined to comparison only with direct product
competitors but, all those businesses or organizations which are recognized
as industry leaders or the best.
(e) Benchmarking is a continuous process and not just one-off initiative.
Industry standards and practices constantly change, and an effective
benchmarking initiative has to regularly monitor these changes and
accordingly adapt itself.
6.3 Types of benchmarking
Product benchmarking
Internal benchmarking
Process benchmarking
Competitive benchmarking
Functional benchmarking
Generic benchmarking
Performance benchmarking
Strategic benchmarking
6.4 One or two examples of benchmarking
A good example of this is General Cinema Corporation (see Caselet).
Many other companies have successfully benchmarked industry success
factors
for development of competitive strategy. Avery Dennison is another example.
Avery Dennison used industry evolution benchmarking against 3M to create
a
new successful strategy.

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MB0052 - Strategic Management and

Define Strategic Management and strategic planning.

Strategic Management: The pattern of objectives, purpose, goals and the

Corporation is an example. Xerox had been forced to make large investments

3.2 Differentiate between surgical and non-surgical turnaround. Give

cloth washing declined fast because of introduction of synthetic washing

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