Assignment Code: MCO-23 /TMA/2022-23

Course Code: MCO-23

Assignment Name: Strategic Management

Year: 2022-2023

Verification Status: Verified by Professor

1. (a) What is mission? How is it different from purpose? Discuss the essentials of a mission statement. (10)

Ans) A mission is described as a statement of purpose and direction that does not alter over time. It may also be referred to as a significant work or obligation that has been given to, allocated to, or self-imposed and is motivated by a strong conviction, calling, or vocation to succeed.

The main function of mission and purpose in business is to explain to customers the motivations behind an organization's procedures and objectives. A mission statement is a written declaration of an organization's specific emphasis, which may vary over time in response to market and environmental changes. A purpose statement, on the other hand, outlines the basic motivation behind an organization's existence and what drives it to accomplish its objectives.

Knowing that purpose goes much further and endures to the very end is crucial since it is the driving force behind an organization's operations. It wouldn't be inaccurate to argue that it serves as both its purpose and motivation. Mission and purpose statements are essential for staying focused in the right direction and overcoming obstacles, whether for personal or professional reasons.

It is a promise to take action. When a decision is made to move forward with a task, it is a statement of how to carry out a vision or purpose. The objective is to carry out that assignment to completion. The goal directs the task. One is motivated and inspired to achieve the task by a mission. Purpose provides the "why" behind actions. The mission articulates the "what" and "for whom" of an activity. In business, it refers to the main reason an organisation exists. It refers to an organization's focus in business, which may shift over time.

Essentials of a Mission Statement

1. It must be clearly articulated: It should be easy to understand so that the values and purpose of the organization are clear to everybody in the organization and will be a guide to them.

2. It must be relevant: should be appropriate to the organization in terms of its history, culture, and shared values.

3. It must be current: A mission statement may become obsolete after some time because of change in the environmental factors and organizational factors. Some companies have changed their mission statements several times. The factors which call for change in the mission statement are changes in the market, growth, diversification into new areas.

4. It must be written in a positive tone: It must be capable of inspiring and encouraging commitment towards fulfilling the mission.

5. It must be unique: It should establish the individuality if not the uniqueness of the company and its products of services.

6. It must be enduring: It should continually guide and inspire and be challenging in the pursuit of its mission.

7. Adapted to the target audience: The mission statement must be directed towards the consumers, general public, shareholders, employees.

(b) Briefly summarize what you understand by the general environment and its importance for business. (10)

Ans) The general environment, or macro-environment, is the variety of factors beyond an organization's control that affect their operation and performance. These external influencers can determine whether a business experiences opportunities or setbacks in the marketplace.  The general environment can shape how a company brands itself, the products they choose to sell and how it interacts with other businesses and regulatory agencies. Companies also examine the general environment when conducting market research and strategic analyses.

A manager must assess the potential effects of a change on their own sector because these effects vary by sector. For instance, the younger demographic profile of India is growing and will have quite distinct effects on industries like health care or entertainment. While the latter will benefit, the former will suffer a detrimental effect, and both must be considered while making strategic decisions. Managers will be able to seize opportunities or protect themselves from threats in response to these analyses of varied impacts. Exhibit 1 demonstrates the various ways that various industries are impacted by changing environmental trends.

The management must be aware that, if the changes are large, they may have the ability to alter the competitive landscape of the industry as they respond to these diverse impacts with new strategic initiatives. For instance, in India, the post-liberalization period saw a change in the competitive rules of the game, particularly in the last few years, for industries like telecom, banking, and insurance. With the pandemic problem, the norms have changed even more as digitization has become increasingly important.

The majority of the firms in the sector's strategies reflect the fact that norms have altered significantly as a result of the loosening of FDI restrictions and the involvement of significant global companies. These modifications can be observed in the fields of technology and cost, the ferocity of advertising and promotions, their commercial relationships, and their network across the country.

Managers must exercise caution because there may be events that are difficult to forecast and require additional attention in order to be incorporated into their strategy. The management must understand how any change would affect various markets in a global framework. It's entirely feasible that they differ greatly in both degree and nature.

General environment forces have the ability to shape the task environment and a company's abilities to resource needed materials and export goods. They also can affect important aspects of their business, such as their customer's willingness to purchase their product. Take, for instance, how the sociocultural force of individuals switching to streaming movies is making movie theatres and movie rental services become less popular.

Structural Drivers to Change

Numerous elements and their expected influences are provided by the PESTLE study. However, it's critical to pinpoint the precise elements that could have an impact on a sector and push companies to make modifications to remain competitive. These elements are known as structural drivers of change because they are likely to have an impact on the competitive environment or the industry structure. Following the identification of the main driving forces using PESTLE analysis, consideration should be given to the combined influence of these forces. Such driving forces may be able to alter the structure of an industry or its surroundings as a result of growing industrial globalisation and the E enabled era.

2. (a) Explain briefly the five forces framework and use it for analyzing competitive environment of any industry of your choice. (10)

Ans) Porter's Five Forces is a model that identifies and analyses five competitive forces that shape every industry and helps determine an industry's weaknesses and strengths. Five Forces analysis is frequently used to identify an industry's structure to determine corporate strategy.

Competition in the Industry

The first of the Five Forces refers to the number of competitors and their ability to undercut a company. The larger the number of competitors, along with the number of equivalent products and services they offer, the lesser the power of a company.  Suppliers and buyers seek out a company's competition if they are able to offer a better deal or lower prices. Conversely, when competitive rivalry is low, a company has greater power to charge higher prices and set the terms of deals to achieve higher sales and profits.

Potential of New Entrants Into an Industry

A company's power is also affected by the force of new entrants into its market. The less time and money it costs for a competitor to enter a company's market and be an effective competitor, the more an established company's position could be significantly weakened.  An industry with strong barriers to entry is ideal for existing companies within that industry since the company would be able to charge higher prices and negotiate better terms.

Power of Suppliers

The next factor in the Porter model addresses how easily suppliers can drive up the cost of inputs. It is affected by the number of suppliers of key inputs of a good or service, how unique these inputs are, and how much it would cost a company to switch to another supplier. The fewer suppliers to an industry, the more a company would depend on a supplier.  As a result, the supplier has more power and can drive up input costs and push for other advantages in trade. On the other hand, when there are many suppliers or low switching costs between rival suppliers, a company can keep its input costs lower and enhance its profits.

Power of Customers

The ability that customers have to drive prices lower, or their level of power is one of the Five Forces. It is affected by how many buyers or customers a company has, how significant each customer is, and how much it would cost a company to find new customers or markets for its output.  A smaller and more powerful client base means that each customer has more power to negotiate for lower prices and better deals. A company that has many, smaller, independent customers will have an easier time charging higher prices to increase profitability. Example of competitive environment in the industry is as follows:

If you were setting up a haulage business, you'd likely be entering a crowded market. You'd have to consider many potential rivals, how much they charged, and whether they were able to discount deeply. You'd also need to think about their resources: you might be setting up to compete with international logistics companies, as well as local competitors  Remember that at this point the analysis should focus on your potential rivals. Only start thinking about your own offer when you've got your data together on the competition.

(b) What is corporate level strategy? Why is it important for a diversified organization? (10)

Ans) A corporate-level strategy is a multi-tiered company plan that leaders use to define, outline and achieve specific business goals. A corporate-level strategy can be used by a small business to increase its profits over the next fiscal year, whereas a large corporation might be overseeing the operations of multiple businesses to achieve more complex goals like selling the company or entering a new market.

When you're constructing your company's corporate-level strategy, you're seeking the best ways to evenly distribute resources to serve the needs of the company to complete planned objectives. It can also help you come up with a contingency plan, you remain prepared to work under unforeseen circumstances. It includes various types of strategies as well. They are as follows:

Stability strategy: The stability strategy is when you proceed in working with clients in your industry. This strategy also assumes that your company is doing well under this current business model. Since the pathway to growth is uncertain, you should employ a stability strategy to ensure incremental progress that still brings in revenue, which includes practices such as research and development and product innovation. An example can be offering free trials of your existing products to your target audience to increase its engagement.

Expansion strategy: The expansion strategy is great for you if your company is planning on creating new products and reaching new audiences. It can also be used if you're upgrading the level of activity within your business like taking on new clients and hiring more employees. You can apply this strategy if the region you're operating in has a strong economy or if your focus is to enhance your performance. Overall, this strategy has large earnings potential for executives, which can lead to raises and expansion to employee benefits packages as well.

Retrenchment strategy: A retrenchment strategy requires you to strongly consider switching your business model. This may involve stopping the manufacturing of a product or reducing its functionality. You may need to allocate more energy to accounts receivable to ensure you're still getting payments of services you provided to maintain your organization's cash flow.

Combination strategy: A combination strategy is a hybrid of the previous three strategies to create your business model. Its main purpose is to increase the company's performance and find out which areas of your company can grow and retract based on market conditions. This approach makes it easier for you to make adjustments to your strategy because you can be more flexible with your time and how much should be allocated to each function of your strategy.

Diversification at the corporate level and concentration at the business level are the most popular growth methods. The introduction of a company into new business ventures through internal or external channels is known as diversification. Value creation through economies of size and scope or market dominance are the main drivers behind expanded diversification in a business. Organizations may decide to diversify as a result of a government policy, performance issues, or concerns about future cash flow.

Diversification can be thought of as a risk management strategy. Risk appraisal is linked to an organization's ability to gain a competitive advantage because risk is a key factor in strategy selection. Investments in new goods, services, clientele, or geographical markets, including global expansion, might constitute internal development. Acquisitions and joint ventures are two external methods of achieving diversification.

3. Comment briefly on the following statements: (4×5)

(a) Strategy is synonymous with policies.

Ans) The idea of company policy was more prevalent in earlier periods when strategy did not exist in organised form. Although they are not the same, strategy and policy were frequently used interchangeably. Policy is a set of guidelines, whereas strategy is a plan of action. A component of strategy is policy.

Understanding the crucial role that policy interpretation and implementation strategy play is crucial for successful implementation Depending on the needs of the organisation, policy may be general or specialised, organisational or functional, expressed or implicit. For instance, if two employees perform similarly, the senior employee may need to be promoted due to the promotional policy, making him or her eligible.

Policy and strategy have frequently been used interchangeably. Both, however, are distinct and shouldn't be used in the same sentence. Subordinates' judgments and behaviours must adhere to the policy as a guide. It is a broad statement of understanding used to accomplish goals. Both strategies and policies are means to an end. In other words, both have as their goal achieving organisational goals. While policy is a contingent decision, strategy is a rule for making decisions.

(b) 12 per cent of effective management strategy is knowledge and 88 per cent is dealing appropriately with people.

Ans) Leadership means  to guide or to influence into an action. In today’s highly competitive world, it becomes important for organizations to have a good leader. The well-known book “In Search of Excellence” concludes that every company that has maintained its excellence over the years has done so because it had ‘a leader or two’ who gave it its structure.

This conclusion has since been reinforced in a recent study by the Stanford Research Institute. It concluded that “12 per cent of effective management strategy is knowledge and 88 per cent is dealing appropriately with people”. Indeed, dealing appropriately with people is Leadership.

In every human activity involving a group of people, there is a need for the guiding hand of a leader. The head of a family is the most ubiquitous leader since the dawn of human history. It is well accepted that on the quality and effectiveness of this leader, be it father or the mother, depends on the progress and fortunes of the family.

In the modern complex society thousands of individuals are appointed or elected to shoulder roles and responsibilities of leadership in junior, middle and senior levels in factories and farms, schools and colleges, business and financial institutions, dispensaries and hospitals, in civil and military organs of the State’s scientific and research institutions and so on. On their quality and effectiveness depends on the strength, prosperity and happiness of society. In history an effective leader has always been a ‘force multiplier’.

Leadership as the behavioural dimension helps in the successful implementation of the strategy. It is important to remember that leadership cannot be taught. However, a man does have the capability to perform himself/herself-to reprogramme his/her personality. And, it is here, that the most exciting part of human endeavour lies.

(c) The evaluation of the strategy of an organization can be done qualitatively as well as quantitatively.

Ans) Both qualitative and quantitative methods can be used to assess an organization's strategy. The quantitative evaluation is based on statistics, and it is feasible to determine whether the strategy's content is effective or has been effective through post facto analysis. However, asking the question, "Will it work? " is another way to conduct a qualitative review. Thus, the qualitative evaluation can be carried out before implementing modification plans. Real-time qualitative strategy evaluation and control is a procedure.

The effectiveness of the approach is tracked, and remedial measures are made. Any organization's primary mission is to accomplish its objectives. But the group must overcome several obstacles to accomplish its objectives. Every organisation needs a strong strategic control mechanism to get over these obstacles. The term "control" alone has the meanings "to regulate" or "to check." To accomplish the goals of the organisation, the top management must monitor how well the strategy is being put into practise. For instance, if a firm is not producing the desired results, it may be required to enhance advertising efforts, alter the product policy, or as a last resort, withdraw from a certain business.

The process of strategic planning and control is closely related. The procedure is divided into the following three phases. Criteria for evaluation, Performance Evaluation, and Control Techniques  The selection of success factors, development of measures, establishment of standards for the same, and information gathering regarding actual performance comprise the first phase, or evaluation criteria.

When evaluating organisational performance, quantitative evaluation criteria are crucial since they allow for a comparison of actual and anticipated results. Financial ratios are typically used by corporations as quantitative criterion for evaluating strategy.

(d) Measuring in organizational performance is one of the important parts of strategy evaluation process.

Ans) A crucial step in the process of evaluating a strategy is measuring organisational performance. Both the qualitative and the quantitative aspects are included. The quantitative metrics were already covered in the unit on control. Here, we'll put the emphasis on using qualitative criteria to assess performance. The qualitative aspects essentially make up human factors.

Seymour Tilles claims that six qualitative questions can be used to assess a strategy as follows

1. Does the plan internally make sense?

2. Is the plan in keeping with the surroundings?

3. Is the approach suitable in light of the resources at hand?

4. Is the risk involved in the plan reasonable?

5. Is the time frame for the plan appropriate?

6. Is the plan practical?

The judgement of a plan is also influenced by certain other aspects. They include:

1. How well does the company balance its investments between projects with high and low risk?

2. How well does the company divide its funding between long-term and short-term projects?

3. How socially responsible are the organization's alternative strategies?

There may be a lot more questions like these that affect how a plan is evaluated. The final phase is to implement remedial measures to reposition the organisation after answering all of these evaluation questions. This is required to be able to compete and adapt to the changing environment.

4. Difference between the following: (4×5)

(a) Strategy and Policy

Ans) Difference between strategy and policy is as follows:

(b) Global environment and domestic environment

Ans) Difference between Global environment and domestic environment is as follows:

(c) Tangible and Intangible Differentiation

Ans) Differentiation in tangible and intangible is as follows:

(d) Operational and Strategic Control

Ans) Difference between operational and strategic control is as follows:

5. Write short notes on the following: (4×5)

(a) Industrial Organization Model

Ans) The Industrial Organization Model serves as the cornerstone for comprehending the idea of strategy that creates a competitive advantage. The Industrial Organization Model approaches strategic decision-making from the outside in. It starts off with the premise that external variables significantly influence an organization's strategic operations.

Therefore, this model presupposes that the development and application of strategies to produce above-average returns and so achieve competitive advantage are influenced by the characteristics and circumstances of the external environment.

According to this approach, the organisation must establish strategies to meet external demands while also restricting the range of potential techniques that may be appropriate and ultimately successful. Additionally, the model makes the assumption that every business involved in a certain industry possesses a same set of resources. The resources needed to implement strategy are quite transferrable between enterprises.

A method is used by the industrial organisation model to gain competitive advantage. The following steps are discussed:

1. Examine the general, industrial, and competitive environments to determine the external environment's characteristics and to help the organisation decide and set boundaries for its strategic options.

2. The industry with the highest potential for returns should be selected based on the industry's structural features.

3. The characteristics of the industry in which the business intends to operate should be taken into consideration while developing strategies that produce above-average profits.

4. Obtain or create the essential resources needed for the strategies and plans you've developed to be implemented successfully.

5. According to the model, an organisation will acquire competitive advantage if it successfully implements strategic actions that allow it to use its resources to meet external environment needs.

(b) Balanced Score Card

Ans) A balanced scorecard (BSC) is defined as a management system that provides feedback on both internal business processes and external outcomes to continuously improve strategic performance and results. By bringing together measures around internal processes and external outcomes, a balanced scorecard supports continuous improvement at the level of strategic performance and results.

Developed by Robert Kaplan and David Norton in the early 1990s, the balanced scorecard is more than a measurement system—in fact, it's a management system.

In their book The Balanced Scorecard: Translating Strategy Into Action, Kaplan and Norton describe the balanced scorecard as a necessary move away from over reliance on financial measures.

A strictly financial approach for managing organizations is not complete, as it doesn’t capture the landscape of the business and isn’t an indicator of the future. Evaluating organizational performance in a balanced manner on the parameters that influence your business becomes crucial for better management.

The balanced scorecard is a strategic management tool that views the organization from different perspectives, usually the following:

1. Financial: The perspective of your shareholders

2. Customer: What your customers experience and perceive

3. Business process: The key processes you use to meet and exceed customer and shareholder requirements

4. Learning and growth: How you foster ongoing change and continuous improvement

A balanced scorecard can help your organization both articulate and act upon your vision and strategy. Use it to:

1. Facilitate effective and consistent communication because everyone speaks a shared language of metrics

2. Drive focus around key requirements

3. Facilitate reviews on a regular basis

4. Ensure organizational alignment

(c) Value chain framework.

Ans) This is the alternative framework that is most frequently used to direct analysis of the strengths and weaknesses of any organisation. Any firm is viewed in this paradigm as a collection of connected activities that each add value for the consumer. By adding value, the company may either charge more or provide the same amount of service for less money, increasing its profit margin. In the end, this improves the financial success of the company.

Primary activities and support activities make up each of its two sections. The following constitutes the main activities:

1. The actions involved in receiving, holding, and delivering the materials used to create the good or service are known as inbound logistics.

2. Operations including manufacturing, packaging, assembling, testing, and other processes turn different inputs into the finished good or service.

3. The product is gathered, stored, and distributed to clients by outbound logistics. This includes transportation, material handling, and storage for tangible goods.

4. Consumers and users are made aware of the product or service through marketing and sales, enabling them to make a purchase.

5. The efficacy or efficiency of primary activities is improved by a services activity.

The following list of support activities links each of the primary activity groups:

1. Procurement: This is a procedure used in many areas of the business for obtaining the various resource inputs for the primary operations.

2. Technology Development: There are significant technologies associated with various activities, some of which may have a direct connection to the product, processes, or resource inputs.

3. Human Resoburce Management: In this sector, employees are recruited, managed, trained, developed, and given rewards inside the company.

(d) Corporate culture

Ans) Corporate culture is the collection of values, beliefs, ethics and attitudes that characterize an organization and guide its practices.  To some extent, an organization's culture can be articulated in its mission statement or vision statement. Elements of corporate culture include the organization's physical environment; human resource management practices and staff work habits.

Corporate culture is also reflected in the degree of emphasis placed on various defining elements such as hierarchy, process, innovation, collaboration, competition, community involvement and social engagement. A corporate culture that reflects the broader culture is usually more successful than one that is at odds with it. For example, in the current global culture, which values transparency, equality and communication, a secretive company with a strictly hierarchical structure is likely to have trouble recruiting and retaining workers and appealing to customers and partners.