Program – MBA
Subject code & name - MB0052- Strategic Management and Business
Policy
1. What is strategy? Explain some
of the major reasons for lack of strategic management in some companies?
Meaning of strategy
The word ‘strategy’
comes from Greek strategies, which
refers to a military general and combines stratus (the army) and ago (to lead).
The concept and practice of strategy and planning started in the military, and,
over time, it entered business and management. The key or common objective of both
business strategy and military strategy is the same, i.e., to secure
competitive advantage over the rivals or opponents. We will discuss the
similarity between business and military strategies in detail later.
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2. Explain the following:
(a) Core competence
(b) Value chain analysis
(a) Core competence
Core Competence
Core competence
of a company is
one of its
special or unique
internal competence. Core competence is not just a single strength or
skill or capability of a company; it
is ‘interwoven resources, technology and skill’ or synergy culminating into a
special or core competence.
Core competence gives
a company a clear competitive advantage over its competitors. Sony has a
core competence in miniaturization; Xerox’s core competence is inphotocopying;
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(b) Value chain analysis
Various competences and
resources of an organization can be integrated into a chain of activities which
an organization performs to meet customer demand. Since each of these
activities is expected to create value when it is performed, the chain can
appropriately be called a value chain. Michael Porter (1985)
introduced the concept
of value chain analysis. Now, it has
become common for professional companies to do this analysis.
Value chain
analysis helps in
understanding how value is
created in organizations through
various
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3. Describe in brief the following
environmental factors which a business strategist considers:
(a) Political factors
(b) Technology
(a) Description of Political
factors
Political
factors or political conditions can have significant impact on industry, business
and the corporates. Political stability improves business environment and
encourages economic and business activities. Political instability produces the
opposite effects. Political factors
do not refer to
only national political conditions
or relations, but also to international relations. Improved political relations
between the US and China in the mid-70s resulted in trade agreement between the
two countries. The
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(b) Description of Technology as an environmental factor
Technology, as an environmental factor, influences strategic planning and management in a number of ways.
Technological changes
lead to the shortening of product life cycles and create new sets of consumer
expectations. Electronic products are a good example. This sector is
experiencing the most rapid changes today. One can clearly see the
technological revolution in the colour TV market. Sometimes,
advance
signals on technological developments are available through research and
development and industry/trade journals and magazines. Companies in the pharmaceutical industry,
for example, are
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4. Write a brief note on
Turnaround strategy.
Turnaround Strategy
Corporate
turnaround may be defined as
organizational recovery from business decline or crisis. Business decline for a
company means continuous fall in turnover or revenue, eroding profit, or
accrual or accumulation of losses. So, business or organizational decline, like
business performance, is understood in relative terms, that is, compared with
the past. But, some strategy analysts describe business decline in terms of
current comparisons also; for example, relative to industry rates or averages
or even relative toeconomic growth of the country. Corporate crisis means
deepening or perpetuation of a decline. Turnaround strategies
are usually required
for crisis situations.
If organizational decline is not continuous or severe, corporate
restructuring can provide the solutions. That is why turnaround
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5. Define the term ‘strategic
alliance’. What are its characteristics and objectives?
Definition of the term ‘strategic alliance’
Strategic alliance
may be defined
as cooperation between
two or more organizations with a common objective, shared
control and contributions (in terms of
resources, skills and capabilities) by the partners for mutual benefit.
Characteristics of strategic alliance
The definition can be
expanded and made more comprehensive in terms of essential features or characteristics
of strategic alliance. A typical strategic alliance exhibits five essential
features or characteristics:
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6 Write short notes on the
following:
a) Competitive advantage
Competitive advantage,
also called strategic advantage, is essentially a position of superiority of an
organization in relation to its competitors. A more formal definition of
competitive advantage is:
‘Competitive advantage
exists when there
is a match
between the distinctive
competences of a firm and the factors critical for success within its industry
that permits the firms to outperform competitors.’
The
definition shows that superiority of a company over its competitors exists
because the company has developed some unique competence—core competence
or distinctive competence—which matches
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6. b) Porter’s Competitive threat
model
A vital
task of a strategist is
to anticipate and/or recognize the nature
of competition and potential threat from competitors and to develop
appropriate response strategies. The most difficult task in this is to properly
assess the magnitude of existing competition and correctly foresee the threat
from new
and emerging
competitors. Porter (1980) in his pioneering work on competitive strategy had
identified five major types of competitive threats (Below Figure), which are
valid even today. These are:
Fig
: Porter’s Five Forces Model
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SUBJECT CODE & NAME - MB0053 –International
Business Management
1. “The world economy is globalizing at an accelerating pace”. Discuss
this statement and list the benefits of globalization.
The world
economy is globalising
at an accelerating
pace as countries previously closed
to foreign companies
have opened up
their markets. Geographic
distance is shrinking because of the Internet, as the ambitious companies aim
for global leadership. All this is possible because of booming international
business.
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2. Discuss the role of demographic environment in international business.
Demographic environment
In international
business; scanning of
demographic environment plays
an important role as it helps
firm understand the various demographic factors such as
gender; age; religious
background and ethnicity.
Firms; while appraising international
markets for new
business opportunity or
product launch; use demographic environments to identify target markets
for specific products or services
it wishes to
cater. There are
both advantages and disadvantages in
scanning the demographic
environment of the
country. One has to
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3. Regional integration is helping
the countries in growing their trade. Discuss this statement. Describe in brief
the various types of regional integrations.
Regional integration
Regional integration results
in the creation and diversion of trade. It supports overall growth of the
region, coupled with efficient trading practices. Trade creation increases
production and income and also leads to new entrants in the
market and, therefore,
results in tougher
competition. The transfer
of technology is also faster.
Regional integration
induces reduction on tariffs and
prohibitions. It spreads goodwill among member countries and also helps in
reducing the chances of conflict.
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4. Write short note on:
a) Foreign currency derivatives
Currency derivative is
defined as a financial contract that seeks to
swap two currencies at a predestermined rate. It can also be termed as
the agreement where the value
can be determined
from the rate
of exchange of two
currencies at the
spot. The currency
derivative trades in
markets that correspond to the spot
(cash) market. Hence,
the spot market
exposures can be enclosed
with the currency
derivatives. The main
advantage from derivative hedging
is the basket of currency available.
Below
figure describes the examples of currency derivatives. The derivatives can be hedged with
other derivatives. In the foreign
exchange market, currency derivatives
like the currency
features, currency options
and currency swaps are usually traded. The standard
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b) bases of international tax systems
The bases of international
tax system are:
• Tax
neutrality – To keep
the economic efficiency
from being affected the international tax system should
remain neutral.For the nationality of the
invester or the
locality of the
investment not to
be influenced, a neutral tax is important. . Such an
environment will allow capital to move from a nation with lesser return to a
nation with higher return, resulting in well allocated resourses that will
ensure a high gross world output..
• Tax equity – The principle of tax
equity states that all equally positioned tax players contribute in the cost
of operating the government according to the equal rules. The concept
of equity can be perceived in two
ways. It is assert by the first view
that the input of each tax
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5. Strategic planning involves allocation of resources to firms to fulfil
their long term goals. What are the types of strategic planning? Compare
Top-down Vs Bottom-up planning.
Types of strategic planning
Strategic planning process
involves allocation of resources to firms to fulfil their long-term goals. Any
business plan can be classified into three
types.They are:
• Strategic planning: This planning process is the best among the
three business planning processes.
It is a long-term process thatthe business owners utilise
to unveil their
business’ vision and
mission. It also determines a
gateway for business
owners for achieving
their goals. Strategic planning
fulfills the mission and the overall goals of the firm. Whereas, the
other two are
rather more short-term
and are used sometimes without
any relation to the long-term
business goals.
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6. Discuss the various payment
terms in international trade. Which is the safest method and why?
The modes of payment
Cash-in-advance
Cash-in-advance helps
in removing the risks
of credit by the
exporter. By this method, exporter
receives the payment
before the transfer
of goods. The options that are
available with the cash-in-advance method include wire transfers and credit
cards. This is the least attractive method for many of the buyers as it creates
cash flow problems. The buyers are concerned about the quality/quantity and
delivery of the
goods that are
not sent if the
payment is made in advance.
Letters of credit
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