q ans, strategic management, sample question with answer

7/24/2019 q ans, strategic management, sample question with answer

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Q.What is strategic management? Discuss the diferent tasks ostrategic management process.

Ans:

*The concept o strategic management was originally deeloped in militaryadministration. !t has "ecome popular in the "usiness world.*As in war# rapid changes and its accompanying uncertainty are common in "usiness

organi$ations. %ncertainty in "usiness enironment has thrown the organi$ations togreat challenges.*&hanges are taking place in the enironment. 'ost changes are unpredicta"le.*&hanges are continually occurring in demographics# economic conditions# tradepractices (due to deregulation# li"erali$ation)# diersity o workers# technology andglo"ali$ation trends*!nitially# the concept o longrange planning was used in a ew large companies in the%+A. The concept o strategic management got worldwide attention in ,--s/*Thus# managers inole themseles in strategic management process. !t is applica"leto priate# pu"lic and nonpro0t organi$ations.*The term strategic management reers to the managerial process o orming astrategic ision# setting o"1ecties# crating a strategy# implementing and e2ecuting

the strategy and then oer time initiating whateer correctie ad1ustments in theision# o"1ecties# strategy# and e2ecution are deemed appropriate.*Thus# it is the process through which managers undertake eforts to ensure longterm adaptation o their organi$ation to its enironment.

Discuss the diferent tasks o strategic management process are gien

"elow

Five Task of Strategic Management1. Developing a strategic vision and business mission;2. Setting objectives;3. reating a strateg! to ac"ieve t"e objectives;#. $mplementing and %&ecuting t"e Strateg!;'. %valuating (erformance) Monitoring *e+ Developments and $nitiating orrective ,djustments.

The +trategy'aking# +trategy32ecuting 4rocess


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,. Deeloping a strategic ision and "usiness mission (4hase,)

&ompany summari$es their o"1ecties in mission and ision statement/

A strategic ision re5ects management aspirations or the organi$ation and its

"usiness# proiding a panoramic iew o 6where we are going7 and giing

speci0c a"out its uture "usiness plan/

!t spells out longterm "usiness purpose and molds organi$ational identity/

!t points an organi$ation in a particular direction and charts a strategic path or

it to ollow/

A company8s mission statement descri"es9coneys its present "usiness scope

6who we are# what we do and why we are here7/

!t acts as a guide to decision making or all leels o management/

!n short# a ision statement descri"es what a company wants to "e in the uture

and it lists where the company sees itsel some years rom now. ;n the other

hand mission descri"es what a company wants now and it lists the "road goals

or which company is ormed.

uality homes and "usiness.

'ission: To "uild and deelop enironment riendly apartments# commercial "uildings

land pro1ects using the highest standards o saety# architecture# engineering and

green technology.

@. +etting o"1ecties (4hase@)

;"1ecties are an organi$ation8s perormance targetsthe results and outcomes

it wants to achiee/

They unction as yardsticks or tracking an organi$ation8s perormance and

progress/

3ery unit in a company needs concrete# measura"le perormance targets that

contri"ute towards achieing company o"1ecties/

A well ormulated o"1ectie must "e +'A=T# where + stands or speci0c# ' or

measura"le# A or achiea"le or appropriate# = or realistic# and T or time"ound.

;"1ecties o 3astern ousing Bimited %sing +'A=T Tool

To identiy the potential customers "y ne2t C years/

To enhance the organi$ational capacity and strength "y @,/

To estimate the num"er o pro1ects to "e handed oer within @,E/


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To create awareness among the customers to inest in the pro1ects.

;"1ecties are "roken down into targets or which unit and lowerleel

managers are held accounta"le or achieing them/

The need or "oth good 0nancial perormance and good strategic perormance

calls or management to set 0nancial o"1ecties and strategic o"1ecties/

Financial o"1ecties relate to the 0nancial perormance targets thatmanagement wants the organi$ation to achiee and/

+trategic o"1ecties relate outcomes that strengthen an organi$ation# oerall

"usiness positions and competitie itality (energy).

Short-term objectives

Targets to "e achieed soon/

'ilestones or stair steps or reaching longrange perormance/

Long-term objectives

Targets to "e achieed within

G to C years/

4rompt actions now that will

permit reaching targeted

longrange perormance later.

G. &reating a strategy to achiee the o"1ecties (4haseG) A company8s strategy consists o the com"ination o competitie moes and

"usiness approaches that managers employ to please customers complete

successully and achiee organi$ational o"1ecties/

!t is considered as a longterm plan that relates the strategic adantages o an

organi$ation to the challenges o the enironment/

+trategy making "rings into play the critical managerial issue o how to achiee

the targeted results in light o the organi$ation8s situation and prospects/

;"1ecties are the ends and strategy is the means o achieing them.

H. !mplementing and 32ecuting +trategy (4haseH)

Action-oriented, operations-driven actiity aimed at shaping perormance o

core "usiness actiities in a strategysupportie manner

Tougherand more time-consumingthan crafting strategy

Key tasks include improing eIciency o the strategy "eing e2ecuted and

showing measura"le progress in achieing targeted results.


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C. 3aluating 4erormance and 'aking &orrectie Ad1ustments(4haseC)

Taskso crating and implementing the strategy are nota one-time exercise

&ustomer needs and competitie conditions change

Jew opportunities appear/ technology

adances/ any num"er o other

outside deelopments occur

;ne or more aspects o e2ecuting the

strategy may not "e going well

Jew managers with diferent ideas take oer

;rgani$ational learning occurs

All these trigger the need or corrective actions and adjustments on an as-

needed basis

Q.What is company8s e2ternal enironment? 32plain how acompany can analy$e the competitie pressures and strength oits e2ternal orces.

Ans:,ll relevant forces outsides a compan!-s boundaries called %&ternal%nvironment.

a. ow alue chain analysis can help a 0rm? 32plain the Kcompanyalue chain8 and Kalue chain or an entire industry8 with 0gures.

Ans: Value chain analysis can help organisations to gain better understanding of keycapabilities and identify areas for improvement. It can help them to understand how competitors

create value; and help organisations to decide whether to extend or outsource particular

activities.

A companys value chain consists of a linked set of value-creating activities

performed internally. It cannot be used to identify external opportunities andthreats;

It teaches that how competently a company manages its value chain activities

relative to rivals is a key to building valuable competencies and competitive

capabilities and then leveraging them into sustainable competitive advantage.

The value chaincontains two typesof activities

Primary activities where most of the value for customers is created;


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Support activities facilitate performance of the primary activities.

The primary activities are involved with the physical creation of a product! its

distribution! marketing! and the after-sales related service to the product. "n the

other hand! the support activities are necessary for supporting the primary

activities

=epresentatie &ompany


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Business

-Level

Manager

s

a. 32plain the strategies that are initiated in diersi0ed enterprises.Ans:

Beels o +trategy'akingin a Diersi0ed &ompany

Fig. #.# /epresentative0alue "ain for an

%ntire $ndustr!


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&orporate +trategy is the oerall managerial game plan or a

diersi0ed company. &orporate strategy consists o the moes

made to esta"lish "usiness portions in diferent industries and

approaches used to manage the company8s group o "usinesses.

Lusiness strategy reers to the managerial game plan or single

"usiness. !t is mirrored in the pattern o approaches and moes

crated "y management to produce successul perormance in one

speci0c line o "usiness. For a single "usiness company# corporate

strategy and "usiness strategy are one and the same.

Functional strategy reers to the managerial game plan or a

particular unctional actiity# "usiness process# or key department

within a "usiness. A company8s marketing strategy# or e2ample#

represents the managerial game or running the marketing part o

"usiness. A company needs a unctional strategy or eery ma1or

"usiness actiity and organi$ational unit.

;perating +trategy concerns the een narrower strategic initiaties

and approaches or managing key operating units (plants#

distri"ution centers) and handling daily operating tasks. ;perating

leel strategies

Q.What is the purpose o strategy making? 4lease mention our

strategic issues that stand in the way o company8s success in theyears ahead.

Ans: the purpose o strategy making for Positioning the company to bedifferent from competitors: either by performing different activities or else byperforming similar activities differently. Strategy tells you what notto do so that

you can prioritie effort to set your product or organiation apart. ! god strategymust contain ways to deal with all the strategic issue that stand in the way of

company"s financial and competitive success in the years ahead.

!dentiying the +trategic !ssues

ow to stae of market challenges rom new oreign competitors?

ow to com"at price discounting o rials?

ow to reduce a company8s high costs?


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ow to sustain a company8s present growth in light o slowing

"uyer demand?

". What is lowcost proider strategy? 32plain the reasons or theailure o the lowcost strategy.

Ans:Low-cost provider strategies:, compan!-s strateg! of selling itsproducts at a price lo+er t"an its competitors is kno+n as lo+ cost strateg!;

The reasons for the failure of the low-cost strategy are:

$t ma! invite aggressive cutting b! competitors. $t ma! lead toprice-war t"at

ma! lead to lower proftability; ost advantages ma! not sustain if competitors can easily imitate the

strategy. "en competitors are able to cop! t"e cost advantages) lo+ coststrateg! +ill fail;

$f t"e lo+cost product does not contain enough attributes to be attractive to

prospective bu!ers) t"e strateg! ma! fail. o+ price is not al+a!s appealingto bu!ers;

,ttractiveness ma! be lost if t"e product is eatured-poor or quality

defcient; ost saving technological breakthroughs b! t"e competitors or t"e

emergence o lower cost value c"ain models can nullif! a lo+ cost strateg!.

c. Why is company situation analysis necessary? Jame the >uestionsmentioned "y Thompson and +trickland that are considered inperorming company situation analysis.

Ans:

&ompany8s situation analysis prepares the groundwork or

matching the company8s strategy "oth to its e2ternal market

circumstances and to its internal resources and competitiecapa"ilities.

There are C >uestions are considered in perorming company

situation analysis:

ow well is the present strategy working?

What are the company8s resource strengths and weaknesses and its

e2ternal opportunities and threats?


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Are the company8s prices and costs competitie?

ow strong is the company8s competitie position? and

What strategic issues does the company ace?

Q: What is KDiferentiation +trategy8? Jame the common pitalls andmistakes done in pursuing diferentiation.

Ans:Differentiation Strategies:Differentiation strategies seek to produce a competitive edge

by incorporating attributes and features into a companys product/service offering that rivals

dont have. Anything a firm can do to create buyer value represents a potential basis for

differentiation.

$f bu!ers see little value in uni4ue attributes or capabilities a compan!

stresses) t"en its di5erentiation strateg! +ill get a "o"um market reception. ommon pitfalls and mistakes in pursuing di5erentiation include

Trying to differentiate on the basis of something that does not lower a buyers cost or

enhance a buyers well-being, as perceived by the buyer;

Over-differentiating so that price is too high relative to competitors or that product quality or

service levels exceed buyers needs;

Trying to charge too high a price premium (the bigger the price differential the harder it is to

keep buyers from switching to lower priced competitors;

Ignoring the need to signal value and depending only on intrinsic products attributes to

achieve differentiation;

Not understanding or identifying what buyers consider as value.

Q: What is +W;T analysis? 32plain the steps in +W;T analysis.

Ans:A +W;T analysis proides an oerall iew o a 0rm8s situation andis an essential component o crating a strategy tightly matched to the

company8s situation/

!t prepares the groundwork or matching the 0rm8s strategy "oth to

the e2ternal market circumstances and its internal resources and

competitie capa"ilities/

+ W ; T represents the 0rst letter in


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Strengths

Weaknesses

pportunities

Threats

A company8s resource strengths# competencies# and competitie

capa"ilities are important "ecause they are the most logical and

appealing "uilding "locks or strategy/

=esource weaknesses are important they may represent

ulnera"ilities that need correction/

For a company8s strategyto "e !e""-conceived,it must "e:

'atched to its resource strengths and weaknesses

Aimed at capturing its "est market opportunities and erecting

deenses against e2ternal threats to its well"eing.

The Three +teps o +W;T Analysis


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Q: ow Kocused low cost strategy8 difers rom Kocused diferentiation

strategy8?

Ans:

Focused low-cost strategy:It is the strategy of entering into a niche market at low cost with

a unique type of product that has a special need among the customers in the niche market.

This strategy is targeted to those buyers who desire to have unique products at a low-cost. A

company may adopts this strategy to serve a buyer-segment whose needs can be satisfied with

less cost compared to the rest of the market.

Focused differentiation strategy:It is the strategy operating the business with a

differentiated product in a chosen niche market. When a company pursues such strategy, it

concentrates on a narrow buyer-segment and offer customized attributes in products better

than competitors products. Here the focuser company completes against competitors not based

on low-cost, rather based on product differentiation. Since, the focuser company has

knowledge about the needs of niche customer-groups; it can successfully differentiate its

products. For example, Alam Soap Company, producer of EK Number Pacha Saban, competes

against other soap producers in the laundry bar soap segment of the soap market, not in the

perfume-soap or liquid-soap markets. Its strategy is focused differentiation strategy.

Q: What are the actors that shape a company8s strategy? Discuss the

strategies which are initiated at diferent leels in a diersi0ed

company?

Ans: . The Factors that +hape a &ompany8s +trategy: Man! situational considerationsenter into crafting strateg!. 0er! fe+ strategies c"oices are made in t"e same conte&t. %ven in

same industr!) situational factors di5er enoug" from compan! to compan! t"at t"e strategies of

rivals turn out to be 4uite distinguis"able from one anot"er rat"er t"an imitative. T"is +"!

carefull! si6ing up all t"e various situational factors) bot" e&ternal and internal) is t"e starting

point in crafting strateg!. Follo+ing are t"e primar! factors t"at s"ape a compan!-s strategic

approac"es

+trategy +haping Factors 32ternal to the &ompany

%conomic) societal) political) regulator! and communit! factors;

ompetitive conditions and overall industr! attractiveness; ompan!-s opportunities and t"reats to compan!-s +ell being;

+trategy +haping actors !nternal to the &ompany

ompan! strengt"s) +eaknesses) competencies and competitive capabilities;

Managers personal ambitions) business p"ilosop"ies) and et"ics;

S"ared values and compan!-s culture.

Strateg! is s"aped b! bot" e&ternal and internal considerations. , good strateg! must be +ell

matc"ed to all t"ese situational considerations. %conomic) societal) political) regulator! and

communit! citi6ens"ip factors limit t"e strategies actions a compan! can or s"ould take. %ver!


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strategic action a compan! takes s"ould be et"ical. T"e compan! "as et"ical duties to o+ners)

emplo!ees) customers) suppliers) t"e communities +"ere it operate) and t"e public at large.

the strategies which are initiated at diferent leels in a diersi0ed

company:

&orporate +trategy:$t is t"e overall managerial game plan for a diversi7ed compan!.orporate strateg! consists of t"e moves made to establis" business portions in di5erent

industries and approac"es used to manage t"e compan!-s group of businesses. orporate

strateg! is crafted at t"e "ig"est levels of management.

Lusiness +trategy:8usiness strateg! refers to t"e managerial game plan for single

business. $t is mirrored in t"e pattern of approac"es and moves crafted b! management to

produce successful performance in one speci7c line of business. For a single business

compan!) corporate strateg! and business strateg! are one and t"e same. ead

responsibilit! for business strateg! falls in t"e lapof +"oever is in c"arge of t"e business.

Functional strategy: $t refers to t"e managerial game plan for a particular functional

activit!) business process) or ke! department +it"in a business. , compan!-s marketing

strateg!) for e&ample) represents t"e managerial game for running t"e marketing part of

business. , compan! needs a functional strateg! for ever! major business activit! and

organi6ational unit. ead responsibilit! for conceiving strategies for eac" important

business functions and process is normall! delegated to t"e respective functiona

department "eads and process managers.


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;perating +trategy: $t concerns t"e even narro+er strategic initiatives and approac"es

for managing ke! operating units 9plants) distribution centers: and "andling dail!

operating tasks. perating level strategies provide valuable support to "ig"erleve

strategies. ead responsibilit! for operating strateg! is usuall! delegated to frontline

managers) subject to revie+ and approval b! "ig"erranking managers.

Q: 32plain the alue chain o a 0rm as an analytical tool o strategic cost

analysis. Why a 0rm should use alue chain techni>ue or situation

analysis?

Ans:

Q: What is competitie strategy? Discuss the generic competitie

strategies used to achiee or deend competitie adantage o a

company.

Ans: &ompetitie strategy:$t consists of t"e business approac"es and initiatives undertakenb! a compan! to attract customers and to deliver superior value to t"em t"roug" ful7lling t"eir

e&pectations as +ell as to strengt"en its market position. $t aims at gaining competitive

advantage in t"e market place against t"e competitors.

How a companycan achieve or defend competitive advantagethrough the strategy it employs

and its management of the value chain is discussed below.

Five distinct competitive strategies approaches are:1.Low-cost provider strategies: appealing to a broad spectrum of customers based on being

the overall low-cost provider of product or service;

2.Differentiation strategies: seeking to differentiate the companys product offering from

rivals in ways that will appeal to a broad spectrum of buyers;

3.Best-cost provider strategies:giving customers more value for the money by incorporating

good-to-excellent product attributes at a lower cost than rivals; the target to have the lowest

(best) costs and prices compared to rivals offering products with comparable upscaleattributes;

4.Focused (or market niche) strategies based on lower cost:concentrating on a narrow

buyer segment and outcompeting rivals by serving niche members at a lower cost than rivals;

5.Focused (or market niche) strategies based on differentiation: concentrating on a narrow

buyer segment and outcompeting rivals by offering niche members customized attributes

that meet their tastes and requirements better than rivals product;


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&ompetitie strategy: $t consists of t"e business approac"es and initiatives undertaken b! a

compan! to attract customers and to deliver superior value to t"em t"roug" ful7lling t"eir

e&pectations as +ell as to strengt"en its market position. $t aims at gaining competitive

advantage in t"e market place against t"e competitors.

A successful differentiation strategy must entail creating customer value in ways unmatched by

rivals; the hard thing is to figure out how to create unique attributes that buyers will consider

valuable. Any of the four approaches can be used to achieve differentiation in a companys products:

To incorporate product attributes and users features that lower the buyers overall costs of

using companys product;

To incorporate features that raise the performance a buyer gets out of the product;

To incorporate features that enhance buyer satisfaction in noneconomic or intangible ways;

To deliver value to customers via competitive capabilities that rivals dont have or cant afford

to match.

Q: +tate the adantages o strategic management in a "usiness

organi$ation.

Ans: +tate the adantages or "ene0ts o strategic management in a

"usiness organi$ation are gien "elow :

4roiding "etter guidance to the entire organi$ation on the crucial

point o 6 what it is we are trying to do/

'aking managers and organi$ational mem"ers more alert to the

winds o change# new opportunity and threatening deelopments/

elping to uniy the organi$ation/

&reating a more proactie management posture/

4romoting the deelopment o a constantly eoling "usinessmodel that will produce sustained "ottomline success or the

enterprise and /

4roiding managers with rationale or ealuating competing "udget

re>uestsa rationale that argues strongly or steering resources

into strategysupportie# resultsproducing areas.


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Q: What is Driing Forces that tend to change competitie condition in

the industry? Mie some e2amples o most common Driing Forces.

,ns%nvironment ma! be c"anging because of ne+ developments in t"eindustr!. *e+ developments take place in t"e industr! because important

forces are al+a!s driving competitors) customers) suppliers to alter t"eir actions.

T"ese are called t"e driving forces. T"e! tend to c"ange competitive conditions in

t"e industr!.

T"e most common driving forces are c"anges in t"e longterm industr!

gro+t" rate) c"anges in bu!ers demograp"ics) product innovation)

tec"nological c"ange) marketing innovation) c"anges in cost and euestions mentioned "y Thompson and +tricklandthat

answers "uild an understanding o a 0rm8s surrounding enironment and

orm the "asis or matching its strategy are gien "elow


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=uestion 1 "at ,re t"e $ndustr!-s Dominant %conomic Features>

=uestion 2 "at ?inds of ompetitive Forces ,re $ndustr! Members

Facing>

=uestion 3 "at Factors ,re Driving $ndustr! "ange and "at

$mpacts ill T"e! @ave>

=uestion # "at Market (ositions Do /ivals ccup!A"o $s Strongl!

(ositioned and "o $s *ot>

=uestion ' "at Strategic Moves ,re /ivals ikel! to Make *e&t>

=uestion B "at ,re t"e ?e! Factors for Future ompetitive Success>

=uestion C Does t"e utlook for t"e $ndustr! (resent an ,ttractive

pportunit!>

Q: 32plain the steps needed in conducting +W;T analysis in a "usiness

organi$ation.

,ns T"ree Steps

Q: +tate the situation where the KDiferentiation +trategies8 works well.

Ans:Differentiation strategies tend to work best in market circumstances:

Where there are many ways to differentiate the product or service and many buyers perceive

these differences as having value;

Where buyer needs and uses are diversethe more diverse buyers preferences are, the more

room firms have to pursue different approaches to differentiation and thereby avoid out-

differentiate one another on much the same attributes;

Where few rivals firms are following a similar differentiate approach;


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Where technological change and product innovation are fast-paced and competition revolves

around rapidly evolving product features (rapid innovation and frequent introductions of next

version products help maintain buyer interest in the product and provide space for

companies to pursue separate differentiating paths).

Q: What is +trategic Mroup in an industry? Why +trategic Mroup 'apping

techni>ue is used "y a company?

Ans:T"e companies in t"e same group are found to follo+ t"e same basic strateg! and somefollo+ a strateg! di5erent from t"e ot"er companies in ot"er groups. T"ese groups are called

+trategic Mroup.

Strategic roup Mapping tec"ni4ue is used b! a compan! cause Strategic groupmapping endeavors to determine t"e strategic group for a product of compan!. ompanies is an

industr! often di5er +it" respect to several factors suc" as distribution c"annels) market

segments) 4ualit! of products) pricing polic!) customers service etc. t"ese di5erences lead to

di5erent groups consisting of limited number of companies in t"e same industr!.

Q: De0ne core competence o a company? 4lease put some e2amples o

core competence o a "usiness organi$ation.

,ns A core competenceis a wellperormed internal actiity centra"(not

peripheral or incidental) to a company8s competitiveness and

pro#tabi"ity

$ompany competencies are norma""y bund"es of ski""s, kno!-ho!,

resources, and techno"ogy%as opposed to a sing"e discrete ski"" or

resource or techno"ogy. &xamp"es of competencies inc"ude'

ski"" in merchandising and product disp"ay,

expertise in a speci#c-techno"ogy,

proven abi"ity to se"ect good "ocation for retai" out"ets,

ski""s in !orking !ith customers on ne! app"ications, and use of

products etc(

Some examp"es of core competences are'

expertise in bui"ding net!orks and systems that enab"e e-

commerce,

speeding ne! or next generation product to the market,


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ski""s in manufacturing high )ua"ity product,

innovativeness in deve"oping popu"ar product features,

agi"ity in responding to ne! market trends and changing

competitive conditions,

expertise in integrating mu"tip"e techno"ogies to create fami"ies ofne! products etc(

A core competence gies a company competitie capa"ility and

thus >uali0es as a genuine company strength and resource .

Q: +tate the issues that are considered in appraising company8s

competitie position.

Ans: the issues that are considered in appraising company8s competitie

position are

ow to stae of market challenges rom new oreign competitors?

ow to com"at price discounting o rials?

ow to reduce a company8s high costs?

ow to sustain a company8s present growth in light o slowing

"uyer demand?

Whether to e2pand a company8s product line?

Whether to ac>uire a rial 0rm?

Whether to e2pand into oreign markets rapidly or cautiously?

What to do a"out aging demographics o a company8s customer

"ase?

Q: 32plain 'ichael 4otersFie Forces 'odelused or an industry8s

competition analysis? Why is such analysis important?

,nsStrategic $mplications of t"eFive ompetitive Forces

ompetitive environmentis unattractivefromt"e standpoint of

earning good pro7ts !hen

/ivalr! is vigorous


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%ntr! barriers are lo+

and entr! is likel!

ompetition from

substitutes is strong

Suppliers and customers "ave

considerable bargaining po+er

T"e Five Forces Model of ompetition

Q: Why is it necessary to undertake +;WT analysis in the "usiness

organi$ation? Discuss the issues considered in +W;T analysis.

,ns

Q: What is ocus strategy? Discuss the diferent types o ocus

strategy and state risks inole in ocus strategy.

Ans:

Focused (or market niche) Strategies:The competitive advantage of focusing is earned either by

achieving lower-costs in serving the target market niche or by developing an ability to offer niche

buyers something different from rival competitors--in other words, it is either cost-based or

differentiation based. Focus strategy concerns itself with the identification of a niche-market and

launching a unique product or service in that market.

diferent types o ocus strategy: :A company can pursue strategy either with a

low-cost approach, or a differentiation approach. There are two types of focus strategy:


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Focused low-cost strategy:It is the strategy of entering into a niche market at low cost with a

unique type of product that has a special need among the customers in the niche market. This

strategy is targeted to those buyers who desire to have unique products at a low-cost. A

company may adopts this strategy to serve a buyer-segment whose needs can be satisfied with

less cost compared to the rest of the market.

Focused differentiation strategy:It is the strategy operating the business with adifferentiated product in a chosen niche market. When a company pursues such strategy, it

concentrates on a narrow buyer-segment and offer customized attributes in products better

than competitors products. Here the focuser company completes against competitors not based

on low-cost, rather based on product differentiation. Since, the focuser company has

knowledge about the needs of niche customer-groups; it can successfully differentiate its

products. For example, Alam Soap Company, producer of EK Number Pacha Saban, competes

against other soap producers in the laundry bar soap segment of the soap market, not in the

perfume-soap or liquid-soap markets. Its strategy is focused differentiation strategy.

risks inole in ocus strategy:There are some risks of focus strategy whichare:

Competitors find effective ways tomatch a focusers capabilitiesin serving niche;

Nichebuyers preferences shifttowards product attributes desired by majority of

buyers niche becomes part of overall market;

Segment becomes so attractive itbecomes crowded with rivals,causing segment

profits to be splintered.

Q: What is macroenironment o a "usiness organi$ation? +how

the macroenironment o an organi$ation in 0gure.

Ans: T"e macroenvironment includes all relevant forces outsides a compan!-s boundariesrelevant forces outsides a compan!-s boundaries"ile man! forces in t"e macroenvironment are be!ond a compan!-s sp"ere of inEuence"ile man! forces in t"e macroenvironment are be!ond a compan!-s sp"ere of inEuence

compan! managements are nonet"eless obliged to monitor t"em and adapt t"e compan!compan! managements are nonet"eless obliged to monitor t"em and adapt t"e compan!strateg! as ma! be neededstrateg! as ma! be needed


21/23

Q: Jame the seen >uestions mentioned "y Thompson and

+trickland that "uild understanding o a 0rm8s surrounding

enironment and orm the "asis or matching its strategy.

Ans:

=uestion 1 "at ,re t"e $ndustr!-s Dominant %conomic Features>

=uestion 2 "at ?inds of ompetitive Forces ,re $ndustr! MembersFacing>

=uestion 3 "at Factors ,re Driving $ndustr! "ange and "at

$mpacts ill T"e! @ave>

=uestion # "at Market (ositions Do /ivals ccup!A"o $s Strongl!

(ositioned and "o $s *ot>

=uestion ' "at Strategic Moves ,re /ivals ikel! to Make *e&t>

=uestion B "at ,re t"e ?e! Factors for Future ompetitive Success>

=uestion C Does t"e utlook for t"e $ndustr! (resent an ,ttractive

pportunit!>

Q: +tate the approaches applied to achiee diferentiation in a

company8s products.

Ans: four approaches can be used to achieve differentiation in a companys

products:

To incorporate product attributes and users features that lower the buyers

overall costs of using companys product;

To incorporate features that raise the performance a buyer gets out of the

product;


22/23

To incorporate features that enhance buyer satisfaction in noneconomic or

intangible ways;

To deliver value to customers via competitive capabilities that rivals dont haveor cant afford to match.

Q: Jame the 0e >uestions mentioned "y Thompson and +trickland

that are considered in perorming company situation analysis.

Ans:

There are C >uestions are considered in perorming companysituation analysis:

ow well is the present strategy working?

What are the company8s resource strengths and weaknesses and its

e2ternal opportunities and threats?

Are the company8s prices and costs competitie?

ow strong is the company8s competitie position? and

What strategic issues does the company ace?

Q: 32plain the alue chain analysis as a techni>ue or situation

analysis.

Ans:

Q: +tate the situations where the Bow &ost 4roider +trategy works

well.

Ans:When a low cost provider strategy works well:A strategy of trying to be the low-cost

provider works well in situations where:

The industrys product is essentially the same from seller to seller (brand differences are

minor).

Many buyers are price-sensitive and shop for the lowest price.

There are only a few ways to achieve product differentiation that have much value to buyers.

Most buyers use the product in the same ways and thus have common user requirements.


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Buyers costs in switching from one seller or brand to another are low or even zero.

Buyers are large and have significant power to negotiate pricing terms.

Q:What is core competence? 4ut our e2amples o core

competence.

Ans :

Acore competenceis a well-performed

internal activitycentral(not peripheral or incidental)to a companyscompetitiveness and profitability

. Some examp"es are

e&pertise in building net+orks and s!stems t"at enable ecommerce) speeding

ne+ or ne&t generation product to t"e market)

skills in manufacturing "ig" 4ualit! product)

innovativeness in developing popular product features)

agilit! in responding to ne+ market trends and c"anging competitive conditions)

e&pertise in integrating multiple tec"nologies to create families of ne+ products

etc.

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