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Explain five force model of industry analysis and give example of each force?

Porters Five Forces It explains the Structure-Conduct-Performance model, which essentially links what decisions could be made by a company based on the correlation between the firms structure, conduct and performance. The criteria that makes up each portion of this are outlined in the image below:

Threat of Entry The threat of entry for Microsoft is relatively low for all of their divisions. In the personal computing business, they have a strong hold of the majority share of operating systems that are used by consumers. Currently, there is really only one main competitor with any real market share, which would be Apple and the Max OS X. Open source projects such as Linux do not currently pose much of a threat because it is much more of a tech niche market.

Creating an OS can take years and requires expansive knowledge of computing. Both Microsoft and Apple have been building off of their knowledge from old versions of their OSs for years. They also have an incredibly strong user base who are sometimes pretty passionate about the product. A firm that is trying to create a new OS would not only have to overcome the financial costs and necessary time, but also the lack of knowledge/experience and the fight to pull users from their existing OS of choice.

From a console gaming perspective, Microsoft again sees low threat of entry. At this time, the major players have been set as Microsoft, Nintendo and Sony. Between these three companies, all voiced consumer interests and demands are being filled. There would be very little that a new firm could do to differentiate a new gaming console from anything these three companies currently do or will do with their next generation. They have also been

producing these systems long enough to understand how to minimize their costs with the components they choose, leaving little chance for cost advantage.

Threat of Rivalry

The threat of rivalry is relatively low for Microsoft. From an operating system standpoint, there are not many competitors who make operating systems. Because of this, Microsoft does not feel that they need to constantly be surveying a large amount of companies to see what price or sales trends are occurring. Prices are rather static because of this. The only type of differentiation created between operating systems is what software it can run. However, the number of software packages that are only available on one platform are getting smaller every year. One thing to mention would be that Windows can be installed on Apple hardware, while Mac OS X cannot be installed on a large majority of non-Apple products (with the exception of building a Hackintosh which would require more knowledge than most casual computer users have.)

However, the gaming division of Microsoft is under a high threat of rivalry from Nintendo and Sony. It is standard practice to make large price cuts to game consoles every six to twelve months as production costs decrease, and there is a constant console war going on. As soon as a console is released, a new one begins R&D. Nintendo announced they will unveil their successor to the Wii (The Wii U) at E3 this year, and the spec information for Sonys forthcoming console has started leaking to news media.

Threat of Substitutes

Threat of substitute for Windows is low, even with the advancements Mac OS X has made. In order for users to switch over to Mac OS X, they would have to buy an Apple machine. These machines are, on average, much more expensive for the same amount of power. While some people do it, many people cannot justify the cost. Linux could show some threat of substitute as it is a free fully functioning stable GUI, but many users would see the constant manual updating as a hassle and do not want to take the time to learn how to overcome the related tech obstacles.

Microsofts gaming division has a moderately high threat of substitute. I say this because there are two gaming audiences: casual and hardcore. A hardcore gamer will likely own multiple consoles to make sure they get to play every game they want to due to exclusive

titles on separate consoles. This group would likely not contribute to a threat of substitute. However, casual gamers will easily substitute for a Nintendo or Sony console, or even just buy a few games on their smart phone. While Microsofts Xbox 360 offers many other services (Netflix, Hulu, Youtube, Last.fm, etc) these services could be found elsewhere if someone is not interested in the games available on the console.

Threat of Powerful Suppliers

For both Windows and the Xbox 360, there is a relatively low threat of powerful suppliers. All of the resources that would need to be supplied to Microsoft by outside suppliers are available from a large number of firms. Blank media, circuit boards, processors, etc. are not in short supply in any way. Given the size and brand recognition that Microsoft has and the number of other suppliers available, many suppliers know they would have to offer a good price in order to work with them. None of the items supplied are necessarily unique, and the very few times that a supplier has tried to enter a videogame market through forward vertical integration, it has not gone very well.

The only threat a supplier could hold is that the physical items needed by Microsoft are used in a wide variety of electronics. Memory chips, processors, hard drives, DVDs, capacitors, circuit boards, etc are all used in everything now. However, a large number of game consoles have been sold by Microsoft (66 million units as of 1/9/2012.) This would suggest that the components inside each console would pass as a decent side of a suppliers business.

Threat of Powerful Buyers

Microsoft has had deals with almost every major PC company (buyers in this instance) to include a copy of the latest Windows version as part of the cost of a pre-built PC. This has become expected from people buying non-Apple computers and if a buyer was to decide not to include this, it would probably lead to negative repercussions. There is room for tablets and some netbooks to run versions of iOS or Android OSs, but when some laptop manufacturers tried to switch from Windows being preinstalled to Linux, it did not fare well. The cost of having Windows included is also not a large amount of the cost of the computer, so it does not carry that much weight for the company building the machine. These attributes lead to a low threat from buyers.

From a game console standpoint, the threat from buyers is low as well. The console gaming market is a multi-billion dollar industry and there are a large number of retailers who stock Xbox 360s. There is enough of aneconomic profit from consoles and associated merchandise to validate whole stores dedicated to just selling these items. The possibility of a retailer attempting to develop and distribute their own console is incredibly unlikely due to the cost and barriers.

Q. Evaluate the impact of five forces that drive competition of that company where you have completed your Summer Internship Project.

Michael Porters Five-Force Analysis of Vadilal Ice-creams

According to Porter (1980) a firm must be analyzed in relation to its industry. Factors outside the industry tend to influence all the industrys firms in the same way and are thus not as important to study. To a large extent, industry structure governs the strategies open to the firms. The profitability and attractiveness of an industry is dependent of the level of competition. Competition in an industry originates from industry structure and goes well beyond the behavior of individual competitors. According to Porter, each industry has a potential profitability and the profitability for the firms is dependent on the competitive forces in the industry. Porter identifies five competitive forces that derive from the ambition to obtain as large share of the profitability as possible. The five forces are the foundation of the five-force model.

Major competitors of the Vadilal Ice-creams include: Amul Mother Diary Kwality Walls Cream Bell Dinshaws Havmor Local & Regional players: Vinod Aditya Five Star

The success of the national and local competitors brands includes effective distribution system, advertising, good pricing policy etc. The factors ascribed by Porter are:

Threats of New Entrants Bargaining Power of Suppliers Bargaining Power of Buyers Rivalry among Competitors Threats from Substitutes

These factors can be explained in context to Vadilal Ice-creams as below:

Threats of New Entrants:

Economies of Scale: Vadilal enjoys economies of scale, which is difficult to match by any other competitor. It is because of this reason that no regional competitor has grown to a national level. Cost and Resource advantages: Vadilal was started by Vadilal Gandhi in 1906 and with 100 years of industry experience it has build a very good reputation at domestic and international level. Here, the raw material procurement is very difficult for the new entrants. Consequently capital requirement is also high. Still new entrants are emerging such as domestic and international players. So the threats of new entrants are moderate. Brand Preferences and Consumer Loyalty: There is an immense level of Brand Preference of Vadilal in the minds of the people. It is because of the variety of products offered by Vadilal in different sizes and shapes. Access to Distribution Channels: The distribution channel of Vadilal is a very planned and perfect one. For any new entrant to enter it would be a very difficult task. For Vadilal the result is years of hard work and its investment in its employees as well as at different levels in the distribution network.

Inability to match the technology and specialized know-how of firms already in the industry: The technology used by Vadilal is standard with all the universal certifications and ratings.. It is a state of art technology. To get this technology in India, a firm would require a huge amount of resources. Capital Requirements: The total investment required in the industry is huge and is a decision worth considering even for MNCs. The investment decisions cover the processing costs as well as the marketing costs. To compete with the brand Vadilal in India is difficult as Vadilal is synonymous to Quality.

Bargaining Power of Supplier:


The objective of Vadilal is to become market leader. It is only possible if the supplier is providing them raw materials at right place and on right time. And Vadilal has made sure that the supplier gets his fair share of return. There is appropriate bargaining power of the supplier. Nowadays the farmers rights are protected under the cooperative rules and regulations, which ultimately results in moderate power of bargaining from the supplier.

Bargaining Power of Buyers:


Cost of switching to competitor brands: The switching of brands is seen very much in products such as ice creams. To tackle this problem, Vadilal is offering more than 250 varieties of ice-cream and also has 150 SKUs (Stock Keeping Units) for smooth functioning of supply chain management. Large no. of buyers: With increasing disposable income of population in India, and also rise in the temperature year after year, the demand for ice-cream is increasing. Moreover the buyers are spread evenly over the country and do not have any bargaining power.

Rivalry among Competitors:


Demand for the product: The demand of the products of Vadilal is increasing at a very healthy rate. To stand against the rivalry Vadilal is coming with a wide range of premium products. Nature of Competitors: In different business category Vadilal faces competition from different players. In the ice-cream market it faces competition from Kwality Walls, Cream Bell, Havmor, Dinshaws, etc. Rivalry intensifies as each of the competitors has different lines and this would in turn depend on the importance the line holds for the competitor.

Mergers and Acquisitions: As such in the industry there are no mergers or acquisitions. However if any MNC wishes to enter through this route then the competition might be severe.

Threats of Substitutes:
Availability of attractive priced substitutes: Different substitutes are available for different category of products. There is ample availability of low priced substitutes from local vendors and retailers. This is a front where Vadilal is still finding hard to combat. Satisfaction level of substitutes: Customers do consider these products as equal on quality if not better then the products of Vadilal. Hence the rate of customers switching to the substitutes is very high. Moreover the buyers also can switch to the customers easily without any hurdles. Not immediate substitutes: Distant substitutes are present in many of the categories of business of Vadilal. For example in the Vadilal Sundae ice-cream category it faces competition from McDonalds McFlurry. But wherein Vadilal Sundae ice-cream is available in Rs.25/- ; Mc Donalds McFlurry is available at Rs.100/-. These 5 forces interact among themselves at different degrees over a period of time. Moreover it will get intense or loosen up depending upon the moves of its competitors, buyers, suppliers, etc. However Vadilal has been able to outperform on almost all fronts excluding a few lines of business.

Managers Vs Leaders Managers are people who do things right and leaders are people who do the right thing. The difference may be summarized as activities of vision and judgment effectiveness versus activities of mastering routines efficiency 1. Managers give answers, leaders ask questions. Theres nothing certain to turn your employees against you faster than shouting orders at them. Why not spare yourself the impending resentment and simply ask your employees this: What would you do? or What do you think of this idea? Allowing people to participate in the decision-making process will not only transform what could have been an order into something more easily swallowed--it also inspires creativity, motivation, and autonomy. 2. Managers criticize mistakes, leaders call attention to mistakes indirectly. It may seem more efficient to point out your employees mistakes directly, but this will only leave them feeling embarrassed and frustrated. You should really be giving them the chance to learn and grow from through your critiques. Instead, give your employees the chance to address their mistakes. For example, say a project was sent to a client and you receive back a disgruntled message. Calmly ask your employee about the clients concern and whether they feel what was provided was on par. This will give them a chance to provide their input, while also improving for the future. 3. Managers forget to praise, leaders reward even the smallest improvement. Praise pays off when it comes to increasing the overall success of your company. Finding time to recognize your employees for even the smallest accomplishment will only increase their interest in what they do. If youre interested in ensuring your employees take pride in all that they do, regular feedback and recognition is certain to do the trick. Everyone wants to be genuinely appreciated for their efforts. 4. Managers focus on the bad, leaders emphasize the good. This really comes down to seeing the cup half empty or half full. If youre only willing to point out the flaws of a project or an employee, youre not giving them much interest in learning or improving. Instead, create a sandwich effect. Start with some form of praise, follow with the criticism, and end with praise.

5. Managers want credit, leaders credit their teams. Managers who lack leadership abilities are always first to take credit. But effective leaders understand the importance of crediting their teams for the big wins. This pays off in the long run for creative a workplace with a more positive company culture and employees who are driven toward more successes as a team. To summarise,. The manager administers; the leader innovates. The manager is a copy; the leader is an original. The manager maintains; the leader develops. The manager accepts reality; the leader investigates it. The manager focuses on systems and structure; the leader focuses on people. The manager relies on control; the leader inspires trust. The manager has a short-range view; the leader has a long-range perspective. The manager asks how and when; the leader asks what and why. The manager has his or her eye always on the bottom line; the leader has his or her eye on the horizon. The manager imitates; the leader originates. The manager accepts the status quo; the leader challenges it. The manager is the classic good soldier; the leader is his or her own person. The manager does things right; the leader does the right thing. The most dramatic differences between leaders and managers are found at the extremes: poor leaders are despots, while poor managers are bureaucrats in the worst sense of the word. Whilst leadership is a human process and management is a process of resource allocation, both have their place and managers must also perform as leaders. All first-class managers turn out to have quite a lot of leadership ability.

Q 20 Explain The Different Organizational Structure With Its Importance In Strategic Management. Explain The Concept Of Restructuring

Organizational Structure

Functional Structure The organization is structured according to functional areas instead of product lines. The functional structure groups specialize in similar skills in separate units. This structure is best used when creating specific, uniform products. A functional structure is well suited to organizations which have a single or dominant core product because each subunit becomes extremely adept at performing its particular portion of the process. They are economically efficient, but lack flexibility. Communication between functional areas can be difficult. The most widely used structure is the functional or centralized type because this structure is the simplest and least expensive of the seven alternatives. A functional structure groups tasks and activities by business function such as production/operations, marketing, finance/accounting, research and development, and computer information systems. A university may structure its activities by major functions that include affairs, student services, alumni relations, athletics, maintenance, and accounting. Besides being simple and inexpensive, a functional structure also promotes specialization of labor, encourages efficiency, minimizes the need for an elaborate control system, and allows rapid decision making. Some disadvantages of a functional structure are that it forces accountability to the top, minimizes career development opportunities, and is sometimes characterized by low employee morale, line/staff conflicts, poor delegation of authority, and inadequate planning for products and markets.

Divisional Structure Divisional structure is formed when an organization is split up into a number of selfcontained business units, each of which operates as a profit centre. such a division may occur on the basis of product or market or a combination of the two with each unit tending to operate along functional or product lines, but with certain key function (e.g. finance, personnel, corporate planning) provided centrally, usually at company headquarters. The divisional or decentralized structure is the second most common type used by American businesses. As a small organization grows, it has more difficulty managing different products and services in different markets. Some form of divisional structure generally becomes necessary to motivate employees, control operations, and compete successfully in diverse locations. The divisional structure can be organized in one of four ways: Geographic area, Product or service, Customer, Process.

With a divisional structure, functional activities are performed both centrally and in each separate division. A divisional structure has some clear advantages. First and perhaps foremost, accountability is clear. That is, divisional managers can be held responsible for sales and profit levels. Because a divisional structure is based on extensive delegation of authority, managers and employees can easily see the results of their good or bad performances. As a result, employee morale is generally higher in a divisional structure than it is in a centralized structure. Other advantages of the divisional design are that it creates career development opportunities for managers, allows local control of local situations, leads to a competitive climate within an organization, and allows new businesses and products to be added easily.

The divisional design is not without some limitations, however. Perhaps the most important limitation is that a divisional structure is costly, for a number of reasons. First, each division requires functional specialists who must be paid. Second, there exists some duplication of staff services, facilities, and personnel; for instance, functional specialists are also needed centrally (at headquarters) to coordinate divisional activities. Third, managers must be well qualified because the divisional design forces delegation of authority; better-qualified individuals require higher salaries. A divisional structure can also be costly because it requires an elaborate, headquarters-driven control system. Finally, certain regions, products, or customers may sometimes receive special treatment, and it may be difficult to maintain consistent, companywide practices. Nonetheless, for most large organizations and many small firms, the advantages of a divisional structure more than offset the potential limitations. A divisional structure by geographic area is appropriate for organizations whose strategies need to be tailored to fit the particular needs and characteristics of customers in different geographic areas. This type of structure can be most appropriate for organizations that have similar branch facilities located in widely dispersed areas. A divisional structure by geographic area allows local participation in decision making and improved coordination within a region. The divisional structure by product is most effective for implementing strategies when specific products or services need special emphasis. Also, this type of structure is widely used when an organization offers only a few products or services, or when an organization's products or services differ substantially. The divisional structure allows strict control and attention to product lines, but it may also require a more skilled management force and reduced top management control. When a few major customers are of paramount importance and many different services are provided to these customers, then a divisional structure by customer can be the most effective way to implement strategies. This structure allows an organization to cater effectively to the requirements of clearly defined

customer groups. For example, book publishing companies often organize their activities around customer groups such as colleges, secondary schools, and private commercial schools. Some airline companies have two major customer divisions: passengers and freight or cargo services. Merrill Lynch is organized into separate divisions that cater to different groups of customers, including wealthy individuals, institutional investors, and small corporations. A divisional structure by process is similar to a functional structure, because activities are organized according to the way work is actually performed. However, a key difference between these two designs is that functional departments are not accountable for profits or revenues, whereas divisional process departments are evaluated on these criteria. An example of a divisional structure by process is a manufacturing business organized into six divisions: electrical work, glass cutting, welding, grinding, painting, and foundry work. In this case, all operations related to these specific processes would be grouped under the separate divisions. Each process (division) would be responsible for generating revenues and profits. The divisional structure by process can be particularly effective in achieving objectives when distinct production processes represent the thrust of competitiveness in an industry.

The Strategic Business Unit (SBU) Structure Strategic Business Unit or SBU is understood as a business unit within the overall corporate identity which is distinguishable from other business because it serves a defined external market where management can conduct strategic planning in relation to products and markets. When companies become really large, they are best thought of as being composed of a number of businesses (or SBUs). These organizational entities are large enough and homogeneous enough to exercise control over most strategic factors affecting their performance. They are managed as self contained planning

units for which discrete business strategies can be developed. A Strategic Business Unit can encompass an entire company, or can simply be a smaller part of a company set up to perform a specific task. The SBU has its own business strategy, objectives and competitors and these will often be different from those of the parent company. As the number, size, and diversity of divisions in an organization increase, controlling and evaluating divisional operations become increasingly difficult for strategists. Increases in sales often are not accompanied by similar increases in profitability. The span of control becomes too large at top levels of the firm. For example, in a large conglomerate organization composed of 90 divisions, the chief executive officer could have difficulty even remembering the first names of divisional presidents. In multidivisional organizations an SBU structure can greatly facilitate strategyimplementation efforts. The SBU structure groups similar divisions into strategic business units and delegates authority and responsibility for each unit to a senior executive who reports directly to the chief executive officer. This change in structure can facilitate strategy implementation by improving coordination between similar divisions and channeling accountability to distinct business units. In the ninety-division conglomerate just mentioned, the ninety divisions could perhaps be regrouped into ten SBUs according to certain common characteristics such as competing in the same industry, being located in the same area, or having the same customers. Two disadvantages of an SBU structure are that it requires an additional layer of management, which increases salary expenses, and the role of the group vice president is often ambiguous. However, these limitations often do not outweigh the advantages of improved coordination and accountability. Atlantic Richfield and Fairchild Industries are examples of firms that successfully use an SBU-type structure.

The Matrix Structure A matrix structure is the most complex of all designs because it depends upon both vertical and horizontal flows of authority and communication (hence, the term matrix). In contrast, functional and divisional structures depend primarily on vertical flows of authority and communication. A matrix structure can result in higher overhead because it creates more management positions. Other characteristics of a matrix structure that contribute to overall complexity include dual lines of budget authority (a violation of the unity-of-command principle), dual sources of reward and punishment, shared authority, dual reporting channels, and a need for an extensive and effective communication system. Despite its complexity, the matrix structure is widely used in many industries, including construction, healthcare, research, and defense. Some advantages of a matrix structure are that project objectives are clear, there are many channels of communication, workers can see visible results of their work, and shutting down a project can be accomplished relatively easily.

Restructuring Restructuring is the corporate management term for the act of partially dismantling and reorganizing a company for the purpose of making it more efficient and therefore more profitable. It generally involves selling off portions of the company and making severe staff reductions. Restructuring is often done as part of a bankruptcy or of a takeover by another firm, particularly a leveraged buyout by a private equity firm such as KKR. It may also be done by a new CEO hired specifically to make the difficult and controversial decisions required to save or reposition the

company.

Characteristics The selling of portions of the company, such as a division that is no longer profitable or which has distracted management from its core business, can greatly improve the company's balance sheet. Staff reductions are often accomplished partly through the selling or closing of unprofitable portions of the company and partly by consolidating or outsourcing parts of the company that perform redundant functions (such as payroll, human resources, and training) left over from old acquisitions that were never fully integrated into the parent organization. Other characteristics of restructuring can include: Changes in corporate management (usually with golden parachutes) Sale of underutilized assets, such as patents or brands Outsourcing of operations such as payroll and technical support to a more efficient third party Moving of operations such as manufacturing to lower-cost locations Reorganization of functions such as sales, marketing, and distribution Renegotiation of labor contracts to reduce overhead Refinancing of corporate debt to reduce interest payments A major public relations campaign to reposition the company with consumers

Results A company that has been restructured effectively will generally be leaner, more efficient, better organized, and better focused on its core business. If the restructured company was a leverage acquisition, the parent company will likely resell it at a profit when the restructuring has proven successful. Firms often employ restructuring when various ratios appear out of line with competitors as determined

through benchmarking exercises. Benchmarking simply involves comparing a firm against the best firms in the industry on a wide variety of performance-related criteria. Some benchmarking ratios commonly used in rationalizing the need for restructuring are headcount-to-sales-volume, or corporate-staff-to-operating employees, or span-of-control figures. The primary benefit sought from restructuring is cost reduction. For some highly bureaucratic firms, restructuring can actually rescue the firm from global competition and demise. But the downside of restructuring can be reduced employee commitment, creativity, and innovation that accompany the uncertainty and trauma associated with pending and actual employee layoffs. Another downside of restructuring is that many people today do not aspire to become managers, and many present-day managers are trying to get off the management track. Sentiment against joining management ranks is higher today than ever. About 80 percent of employees say they want nothing to do with management, a major shift from just a decade ago when 60 to 70 percent hoped to become managers.

Managing others historically led to enhanced career mobility, financial rewards, and executive perks; but in today's global, more competitive, restructured arena, managerial jobs demand more hours and headaches with fewer financial rewards. Managers today manage more people spread over different locations, travel more, manage diverse functions, and are change agents even when they have nothing to do with the creation of the plan or even disagree with its approach. Employers today are looking for people who can do things, not for people who make other people do things. Restructuring in many firms has made a manager's job an invisible, thankless role. More workers today are self-managed, entrepreneurs, or team managed. Managers today need to be counselors, motivators, financial advisors, and psychologists. They also run the risk of becoming technologically behind in their areas of expertise. "Dilbert" cartoons commonly portray managers as enemies or as morons

Explain the difference between twentieth and twenty first century organisation? DIFFERENCE 1.Period 2. Technology factors 20TH CENTURY January 1,1901 to 31st Dec 2000 Technology not used in the production process.Use of labour in production process. Usage of Pagers ,fax ,telephones,letters for communicating message in the organization. Social media sites were not into use. 21ST CENTURY Jan 1,2001 to 31 Dec 2100 Advanced technology used in the production process.eg: labour substituted by machines

3. Communication factors

Use of mobile applications ,internet ,messages of mobile etc.

4. Use of Social Media

5. Internet marketing

Limited use of internet for marketing products.

6. Globalization

Exposure of companies towards domestic markets.

7. Innovation

Lacked skills in innovating a new

Social media sites used by organizations to promote products of their companies.eg Through Facebook and google+,promoting products Internet marketing used at a greater extent for selling all types of products like mobiles ,clothing , furniture ,laptop etc.Companies like myntra.com ,ebay ,inkfruit.com have made enormous profits by going online. Exposure towards international markets ie increase in exports and imports which would also ensure new technology entering in our country . Innovating new products and improving it day by

day as per the requirements of the customer .for eg: shifting of consumer from soaps to shampoo for hair and then conditioners for silky hair. 8. Health and Employees health Employees are given and hygiene factors benefits regarding medical Hygiene factors were not considered benefits in the form of and not maintained. reimbursement of medical expenses. 9. Treatment of Employees were . Employees are treated as treated as labourers an important asset to the Employees ,and were not given organization and are due respect . treated with respect. 10. Leadership style Autocratic style of Participative style of leadership ,in which leadership ,which superior used to take included involving decision on his own subordinates in taking decisions and then taking the final decision. 11. Motivation If an employee ,does If an employee does not not perform well ,he performs well ,he is given factors in was fired by the training again and then organization organization. motivation is provided which helps in a positive manner to attain results .New theories of motivation : Maslow theory of motivation ,Fredrieg Herzberg theory of motivation. 12 Performance Performance . Performance appraisal appraisal was not refers to the evaluating the Appraisal given due attention. performance of employees ,which is taken into consideration and on the basis of that particular productivity and other factors are measured and are rated on that basis. 13Customer Organizations main Organizations main aim is aim was to sell goods not only selling goods and feedback

product or service.

at a higher level and earn profit.

14 Organizational culture

15 Corporate Social Responsibility

16.Environmental concern and Pollution control

earning profit ,but also customer satisfaction.Customer is given more importance as he is the king of the society and the organization can only sustain ,if the customers are satisfied. Organizational Organizational culture culture consisted of consisted of Centralisation ,ie Decentralisation ie doing all tasks alone .delegating tasks to and not delegating subordinates,Transparency tasks.No in business activities ie transparency in make aware the business activities. employees the activities undertaken and transparency in approach. Organizations main Organizations have started aim was to maximize giving importance to CSR sales ,but they didnt activities as it is the do csr related responsibility as a social activities. human being to give back to the society ,out of which it is earning profits. Organizations were Organizations adopting not taking much certain measures like Go interest in protecting Green and Save the the environment and Earth and Sustainable due to which Competitive advantage are pollution levels were adopted. higher.

Explain organizational culture in strategy implementation.


Strategy implementation is the translation of chosen strategy into organizational action so as to achieve strategic goals and objectives. Strategy implementation is also defined as the manner in which an organization should develop, utilize, and amalgamate organizational structure, control systems, and culture to follow strategies that lead to competitive advantage and a better performance. Organizational structure allocates special value developing tasks and roles to the employees and states how these tasks and roles can be correlated so as maximize efficiency, quality, and customer satisfaction-the pillars of competitive advantage. But, organizational structure is not sufficient in itself to motivate the employees. Following are the main steps in implementing a strategy: Developing an organization having potential of carrying out strategy successfully. Disbursement of abundant resources to strategy-essential activities. Creating strategy-encouraging policies. Employing best policies and programs for constant improvement. Linking reward structure to accomplishment of results. Making use of strategic leadership. Excellently formulated strategies will fail if they are not properly implemented. Also, it is essential to note that strategy implementation is not possible unless there is stability between strategy and each organizational dimension such as organizational structure, reward structure, resource-allocation process, etc. Organizational culture: According to Mintzberg, one of the basic building blocks of organizational design is the ideology or culture of the organization. This consist of values, beliefs and taken for granted assumptions. It is essential to study the culture of the organization in order to design an organizational structure that functions properly. It is the reflection of the basic assumptions and beliefs that are shared by members of an organization. There are fundamental constraints to the implemental of different strategy and policy options. These influences need to be understood when deciding on strategy. Ethics, social factors and cultural factors will influence the way in which the organization works and the priorities which actually emerge in practice. The performance of an organization is also determined by the softer controls within organizations- the social controls and self-controls. It is important that social controls are working well in organizations with highly devolved structures, since they can be the primary

mechanism for co-ordination in the organization. Organizations often commit significant resources to maintaining professional social networks, both inside and between organizations, as a method of keeping in touch with best practice. The culture of an organization has been considered to consist of three layers: values about the organizations mission, objectives or strategies; beliefs which people in the organization talk about; taken for granted assumptions or the organizational paradigm. The paradigm includes the soft of assumptions which are rarely talked about, which are not considered problematic, and about which managers are unlikely to be explicit. It is likely to evolve gradually rather than change rapidly. For an organization to operate effectively there has to be such a generally accepted set of assumptions; in effect, it represents collective experience without which people would have to reinvent their world for different circumstances that they face. The public statements of the organizations values, beliefs and purposes are not descriptions of the organizational paradigm. They are likely to partially reflect the real organizational culture. This real culture is evidenced by the way the organization actually operates. Matching strategic positioning and organizational culture is critical feature of successful organizations. For example, there is a common belief that the culture in a Birla Organization is different from that in a Tata Organization. Their collective behavior often is determined by paradigms which are created by the culture of the organization. Functional/divisional It is not usually possible to characterize the whole organization as one particular type of culture. There are usually important subcultures within organizations. These subcultures may relate directly to the structure of the organization. For example, the differences between functional groups such as finance, marketing and operations. In a divisional structure, different divisions may be positioned in different ways and pursue different generic strategies. The different positions foster different cultures. Charactering an organizations culture There is not a best and worst culture. The issue is how well the culture matches and supports the strategy of the organization. This becomes important as there is evidence that organizational culture is not easy to change, and therefore they can impair or assist in the development of organizational strategies.

It is important that the organization must develop a degree of coherence in its culture to be able to function effectively. The situation is healthy when there is constructive friction-where a strong corporate culture is maintained, but where the core beliefs and assumptions are continuously subjected to critique from within the organization. Challenge and debate, although not comfortable, are regarded as legitimate and signs of strength. Miles and Snow categorized organizations as defender, prospector and analyzer organizations in terms of how they behave strategically. Defender cultures find change threatening and tend to favor strategies which provide continuity and security. Therefore, it is supported by bureaucratic approach to management. The analyzer culture matches the new ventures to the shape of the existing business and favors growth through market penetration, exploitation of applied research and is generally a follower in the market. In contrast, a prospector culture flourishes on change. It favors strategies of product and/or market development supported by a more creative and flexible management style. It is necessary to identify forces within the organization that could help or hinder change. Many aspects of the culture of the organization work to shape and guide strategy. The cultural web is useful way of considering forces for and against change. The cultural web provides an understanding on how an organizations culture will affect its ability to change and adapt to new policies or environments. Organizational cultures are not easy to change; they have an important impact on strategy formulation and implementation.

1. What is the resources-based view? Give example of three different types of resources.
The resource-based view (RBV) as a basis for the competitive advantage of a firm lies primarily in the application of a bundle of valuable tangible or intangible resources at the firm's disposal. To transform a short-run competitive advantage into a sustained competitive advantage requires that these resources are heterogeneous in nature and not perfectly mobile. Effectively, this translates into valuable resources that are neither perfectly imitable nor substitutable without great effort. If these conditions hold, the bundle of resources can sustain the firm's above average returns. The VRIO and VRIN model also constitutes a part of RBV. There is strong evidence that supports the RBV. The key points of the theory are: 1. Identify the firms potential key resources. 2. Evaluate whether these resources fulfill the following criteria Valuable A resource must enable a firm to employ a value-creating strategy, by either outperforming its competitors or reduce its own weaknesses. Relevant in this perspective is that the transaction costs associated with the investment in the resource cannot be higher than the discounted future rents that flow out of the value-creating strategy. Rare To be of value, a resource must be rare by definition. In a perfectly competitive strategic factor market for a resource, the price of the resource will be a reflection of the expected discounted future aboveaverage returns. In-imitable If a valuable resource is controlled by only one firm it could be a source of a competitive advantage. This advantage could be sustainable if competitors are not able to duplicate this strategic asset perfectly. The term isolating mechanism was introduced by Rumelt (1984, p567) to explain why firms might not be able to imitate a resource to the degree that they are able to compete with the firm having the valuable resource. An important underlying factor of inimitability is causal ambiguity, which occurs if the source from which a firms competitive advantage stems is unknown. If the resource in question is knowledge-based or socially complex, causal ambiguity is more likely to occur as these types of resources are more likely to be idiosyncratic to the firm in which it resides. Conner and Prahalad go so far as to say knowledge-based resources are the essence of the resource-based perspective.

Non-substitutable Even if a resource is rare, potentially value-creating and imperfectly imitable, an equally important aspect is lack of substitutability. If competitors are able to counter the firms value creating strategy with a substitute, prices are driven down to the point that the price equals the discounted future rents resulting in zero economic profits. 3. Care for and protect resources that possess these evaluations, because doing so can improve organizational performance The VRIN characteristics mentioned are individually necessary, but not sufficient conditions for a sustained competitive advantage. Within the framework of the resource-based view, the chain is as strong as its weakest link and therefore requires the resource to display each of the four characteristics to be a possible source of a sustainable competitive advantage The resource-based view of the firm is the perception of a firms internal and distinct combination of resources (assets, skills, people, capabilities, and intangibles) which, when developed, create competencies that become sources of competitive advantage.
Barriers to imitation of resources

Resources are the inputs or the factors available to a company which helps to perform its operations or carry out its activities. Also, these authors state that resources, if considered as isolated factors do not result in productivity; hence, coordination of resources is important. The ways a firm can create a barrier to imitation are known as isolating mechanisms, and are reflected in the aspects of corporate culture, managerial capabilities, information asymmetries and property rights. Further, they mention that except for legislative restrictions created through property rights, the other three aspects are direct or indirect results of managerial practices. King (2007, p. 156) mentions inter-firm causal ambiguity may results in sustainable competitive advantage for some firms. Causal ambiguity is the continuum that describes the degree to which decision makers understand the relationship between organizational inputs and outputs. Their argument is that inability of competitors to understand what causes the superior performance of another (inter-firm causal ambiguity), helps to reach a sustainable competitive advantage for the one who is presently performing at a superior level. Holley and Greenly state that social context of certain resource conditions act as an element to create isolating mechanisms and quote Werner felt (1986) that tastiness complexity (large number of inter-related resources being used) and

specificity and ultimately, these three characteristics will result in a competitive barrier. Referring back to the definitions stated previously regarding the competitive advantage that mentions superior performance is correlated to resources of the firm and consolidating writings of King stated above, we may derive the fact that inter-firm causal ambiguity regarding resources will generate a competitive advantage at a sustainable level. Further, it explains that the depth of understanding of competitorsregarding which resources underlie the superior performancewill determine the sustainability strength of a competitive advantage. Should a firm be unable to overcome the inter-firm causal ambiguity, this does not necessarily result in imitating resources. As to Johnson and Mahoney, even after recognizing competitors' valuable resources, a firm may not imitate due to the social context of these resources or availability of more pursuing alternatives. Certain resources, like company reputation, are path-dependent and are accumulated over time, and a competitor may not be able to perfectly imitate such resources. They argue on the basis that certain resources, even if imitated, may not bring the same impact, since the maximum impact of the same is achieved over longer periods of time. Hence, such imitation will not be successful. In consideration of the reputation of fact as a resource and whether a late entrant may exploit any opportunity for a competitive advantage, Kim and Park mention three reasons why new entrants may be outperformed by earlier entrants. First, early entrants have a technological know-how which helps them to perform at a superior level. Secondly, early entrants have developed capabilities with time that enhance their strength to out-perform late entrants. Thirdly, switching costs incurred to customers, if they decide to migrate, will help early entrants to dominate the market, evading the late entrants' opportunity to capture market share. Customer awareness and loyalty is another rational benefit early entrants enjoy. However, first mover advantage is active in evolutionary technological transitions, which are technological innovations based on previous developments. The same authors further argue that revolutionary technological changes will eliminate the advantage of early entrants. Such writings elaborate that though early entrants enjoy certain resources by virtue of the forgone time periods in the markets, rapidly changing technological environments may make those resources obsolete and curtail the firms dominance. Late entrants may comply with the technological innovativeness and increased pressure of competition, seeking a competitive advantage by making the existing competencies and resources of early entrants invalid or outdated. In other words, innovative technological implications will significantly change the landscape of the industry and the market, making early movers' advantage minimal. However, in a market where technology does not play a dynamic role, early mover advantage may prevail.

Analyzing the above-developed framework for the Resource-Based View, it reflects a unique feature, namely, that sustainable competitive advantage is achieved in an environment where competition does not exist. According to the characteristics of the Resource-based view, rival firms may not perform at a level that could be identified as considerable competition for the incumbents of the market, since they do not possess the required resources to perform at a level that creates a threat and competition. Through barriers to imitation, incumbents ensure that rival firms do not reach a level at which they may perform in a similar manner to the former. In other words, the sustainability of the winning edge is determined by the strength of not letting other firms compete at the same level. The moment competition becomes active, competitive advantage becomes ineffective, since two or more firms begin to perform at a superior level, evading the possibility of single-firm dominance; hence, no firm will enjoy a competitive advantage. Agrees stating that, by definition, the sustainable competitive advantage discussed in the Resource based view is anti-competitive. Further such sustainable competitive advantage could exist in the world of no competitive imitation. Based on the empirical writings stated above, RBV provides the understanding that certain unique existing resources will result in superior performance and ultimately build a competitive advantage. Sustainability of such an advantage will be determined by the ability of competitors to imitate such resources. However, the existing resources of a firm may not be adequate to facilitate the future market requirement, due to volatility of the contemporary markets. There is a vital need to modify and develop resources in order to encounter the future market competition. An organization should exploit existing business opportunities using the present resources while generating and developing a new set of resources to sustain its competitiveness in the future market environments; hence, an organization should be engaged in resource management and resource development. Their writings explain that in order to sustain the competitive advantage, it is crucial to develop resources that will strengthen the firm's ability to continue the superior performance. Any industry or market reflects high uncertainty and, in order to survive and stay ahead of competition, new resources become highly necessary. Morgan agrees, stating that the need to update resources is a major management task since all business environments reflect highly unpredictable market and environmental conditions. The existing winning edge needed to be developed since various market dynamics may make existing value-creating resources obsolete.

The three different types of resources include:

1) Tangible assets Tangible assets are the easiest resources to identify and are often found on a firms balance sheet. These resources include production facilities, raw materials, financial resources and real estate. 2) Intangible assets Resources which cannot be touched or seen, but are nevertheless critical in creating competition. These resources include brand names, company reputation, organizational morale, technical knowledge, patents and trademarks, and accumulated experience. 3) Organizational capabilities Organizational capabilities is the ability and ways of combining assets, people and processes. They are the skills that a company uses to transform inputs into outputs.

Five forces of Industry analysis

Five Forces Analysis assumes that there are five important forces that determine competitive power in a business situation. These are:

Supplier Power
Here you assess how easy it is for suppliers to drive up prices. This is driven by the number of suppliers of each key input, the uniqueness of their product or service, their strength and control over you, the cost of switching from one to another, and so on. The fewer the supplier choices you have, and the more you need suppliers' help, the more powerful your suppliers are.

Buyer Power
Here you ask yourself how easy it is for buyers to drive prices down. Again, this is driven by the number of buyers, the importance of each individual buyer to your business, the cost to them of switching from your products and services to those of someone else, and so on. If you deal with few, powerful buyers, then they are often able to dictate terms to you.

Competitive Rivalry
What is important here is the number and capability of your competitors. If you have many competitors, and they offer equally attractive products and services, then you'll most likely have little power in the situation, because suppliers and buyers will go elsewhere if they don't get a good deal from you. On the other hand, if no-one else can do what you do, then you can often have tremendous strength.

Threat of Substitution
This is affected by the ability of your customers to find a different way of doing what you do for example, if you supply a unique software product that automates an important process, people may substitute by doing the process manually or by outsourcing it. If substitution is easy and substitution is viable, then this weakens your power.

Threat of New Entry


Power is also affected by the ability of people to enter your market. If it costs little in time or money to enter your market and compete effectively, if there are few economies of scale in place, or if you have little protection for your key technologies, then new competitors can quickly enter your market and weaken your position. If you have strong and durable barriers to entry, then you can preserve a favorable position and take fair advantage of it.

Industry Analysis Example Wal-Mart

Here is a very brief example of an Industry Analysis for the Cases using Wal-Mart, specifically WalMarts competition in the consumer retail industry and not in the industries where it competes. Remember, that you are concerned with where Wal-Mart is positioned in the industry relative to the respective industry forces.

Potential Competitors: Medium pressure

o Grocers could potentially enter into the retail side.

o Entry barriers are relatively high, as Wal-Mart has an outstanding distribution systems, locations, brand name, and financial capital to fend off competitors. o Wal-mart often has an absolute cost advantage over other competitors.

Rivalry Among Established Companies: Medium Pressure o Currently, there are three main incumbent companies that exist in the same market as Wal-Mart: Sears, K Mart, and Target. Target is the strongest of the three in relation to retail. o Target has experienced tremendous growth in their domestic markets and have defined their niche quite effectively. o Sears and K-Mart seem to be drifting and have not challenged K-Mart in sometime. o Mature industry life cycle.

The Bargaining Power of Buyers: Low pressure o The individual buyer has little to no pressure on Wal-Mart. o Consumer advocate groups have complained about Wal-Marts pricing techniques. o Consumer could shop at a competitor who offers comparable products at comparable prices, but the convenience is lost.

Bargaining Power of Suppliers: Low to Medium pressure o Since Wal-Mart holds so much of the market share, they offer a lot of business to manufacturers and wholesalers. This gives Wal-Mart a lot of power because by WalMart threatening to switch to a different supplier would create a scare tactic to the suppliers. o o Wal-Mart could vertically integrate. Wal-Mart does deal with some large suppliers like Proctor & Gamble, Coca-Cola who have more bargaining power than small suppliers.

Substitute Products: Low pressure

o When it comes to this market, there are not many substitutes that offer convenience and low pricing. o The customer has the choice of going to many specialty stores to get their desired products but are not going to find Wal-Marts low pricing. o Online shopping proves another alternative because it is so different and the customer can gain price advantages because the company does not necessarily have to have a brick and mortar store, passing the savings onto the consumer.

Complementors: Low pressure


o One complementor that exists for Wal-Mart is Sams Wholesale Clubs. Although the same company owns this, it complements Wal-Mart by offering the same products in wholesale form, making the company more profitable. o o Suppliers of goods need to have innovative products to attract customers. For the most part, complementors do not affect Wal-Marts business model.

Write short note on qualities of long term objectives Answer:


Qualities of Long-Term Objectives What distinguishes a good objective from a bad one? What qualities of an objective improve its chances of being attained? Perhaps these questions are best answered in relation to seven criteria that should be used in preparing long-term objectives: acceptable, flexible, measurable over time, motivating, suitable, understandable, and achievable. Acceptable: Managers are most likely to pursue objectives that are consistent with their preferences. They may ignore or even obstruct the achievement of objectives that offend them (e.g., promoting a non-nutritional food product) or that they believe to be inappropriate or; unfair (e.g., reducing spoilage to offset a disproportionate allocation of fixed overhead). In addition, long-term corporate objectives frequently are designed to be acceptable to groups external to the firm. An example is efforts to abate air pollution that are undertaken at the insistence of the Environmental Protection Agency. Flexible: Objectives should be adaptable to unforeseen or extraordinary changes in the frmn's competitive or environmental forecasts. However, such flexibility usually is increased at the expense of specificity. Moreover, employee confidence may be tempered because adjustment of flexible objectives may affect their jobs. One way of providing flexibility while minimizing its negative effects is to allow for adjustments in the level, rather than in the nature, of objectives. For example, the personnel department objective of providing managerial development training for 15 supervisors per year over the next five-year period might be adjusted by changing the number of people to be trained. In contrast, changing the personnel department's objective of" assisting production supervisors in reducing job-related injuries by 10 percent per year" after three months had gone by would understandably create dissatisfaction. Measurable: Objectives must clearly and concretely state what will be achieved and when it will be achieved. Thus, objectives should be measurable over time. For example, the objective of "substantially improving our return on investment" would be better stated as "increasing the return on investment on our line of paper products by a minimum of I percent a year and a total of 5 percent over the next three years."

Motivating: Studies have shown that people are most productive when objectives are set at a motivating level--one high enough to challenge but not so high as to frustrate or so low as to be easily attained. The problem is that individuals and groups differ in their perceptions of what is high enough. A broad objective that challenges one group frustrates another and

minimally interests a third. One valuable recommendation is that objectives be tailored to specific groups. Developing such objectives requires time and effort, but objectives of this kind are more likely to motivate. Suitable: Objectives must be suited to the broad aims of the firm, which are expressed in its mission statement. Each objective should be a step toward the attainment of overall goals. In fact, objectives that do not coincide with the company mission can subvert the firm's aims. For example, if the mission is growth oriented, the objective of reducing the debt-to- equity ratio to 1.00 would probably be unsuitable and counterproductive. Understandable: Strategic managers at all levels must understand what is to be achieved. They also must understand the major criteria by which their performance will be evaluated. Thus, objectives must be so stated that they are as understandable to the recipient as they are to the giver. Consider the misunderstandings that might arise over the objective of "increasing the productivity of the credit card department by 20 percent within five years." What does this objective mean? Increase the number of outstanding cards? Increase the use of outstanding cards? Increase the employee workload? Make productivity gains each year? Or hope that the new computer-assisted system, which should improve productivity, is approved by year 5? As this simple example illustrates, objectives must be clear, meaningful, and unambiguous. Achievable: Finally, objectives must be possible to achieve. This is easier said than done. Turbulence in the remote and operating environments affects a firm's internal operations, creating uncertainty, and limiting the accuracy of the objectives set by strategic management. To illustrate, the wildly fluctuating prime interest rates in 1980 made objective setting extremely difficult for the years 1982 to 1985, particularly in such areas as sales projections for producers of consumer durable goods like General Motors and General Electric.

Advantages

of a Cost Leadership Strategy Low-cost advantages reduce likelihood of pricing pressure from buyers Sustained low-cost advantages may push rivals into other areas, lessening price competition New entrants must face an entrenched cost leader without experience to replicate cost advantages Low-cost advantages should lessen attractiveness of substitutes Higher margins allow low-cost producers to withstand supplier cost increases.

Creating

a Competitive Advantage Based on Speed Has become a major source of competitive advantage for many firms Involves the availability of a rapid response to customers by Providing current products quicker Accelerating new product development or improvement Quickly adjusting production processes Making decisions quickly.

Advantages of a Speed-Based Strategy Creates a way to lessen rivalry because firm has the availability of something a rival may not Allows firm to charge buyers more, engender loyalty, or enhance its position relative to its buyers Generates cooperation and concessions from suppliers since they benefit from increased revenues Substitutes and new entrants are trying to keep up with the rapid changes rather than introducing them.

Key Risks of a Speed-Based Strategy Speeding up activities that have not been conducted in a fashion prioritizing rapid response should only be done after attention to training, reorganization, and/or reengineering Some industries - stable, mature ones - may not offer much advantage to a firm introducing some forms of rapid response

Creating a Competitive Advantage Based on Market Focus Involves building cost, differentiation, and/or speed competitive advantages targeted to a narrow, market niche Allows a firm to Learn its target customers Build up organizational knowledge of ways to satisfy its target market better than larger rivals Risks of focus strategies Can attract major competitors to the segment Believing a focus strategy, by itself, creates success, rather than a form of low cost, differentiation, or speed.

Speed-Based Strategy Speed-Based Strategy Factoring speed into strategy is a key element to gaining a competitive advantage in the market. It is not enough to have a strategic planning session, get people aligned with strategic direction and move on to execution. A timeline for delivery matched with resources to get the job done are critical steps to success. Companies often stop at the strategy planning session forgetting that the strategic thrusts must be resourced and monitored. How do fast to market companies do this?

Speed-Based Goals & Objectives First, speed must be factored into goals and objectives. The market tells the company when a product is needed. Too often, companies believe that they can tell the market when it will get a product. That is a big mistake.

In the 1990s, the disk drive industry learned that Fall Comdex and Spring Comdex were product introduction events that set up the sales cycle. New products had to be ready every six months. As the strategic plans were committed each year, so too were the engineering, marketing and manufacturing plans that ensured new product introductions every spring and fall. Those companies that were excellent at resourcing, designing, developing and delivering new products to that schedule were rewarded with spectacular growth.

You ask. How can a hard drive company deliver new products on a six month cycle? The answer is: They figured it out. Some created a waterfall development cycle that allowed for core technology to be developed over a longer cycle with iterative changes delivered at sixmonth intervals. Others stock piled break through technologies in R&D, and introduced them into product development timed to the needs of the OEMs, which brings up another key to speed.

Establish Early Key Supplier Relationships Establish early strategic supplier relationships. Key suppliers have to design and develop in parallel with fast paced companies. To succeed at this, cross company teams are developed and managed just as cross functional teams are in a single company. Establish trusted relationships with suppliers, engage them in your product plans and communicate with them continuously.

Keep The Cost Of Lateness Visible Finally, keep the cost of lateness visible. Time equals revenue. So, have your development team look at the first year gross profit for a product. If a product is released to market on time at cost and quality, the company receives a high margin. If the product is late to market by a month, the company has just delayed 1/12 of the revenue. If a competitor hits the market window and you dont, you have just ceded the sweet spot of the profit margin. Now you are in catch up mode

Question: List & describe evaluate & five example of 15 grand strategies that decision maker use in forming their companies competitive plan ? Ans: Grand strategies are comprehensive general approaches that are viewed by the organization as necessary to the accomplishment of its mission and the achievement of its preferred future. Grand strategies may be short-term focused organizational efforts or longterm far-reaching initiatives. An organization should review and consider a variety of widely used grand strategies before deciding how to position itself to operate successfully in its particular environment. Grand strategies to be considered should include but not necessarily be limited to some or all of the following: General Growth : Increasing the size of the organization to realize economies of scale, enlarge the organization's marketplace, build operating surpluses or for some other expansion related reason. Concentrated Growth: Choosing to focus on and upgrade or increase the market penetration of a limited number of successful products or services that have been mainstays of the organization. Concentric Diversification: Choosing to acquire or merge with other organizations that are compatible with or reinforce the organization's technology, markets, products or services. Product/Service Diversification: Choosing to move into new areas of focus or spheres of activity to utilize the organization's existing resources, as the organization's primary markets mature or decline. Integration: Choosing to consolidate major systems or processes, usually through mergers or acquisitions. Horizontal Integration: Choosing to acquire or merge with a similar organization in order to reduce competition.

Vertical Integration: Choosing to develop an internal supply network that puts the organization closer to its producers or providers (backward integration), or to develop an internal distribution system that puts the organization closer to its end users (forward integration).

Quality Improvement : Choosing to improve the organization's status, capacity, resources and influence by continuously upgrading its existing products, services and internal operating capabilities.

Market Development : Choosing to add new customers in related markets. Twenty-Five Examples of Organizational Grand Strategies

Product/Service Development : Choosing to create new, but related products or services that can be sold to the organization's existing primary markets.

Piggybacking : Choosing to offset declining revenue or income in one or more areas of focus or spheres of activity or to subsidize one or more particularly desirable spheresof activity, with income earned in other sphere(s) of activity.

Focus/Specialization : Choosing to limit and focus the organization's activities, often by withdrawing from certain areas of focus or spheres of activity, so that it only does what it can do well within a particular arena or niche, typically by aiming at a particular customer group, segment of the product or service line, or geographic market.

Innovation/Differentiation Leadership : Choosing to create products or services thatare perceived in the marketplace to be so new, so different or so superior (often by applying cutting-edge information technology) that they expand performance boundaries and make existing products or services obsolete.

Strategic Alliance : Choosing to develop teams, partnerships, joint ventures, networking, shared services or cooperative programs with suppliers, customers or other compatible enterprises, in order to develop new products, markets, services or efficiencies.

Financial Independence : Striving for diversification of the organization's funding sources as a way of gaining control over its fiscal environment.

Question: Explain the strategic management process in short? Ans:


1: Define the Current Business: Every company must choose the terrain on which it will competein particular, what products it will sell, where it will sell them, and how its products or services will differ from its competitors. For Eg ; Rolex and Seiko are both in the watch business, but Rolex sells a limited product line of high-priced quality watches. Seiko sells a wide variety of relatively inexpensive but innovative specialty watches with features like compasses and altimeters. Therefore, the most basic strategic decisions managers make involve deciding what business their firms should be in. They ask, Where are we now in terms of the business were in, and what business do we want to be in, given our companys opportunities and threats, and its strengths and weaknesses? Managers then choose strategiescourses of action such as buying competitors or expanding overseasto get the company from where it is today to where it wants to be tomorrow. 2: Perform External and Internal Audits: Ideally, managers begin their strategic planning by methodically analyzing their external and internal situations. The strategic plan should provide a direction for the firm that makes sense, in terms of the external opportunities and threats the firm faces and the internal strengths and weaknesses it possesses. To facilitate this strategic external/internal audit, many managers use SWOT analysis. 3: Formulate New Business and Mission Statements: Based on the situation analysis, what should our new business be, in terms of what products it will sell, where it will sell them, and how its products or services will differ from its competitors? What is our new mission and vision? 4: Translate the Mission into Strategic Goals: Saying the mission is to make quality job one is one thing; operationalizing that mission for your managersis another. The firms managers need strategic goals. What exactly does that mission mean, for each department, in terms of how well boost quality?

As an example, WebMDs sales director needs goals regarding the number of new. To guide managerial action, it needs goals in terms of things like building shareholder value, maintaining superior rates of return, building a strong balance sheet, and balancing the business by customer, product, and geography. 5: Formulate Strategies to Achieve the Strategic Goals: Again, a strategy is a course of action. It shows how the enterprise will move from the business it is in now to the business it wants to be in (as laid out by its vision, mission, and strategic goals), given the firms opportunities, threats, strengths, and weaknesses. The strategies bridge where the company is now, with where it wants to be tomorrow. The best strategies are concise enough for the manager to express in an easily communicated phrase that resonates with employees. 6: Implement the Strategies: Strategy implementation means translating the strategies into actions and resultsby actually hiring (or firing) people, building (or closing) plants, and adding (or eliminating) products and product lines. Strategy implementation involves drawing on and applying all the management functions: planning, organizing, staffing, leading, and controlling. 7: Evaluate Performance: Strategies dont always succeed. For example, Procter & Gamble announced it was selling its remaining food businessesJif, Crisco, and Folgers coffeebecause management wants to concentrate on household and cosmetics products. Managing strategy is an ongoing process. Competitors introduce new Products, technological innovations make production processes obsolete, and social trends reduce demand for some products or services while boosting demand for other.

Question: Describe and illustrate four types of Strategic Control.


Strategic Control: It is concerned with tracking a strategy as is being implemented, detecting problem or changes in its underlying premises and making necessary adjustment. A typical process for management control includes the following steps; a. Actual performance is compared with planned performance. b. The difference between the two is measured. c. Causes contributing to the difference are identified d. Corrective action is taken to eliminate or minimize the difference. Strategic control involves tracking a strategy as its being implemented. It's also concerned with detecting problems or changes in the strategy and making necessary adjustments. As a manager, you tend to ask yourself questions, such as whether the company is moving in the right direction, or whether your assumptions about major trends and changes in the company's environment are correct. Such questions necessitate the establishment of strategic controls.

The types of Strategic Control are as follows; I. Premise Control Every strategy is based on certain planning premises or predictions. Premise control is designed to check methodically and constantly whether the premises on which a strategy is grounded on are still valid. If you discover that an important premise is no longer valid, the strategy may have to be changed. The sooner you recognize and reject an invalid premise, the better. This is because the strategy can be adjusted to reflect the reality. II. Special Alert Control A special alert control is the rigorous and rapid reassessment of an organization's strategy because of the occurrence of an immediate, unforeseen event. An example of such event is the acquisition of your competitor by an outsider. Such an event will trigger an immediate and intense reassessment of the firm's strategy. Form crisis teams to handle your company's initial response to the unforeseen events. III. Implementation Control Implementing a strategy takes place as a series of steps, activities, investments and acts that occur over a lengthy period. As a manager, you'll mobilize resources, carry out special projects and employ or reassign staff. Implementation control is the type of strategic control that must be carried out as events unfold. There are two types of implementation controls: strategic thrusts or projects, and milestone reviews. Strategic thrusts provide you with information that helps you determine whether the overall strategy is shaping up as planned. With milestone reviews, you monitor the progress of the strategy at various intervals or milestones.

IV.

Strategic Surveillance Strategic surveillance is designed to observe a wide range of events

within and outside your organization that are likely to affect the track of your organization's strategy. It's based on the idea that you can uncover important yet unanticipated information by monitoring multiple information sources. Such sources include trade magazines, journals such as The Wall Street Journal, trade conferences, conversations and observations.

Q. What are the activities and capabilities the firms should posses differentiation based strategies?
Answer:Differentiation strategies are based on providing buyers with something that is different or unique, that makes the companys product or service distinct from that of its rivals. The key assumption behind a differentiation strategy is that customers are willing to pay a higher price for a product that is distinct (or at least perceived as such) in some important way. Superior value is created because the product is of higher quality, is technically superior in some way, comes with superior service, or has a special appeal in some perceived way. In effect differentiation builds competitive advantage by making customers more loyal-and less price-sensitive-to a given firms product. Additionally, consumers are less likely to search for other alternative products once they are satisfied. Differentiation may be achieved in a number of ways. The product may incorporate a more innovative design, may be produced using advanced materials or quality processes, or may be sold and serviced in some special way. Often, customers will pay a higher price if the product or service offers a distinctive or special value or feel to it. Differentiation strategies offer high profitability. When the price premium exceeds the costs of distinguishing the product or service. Examples of companies that have successfully pursued differentiation strategies include Prince in tennis rackets, Callaway in golf clubs, Mercedes and BMW in automobiles, Coors in beer, Beretta in guns, Brooks Brothers and Paul Stuart in classic-cut clothing, Dinners Club/Carte Blanche in credit cards, Bose in stereo speakers, American express in travel services, J.P Morgan Chase in investment banking, Krups in coffee makers and small kitchen appliances, and Benetton in sweaters and light fashions. Building a differentiation-Based Advantage Firms practicing differentiation seek to design and produce highly distinctive or unique product or service attributes that create high value for their customers. Within the firm, differentiationbased sources of competitive advantage in value-adding activities can be built through a number of methods. An important strategic consideration managers must recognize is that differentiation does not mean the firm can neglect its cost structure. While low unit cost is less important than distinctive product features to firms practicing differentiation, the firms total cost structure is still important. In other worlds, the costs of pursuing differentiation cannot be so high that they completely erode the price premium the firm can charge. Firms pursuing differentiation must still control expenses to balance somewhat higher costs with a distinctive edge in key activities. The cost structure of a firm or business pursuing a differentiation strategy still needs to be carefully managed, although attaining low-unit costs is not the overriding priority. A firm selecting differentiation must therefore aim at achieving cost parity or, at the very least, cost proximity relative to competitors by keeping costs low in areas not related to differentiation and by not spending too much to achieve differentiation. Thus, the cost structure of a firm practicing differentiation cannot be that far above the industry average. Also, differentiation is not an end in itself; companies must continue to search for new ways to improve the distinctiveness or uniqueness of their products/services. 7-Eleven (formerly Southland Corporation) has practiced differentiation to avoid direct competition with large supermarket chains. It offers consumers greater convenience in the form of nearby location, shorter shopping time, and quicker checkout. It achieves these benefits by designing a business system within the value chain that is different from that of supermarket chains in several key respects: smaller stores, more store locations, and narrower product line. Its approach is higher cost than that of supermarket chains, so 7-Eleven must ordinarily charge higher prices to achieve

when the price premium exceeds the costs of distinguishing the product or service. Examples of companies that have successfully pursued differentiation strategies include Prince in tennis rackets, Callaway in golf clubs, Mercedes and BMW in automobiles, Coors in beer, Beretta in guns, Brooks Brothers and Paul Stuart in classic-cut clothing, Dinners Club/Carte Blanche in credit cards, Bose in stereo speakers, American express in travel services, J.P Morgan Chase in investment banking, Krups in coffee makers and small kitchen appliances, and Benetton in sweaters and light fashions. Building a differentiation-Based Advantage Firms practicing differentiation seek to design and produce highly distinctive or unique product or service attributes that create high value for their customers. Within the firm, differentiationbased sources of competitive advantage in value-adding activities can be built through a number of methods. An important strategic consideration managers must recognize is that differentiation does not mean the firm can neglect its cost structure. While low unit cost is less important than distinctive product features to firms practicing differentiation, the firms total cost structure is still important. In other worlds, the costs of pursuing differentiation cannot be so high that they completely erode the price premium the firm can charge. Firms pursuing differentiation must still control expenses to balance somewhat higher costs with a distinctive edge in key activities. The cost structure of a firm or business pursuing a differentiation strategy still needs to be carefully managed, although attaining low-unit costs is not the overriding priority. A firm selecting differentiation must therefore aim at achieving cost parity or, at the very least, cost proximity relative to competitors by keeping costs low in areas not related to differentiation and by not spending too much to achieve differentiation. Thus, the cost structure of a firm practicing differentiation cannot be that far above the industry average. Also, differentiation is not an end in itself; companies must continue to search for new ways to improve the distinctiveness or uniqueness of their products/services. 7-Eleven (formerly Southland Corporation) has practiced differentiation to avoid direct competition with large supermarket chains. It offers consumers greater convenience in the form of nearby location, shorter shopping time, and quicker checkout. It achieves these benefits by designing a business system within the value chain that is different from that of supermarket chains in several key respects: smaller stores, more store locations, and narrower product line. Its approach is higher cost than that of supermarket chains, so 7-Eleven must ordinarily charge higher prices to achieve and 2 video game systems. However, these same technologies also require the firm to remain on the cutting edge of innovation and quality accelerate new product development and to stay in touch with customers needs and market trends. It is not unusual for firms practicing differentiation to invest in production processes that use specially designed equipment that makes it hard for rivals to imitate the products quality. Olympus Optical fine camera lenses are one example. Olympuss skills in fine optics and lens grinding make it difficult for other competitors to rapidly imitate its fine quality of cameras, microscopes, and other laboratory instruments that command premium prices through the world. Any potential source of increased buyer value represents an opportunity to pursue a differentiation strategy. Buyer value can be increased or made more distinctive through several approaches, including (1) lowering the buyers cost of using the product, (2) increasing buyer satisfaction with the product, and (3) modifying the buyers perception of value. Of course, these three approaches to increasing buyer value are not mutually exclusive; a distinctive product or service that lowers buyers direct costs can certainly increase their level of satisfaction as well. Nevertheless, increasing buyer value on any dimension usually means a need to reconfigure or to improve other activities within the firms value chain. Advantages of Differentiation A big advantage behind the differentiation strategy is that it allows firms to insulate themselves partially from competitive rivalry in the industry. When firms produce highly sought-after, distinctive products, they do not have to engage in destructive price wars with their

competitors. In effect, successful pursuit of high differentiation along some key product attribute or buyer need may allow a firm to carve its own strategic group within the industry. This has been particularly the case in the food preparations industry, where large manufacturers try to avoid direct price-base competition with one another through frequent product differentiation and new product introductions. A major advantage behind differentiation is that customers of differentiated products are less sensitive to prices. In practical this attitude means that firms may be able to pass along price increases to their customers. Although the price lf Lexus automobiles have risen steadily over the past several years, demand for these cars also continues to rise, as does buyer loyalty. The high degree of customer satisfaction with Lexus cars has translated over to the sport utility vehicle segment, where vehicles command a far higher price and profit. Buyer loyalty means that successful firms may see a substantial increase in repeat purchases for the firms products. Another advantage is that strategies based on high quality may, up to a point, actually increase the potential market share that a firm can gain. One landmark study noted, in fact, that competitive strategies based on high product quality actually increased market share resulted in significantly increased profitability. Product quality often leads to higher reputation and demand that translate into higher market share. Finally, differentiation processes substantial loyalty barriers that firms contemplating entry must overcome. Highly distinctive or unique products make it difficult for new entrants to compete with the reputation and skills that existing firms already possess. Nordstroms ability to woo and retain customers in the cutthroat fashion and clothing retailing industry enabled the leadingedge store chain to anticipate its customers needs and to offer them special promotions before they become available to the general buying public. Nordstroms focus on superior customer service has, until recently, allowed the form to sell top-of-the line brands that offer a much higher margin than brands targeted to the middle market. Disadvantages of Differentiation A big disadvantage associated with differentiation is that other firms may attempt to out differentiate firms that already have distinctive products by providing a similar or better product. Thus, differentiation strategies, while effective in generating customer loyalty and higher prices, do not completely seal off the market form other entrants. Consider the market for steak sauces in the food industry. Once a competitor develops a particular flavor of steak sauce, its rivals can easily meet that challenge with their own offerings. In fact, excessive product proliferation can even hurt a firms attempt to dedifferentiate, since customers may become confused with the wide variety of offerings. For example, H.J. Heinzs recent moves to offer ketchup with different coolers may have backfired, as some buyers are turned off by the prospect of putting purple or green ketchup on their French fries. The attempt to outdifferentiate another rivals moves occurs frequently in the radio broadcasting industry. Frequently, a station will adopt a format that emphasizes a particular theme; oldies, light rock, rock form the 1970s, pop, easy listening, country, or Top 40. However, the initial gains that any given station makes are difficult to sustain, because competing stations can dilute this message with their own variation of a theme. Most recently, some radio stations are attempting to reach a previously underserved market segment, such as the growing Hispanic or African American audience. Companies such as Radio One are buying stations in different parts of the country that have a strong African American presence. Radio one hopes that its distinctive music offerings and programs will enable it to capture a disproportionate share of advertising dollars of product that target the African American market. Thus, unless differentiation is based on the possession of some truly proprietary technology, expertise, skill, service, patent, or specialized asset, a firm runs the risk of being outmaneuvered by an even shrewder competitor. Another disadvantage of

differentiation is the difficulty in sustaining a price premium as a product becomes more familiar to the market. As a product becomes more mature, customers become smarter about what they want, what genuine value is, and what they are willing to pay. Price premiums become difficult to justify as customers gain more knowledge about the product. The comparatively high cost structure of a firm practicing differentiation could become a real weakness when lower-cost product imitations or substitutes hit the market. Consider, for example, the recent travails that beset Callaway Golf. Despite the enormous popularity of its Big Bertha golf club design that made swinging and higher ball easier, Callaway golf was unable to sustain a huge market share position in the golf equipment business because other competitors eventually followed with similar, but somewhat different, designs or variations on the same theme. Even existing golf equipment providers, such as Wilson innovated their own sets of large-head golf clubs that eroded Callaways once-distinctive identity in the marketplace. Callaways differentiation strategy yielded fewer benefits as new entrants seized the initiative away from the innovator and started producing similar clubs at lower cost. Differentiation also leaves a firm vulnerable to the eventual commoditization of its product, service offering. Or value concept when new competitors enter the market or when customers become more knowledgeable about what is available. Over time, firms that are unable to sustain their initial differentiation-based lead with future product or service innovations will find themselves at a significant, if not dangerous, cost disadvantage when large numbers of customers eventually gravitate to those forms that can produce a similar product or service at lower cost. Finally firms also face risks of overdoing differentiation that may overtaxes or overextend the firms resources. For example Nissan Motor of Japan during the past decade became so obsessed with finding new ways to differentiate its cars that it produced more than thirty types of steering wheels for its line of cars and a broad line of engine, all of which eventually confused customers and made manufacturing costly. Nissan recently announced a sharp reduction in the number of steering wheel sizes, optional accessories, and other features in its cars to lower its operating cost. In 2000, Nissan reduced the number of core automobile platforms to seven in order to reduce the high cost of overlap and design. Excessive differentiation can seriously erode the competitive advantage and profitability of firms as rising operating costs eat into price premiums that customers are willing to pay.

1). Explain five forces model of industry analysis and give example of each force ? Ans.
The model originated from Michael E. Porter's 1980 book "Competitive Strategy: Techniques

for Analyzing Industries and Competitors." Since then, it has become a frequently used tool for analyzing a company's industry structure and its corporate strategy.

In his book, Porter identified five competitive forces that shape every single industry and market. These forces help us to analyze everything from the intensity of competition to the profitability and attractiveness of an industry. Figure 1 shows the relationship between the different competitive forces.

Threat of New Entrants - The easier it is for new companies to enter the industry, the more cutthroat competition there will be. Factors that can limit the threat of new entrants are known as barriers to entry. Some examples include:

Existing loyalty to major brands Incentives for using a particular buyer (such as frequent shopper programs) High fixed costs Scarcity of resources High costs of switching companies Government restrictions or legislation Eg. manufacturing deodorants, we suspect the threat of new entrants is fairly low in the industry. In some segments within the household consumer-products industry, this may not be the case since a small manufacturer could develop a superior product, such as a detergent, and compete with Procter & Gamble. The test is whether the small manufacturer can get its products on the shelves of the same retailers as its much larger rivals. Verdict: Low threat of new entrants.

Power of Suppliers - This is how much pressure suppliers can place on a business. If one supplier has a large enough impact to affect a company's margins and volumes, then it holds substantial power. Here are a few reasons that suppliers might have power:

There are very few suppliers of a particular product

There are no substitutes Switching to another (competitive) product is very costly The product is extremely important to buyers - can\'t do without it The supplying industry has a higher profitability than the buying industry Eg. Since Wal-Mart holds so much of the market share, they offer a lot of business to manufacturers and wholesalers. This gives Wal-Mart a lot of power because by Wal-Mart threatening to switch to a different supplier would create a scare tactic to the suppliers. Wal-Mart could vertically integrate. Wal-Mart does deal with some large suppliers like Proctor & Gamble, Coca-Cola who have more bargaining power than small suppliers.

Power of Buyers - This is how much pressure customers can place on a business. If one customer has a large enough impact to affect a company's margins and volumes, then the customer hold substantial power. Here are a few reasons that customers might have power:

Small number of buyers Purchases large volumes Switching to another (competitive) product is simple The product is not extremely important to buyers; they can do without the product for a period of time Customers are price sensitive Eg. Retailers like Wal-Mart WMT and Target TGT are able to negotiate for pricing with companies like Clorox because they purchase and sell so much of Clorox's products. Verdict: Strong buyer power from retailers

Availability of Substitutes - What is the likelihood that someone will switch to a competitive product or service? If the cost of switching is low, then this poses a serious threat. Here are a few factors that can affect the threat of substitutes:

The main issue is the similarity of substitutes. For example, if the price of coffee rises substantially, a coffee drinker may switch over to a beverage like tea. If substitutes are similar, it can be viewed in the same light as a new entrant.

Eg. When it comes to this market, there are not many substitutes that offer convenience and low pricing. The customer has the choice of going to many specialty stores to get their desired products but are not going to find Wal-Marts low pricing. Online shopping proves another alternative because it is so different and the customer can gain price advantages because the company does not necessarily have to have a brick and mortar store, passing the savings onto the consumer.

Competitive Rivalry - This describes the intensity of competition between existing firms in an industry. Highly competitive industries generally earn low returns because the cost of competition is high. A highly competitive market might result from:

Many players of about the same size; there is no dominant firm Little differentiation between competitors products and services A mature industry with very little growth; companies can only grow by stealing customers away from competitors

Eg.

Consumers in this category enjoy a multitude of choices for everything from cleaning products

to bath washes. While many consumers prefer certain brands, switching costs in this industry are quite low. It does not cost anything for a consumer to buy one brand of shampoo instead of another. This, along with a variety of other factors, including the forces we've already examined, makes the industry quite competitive. Verdict: High degree of rivalry.

2) Describe SWOT analysis as away to guide internal analysis ? Ans. SWOT analysis is technique through which managers create a quick overview of a companys
strategic situation. A SWOT analysis will provide many of the inputs and outputs found in the basic strategic management process and serves as a logical framework for guiding internal analysis. The strengths and weaknesses the firm identifies through SWOT analysis is essentially the firm conducting an internal analysis. Correspondingly, opportunities and threats revealed through SWOT analysis enable the firm to assess the external environment. Leveraged holistically, information gained through SWOT analysis could be utilized by the firm to determine its most desirable options in matching its resources (strengths and weaknesses) with the external environment (opportunities and threats) and in formulating long- and short-term objectives, annual goals and grand strategies. And lastly, periodic SWOT analyses can be used by management as a means to monitor and assess how well current strategies may be working to support the firms mission and goals

Strengths a)A strength is a resource or capability controlled by or available to a firm that gives it an advantage relative to its competitors in meeting the needs of the customers it serves.(1)Strengths arise from the resources and competencies available to the firm.

Weaknesses a)A weakness is a limitation or deficiency in one or more of a firms resources or capabilities relative to its competitors that create a disadvantage in effectively meeting customer needs.

Opportunities a)An opportunity is a major unfavorable situation in a firms environment (1)Key trends are one source of opportunities. (2)(2)Identification of a previously overlooked market segment, changes in competitive or regulatory circumstances, technological changes,and improved buyer or supplier relationships could represent opportunities for the firm

Threats a)A threat is a major unfavorable situation in a firms environment. (1)Threats are key impediments to the firms current or desired position.

(2)The entrance of new competitors, slow market growth, increased bargaining power of key buyers or suppliers, technological changes, and new or revised regulations could represent threats to a firms success. b)Large national residential home builders have seen lower interest rates as a major opportunity driver in single-family housing developments nationwide (1)These same residential home builders have had to face an increasing threat of rapidly accelerating energy and materials costs brought on both by their collective, fast-paced development activities, further exacerbated by the exploding demand for these dame building supplies in the Chinese marketplace. (2)So these large national home builders had to craft strategies built around these opportunities and threats among perhaps several others. c)Once managers agree on key opportunities and threats facing their firm,they have a frame of reference or context from which to evaluate their firms ability to take advantage of opportunities and minimize the effect of key threats. (1)And vice versa: Once managers agree on their firms core strengths and weaknesses, they can logically move to consider opportunities that best leverage their firms strengths while minimizing the effect certain weaknesses may present until remedied

Using SWOT Analysis in Strategic Analysis 1.The most common use of SWOT analysis is as a logical framework guiding discussion and reflection about a firms situation and basic alternatives. a)This often takes place as a series of managerial group discussions. b)What one manager sees as an opportunity, another may see as a potential threat. c)Likewise, a strength to one manager may be a weakness to another. d)The SWOT framework provides an organized basis for insightful discussion and information sharing, which may improve the quality of choices and decisions managers subsequently make. e)Consider what initial discussions among Apple Computers management team might have been that led to the decision to pursue the rapid development and introduction of the iPod. f)A brief SWOT analysis of their situation might have identified

1) Strengths Sizable miniature storage expertise User-friendly engineering skill Reputation and image with youthful consumers Brand name Web-savvy organization and people

Jobss Pixar experience

(2) Weaknesses Economies of scale versus computer rivals Maturing computer markets Limited financial resources Limited music industry expertise

(3) Opportunities Confused online music situation Emerging file-sharing restrictions Few core computer-related opportunities Digitalization of movies and music

(4) Threats Growing global computer companies Major computer competitors

Q. Describe the Environmental factors that affects the performance of the firm? Ans:
There are various environmental factors which can impact the businesses in an economy. These environmental factors can be categorized into external and internal environment of the businesses. The internal environment of the company includes the factors which are within the company and under the control of company like product Organizational culture, Leadership, and Manufacturing (quality). On the other hand, the external factors are not under the control of the company and include Social environment, political conditions, suppliers, competitors of the company, Government regulations and policies, accounting agencies like Accounting standard board, Resources in an economy and demographics of people. Social Political Financial QoS Product Quality Distribution Channels Promotional Channels Manufacturing Employee Leadership

Environmental factors affecting sales; Political factors. These refer to government policy such as the degree of intervention in the economy. What goods and services does a government want to provide? To what extent does it believe in subsidizing firms? What are its priorities in terms of business support? Political decisions can impact on many vital areas for business such as the education of the workforce, the health of the nation and the quality of the infrastructure of the economy such as the road and rail system. Economic factors. These include interest rates, taxation changes, economic growth, inflation and exchange rates. For example: higher interest rates may deter investment because it costs more to borrow a strong currency may make exporting more difficult because it may raise the price in terms of foreign currency inflation may provoke higher wage demands from employees and raise costs higher national income growth may boost demand for a firm's products Social factors. Changes in social trends can impact on the demand for a firm's products and the availability and willingness of individuals to work. In the UK, for example, the population has been ageing. This has increased the costs for firms who are committed to pension payments for their employees because their staff are living longer. It also means some firms such as Asda have started to recruit older employees to tap into this growing labour pool. The ageing population also has impact on demand: For example, demand for sheltered accommodation and medicines has increased whereas demand

for toys is falling. Technological factors: New technologies create new products and new processes. MP3 players, computer games, online gambling and high definition TVs are all new markets created by technological advances. Online shopping, bar coding and computer aided design are all improvements to the way we do business as a result of better technology. Technology can reduce costs, improve quality and lead to innovation. These developments can benefit consumers as well as the organisations providing the products. Environmental Factors Affecting Firms Ability to Compete: A Retail Perspective Organizations that promote learning are better equipped to handle the ever-changing business environment. Retailers are no different. When an organizations leadership plans for the future it must take into account principle environmental factors. A companys ability to compete will be affected by how well the leaders have learned to identify those factors, to demonstrate their companys significance, and to estimate the extent or magnitude of each of the factors impact on the corporate strategy like, Competitors Every business has external peers that perform similar functions within their professional discipline. These peers are considered competitors and they are rival producers of goods or services. These competitors contribute to the overall industry by their ability to deliver goods and services of high caliber at competitive prices. Competition is good from a market perspective as it gives consumers choices and provides the businesses and opportunity to create a niche. Creditors Most businesses purchases goods and services much like a consumer. However, they do so to large extent on credit as they are able to get discounts or other incentives to buy in bulk. When businesses buy goods and services on credit the business that holds the note or paper is referred to as a creditor. A firms power and prestige in domestic markets may be significantly enhanced with the right credit resources. Enhanced prestige can translate into a better negotiating position with other creditors, suppliers, distributors and other important groups. Customers Customers are an essential part of any business, without the customer there would be no need for the business. Regardless of the product or service provided, a business must be able to leverage their marketing and production to ensure they satisfy consumer demand.

Q. Write short note on qualities of long-term objectives?

Qualities of Long-Term Objectives

What distinguishes a good objective from a bad one? What qualities of an objective improve its chances of being attained? Perhaps these questions are best answered in relation to seven criteria that should be used in preparing long-term objectives: acceptable, flexible, measurable over time, motivating, suitable, understandable, and achievable. Acceptable: Managers are most likely to pursue objectives that are consistent with their preferences. They may ignore or even obstruct the achievement of objectives that offend them (e.g., promoting a non-nutritional food product) or that they believe to be inappropriate or; unfair (e.g., reducing spoilage to offset a disproportionate allocation of fixed overhead). In addition, long-term corporate objectives frequently are designed to be acceptable to groups external to the firm. An example is efforts to abate air pollution that are undertaken at the insistence of the Environmental Protection Agency. Flexible: Objectives should be adaptable to unforeseen or extraordinary changes in the frmn's competitive or environmental forecasts. However, such flexibility usually is increased at the expense of specificity. Moreover, employee confidence may be tempered because adjustment of flexible objectives may affect their jobs. One way of providing flexibility while minimizing its negative effects is to allow for adjustments in the level, rather than in the nature, of objectives. For example, the personnel department objective of providing managerial development training for 15 supervisors per year over the next five-year period might be adjusted by changing the number of people to be trained. In contrast, changing the personnel department's objective of" assisting production supervisors in reducing job-related injuries by 10 percent per year" after three months had gone by would understandably create dissatisfaction.

Measurable: Objectives must clearly and concretely state what will be achieved and when it will be achieved. Thus, objectives should be measurable over time. For example, the

objective of "substantially improving our return on investment" would be better stated as "increasing the return on investment on our line of paper products by a minimum of I percent a year and a total of 5 percent over the next three years." Motivating: Studies have shown that people are most productive when objectives are set at a motivating level--one high enough to challenge but not so high as to frustrate or so low as to be easily attained. The problem is that individuals and groups differ in their perceptions of what is high enough. A broad objective that challenges one group frustrates another and minimally interests a third. One valuable recommendation is that objectives be tailored to specific groups. Developing such objectives requires time and effort, but objectives of this kind are more likely to motivate. Suitable: Objectives must be suited to the broad aims of the firm, which are expressed in its mission statement. Each objective should be a step toward the attainment of overall goals. In fact, objectives that do not coincide with the company mission can subvert the firm's aims. For example, if the mission is growth oriented, the objective of reducing the debt-to- equity ratio to 1.00 would probably be unsuitable and counterproductive. Understandable: Strategic managers at all levels must understand what is to be achieved. They also must understand the major criteria by which their performance will be evaluated. Thus, objectives must be so stated that they are as understandable to the recipient as they are to the giver. Consider the misunderstandings that might arise over the objective of "increasing the productivity of the credit card department by 20 percent within five years." What does this objective mean? Increase the number of outstanding cards? Increase the use of outstanding cards? Increase the employee workload? Make productivity gains each year? Or hope that the new computer-assisted system, which should improve productivity, is approved by year 5? As this simple example illustrates, objectives must be clear, meaningful, and unambiguous.

Achievable: Finally, objectives must be possible to achieve. This is easier said than done. Turbulence in the remote and operating environments affects a firm's internal operations, creating uncertainty, and limiting the accuracy of the objectives set by strategic management. To illustrate, the wildly fluctuating prime interest rates in 1980 made objective setting

extremely difficult for the years 1982 to 1985, particularly in such areas as sales projections for producers of consumer durable goods like General Motors and General Electric. Motorola provides a good example of well-constructed objectives. Motorola saw its market share of the mobile telephone market shrink from 26 percent to 14 percent between 1996 and 2001, while its main rival Nokia captured all of the Motorolas lost share and more. As a key part of a plan to recapture its market position, Motorolas CEO challenged its company with the following long-term objectives; Cut sales, marketing, and administrative expenses from $2.4 billion to $1.6 billion in the next fiscal year. Increase gross markings from 20 percent to 27 percent by 2002. Reduce the number of Motorola telephone styles by 84 percent to 20 and the number of silicon components by 82 percent to 100 by 2003.

Q) What are the activities and capabilities the firm should possesses the speed based strategy?
1.Speed-based strategies, or rapid response to customer requests or market andtechnological changes, have become a major source of competitive advantagefor numerous firms in todays intensely competitive global economy. a) Speed is certainly a form of differentiation, but it is more than that. b) Speed involves the availability of a rapid response to a customer by providing current products quicker, accelerating new-product development or improvement, quickly adjusting production processes, and making decisions quickly. c) While low cost and differentiation may provide important competitive advantages, managers in tomorrows successful companies will basetheir strategies on creating speed based competitive advantages. d) Evaluating a Businesss Rapid Response (Speed) Opportunities, describes and illustrates key skills and organizational requirements that are associated with speed-based competitiveadvantage. 2.Speed-based competitive advantages can be created around several activities: a) Customer responsiveness (1) All consumers have encountered hassles, delays, and frustration dealing with various businesses from time to time. (2)The same holds true when dealing with business to business. (3)Quick response with answers, information, and solutions to mistakes can become the basis for competitive advantageone that builds customer loyalty quickly. b)Product development cycles c) Product or service improvements Like development time, companies that can rapidly adapt their products or services and do so in a way that benefits their customers or creates new customers have a major competitive advantage over rivals that cannot do this.

d)Speed in delivery or distribution Firms that can get you what you need when you need it, even whenthat is tomorrow, realize that buyers have come to expect that level of responsiveness.

e)Information Sharing and Technology 1)Speed in sharing information that becomes the basis for decisions,actions, or other important activities taken by a customer, supplier,or partner has become a major source of competitive advantage for many businesses. 2)Telecommunications, the Internet, and networks are but a part of a vast infrastructure that is being used by knowledgeable managers to rebuild or create value in their businesses via information sharing. 3. These rapid response capabilities create competitive advantages in sever always. a) They create a way to lessen rivalry because they have availability of something that a rival may not have. b) It can allow the business to change buyers more, engender loyalty, or otherwise enhance the businesss position relative to its buyers. c) Particularly where impressive customer response is involved, businesses can generate supplier cooperation and concessions because their business ultimately benefits from increased revenue. d) Finally, substitute products and new entrants find themselves trying to keep up with the rapid changes rather than introducing them. e) Strategy in Action, provides examples of how speed has become a source of competitive advantage for several well-known companies around the world. 4. While the notion of speed-based competitive advantage is exciting, it has risks managers must consider. a) First, speeding up activities that havent been conducted in a fashion that prioritizes rapid response should only be done after considerable attention to training, reorganization, and/or reengineering. b)Second, some industriesstable, mature ones that have very minimal levels of change may not offer much advantage to the firm that introduces some forms of rapid response. c) Customers in such settings may prefer the slower pace or the lower costs currently available, or they may have long time frames in purchasing such that speed is not that important to them.

Evaluating Market Focus as a Way to Competitive Advantage 1. Small companies, at least the better ones, usually thrive because they serve narrow market niches. a)This is usually called market focus, the extent to which a business concentrates on a narrowly defined market. b) The narrow focus may be geographically defined, or defined by product type features, or target customer type, or some combination of these. 2. Market focus allows some businesses to compete on the basis of low cost, differentiation, and rapid response against much larger businesses with greater resources. a)Focus lets a business learn its target customerstheir needs, specialconsiderations they want accommodatedand establish personalrelationships in ways that differentiate the smaller firm or make itmore valuable to the target customer. b) Low costs can also be achieved, filling niche needs in a buyers operations that larger rivals either do not want to bother with or cannot do as cost effectively. c) Cost advantage often centers around the high level of customized service the focused, smaller business can provide. d) And perhaps the greatest competitive weapon that can arise is rapid response. e) With enhanced knowledge of its customers and intricacies of their operations, the small, focused company builds up organizational knowledge about timing-sensitive ways to work with a customer. f) Often the needs of that narrow set of customers represent a large part of the small, focused businesss revenues. g) Top Strategist, illustrates how Irelands Ryanair has become the European leader in discount air travel via the focused application of low cost, differentiation, and speed. 3. The risk of focus is that you attract major competitors who have waited for your business to prove the market. a) Dominos proved that a huge market for pizza delivery existed and now faces serious challenges. b) Likewise, publicly traded companies built around focus strategies become takeover targets for large firms seeking to fill out a product portfolio. c) And perhaps the greatest risk of all is slipping into the illusion that it is focus itself, and not some special form of low cost, differentiation, or rapid response, that is creating the businesss success.

4. Managers evaluating opportunities to build competitive advantage should link strategies to resources, capabilities, and value chain activities that exploit low cost, differentiation, and rapid response competitive advantages. a) When advantageous, they should consider ways to use focus to leverage these advantages. b) One way business managers can enhance their likelihood of identifying these opportunities is to consider several different generic industry environments from the perspective of the typical value chain activities most often linked to sustained competitive advantages in those unique industry situations. c) The next section discusses five key generic industry environments and the value chain activities most associated with success

Speed of delivery-is a benefit that most consumers value and are willing to pay extra for. If your company is able to deliver goods or services to the consumer faster than the competition speed of delivery might be the competitive advantage thats worth pursuing. This is a great way to differentiate for non-FMCG companies, where products take longer to manufacture or are made to order: furniture, heavy-duty equipment, custom clothing and jewelry, to name a few. The perfect example comes from an industry where delivery is the actual product being offered. In a smart strategic move Fed-Ex decided not to compete head-on with UPS, but instead focus on overnight shipping. Their effective positioning was reflected in their famous slogan FedEx: When it absolutely, positively has to be there overnight. Availability-no brand, no matter how great the positioning and communication strategy, will make it to the consumers shopping list if it is not present in the places they shop. A brand that is readily available in more places than the competition could turn availability into a competitive advantage. Husqvarna, the world leader in outdoor power products, maintains its number one position through a well-established network of independent, specialized retailers that provide greater geographical coverage than competition (combined with superior service and support). Enterprise made the car rental process easier by pioneering the free customer pick-up service. As a result they have become the number one car rental company in the US. Loyalty programs-is a great way to generate repeat purchase and build a solid customer base. Moreover, rewards can create brand preference particularly when the products are not easily differentiated. In order for any loyalty program to work it has to be simple to subscribe to, collect, and redeem the rewards. These initiatives are very popular in North America, with the major credit card companies, retail chain and major airlines competing to provide the most rewarding experience. After sale service and training- is a differentiating advantage for companies involved in manufacturing and marketing complex products that require assembly, operating instructions, regular maintenance and updates: plant equipment, furniture, enterprise resource software,

etc. A well-trained sales force and service personnel are required to continually deliver on this promise. Warranty-is a great way to create brand preference. Warranty coverage provides consumers with piece of mind and reinforces the company commitment to product quality. When Hyundai first entered the North American auto market with its Excel model, the company quickly built a negative reputation due to the cars poor reliability. Many dealers made money only on repairs, while others ended up abandoning the product. The company was subject to many jokes such as Hyundai: Hope you understand nothings driveable and inexpensive. Today the South Korean manufacturer has become the fastest growing automaker in North America due significant investments in quality and design, backed by Americas Best Warranty: 5 year-100,000 miles warranty program.

How is VCA different from SWOT analysis ? Ans. Value chain analysis (VCA): The value chain, created by Michael Porter, is a business management concept that includes nine activities that work together to provide value to customers. When a company implements a value chain, it possesses a greater ability to generate profits. SWOT is a strategic planning method in business that allows a company to identify and analyze its strengths, weaknesses, opportunities and threats. SWOT analysis allows companies to evaluate internal and external factors and develop effective marketing plans. The value chain deals with several departments in a company, while SWOT is primarily analyzed by the marketing department. Primary Activities Five general activities make up the primary activities of the value chain inbound logistics, operations, outbound logistics, marketing and sales and services. The specific activities found in the five primary activities vary per industry. Inbound logistics consist of receiving and storing material goods for use and inventory control. Operating activities take the goods received through inbound logistics and turn them into finished products. Outbound logistics consist of transporting finished products to customers and storage facilities. Marketing activities include informing customers of the companys finished products and services include maintaining the value of the product and offering customer service. Secondary Activities The secondary or support activities increase the companys efficiency. Secondary activities usually do not contribute directly to a companys products. The four secondary activities of the value chain include procurement, technology development, human resources management and firm infrastructure. The procurement activity deals with how the firm acquires its raw material. Technology development includes researching and develop new technology to improve processes. Human resources management includes recruiting and managing all aspects concerning employees. Infrastructure consist of back office needs, such as finance, law and administrative tasks.

Swot analysis: SWOT is an acronym that stands for strengths, weaknesses, opportunities and threats. SWOT provides a framework for analysis of the internal and external business environment. The value chain is another framework for business analysis. The value chain is a companys process for creating the value thats offered to customers. Ideally, each business activity adds value by creating a link in the chain. SWOT analysis is a common way to quickly assess a companys strategic situation. The internal environment is assessed through determining the companys strengths and weaknesses, while evaluating opportunities and threats helps to understand the external environment. In many cases, managements goal is to figure out how to make the internal and the external fit together. When discussing SWOT, business managers sometimes note the lack of analysis of internal operations.

Strengths and Weaknesses The strengths and weaknesses of SWOT deal with the internal aspects of a company. When a company analyzes its strengths, it should consider the value added to the firm and its customers. Managers should also consider the advantages the company possesses over its competitors and how the company is perceived by the market. The weaknesses of a firm may include things that cause the companys revenue to decline, areas that need improvement and where the company is lagging in the industry. A company can look at its weaknesses through the eyes of competitors and pinpoint the areas where competitors seek to capitalize.

Opportunities and Threats Opportunities and threats are considered external factors that affect the organization. Opportunities are outside positions that companies can enter into to become more profitable and valuable to customers. Threats are external changes that hinder growth and profitability. An external factor can present itself as an opportunity to one company and a threat to another. External factors may include changes in government regulations, suppliers, customer preferences, market trends or social development.

Eg. SWOT ANALYSIS Of Indian Tobacco Company: Strength Biggest and the largest player in the Indian tobacco market with a market share of 80%. Its Gold Flake tobacco brand is the largest FMCG brand in India - and this single brand alone holds 70% of the tobacco market. The second biggest tobacco company in India The first and only tobacco company to organize the fragmented cigar market in India and secure its position as the market leader in the cigar distribution. Partnering with some of the top most players in the international tobacco industry. High quality standard products & services Excellent export earnings. Highly professional management. Excellent distribution network. Weakness

It still has to consolidate its foot in the cigar market largely dominated by Godfrey Philips. High competition from established brands which has resulted in reduction in profit margins. Steep increase in cigarette taxes has adversely affected the revenue earned. Due to high price of cigarette, consumers are switching to other cheaper forms of tobacco. Unrelated diversifications The company is still dependant upon its tobacco revenue. Opportunities Big untapped market available. For cigarettes, High growth potential could be achieved. Good source of revenue & foreign exchange available by way of exports of products, cigarettes in African nation where they have an good opportunities Its competitors dont have the financial banking like it so it can take advantage of this.. ITC is moving into new and emerging markets like developing countries of Eastern Europe, Africa etc Merger with one of the African countries in tobacao sector can help them to target the market Threats The obvious threat is from competition, both domestic and international fom copany such as GPI, in domestic and Benson light , duhill in international market Health hazard Increasing tax in Cigarettes Negative publicity for smoking could affect its cigarette segment. Government is under huge pressure from public organizations for banning tobacco products which could affect it adversely. High competition from established brands. Competition from unbranded products. FDI since FDI was ban in this sector government is trying to brink FDI Back in retail sector as well.

Ques : Which 7 areas the strategic planner has to focus to achieve long term objective? Ans: To achieve long-term prosperity, strategic planners commonly establish long-term objectives in seven areas such as follows: 1. Profitability: The ability of any firm to operate in the long run depends on attaining an acceptable level of profits. Strategically managed firms characteristically have a profit objective, usually expressed in earnings per share or return on equity. 2. Productivity: Strategic managers constantly try to increase the productivity of their systems. Firms that can improve the input- output relationship normally increase profitability. Thus, firms almost always state an objective for productivity. Commonly used productivity objectives are the number of items produced or the number of services rendered per unit of input. However, productivity objectives sometimes are stated in terms of desired cost decreases. For example, objectives may be set for reducing defective items, customer complaints leading to litigation, or overtime. Achieving such objectives increases profitability if unit output is maintained. 3. Competitive position: One measure of corporate success is relative dominance in the market place. Larger firms commonly establish an objective in terms of competitive position, often using total sales or marker share as measures of their competitive position. An objective with regard to competitive position may indicate a firms long-term priorities. For example, Gulf oil set a five-year objective of moving from third to second place as a producer of highdensity polypropylene. Total sales were the measure. 4. Employee Development: Employees value education and training, in part because they lead to increased compensation and job security. Providing such opportunities often increases productivity and decreases turnover. Therefore, strategic decision makers frequently include an employee development objective in their long-range plans, For Example, PPG has declared an objective of developing highly skilled and flexible employees and, thus, providing steady employment for a reduced number of workers. 5. Employee Relations: Whether or not they are bound by union contracts, firms actively seek good employee relations. In fact, proactive steps in anticipation of employee needs and expectations are characteristic of strategic managers. Strategic managers believe that productivity is linked to employee loyalty and to appreciation of managers interest in employee welfare. They, therefore, set objectives to improve employee relations. Among the outgrowths of such objectives are safety programmes, worker representation on management committees and employee stock action plans. 6. Technological Leadership : Firms must decide whether to lead or follow in the market place. Either approach can be successful, but each requires a different strategic posture. Therefore, many firms state on objective with regard to technological leadership.

For example, Caterpillar Tractor Company established its early reputation and dominant position in its industry by being in the forefront of technological innovation in the manufacture of large earthmovers, E-commerce technology officers will have more of a strategic role in the management hierarchy of the future, demonstrating that the internet has become an integral aspect of corporate long-term objective setting. In offering an etechnology manager higher-level responsibilities, a firm is pursuing a leadership position in terms of innovation in computer networks and systems. Officers of e-commerce technology at GE and Delta Air have shown their ability to increase profits by driving down transaction related costs with Web-based technologies that seamlessly integrate their firms supply chains. These technologies have the potential to lock in certain supply. 7. Public Responsibility : Managers recognize their responsibilities to their customers and to society at large. In fact many firms seek to exceed Govt. requirements. They work not only to develop reputations for fairly priced products and services but also to establish themselves as responsible corporate citizens. For example, they may establish objectives for charitable and educational contributions, minority training, public or political activity, community welfare, or urban revitalization. In an attempt to exhibit their public responsibility in the Unites States, Japanese companies, such as Toyota, Hitachi and Matsushita contribute more than $ 500 million annually to American Educational Projects, Charities and non-profit organizations

Q. Evaluate the impact of five forces that drive competition of that industry company where you have completed your summer internship project.
Ans : The impact of five forces that drive competition of IT industry of Web design company Introduction The model of the Five Competitive Forces was developed by Michael E. Porter in his book Competitive Strategy: Techniques for Analyzing Industries and Competitors in 1980. Since that time it has become an important tool for analyzing an organizations industry structure in strategic processes. Porters model is based on the insight that a corporate strategy should meet the opportunities and threats in the organizations external environment. Especially, competitive strategy should base on and understanding of industry structures and the way they change. Porter has identified five competitive forces that shape every industry and every market. These forces determine the intensity of competition and hence the profitability and attractiveness of an industry. The objective of corporate strategy should be to modify these competitive forces in a way that improves the position of the organization. Porters model supports analysis of the driving forces in an industry. Based on the information derived from the Five Forces Analysis, management can decide how to influence or to exploit particular characteristics of their industry.

The Five Competitive Forces of IT Industry :


Availability of substitutes : Medium

Supplier Power : Low / No Power

competitive Rivalry : High

Buyer Power : Medium

Threat Of New Entrants : High

Power of Buyers: The Indian IT sector has a large number of players and few entry
barriers for new entrants. Thus, the buyer has many options to choose from and can clearly articulate their needs. However, the bigger companies also enjoy the advantage of switching

costs. It means that once a particular client selects a particular company as its partner, it becomes dependent on that company for all its upgrades and technology requirements, making it difficult for the client to switch. Thus, the buyer has Medium bargaining leverage.

Power of Suppliers: Knowledgeable human resource is the largest requirement for the IT
sector. Large supply of this human resource, at low cost is available from around the world. Also, a lot of matured education and training is easily available. As their exist many competitive suppliers in the market the supplier has very Low or No Power in the IT sector.

Competitive Rivalry: No huge capital investment is required to start a new company,


leading to very large numbers of small and medium size companies. It is becoming increasingly difficult for players to differentiate, which has led to a decrease in margins. However, a few top and niche players still enjoy pricing power. Thus, the competition in the sector is high.

Availability of Substitutes: Certain countries e.g. china, Korea, Taiwan have started to
develop an environment required for growth of IT sector and are emerging as suppliers of these products and services. Indian companies need to continuously innovate to have an edge over the others. Thus the availability of substitute is Medium.

Threat of New Entrants : Set up cost is almost negligible. Further the government policies also promote the entrepreneurs by providing benefits in terms of tax holidays and building software technology parks. Apart from this there are many venture capitalists who are ready to fund new start-ups enabling them to scale up with increased demand and higher margins the threat of new entrant is High .

The Five Competitive Forces on Web design Company :

Threat of New Entrants

Bargaining Power of Suppliers

Competitive Rivalry

Threat of Substitute Products

Bargaining Power of Customers

1.Bargaining Power of Customers High


In our industry I would have to say that bargaining power of customers is very high. We are frequently pitted against each other for pricing and delivery concessions. Most customers have the luxury of interviewing over a dozen web designers for a single project. They also have access to freelance websites where literally thousands of designers can bid for projects.

2.Bargaining Power of Suppliers Moderate


Suppliers to our industry including web hosting companies, software companies, subscription service providers etc. Since its a fragmented industry and most web designers rarely band together to demand a better price, so suppliers usually exert moderate pressure. However the good news is that our suppliers are themselves in a competitive market hence web designers still do retain some clout. There are of course exceptions such as Google Apps who have refused to lower prices or provide flexibility.

3.Threat of New Entrants Very High


The barriers to entry in our business is very very low. Any person with a laptop and a little knowledge of html can promote themselves as web designers. Everyday, hundreds of new companies, tiny and small, jump into the fray. This usually leads to two problems they drive down prices and they drive down industry reputation. This hurts the long term players like us.

4.Threat of Substitute Products High


The threat per se is not to websites themselves but comes from an internal source. Ready-touse off-the-shelf do-it-your-self cheap websites are the threat. A great web designer can add tremendous value to a website and the clients business but this is now being seriously undermined by quick fix solution providers. Of course these providers are filling a need for low cost, fast solutions but they are also bottoming out the market in terms of cost and quality. You can compare them to fast food like McDonalds whereas we are the fine dine gourmet restaurants. I suppose there will be place for both in this industry but for high value solution providers like us, its a constant threat.

5.Competitive Rivalry within an industry Very High

This is a highly competitive industry. It is not common for web designers to be pitted against 5-10 other rivals. Web designers are notorious for under cutting each other. In this scenario no one wins, not even the client. This is a very tough industry to survive in, let alone thrive.

Q. Briefly describe the remote environment of business by giving an example of important recent changes in Indian business. Ans. Remote Environment Remote environment is a term used to describe events that happen outside of a business. These things can have an impact their success or the way that they run, but which they have no control over. The remote environment comprises factors that originate beyond, and usually irrespective of, any single firms operating situation: (A) Economic, (B) Social, (C) Political, (D) Technological, and (E) Ecological factors

(A) Economic

1. Economic factors concern the nature and direction of the economy in which a firm operates. i. Because consumption patterns are affected by the relative affluence of various market segments, each firm must consider economic trends in the segments that affect its industry. ii. On both the national and international levels, managers must consider the general availability of credit, the level of disposable income, and the propensity of people to spend. iii. Prime interest rates, inflation rates, and trends in the growth of the gross national product are other economic factors they should monitor.

2. The emergence of new international power brokers has changed the focus of economic environmental forecasting. i. Among the most prominent of these power brokers are the European Economic Community (EEC, or Common Market), the Organization of Petroleum Exporting Countries (OPEC), and coalitions of developing countries. ii. The EEC, whose members include most of the West European countries, eliminated quotas and established a tariff-free trade area for industrial products among its members. iii. By fostering intra-European economic cooperation, it has helped its member countries compete more effectively in non-European international markets.

(B) Social

1. The social factors that affect a firm involve the beliefs, values, attitudes, opinions, and lifestyles of persons in the firms external environment, as developed from cultural, ecological, demographic, religious, educational, and ethnic conditioning. i. As social attitudes change, so too does the demand for various types of clothing, books, leisure activities, and so on. ii. Social forces are dynamic, with constant change resulting from the efforts of individuals to satisfy their desires and needs by controlling and adapting to environmental factors.

2. One of the most profound social changes in recent years has been the entry of large numbers of women into the labor market. i. This has not only affected hiring and compensation policies and the resource capabilities of their employers; it has also created or greatly expanded the demand for a wide range of products and services necessitated by their absence from the home.

ii.

Firms that anticipated or reacted quickly to this social change offered such products and services as convenience foods, microwave ovens, and day care centers.

3. A second profound social change has been the accelerating interest of consumers and employees in quality-of-life issues. i. ii. Evidence of this change is seen in recent contract negotiations. In addition to the traditional demand for increased salaries, workers demand such benefits as sabbaticals, flexible hours or four-day workweeks, lump-sum vacation plans, and opportunities for advanced training.

4. A third profound social change has been the shift in the age distribution of the population. i. Changing social values and a growing acceptance of improved birth control methods are expected to raise the mean age of the U.S. population, which was 27.9 in 1970, and 34.9 in the year 2000. ii. This trend will have an increasingly unfavorable effect on most producers of predominantly youth-oriented goods and will necessitate a shift in their longrange marketing strategies. iii. Producers of hair and skin care preparations have already begun to adjust their research and development to reflect anticipated changes in demand. iv. A consequence has been a sharp increase in the demands made by a growing number of senior citizens. v. Constrained by fixed incomes, senior citizens have demanded that arbitrary and rigid policies on retirement age be modified and have successfully lobbied for tax exemptions and increases in Social Security benefits.

5. Cutting across these issues is concern for individual health. i. ii. The fast-food industry has been the target of a great deal of public concern. Americans are concerned over the relationship between obesity and health.

iii.

Health experts blamed the fast food industry for the rise in obesity, claiming that companies like McDonalds create an environment that encourage overeating and discourage physical activity.

iv.

McDonalds responded aggressively and successfully, establishing themselves as an innovator in healthy food options.

(C) Political

1. The direction and stability of political factors are a major consideration for managers on formulating company strategy. i. Political factors define the legal and regulatory parameters within which firms must operate. ii. Political constraints are placed on firms through fair-trade decisions, antitrust laws, tax programs, minimum wage legislation, pollution and pricing policies, administrative jawboning, and many other actions aimed at protecting employees, consumers, the general public, and the environment. iii. Because such laws and regulations are most commonly restrictive, they tend to reduce the potential profits of firms.

2. The direction and stability of political factors are a major consideration when evaluating the remote environment. 3. Political activity also has a significant impact on two governmental functions that influence the remote environment of firms: the supplier function and the customer function:

i.

Supplier Function Government decisions regarding the accessibility of private businesses to government-owned natural resources and national stockpiles of agricultural products will affect profoundly the viability of the strategies of some firms.

ii.

Customer Function

Government demand for products and services can create, sustain, enhance, or eliminate many market opportunities.

(D) Technological

1. The fourth set of factors in the remote environment involves technological change. i. To avoid obsolescence and promote innovation, a firm must be aware of technological changes that might influence its industry. ii. Creative technological adaptations can suggest possibilities for new products, for improvements in existing products, or in manufacturing and marketing techniques.

2. A technological breakthrough can have a sudden and dramatic effect on a firms environment. i. It may spawn sophisticated new markets and products or significantly shorten the anticipated life of a manufacturing facility. ii. Thus, all firms, and most particularly those in turbulent growth industries, must strive for an understanding both of the existing technological advances and the probably future advances that can affect their products and services. (E) Ecological

1. The most prominent factor in the remote environment is often the reciprocal relationship between business and the ecology. i. The term ecology refers to the relationships among human beings and other living things and the air, soil, and water that supports them. ii. Threats to our life-supporting ecology caused principally by human activities in an industrial society are commonly referred to as pollution.

2. The global climate has been changing for ages; however, it is now evident that humanitys activities are accelerating this tremendously. i. A change in atmospheric radiation, due in part to ozone depletion, causes global warming.

ii.

Solar radiation that is normally absorbed into the atmosphere reaches the earths surface, heating the soil, water, and air.

3. Another area of great importance is the loss of habitat and biodiversity. i. Ecologists agree that the extinction of important flora and fauna is occurring at a rapid rate and could constitute a global extinction on the scale of those found in fossil records. ii. iii. The earths life-forms depend on a well-functioning ecosystem. Immeasurable advances in disease treatment can be attributed to research involving substances found in plants.

4. Air pollution is created by dust particles and gaseous discharges that contaminate the air. i. Acid rain, which can destroy aquatic and plant life, is believed to result from coalburning factories in 70 percent of all cases. ii. A health-threatening thermal blanket is created when the atmosphere traps carbon dioxide emitted from smokestacks in factories burning fossil fuels. iii. This is called the greenhouse effect and can disastrous consequences.

5. Water pollution occurs principally when industrial toxic wastes are dumped or leak into the nations waterways. i. Fewer than 50 percent of all municipal sewer systems are in compliance with EPA requirements. ii. Efforts to keep from contaminating the water supply are a major challenge to even the most conscientious of manufacturing firms.

6. Land pollution is caused by the need to dispose of ever-increasing amounts of waste. i. ii. Routine, everyday packaging is a major contributor to this problem. Land pollution is more dauntingly caused by the disposal of industrial toxic wastes in underground sites.

iii. iv.

Q. Discuss the role of organizational leader and qualities required for strategic leadership? Answer: v. Role of organizational leader vi.

vii. viii.

Developing a Strategic Vision and Mission Vision is the core of leadership and is at the heart of strategy. The leaders job is to create the vision for the enterprise in a way that will engage both the imagination and the energies of its people. An effective leader knows that the ultimate task of leadership is to create human energies and human vision, The vision must be tied to what the firm values, and the leader must make this connection in a way that the organization can understand, grasp, and support. Vision moves the enterprise; values stabilize the enterprise. Vision looks to the future, values to the past.

ix. x. The leader distinguishes between vision, which describes where the enterprise is headed, and mission, which articulates why the enterprise exists. A good mission statement encapsulates a firms purpose with its unique contribution. For example, Disneys mission may be stated simply as, To make people happy. A good leader understands the difference between vision and mission and makes sure that the organization does, too. xi. xii. xiii. Setting Goals and Objectives Good visions do not become reality by magic. The process of realizing the visionstrategyis just as important to the firm as having the foresight and the commitment to achieve the vision. Somewhere just beyond the horizon of vision and before the hard edge of strategy kicks in begins the leaders work of setting strategic goals and objectives for the organization. This activity calls for disciplined thinking to narrow the organizations focus. xiv. The leader sets measurable goals and objectives for the organization. A goal or objective for which attainment cannot be measured is worthless. The leader makes measurable goals effective by building in incentives for attainment. These incentives reward goal-attaining behavior, discourage the opposite, and thus make

strategy happen by virtue of their self-enforcement power, but they must be created to fit the organization. When the leaders establish goals and build in incentives that reward attainment, the organization moves to achieve them. xv. xvi. Crafting a Strategy The leader must now ask the question, How are we as a firm going to employ our resources to achieve our goals? Taking a strategic position means accepting that there will be trade-offs with other positions. It also means choosing what not to do, as well as what to do, because no company can compete successfully in every business segment featuring every variation of product or service. The essence of strategy is choosing what not to do, says Michael Porter, groundbreaking author of Competitive Strategy and creator of the five forces model of competition. Tough choices must be made, and the leader must be the one to force the issue. xvii. xviii. But crafting strategy is not all top-down. Gary Hamel asserts that revolutionary strategy-making involves getting to the revolutionaries who are embedded in every organization and involving them in the strategy-making process. He advocates taking a diagonal slice through the organization to pick up these revolutionaries who exist at every level and across every function. Furthermore, the leader should make sure that three kinds of people participate in strategymaking: the young, those who are new to the firm, and those on the periphery, that is, the geographic boundaries of the business. Why these people? Because they are the onestogether with those picked up in the diagonal slicewho are certain to have the most revolutionary ideas for the company. They are the ones most likely to challenge the assumptions that the senior managers have all been taught to share. They are the most likely to redefine the industry by challenging its accepted beliefs. Such challenges require an attitude of humility and openness from the leader who crafts strategy for the firm. xix. xx. In the end, it is the leaders job to define the companys strategic position and make the trade-offs. Instead of broadening into every segment in which profits may be earned, the leader focuses the company on deepening its strategic position and communicates the strategy externally to customers who value it, as well as internally to the firm. Taking a strategic position that delivers value and

communicating that value inside and out are the core leadership tasks in crafting strategy. xxi. xxii. xxiii. Executing the Strategy xxiv. Leaders have primary responsibility for implementing the chosen strategy. While an action plan involves many discrete tasks, at the core the leader must build an organization that can carry out the strategy. The leader builds both an organizational culture and an organizational capability for executing strategy. xxv. The Southwest Spirit is a positive, fun-loving, can-do approach to the job of flying passengers to their destinations. The company promotes two core values: LUV (love) and fun. LUV, the companys ticker symbol, has to do with treating employees and customers with courtesy, caring, and respect. Former CEO Herb Kelleher took a different tack than most company executives do by insisting that the employees come first, the customer second. He reasoned that by treating employees well, they would be happier in their jobs and would in turn treat customers well. xxvi. xxvii. However, it would be nave to think that Southwest Airlines is successful solely because of a good company culture. Kelleher and his management team drove the company hard to squeeze cost out of every activity, from ticketing through baggage handling, and achieved distinctive capabilities that rivals have not been able to imitate. The Southwest Spirit undergirds this competitive capability with a company culture that, taken together, has made the airline consistently profitable. xxviii. Concepts that provide a simple framework for the leader who would implement good strategy are: (1) embed strategy in the organizations culture while focusing the organization on a few key strategic capabilities; (2) build a good team, and (3) remember that any strategy is temporary at best, so watch the environment and make adjustments in the organization as needed. xxix. Evaluating Performance

xxx.

How does the firm keep its strategy fresh? By keeping both the organization and its leadership agile. Gary Hamel and Liisa Vlikangas coined the term strategic resilience to describe the firms ability to continuously anticipate and adjust to trends that can permanently impair the earning power of the company. The goal is a resilient organization that is constantly making its future rather than defending its past.

xxxi. In the face of rapid change, the firm must conquer denial, nostalgia, and arrogance by cultivating good habits, such as visiting the places where change is taking place and getting to the real ideas and opinions of those who make change. The leader recognizes that even the best strategy decays with time and has to be renewed or altogether reinvented. Competitors, market forces, and technology changes cause such decay. Astute leaders must keep their eyes open in order to accurately and honestly appraise strategy decay as it occurs. xxxii. At the same time, the leader must see that there is an adequate supply of options that can be cultivated into full-fledged strategies to replace the decaying ones. These may start out as small stakes bets; the most promising ones are then selected and funded to full development. The more strategy options that are created in this fashion, the more resilient the firm will be in the face of change. The agile leader must nurture this process of renewal that replaces decay. xxxiii. xxxiv. Qualities required for strategic leadership xxxv. Loyalty: xxxvi. Powerful and effective leaders demonstrate their loyalty to their vision by their words and actions xxxvii. Keeping them updated: xxxviii. Efficient and effective leaders keep themselves updated about what is

happening within their organization. They have various formal and informal sources of information in the organization. xxxix. Judicious use of power:

xl.

Strategic leaders makes a very wise use of their power. They must play the power game skillfully and try to develop consent for their ideas rather than forcing their ideas upon others. They must push their ideas gradually.

xli. xlii. xliii. xliv. Have wider perspective/outlook: Strategic leaders just dont have skills in their narrow specialty but they have a little knowledge about a lot of things. xlv. xlvi. Motivation: Strategic leaders must have a zeal for work that goes beyond money and power and also they should have an inclination to achieve goals with energy and determination. xlvii. Compassion: xlviii. Strategic leaders must understand the views and feelings of their subordinates, and make decisions after considering them. xlix. l. Self-control: Strategic leaders must have the potential to control distracting/disturbing moods and desires, i.e., they must think before acting. li. lii. liii. liv. Social skills: Strategic leaders must be friendly and social. Self-awareness: Strategic leaders must have the potential to understand their own moods and emotions, as well as their impact on others. lv. Readiness to delegate and authorize:

lvi.

Effective leaders are proficient at delegation. They are well aware of the fact that delegation will avoid overloading of responsibilities on the leaders. They also recognize the fact that authorizing the subordinates to make decisions will motivate them a lot.

lvii. lviii. lix. Articulacy: Strong leaders are articulate enough to communicate the vision (vision of where the organization should head) to the organizational members in terms that boost those members. lx. Constancy/ Reliability:

lxi.

Strategic leaders constantly convey their vision until it becomes a component of organizational culture.

Q. Explain the generic strategies of low cost leadership, differentiation & focus strategy.

Definition of Generic Strategy:-

Basic approaches to strategic planning that can be adopted by any firm in any market or industry to improve its competitive performance. Generic strategies are commonly used by businesses to achieve and maintain competitive advantage.

The three fundamental marketing strategies are differentiation strategy, focus strategy, and low cost strategy.

1. Cost Leadership Strategy:-

This strategy involves the firm winning market share by appealing to costconscious or price-sensitive customers. This is achieved by having the lowest prices in the target market segment, or at least the lowest price to value ratio. To succeed at offering the lowest price while still achieving profitability and a high return on investment, the firm must be able to operate at a lower cost than its rivals. There are three main ways to achieve this.

a. The first approach is achieving a high asset turnover:In service industries, this may mean for example a restaurant that turns tables around very quickly, or an airline that turns around flights very fast. In manufacturing, it will involve production of high volumes of output.

These approaches mean fixed costs are spread over a larger number of units of the product or service, resulting in a lower unit cost, i.e. the firm hopes to take advantage of economies of scale and experience curve effects.

b. The second dimension is achieving low direct and indirect operating costs:This is achieved by offering high volumes of standardized products, offering basic no-frills products and limiting customization and personalization of service. Production costs are kept low by using fewer components, using standard components, and limiting the number of models produced to ensure larger production runs. Maintaining this strategy requires a continuous search for cost reductions in all aspects of the business. This will include outsourcing, controlling production costs, increasing asset capacity utilization, and minimizing other costs including distribution, R&D and advertising.

c. The third dimension is control over the supply/procurement chain to ensure low costs:This could be achieved by bulk buying to enjoy quantity discounts, squeezing suppliers on price, instituting competitive bidding for contracts, working with vendors to keep inventories low using methods such as Justin-Time purchasing or Vendor-Managed Inventory.

A cost leadership strategy may have the disadvantage of lower customer loyalty, as price-sensitive customers will switch once a lower-priced substitute is available.

2. Differentiation Strategy:-

A differentiation strategy is appropriate where the target customer segment is not price-sensitive, the market is competitive or saturated, customers have very specific needs which are possibly under-served, and the firm has unique resources and capabilities which enable it to satisfy these needs in ways that are difficult to copy. These could include patents or other Intellectual Property (IP), unique technical expertise (e.g. Apple's design skills or Pixar's animation prowess), talented personnel (e.g. a sports team's star players or a brokerage firm's star traders), or innovative processes.

3. Focus Strategy:-

This strategy describes the scope over which the company should compete based on cost leadership or differentiation. The firm can choose to compete in the mass market with a broad scope, or in a defined, focused market segment with a narrow scope. In adopting a narrow focus, the company ideally focuses on a few target markets which is also called a segmentation strategy or niche strategy. A focused strategy should target market segments that are less vulnerable to substitutes or where a competition is weakest to earn aboveaverage return on investment. Examples of firm using a focus strategy include Southwest Airlines, which provides short-haul point-to-point flights in contrast to the hub-and-spoke model of mainstream carriers, and Family Dollar.

Que: Describe & Illustrate four types of Strategic control.

Ans: Control of strategy lies in the nature of steering of control. A strategy is formulated on the basis of several assumptions related to environmental and organizational factors, which are dynamic and eventful. There is a considerable gap between the time a strategy is formulated and when it is implemented. As time elapses between the initial implementation of a strategy and achievement of its intended results, numerous actions and resource allocation has taken place. As changes are taking place in both the external and internal environment of the firm, there is a possibility that the assumptions made while formulating strategy do not remain valid or, at least, are no longer so valid. Strategic controls are necessary to steer the firm through these events. They provide the basis to guide the firms strategic actions and give changes in direction for the firm in response to changes taking place. Strategic control involves tracking a strategy as it's being implemented. It's also concerned with detecting problems or changes in the strategy and making necessary adjustments. As a manager, you tend to ask yourself questions, such as whether the company is moving in the right direction, or whether your assumptions about major trends and changes in the company's environment are correct. Such questions necessitate the establishment of strategic controls. The four types of strategic controls are: 1. 2. 3. 4. Premise control Implementation control Strategic surveillance Special alert control

a) Premise control: As mentioned above, every strategy is based on certain planning premises assumptions about environmental and organizational factors. Some of these factors are highly significant and any change in them can affect the strategy to a large extent. Premise control is designed to systematically and continuously check whether the premises on which the strategy is based are still valid or not. This enables the strategists to take corrective action at the right time rather than continuing with a strategy based on invalid assumptions. b) Implementation control: Strategy implementation takes place as a series of steps, program and investments. Implementation control is aimed at evaluating whether these programs and investments are actually guiding the organization towards its predetermined objectives or not. If, at any time, it is felt that the commitment of resources would not benefit the organization as envisaged, they have to be revised. Implementation control is designed to assess whether the overall strategy needs to be changed in light of the current available results, due to

implementation carried out so far. Implementation control may be put into practice through identification and monitoring of strategic thrusts such as an assessment of the marketing success of a new product after pre-testing or checking the feasibility of a diversification program after initial attempts at seeking technological collaboration. Another method of implementation control is milestone reviews, through which critical points in strategy implementation are identified in terms of events, major resource allocation, or time. After identification of milestones, a comprehensive review of implementation is made to reassess its continued relevance to achievement of objectives. c) Strategic surveillance: The premise and implementation types of strategic controls are focused in nature. Strategic surveillance, on the other hand, is aimed at a more generalized control designed to monitor a broad range of events inside and outside the company that are likely to threaten the course of a firms strategy. Strategic surveillance can be carried out through a broad-based, general monitoring based on selected information sources to uncover events that are likely to affect the strategy of an organization. Strategic surveillance is carried out through a loose environmental scanning activity. According to Aaker, a formal yet simple strategic information scanning system can enhance the effectiveness of the scanning effort and preserve much of the information now lost within the organization. d) Special alert control: Special alert control is the through and quick analysis and reconsideration of a firms strategy due to an unexpected situation. This is a trigger mechanism for rapid response and immediate reassessment of strategy in the light of sudden and unexpected events. Special alert control can be exercised through the formulation of contingency strategies and assigning the responsibility of handling unforeseen events to crisis management teams. Examples of such events can be the sudden fall of a government at the central or state level, instant change in a competitors posture, an unfortunate industrial disaster or a natural catastrophe.

Q. 1) Describe

SWOT analysis as a way to guide internal analysis.

Answer SWOT analysis is technique through which managers create a quick overview of a companys strategic situation. A SWOT analysis will provide many of the inputs and outputs found in the basic strategic management process and serves as a logical framework for guiding internal analysis. The strengths and weaknesses the firm identifies through SWOT analysis is essentially the firm conducting an internal analysis. Correspondingly, opportunities and threats revealed through SWOT analysis enable the firm to assess the external environment. Leveraged holistically, information gained through SWOT analysis could be utilized by the firm to determine its most desirable options in matching its resources (strengths and weaknesses) with the external environment (opportunities and threats) and in formulating long- and short-term objectives, annual goals and grand strategies. And lastly, periodic SWOT analyses can be used by management as a means to monitor and assess how well current strategies may be working to support the firms mission and goals. SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats. Broadly speaking, Strengths and Weaknesses often relate to internal factors dealing with core competences and resources that are under your control. Opportunities and Threats are often external factors outside of your immediate control.

Strengths (Internal): What does the company do well? What are its assets? What advantages does the company have over its competitors? Weaknesses (Internal): Why is the company for sale? What is done badly? Why is it losing money? How might a change in ownership affect the staff? Opportunities (External): What has the competition missed?

What are the emerging needs of the customer? What should this company be doing better? Threats (External): Are the companys competitors getting stronger? Will a change in ownership be perceived negatively by vendors and customers? Does the company have cash to fund research and development? Will it be possible to retain key employees after the sale? SWOT Analysis is instrumental in strategy formulation and selection. It is a strong tool, but it involves a great subjective element. It is best when used as a guide, and not as a prescription. Successful businesses build on their strengths, correct their weakness and protect against internal weaknesses and external threats. They also keep a watch on their overall business environment and recognize and exploit new opportunities faster than its competitors. SWOT Analysis helps in strategic planning in following manner It is a source of information for strategic planning. Builds organizations strengths. Reverse its weaknesses. Maximize its response to opportunities. Overcome organizations threats. It helps in identifying core competencies of the firm. It helps in setting of objectives for strategic planning. It helps in knowing past, present and future so that by using past and current data, future plans can be chalked out.

MANAGER VS LEADER
Manager
A Manager is the person responsible for planning and directing the work of a group of individuals, monitoring their work, and taking corrective action when necessary. For many people, this is their first step into a management career. A manager may have the power to hire or fire employees or to promote them.The manager has the authority to change the work assignments of team members. The manager must be familiar with the work of all the groups he/she supervises, but does not need to be the best in any or all of the areas. It is more important for the manager to know how to manage the workers than to know how to do their work well.

Leader
Leadership is a process by which an executive can direct, guide and influence the behavior and work of others towards accomplishment of specific goals in a given situation. Leadership is the ability of a manager to induce the subordinates to work with confidence and zeal. Leadership is the potential to influence behaviour of others. It is also defined as the capacity to influence a group towards the realization of a goal. Leaders are required to develop future visions, and to motivate the organizational members to want to achieve the visions. According to Keith Davis, Leadership is the ability to persuade others to seek defined objectives enthusiastically. It is the human factor which binds a group together and motivates it towards goals.

Manager

Leader

A person becomes a manager by virtue of his position.

A person becomes a leader on basis of his personal qualities.

Manager has got formal rights in an organization because of his status.

Rights are not available to a leader.

The subordinates are the followers of managers.

The group of employees whom the leaders leads are his followers.

A manager performs all five functions of management.

Leader influences people to work willingly for group objectives.

A manager is very essential to a concern.

A leader is required to create cordial relation between person working in and for organization.

It is more stable.

Leadership is temporary.

All managers are leaders.

All leaders are not managers.

Manager is accountable for self and subordinates behaviour and performance.

Leaders have no well defined accountability.

A managers concern is organizational goals.

A leaders concern is group goals and members satisfaction.

People follow manager by virtue of job description.

People follow them on voluntary basis.

A manager can continue in office till he performs his duties satisfactorily in congruence with organizational goals.

A leader can maintain his position only through day to day wishes of followers.

Manager has command over allocation and distribution of sanctions.

A leader has command over different sanctions and related task records. These sanctions are essentially of informal nature.

Tata Power to buy AES Corporation's Gujarat wind farm Tata Power inks Share Purchase Agreement to acquire 39.2 MW wind farm in Gujarat
The usage of coal and demand for coalespecially from countries like India, Chinais going up every year, due to which there is a constant rise in the prices of coal. This Deal will help TATA power to reduce carbon footprint and help in producing power through clean resources. Tata power is committed to generating 20 to 25 per cent of its total generation capacity from clean energy sources. Coastal Gujarat Power Limited CGPL, the Companys wholly owned subsidiary, has implemented andcommissioned the 4,000 MW (5 x 800 MW) Ultra Mega Power Plant (UMPP) atMundra in Gujarat. POWER PURCHASE AGREEMENT (PPA) Under the existing PPA, CGPL is able to recover partial cost of fuelthrough its tariff. International coal prices have gone upsignificantly during the last five years accentuated by the changes inIndonesian coal price regulations. This has led to significantfinancial burden for CGPL including impairment provisioning against itsassets. Your Company is of the view that this is an industry-wide issueand not specific to Mundra UMPP alone and needs urgent resolution. Due to changes in Indonesian regulation, the Company is exposed to under-recovery of coal costs The Company and some of the project lenders have received certain complaints with regard to social and environmental compliances from organisations claiming to represent sections of the local communities. The Company has clarified to the national and international institutions that it is proactive in its association with the communities around the project area and has ensured compliance to all requirements. Since much of these concerns arise out of inadequate understanding of power plant operations, a website explaining the practices, the societal and environmental safeguards being implemented, has been created to foster better understanding. (www.tatapower.com/cgpl-mundra/myths-realities.aspx).

CARE FOR OUR PEOPLE - SAFETY The company has declared Safety as a core value and consequentlyemphasized its intent for maintaining a healthy and safe environment inand around its operating facilities as well as at project sites throughits Organizational Health & Safety policies/guidelines. CARE FOR OUR ENVIRONMENT

For Tata Power, "Care for the Environment" implies targeting outcomesin the following areas:

- Compliance at all times to relevant Environment relatedNational/Local standards/Regulatory requirements. - Commitments have 20-25% of its portfolio from non-Greenhouse Gas(non-GHG) sources. - Reducing Water consumption; promoting re-use and ensuring necessaryquality of discharge water from its power plants. - Minimizing waste generated; promoting reuse and recycling of wasteproducts (e.g. fly ash, etc.). - Minimizing emissions like SOx, NOx, Fugitive Dust, Particulatematter, etc. - Minimizing Soil contamination atarea of operations. - Preserving the Bio-diversity around our plants. - Increasing the green cover in the vicinity of its operations. The Company has a comprehensive strategy to address the above andperiodically reviews the same to drive improvements.

Despite Companys effort to ensure holistic development of the community around the project, it has often been targeted with baseless allegations of violation of social and environmental norms. So this deal will bring in twin benefits for TATA 1. Reduce the dependence on coal, which creates cost recovery pressure. 2. More production of power from Green Sources of energy, which proves the allegations of the people wrong by indicating that the company cares about environmental factors too.