Introduction to Strategic Management – Nov 23

C HAPTER 1

I NTRODUCTION TO S TRATEGIC M ANAGEMENT

Concept Problem 1

Health Wellnow is a Delhi based charitable organization promoting healthy lifestyle amongst the office-goers.
It organises free of cost programmes to encourage and guide office-goers on matters related to stress relief,
yoga, exercises, healthy diet, weight management, work-life balance and so on. Many business organizations
and resident welfare associations are taking services of Health Wellnow in Delhi and adjoining areas and
make financial contributions to its cause. The Health Wellnow is able to generate sufficient funds to meet its
routine expenses. How far strategic management is relevant for Health Wellnow? Discuss.
Answer

The concepts of strategic management are relevant for Health Wellnow. Organizations can be classified as
commercial and non-commercial on the basis of the interest they have. Health Wellnow falls in the category
of a non-commercial organization.
While non-commercial organizations may have objectives that are different from the commercial
organizations, they need to employ the strategic management tools to efficiently use their resources,
generate sufficient surpluses to meet daily expenses and achieve their objectives. In fact, many non-profit
and governmental organizations outperform private firms and corporations on innovativeness, motivation,
productivity, and human relations.
The strategic management in Health Wellnow needs to cover aspects such as:
i) Analyzing and interpreting the strategic intent in terms of vision, mission and objectives.
ii) Generate sufficient funds for meeting its objectives.
iii) Promote itself to cover more offices, resident welfare associations.

iv) Have a deep collaboration with health experts, including dieticians, psychologist, fitness trainers, yoga
experts.
v) Undertaking SWOT analysis from time to time.
vi) Efficiently reach office-goers and help them to have health in life.

Concept Problem 6

Kamal Sweets Corner, a very popular sweets shop in Ranchi, was facing tough competition from branded
stores of packaged sweets and imported goods. The owners realised that their business reduced by 50% in the
last six months, and this created a stressful business environment for them. To find a solution, they consulted
a business consultant in practice to help them develop a strategy to fight competition and sustain their
century old family business. The business consultant advised them to innovate a new snack for the public

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and market it as a traditional snack of the region. The owners liked the idea and developed a new snack
called Dahi Samosa, which very quickly became popular amongst the public and it helped regain the lost
business of Kamal Sweets Corner.
One of the very crucial importance of strategic management was used by the business consultant to help the
owners of Kamal Sweets Corner. Which one could it be? Also, was this strategy Reactive or Proactive?
According to you which is more beneficial in general parlance?
Answer

The strategy used here was of developing a competitive advantage via product which helped Kamal Sweets
Corner regain their lost business. This is also one the of major importance cum advantage of Strategic
Management, that is helps to develop core competencies and competitive advantages to overcome
competition.
This strategy was a Reactive Strategy. Wherein, the owners saw their business fall to 50% of revenue and
then seeking a strategic advisory. They did not plan proactively as to when the new shops were already
opening. They reacted only when the business started to lose up.
Generally, it is always beneficial to develop strategies proactively, so that the dip in businesses is small and
manageable, and even if they are huge, the management has ample time to fix it.
Concept Problem 16

Organizations sustain superior performance over a long period of time, inspite of the rapid, changes taking
place continually in its competitive environment if they implement strategic management successfully.
Discuss.
Answer

Business organizations function with dynamic environment, the environment may vary from being conducive
to hostile. Whatever be the conditions, implementation of strategic management is very important for the
survival and growth of business organizations. Strategy implementation helps in improving the competence
with which it is executed and helps organizations to sustain superior performance in following manner:
i) Strategic management helps organizations to be more proactive rather than reactive.
ii) It provides better guidance to entire organizations on the crucial point-what it is trying to do

iii) It facilitates to prepare the organizations to face the future

iv) Organizations are able to identify the available opportunities and identify ways and means as how to
reach them
v) It serves as a corporate defense mechanism against mistakes and pitfalls

vi) Over a period of time strategic management helps organization to evolve certain core competencies and
competitive advantages
Concept Problem 19

'ALBELA' Foods and 'JustBE' Foods are successfully competing chain of restaurants in India. ALBELA' s are
known for their innovative approach, which has resulted in good revenues. On the other hand, JustBE is slow
in responding to environmental change. The initial stages of Covid-19 pandemic and the ensuring strict
lockdown had an adverse impact on both the companies. Realizing its severity and future consequences
ALBELA Foods immediately chalked out its post lockdown strategies, which include initiatives like:
a) Contactless dinning

b) New category of foods in the menu for boosting immunity

c) Improving safety measures and hygiene standards

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d) Introducing online food delivery app

Seeing the positive buzz around these measures taken by ALBELA Food, JustBE Foods also thinks to introduce
these measures.
i) Identify the strategic approach taken by 'ALBELA' Foods and 'JustBE' Foods.
ii) Discuss these strategic· approach.

iii) Which strategic approach is better and why?

Answer

i) ‘ALBELA’ foods is proactive in its approach. On the other hand, ‘JustBE’ foods is reactive in its approach.
ii) Proactive strategy is planned strategy. While continuing with the previously initiated business approaches
that are working well, the newly launched managerial initiatives aim to strengthen the company's overall
position and performance. These are outcomes of management's analysis and strategic thinking about
the company's situation and its conclusions about the positioning of the company in the marketplace. If
done well, it helps the company to effectively compete for buyer patronage.
Reactive strategy is an adaptive reaction to changing circumstances. It is not always possible for a
company to fully anticipate or plan for changes in the market. There is also a need to adapt strategy as
new learnings emerge about which pieces of strategy are working well and which aren't. By itself also,
the management may hit upon new ideas for improving the current strategy.
iii) In reference to the given case, proactive strategy seems to be better because ALBELA foods had been
able to utilise available opportunities, reduce adverse impact, enhance the demand for product and is also
able to avail the first mover advantage.
Concept Problem 20

Discuss the challenges faced by public sector units while designing strategies for their organizations. [RTP
May/Nov 22]
Answer

Central, state, municipal agencies, Public Sector Units, departments are responsible for formulating,
implementing, and evaluating strategies that use taxpayers' money in the most cost-effective way to provide
services and programs. The Challenges faced by the public sector units while designing their organizations are
on account of basic nature of such organizations.
Public sector units face the following challenges while designing strategies for their organizations:

➢ Operating with less strategic autonomy.

➢ Cannot diversify into unrelated businesses or merge with other firms.

➢ Strategists usually enjoy little freedom while altering organization’s mission or objectives when needed.

➢ Legislators and politicians control over major decisions and resources.

➢ Fear of media debate over the strategic issues.

➢ Chances of politicization of issues resulting fewer strategic choice.

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C HAPTER 2

D YNAMICS OF C OMPETITIVE S TRATEGY

Concept Problem 1

Rohit Sodhi runs a charitable organization for promotion of sports in the country. His organization conducts
regular free training camps for youths interested in playing cricket, football, hockey, badminton and so on.
Many of his trainees have reached national level contests. Rohit noticed that with success of IPL (Cricket)
tournament there is an increasing trend to extend similar format in other sports as well. He wishes to know
how the development is going help sports and to which industries it will offer opportunities and threats.
Answer

With the success of IPL, league matches are taking place in other sports as well. These are held in a grandeur
manner between several teams. For example, league matches in magnificent manner now take place in
Football, Kabaddi and Hockey in India. These events are profit and entertainment driven. These are going to
help sports in India by generating interest in sports, making them more popular, increasing quality of
competition and bringing money into sports.
A number of entities and processes are involved in these events from various industries offering opportunities
and threats to them. An opportunity is a favourable condition in the organization’s environment which
enables it to strengthen its position. On the other hand, a threat is an unfavourable condition in the
organization’s environment which causes a risk for, or damage to, the organization’s position. An opportunity
is also a threat in case internal weaknesses do not allow organization to take their advantage in a manner
rivals can. It will offer opportunity and threats to the following:
Opportunities

▪ Stadia.

▪ Manufacturers of sports goods.

▪ Media Industry – Sports channels / television, advertisers.

▪ Hotel Industry linking events with their offerings.

Threats

▪ Entertainment industry engaged in TV serials, cinema theatres, Entertainment theme parks as

competitors will be fighting for the same viewers/target customers.

▪ Event Management organization engaged in non-sports events.

Concept Problem 6

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Atrix Ltd. is a company engaged in the designing, manufacturing, and marketing of mechanical instruments
like speed meters, oil pressure gauges, and so on. Their products are fitted into two and four wheelers. During
the last couple of years, the company has been observing a fall in the market share. This is on account of
shift to the new range of electronic instruments. The customers are switching away mechanical instruments
that have been the backbone of Atrix Ltd.
As a CEO of Atrix Ltd., what can be the strategic options available with you.
Answer

Atrix is having a product portfolio that is evidently in the decline stage. The product is being replaced with
the technologically superior product. Strategically the company should minimize their dependence on the
existing products and identify other avenues for the survival and growth. As a CEO of Atrix Ltd., following can
be the strategic options available with the CEO:
a) Invest in new product development and switchover to the new technology. Atrix Ltd. also need time to
invest in emerging new technology.
b) They can acquire or takeover a competitor provided they have or are able to generate enough financial
resources.
c) They may also consider unrelated growth and identify other areas for expansion. This will enable Atrix
Ltd. to spread their risks.
d) In longer run, they should divest the existing products. However, they may continue with the existing
products in a limited manner for such time there is demand for the product.
Concept Problem 15

An industry comprises of only two firms-Soorya Ltd. and Chandra Ltd. From the following information
relating to Soorya Ltd., prepare BCG Matrix:

Revenues Percent Profits Percent % % Industry Growth

Product
(in Rs.) Revenues (in Rs) profits Market share rate
A 6 crores 48 120 lakhs 48 80 + 15
B 4 crores 32 50 lakhs 20 40 + 10
C 2 crores 16 75 lakhs 30 60 - 20
D 50 Lakhs 4 5 lakhs 2 5 - 10
Total 12.5 crores 100 250 lakhs 100 100

Answer

Using the BCG approach, a company classifies its different businesses on a two-dimensional growth-share
matrix. In the matrix, the vertical axis represents market growth rate and provides a measure of market
attractiveness. The horizontal axis represents relative market share and serves as a measure of company
strength in the market. With the given data on market share and industry growth rate of Soorya Ltd, its four
products are placed in the BCG matrix as follows:

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Product A is in best position as it has a high relative market share and a high industry growth rate.
Product B has a low relative market share, yet competes in a high growth industry.
Product C has a high relative market share, but competes in an industry with negative growth rate. The
company should take advantage of its present position that may be difficult to sustain in long run.
Product D is in the worst position as it has a low relative market share, and competes in an industry with
negative growth rate.
Concept Problem 16

Aurobindo, the pharmaceutical company wants to grow its business. Draw Ansoff’s Product Market Growth
Matrix to advise them of the available options.
Or
Sky chemical industry intends to grow its business. Advise the company on the available options using
Ansoff’s product market growth matrix. [MTP May 22] [MTP Nov 22] [MTP May 23]
Answer

The Ansoff’s product market growth matrix (proposed by Igor Ansoff) is an useful tool that helps businesses
decide their product and market growth strategy. With the use of this matrix, a business can get a fair idea
about how its growth depends upon its markets in new or existing products in both new and existing markets.
The Ansoff’s product market growth matrix is as follows:

Based on the matrix, Aurobindo may segregate its different products. Being in pharmaceuticals, development
of new products is result of extensive research and involves huge costs. There are also social dimensions that

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may influence the decision of the company. It can adopt penetration, product development, market
development or diversification simultaneously for its different products.
Market penetration refers to a growth strategy where the business focuses on selling existing products into
existing markets. It is achieved by making more sales to present customers without changing products in any
major way.
Market development refers to a growth strategy where the business seeks to sell its existing products into
new markets. It is a strategy for company growth by identifying and developing new markets for the existing
products of the company.
Product development refers to a growth strategy where business aims to introduce new products into existing
markets. It is a strategy for company growth by offering modified or new products to current markets.
Diversification refers to a growth strategy where a business markets new product in new markets. It is a
strategy by starting up or acquiring businesses outside the company’s current products and markets.
As market conditions change overtime, a company may shift product-market growth strategies. For example,
when its present market is fully saturated a company may have no choice other than to pursue new market.
Concept Problem 17

In the context of Ansoff’s Product-Market Growth Matrix, identify with reasons, the type of growth strategies
followed in the following cases:
i) A leading producer of tooth paste, advises its customers to brush teeth twice a day to keep breath fresh.
ii) A business giant in hotel industry decides to enter into dairy business.
iii) One of India’s premier utility vehicles manufacturing company ventures to foray into foreign markets.
iv) A renowned auto manufacturing company launches ungeared scooters in the market.
Answer

The Ansoff’s product market growth matrix (proposed by Igor Ansoff) is an useful tool that helps businesses
decide their product and market growth strategy. This matrix further helps to analyse different strategic
directions. According to Ansoff there are four strategies that organization might follow.
i) Market Penetration: A leading producer of toothpaste, advises its customers to brush teeth twice a day to
keep breath fresh. It refers to a growth strategy where the business focuses on selling existing products
into existing markets.
ii) Diversification: A business giant in hotel industry decides to enter into dairy business. It refers to a
growth strategy where a business markets new product in new markets.
iii) Market Development: One of India’s premier utility vehicles manufacturing company ventures to foray
into foreign markets. It refers to a growth strategy where the business seeks to sell its existing products
into new markets.
iv) Product Development: A renowned auto manufacturing company launches ungeared scooters in the
market. It refers to a growth strategy where business aims to introduce new products into existing
markets.
Concept Problem 26

Distinguish between Market Development and Product Development under Ansoff’s Product Market Growth
Matrix. [RTP Nov 22] [MTP May 23]
Answer

Following are the differences between the market development and product development:

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Basis Market Development Product Development

Meaning It refers to a growth strategy where the It refers to a growth strategy where
business seeks to sell its existing products into business aims to introduce new products
new markets. It is a strategy for company into existing markets. It is a strategy for
growth by identifying and developing new company growth by offering modified or
markets for current company products. new products to current markets.
Strategy It may be achieved through new geographical It is for company’s growth and requires the
Application markets, new product dimensions or development of new competencies and the
packaging, new distribution channels or business to develop modified products
different pricing policies to attract different which can appeal to existing markets
customers or create new market segments

Concept Problem 29

ABC Ltd. manufactures and sells air purifier ‘Fresh Breath’. The ‘Fresh Breath’ has seen sales growth of
around 1% for the last two years, after strong growth in the previous five years. This is due to new products
entering the market in competition with the ‘Fresh Breath’. ABC Ltd. is therefore considering cutting its
prices to be in line with its major rivals with a hope to maintain the market share. Market research indicates
that this will now cause a significant increase in the level of sales, even though in previous years price cuts
have had little effect on demand. ABC ltd. is also planning to launch a promotional campaign to highlight the
benefits of the ‘Fresh Breath’ against its rival products.
Identify and explain the stage of the product life cycle in which ‘Fresh Breath’ falls.
Answer

Product Life Cycle is a useful concept for guiding strategic choice. PLC is an S-shaped curve which exhibits
the relationship of sales with respect of time for a product that passes through the four successive stages of
introduction (slow sales growth), growth (rapid market acceptance) maturity (slowdown in growth rate) and
decline (sharp downward drift).
The product ‘Fresh Breath’ of ABC Ltd. falls under Maturity stage of product life cycle. In this stage, the
competition gets tough and market gets stabilised. Profit comes down because of stiff competition. At this
stage, ABC Ltd. have to work for maintaining stability by cutting the prices to be in line with its major rivals
with a hope to maintain the market share and by launching a promotional campaign to highlight the
benefits of the ‘Fresh Breath’ against its rival products.
Concept Problem 30

Ajanta & Sons Limited are manufacturers of domestic household security alarms for high income group
homeowners in India. The company is currently reviewing two strategic options.
Option 1: Selling the same alarms although with different coverings to smaller and low- income group
households at a lower price.
Option 2: Development of new, more sophisticated alarms and a wide range of security services (guards and
surveillance) for sale to industrial clients for higher prices.
The management team of Ajanta & Sons Limited are keen to analyse the two options using Ansoff’s matrix.
Answer

Selling the same alarms with different coverings to smaller and low-income group households at a lower price
represents Market Development as the same products are being sold into a new market. Market development
refers to a growth strategy where the business seeks to sell its existing products into new markets. It is a
strategy for company growth by identifying and developing new markets for the existing products of the
company.
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While the development of new and more sophisticated alarms and a wide range of security services (guards
and surveillance) for sale to industrial clients for higher prices is classified as Diversification, because it
involves a new product, being sold in a new market. Diversification refers to a growth strategy where a
business markets new products in new markets. It is a strategy by starting up or acquiring businesses outside
the company’s current products and markets.

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C HAPTER 3

S TRATEGIC M ANAGEMENT P ROCESS

Concept Problem 1

Mr Raj has been hired as a CEO by XYZ ltd a FMCG company that has diversified into affordable cosmetics.
The company intends to launch Feelgood brand of cosmetics. XYZ wishes to enrich the lives of people with its
products that are good for skin and are produced in ecologically beneficial manner using herbal ingredients.
Draft vision and mission statement that may be formulated by Raj.
Answer

Feelgood brand of cosmetics may have following vision and mission:

Vision: Vision implies the blueprint of the company’s future position. It describes where the organisation
wants to land.
Mr Raj should aim to position “Feelgood cosmetics” as India’s beauty care company. It may have vision to be
India’ largest beauty care company that improves looks, give extraordinary feeling and bring happiness to
people.
Mission: Mission delineates the firm’s business, its goals and ways to reach the goals. It explains the reason
for the existence of the firm in the society. It is designed to help potential shareholders and investors
understand the purpose of the company:
Mr Raj may identify mission in the following lines:

▪ To be in the business of cosmetics to enhance the lives of people, give them confidence to lead.

▪ To protect skin from harmful elements in environment and sun rays.

▪ To produce herbal cosmetics using natural ingredients.

Concept Problem 2

Shri Alok Kumar is having his own medium size factory in Aligarh manufacturing hardware consisting
handles, hinges, tower bolts and so on. He has a staff of more than 220 in his organization. One of the
leading brands of Hardware seller in India is rebranding and selling the material from his factory. Shri Alok
Kumar, believes in close supervision and takes all major and minor decisions in the organization.
Do you think Shri Alok should take all decisions himself? What should be nature of decisions that should be
taken by him.
Answer

Decision making is a managerial process of selecting the best course of action out of several alternative

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courses for the purpose of accomplishment of the organizational goals. Decisions may be operational, i.e.,
which relate to general day-to-day operations. They may also be strategic in nature.
As owner manager at the top level in the company, Shri Alok Kumar should concentrate on strategic
decisions. These are higher level decisions having organization wide implications. The major dimensions of
strategic decisions are as follows:
i) Strategic decisions require top-management involvement as they involve thinking in totality of the
organization.
ii) Strategic decisions involve significant commitment of organizational resources.
iii) Strategic decisions necessitate consideration of factors in the firm’s external environment.

iv) Strategic decisions are likely to have a significant impact on the long-term prosperity of the firm.

v) Strategic decisions are future oriented.

vi) Strategic decisions usually have major multifunctional or multi-business consequences.

Concept Problem 7

Strategy execution is an operations-oriented activity which involves a good fit between strategy and
organizational capabilities, structure, climate & culture. Enumerate the principal aspects of strategy
execution process which are used in most of the situations.
Answer

Implementation or execution is an operations-oriented activity aimed at shaping the performance of core

business activities in a strategy-supportive manner. To convert strategic plans into actions and results, a
manager must be able to direct organizational change, motivate people, build and strengthen company’s
competencies and competitive capabilities, create a strategy-supportive work culture, and meet or beat
performance targets. Good strategy execution involves creating strong “fits” between strategy and
organizational capabilities, structure, climate and culture.
In most situations, strategy-execution process includes the following principal aspects:
i) Developing budgets that steer ample resources into those activities critical to strategic success.
ii) Staffing the organization with the needed skills and expertise, consciously building and strengthening
strategy-supportive competencies and competitive capabilities, and organizing the work effort.
iii) Ensuring that policies and operating procedures facilitate rather than impede effective execution.

iv) Using best-known practices to perform core business activities & pushing for continuous improvement.
v) Installing information and operating systems that enable company personnel to better carry out their
strategic roles day in and day out.
vi) Motivating people to pursue the target objectives energetically.
vii) Creating a company culture and work climate conducive to successful strategy implementation and
execution.
viii) Exerting the internal leadership needed to drive implementation forward and keep improving strategy
execution. When the organization encounters stumbling blocks or weaknesses, management has to see
that they are addressed and rectified quickly.
Concept Problem 9

What are 'objectives'? What characteristics it must possess to be meaningful? [RTP May 22] [MTP May 23]
Answer

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Objectives are organizations performance targets – the results and outcomes it wants to achieve. They
function as yardstick for tracking an organization’s performance and progress.
Objectives with strategic focus relate to outcomes that strengthen an organization’s overall business position
and competitive vitality. Objectives, to be meaningful to serve the intended role, must possess the following
characteristics:
i) Objectives should define the organization’s relationship with its environment
ii) Objectives should be facilitative towards achievement of mission and purpose.
iii) Objectives should provide the basis for strategic decision-making.

iv) Objectives should provide standards for performance appraisal.

v) Objectives should be understandable.
vi) Objectives should be concrete and specific.
vii) Objectives should be related to a time frame.

viii) Objectives should be measurable and controllable.

ix) Objectives should be challenging.

x) Different objectives should correlate with each other.
xi) Objectives should be set within constraints.
Concept Problem 15

'Objectives' and 'Goals' provide meaning and sense of direction to organizational endeavour. Explain
Answer

Business organization translates their vision and mission into goals and objectives.
Goals are open-ended attributes that denote the future states or outcomes.
Objectives are close-ended attributes which are precise and expressed in specific terms. Thus, Objectives are
more specific and translate to objectives to short term perspective.
All organizations have objectives. The pursuit of objectives is an unending process such that organizations
sustain themselves. They provide meaning and sense of direction to organizational endeavour. Organizational
structure and activities are designed and resources are allocated around the objectives to facilitate their
achievement. They also act as benchmarks for guiding organizational activity and for evaluating how the
organization is performing.
Concept Problem 16

Explain briefly the key areas in which the strategic planner should concentrate his mind to achieve desired
results. [MTP May 22, RTP Nov 22]
Answer

A strategic manager defines the strategic intent of the organisation and take it on the path of achieving the
organizational objectives. There can be a number of areas that a strategic manager should concentrate on to
achieve desired results. They commonly establish long-term objectives in seven areas as follows:
i) Profitability.
ii) Productivity.
iii) Competitive Position.

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iv) Employee Development.

v) Employee Relations.
vi) Technological Leadership.

vii) Public Responsibility.

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C HAPTER 4

C ORPORATE L EVEL S TRATEGIES

Concept Problem 1

Gautam and Siddhartha two brothers are the owners of a cloth manufacturing unit located in Faridabad.
They are doing well and have substantial surplus funds available within the business. They have different
approaches regarding corporate strategies to be followed to be more competitive and profitable in future.
Gautam is interested in acquiring another industrial unit located in Faridabad manufacturing stationery
items such as permanent markers, notebooks, pencils and pencil sharpeners, envelopes and other office
supplies. On the other hand, Siddhartha desires to start another unit to produce readymade garments.
Discuss the nature of corporate strategies being suggested by two brothers and risks involved in it.
Answer

Gautam wishes to diversify in a business that is not related to their existing line of product and can be
termed as conglomerate diversification. He is interested in acquiring another industrial unit located in
Faridabad manufacturing stationery items such as permanent markers, notebooks, pencils and pencil
sharpeners, envelopes and other office supplies, which is not related to their existing product.
In conglomerate diversification, the new businesses/ products are disjointed from the existing businesses/
products in every way; it is an unrelated diversification. In process/ technology/ function, there is no
connection between the new products and the existing ones. Conglomerate diversification has no common
thread at all with the firm's present position.
On the other hand, Siddhartha seeks to move forward in the chain of existing product by adopting vertically
integrated diversification/ forward integration. The cloth being manufactured by the existing processes can
be used as raw material of garments manufacturing business. In such diversification, firms opt to engage in
businesses that are related to the existing business of the firm. The firm remains vertically within the same
process and moves forward or backward in the chain. It enters specific product/process steps with the
intention of making them into new businesses for the firm. The characteristic feature of vertically integrated
diversification is that here, the firm does not jump outside the vertically linked product-process chain.
Both types of diversifications have their own risks. In conglomerate diversification, there are no linkages with
customer group, customer marketing functions and technology used, which is a risk. In the case of vertical
integrated diversification, there is a risk of lack of continued focus on the original business.
Concept Problem 2

An XYZ Company is facing continuous losses. There is decline in sales and product market share. The
products of the company became uncompetitive and there is persistent negative cash flow. The physical
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facilities are deteriorating and employees have low morale. At the board meeting, the board members decided
that they should continue the organization and adopt such measures that the company functions properly.
The board has decided to hire young executive Shayamli for improving the functions of the organization.
What corporate strategy should Shayamli adopt for this company and what steps to be taken to implement
the corporate strategy adopted by Shayamli?
Answer

XYZ Company is facing continuous losses, decline in sales and product market share, persistent negative cash
flow, uncompetitive products, declining market share, deterioration in physical facilities, low morale of
employees. In such a scenario, Shayamli may choose turnaround strategy as this strategy attempts to
reverse the process of decline and bring improvement in organizational health. This is also important as
Board has decided to continue the company and adopt measures for its proper functioning.
For success, Shayamli needs to focus on the short and long-term financing needs as well as on strategic
issues. During the turnaround, the “product mix” may be changed, requiring the organization to do some
repositioning.
A workable action plan for turnaround would involve:
Stage One - Assessment of current problems: The first step is to assess the current problems and get to the
root causes and the extent of damage the problem has caused.
Stage Two - Analyze the situation and develop a strategic plan: Before making any major changes;
determine the chances of business’s survival. Identify appropriate strategies and develop a preliminary action
plan.
Stage Three - Implementing an emergency action plan: If the organization is in a critical stage, an
appropriate action plan must be developed to stop the bleeding and enable the organization to survive. A
positive operating cash flow must be established as quickly as possible and enough funds to implement the
turnaround strategies must be raised.
Stage Four - Restructuring the business: The financial state of the organization’s core business is particularly
important. If the core business is irreparably damaged, then the outlook for the entire organization may be
bleak. Efforts to be made to position the organization for rapid improvement.
Stage Five - Returning to normal: In the final stage of turnaround strategy process, the organization should
begin to show signs of profitability, return on investments and enhancing economic value-added. Emphasis is
placed on a number of strategic efforts such as carefully adding new products and improving customer
service, creating alliances with other organizations, increasing the market share, etc.
Concept Problem 6

Swift Insurance is a company engaged in the business of providing medical insurance maintaining a market
share of 25 to 30 per cent in last five years. Recently, the company decided to enter into the business of
auto insurance by having foreign collaboration. Identify the strategy being followed by the Swift Insurance
with its advantages.
Answer

Overall Swift Insurance is following growth or expansion strategy as it is redefining the business and enlarging
its scope. The step will also substantially increase investment in the business.
The new business is related and at the same time caters to a different segment and accordingly can be
termed as related diversification. The new business falls within the scope of general insurance and
horizontally related to the existing business.
In the process of expansion, the company will be able to exploit:
i) Its brand name.

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ii) The marketing skills available.
iii) The existing sales and distribution infrastructure.

iv) Research and development.

v) Economies of scale
Concept Problem 9

XYZ Co. was formed by the merger between a number of chemical companies. Since it aimed at expanding
its presence in a large number of value-added specialty chemical operations; within a few years the
company involved in activities like bulk chemicals, explosives, fertilizers, paints and commodity plastics. But
expanding the scope of business to so many businesses; little it did for the bottom line.
On analyzing, the top management found that although many of the businesses were linked in some way to
the chemical industry, but there were far fewer synergies among the operations that it had initially thought.
The top management explored and concluded that there was little commonality between bulk chemicals and
fertilizers, between plastics and paints, between explosives and advanced materials. In other words, the value
created by the diversification was questionable. After reading this scenario, what do think has gone wrong in
this case? How do you think this problem can be rectified?
Answer

In the present scenario, the problem is related to diversification strategy to expand and mark its presence.
Diversification can be either related or unrelated. Related diversification is when the new business is linked to
the existing businesses through process, technology or marketing. The new product is a spin-off from the
existing facilities and products/processes. This means that in related diversification there are benefits of
synergy with the current operations as the new product is only connected in a loop-like manner at one or
more points in the firm’s existing process/technology/ product chain.
Whereas, in unrelated diversification, no such linkages exist; the new businesses/ products are disjointed from
the existing businesses/products in every way. In process/technology/function, there is no connection between
the new products and the existing ones. Conglomerate diversification has no common thread at all with the
firm’s present position.
In the present case, the company tried to diversify in products like bulk chemicals, explosives, fertilizers,
paints and commodity plastics thinking that the diversification is linked in some way to the chemical
industry. But when the bottom line did not improve with this diversification; the top management explored
and found that there were far fewer synergies among the company’s operations that it had initially thought.
There was little commonality between bulk chemicals and fertilizers, between plastics and paints, between
explosives and advanced materials which means that the company made a dire mistake in understanding
whether the diversification was related or unrelated.
The probable solution for this would be breaking up the company into constituent parts; may be two or three
and put the related businesses into the relevant SBUs and consider selling off the businesses that are totally
unrelated or totally get into unrelated diversification and form a structure accordingly.
Concept Problem 16

What strategic option is available to the management of a sick company dealing in an electric home
appliance? Give reasons for your answer.
Answer

A sick company has huge accumulated losses that have eroded its net worth. The electric home appliance
company may analyse its various products to take decisions on the viability of each.

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Retrenchment becomes necessary for coping with hostile and adverse situations in the environment and
when any other strategy is likely to be suicidal. The nature, extent and timing of retrenchment are matters to
be carefully decided by management, depending upon each contingency.
Retrenchment strategy is adopted because:
a) The management no longer wishes to remain in business either partly or wholly due to continuous losses
and unviability.
b) The environment faced is threatening.
c) Stability can be ensured by reallocation of resources from unprofitable to profitable businesses.
Retrenchment strategy is followed when an organization substantially reduces the scope of its activity. This
is done through an attempt to find out the problem areas and diagnose the causes of the problems. Next,
steps are taken to solve the problems. These steps result in different kinds of retrenchment strategies.
Turnaround strategy: If the organization chooses to transform itself into a leaner structure and focuses on
ways and means to reverse the process of decline, it adopts a turnaround strategy. It may try to reduce costs,
eliminate unprofitable outputs, generate revenue, improve coordination, better control, and so on. It may also
involve changes in top management and reorienting leadership.
Divestment Strategy: Divestment strategy involves the sale or liquidation of a portion of business, or a major
division, profit center or SBU. Divestment is usually a part of rehabilitation or restructuring plan and is
adopted when a turnaround has been attempted but has proved to be unsuccessful.
Liquidation Strategy: In the retrenchment strategy, the most extreme and unattractive is liquidation strategy.
It involves closing down a firm and selling its assets.
It is considered as the last resort because it leads to serious consequences such as loss of employment for
workers and other employees, termination of opportunities where a firm could pursue any future activities,
and the stigma of failure. Many small-scale units, proprietorship firms, and partnership ventures liquidate
frequently but medium-and large-sized companies rarely liquidate in India. The company management,
government, banks and financial institutions, trade unions, suppliers and creditors, and other agencies are
extremely reluctant to take a decision, or ask, for liquidation.
Liquidation strategy may be unpleasant as a strategic alternative but when a “dead business is worth more
than alive”, it is a good proposition.
The management of a Sick company manufacturing various electrical home appliances be explained about
the each of the above three options of retrenchment strategy with their pros and cons. But the appropriate
advice with respect to a particular option of retrenchment strategy will depend on the specific circumstances
of each electrical home appliances and management goals of the company.
Concept Problem 23

What strategic alternative should be followed during recession?

Answer

Stability strategy is an advisable option for the organizations facing recession.

During recession businesses face reduced demand for their products even at low prices. Funds become scarce,
expenditure on expansion is stopped, profits decline and businesses try to minimize the costs. They work hard
to maintain the existing market share, so that company survives the recessionary period.
Concept Problem 29

GWA, a leading Japan based automobile company decided to make India a hub for the company’s 250cc
motor cycle to be manufactured in collaboration with the TPR Group, a leading Indian company’s home
market as well as to other African countries.

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What is this growth strategy called? Point out the most important advantages both the companies expect
from such strategy/ collaboration. [ICAI Dec 21]
Answer

GWA of Japan and TRP group of India opted for strategic alliance as their growth strategy. A strategic
alliance is a relationship between two or more businesses that enables each to achieve certain strategic
objectives which neither would be able to achieve on its own. Strategic alliances are often formed in the
global marketplace between businesses that are based in different regions of the world.
Advantages of Strategic Alliance [Refer Q 25]
Concept Problem 30

Diversification endeavours can be categorized into four broad classifications. State the basis for this
classification and name the four categories. How is concentric diversification different from vertically
diversification? Explain. [RTP May 22] [MTP Nov 22]
Answer

Diversification strategy involves expansion into new businesses that are outside the current business and
markets of an organisation. Based on the nature and extent of their relationship to existing businesses,
diversification can be classified into four broad categories:
a. Vertically integrated diversification
b. Horizontally integrated diversification
c. Concentric diversification
d. Conglomerate diversification
Concentric diversification takes place when the products are related. The new product is a spin-off from the
existing facilities and products/processes. This means that in concentric diversification too, there are benefits
of synergy with the current operations. However, concentric diversification differs from vertically integrated
diversification in the nature of the linkage the new product has with the existing ones.
In vertically integrated diversification, firms opt to engage in businesses that are related to the existing
business of the firm. The firm remains vertically within the same process. Sequence moves forward or
backward in the chain and enters specific product/process steps with the intention of making them into new
businesses for the firm. The new product falls within the firm’s current process-product chain. In concentric
diversification, there is a departure from this vertical linkage, a new related product is added to the existing
business. The new product is only connected in a loop-like manner at one or more points in the firm’s existing
process/technology/product chain.
Concept Problem 41

ABC Ltd. intends to grow its business. Its top management argues that its ‘Corporate Strategy’ will ensure the
growth of the firm. Do you agree with the top management’s argument? Give reasons. [MTP May 23]
Answer

Yes, agreeing with the top management’s argument. Corporate strategy is basically the growth design of the
firm; it spells out the growth objective- the direction, pace and timing of the firm’s growth. It also spells out
the strategy for achieving the growth.
Corporate strategy ensures the growth of the firm because of the following arguments:

▪ It ensures the correct alignment of the firm with its environment. It also serves as the design for filling
the strategic planning gap.

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▪ It gives importance to combination, sequence, timing, direction and depth of various moves and action
initiatives taken by managers to handle environmental uncertainties and complexities.

▪ It helps build the relevant competitive advantages for the firm. Masterminding and working out the
right fit between the firm and its external environment.

▪ It is to harness the opportunities available in the environment, countering the threats embedded therein.

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C HAPTER 5

B USINESS L EVEL S TRATEGIES

Concept Problem 2

Gennex is a company that designs, manufactures and sells computer hardware and software. Gennex is well
known for its innovative products that has helped the company to have advantage over its competitors. It
also spends on research and development and concerned with innovative software. Often the unique features
of their product, that are not available with their competitors helps them to gain competitive advantage.
Gennex using the strategy is consistently gaining its position in the industry over its competitors.
Identify and explain the Porter’s generic strategy which Gennex has opted to gain the competitive advantage.
Answer

According to Porter, strategies allow organizations to gain competitive advantage from three different bases:
cost leadership, differentiation, and focus. Porter called these base generic strategies.
Gennex has opted differentiation strategy. Its products are designed and produced to give the customer value
and quality. They are unique and serve specific customer needs that are not met by other companies in the
industry. Highly differentiated and unique hardware and software enables Gennex to charge premium prices
for its products hence making higher profits and maintain its competitive position in the market.
Differentiation strategy is aimed at broad mass market and involves the creation of a product or service that
is perceived by the customers as unique. The uniqueness can be associated with product design, brand image,
features, technology, dealer network or customer service.
Concept Problem 5

Infant care is a successful store chain that caters products for expectant mothers and new moms. They offer
everything from nursing classes to strollers, toys, infant clothes, diapers and baby furniture. Due to a one-
stop shop for infants, they are charging a premium for its products. Identify and explain how the strategy
adopted by infant care.
Answer

Infant care is opting for differentiation strategy. A one-stop shop is a benefit for this type of customers,
seeking convenience in a time. Infant care is catering the products only related to infants that is perceived
by the customers as unique. Because of differentiation, the Infant care is charging a premium for its product.
Concept Problem 6

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A century-old footwear company “Mota Shoes” had an image of being the footwear choice for formal
occasions. In an attempt to reinvent its brand, it tied up with a foreign footwear giant “Buffrine” to
manufacture and sell its Hideseek brand in the country. Putting its best foot forward, it launched extra soft,
casual and relaxed footwear for young. Aiming at a brand and image makeover the “Mota Shoes” decided to
price the Hide Seek products at premium.
What kind of Michael Porter business level strategy is being used by “Mota Shoe company”? State its
advantages.
Answer

Mota shoes is trying to use differentiation. This strategy is aimed at broad mass market and involves the
creation of a product or service that is perceived by the customers as unique. The uniqueness can be
associated with product design, brand image, features, technology, dealer network or customer service.
Because of differentiation, the business can charge a premium for its product.
A differentiation strategy has definite advantages as it may help to remain profitable even with rivalry, new
entrants, suppliers’ power, substitute products, and buyers’ power.
1) Rivalry: Brand loyalty acts as a safeguard against competitors. It means that customers will be less
sensitive to price increases, as long as the firm can satisfy the needs of its customers
2) Buyers: They do not negotiate for price as they get special features and also, they have fewer options in
the market
3) Suppliers: Because differentiators charge a premium price, they can afford to absorb higher costs of
supplies and customers are willing to pay extra too.
4) New entrants: Innovative features are expensive to copy. So, new entrants generally avoid these features
because it is tough for them to provide the same product with special features at a comparable price
5) Substitutes: Substitute products can’t replace differentiated products which have high brand value and
enjoy customer loyalty.
Concept Problem 8

Baby Turtle is a children's clothing brand that has been created a new age demand for washable diapers. The
major benefit for the brand has been that not many companies have shown interest in the product, thinking
it is not viable, however, customers, majorly working mothers are loving their product. The core material
needed for production is also used in many other water proofing products in various industries. Baby Turtle
sources this material from a renowned supplier at comparatively low prices. Which of the five forces of
competitive pressure would Baby Turtle experience due to above setup and what are major factors that create
such pressure for a product? Do you think Baby Shark has an advantage in some way to fight off this
pressure?
Answer

Baby Turtle would experience, Bargaining Power of Suppliers, as a competitive pressure for their washable
diaper product. This is because the core material for production is sourced from a single supplier, who is
renowned and in a position to create pressure in terms of prices.
Further, other factors that lead to such pressure are:
1) Their products are crucial to the buyer and substitutes to the material required for production are not
available.
2) Suppliers can manipulate switching cost as the brand is in inception stage and making margins are
important.
An advantage that Baby Turtle has is even though the material required has no substitutes but it used to

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make many other products and thus there are many other suppliers who can provide that material. It might
affect operations in short term but will help to fight off the pressure created by existing supplier.
Concept Problem 9

Domolo is a premium cycle and cycling equipments brand which targets high spending customer with a liking
for quality and brand name. Their cycles range from rupees fifteen thousand to rupees one lac. The recent
trend of fitness through cycling has created humongous demand for cycles and peripherals like helmets,
lights, braking systems, fitness applications, etc. The customer base has grown 150% in the last three
months. Mr. Vijay, who is an investor wants to tap in this industry and bring about cheaper options to people
who cannot spend so much. Which business level strategy would best suit for Mr. Vijay’s idea and what are
the major sub-strategies that can be implemented to capture maximum market? [RTP May 23]
Answer

The Best Cost Provider strategy would ensure a better reach to the not so affluent customers and provide
them with good quality cycles and equipments, thus tap- ping in on the increasing trend of cycling.
Two sub-strategies that can be implemented are:
1) Offering lower prices than rivals for the same quality of products
2) Charging same prices for better quality of products
The idea of Mr. Vijay is to provide almost same quality of products in terms of functionality if not so in terms
of branding, to customer who do not have huge sums of money to pay. Thus, sub-strategy number one,
offering lower prices for almost same quality should be implemented to become the best cost provider of
cycles and related equipments in the market.
Concept Problem 10

ABC Ltd. is a beverage manufacturing company. It chiefly manufactures soft drinks. The products are priced
on the lower side which has made the company a leader in the business. Currently it is holding 35 percent
market share. The R & D of company developed a formula for manufacturing sugar free beverages. On
successful trial and approval by the competent authorities, company was granted to manufacture sugar free
beverages. This company is the pioneer to launch sugar free beverages which are sold at a relatively higher
price. This new product has been accepted widely by a class of customers. These products have proved
profitable for the company.
Identify the strategy employed by the company ABC Ltd. and mention what measures could be adopted by
the company to achieve the employed strategy.
Answer

According to Porter, strategies allow organizations to gain competitive advantage from three different bases:
cost leadership, differentiation, and focus. Porter called these base generic strategies.
ABC Ltd. has opted Differentiation Strategy. The company has invested huge amount in R & D and developed
a formula for manufacturing sugar free beverages to give the customer value and quality. They are pioneer
and serve specific customer needs that are not met by other companies in the industry. The new product has
been accepted by a class of customers. Differentiated and unique sugar free beverages enable ABC Ltd. to
charge relatively higher for its products hence making higher profits and maintain its competitive position in
the market.
Sugar free beverage of ABC Ltd. is being accepted widely by a class of customers. Differentiation strategy is
aimed at broad mass market and involves the creation of a product or service that is perceived by the
customers as unique. The uniqueness can be associated with product design, brand image, features,
technology, and dealer network or customer service.
Achieving Differentiation Strategy
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To achieve differentiation, following strategies are generally adopted by an organization:
i) Offer utility to the customers and match products with their tastes and preferences.
ii) Elevate/Improve performance of the product.
iii) Offer the high-quality product/service for buyer satisfaction.

iv) Rapid product innovation to keep up with dynamic environment.

v) Taking steps for enhancing brand image and brand value.

vi) Fixing product prices based on the unique features of product and buying capacity of the customer.

Concept Problem 22

Analyse the following cases in the context of Michael Porter's Five Forces Model:
a) A supplier has a large base of customers.
b) A manufacturer of sports goods has the advantage of economies of large-scale production
c) Products offered by competitors are almost similar.
Answer

a) Large base of customers of an organization (supplier) may increase its bargaining power in comparison
to the bargaining power of the customer.
b) The manufacturer of sports goods would be in better position amongst existing competitors since it has
advantage of economies of scale. Even the threat of new entrants gets reduced.
c) Similar products will reduce the bargaining power of the rivals, i.e., competitors, in other words the
bargaining power of the customers will be more.
Concept Problem 25

Explain in brief the various basis of differentiation strategy. [MTP May 23]
Answer

There are several basis of differentiation, major being: Product, Pricing and Organization.
Product: Innovative products that meet customer needs can be an area where a company has an advantage
over competitors. However, the pursuit of a new product offering can be costly – research and development,
as well as production and marketing costs can all add to the cost of production and distribution. The payoff,
however, can be great as customer’s flock to be among the first to have the new product.
Pricing: It fluctuates based on its supply and demand and may also be influenced by the customer’s ideal
value for a product. Companies that differentiate based on product price can either determine to offer the
lowest price or can attempt to establish superiority through higher prices.
Organisation: Organizational differentiation is yet another form of differentiation. Maximizing the power of a
brand or using the specific advantages that an organization possesses can be instrumental to a company’s
success. Location advantage, name recognition and customer loyalty can all provide additional ways for a
company differentiate itself from the competition.
Concept Problem 28

A business consultancy firm specializes in environment management consultancy. It advises client

companies on how to set up environmental management accounting systems. For measuring recording and
analyzing environmental costs. A large part of its business involves performing environmental audits to check
whether companies have achieved an international assurance standard in environmental management; this is

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something that rival consultancy firms do not do. The firm also carries out other management consultancy
projects for client, but these make up only a small proportion of its total annual fee income.
Identify the strategy by Michael Porter which best describes the strategy of this firm. [RTP May 22]
Answer

By concentrating mainly on the ‘market’ for consultancy services in environmental management, the firm is
pursuing a focus strategy. By offering audit services, which rival firms do not, this indicates a differentiation
strategy within this chosen market niche. Hence, the firm is following Focus differentiation strategy.
A focused differentiation strategy requires offering unique features that fulfil the demands of a narrow
market. Similar to focused low-cost strategy, narrow markets are defined in different ways in different
settings. Some firms using a focused differentiation strategy concentrate their efforts on a particular sales
channel, such as selling over the internet only. Others target particular demographic groups. Firms that
compete based on uniqueness and target a narrow market are following a focused differentiations strategy.
Concept Problem 31

Rajiv Arya is owner of an electrical appliance company that specializes in manufacturing of domestic vacuum
cleaners. There are four other manufacturers with similar products and sales volume. Current rival firms also
own a number of patents related to the product. The supplier base for procurement of raw material is also
very large as there are multiple suppliers.
Identify Porter’s Five Forces that may be classified as significant for the company? Explain. [RTP Nov 22]
Answer

The competitive rivalry will be a significant force in case of company of Rajiv Arya as all the rivals are
similar in sizes and are manufacturing similar products. It is difficult for any single manufacturer to
dominate the market. Large number of patents will make it difficult for new entrants to break into the
market. Further, as there are a large number of small suppliers the power that suppliers can exert will also be
low.
There is no information relating to substitutes and bargaining power of customers in the information given in
scenario. However, a domestic vacuum cleaner will directly compete with other options such as house maids.
Availability of house maids at low cost can significantly disturb the sales of products.
Further, as the products are similar customers can easily shift from one company to another. This will only
enhance competitive rivalry.
The competitive rivalry will be significant in Rajiv Arya’s dealing industry as all rivals are similar in sizes and
manufacture similar products, making it difficult for anyone manufacturer to dominates the market or gain
market share. The large number of patents will make it hard for new entrants to break into the market, while
the fact that Rajiv Arya buys from a large number of small suppliers suggests that supplier power is also low.
Finally, there is no information relating to substitutes and bargaining power of customers in the information
given in scenario.
Concept Problem 32

A startup company is thinking of launching of a low-cost detergent powder in the market. The market of the
said product is already dominated by a big FMCG player. You are advised to put forward your suggestions to
the management of the company to deal with the problems of 'Entry 'Barrier' while launching the low-cost
detergent powder. [RTP Nov 22]
Answer

There are number of factors that can act as entry barrier for the start -up company. An FMCG, big in size, is
already dominating the market space and will act as a strong deterrent for the new start-up. The following
will be some suggestions to the management of the start-up to deal with the problem of entry barriers:
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i) The company is working on producing low-cost detergent. Keeping other expenses also on the lower side
the management can create price advantage that is competitive to the existing established players
including the large FMCG.
ii) The company focussing on single product in comparison to multiple products of an FMCG can develop
competencies to produce and sell the low-cost detergent that are difficult to deploy by the FMCG by its
strategy that addresses needs of multiple products.
iii) The start-up needs to have strong financial strength to sustain the onslaught from the dominant FMCG
and other players. The start-up can identify sources of capital well in advance and be able to use it
judiciously to their advantage.
iv) The start-up should identify the customer segments that are likely to switch to the product well in
advance so as to target the same and generate the initial hold on the market. Once the product gets
some hold and their brands get some identity, the market can be further developed to address other
customers.
v) The start-up should identify the environmental factors that go to their advantage. These may include
special scheme of the government to encourage entrepreneurs, tax holiday, low interest rates, advantages
available to small and medium sized enterprises alike.
vi) It has to create an image in the market that its products are qualitative and ‘Made in India’ to attract a
particular segment of customers.
vii) They need to have a team of experts and dedicated management professionals who can implement
strategies formulated by top management.
Concept Problem 38

Pulkit was very confident about cloud kitchen business model, and he bought three real estate spaces in very
hideous localities. Later due to government and court orders the cloud kitchens had to be only operated in a
well-ventilated space, which made his investment redundant. What aspect of industry competition is Pulkit
currently faced as a result of this situation? [MTP May 23]
Answer

Pulkit may be facing exit barriers due to his investment in the real estate spaces. Exit barriers are factors
that make it difficult for a company to exit a particular market or industry. In this case, Pulkit’s
investment in the real estate spaces may make it difficult for him to exit the cloud kitchen industry or
switch to a different business model. If Pulkit is unable to find new spaces or make the necessary
renovations, he may be forced to continue operating in the hideous localities, which may impact his brand
image and customer experience. This can create an exit barrier for Pulkit as it may be difficult for him to
turn to a different business model or exit the industry entirely.
Additionally, Pulkit may have incurred significant sunk costs in the purchase and renovation of the real
estate spaces, which can create a further exit barrier. Sunk costs refer to costs that have already been
incurred and cannot be recovered. If Pulkit has invested a significant amount of money in the real estate
spaces, he may be hesitant to exit the industry or switch to a different business model as it may mean that
he has to write off the sunk costs.
Therefore, Pulkit may be facing exit barriers due to his investment in the real estate spaces, which may
make it difficult for him to adapt to the new requirements or exit the industry entirely.

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C HAPTER 6

F UNCTIONAL L EVEL S TRATEGIES

Concept Problem 1

A web company initially started as an online marketplace for books. From “biggest E - Bookstore,” its owners
want to expand into an e commerce platform selling electronic goods. Implementation of this needs
additional funds. What are the different sources of raising funds and their impact on the financial strategy
which you as a financial manager will consider?
Answer

Strategies related to the source of fund are important since they determine how financial resources will be
available for the implementation of the financial strategies. Companies may rely on internal and external
sources of financing for their short term and long-term requirement of their funds. The funds may be raised
from national and international money and capital markets.
Following are some important sources for raising funds:
i) Net profit from the operations: Using retained earnings to reinvest in the business, either in new projects
or to scale up existing operations.
ii) Sale of assets: The purpose of an asset sale is generally to increase cash flow, reduce bad debt risk and
liquidation of assets.
iii) Debt: Debt is an amount of money borrowed by one party from another. I t is used by many corporations
as a method of making large purchases that they could not afford under normal circumstances. It could
be applied to boost organizations return on investment. During low earning periods, too much debt in the
capital structure of an organization can endanger stockholders’ return and jeopardize company survival.
Debt can be in the form of debentures, bonds, loans from financial institutions and deposits from
public/fixed deposits.
iv) Issuance of share capital to the public: Equity can be of two type – ordinary Shares and preference
shares. If ordinary stock is issued to finance strategy implementation; ownership and control of the
enterprise are diluted. This can be a serious concern in today’s business environment of hostile takeovers,
mergers, and acquisitions.
The above answer is from RTP May 22 which is better drafted than Study Material Solution.
Concept Problem 2

ABC Ltd is a company that has grown eleven times its size in last five years. With the increase in size the
company is facing difficulty in managing things. Many a times functional level is not in sync with the

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corporate level. What will you like to advise to the company and why?
Answer

The higher-level corporate strategies need to be segregated into viable plans and policies that are compatible
with each other and communicated down the line. The higher-level strategies need to be broken into
functional strategies for implementation. These functional strategies, in form of marketing, finance, human
resource, production, research and development help in achieving the organizational objective. The reasons
why functional strategies are needed can be enumerated as follows:
i) Functional strategies lay down clearly what is to be done at the functional level. They provide a sense of
direction to the functional staff.
ii) They are aimed at facilitating the implementation of corporate strategies and the business strategies
formulation at the business level.
iii) They act as basis for controlling activities in the different functional areas of business.

iv) They help in bringing harmony and coordination as they are formulated to achieve major strategies.

v) Similar situations occurring in different functional areas are handled in a consistent manner by the
functional managers.
Concept Problem 19

Mr. Vicky Verma, a Gwalior based entrepreneur, has entered into an exclusive-retail deal with an Italian
company selling ‘Fantasy-3D’, a Hologram LED Fan, which is being used for advertising at public places. Mr.
Verma procured a total of 500 units of the product and paid upfront as per the seller’s policy. This resulted in
blocking of his working capital significantly and the shipment is expected in a month. Meanwhile his
continued efforts of establishing relations with the marketing heads of corporates resulted in a series of
meetings, where he demonstrated his specialist product knowledge by changing the hologram images to
personalise basis specifications of the customer. The management of a big automotive company was
impressed with the quality and adaptability of the product, and awarded a contract of 125 units to be
displayed in the auto-maker’s showrooms. Identify and explain the product promotion strategy adopted by
Mr. Verma. [MTP May 23]
Answer

Mr. Vicky Verma established personal contacts with potential buyers of the product and persuaded the
marketing department over several physical meetings, and was finally able to make sales.
The personal relation establishment and physical demonstration, indicates that Mr. Verma used the Personal
Selling method of Promotion. Modern marketing is highly promotional oriented and include personal selling,
advertising, publicity and sales promotion. Personal selling involves face to face interaction of sales persons
with the prospective customers and provides a high degree of personal attention. It involves working with one
customer at a time and hence not cost effective. The intention of oral communication is sale.
Concept Problem 25

What are the issues to be resolved by a business enterprise to have an effective logistic strategy?
Answer

Management of logistics is a process which integrates the flow of supplies into, through and out of an
organisation to achieve a level of service which ensures that the right materials are available at the right
place, at the right time, of the right quality and at the right cost.
For a business enterprise, effective logistic strategy will involve raising and finding solutions to the following
questions:
a) Which sources of raw materials and components are available?
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b) How many manufacturing locations are there?
c) What products are being made at each manufacturing location?
d) What modes of transportation should be used for various products?
e) What is the nature of distribution facilities?
f) What is the nature of materials handling equipment possessed? Is it ideal?
g) What is the method for deploying inventory in the logistics network?
h) Should the business firm own the transport vehicles or hire?
Concept Problem 28

"Projected financial statement analysis is a central strategy-implementation technique." Justify the

statement. [RTP Nov 22] [MTP May 23]
Answer

Projected financial statement analysis is a central strategy-implementation technique because it allows an

organization to examine the expected results of various actions and approaches. This type of analysis can be
used to forecast the impact of various implementation decisions. Nearly all financial institutions require a
projected financial statement whenever a business seeks capital.
A projected income statement and balance sheet allow an organization to compute projected financial ratios
under various strategy-implementation scenarios. When compared to prior years and to industry averages,
financial ratios provide valuable insights into the feasibility of various strategy-implementation approaches.
A financial budget is also a document that details how funds will be obtained and spent for a specified period
of time. Fundamentally, financial budgeting is a method for specifying what must be done to complete
strategy implementation successfully.
Financial budgeting is a method for obtaining the most productive and profitable use of an organization’s
resources. Financial budgets can be viewed as the planned allocation of a firm’s resources based on forecasts
of the future.
Concept Problem 29

Give the meaning of Strategic Human Resource management. State the key Human Resource Management
practices on which strategic focus should be given to achieve competitive advantage. [MTP Nov 22]
Answer

Strategic Human Resource Management may be defined as the linking of human resource management with
strategic goals and objectives to improve business performance and develop organizational culture that
fosters innovation and flexibility. The success of an organization depends on its human resources. This means
how they are acquired, developed, motivated and retained in the organization – plays an important role in
organizational success. This presupposes an integrated approach towards human resource functions and
overall business functions of an organization.
The key Human Resource Management practices on which strategic focus should be given to achieve
competitive advantage are:
a) Pre-selection practices including human resource planning and job analysis.
b) Selection practices meant to staff various positions in the organization. Both recruitment and selection
policies and procedures should be designed keeping in view the mission and the purpose of the
organization.
c) Post-selection practices to maintain and improve the workers job performance levels. Human Resources

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decisions related to training and development, performance appraisal, compensation and motivation
should be based on corporate strategy of the organization.

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C HAPTER 7

O RGANIZATION AND S TRATEGIC L EADERSHIP

Concept Problem 1

Always Fit is a company that operates in pharmacy store chains. Its stores are specialized in providing
prescribed medicines, health and wellness products etc. in the country. The store chain is having surplus
space which can be utilized for other purposes. Azad, a senior executive of the research and development
wing in the company conceives an idea to manufacture and sell the cosmetic products for utilizing the
surplus space available in the pharmacy stores. Identify and explain the role of Azad in company.
Answer

Azad plays role as an intrapreneur who operates within the boundaries of an organisation. He is an
employee of Always Fit, who is vested with authority of initiating creativity and innovation in the
company’s products, services and projects, redesigning the processes, workflows and systems.
Azad believes in change and do not fear failure. He discovers a new idea which can benefit the whole
organization by utilizing the surplus space in the stores. The job of Azad is extremely challenging. He gets
recognition and reward for the success achieved.
Concept Problem 2

Jupiter Electronics Ltd. is known for its ability to come out with path-breaking products. Though the work
environment at Jupiter’s is relaxed and casual, yet, there is a very strong commitment to deadlines. The
employees believe in "work hard play hard" ethic. The organisation has moved away from formal and
hierarchical set up to a more results-driven approach. Employees are committed to strategies and work
towards achieving them. They guard innovations, maintain confidentiality and secrecy in their working. They
are closely related to values, practices, and norms of organisations
What aspects of an organization that are being discussed? Explain.
Answer

The scenario being referred to is culture in Jupiter Electronics. Strong culture promotes good strategy
execution when there’s fit and impels execution when there’s negligible fit. A culture grounded in values,
practices, and behavioural norms that match what is needed for good strategy execution helps energize
people throughout the organization to do their jobs in a strategy-supportive manner. A culture built around
such business principles as listening to customers, encouraging employees to take pride in their work, and
giving employees a high degree of decision-making responsibility. This is very conducive to successful
execution of a strategy of delivering superior customer service.
A strong strategy-supportive culture makes employees feel genuinely better about their jobs and work
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environment and the merits of what the company is trying to accomplish. Employees are stimulated to take
on the challenge of realizing the organizational vision, do their jobs competently and with enthusiasm, and
collaborate with others.
Concept Problem 5

KaAthens Ltd., a diversified business entity having business operations across the globe. The company
leadership has just changed as Mr. D. Bandopadhyay handed over the pedals to his son Aditya
Bandopadhyay, due to his poor health. Aditya is a highly educated with an engineering degree from IIT, Delhi.
However, being very young he is not clear about his role and responsibilities. In your view, what are the
responsibilities of Aditya Bandopadhyay as CEO of the company.
Answer

Aditya Bandopadhyay, an effective strategic leader of KaAthens Ltd. must be able to deal with the diverse
and cognitively complex competitive situations that are characteristic of today’s competitive landscape.
A Strategic leader has several responsibilities, including the following:
i) Making strategic decisions.
ii) Formulating policies and action plans to implement strategic decision.
iii) Ensuring effective communication in the organization.

iv) Managing human capital (perhaps the most critical of the strategic leader’s skills).

v) Managing change in the organization.

vi) Creating and sustaining strong corporate culture.

vii) Sustaining high performance over time.

Concept Problem 16

Distinguish between Entrepreneurs and Intrapreneurs.

Answer

The terms Entrepreneur and the Intrapreneur might seem the same words to hear, but both the terms have
much differences including their spelling and characteristics. The differences between these two terms
have been shortly gleaned below: -

Basis Entrepreneur Intrapreneur

Dependency An entrepreneur is independent in his An intrapreneur is dependent on the
operations. entrepreneur, i.e., the owner.
Raising of An entrepreneur himself raises funds Funds are not raised by the Intrapreneur.
Funds required for the enterprise.
Risk Entrepreneur bears the risk involved in the An intrapreneur does not fully bear the risk
business. involved in the enterprise.
Operation An entrepreneur operates from outside. On the contrary, an intrapreneur operates
from within the organization itself.
Orientation An entrepreneur begins his business with a An intrapreneur sets up his enterprise after
newly set up enterprise. working someone else’s organization.
Experience As an entrepreneur establishes new An intrapreneur establishes his business after
business, so he does not possess any gathering experiences through working in the
experience over the business. other organizations.

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According to the above table, anyone can differentiate between the entrepreneur and intrapreneur as both
the terms are heterogeneous.
Concept Problem 17

Delta is an organization specializing in Information Technology enables Services (ITeS) and

Communications business. Previous year the organization had successfully integrated an Artificial
Intelligence (AI) tool named ‘Zeus’ into the existing ERP system. The AI tool using Deep Learning
technique provided a digital leap transformation in various business processes and operations. It has
significantly diminished the role played by specialist managers of the middle management. This
technological tool in addition to saving organisational costs by replacing many tasks of the middle
management, has also served as a link between top and bottom levels in the organization and assists in
faster decision making. The skewed middle level managers now perform cross-functional duties. Which
type of organisational structure is the company transitioning into? How can this structure benefit the
organization?
Answer

The company Delta is transitioning into the Hourglass organization structure because it has used
technological tools to transform various business processes and operations and has significantly
diminished the role played by specialist managers of the middle management. The technological tool in
addition to savings organisational costs by replacing many tasks of the middle management has also
served as a link between top and bottom levels in the organization and assists in faster decision making.
The skewed middle level managers now perform cross-functional duties. All these factors indicate towards
Hourglass organization structure.

Hourglass structure has obvious benefit of reduced costs. It also helps in enhancing responsiveness by
simplifying decision making. Decision making authority is shifted close to the source of information so that
it is faster. However, with the reduced size of middle management, the promotion opportunities for the lower
levels diminish significantly.
Concept Problem 21

Explain briefly the role of culture in promoting better strategy execution.

Or
'A strategy-supportive culture promotes good strategy execution.' Explain. [RTP Nov 22]
Answer

Strong culture promotes good strategy execution when there's fit and impels execution when there's negligible
fit. A culture grounded in values, practices, and behavioural norms that match what is needed for good
strategy execution helps energize people throughout the organization to do their jobs in a strategy-supportive
manner. A culture built around such business principles as listening to customers, encouraging employees to

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take pride in their work, and giving employees a high degree of decision-making responsibility. This is very
conducive to successful execution of a strategy of delivering superior customer service.
A strong strategy-supportive culture makes employees feel genuinely better about their jobs and work
environment and the merits of what the company is trying to accomplish. Employees are stimulated to take
on the challenge of realizing the organizational vision, do their jobs competently and with enthusiasm, and
collaborate with others.
Concept Problem 25

'To coordinate more complex organizational functions, companies should abandon the simple structure in
favour of the functional structure' Discuss.
Answer

Simple organizational structure is most appropriate usually in those small organizations that follow single
business strategy and offer a line of products in a single geographic market. When a small organization
grows, its complexities also tend to grow which necessitates the companies to abandon the simple
organization structure which it has been adopting hitherto and move towards structures like functional
organizational structure. A typical simple organization structure is often owner driven with small number of
employees.
Functional structure groups tasks and activities by business function, such as production, marketing, finance,
research and development and is generally headed by Chief Executive Officer or Managing Director. Besides
being simple and inexpensive, a functional structure also promotes specialization, encourages efficiency,
minimizes the need for an elaborate control system, and allows rapid decision making. At the same time
with the passage of time and overall growth much more complex organizational structures exist in business
world. However, dividing organization according to functional lines is invariably found at some level or the
other.
Concept Problem 28

How can management communicate that it is committed to creating a new culture assuming that the old
culture was problematic and not aligned with the company strategy?
Answer

Corporate culture refers to company’s values, beliefs, business principles, traditions, ways of operating and
internal work environment. Changing problem cultures is very difficult because of deeply held values and
habits. It takes concerted management action over a period of time to replace an unhealthy culture with a
healthy culture or to root out certain unwanted cultural obstacles and instil ones that are more strategy-
supportive.
▪ The first step is to diagnose which facets of the present culture are strategy supportive and which are
not.
▪ Then, managers have to talk openly and forthrightly to all concerned about those aspects of the culture
that have to be changed.
▪ The talk has to be followed swiftly by visible, aggressive actions to modify the culture -actions that
everyone will understand are intended to establish a new culture more in tune with the strategy.
▪ The menu of culture-changing actions includes revising policies and procedures, altering incentive
compensation, shifting budgetary allocations for substantial resources to new strategy projects,
recruiting and hiring new managers and employees, replacing key executives, communication on need
and benefit to employees and so on.
Concept Problem 33

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"Samar Electronics Limited" is engaged in manufacturing and sale of consumer electronic goods globally. The
company is rated 'best' in "customer satisfaction survey' for 5 years in a row. The spread of the current
pandemic has affected the internal and external environment of the company adversely. Such adverse
impact has negatively impacted the revenue of the company. In order to survive and· retain the business, the
company decided to outsource a major part of its organisational activities, like manufacturing, distribution
channels, after sales service etc. Now the organisation's business functions are scattered worldwide with a
small headquarter connected to independent business units digitally.
What type of organizational structure is the company transitioning into? List the basic features of this new
structure and the disadvantages that the company may face in future in this new structural arrangement.
[RTP Nov 22]
Answer

Samar Electronics Limited transitioning into network structure. It is a newer and somewhat more radical
organisational design. Its essential features are as follows:
a) It is termed as “non-structure” as it eliminates in house functions and outsources many of them.
b) An organisation organised in this manner is often called “virtual organisation” because it is composed of
a series of project groups or collaborations linked by constantly changing non- hierarchical, cob-web like
structures.
c) Network structures become most useful when the environment of a firm is unstable and is expected to
remain so. Under such conditions, there is usually a strong need for innovation and quick response.
d) Instead of having salaried employees, it may contract with people for a specific project or length of time.
e) Long term contracts with suppliers and distributors replace services that company could provide for itself.
However, network structure does have following disadvantages that the company may face in future:
1. The availability of numerous potential partners can be a source of trouble.
2. Co-ordination among the functioning of business partners is perhaps, the biggest problem for the
management in the networking structure.
3. Employees may lack the level of confidence necessary to participate actively in organisation sponsored
learning experiences.

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C HAPTER 8

S TRATEGY I MPLEMENTATION AND C ONTROL

Concept Problem 2

Kewal Kapadia is a managing director of KKC Industries located in Kanpur. In a review meeting with the head
of finance Kuldeep Kapadia, he said that in the first five years of decade, company grew between 8-10
percent every year. Then the growth rate started falling and in previous year, the company managed 1
percent. Kuldeep replied that the company is facing twin issues, one the strategy is not being implemented
as planned; and two the results produced by the strategy are not in conformity with the intended goals.
There is mismatch between strategy formulation and implementation. Kewal disagreed and stated that he
takes personal care in implementing all strategic plans.
You have been hired as a strategy consultant by the KK Industries. Advise way forward for the company to
identify problem areas and correct the strategic approaches that have not been effective.
Answer

The company needs to conduct strategy audit. A strategy audit is needed under the following conditions:
a) When the performance indicators reflect that a strategy is not working properly or is not producing
desired outcomes
b) When the goals and objectives of the strategy are not being accomplished.

c) When a major change takes place in the external environment of the organization.

d) When the top management plans:

➢ to fine-tune the existing strategies and introduce new strategies and

➢ to ensure that a strategy that has worked in the past continues to be in-tune with subtle internal
and external changes that may have occurred since the formulation of strategies.
Adequate and timely feedback is the cornerstone of effective strategy audit. Strategy audit can be no better
than the information on which it is based.
Strategy Audit includes three basic activities:
i) Examining the underlying bases of a firm’s strategy,
ii) Comparing expected results with actual results, and

iii) Taking corrective actions to ensure that performance conforms to plans

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Concept Problem 3

HQ is a service company. Two years back, the company hired a reputed management consultant to formulate
its strategy. The consultant recommended an aggressive expansion plan. Now, in an internal review of the
company, it finds that many of the suggestions are not even fully considered.
Which part of strategic management process is missing in HQ?
Answer

Strategy implementation is missing in HQ. Implementation is the managerial exercise of putting a chosen
strategy into action. It deals with the managerial exercise of supervising the ongoing pursuit of strategy,
making it work, improving the competence with which it is executed and showing measurable progress in
achieving the targeted results.
Strategic implementation is concerned with translating a strategic decision into action, which presupposes
that the decision itself (i.e., the strategic choice) was made with some thought being given to feasibility and
acceptability. The allocation of resources to new courses of action will need to be undertaken, and there may
be a need for adapting the organization’s structure to handle new activities as well as training personnel and
devising appropriate systems.
It is crucial to realize the difference between the formulation and implementation because they both require
very different skills. Also, a company will be successful only when the strategy formulation is sound and
implementation is excellent.
Concept Problem 4

ABC Ltd, an automaker company, analysed its current accounts payable system and found that when
purchasing department writes a purchasing order, they sent a copy to accounts payable. Then material
control would receive the goods and send the copy of documents for the related goods to accounts payable. At
the same time, vendor also sends the receipt for the goods to accounts payable. ABC Ltd realized that
accounts payable department was not as efficient as it should be and it had too many employees than
required.
ABC Ltd. is looking forward to transform its business process of accounts payable. What advice would you
give? Explain with the role of Information technology in this transformation.
Answer

Information technology has developed during the past few years had a very large impact in the
transformation of business processes.
Impact of IT-systems are identified as:
a) Compression of time
b) Overcoming restrictions of geography and/or distance
c) Restructuring of relationships.
IT-initiatives, thus, provide business values in three distinct areas:
a) Efficiency – by way of increased productivity,
b) Effectiveness – by way of better management,
c) Innovation – by way of improved products and services
ABC Ltd can transform by using IT-assisted purchasing process. Purchasing department issues an order and
inputs it into online database. Material control receives the goods and cross references it with the database to
make sure it matches with the order. If it matches material control accepts the order on the computer.

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Concept Problem 5

Sanya Private Limited is an automobile company. For the past few years, it has been observed that the
progress of the company has become stagnant. When scrutinized, it was found that the planning department
was performing fairly well but the plans could not be implemented due to improper use of resources,
undesirable tendencies of workers and non-conformance to norms and standards. You are hired as a Strategic
Manager. Suggest the elements of process of control to overcome the problem. [MTP May 22]
Answer

Sanya Private Limited deteriorating performance due to poor implementation of plans that is improper use of
resources, undesirable tendencies of the workers, and non- conformance to norms and standards, all point
towards weak controls in the organization. Implementation of plans cannot assure results unless strong and
sufficient controls are put in place. The management of the company should focus diligently on developing
controls especially in the identified problem areas.
The process of control has the following elements:
i) Objectives of the business system which could be operationalized into measurable and controllable
standards.
ii) A mechanism for monitoring and measuring the performance of the system.
iii) A mechanism (i) for comparing the actual results with reference to the standards (ii) for detecting
deviations from standards and (iii) for learning new insights on standards themselves.
iv) A mechanism for feeding back corrective and adaptive information and instructions to the system, for
effecting the desired changes to set right the system to keep it on course.
Above elements of control would ensure a proper check on improper use of resources, undesirable tendencies
of the workers, and non-conformance to norms and standards and ensure a result-oriented implementation
of plans.
Concept Problem 17

Elaborate the interrelationship between strategy formulation and implementation.

Answer

Strategy implementation is the managerial exercise of putting a chosen strategy into place. Strategy
execution deals with supervising the ongoing pursuit of strategy, making it work, improving the competence
with which it is executed and showing measurable progress in achieving the targeted results. Strategic
implementation is concerned with translating a decision into action.
It involves allocation of resources to new courses of action that need to be undertaken. There may be a need
of adapting the organization’s structure to handle new activities as well as training personnel and devising
appropriate system
It is crucial to realize the difference between the formulation and implementation because both require very
different skills. A business organization will be successfully only when the strategy formulation is sound and
implementation is excellent
Concept Problem 23

Dr. Raman has been running a nursing home for about twenty-two years now, and has gained enormous
name for his benevolence in Balram district of Chhattisgarh. Recently, his daughter, Dr. Radhika completed
her medicine degree from the United States of America and returned to her hometown to be a part of her
father’s practice. She has been given the baton to promote modern medicine and retain the local skilled
youth in their practice. However, their nursing home’s skilled youth has been more inclined to E-Commerce
employment opportunities. Dr. Radhika has taken it as a challenge to imbibe the very essence of service in

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them, by being employed as nurses and caretakers of the ill. This shall be very crucial in growing the practice
as desired.
Which of the following phases of Kurt Lewin’s Model of Change will be most challenging for Dr. Radhika to
strategically positioning her father’s nursing home?
Answer

Kurt Lewin’s Model of Change proposes three phases of change process to make the change lasting. They are
Compliance, Identification and Internalization.
For Dr. Radhika, Compliance and Identification will not a big challenge, as her father has been one of the
most sought-after personalities serving the ill in their district. And her return from the USA to serve her
country, especially her district, will help the workforce identify her as a role model and there would actually
be no need for compliance, i.e., Reward and Punishment for bringing about a change.
However, the new lucrative E-Commerce employment opportunities will have to be fought through
Internalization, i.e., internal changing of the individual’s thought process, to give them freedom to learn and
succeed. Thus, Internalization will be the most challenging phase.
Concept Problem 24

India's luxurious domestic airline Indijet in an attempt to retain its leadership in aviation sector has hired J S
Dutta as its Chief Executive. Mr Dutta wishes to reorient company to make it a domestic discount carrier. He
desires to introduce no frills business model by offering extremely low fares and improve margins by cutting
down traditional amenities such as reclining seats and complimentary meals. At the same time setting the
stage for a new air revolution, he wishes to brand itself as on-time airlines having proper systems in place
and removing additional and wasteful activities and processes.
What steps will you advise to Mr Dutta? [RTP May 23]
Or
Slow Ltd. is a fifty-year-old organisation engaged in manufacturing of consumer products. Over a time, its
processes have lengthened making it very slow in decision making, production, product and service delivery.
As a manager, you have been asked to suggest how the processes of Slow Ltd. can be improved?
Answer

Mr Dutta should adopt business process reengineering (BPR). It is an approach to unusual improvement in
operating effectiveness through the redesigning of critical business processes and supporting business
systems. It is revolutionary redesign of key business processes that involves examination of the basic process
itself. BPR refers to the analysis and redesign of workflows and processes both within the organization and
between the organization and the external entities like suppliers, distributors, and service providers.
The orientation of redesigning efforts involves total deconstruction and rethinking of business process BPR
involves the following steps:
a) Determining objectives: Objectives are the desired end results of the redesign process. They will provide
the required focus, direction, and motivation for the redesign process and help in building a
comprehensive foundation for the reengineering process.
b) Identify customers and determine their needs: The process designers have to understand customers. The
purpose is to redesign business process that clearly provides value addition to the customer.
c) Study the existing processes: The study of existing processes will provide an important base for the
process designers. The purpose is to gain an understanding of the ‘what’, and ‘why’ of the targeted
process.
d) Formulate a redesign process plan: Formulation of redesign plan is the real crux of the reengineering

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efforts. Customer focussed redesign concepts are identified and formulated. In this step alternative
processes are considered and the best is selected.
e) Implement the redesigned process: It is easier to formulate new process than to implement them.
Implementation of the redesigned process and application of other knowledge gained from the previous
steps is key to achieve dramatic improvements.
Concept Problem 27

Why is Strategic Control important for organizations?

Answer

Importance of strategic control: Strategic control is an important process that keeps organisation on its
desired path. It involves evaluating strategy as it is formulated and implemented. It is directed towards
identifying problems and changes in premises and making necessary adjustments.
Strategic control focuses on the dual questions of whether:
a) the strategy is being implemented as planned; and

b) the results produced by the strategy are those intended.

Concept Problem 32

Explain the various categories in which generic business process of a firm requires redesigning. [RTP May 22]
Answer

The generic business processes of a firm that require redesign may be classified into three broad categories
as follows:
a. Processes pertaining to development and delivery of product(s) and / or services: These may include
research, design, engineering, manufacturing, and logistics, besides purchasing / procurement and
materials management.
b. Process involving interface(s) with customers: These usually include marketing, advertising, order
fulfilment, and service.
c. Process comprising management activities: These include strategy formulation, planning and budgeting,
performance measurement and reporting, human resource management, and building infrastructure.
In the context of these generic business processes, BPR may be viewed as a means of solving business
problem through IT capabilities.
Concept Problem 35

ABC Ltd. is a shoe manufacturing company. The strategic manager of ABC ltd. is Ms. Suman. Ms. Suman
hired the best designers she could find online for her ethnic shoe brand but later she found that the designers
were better at leather designs. Identify and explain linkage in the given situation as she had to change her
strategy basis the actual resources she had? [MTP Nov 22]
Answer

The strategy formulation and strategy implementation are intertwined and linked with each other. Two types
of linkages exist between these two phases of strategic management. The forward linkages deal with the
impact of strategy formulation on strategy implementation while the backward linkages are concerned with
the impact in the opposite direction.
In the given situation Ms. Suman has to follow Backward Linkages as she had to change her strategy basis
the actual resources she had. While dealing with strategic choice, remember that past strategic actions also
determine the choice of strategy. Organizations tend to adopt those strategies which can be implemented

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with the help of the present structure of resources combined with some additional efforts. Such incremental
changes, over a period of time, take the organization from where it is to where it wishes to be.

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