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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&le) 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
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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;
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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.