QUESTION 1

a) Given the many challenges and opportunities in the industry, SBD must have good
strategic management to remain competitive. Briefly explain the four (4) key attributes of
strategic management.

First, strategic management is directed toward overall organizational goals and

objectives. Such efforts must be directed toward what is best for the organization as a
whole, instead of just a single functional area. SBD operations may decide to schedule
long production runs of similar products to lower unit costs.

Second, strategic management includes multiple stakeholders in decision making. Any

decision made by the company will have an impact on the stakeholders in the future.
The decision’s implementation will be successful if stakeholders' contribution is
considered. If managers of SBD only focus on generating profits for the owners,
employees may become alienated, customer service may suffer, and the suppliers may
resent demands for pricing concessions.

Third, strategic management requires incorporating both short term and long term
perspectives. Managers must maintain both a vision for the organization’s future and a
focus on its current operational needs. Therefore, SBD needs to consider decision
making that will have an impact not only in the short term period but also in the long term
period as to keep the company sustain in the industry.

Fourth, strategic management involves the recognition of trade offs between

effectiveness and efficiency. SBD must allocate and use resources wisely while also
directing their efforts toward the achievement of overall organizational goals.

b) Do you think a vision statement is an instrumental force for SBD to excel in business or
can SBD still excel without a vision statement? Support your answer with one (1) reason.

Yes, I think vision statements are an instrumental force for SBD to excel in business. In
relation, SBD managed to be successful for the last 20 years as the market leader in the
 book and magazine distributors industry in Malaysia because of its vision which is ‘to be
the nation's premium book and magazine distributor’.

Having a vision statement is part of the strategic planning process. The vision states
what the organization (SBD) aspires to become in the future and it helps SBD by serving
as a strategic plan for success in being the market leader. SBD needs a vision as a
guide for them when they encounter challenges and it helps motivate them to work
harder in their work. SBD vision statements define the core reason for the company’s
existence and as a guiding light that acts as an internal leadership force that keeps the
company focused on priorities best through stated goals and objectives of the company.

A good vision statement will evoke(s) powerful and compelling mental images of the
organization. It will also capture both the minds & hearts of employees. Without an
effective vision statement, everyone in the company will lose focus on their goal and
priorities.

c) Discuss in detail the possible favorable impact of the following segments of the general
environment on SBD's vision to be the nation's premier book and magazine distributor
through its new SBD.com initiative:

i. Technological Segment
New business segment which is the digital book innovation has created business
opportunities for SBD. Technological segment helps to bring customers as it helps to
make it easier for SBD to provide service to their customer by making the easiest way to
sell their book to the user. Technology is the perfect vehicle in which to package
valuable information and also easy to deliver. It also can create opportunities for SBD to
be the nation's premier book and magazine distributor by using technology
advancement.

ii. Sociocultural Segment

These segments influence customs, lifestyle and values that characterize a society. It is
important to consider by SBD in creating and implementing a marketing strategy. A new
 business segment which is digital book innovation will affect the decisions of consumers
since digital books have been the current trend of purchasing books. It will help SBD to
increase the numbers of buyers and result in increasing sales of the company.

d) Discuss three (3) entry barriers that may pose problems for SBD.com as a new entrant
to compete with eBook.com.

i. Product differentiation
As eBook has been in the business first, they have brand identification and customer
loyalties already, therefore it forces SBD to spend heavily such as make a massive
promotion for the new product to make it knowledgeable to the potential customers and
to overcome the loyalties they have to eBook. SBD may bring a different product to
market but its benefits must be clearly communicated to the target customer and they
must find an effective positioning in marketing resources that might go beyond their
budget.

ii. Access to distribution channels

SBD will face a hard time in finding a good distribution channel because of the limited
and small access to the distribution channel that is available for their new products, as
the channels have been locked up and taken by eBook first.

iii. Cost disadvantages independent of scale

SBD cannot replicate or use the same cost as eBook.com for their new product because
of the lack of experience and product technology as eBook already in the business first,
they might have many experiences and have done a lot of research for what technology
they should use to produce the books, where to access good raw materials and
favourable places to open the store. However SBD needs to gain more knowledge first
before they can compete with existing businesses such as eBook.
e) Do you think that SBD should continue with Encik Fahmin’s suggestion to change its
business strategy in order to remain as the market leader in the book and magazine
distribution industry in Malaysia.

Yes. SBD should follow Encik Fahmin's advice since we need to adapt to the latest and
customer preferences. As technology advances, it is preferable to change the business
strategy of SBD by publishing an ebook. This will not only attract more customers but will
also benefit against competitors. Since technology has become more advanced, SBD
should take this chance and continue to operate in accordance with the trend.
Customers who do not have time to buy physical books and prefer to buy online may
suffer if the company does not change its business strategy.
QUESTION 2

a) Do you think Azzam should have analyzed the external environment first before he
started Sejahtera Minda Buku? Support your answer with three (3) reasons.

Azzam should have analyzed the external environment first before he started Sejahtera
Minda Buku because:

1) He would be able to identify the general environment. General environment is the

factors external to the industry and usually beyond a firm’s control which includes the
demographic, sociocultural, political, technological, economic, and global segments. By
identifying the general environment, Azzam would be able to know the demographic of
the population and know how much of the population has a reading habit and what
language the population prefers.

2) He would be able to identify the threats that come when starting Sejahtera Minda
Buku. By doing a SWOT analysis, Azzam would be able to identify the threats when
entering a new market. The threat is the external factors that may cause damage to the
business. In this case, the threat would be that technological advancement has lowered
the reading habit among the population so that more people would rather surf the
internet instead. By having this knowledge, Azzam will take into consideration that
younger customers would not be interested in reading books.

3) He would be able to make a strategy when starting Sejahtera Minda Buku. By

having an understanding regarding the population, habits, weaknesses, and strength,
Azzam would be able to strategize when going into his new business. With a strategy,
Azzam can enter the market strongly and gain more profit. For example, by knowing the
population’s preference, Azzam can stock up on more Malay books than English, thus
increasing his sales considerably.

b) Explain the way demographic and sociocultural analysis can help Azzam in operating his
new business, Sejahtera Minda Buku.
 Demographic

Demographics are external factors of genetic and observable characteristics of a

population such as age, ethnicity, education, geographic region and income. These are
easily understandable & quantifiable. This factor is beyond the control of business
because it includes the society in making decisions. Therefore, demographic factors
can influence the buying power of customers and change the role of industry drastically.
In this case, The younger group who are IT-savvy prefers to watch television, play
computer games or just spend time surfing the internet. We can see that the Azzam
population starts to evolve by changing to online learning with more use of technology
than physical books.

For the solution, Azzam should change his business nature or change his business
product line such as providing printing services so that he can catch up with other
industries and also will survive in the future.

Sociocultural

Sociocultural forces influence the values, beliefs, and lifestyles of a society. This
external factor changes the mindset of customers in choosing products that are
provided by the industry. As in the case, the reading culture in the town is to read books
in Malay. So, if Azzam provides English books, he fails to tackle the market share even
though he has the best book price in the town.

Therefore, the solution he can do in order to increase his market share and sales for
his business is by selling the latest and best fiction and non-fiction book or magazine so
he can penetrate the as he has a good reputation on selling books with the best price in
the town.

c) Do you think it is wise of Azzam not to have vision and a mission for Sejahtera Minda
Buku since he is a sole proprietor and not a large company? Support your answer with
three reasons.
 No. Vision and mission is an important part in the business even for a sole proprietor to
become successful. The importance of having a vision is to set a goal to be achieved
and show the future of the business. By having a clear vision, it will keep the employees
motivated towards the business goals. Business will not run properly if there is no clear
vision or goals to be achieved. Vision is the fundamental of an organization's value and
mission statement provides what needs to be done to reach the expected vision.
Secondly, the purpose of organization is built based on the vision and mission. This will
create a mindset for the organization to be successful and achieve beyond the
competitor standard. Competitive spirit is created by having a great mindset to achieve
the goals. Lastly, it helps to properly manage the organization or business resources and
management. The mission needs to be properly managed to reach a certain efficiency
for the organization.

d) Discuss the impact of the threat of substitute products on the sales of Sejahtera Minda
Buku.

Substitute products & services limit the potential returns of an industry. The fact that
substitutes products come from another industry. It provides products that give the same
function and performance as the industry’s offerings. Also, the product comes to change
and improve the efficiency of the main product. Example of substitute product such as
coffee and tea, physical books and eBook

Therefore, substitutes give a massive impact for sales of Sejahtera Minda Buku by
placing a ceiling on prices that firms in an industry can profitably charge. In short it
forces industry to set a lower price to the main product in order for them to get
customers. If the main product is high priced, customers will go for a substitute product
that has a lower price. This indicates an increase in product to sales and lower in the
price where industries with lowest price and have best quality will gain more customers
and have a favourable sale.