2016 questions paper

Q-1 What are the characteristics of an effective vision

management? How is a strategic vision different from
the vision statement?
Answer: -
A vision statement is used to refer to an understanding
of why the organization exists. It provides direction for
the organization.
Vision statements of many companies show that most of
them do clearly communicate the intent of the
management. Some of them are not inspiring. Vision
statements of some companies are full of nicely worded
abstracts with no clear direction. These visions
statements fail to say anything specific and really
meaningful (such as becoming a global leader).

All stakeholders should be involved in developing an

organization’s vision to ensure an effectively worded
statement. An effective vision should have the following
characteristics so that it can serve as a management tool
for providing the company a sense of direction.
• Graphic: The vision should draw a picture that can
reveal where the company is heading and can also
indicate clearly the market position.
• Directional: It is able to provide clear direction to
the managers and employees as well as describe a
forward-looking picture of the company.
• Focused: It can specifically guide managers in
decision making and allocating resources of the
company.
• Flexible: It must be flexible enough so that with
changes in the products or technology or market,
the vision itself can also be changed to keep pace
with the changing situations.
• Feasible: It should portray an expectation for the
future that is achievable – not just spelling out an
expectation for the sake of talking about an
expectation.
• Desirable: It should be able to indicate; ‘why the
chosen path makes good business sense’.
• Easy to communicate: The vision must be worded in
such a way that it can be communicated easily to the
stakeholders, especially the shareholders,
employees, and customers.
Strategic Vision v/s Mission statement
 Strategic Vision the ideas for the direction and
activities of business development. Generally
included in a document or statement so all company
managers can share the same vision for the
company and make decisions according to the
shared principals and company mission. Your
mission statement serves as a guide for day-to-day
operations and as the foundation for strategic
planning and future decision making.
Mission statement
• A company’s mission statement is typically focused on
its present business scope – “who we are and what
we do”.
• The main concern of a strategic mission statement is
with “who we are and what we do”.
• A mission statement describes a company’s present
business scope.
• The mission statement stresses what the company’s
present products and services are, what type
customers it serves, what technologies and business
capabilities it has.
• The scope of the strategic mission is narrower than
that of strategic vision.
• Most of the strategic mission statements are in
written form.
 OR
Discuss the Benefits of strategic management for
organization.
Answer: -
Strategic management is the process of setting goals,
procedures, and objectives in order to make a company
or organization more competitive.
Benefits of Strategic Management are-
Discharges Board Responsibility
The first reason that most organizations state for having
a strategic management process is that it discharges the
responsibility of the Board of Directors.
Forces An Objective Assessment
Strategic management provides a discipline that enables
the board and senior management to actually take a step
back from the day-to-day business to think about the
future of the organization. Without this discipline, the
organization can become solely consumed with working
through the next issue or problem without consideration
of the larger picture.
Provides a Framework For Decision-Making
Strategy provides a framework within which all staff can
make day-to-day operational decisions and understand
that those decisions are all moving the organization in a
single direction. It is not possible (nor realistic or
appropriate) for the board to know all the decisions the
executive director will have to make, nor is it possible
(nor realistic or practical) for the executive director to
know all the decisions the staff will make. Strategy
provides a vision of the future, confirms the purpose and
values of an organization, sets objectives, clarifies threats
and opportunities, determines methods to leverage
strengths, and mitigate weaknesses (at a minimum). As
such, it sets a framework and clear boundaries within
which decisions can be made. The cumulative effect of
these decisions (which can add up to thousands over the
year) can have a significant impact on the success of the
organization. Providing a framework within which the
executive director and staff can make these decisions
helps them better focus their efforts on those things that
will best support the organization’s success.
Supports Understanding & Buy-In
Allowing the board and staff participation in the strategic
discussion enables them to better understand the
direction, why that direction was chosen, and the
associated benefits. For some people simply knowing is
enough; for many people, to gain their full support
requires them to understand.
Enables Measurement of Progress
A strategic management process forces an organization
to set objectives and measures of success. The setting of
measures of success requires that the organization first
determine what is critical to its ongoing success and then
forces the establishment of objectives and keeps these
critical measures in front of the board and senior
management.
Provides an Organizational Perspective
Addressing operational issues rarely looks at the whole
organization and the interrelatedness of its varying
components. Strategic management takes an
organizational perspective and looks at all the
components and the interrelationship between those
components in order to develop a strategy that is
optimal for the whole organization and not a single
component.
Q-2 What does the term environmental scanning mean?
Discuss how a development in a corporation’ societal
environment affects it through the task management.
Answer: -
The process of collecting, evaluating, and delivering
information for a strategic purpose is defined as
environmental scanning. The process of environmental
scanning requires both accurate and personalized data
on the business environment in which the organization is
operating or considering entering.
Components of Environmental Scanning-
Internal Environmental Components: The components
that lie within the organization are internal components
and changes in these affect the general performance of
the organization. Human resources, capital resources and
technological resources are some of the internal
environmental components.
External Environmental Components: The components
that fall outside the business organization are called
External environmental components. Although the
components lie outside the organization, they still affect
the organizational activities. The external components
can be divided into microenvironmental components,
and macro environmental components. Micro
environmental components include competitors,
consumers, markets, suppliers, organizations, etc. Macro
environmental components include political, legal,
economic, cultural, demographic, and technological
factors.
The societal environment is an environment made by us,
humans, and includes general forces that do not directly
tough the short-term activities but can influence the
long-term ones. The STEEP Analysis is an approach to
scanning the societal environment that examines
sociocultural, technological, economic, ecological, and
political-legal forces. When scanning the societal
environment, “trends in one area may be very important
to firms in one industry but of lesser importance to firms
in other industries”. Sociocultural involves demographic
trends. Technological changes can have a great impact of
multiple different industries. The economical part can
have an impact of business activity, like increase in
interest rates means less sales of home appliances.
Trends in ecological have accelerated and are hard to
keep up with. This element focuses on the natural
environment and its impact on business. Lastly, states
that political-legal has a huge impact on not only the
level of competition within an industry but also on
strategies and if they will be successful.
Task Environment of an organization is the environment
which directly affects the organization from attaining
business goals. In brief, Task Environment is the set of
conditions originating from suppliers, distributors,
customers, stock markets and competitors which directly
affects the organization from achieving its goals.
Suppliers, distributors, customers, competitors all form
part of the entire ecosystem in which an organization
operates. Every business needs the other business to
make sure that the best product is created for the
customer meeting the needs and also earns profit. These
interdependent conditions form the task environment.
Factors of task management are – Competitors,
Customer, Suppliers, Distributor.

OR
What do you understand by the term value-chain
analysis? Describe the corporate value-chain analysis
for a manufacturing firm.
Answer: -
A value chain is the full range of activities – including
design, production, marketing and distribution – that
businesses conduct to bring a product or service from
conception to delivery. For companies that produce
goods, the value chain starts with the raw materials to
make the products and consists of everything added
before the product is sold to consumers. Value chain
analysis finds any deficiencies in these processes and
improves them, saving money, improving quality and
expediting time to market.
Value chain analysis can create change within a business,
improve the products and services it offers, and expand
connections with other companies and their customers
or clients. The United States Postal Service (USPS)
explains the purpose of value chain analysis is “to create
value that exceeds the cost of providing the product or
service and generates a profit margin.”
Benefits of value chain analysis are-
• Improved Bids and Proposals
• Better Product Planning, Research, and
Development
• Standardized Processes
• Improved Vendor Management
• Post-Sales Service and Support
• Reduced Costs
• Improved Profitability
For manufacturing companies, the value chain extends to
the raw materials used to make products, and consists of
every step before the products are sold to consumers.
The value chain includes design, production, marketing
and distribution.
Q-3 What is a business strategy? Discuss Porter’s
‘generic’ competitive strategies.
Answer: -
A business strategy outlines the plan of action to achieve
the vision and set objectives of an organization and
guides the decision-making processes to improve the
company’s financial stability in a competing market.
There are three levels of business strategy
1. Corporate level
2. Business level
3. Functional Level
1. Corporate Level: Corporate level strategies are the
strategic plans of an organization’s top management.
They form the mission and vision statement and have
a fundamental impact on the firm’s long-term
performance. They guide decisions around growth,
acquisitions, diversification and investments.
2. Business Level: Business level strategies integrate
into the corporate vision, but with a focus on a
specific business. At this level, the vision and
objectives are turned into concrete strategies that
inform how a business is going to compete in the
market.
 3. Functional Level: Functional level strategies are
designed to answer how functional departments like
Marketing, HR or R&D can support the defined
business and corporate strategies of an organization.

Michael Porter, a Harvard professor, developed the

phrase “generic competitive strategies (GCS)” in his
business planning and strategizing book, “Competitive
Advantage: Creating and Sustaining Superior
Performance.” Porter’s generic competitive strategy
is a framework for planning the strategic direction of
your business that assists with gaining an advantage
in the marketplace over your competitors. He also
claimed that a company must only choose one of the
three strategies or risk wasting precious resources.
There are 3 types of generic strategies-
1. Cost leadership
2. Differentiation
3. Focus
(1) Cost Leadership: -
A business that wants to gain a market advantage by
controlling costs. There are two types of cost leadership:
low-cost strategy and best-value strategy. One aims to
increase profits by reducing costs while maintaining
industry-average prices. The other aims to increase
market share by charging lower prices and reducing
costs.
Keep in mind consumers' perception of your product. If
your only strategy is to be “cheaper” than the
competition, your consumers may devalue what you
offer. Seek out a medium between pricing your product
or service as valuable and still attainable.
Also, consider using promotions and discounts to
improve consumer perception. You may price the
product higher but offer incentives for purchase via a
short-long term discount code, coupon or sale. The
consumer still sees the product as valuable but may get
excited about the cost savings.
(2) Differentiation: -
Adapting to a differentiation strategy means that your
company must find something about its products that
is special or different from your competitor’s. You
could do this by rebranding or developing new
specialized products to offer under your existing brand
and marketing strategy. By being attentive and
responsive to customers’ needs and wants, you
encourage them to pay prices that may be higher than
your competitors.
 To determine your differentiation, you may need to
create—or revisit—your mission and values
statements. What is your value proposition to the
market? How is your product different from the
competition? They may be similar, but it is up to you to
distinguish how yours is different and better.
(3) Focus: -
The focus strategy provides the option to use either
cost leadership or differentiation within a niche
market. This doesn’t mean that the market will be
smaller because your company might be small, but
rather that your company wants to build product value
and generate a loyal, yet specific client base for future
profits and sales.
There are two types of focus: low-cost and best-value.
The best-value focus is also known as differentiation
focus. The two differ by focusing on either lowest cost
possible or best value for the price.
OR
Discuss the following corporate strategies:
(a) Portfolio analysis
(b) Corporate parenting
Answer: -
 (A) Portfolio analysis: -
Portfolio analysis is a process of examining all the aspects
to the organization to improve the organization profits.
Portfolio analysis aims to identify the components that
need to be enhanced to remove barriers from making
the working process recognize better methods to
allocate resources to improve the return on investment
(ROI).
Reasons for Portfolio analysis
• Analysis
• Formulate Growth Strategy
• Decision Regarding Product Retention
ANALYSIS
The organization’s first reason to conduct a portfolio
analysis in strategic management is to determine every
product mix’s current position and determine which
SBUs (strategic business unit) need more or less
investment. Management needs to create the
organization’s entire portfolio to analyze the present
opportunities and threats to the market and the product.
DECISION REGARDING PRODUCT RETENTION
FORMULATE GROWTH STRATEGY
Another aspect that management wants to formulate
from the portfolio analysis in strategic management is
the growth strategy. According to other products and
markets, they develop a different strategy according to
their potential threats and opportunities. Portfolio
analysis in strategic management helps in laying down
the strategy of expansion as well.
DECISION REGARDING PRODUCT RETENTION
Another reason for corporate portfolio analysis in
strategic management is to determine the life of the
product i.e., to determine which product should be
retained longer and which product should be removed
from the product line.
(B) Corporate Parenting
Corporate parenting refers to the shared responsibility
across the council to ensure that children and young
people in our care or leaving care are supported to
thrive.
There are basically three styles of corporate parenting as
follows;
 1. Financial control.
Under this style the role of the corporate parent is to
monitor and evaluate the financial performance of
investment portfolio of the respective business units.
The corporate managers act as agents on behalf of
shareholders and financial markets to identify and acquire
viable assets and businesses. The business unit managers
are given the autonomy to carry out business activities
and make decisions at their level. However, the corporate
parent sets performance standards for control purposes.
2.Strategic planning
Under this style the role of the corporate parent is to
enhance synergies across the business units. This may be
achieved through: envisioning to build a common
purpose, facilitating cooperation across businesses and
providing central services and resources.
3.Strategic control
Under this style the corporate parent leverages its
resources and competences to build value for its
businesses. For example, a corporate could have a
valuable brand or a specialist skill. The corporate parent
uses its parenting capabilities to seize opportunities for
growth.
But, more ambitious aspiration for the parent is its ability
to gain parenting advantage – it should aim to be the best
possible parent for its businesses. In aggregate, the
businesses under its “patronage” should perform not only
better than they would as standalone entities but also
better than they would under “patronage” of any other
parent. Corporate strategy should clarify how and where
the enterprise can achieve parenting advantage. The link
between parenting advantage and corporate
strategy therefore parallels the link between competitive
advantage and business strategy. Competitive advantage
is in the heart of successful business strategies. It guides
strategic analysis and provides a basis for assessing
alternative action plans. The concept of parenting
advantage plays a similar role at the corporate level. It
should be the fundamental test for judging corporate
strategies and the guiding principle in corporate-level
decisions, guiding the decisions towards better market
opportunities and higher corporate performance.

Q-4 What are the characteristics of an attractive

industry from an entrepreneur’s point of view? What is
the role of innovation in strategy implementation?
Answer: -
Entrepreneurs are not ready to start a business until
they study and understand the industry they plan to
enter. There are particular industry characteristics to
look for that can help project a firm's profitability and
chances of survival. As much as firm-specific factors
usually take higher importance, industry matters more
for firms that are not well positioned and do not have
products that are clearly differentiated from the pack.

Start-Up Capital
Entrepreneurs generally have limited capital, and
financial institutions are not typically willing to lend
them large sums of money. Thus, the industry an
entrepreneur aspires to venture into should require a
relatively low initial capital outlay.
Entry Barriers
The industry should allow relative ease for a new
venture to enter. Entry barriers could be because of
regulations or the formalities involved before authority
is granted to start conducting business in the industry.
Complex formalities and regulations may not only delay
operations but also unnecessarily sap up an
entrepreneur's limited capital without any immediate
returns.
Growth Prospects
The industry should contain market that are underserved
or ripe for innovation. The entrepreneur can thus
undertake to serve the residual market or invest in
research and development for growth. Growth forecasts
are also dependent on anticipated environmental trends.
For example, network marketing companies have high
potential for growth given sustained technological
advancements in e-commerce. One has also to look at
other market structure variables before making full
conclusions about an industry's potential growth
prospects.
Competition Levels

A concentrated industry with many established players

will not be appropriate for a new venture. This is
because most, if not all, of the competitive advantage
areas will have been exhausted by the existing players,
who will also have the upper hand in taking any new
opportunities because of their accumulated resources.
Any benefits of innovations will also be captured by the
other firms, leaving the new venture struggling to gain a
foothold in the market.
Innovation in Strategy Execution

Your strategy is the long-term blueprint for your

business. How do you build a company capable of
adapting faster to accelerating changes around you?
What needs do you satisfy and for whom? How do you
do it in a profitable, sustainable way? How do you
finance it? How do you defend your position? How do
you create an environment where the creativity and
talents of every individual is fostered? Along the way,
though, there are always problems to be solved. Some
problems are straight forward. Perhaps the solution is
evident and easy to implement. Perhaps the solution can
be purchased. But in truly differentiated businesses,
some of the problems we encounter are so unique that
no obvious solutions exist.

Problems that are common among competitors present

an opportunity for you to differentiate.

That’s when we need to embrace innovative problem-

solving capability. In more competitive businesses, where
companies tend to look more alike than not, problems
that are common among competitors present an
opportunity for you to differentiate by developing unique
solutions that are unknown or unavailable to
competitors.
Of course, product and service innovation is also a key
element of strategy execution. Many companies are on
the hook for delivering new products or services on a
regular basis—always being expected by their customers
to “raise the bar.” In these companies, a systematic and
predictable capability to innovate is a must. Whether
through R&D or product\service design and
development, for many companies’ innovation is an
everyday part of managing the business and accordingly
is a fundamental component of strategy execution.

OR
What do you understand by the term corporate
governance? What is the relationship between
governance and social responsibility?
Answer: -
Corporate governance is the combination of rules,
processes or laws by which businesses are operated,
regulated or controlled. The term encompasses the
internal and external factors that affect the interests of a
company’s stakeholders, including shareholders,
customers, suppliers, government
regulators and management. The board of directors is
responsible for creating the framework for corporate
governance that best aligns business conduct with
objectives.
Specific processes that can be outlined in corporate
governance include action plans, performance
measurement, disclosure practices, executive
compensation decisions, dividend policies, procedures
for reconciling conflicts of interest and explicit or implicit
contracts between the company and stakeholders.

An example of good corporate governance is a well-

defined and enforced structure that works for the benefit
of everyone concerned by ensuring that the enterprise
adheres to accepted ethical standards, best
practices and formal laws. Alternatively, bad corporate
governance is seen as poorly-structured, ambiguous and
noncompliant, which could damage the image or
financial health of a business.

Corporate Governance is ensuring that an organization is

run in a responsible manner by ensuring accountability,
transparency and compliance with due regard to its key
stakeholders. It is the whole set of legal, cultural, and
institutional arrangements that determine what publicly
traded corporations can do, who controls them, how that
control is exercised, and how the risks and returns from
the activities they undertake are allocated (Margaret
Blair, 1995)
Corporate Social Responsibility (CSR) is corporate form of
self-regulation integrated into the business model to
create a positive impact on the stakeholders and the
environment. CSR is a concept whereby companies
integrate social and environmental concerns in their
business operations and in their interactions with their
stakeholders on a voluntary basis (European
Commission, 2001).
A traditional view suggested a contradiction between
CSR and Corporate Governance. Corporate Governance
was related to profit maximization and provided
protection to shareholders who have provided capital to
firm, while CSR apparently was against profit
maximization because it suggested a set of actions
beneficial for external stakeholders that may not be good
for a shareholder. But not anymore. Corporate
Governance is an umbrella term and CSR is gradually
getting fused into the company’s corporate governance
practices. Their relationship can be interpreted by
abandoning the standard view of the firm as a
shareholder value maximizer and embracing the view of
a firm as a stakeholder value maximizer. This
convergence paves the way for Corporate Governance to
be driven by ethical norms and the need for
accountability, and it enables CSR to adapt prevailing
business practices. Today both Corporate Governance
and CSR focus on ethical practices in business and the
responsiveness of an organization to its stakeholders and
the environment in which it operates.

Q-5 Discuss the growth strategies of Procter & Gamble

Company.
Answer: -
• Founded in 1837 by William Procter & James Gamble
• An American multinational consumer-based company
headquartered in downtown Cincinnati, Ohio
• It is one of the largest and amongst the fastest
growing consumer good companies in India

Generic Strategy – Cost leadership

• Purpose is to achieve competitive advantage in
consumer good industry
• The emphasis is given on product quality and value
• These are significant in supporting P&G’S efforts to
achieve and maintain a leadership position in the
consumer good industry
• Example: - Tide Naturals at 30% lower costs than
existing ones.
Generic Strategy – Focus
• Focuses on marketing in developing countries
 • Strategy is to have minimal price and better-quality
product
• Example: - MACH3 razor with triple blades
Generic Strategy – Differentiation
• Close to 300 brands across the globe
• Very first company to bring baby diapers in market
• During the year 2008, out of 25 products that were
launched newly,10 was from P&G in comparison with
J&J, L’oreal, Colgate etc.
Intensive Strategies - Market Penetration
• Main aim is to increase the company’s market share
• Does so through marketing campaigns to increase
consumer awareness about the company’s consumer
goods.
• This strategy is especially significant for low-
performing products in the market
• Example: -National Rural Health Mission in Rajasthan
which was Involved in sampling of sanitary napkins,
Vicks.
Intensive Strategies – Growth Development
• Involves design and production processes for
products that attract target customers.
• P&G applies product development to support
continuous business growth, while addressing
competition.
• Example: -Fusion & Mach3 sensitive, OLAY fresh
products, Illumina colors from Wella professionals,
Tide naturals.
Intensive Strategies – Market Development
• Uses market development as a supporting intensive
growth strategy
• P&G could enter new market segments when it
creates an entirely new product line or when it
changes its market focus
• Example: - P&G has well established markets in the
category of Dental care, food and household care,
personal care.
Intensive Strategies – Diversification
• Supporting intensive growth strategies
• Involves establishing new business operation
• This intensive growth strategy is considerably difficult
to implement because of its large-scale effects on
P&G’s business organization
• Example: -P&G’s acquisition of Gillette helped it
diversify its products from household to lifestyle
products.