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CORPORATE STRATEGY

 

Course Description

 

This course is designed to introduce the concepts, tools, and first principles of strategy formulation and competitive analysis.   It is concerned with managerial decisions and actions that materially affect the success and survival of business enterprises.  The course focuses on the information, analyses, organizational processes, and skills and business judgment managers must use to craft strategies, position their businesses and assets, and define firm boundaries, so as to maximize long-term profits in the face of uncertainty and competition.

 

Strategic Management is an integrative and interdisciplinary course in two important respects.  First, it assumes a broad view of the environment that includes buyers/consumers, suppliers, technology, economics, capital markets, competitors, government, and global forces.  And it assumes that the external environment is dynamic and characterized by uncertain changes.   Second, the course takes a general management perspective.  It views the firm as a whole and examines how policies in each functional area can be integrated into an overall competitive strategy. 

 

 

Learning Outcomes

 

This course helps students develop skills for formulating strategy.  The strategy process demands the mastery of a body of analytical tools and the ability to take an integrative point of view.  You will develop these skills through:

 

·         In-depth analysis of industries and competitors

·         Prediction of competitive behavior

·         Techniques for analyzing how firms can develop and sustain competitive advantages over time

 

 

Course Contents

 

 

Indicative Reading

 

Core text

Johnson Gerry and Scholes Kevan, (4th Edition) Exploring Corporate Strategy – Text and Cases , PHI

 

Reference Books

·        Thompson A Arthur, Strickland A J 12th Ed. Strategic Management Concepts and Cases: Tata McGraw Hill

·        Mintzberg Henry, Quin J B, Ghoshal S The Strategy Process: Prentice Hall

·        Pearson J A , Richard B Strategic Management (Business Week) PHI

 

Assessment

 

Mode:              Case Study

Case Study:      Coca-Cola and Pepsi Cola and The Soft Drink Industry. (Refer Handout given in class)

Question:          Prepare a five competitive force (Porter Model) analysis of the Soft Drink Industry with your focus being the concentrate producers. Be sure to separate the concentrate producers and the bottlers in your analysis. You are required to do your analysis on the concentrate producers only. (Remember that the bottlers are “buyers” from the concentrate producers’ perspective). You should identify and describe factors that affect the threat of new entrants in the concentrate producers’ industry, the factors that most influence the rivalry among concentrate producers, the importance of substitutes, and the protection the industry players have from major suppliers and buyers. Based on the five-forces analysis, do you think the industry is attractive? What may threaten the attractiveness of this industry in the years to come? Give reasons in support of your answer.

Weighting:        100 %

Word Limit:      700 – 1000 Words

Submission:      Analysis of the case study should be submitted, in hard copy only, on or before 30 AUGUST 2005. Failure to submit the case-study in time will result in an ‘F’ grade and the student will have to repeat the course.

 

Why Case Study?

 

Reasons for employing the case discussion method of instruction include: 

 

·        The case method allows you to develop skills at problem definition in addition to problem solving.  Cases typically do not have an obvious set of tasks whose performance will lead to mastery.  Rather, they force you to sift through a mass of information, some of it irrelevant or contradictory, in order to identify the important or strategic issues

 

·        The case method gives you a chance to deal with ambiguity.  Most cases do not have obvious "right" answers.  Managers must be able to function in situations where the right answer is not known, without falling into the trap of assuming that any answer is as good as another.  Some analyses and proposed strategies are clearly wrong and some are clearly better than others.  Remember: "There are no right answers, but there are wrong answers."

 

·        Case discussion techniques provide a chance to learn the meaning of analytical rigor in situations other than open-and-shut problems.

 

Case Preparation

 

Because this course relies on case material, extensive preparation before class and participation in class are required to ensure the course's success. 

 

·        Preparation for a case discussion should begin with a rapid reading of the assigned case and other materials.  

 

·        Then, it is worthwhile to review the discussion questions provided for clues as to what issues require special attention. 

 

·        The next step is normally to re-read the case carefully, taking notes that sort information, facts, and observations under a number of relevant headings.  Try to formulate theories or hypotheses about what is going on as you read, modifying or rejecting them as new information surfaces.  Push yourself to reach definitive conclusions.

 

·        You should perform quantitative analyses, “crunching” whatever numbers are available.  It is also very important to provide quantitative support wherever possible, particularly when exploring various hypotheses as to the nature and importance of certain phenomena.  (If the requisite data are not available in the case, a precise description of what data are missing often triggers ideas for making creative use of the information that is available.)  It is usually worthwhile to identify trends in the firm or industry, preferably with a quantitative measurement.  Some of these trends, often very important ones, will not be flagged in the text of the case. 

 

·        Finally, preparation will include notes that can be used to guide your interventions in class discussions.

 

 

CLASS :          9 AUGUST AND 16 AUGUST

 

Power Point Slides

                                    

Further Understanding

 

The following questions are only for your further understanding of the subject:

 

Essay-type questions

 

1.      What do you mean by the PEST analysis ? Explain with the help of an example.

 

2.      Why is it important to have an understanding of the competitive environment of a business?

 

3.      Critically analyze any organization of your choice using the SWOT analysis

 

4.      Explain the ‘vocabulary of strategy’ with an example for each term.

 

5.      Discuss the three views of the strategy development process

 

Multiple-choice questions

 

1.      Which of the following is an internal cultural factor affecting a company’s corporate strategy:

a.       Frame of reference

b.      Social norms

c.       Routines and rituals

d.      Values of the society

 

2.      suppliers are external stakeholders

a.      true

b.      false

 

3.      stakeholders who have low power and high level of interest have to be:

a.      kept informed

b.      kept satisfied

c.       given no effort

d.      none of the above

 

4.      according to Porter, a company who is “stuck in the middle” has no strategic direction

a.      true

b.      false

 

5.      cost leadership strategy refers to

a.       selecting a niche and serving it

b.      selling to all

c.       going for international ventures

d.      advertising heavily

 

6.      if skyline wants to diversify to a school it is

a.      related diversification

b.      unrelated diversification

 

7.      moving from semi automatic washing machines to automatic washing machines is

a.       market development

b.      product development

c.       market penetration

d.      withdrawal

 

8.      Rolls Royce is an example of route

a.       1 of strategy clock

b.      4 of strategy clock

c.       5 of strategy clock

d.      8 of strategy clock

 

9.      The use of stakeholders mapping  is to find out who would be the key blockers and facilitators

a.      True

b.      False

10.  opening a poultry farm by KFC is an example of backward integration

a.      true

b.      false

 

11.  if you need speed of entry into a unknown market, the best method to adopt is

a.      acquisition

b.      internal development

c.       franchising

d.      consortia

 

12.  the question raised in suitability is – can the strategy selected be implemented successfully?

a.       True

b.      False

 

13.  the question raised in feasibility is – can the strategy selected be implemented successfully?

a.      True

b.      False

 

14.  acceptability refers to the culture and stakeholders

a.      true

b.      false

 

15.  in the embryonic stage of a company life cycle, following type of culture feature is not seen

a.       cohesive culture

b.      founder dominant

c.       outside help not valued

d.      mismatches and tensions arise

 

16.  if the environment is changing fast, you would assess suitability by:

a.       ranking

b.      decision tree

c.       scenario planning

 

17.  a dominant competitive position means

a.       very less competition

b.      high competition

c.       too many competitors

d.      monopoly/virtual monopoly

 

18.  portfolio analysis helps us to know how a new strategy will improve the mix of activities in the organization:

a.      true

b.      false

 

19.  profitability analysis is a part of:

a.       suitability

b.      acceptability

c.       feasibility

 

20.  the hybrid strategy in the strategy clock is not the same as middle of the road

a.       true

b.      false

 

21.  a formula approach for allocating resources is used when few resource change are required

a.      true

b.      false

 

22.  if the perceived need for change is high, and the extent of central direction is low, you would use the following approach to allocate resources at the corporate level

a.       imposed priorities

b.      open competition

c.       free bargaining

d.      none of the above

 

23.  one of the following is not an element to be considered while undertaking organizational design

a.       centralization/devolution

b.      organizational configuration

c.       management system

d.      resource availability

 

24.  the traditional planning approach is the traditional top down approach

a.      true

b.      false

 

25.  in strategic control approach the center acts as a banker

a.       true

b.      false

 

26.  Salesman is an example of operating core

a.      true

b.      false

 

27.  the computer department is a part of technostructure in which of the following condition

a.      computer department in a manufacturing organization

b.      computer department in a computer training institute

 

28.  which of the following is not a step in Lewin’s model of handling change

a.       unfreezing

b.      moving

c.       unmoving

d.      refreezing

 

29.  where there is a lack of information or inaccurate information and analysis, you would use which of the following approach to deal with resistance to change

a.       facilitation and support

b.      negotiation and agreement

c.       education and communication

d.      explicit and implicit coercion

 

30.  a typical input-output-model for handling change is the

a.       lewin’s model

b.      congruence model

c.       comprehensive model

 

31.  which is the best method of coordination for projects

a.       standardization of work process

b.      direct supervision

c.       mutual adjustment

d.      standardization of skills

 

32.  an organization structure based on the products is known as the

a.       simple organization structure

b.      multidivisional organizational structure

c.       geographic organization structure

d.      matrix organization structure

 

33.  you get a greater operational control through functional organizational structure

a.      true

b.      false

 

34.  activity carried out in resource identification include

a.      detailed resource requirements

b.      new resources

c.       linkages

 

35.  basic work in an organization is done in

a.      operating core

b.      middle line

c.       strategic apex

 

36.  unfreezing is a transition period

a.       true

b.      false

 

37.  an organization structure based on the area is known as the

a.       simple organization structure

b.      multidivisional organizational structure

c.       geographic organization structure

d.      matrix organization structure

 

38.  secretary to the managing director is an example of operating core

a.       true

b.      false

 

39.  if the perceived need for change is high, and the extent of central direction is high, you would use the following approach to allocate resource at the corporate level

a.      imposed priorities

b.      open competition

c.       free bargaining

d.      none of the above

 

40.  to sustain a momentum of change a firm needs to

a.       provide resources

b.      develop new competences and skills by training

c.       build support systems

d.      all of the above

 

41.  one of the following is not a tool used for allocating resources

a.      value chain analysis

b.      financial plans and budgets

c.       manpower planning

d.      network analysis

 

42.  strategy is concerned with

a.       short term direction of the company

b.      long term direction of the company

c.       medium term direction of the company

d.      none of the above

 

43.  market is best defined as

a.      collection of potential and actual buyers

b.      place where buying and selling takes place

c.       place where specific goods or services are available

d.      none of the above

 

44.  which of these is not an example of political environment

a.       visa relaxation during DSF 2002

b.      restrictions of new competition

c.       continuous checking by the department of health

d.      changing demographic patterns of the country

 

45.  which one of the following is not a factor affecting entry of competitors

a.       legal issues

b.      capital requirements

c.       access to distribution channels

d.      large number of small time operators

 

46.  strategic group analysis is useful in analyzing

a.       all competitors

b.      basis of competition

c.       competitive rivalry

d.      competitive price

 

47.  in GE matrix, if your SBU falls in the lower 3 quadrant, you

a.      divest the SBU

b.      invest in the SBU

c.       harvest the SBU

d.      maintain current level of investment

 

48.  opening a poultry farm by KFC is an example of forward integration

a.       true

b.      false

 

49.  Cost focus strategy refers to:

a.      Selecting a price sensitive niche and keeping low price

b.      Selling to all

c.       Going for international ventures

d.      Advertising heavily

 

50.  we use the analysis of stakeholders to develop political support in handling change as per the comprehensive model

a.      true

b.      false

 

51.  when speed is essential you use the following method to deal with resistance to change

a.      implicit and explicit coercion

b.      manipulation

c.       facilitation and support

d.      education and communication

 

52.  a company’ss paradigm includes

a.       values

b.      beliefs

c.       assumptions

d.      all of the above

 

53.  stakeholder mapping consists of making judgements on the following issues

a.       how likely each stakeholder groups is to impress its expectations on the company

b.      whether they have the means to do so

c.       the likely impact of stakeholder expectations on future strategy

d.      all the above

 

54.  the power/interest matrix indicates the type of relationship which the organization will need to establish with each stakeholder group

a.       true

b.      false

 

55.  in the power/dynamism matrix the most difficult group to cope with is one

a.       which is low on power but highly predictable

b.      which is high on power but low on predictability

c.       which is high on power and highly predicatable

d.      which is low on power and predictability simultaneously

 

56.  legitimate /hierarchical power is a result of the power person has because of his /her position in the organization       

a.      true

b.      false

 

57.  feasibility criterion includes all of the following except:

a.       can the strategy be financed

b.      do we have the right kind of technology

c.       will the strategy improve the value for customers

d.      is the organization capable of delivering quality economics

 

58.  need is

a.       something which you would like to have

b.      something without which you cannot survive

c.       felt deprivation

d.      something external to the human body

 

59.  the purpose of Porters 5 forces model is

a.      to analyze the general competitive position of the industry

b.      to analyze the competitive position of the company

c.       to analyze the competitive position of the nations

d.      none of the above

 

60.  the extent of the competitive rivalry is maximum in the

a.       introduction stage

b.      growth stage

c.       maturity stage

d.      decline stage

 

61.  which of the following is not a source of power for internal stakeholders of a company

a.       control of strategies resources

b.      resource dependence

c.       charismatic / influential

d.      legitimate / hierarchical

 

62.  identifying stakeholders does not include

a.       who are the external and internal stakeholders

b.      who are the formal and informal stakeholders

c.       what events triggered formation of stakeholder group

d.      assessing the power of stakeholders

 

63.  power is a key force which shapes organization culture

a.      true

b.      false

 

64.  the alternative methods that can be adopted when developing strategy include

a.       internal development

b.      acquisition and merges

c.       joint developments

d.      all of the above

65.  which of the following is not a problem with generic strategy concept

a.       sustainable cost leadership can be achieved by simply cutting cost

b.      a firm can have a focus strategy where it selects a group of segments in the industry and tailor the strategy to serve them exclusively

c.       low cost analysis gives a competitive advantage to a firm

d.      cost leadership and low price are one and the same thing

 

66.  Pepsi is an example of a firm following a

a.      cost leadership strategy

b.      differentiation strategy

c.       cost focus strategy

d.      differentiation focus strategy

 

67.  when a firm focuses on a price sensitive segment exclusively it is following

a.       cost leadership strategy

b.      differentiation strategy

c.       cost focus strategy

d.      differentiation focus strategy

 

68.  in the strategy clock which strategy is destined for a complete failure

a.       low price / low added value strategy

b.      hybrid strategy

c.       focused differentiation

d.      increased prices/ low value strategy

 

69.  Ikea follows a

a.      hybrid strategy

b.      low price / low added value strategy

c.       focused differentiation

d.      increased prices/ low value strategy

 

70.  BMW follows a

a.       low price / low added value strategy

b.      hybrid strategy

c.       focused differentiation

d.      increased prices/ low value strategy

 

71.  Withdrawal maybe an option selected when

a.      A firm is arranging funds for other SBUs mainly stars, or to clear debits

b.      Firm is going in for turnaround

c.       Increasing the existing market share

d.      The firm is planning to find new markets

 

72.  Microsoft is making huge investments in biotechnology research projects. This is an example of

a.       Backward integration

b.      Forward integration

c.       Horizontal integration

d.      Unrelated diversification

 

73.  related diversification is development beyond the present product and market but still within the same industry

a.      true

b.      false

 

74.  McDonald is an example of

a.       Joint venture

b.      Franchise

c.       Network alliance

d.      Consortia

 

75.  internal development is not suitable when

a.      speed of entry is required

b.      selling technologically advanced products

c.       firm wants to keep control on secrets

d.      If day to day market knowledge is critical

 

76.  the concept of synergy can be very effectively used in

a.       withdrawal

b.      consolidation

c.       related and unrelated diversification

d.      market penetration

 

77.  strategic decisions are not likely to affect operational decision

a.       true

b.      false

 

78.  deciding who is responsible for carrying out the strategy is decided at the strategic choice phase      

a.       true

b.      false

 

79.  Feasibility concerns whether an organization has the resources and competences to deliver a strategy

a.      Yes

b.      No

 

80.  The owner of teaching competence is

a.      The teacher

b.      The educational institute

c.       The ministry of education

d.      The dean of the college

 

81.  Competitor gap analysis is important because

a.      The difference in performance levels between firms and competitors

b.      How far the firm is from customer expectations

c.       The customer expectations

d.      All the above

 

82.  financial statements give us past information

a.      true

b.      false

 

83.  which of the following is not a primary activity

a.       outbound logistics

b.      inbound logistics

c.       technology development

d.      marketing and sales

 

84.  primary activity that is concerned with distribution of the goods to the consumer is

a.       inbound logistics

b.      technology development

c.       outbound logistics

d.      marketing and sales

 

85.  Assessing the balance of resource does not include

a.       Portfolio analysis

b.      Comparative analysis

c.       Balance of skill analysis

d.      Flexibility analysis

 

86.  Which of the following is not a source of cost efficiency

a.       Supply cost

b.      Experience

c.       Technology development

d.      Economies of scale

 

87.  generation of strategic options is an important part of strategic analysis phase of strategic management process

a.       true

b.      false

 

88.  suitability, feasibility and acceptability study is done at

a.       strategic analysis

b.      strategic choice

c.       strategic implementation

d.      all the above

 

89.  which of the following is an industry attractiveness indicator

a.       market knowledge

b.      sales effectiveness

c.       market size

d.      product quality

 

90.  when we acquire a new market by using existing competence it is known as

a.       premier plus 10

b.      mega opportunities

c.       fill in the blanks

d.      white spaces

 

91.  when we acquire new competence for a new market we call it

a.       premier plus 10

b.      fill in the blanks

c.       mega opportunities

d.      white spaces

 

92.  buyer power is low when:

a.      there is a high product differentiation

b.      the threat of backward integration is high

c.       concentration of buyers in relation to sellers is high

d.      volume of purchase is high

 

93.  life cycle analysis is concerned with evaluating whether the strategy fits the stage that the company is in

a.      true

b.      false

 

94.  the growth phase of organizations culture involves

a.      a large variety of cultural change in different circumstances

b.      culture of company that has been institutionalized and people may not be aware of it

c.       culture serves as a key defense against a hostile environment

d.      the culture is being shaped by the founders

 

95.  culture is used as a key defense against a hostile environment in

a.       embryonic stage

b.      growth stage

c.       maturity stage

d.      decline stage

 

96.  if a strategy requires few resource changes in a highly centralized firm, it will follow

a.      formula approach

b.      imposed priorities

c.       free bargaining

d.      open competition

 

97.  when resource allocation is done for a firm during the growth stage

a.       priority areas are established centrally and resource allocations are imposed by center

b.      the center could allocate resources through a process of open competitor

c.       the center could first impose the allocation that these give additional resources on request

d.      all the above

 

98.  change is necessary because of

a.       technical obsolescence

b.      political and social events

c.       increase in size, completely and specialization of organization

d.      all the above

 

99.  which of the following is not a source of resistance to change

a.       uncertainty

b.      lack of trust

c.       shared vision

d.      perceptual differences

 

100.          changes have to be managed against a set of objectives and to a time table

a.       true

b.      false