1) Difference between business policy and strategic management.

1. Definition:
 Business Policy: Guidelines and rules for decision-making in a
company.
 Strategic Management: Process of planning, monitoring,
analysing, and assessing all that is necessary for an organization to
meet its goals.
2. Focus:
 Business Policy: Sets boundaries for daily operations.
 Strategic Management: Focuses on long-term goals and overall
direction.
3. Scope:
 Business Policy: Covers routine decisions and administrative
functions.
 Strategic Management: Encompasses major decisions impacting
the whole organization.
4. Time Frame:
 Business Policy: Short to medium-term.
 Strategic Management: Long-term planning.
5. Flexibility:
 Business Policy: Generally, more rigid, and stable.
 Strategic Management: Requires adaptability and flexibility.
6. Implementation:
 Business Policy: Applied by middle and lower management.
 Strategic Management: Driven by top management and
executives.
7. Objectives:
 Business Policy: Ensures consistency and uniformity in decision-
making.
 Strategic Management: Achieves competitive advantage and
organizational growth.

8. Components:
 Business Policy: Includes company policies, procedures, and rules.
 Strategic Management: Involves analysis (SWOT), strategy
formulation, implementation, and evaluation.

9. Change Management:
 Business Policy: Less focused on change.
 Strategic Management: Emphasizes managing and leading
change.

10.Examples:
 Business Policy: Employee leave policy, code of conduct.
 Strategic Management: Market expansion strategy, innovation
roadmap.
2) Steps and processes in Business Policy.

1. Understanding the Organization's Goals:

 Know what the company wants to achieve, such as increasing
sales, improving customer satisfaction, or expanding to new
markets.
2. Identifying Policy Needs:
 Determine what areas need guidelines, such as employee
behavior, customer interactions, or financial management.
3. Drafting Policies:
 Write clear and concise rules or guidelines that align with the
company's goals. For example, create a dress code policy or a
customer service protocol.
4. Review and Approval:
 Share the drafted policies with top management or relevant
stakeholders for feedback and approval. Ensure that everyone
agrees with and understands the policies.
5. Communication:
 Inform all employees about the new policies. This can be done
through meetings, emails, or training sessions. Make sure
everyone knows what the policies are and why they are important.
6. Implementation:
 Put the policies into action. Ensure that everyone follows the new
guidelines and that they are applied consistently across the
organization.
7. Monitoring and Enforcement:
 Regularly check to see if the policies are being followed. This can
involve supervision, audits, or feedback from employees and
customers. Address any issues or violations promptly.
8. Review and Update:
 Periodically review the policies to ensure they are still relevant and
effective. Update them as needed to adapt to new circumstances
or company goals.
9. Training and Support:
 Provide ongoing training and support to employees to help them
understand and adhere to the policies. This can include refresher
courses or additional resources.
10.Feedback and Improvement:
 Encourage feedback from employees and stakeholders about the
policies. Use this feedback to make continuous improvements and
ensure the policies remain effective and useful.
3) Challenges of strategy formulation in strategic management.

1. Understanding the Environment:

 It is tough to get a clear picture of all the external factors (like
market trends, competition, and regulations) that can affect the
company.
2. Defining Clear Objectives:
 Setting specific and realistic goals can be challenging, especially
when there are many different interests and opinions within the
company.
3. Resource Allocation:
 Deciding how to distribute limited resources (money, people,
time) to different projects and departments can be tricky.
4. Managing Change:
 People often resist change, so getting everyone on board with a
new strategy can be a major hurdle.
5. Balancing Short-Term and Long-Term Goals:
 Finding the right balance between achieving immediate results
and investing in future growth is a common challenge.
6. Uncertainty and Risk:
 The future is unpredictable, and making decisions with incomplete
information involves taking risks that can affect the company's
success.
7. Internal Alignment:
 Ensuring all departments and employees understand and support
the strategy can be difficult, especially in large organizations.
8. Innovation and Adaptability:
 Staying innovative and adaptable in a rapidly changing market
requires continuous effort and creativity.
9. Competitor Actions:
 Anticipating and responding to competitors' moves can be
challenging and requires constant vigilance and flexibility.

10.Cultural and Ethical Considerations:

 Developing strategies that align with the company’s culture and
ethical standards while still being competitive can be complex.
4) Types of strategies in strategic management.

1. Growth Strategy:
 Focuses on expanding the company’s operations. This can be done
by increasing sales, entering new markets, or launching new
products. For example, a coffee shop chain opening new locations
in different cities.
2. Stability Strategy:
 Aims to maintain the company’s status without major changes.
This is often used when a company is performing well and wants
to keep things steady. For instance, a successful local bakery
continuing its current operations without expansion.
3. Retrenchment Strategy:
 Involves cutting back or reducing operations to improve the
company’s financial health. This might include closing unprofitable
stores or discontinuing poor-performing products. An example is a
retailer shutting down underperforming branches to save costs.
4. Diversification Strategy:
 Involves adding new products or services that are different from
the current offerings. This can be related diversification (similar to
current products) or unrelated diversification (completely
different). For example, a smartphone company starting to make
smart home devices.
5. Cost Leadership Strategy:
 Aims to become the lowest-cost producer in the industry.
Companies do this by increasing efficiency and reducing costs,
allowing them to offer lower prices. An example is a discount
retailer like Walmart focusing on cost-cutting to offer lower prices
than competitors.
6. Differentiation Strategy:
 Focuses on making products or services unique and attractive
compared to competitors. This can be achieved through high
quality, innovation, or exceptional service. For example, Apple
differentiating its products through design and technology.
7. Focus Strategy:
 Targets a specific niche market. Companies concentrate their
efforts on serving a particular group of customers better than
competitors. An example is a luxury car manufacturer like Ferrari
focusing on high-end sports cars.
8. Innovation Strategy:
 Centres on developing new products, services, or processes.
Companies aim to be first movers and set market trends. An
example is a tech company like Tesla innovating with electric
vehicles and self-driving technology.
9. Defensive Strategy:
 Protects the company’s market position and competitive edge.
This might involve improving existing products, reducing costs, or
responding to competitors' actions. For example, a company
enhancing its customer service to retain loyalty against new
entrants.
10.Alliance Strategy:
 Involves forming partnerships with other companies to achieve
strategic objectives. This can include joint ventures, strategic
alliances, or mergers. An example is two tech companies
collaborating on a new software product to combine their
expertise.
5) Cadell's Model in Strategic Management
1. Environmental Scanning and Analysis:
 Internal Analysis: Like the internal component of a SWOT analysis
(Strengths and Weaknesses), Cadell’s model emphasizes
understanding an organization’s internal capabilities and
resources. This involves evaluating assets, competencies, and
competitive advantages.
 External Analysis: Comparable to the external factors in SWOT
(Opportunities and Threats) and PESTLE analysis (Political,
Economic, Social, Technological, Legal, Environmental), this aspect
of Cadell's model looks at the external environment. It requires
identifying trends, market conditions, and competitive forces that
can impact the organization.
2. Strategic Formulation:
 Strategy Development: Cadell’s model would include the
development of strategic initiatives that align with the insights
gained from environmental scanning. This mirrors the strategic
formulation stage in frameworks like Porter's Five Forces, where
understanding the competitive landscape informs strategy
development to achieve competitive advantage.
 Goal Setting: Setting strategic objectives based on the analysis,
similar to the Balanced Scorecard approach, ensuring that goals
are specific, measurable, achievable, relevant, and time-bound
(SMART).
3. Strategy Implementation:
 Action Plans: Implementation involves developing detailed action
plans and allocating resources to execute the strategic initiatives.
This stage is akin to the operationalizing part of strategic
management where strategies are translated into actionable
steps.
 Change Management: Managing change effectively to ensure
smooth execution of strategies. This could involve training,
 leadership alignment, and stakeholder engagement, much like the
Kotter’s 8-Step Change Model emphasizes.
4. Monitoring and Evaluation:
 Performance Measurement: Ongoing assessment of strategy
execution through performance metrics and KPIs (Key
Performance Indicators). This phase ensures that strategies are on
track and making the desired impact.
 Feedback Loop: Incorporating feedback mechanisms to adjust
strategies as needed. This reflects the dynamic nature of strategic
management where continuous improvement and adaptability are
key.
 6) Diff modes of strategic decision making

1. Rational Decision-Making Mode

This mode involves a systematic, step-by-step process to make decisions. It is
logical and data-driven.
 Steps:
 Identify the problem or opportunity.
 Gather and analyze relevant information.
 Develop multiple alternatives.
 Evaluate the alternatives against criteria like cost, benefits, and
risks.
 Choose the best alternative.
 Implement the decision.
 Monitor and adjust as needed.
When to use: When there is enough time to thoroughly analyze the situation
and when reliable data is available.
2. Intuitive Decision-Making Mode
This approach relies on the gut feelings, instincts, and experience of the
decision-maker rather than extensive data analysis.
 Characteristics:
 Decisions are made quickly.
 Based on experience and intuition.
 Less formal analysis.
When to use: In situations requiring quick decisions, or when the decision-
maker has extensive experience and knowledge about the issue.
3. Political Decision-Making Mode
In this mode, decisions are made based on negotiations and power dynamics
among different stakeholders with varying interests.
 Characteristics:
 Influenced by internal politics and alliances.
 Decisions are the result of bargaining and compromise.
 Power and influence play a significant role.
When to use: When dealing with complex issues involving multiple
stakeholders with conflicting interests.

4. Garbage Can Decision-Making Mode

This mode is less structured and occurs in a more chaotic environment where
problems, solutions, participants, and choices are mixed together.
 Characteristics:
 Decisions are made in a disorganized manner.
 Solutions may be found before problems are fully understood.
 Involves a lot of trial and error.
When to use: In highly dynamic and uncertain environments where traditional
decision-making processes are not feasible.
5. Incremental Decision-Making Mode
Also known as "muddling through," this mode involves making small, gradual
changes rather than big, radical shifts.
 Characteristics:
 Small adjustments and tweaks are made over time.
 Focus on short-term steps and immediate solutions.
 Avoids major risks.
When to use: When major changes are too risky or when there is uncertainty
about the best course of action.
6. Collaborative Decision-Making Mode
This approach emphasizes teamwork and group consensus in making decisions.
 Characteristics:
 Involves input from multiple team members or departments.
 Encourages diverse perspectives and shared responsibility.
 Focuses on reaching a consensus.
When to use: When it’s important to get buy-in from various stakeholders or
when diverse expertise is needed.

7. Adaptive Decision-Making Mode

This mode involves continuously learning and adapting based on feedback and
changing circumstances.
 Characteristics:
 Ongoing adjustments and flexibility.
 Learning from past outcomes to inform future decisions.
 Responding to new information and changing environments.
When to use: In rapidly changing environments where ongoing adjustment is
necessary to stay competitive.
 7) Explain all the components of Strategic Audit

1. External Environment Analysis

This component focuses on the factors outside the organization that can
impact its strategy.
 Macro-environmental Analysis (PESTEL):
 Political: Government policies, regulations, and legal issues.
 Economic: Economic conditions, trends, and factors like inflation
and unemployment.
 Sociocultural: Social trends, demographics, and cultural factors.
 Technological: Technological advancements and innovations.
 Environmental: Environmental issues and sustainability practices.
 Legal: Laws and regulations affecting the industry.
 Industry Analysis (Porter’s Five Forces):
 Competitive Rivalry: Intensity of competition among existing
firms.
 Threat of New Entrants: Ease with which new competitors can
enter the market.
 Bargaining Power of Suppliers: Influence suppliers have over
prices and terms.
 Bargaining Power of Buyers: Influence customers have over prices
and terms.
 Threat of Substitutes: Likelihood of customers switching to
alternative products.
2. Internal Environment Analysis
This component examines the internal aspects of the organization that affect
its ability to implement its strategy.
  Resource Analysis:
 Tangible Resources: Physical and financial assets.
 Intangible Resources: Brand reputation, intellectual property,
company culture.
 Capabilities Analysis:
 Core Competencies: Unique strengths and abilities that give the
company a competitive advantage.
 Value Chain Analysis:
 Assessing the company's primary and support activities to identify
areas of competitive advantage.
3. Strategic Objectives and Goals
Evaluating the company’s long-term goals and the clarity, relevance, and
attainability of its strategic objectives.
4. Strategy Formulation
Reviewing the current strategies to determine if they align with the company’s
goals and environmental conditions.
 Corporate Strategy: Decisions about the overall scope and direction of
the company (e.g., diversification, mergers, acquisitions).
 Business Strategy: How the company competes in a particular market or
industry (e.g., cost leadership, differentiation).
 Functional Strategy: Strategies at the departmental level (e.g.,
marketing, finance, operations).
5. Strategy Implementation
Assessing how well the company executes its strategies.
 Organizational Structure: Alignment of the structure with the strategy.
 Leadership and Culture: Role of leadership and organizational culture in
supporting the strategy.
 Resource Allocation: Efficiency and effectiveness in allocating resources.
  Performance Management: Systems in place for tracking progress and
performance.

6. Performance Evaluation
Measuring the outcomes of the strategic initiatives and overall strategy.
 Financial Performance: Profitability, revenue growth, return on
investment.
 Market Performance: Market share, customer satisfaction, brand loyalty.
 Operational Performance: Efficiency, productivity, quality.
 Employee Performance: Employee satisfaction, retention, and
productivity.
7. Strategic Control
Processes to monitor and adjust strategies as necessary to ensure they are
effective and aligned with the company’s goals.
 Feedback and Learning Systems: Mechanisms for learning from past
performance and making necessary adjustments.
 Balanced Scorecard: A tool to monitor performance across financial,
customer, internal process, and learning and growth perspectives.
8. Risk Assessment
Identifying and evaluating risks that could impact the strategic plan.
 Risk Identification: Recognizing potential risks in internal and external
environments.
 Risk Analysis: Assessing the likelihood and impact of identified risks.
 Risk Mitigation: Developing strategies to manage and mitigate risks.
9. SWOT Analysis
Summarizing the findings of the strategic audit into a SWOT (Strengths,
Weaknesses, Opportunities, Threats) analysis to provide a clear picture of the
company's strategic position.
 8) Explain Ethical decision-making process

1. Identify the Ethical Issue

The first step is to recognize that a decision or situation involves ethical
considerations.
 Recognize Ethical Dilemmas: Identify situations where there is a conflict
of values, duties, or responsibilities. For instance, choosing between
profitability and environmental sustainability.
 Understand Stakeholder Impact: Identify all parties affected by the
decision, including employees, customers, shareholders, suppliers, and
the community.
2. Gather Information and Identify Alternatives
Collect relevant information to understand the context and the implications of
various choices.
 Fact-Finding: Gather facts about the situation, including legal
requirements, industry standards, and company policies.
 Stakeholder Perspectives: Understand the viewpoints and concerns of
different stakeholders.
 Alternative Actions: Identify possible courses of action, considering both
immediate and long-term consequences.
3. Evaluate the Alternatives from an Ethical Perspective
Assess the identified alternatives using ethical principles and frameworks.
 Utilitarian Approach: Evaluate which option will produce the greatest
good for the greatest number of people.
 Rights-Based Approach: Consider which option respects the
fundamental rights of all individuals involved.
  Justice Approach: Determine which option is the most fair and just,
distributing benefits and burdens equitably.
 Common Good Approach: Evaluate which option contributes to the
overall well-being of the community.
 Virtue Ethics Approach: Consider which option aligns with moral virtues
such as honesty, courage, compassion, and integrity.
4. Make a Decision
Choose the best ethical alternative after careful consideration of the
evaluation.
 Balance Values and Objectives: Ensure the chosen action aligns with the
company’s core values and strategic objectives.
 Consider Long-Term Implications: Think about the long-term ethical
implications and sustainability of the decision.
5. Implement the Decision
Put the chosen course of action into practice.
 Communication: Clearly communicate the decision and the rationale
behind it to all stakeholders.
 Action Plan: Develop an implementation plan outlining the steps,
responsibilities, and timelines.
 Support Systems: Ensure that resources and support are in place to carry
out the decision effectively.

6. Monitor and Evaluate the Outcomes

After implementation, assess the impact and outcomes of the decision.
 Feedback Mechanisms: Set up systems to gather feedback from
stakeholders about the impact of the decision.
 Performance Metrics: Use both qualitative and quantitative metrics to
evaluate the effectiveness and ethical implications of the decision.
 Adjustments: Be prepared to make adjustments if the outcomes are not
as expected or if new ethical issues arise.
7. Reflect and Learn
Review the decision-making process to improve future ethical decision-making.
 Review Process: Reflect on what worked well and what could be
improved in the decision-making process.
 Documentation: Document lessons learned and best practices to guide
future ethical decision-making.
 Training and Development: Provide ongoing ethics training and
development for employees to reinforce the importance of ethical
decision-making.
10) Explain with real life examples about Trade Barriers.
1. Tariffs
Example: U.S. Tariffs on Chinese Goods In recent years, the U.S. imposed
significant tariffs on Chinese goods, ranging from electronics to clothing, as part
of a trade war aimed at addressing trade imbalances and protecting domestic
industries.
Strategic Implications:
 Cost Management: Companies importing from China faced increased
costs, prompting them to consider sourcing materials from other
countries to reduce expenses.
 Supply Chain Adjustments: Businesses had to redesign their supply
chains to mitigate the impact of tariffs, such as relocating manufacturing
to countries not affected by tariffs.
 Pricing Strategy: Firms needed to evaluate their pricing strategies to
maintain profitability without losing competitiveness due to higher
import costs.
2. Quotas
Example: U.S. Import Quotas on Sugar The U.S. has long-standing import
quotas on sugar to protect domestic sugar producers. These quotas limit the
amount of sugar that can be imported, maintaining higher domestic prices.
Strategic Implications:
 Local Sourcing: Food and beverage companies in the U.S. might prioritize
sourcing sugar domestically, despite higher costs, to avoid quota
restrictions.
 Product Formulation: Some companies may reformulate products to
reduce sugar content or substitute other sweeteners, balancing cost and
consumer preferences.
  Market Entry: Foreign sugar producers face limited access to the U.S.
market, affecting their global market strategies and potentially driving
them to focus on other regions.

3. Subsidies
Example: European Union Agricultural Subsidies The EU provides substantial
subsidies to its agricultural sector under the Common Agricultural Policy (CAP).
These subsidies help European farmers compete against cheaper imports.
Strategic Implications:
 Competitive Advantage: European agricultural producers benefit from a
lower cost structure, allowing them to compete more effectively both
domestically and internationally.
 Market Dynamics: Non-EU countries face challenges in exporting
agricultural products to the EU due to the price competitiveness of
subsidized European goods.
 Strategic Alliances: Non-EU companies might seek joint ventures or
partnerships with EU firms to access the European market under more
favorable conditions.
4. Non-Tariff Barriers (NTBs)
Example: Japan’s Strict Food Safety Standards Japan has stringent food safety
standards and certification processes for imported food products. These non-
tariff barriers can delay market entry and increase costs for foreign food
exporters.
Strategic Implications:
 Compliance and Certification: Exporters must invest in meeting Japan’s
food safety standards, which may require changes in production
processes and additional certification costs.
 Market Research: Companies need to conduct thorough market research
and understand local regulations before entering the Japanese market.
 Brand Positioning: Successfully meeting high standards can be leveraged
in marketing to position products as premium quality, potentially
justifying higher prices.
5. Embargoes
Example: U.S. Embargo on Cuba The U.S. has imposed an embargo on Cuba
since the 1960s, prohibiting most trade between the two countries.
Strategic Implications:
 Market Exclusion: U.S. companies are excluded from the Cuban market,
missing out on potential business opportunities.
 Alternative Markets: Companies must seek alternative markets and
diversify their international presence to mitigate risks associated with
such embargoes.
 Political Risk Management: Businesses need to closely monitor
geopolitical developments and adjust their strategies accordingly to
avoid the impact of sudden policy changes.
6. Trade Agreements and Retaliation
Example: NAFTA/USMCA The North American Free Trade Agreement (NAFTA),
now replaced by the United States-Mexico-Canada Agreement (USMCA), aimed
to reduce trade barriers between the U.S., Canada, and Mexico. However,
disputes sometimes lead to retaliatory tariffs.
Strategic Implications:
 Regional Integration: Companies benefit from reduced tariffs and
increased market access within the trade bloc, encouraging regional
supply chains and investment.
 Risk of Retaliation: Businesses must be prepared for potential trade
disputes and retaliatory measures, which can disrupt trade flows and
increase costs.
 Strategic Alliances: Firms often form strategic alliances with partners in
member countries to maximize the benefits of trade agreements.