Question 1

Definition (Any 5 from stated below)

1. Sustainability
Refers to the use of business practices to manage the triple bottom line
The triple bottom line involves:
1. The management of traditional profit/ loss.
(Responsibility for the shareholders)
2. The management of the company’s social responsibility.
(Responsibility for the employees, customers, community in which it operates).
3. The management of its environmental responsibility.
(Responsibility to treat the environment well).
Example: Apple making high quality material that is safer for people and earth apart from
their profitability.

2. Agency Theory
Agency theory states that problems arise in corporations because the agents (top
management) are not willing to bear responsibility for their decisions unless they own a
substantial amount of stock in the corporation.
Example: Enron the company’s stock management was selling their stock at higher price
due to false accounting report since the stock doesn’t belong to top management.

3. Retrenchment strategy
When an organization aims at reducing its one or more business operations with the view to
cut expenses and reach to a more stable financial position.
Example: MAS retrenched due to financial crisis, 3600 MAS staff that was laid off 2 years
ago.

4. Competitive intelligence
Formal program of gathering information such as process of observing, collecting and
analyzing relevant information about the external business environment of the company’s
competitors’ customer, product, market and others relevant elements.
Example: Everyday airline companies are changing their ticket prices based on external
information such competitors increase the price certain route they will decrease the price.
5. Reengineering strategy
Systematic starting over and reinventing the way a firm, or a business process, gets its work
done to achieve cost, service, time.
Example: Google redesign its hiring process has became one of the most effect companies
in the world at judging the right people to hire.

6. Benchmarking
The continual process of measuring products, services and practices against the toughest
competitors or those companies recognized as industry leaders.
Example: Sports Direct a retail company in sports goods retailing will be benchmark again
Amazon. Com as world’s largest online retailer.

7. Core-competence
A collection of competencies that cross divisional boundaries is wide-spread throughout the
corporation and is something the corporation does exceedingly well.
Example: Apple has outstanding design that other competitors do not have.

8. Organizational structure
A system that outlines how certain activities are directed in order to achieve the goals of
an organization. These activities can include rules, roles and responsibilities.
The organizational structure also determines how information flows from level to level within
the company.
Example: Goggle is a successful company because of the organizational structure is not
conventional because its emphasis on flatness.

9. Competitive advantage
A superiority gained by an organization when it can provide the same value/product as its
competitors but at a lower price, or can charge higher prices by providing greater value
through differentiation.
Example: Wal-mart implements low pricing strategy that becomes a strong source of
competitive advantage.
Question 2
Value Chain Analysis

Typical Value chain

 A value chain is a high-level model developed by Michael Porter used to describe the
process by which businesses receive raw materials, add value to the raw materials
through various processes to create a finished product, and then sell the finished
product to customers.
 represents the internal activities a firm engages in when transforming inputs into
outputs.
 a linked set of value-creating activities that begin with basic raw materials coming
from suppliers moving on to a series of value-added activities involved in producing
and marketing a product or service, and ending with distributors getting the final
goods into the hands of the ultimate consumer.
 Companies conduct value-chain analysis by looking at every production step
required to create a product and identifying ways to increase the efficiency of the
chain. The overall goal is to deliver maximum value for the least possible total cost
and create a competitive advantage.

Value Chain Analysis

 is a process where a firm identifies its primary and support activities that add value to
its final product and then analyze these activities to reduce costs or increase
differentiation.
 Value chain analysis is a strategy tool used to analyze internal firm activities. Its goal
is to recognize, which activities are the most valuable (i.e. are the source of cost or
differentiation advantage) to the firm and which ones could be improved to
provide competitive advantage.
 In other words, by looking into internal activities, the analysis reveals where a firm’s
competitive advantages or disadvantages are.
 M. Porter introduced the generic value chain model in 1985. Value chain represents
all the internal activities a firm engages in to produce goods and services.
 Value chain is formed of primary activities that add value to the final product directly
and support activities that add value indirectly.
 Although, primary activities add value directly to the production process, they are not
necessarily more important than support activities.
 Nowadays, competitive advantage mainly derives from technological improvements
or innovations in business models or processes.
 Therefore, such support activities as ‘information systems’, ‘R&D’ or ‘general
management’ are usually the most important source of differentiation advantage.
Corporate Value Chain Analysis

Primary Activities

Primary activities are directly concerned with creating and delivering a product. They can
be grouped into five main areas: inbound logistics, operations, outbound logistics,
marketing and sales, and service. Each of these primary activities is linked to support
activities which help to improve their effectiveness or efficiency; and According to Porter
(1985), the primary activities are:
1. Inbound logistics
 Refers to goods being obtained from the organisation's suppliers and to be used for
producing the end product.
2. Operations
 Raw materials and goods are manufactured into the final product. Value is added to
the product at this stage as it moves through the production line.
3. Outbound logistics
 Once the products have been manufactured they are ready to be distributed to
distribution centres, wholesalers, retailers or customers. Distribution of finished
goods is known as outbound logistics.
4. Marketing and Sales
  Marketing must make sure that the product is targeted towards the correct
customer group. The marketing mix is used to establish an effective strategy, any
competitive advantage is clearly communicated to the target group through the
promotional mix.
5. Services
 After the product/service has been sold what support services does the
organisation offer customers? This may come in the form of after sales training,
guarantees and warranties.

Supporting Activities

Support activities facilitate the efficiency of the primary activities in a value chain. The four
support activities are procurement, technological development, human resource (HR)
management, and company infrastructure. Increasing the efficiency of any of the four
support activities increases the benefit to at least one of the five primary activities. These
support activities are normally denoted as overhead costs on a company's income
statement.
Question 2

Corporate Strategies

Integration Strategy

 It is done where the company attempts to widen the scope of its business definition in
such a manner that it results in serving the same set of customers. The alternative
technology of the business undergoes a change.
 It is combing activities related to the present activity of a firm. Such a combination
may be done through value chain. A value chain is a set of interrelated activity
performed by an organization right from the procurement of basic raw materials down
to the marketing of finished products to the ultimate customers.
1) Vertical Integration •
 When pursuing a vertical integration strategy, a firm gets involved in new
portions of the value chain. This approach can be very attractive when a
firm’s suppliers or buyers have too much power over the firm and are
becoming increasingly profitable at the firm’s expense.
 Examples - Oil companies like ConocoPhillips can be involved in all stages of
the value chain, including crude oil exploration, drilling for oil, shipping oil to
refineries, refining crude oil into products such as gasoline, distributing fuel to
gas stations, and operating gas stations.
2) Forward Integration
 When pursuing a vertical integration strategy, a firm gets involved in new
portions of the value chain. This approach can be very attractive when a
firm’s suppliers or buyers have too much power over the firm and are
becoming increasingly profitable at the firm’s expense.
 Examples - Disney has pursued forward vertical integration by operating more
than three hundred retail stores that sell merchandise based on Disney’s
characters and movies. This allows Disney to capture profits that would
otherwise be enjoyed by another store.
3) Backward Integration
 When pursuing a vertical integration strategy, a firm gets involved in new
portions of the value chain. This approach can be very attractive when a
firm’s suppliers or buyers have too much power over the firm and are
becoming increasingly profitable at the firm’s expense.
  Examples - Ford Motor Company created subsidiaries that provided key
inputs to vehicles such as rubber, glass, and metal. This approach ensured
that Ford would not be hurt by suppliers holding out for higher prices or
providing materials of inferior quality.
4) Horizontal Integration
 It is a type of integration strategies pursued by a company in order to
strengthen its position in the industry. A corporate that implements this type of
strategy usually mergers or acquires another company that is in the same
production stage.
 Example - One example of horizontal integration is what happened between
the infamous Daimler Benz and Chrysler merger (car developing,
manufacturing and retailing).

Diversification Strategy

 A diversification strategy is the strategy that an organization adopts for the

development of its business.
 This strategy involves widening the scope of the organization across different
products and market sectors. The strategy is to enter into a new market or industry
which the organization is not currently in, whilst also creating a new product for the
new market.
 Diversification strategy is a form of growth strategy which helps the organizational
business to grow. It opens up new possibilities for the organization.
 By adopting this strategy, the organization not only diversifies its products offerings in
the target markets but also expands its business horizons. The strategy helps the
organization to increase sales volume and revenues while keeping costs to minimum.

1) Concentric Diversification Strategy

 The introduction of new but related products in the new markets is considered
as concentric diversification strategy.
 For example, the AT&T Company in America is involved in the application of
concentric diversification strategy by adding cable lines for fast internet
services across the country.
 The previous product of the company was telephone line but it spends $120
billion for the acquisition of cable television. In this way the AT&T jointly works
 with America Online (AOL) to provide cable internet access to the AOL
customers.

2) Conglomerate Diversification Strategy

 Diversification strategies include conglomerate diversification in which new
products are added in the pool of the business organization that are not
related to the existing ones.
 There are certain organizations that are involved in the conglomerate
diversification on the basis of expectation that they can earn profit by
acquiring other firm and breaking & selling its parts in a piecemeal.

3) Horizontal Diversification Strategy

 Horizontal diversification occurs when new & unrelated products are provided
to the existing customers.
 Horizontal diversification strategy is less risky than conglomerate
diversification because of the fact that the current customers of the
organization are already exposed.

Strategic Alliances

 A strategic alliance is an arrangement between two companies that have decided to

share resources to undertake a specific, mutually beneficial project.
 A strategic alliance is less involved and less binding than a joint venture, in which two
companies typically pool resources to create a separate business entity. In a
strategic alliance, each company maintains its autonomy while gaining a new
opportunity.
 Example - In June 2011,Twitter announced the formation of a strategic alliance with
Yahoo! Japan. The alliance involves relevant Tweets appearing within various
functions offered by Yahoo! Japan.
Question 3

3) Strategic Implementation

1. What involves the strategy implementation? / How would you develop

programme, budget and procedures to implement strategic change?
 allocation of sufficient resources (financial, personnel, time, technology
support),
 establishing a chain of command or some alternative structure,
 assigning responsibility of specific tasks or processes to specific individuals
groups,
 procedure / it also involves managing the process (monitoring results,
comparing to benchmarks and best practices, evaluating the efficacy and
efficiency of the process, controlling for variances, making adjustments to the
process as necessary),
 implementing specific programs, meaning acquiring the requisite resources,
developing the process, training, process testing, documentation and
integration with legacy process.

2. State THREE (3) elements in strategy implementation process and give ( 1 )
example for each elements.

Programs:

Is collection of tactics where the tactic is the individual action (any single effort) taken by the
organization as effort to accomplish for the plan and programs make strategies action-
oriented.
Example: Xerox Corporation undertook turnaround strategy. It needed to reduce its costs
and expenses. They introduce a program called (lean six sigma) this program was
developed to identify and improve a poorly performing process. The company trained their
top executives then their staff.

Budget:
It is the costs in detail of the programs and tactics after these programs and tactics
developed (made) and bbudget provides the last real check on the feasibility of the strategy.
Example: Estimates the budget to execute the program and the budget must be relevant
with program.
Procedure:
After the programs and budgets are approved. Procedures must be developed, often called
Standard Operation Procedures (SOP). It is (organizational routines)- detail about the
various activities that must be carried out to complete a corporation’s programs. Procedures
must to be update to reflect any change in the technology as well as strategy.
Example: Company follows differentiation competitive strategy manages its sale force more
closely than firm follows law-cost strategy. Because differentiation requires long term
customer relationships create out of interaction with the sales force. The firm needs to
change to meet the customer's needs, so need to update their procedures.

2. What means strategy implementation and execution?

 Strategy implementation and execution means putting the strategy into place and
getting individuals and organizational subunits to go all out in executing their tasks in
the next step. The leadership’s challenge is to so stimulate the enthusiasm, pride and
commitment of managers and employees in order to carry out the chosen strategy
and to achieve the targeted results.

3. Why is strategic control important in monitoring the process of strategy

implementation?

 Strategic control is very important in the strategy implementation process. Strategic

control requires careful monitoring and evaluation of the strategy management
process as a whole to ensure that it is functioning to meet organizational objectives.
Strategic control focuses on the activities involved in external and internal analysis,
setting or mission statement, strategy formulation, and strategy implementation.
Strategic control can ensure that all steps of the strategy management process are
appropriate, effective and functioning properly.
Question 4

4) Strategy Evaluation

Types of Control

1. Output controls specify what is to be accomplished by focusing on the end result

(sales, profit and customer satisfaction)

- What is to be accomplished by focus on end result through performance targets and

objectives.

- When output is clear but the relation between activity and result is not clear.

Example: Production targets, sales quotas, specific cost reduction, or target profit

Companies uses conglomerate diversification use output control because the managed
independently.

2. Behavior controls (Process control) how something is done through policies,

procedures, rules, standard operating procedures and orders from supervisors.

- Control the process, like following company procedures.

Example: ISO standard (the company supervisor will set up the guidelines, procedures to
control the direction and behavior to make sure the process and the performance of the
company in well order condition)

3. Input controls (the material we use to making the product, the people that we
appoint as labor to make product and everyone that going to involve in the process)

- Emphasize resources: skills, abilities, values, motives.

Example: company send employee to training in order to improve their skills.

Question 5

Case study

Michel 5 Porter

PEST

SWOT and TOWS

Recommendation