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Assignment

Subject Code: MB0052


Roll no- 1302006411
Q1. Describe the role of five major participants in the Strategic Management
Process (SMP) of a company.
A.
The five participants are:
a. Board of directors
b. Chief Executive Officer (CEO)
c. Corporate planning staff
d. Other managers
e. Consultants
Role of Board of Directors:
The board of directors is the highest level body in any organizational hierarchy. The board is
the final authority in managing the affairs of a company, strategic or non-strategic. They
perform these functions according to or subject to the memorandum of association and
articles of association of the company.
The role of a board member depends on his (her) degree of involvement in the strategic
process; and the degree of involvement of a member depends partly on the management
philosophy of a company and partly on the interest a particular board member takes in the
affairs of the company.
Role of Chief Executive:
The chief executive plays the most important role in the strategic management process of a
company. Major management functions of a chief executive can be broadly divided into two
categories; strategic and non-strategic. Every chief executive should clearly distinguish
between his/her strategic functions and non-strategic or operational functions so that he can
appropriately allocate his time and concentrate more on strategic functions.
Role of Corporate Planning Staff:
Chief executive essentially needs to have the support of his corporate planning staff. With
increasing volatility of the competitive environment, the strategic planning and
management process is becoming more complex. Also, with the introduction of new tools,
techniques and planning models, the planning system is also becoming more technical and
specialized. Therefore, almost all large companies and multinationals have created a
separate corporate planning division or unit.
Role of Senior Managers:
Managers, particularly the senior managers also play an important role apart from the
corporate planning staff in the strategic management process of a company. The senior
managers include SBU heads and also functional heads. Some of these heads are at the
level of directors who are represented on the board.
Role of Consultants:
Management Consultants render services in different functional areas of management
including the strategic planning and management process. In companies with no separate
planning division or unit, consultants can fill that gap. They can undertake planning and
strategy exercises as and when the company management feels the need for such exercises

or consultancies. Even in companies with a corporate planning division/unit, consultants may


provide specialized inputs or insights into identified management or strategy areas.

Q2. Differentiate between mission and vision of a company? Explain with


examples.
A.
Mission and Vision:
Many a times, mission and vision of a company are used synonymously or interchangeably
which is not correct. There is a marked distinction between the two. Mission is concerned
more with the present; the vision, more with the future. The mission statement answers the
question: What is our business? The vision statement answers the question: What do we
want to become or, which way should we be going? The mission statement focuses on the
present strategic thrust, while the vision statement outlines the strategic path. All visionary
companies have a vision statement.
Progressive companies develop both a mission statement and a vision statement. Indian Oil
Corporation (IOC) is a good example. Vision and mission statements of IOC are:
Vision: Indian Oil aims to achieve international standards of excellence in all aspects of
energy and diversified business with focus on customer delight through quality products and
services.
Mission: Maintaining national leadership in oil refining, marketing and pipeline
transportation.
Vision and mission statements are usually printed in the beginning of annual reports of
companies. These statements are also seen in the corporate or long-term strategic plans of
companies. These also appear in many company reports or documents like customer service
agreements, loan requests, labour relations contracts, etc. Many companies also display
them at prominent points or locations in company premises.
Mission Statements of Some Companies:
Mission statement of each company varies. Following are the examples, mission statements
of two Indian companies - Tata Steel and Hero Honda Motors - and, two US companies Pepsico and Dell computer. All these companies are in different kinds of business.
Tata Iron and Steel Company (TISCO):
The fundamental mission of TISCO (Tata Iron and Steel Company Limited; now Tata Steel) is
to strengthen Indias industrial base through increased productivity, effective utilization of
manpower and material resources, and continued application of modern scientific
managerial methods as well as through systematic growth in keeping with the national
aspirations.
Hero Honda Motors:
It is our mission to strive for synergy between technology, systems and human resources to
produce products and services that meet the quality, performance and price aspirations of
our customers. While doing so, we maintain the highest standards of ethics and societal
responsibilities. This mission is what drives us to new heights in excellence and helps us to
forge a unique and mutually beneficial relationship with all our stakeholders. We are
committed to moving ahead resolutely on this path.
Q3. Explain in detail Porters four generic strategies.

A.
Porter (1985) evolved the theory that there are four generic strategic options
available to companies. These are: a) Cost leadership
b) Focused cost leadership
c) Differentiation
d) Focused differentiation
Porters theory is based on the concepts of niche marketing and mass marketing and
product proposition to be offered by different companies. Two dimensions of the strategy
analysis are market coverage and basis of product performance.
Cost leadership strategy is based on exploiting some aspects of the production
process, which can be executed at a cost significantly lower than that of competitors. There
can be various sources of this cost advantage:
i. lower input costs, (e.g., the price paid by New Zealand timber mills for the logs
produced by the countrys highly efficient forestry industry or cheap source of high quality
bauxite for National Aluminium Company (NALCO) in India from its mines);
ii. In-plant production costs, (e.g., lower labour costs enjoyed by Japanese companies
locating their video assembly operations in Thailand);
iii. Lower delivery cost because of proximity of key markets, (e.g., the practice of
major beer producers in Europe to locate micro-breweries in or around major metropolitan
cities).
Focused cost leadership exploits the same advantages as in cost leadership strategy,
but the company occupies a specific niche or niches serving only a part of the total market.
For example horticulture enterprise, which operates an onsite farm shop, offers low-priced
fresh vegetables to the inhabitants in the immediate neighborhood area.
Porter has mentioned that cost leadership and focused cost leadership represent a
low scale advantage because it is quite likely that eventually a companys capabilities will
be eroded by rising costs (labour cost in particular) or its market position will be challenged
by an even lower cost producer of goods, (e.g., Russias post-Perestroika entry in the world
arms market offering extremely competitive prices).
Differentiation strategy is based on offering superior performance, and Porter argues
that this is a high scale advantage because, first, the producer can usually command a
premium price for its product and, second, competitors are less of a threat, because to be
successful, they must be able to offer an even higher performance product.
Focused differentiation, which is typically a strategy of smaller and most specialist
companies, is also based on superior performance. The only difference is that in this
strategy, a company specializes in serving the needs of a specific market or markets. For,
e.g., the Cray Corporation supplies super computers to the aerospace and defence
industries.
Q4. Differentiate between core competence and distinctive competence.
A.
Core Competence:
Core competence gives a company its competitive advantage by enabling it to deliver
value to its customers. Changing core competence requires key skills and abilities in a new
job or field of operations.
Core competence of a company is one of its special or unique internal competences. Core
competence is not just a single strength or skill or capability of a company; it is interwoven
resources, technology and skill or synergy culminating into a special or core competence.
Core competence gives a company a clear competitive advantage over its competitors.
Example: Xeroxs core competence is in photocopying; Canons core competence lies in
optics, imaging and laser control; Hondas core competence is in engines (for cars and
motorcycles)
To achieve core competence, a particular competence level of a company should satisfy
three criteria:

a) It should relate to an activity or process that inherently underlies the value in the
product or service as perceived by the customer.
b) It should lead to a level of performance in a product or process which is
significantly better than those of competitors. Benchmarking is a good way and is generally
recommended for undertaking performance standard.
c) It should be robust, i.e., difficult for competitors to imitate.
Distinctive Competencies:
Distinctive competence is based on the assumption that there are different alternative
ways to secure competitive advantage and not only special technical and production
expertise as emphasized by core competence.
Distinctive competence includes core competence as one of the alternatives.
The focus in distinctive competence is on exploiting a market opportunity. And, depending
on the market or competitive situation, one or some of the alternative competences may
work
Example: Product or process superiority (core competence), product differentiation
(situational or adaptability), cost effectiveness or cost efficiency to support a price strategy,
special capability in marketing or distribution, etc. Under given circumstances, one of these,
or a combination of some of these, will produce a distinctive competence which would be
appropriate or best suited to exploit the opportunity and produce desired results.
Q5. Define the term industry. List the types of industries. How do you conduct
an industry analysis?
A.
An industry can be broadly defined as the group of firms producing products that are
close substitutes for each other. There is, however, a great deal of controversy over an
appropriate definition of industry. The debate or controversy mostly centers around how
close substitutability needs to be in terms of product, process or geographic market
boundaries. For example, if we take computers, desktop computers may be an industry;
similarly laptop computers may be another industry. But, because there is a good deal of
substitutability between desktop and laptop computers, an appropriate industry definition
may be personal computer which includes both.
Industries can be of various typeseach major product group constitutes an industry
(subject to the definition above). Industries can also be classified in terms of size of the
constituent units or companies, state or pace of development of the industry, spread of the
market, etc. These are important ways of looking at the structure of an industry. Based on
such factors, various industries can be broadly classified into five categories according to
Porter:
a. Fragmented industry
b. Emerging industry
c. Mature industry
d. Declining industry
e. Global industry
Understanding industry structure and formulating competitive strategies imply
industry analysis. But, conducting a proper industry analysis is a very big task. To conduct
such an analysis, the industry analyst has to find answers to many important questions:
What should be the starting point?
Which types of data one looks for?
Should one look for only published or secondary data?
Or, should one also generate primary data from industry observers (participants)?
What are the analytical techniques to be used for data processing and analysis?
Answers to these questions would make possible an appropriate industry analysis.
This is about complete or comprehensive industry analysis. If, however, one is interested in
a particular aspect of an industry, say, only industry growth, one can also conduct a partial
industry analysis with respect to the particular object. In that case, data requirements would
be less, and data processing and analysis also would be much easier.

Industry analysis should follow a number of logical or strategic steps. These are
shown below:
Step 1 : Determine or specify the objective or objectives so that there is no lack of
focus.
Step 2 : Collect and scan through available published or secondary data.
Step 3 : Identify data or information gaps for generation of primary data.
Step 4 : Generate primary data (through survey, interviews, meetings, etc.,) to fill the
data information gap.
Step 5 : Process/tabulate various data as mentioned below
Data Categories
Compilation
Product lines
By company
Buyers and their behaviour
By year
Complementary products
By functional area
Substitute products
Growth
Rate
Pattern (seasonal, cyclical)
Determinants
Technology of production and distribution
Cost structure
Economies of scale
Value added
Logistics
Labour
Marketing and Selling
Market segmentation
Marketing practices
Suppliers
Distribution channels (if indirect)
Innovation
Types
Sources
Rate
Economies of scale
Step 6 : Prepare a general overview of the industry using the processed/ tabulated
data/information.
Step 7 : Prepare specific sectoral analysistechnology, product, marketing pattern,
competition analysis.
Step 8 : Draw inferences or conclusions to complete the analysis.
Q6. What is meant by structure of an organisation? Describe the five major
structural types or forms of an organisation.
A.
Structure of an organization defines the levels and roles of management in a
hierarchical way. One can also say that an organizational structure spells out the way tasks,
functions and responsibilities are allocated for implementing a policy or strategy.
Major structural types or forms are mentioned below:
a. Entrepreneurial Structure
b. Functional Structure
c. Divisional Structure
d. SBU Structure
e. Matrix Structure
f. Project-based Structure
a) Entrepreneurial Structure:

This is the most elementary form of structure. The entrepreneurial structure


represents an organization which is owned and managed by a single individual the
entrepreneur. Some call it a simple structure and contend that this is no formal structure at
all. Organizations with such structures are typically single business product or service
companies which cater to local or regional markets. This is the way most small businesses
operate. The owner-entrepreneur assumes/discharges most of the responsibilities of
management with some manager(s)/staff assisting him/her. The manager(s)/staff hardly
exercise any authority and there is no or very little division of management responsibilities.
b) Functional Structure:
As an organization increases in size with expansion of business, the simple
entrepreneurial system outlives its utility as a structural form. Need arises for functional
specialization and also delegation of powers for efficient functioning. This implies a
functional structure. A functional structure is based on differentiation and allocation of
primary functions such as production, marketing, finance, and HR along with certain
delegation of powers. Each of these functions is headed by a general manager or director
usually at board level. Other important functions or activities like public relations and legal
may be directly under the charge of CEO or MD. The functional structure is most commonly
used by medium and large organizations with narrow or limited product range.
c) Divisional Structure:
A divisional structuresome call it multidivisional structureconsists of separate
divisions constituted on the basis of products, services or geographical areas. Need for a
divisional structure arises primarily because of inadequacy of a simple functional structure
to deal with the complexities of business as an organization grows very large. The more
common form of divisionalization is on the basis of product or business. Divisionalization
gives focus on different divisions with separate product/market strategies. The divisional
structure, however, does not do away with the functional structure. Within divisions, the
functional allocations will still continue.
d) SBU Structure:
Divisions closely approximate strategic business units (SBUs) in all large multibusiness organizations. The fundamental factor in the SBU structure is to identify
independent product/market segment which requires distinct strategies. Each of these
product/market segments also face a different environment, and, therefore, more is the
need for separate strategies. In many companies, particularly in the public sector, the earlier
divisional structure has been replaced by an SBU structure to give more focus on individual
business and clearly define the role of corporate parents.
e) Matrix Structure:
A matrix structure is a need-based or project-based structure which does not follow
the conventional lines of hierarchy or control. We can call it a combination structure
combination of different divisions or functionsdesigned to form a project team for
launching a new product, development of a new market or geographical operations. In the
matrix structure, a project manager is appointed to coordinate and manage project
activities. Functional/specialist resources are drawn from different divisions/functional areas
to constitute the project team. The members of the team have dual responsibility and
authorityone is project responsibility and authority and the other their line responsibility
and authority in terms of hierarchy and command. Every matrix structure usually has a
defined duration, that is, the project period. After the completion of the project, the
managers go back to their respective divisions/functional areas. Matrix structures need not
be adopted only by very large complex organizations; these can be used by many
professional organizations, like construction companies, consultancy organizations, etc.
Multinational companies may use matrix structure for international trading of various
products. Here the products are projects.

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