AIJE B.

CEQUINA BS-ENTREP 3A

Strategic management

BA 218

Questions 1.1

1. How will you describe in your own words the reality of dynamism? Cite examples to
prove why the environment is considered dynamic.

Examples to prove why the environment is considered dynamic, Economic changes can
spark a dynamic business environment, too. Falling interest rates may allow a business or its
competitors to expand, rapidly changing the industry's growth rate. ... Shifting demographics
may also lead to a dynamic environment, as businesses respond with new and improved
products and services.

2. Define hypercompetition. Give two important catalysts of competition and expound on

their respective roles in setting off hypercompetition in the global environment.

In strategic management, hypercompetition is a condition when the competition is so

intense, creating instability in the market. These conditions require companies to change
strategies continuously. Companies maneuver with each other so that changing market
dynamics quickly. As a result, the strategic competitiveness of a company can disappear
immediately.

Questions 1.2

1. How will you define strategic management?

Strategic management is the process of setting goals, procedures, and objectives in order to
make a company or organization more competitive. Typically, strategic management looks at
effectively deploying staff and resources to achieve these goals.

2. What roles Do organizational input play in the attainment of the success of am

organization? Identify each of these input.

Organization roles and responsibilities are the foundation of a successful business. As the
leader of your company, it’s your job to ensure that the organization roles and responsibilities
are well defined so every department and division fits together as a whole. Employees that
understand their roles in a business organization are more likely to perform their jobs well and
feel secure in what they’re doing. Entrepreneurs that believe in defining organization roles and
responsibilities typically make organizational charts available to their people so that everyone
has a clear picture.

3. Differentiate strategic analysis from strategic decision-making. Give an example.

Strategic analysis of an organization is an essential factor when it comes to formulating

a plan for the smoother working of your company. With the help of strategic planning, you can
achieve the goals or objectives set by the company. While Strategic decision-making is the
process of charting a course based on long-term goals and a longer term vision. By clarifying
your company's big picture aims, you'll have the opportunity to align your shorter term plans
with this deeper, broader mission – giving your operations clarity and consistency.
 3. Differentiate strategic intelligence from strategic thinking. Show this difference using
companies that have demonstrated the application of both processes.

Strategic thinking is a skill. You can develop it, leverage it or improve it. Strategic planning
is a process. It has to be conducted or carried out. So while thinking in a certain manner can be
a natural or a nurtured attribute, planning strategically is a process that drives results or needs
tactical actions to be defined within its framework.

4. When does an organization enjoy competitiveness? Explain by giving an example What

is comparative advantage? Cite examples.

A competitive advantage may stem from the user experience — that is, a better, more
affordable or more enjoyable product — or it may be another tangible or intangible asset, such
as the intellectual property or the customer service team. Competitive advantage separates a
surviving business with a thriving one, but the source of competitive advantage can change
from sector to sector and company to company. Your competitive advantage lies in unlocking
the most engaging benefit, for your target audience, and delivering it in a way that no other
business can.

5. It’s possible you’ll have several possible competitive advantages, the one you choose to
promote in your marketing and brand communication should be the one with the
greatest differentiation and potential to engage.

Competitive advantage is what makes a customer choose your business over another one.
By understanding, and promoting, a competitive advantage, companies can win a greater
amount of market share. A competitive advantage may stem from the user experience — that
is, a better, more affordable or more enjoyable product — or it may be another tangible or
intangible asset, such as the intellectual property or the customer service team.

6. What role does strategic control play in the strategic management of an organization?
Give examples.

Strategic control systems provide managers the tools to regulate and govern their
activities. In strategic control, managers first select strategy and organization structure and
then create control systems to evaluate and monitor the progress of activities directed towards
implementing strategies.

Questions 1.3

1. Discuss in what ways strategic management and strategic planning are similar. In what
ways are the two different?

While this can be true, as they are both part of the same overall process, each phrase has a
slightly different implication. Strategic planning is the process of formulating a direction for an
organization, while strategic management is the process of determining how this direction can
be achieved.

2. Give reasons why organizations undertake strategic planning. Do you agree with these
reasons? Explain your answers.

Yes, because a strategic plan establishes a direction for your business to take, it will help it
sharpen its focus in order to get there. Strategic planning can therefore help your organization
develop the right goals and targets and help everyone focus their efforts into meeting them.
 3. What are the disadvantages of conducting strategic planning? Will you still advise
organizations to conduct strategic planning? Why?

One of the major criticisms of strategic management is that it requires the organization to
anticipate the future environment in order to develop plans, and as we all know, predicting the
future is not an easy undertaking. The belief being that if the future does not unfold as
anticipated then it may invalidate the strategy taken. Recent research conducted in the private
sector has demonstrated that organizations that use planning process achieve better
performance than those organizations who don’t plan – regardless of whether they actually
achieved their intended objective. In addition, there are a variety of approaches to strategic
planning that are not as dependent upon the prediction of the future.

4. Define strategic planning and discuss its salient features.

Strategic planning means planning for strategies and implementing them to achieve
organizational goals. Strategic planning helps in knowing what we are and where we want to go
so that environmental threats and opportunities can be exploited, given the strengths and
weaknesses of the organization.

5. Discuss and differentiate the two types of strategic planning.

Internal Strategic Planning: The key aspect of strategic planning is aligning all members of the
management team with the vision and mission of the organization; both in the short and long
term. Once an organization is on the same page as far as where they want to go and what they
want to achieve, they then need to create the action plans to get there. In contrast, making
decisions that are not directly inline with their goals and objectives, an organization risks
wasting valuable time and money. Competitive Strategic Planning: Once you have a good
understanding of what what your organization's mission, vision and values are, you may find
your company operating in a highly competitive environment. All companies have competitors,
but in some industries, the actions and decisions that your competitors make have a greater
impact on how you run your organization.

6. Enumerate the steps in strategic planning.

 Identify your core mission.

 Have a future-focused vision statement.

 Identify priorities.

 Build a communication or rollout plan.

 Hold people accountable.

 Review, review, review.

Questions 1.4

1. Define organizational vision by using an example.

The vision statement helps the organization simply define its goals, creating something to
work towards in the future. Often your vision can be summed up in one or two sentences, as in
these examples: ... As we move towards our goal of being a world-class university, we will
support research on a global scale.

2. Why is the mission statement important to an organization?

Mission statements are an incredibly important navigational tool when you are thinking
about the future of your company. By identifying the purpose of your work, you can better
understand the goals your company should be committed to accomplishing. ... The mission
statement is the bedrock of any organization.

3. Are organizational goals and objectives similar? In what way / s are they different?

Goals are the outcomes you intend to achieve, whereas objectives are the specific actions
and measurable steps that you need to take to achieve a goal. ... Alignment and order: Goals
are set to achieve the mission of an organization or individual, while objectives are set for the
accomplishment of goals.

4. What values / value system do you want an organization to demonstrate? Explain your
answer.

Having clear company values helps you ensure that all your employees are working towards
the same goals. Your core values support the company's vision and shape its culture. That's
why every single business decision should be aligned with these values. A business without core
values isn't really a business. How can you build great teams, deliver an excellent customer
service and foster innovation if you haven't defined and shared your company values with your
employees?5. Differentiate organizational climate from organizational culture.

CHAPTER TEST

Multiple Choice

1. C 11. B

2. A 12. A

3. C 13. A

4. C 14. D

5. B 15. C

6. B 16. A

7. B 17. C

8. C 18. B

9. A 19. C

10. A 20.C
Identification

1. Value System 6.

2. Organizational Climate 7. Organizational Culture

3. Organizational Goal 8. Strategy Analysis

4. Hypercompetition 9. Strategic Decision-making

5. Strategy Implementation 10. Strategic Control

Questions 2.1

1. Why should organizations possess "organizational intelligence"?

Organizational intelligence helps companies understand the relationships that drive their
business—by identifying communities as well as employee workflow and collaborative
communications patterns across geographies, divisions, and internal and external organizations.

2. How will you define environmental scanning? Explain why conducting environmental
scanning is important.

Environmental scanning is the process of gathering information about events and their
relationships within an organization's internal and external environments. The basic purpose of
environmental scanning is to help management determine the future direction of the
organization.

3. What are the two sources of strategic information? Differentiate one from the other and
give your own examples.

A wealth of strategic information is available to organizations from both published and

unpublished sources. Unpublished sources include customer surveys, market research,
speeches at professional and shareholders’ meetings, television programs, interviews, and
conversations with stakeholders. Published sources of strategic information include periodicals,
journals, reports, government documents, abstracts, books, directories, newspapers, and
manuals. A company website is usually an excellent place to start to find information about a
firm, particularly on the Investor Relations web pages.

4. Enumerate the four modes of environmental scanning. Give examples for each type. As a
manager, is it always beneficial to conduct a fomal search? Explain-your answer.

Questions 2.2

1. What is SWOT Matrix Analysis? Explain its relevance to organizations.

SWOT analysis can help your business identify what it's doing right and what needs to
change in the organization — and the process is surprisingly simple. SWOT analysis is a
planning methodology that helps organizations build a strategic plan to meet goals, improve
operations and keep the business relevant.
 2. What are the components of SWOT Matrix Analysis? What actions do organizations
have to do when their strengths are underutilized, their weaknesses are not dealt with,
the threats to them are not minimized, and the opportunities are not taken advantage
of?

Organizational strategies are the means through which companies accomplish their missions
and goals. Successful strategies address four elements of the setting within which the company
operates: (1) the company's strengths, (2) its weaknesses, (3) the opportunities in its
competitive environment, and (4) the threats in its competitive environment. This set of four
elements—strengths, weaknesses, opportunities, and threats—when used by a firm to gain
competitive advantage, is often referred to as a SWOT analysis. SWOT was developed by Ken
Andrews in the early 1970s. An assessment of strengths and weaknesses occurs as a part of
organizational analysis; that is, it is an audit of the company's internal workings, which are
relatively easier to control than outside factors. Conversely, examining opportunities and threats
is a part of environmental analysis—the company must look outside of the organization to
determine opportunities and threats, over which it has lesser control.

3. Look for a real-life case and apply SWOT analysis. Recommend corresponding plans of
actions or strategies.

Strengths & Weaknesses

The strengths of an organization are typically the pillars which make it a success. Due to
its vast success domestically and globally, McDonald's has several strengths. Let's take a
look at some of the strengths of the McDonald's corporation.

Brand Recognition. Who doesn't recognize the golden arches forming the M that makes
the logo for McDonald's? McDonald's is renowned for being recognizable for that same
logo, as well as for their popular mascot, the red-haired Ronald McDonald clown.

Opportunities & Threats

The opportunities in a SWOT analysis are those things that provide a chance for an
organization to grow and become a more viable competitor in the market. Here are
some opportunities for McDonald's:

Expand Menu. Since McDonald's largely dominates the market for hamburgers, a prime
opportunity would be for it to enter another food industry, such as tacos or pizza. This
expansion of the menu could also include beverage choices as well.

Questions 2.3

1. What is the external environment? What are the forces interplaying in the external
environment?

An external environment is composed of all the outside factors or influences that impact the
operation of business. The business must act or react to keep up its flow of operations. The
external environment can be broken down into two types: the micro environment and the
macro environment.

2. In relation to critical social concerns today in the external environment, how do

changing social structures, the world's aging population and great demand for health
services, the evolving sophistication in the lifestyle of peoples, and cross-cultural
diversity impact organizations?
 The answer to this question lies partly in the ability of families and communities, as well as
modern social, political, economic, and health service delivery systems, to provide optimal
support to older persons. However, while all modern societies are committed to providing
health and social services to their citizens, these systems are always in flux, guided by diverse
and evolving national and regional policy formulations. Health, social, and economic policies for
older persons vary substantially among industrialized nations. Analysis of these variations
through appropriate cross-national research may assist greatly in the formulation of effective
policies aimed at enhancing the health status, as well as the social and economic well-being, of
elderly populations.

3. How do geopolitical issues like political independence, changing governments, balance

of power, terrorism, suicide bombings, global alliances, and chemical and nuclear
warfare affect the global political balance?

Terrorism is the intentional use of indiscriminate violence to create fear and terror as a
means to achieve an ideological, financial, religious, or political aim. It is often used against
non-combatant targets. Terror tactics may include biologic, chemical, nuclear, or explosive
events. Terrorism is generally considered to be the use of force or violence outside the law to
create fear among citizens with the intent to coerce some sort of action. Health professionals
should be aware bioterrorism is a perfect vehicle for terrorists to strike fear into the hearts and
minds of citizens in the hopes they will bend the will of the people to support their agendas. All
health professionals need to be prepared for this potentially catastrophic event. This activity
reviews the types, evaluation, and treatment of biologic, chemical, and radiation terrorism and
discusses the role of the interprofessional team in evaluating and treating catastrophic events
associated with terrorism.

4. In what ways do economic realities like globalization, competitors and suppliers, the fall
of financially stable organizations, increasing oil prices, economic trade agreements, the
emergence of new markets, and the rise of China as a major economic player in the
world affect the growth and development of nations?

Put simply, globalization is the connection of different parts of the world. In economics,
globalization can be defined as the process in which businesses, organizations, and countries
begin operating on an international scale. Globalization is most often used in an economic
context, but it also affects and is affected by politics and culture. In general, globalization has
been shown to increase the standard of living in developing countries, but some analysts warn
that globalization can have a negative effect on local or emerging economies and individual
workers.

5. How do technological advances observed in the fields of communication, business,

banking, education, medicine, and security, contribute to the decision-making of
organizations?

Given the rapid advances and the increased reliance on technology, the question of how it is
changing work and employment is highly salient for scholars of organizational psychology and
organizational behavior (OP/OB). To illustrate technology's impact on work, work systems, and
organizations, we present four popular technologies: electronic monitoring systems, robots,
teleconferencing, and wearable computing devices.

6. Environmental issues are urgent and critical today. What are these concerns and why is
environmental responsibility the urgent appeal of the global neighborhood?

Healthy ecosystems, interdependent webs of living organisms and their physical

environment, are vital to all life on Earth. Our ecosystems provide us with clean air, fresh water,
food, resources and medicine. Biodiversity, the variation of life on Earth, is a major factor in
nature's resilience. In a biodiverse ecosystem, if the environment changes and some organisms
can no longer thrive, others can take their place and fulfill essential functions. It is often the
most overlooked species that are the most important to healthy ecosystems. Insects, for
example, play an essential role in pollinating flowering plants — a third of the food we eat
depends on animal pollinators.

CHAPTER TEST

Multiple Choice

1. A 9. B

2. A 10. A

3. A 11. C

4. C 12. A

5. B 13. C

6. A 14. C

7. B 15. A

8. A

IDENTIFICATION

1. Social Structure 6. SWOT Matrix

2. Environmental Scanning 7. Climate change /use of Biodegradable

Materials
3. Secondary Information
8. Organizational Intelligence
4. Strategic Information
9. Digital Medicine
5. Undirect Viewing
10. E-banking

Questions 3.1

1. Why is there a need for the government to regulate business activities? Explain your
answer.

Government regulates business for several reasons. First is public safety and welfare. Many
industries are regularly reviewed and overseen because their activities, if they go awry, can
have significantly harmful effects to human health, financial well-being, or community structure.
The second reason is protection of industry. Many regulations are in place to protect those who
have developed their business correctly; licensing, permits, and inspections by the government
weed out undesirables or criminal activities that undercut honest industries. The third reason is
revenue generation. Many programs require certification or licensing that businesses must pay
for in order to operate.

2. How responsible is the government in bringing about a robust economy? What is the
extent of this responsibility?

Under Communist state, government is in full control of all branches of the economy, every
industry there is and every business small or large. As such, it carries full responsibility of the
status of the economy. Under 19th century Capitalism the government didn’t involve into
economic issues almost at all. In between these two extremes lays State capitalism Under State
Capitalism government doesn’t control economy fully, yet has a mechanism to influence it via
Governmental regulations, licensing, taxes, fees and other forms of control. As such, a
government is being held responsible for the weak economy. It also always takes credit for its
robust conditions.

3. Why is infrastructure important to the economy of a nation?

The economy needs reliable infrastructure to connect supply chains and efficiently move
goods and services across borders. Infrastructure connects households across metropolitan
areas to higher quality opportunities for employment, healthcare and education. Clean energy
and public transit can reduce greenhouse gases. This same economic logic applies to
broadband networks, water systems and energy production and distribution.

4. How should government regulate monopolistic and oligopolistic business entities? What
are anti-trust laws? Give examples.

Competitive firms sell at market prices, which maximizes both consumer surplus and total
surplus. Consumer surplus is the additional benefit enjoyed by consumers over the price that
they paid for the product. Monopolies, on the other hand, set prices to maximize their own
profits, by decreasing supply, increasing their own producer surplus at the expense of both
consumers and society. And because there is a deadweight loss from imperfect competition, the
economy produces less because of the monopoly. Furthermore, allocative efficiency is reduced,
not only because desired products are not produced in the quantity that could be produced
considering the costs of production, but also because monopolies often don't produce a product
that would be most desirable by society, because they do not have to worry about competition,
so there will not be another company producing a better or more desirable product that could
possibly take market share away from the monopoly. And the lack of competition makes the
employees of the monopoly complacent. Indeed, innovation may be shunned because there are
always risks with new ideas and the complacent employees do not want to upset the status
quo. With competition, they must take those risks; otherwise, they would lose market share and
may even become bankrupt eventually.

5. How can the government stimulate an otherwise stagnating economy? Give examples.

Central governments, including the U.S. federal government, utilize fiscal and monetary
policy tools to stimulate growth. Fiscal stimulus refers to policy measures undertaken by a
government that typically reduce taxes or regulations—or increase government spending—in
order to boost economic activity.
Questions 3.2

1. Can you say that the Filipino culture is uniquely Filipino? Why?

Yes, Filipino culture is unique compared to other Asian countries, and beliefs apply every
day in the life of the Filipinos and reveal how rich and blessed the culture the people have. This
trait is usually seen during fiestas and holidays where many Filipinos are giving their best to
entertain their visitors well.

2. The Filipinos' spirit of hospitality is expressed through the celebration of town fiestas. Is
this a good Filipino trait?

Yes, this trait of the Filipinos towards their visitors is undeniably exceptional. Whenever a
visitor stays in a Filipino home, there will be a feast or a grand celebration as it is somehow a
tradition for us to prepare bountiful Filipino cuisine for guests to have a taste of our culture
through food.

3. When is bayanihan a good Filipino characteristic?

Bayanihan is a core essence of the Filipino culture. It is helping out one's neighbor as a
community, and doing a task together, thus lessening the workload and making the job easier.
It is also called the 'community spirit'. It is best exhibited when people wish to move locations
in the rural area.

4. Is emphasis on close family ties always a positive trait?

In the Philippine households, it’s common to see not only a father, a mother and children
living together. It’s easy to find the grandparents, an aunt or uncle or some cousins under the
same roof. One value that Filipinos are known for is the “close family ties” that results to
extended family structure. It is because Filipinos believe that families should be together and
help each other out. Family and relatives do as much as they can to support each other even
financially. For example, if a relative gets married, close kins somewhat feel obliged to help out,
whether in the expenses or labor that comes with the occasion. The soon-to-be-wed barely
needs to hand out invitations because attending such occasion feels like a duty.

5. Why is the mañana habit a bad Filipino practice?

Manana Habit is considered a bad Filipino practice because this affects the mood, decision
power, and most of all, this is dangerous once this becomes a habit.

6. When does kanya-kanya become detrimental to our growth as a nation?

Kanya-kanya is selfishness in total. It is democracy at its worst - it happens and is

happening the grievous in the USA today- freedom of everything- the Filipino lives to parrot the
Americans- freedom of speech ( kahit nagmumura) , freedom of arms( patayan dahil may baril-
licensed or not , like road rage and parking space, and natingnan lang ng malalim. Freedom of
corruption, it’s a way of life here- all those who thinks of joining government has thoughts of
making money first before serving the people.

7. Is being highly politicized a good or a bad trait? Explain your answer.

Good traits are that these people have a strong set of beliefs and values shaped by their
own or others experiences that they totally believe in and are prepared to vocalise and defend
on an ongoing basis, sometimes in the face of intense opposition. I think it is a positive
character trait to know what defines you and why, and to be consistent and upfront and
truthful about it, rather than being a sheep, or changing views based on what is fashionable at
the time.

8. How does culture affect the conduct of business activities in the Philippines?

The influence of cultural factors on business is extensive. Culture impacts how employees
are best managed based on their values and priorities. It also impacts the functional areas of
marketing, sales, and distribution. It can affect a company’s analysis and decision on how best
to enter a new market. Do they prefer a partner (tending toward uncertainty avoidance) so they
do not have to worry about local practices or government relations? Or are they willing to set
up a wholly owned unit to recoup the best financial prospects?

Questions 3.3

1. What kinds of risks do stakeholders face when they venture in any business?

The various stakeholders face different levels of risk and also potential rewards. The risks
change as the business moves through the stages of startup to maturity. At startup stage the
risks are: You: The high risk of building the company, its success or failure. Loss of income
Investors: losing their investment $ Employee team: Loss of income, job. Potential salary .
Customers: New product assimilation

2. How important are stakeholders to the economy of the government?

Community and Government as a Stakeholder The government collects taxes from the
company, so it benefits from the company's profits. As a small business grows, it can affect the
community in positive or negative ways. A business may provide jobs, and it may contribute
funds to local schools and community organizations.

3. In what ways are government and employees considered indirect stakeholders?

Direct stakeholders are those involved in the company's day-to-day activities. Like
employees, who carry out their daily tasks, working on the company's ongoing projects. Indirect
stakeholders are those who are more interested in the result of the production.

4. In what ways are the stakeholders responsible to the community? Explain company
social responsibility.

Company stakeholders have a social responsibility to act for the good of the entire
company, not just their own self-interests. The policies for which stakeholders push must not be
based purely on financial gain. For example, stakeholders may have the opportunity to increase
their own wealth if they push to merge the company's subsidiaries into the parent company.
This merger, however, could limit the company's ability to serve multiple markets, hinder its
product diversification or create other problems. Stakeholders must push for a strategy that
focuses on long-term gain and growth for their company.

5. Can companies share business secrets among themselves and still consider each other
as competitors?

Competition law requires competitors to act strictly independently of each other in the
market. When competing companies share commercially sensitive information, whether directly
or indirectly through a third party, this can cause two types of problems under competition law.

6. Why are some companies competing against themselves?

 Is it good to be competitive? Some say yes, others say no. Why? Well, that’s because being
competitive has both benefits and drawbacks. On one hand, competitive people are ambitious
and confident. They also don’t give up easily and are ready to do anything to fulfill their
deepest desires. We envy them, because eventually, they reach success. However, being
competitive has its disadvantages too. Competitive people are often self-absorbed, conceited,
and fussy. Moreover, because their desire to win is fueled by fear of defeat, they live in
constant stress. No wonder we don’t want to be competitive. But, what if you could be
competitive in a healthy way?

7. Why is there a need for a company to identify and know its competitors?

Knowing who your competitors are, and what they are offering, can help you to make your
products, services and marketing stand out. You can use this knowledge to create marketing
strategies that take advantage of your competitors' weaknesses, and improve your own
business performance.

8. Define unfair competition. Give examples.

Unfair competition addresses circumstances where consumers have been misled, or

deceptive trade practices, as well as practices designed to restrict or alter a company's revenue.
In all cases, the activity can legally give rise to a tort action. That is, the wrongful act is such
that the perpetrator can and should be held civilly liable in a court of law. Some forms of unfair
competition are crimes, as well.

9. Categorize the different types of products and give an example for each type.

Firstly, what specifically is a consumer product? A consumer product is a product bought by

final consumers for personal consumption. But not every consumer product is the same. There
are four different types of consumer products. Marketers usually classify consumer products
into these 4 types of consumer products: Convenience products, Shopping products, Speciality
products, Unsought products. These 4 types of consumer products all have different
characteristics and involve a different consumer purchasing behaviour. Thus, the types of
consumer products differ in the way consumers buy them and, for that reason, in the way they
should be marketed.

10. Differentiate the forms of competition. Discuss the advantages and disadvantages of
these types of competition.

Market Structure is defined as the number of firms producing identical products which are
homogeneous. In other words, it is the factors that influence the interaction of buyers and
sellers in a market, and also determines changes in price by how different levels of production
and selling processes interact together. Market structures are important both to firms and
consumers alike, because it influences how they (firms and consumers operating within the
market or industry) behave in terms of pricing, supply, entry & exit, competition and efficiency.
Currently, there are four types of market structures practiced in the world. These are: Perfect
Competition, Imperfect or Monopolistic Competition, Monopoly and Oligopoly.

Questions 3.4

1. 1.Draw a profile of the Filipino consumer of today: his needs, wants, demands, and
expectations.

2. In what sense has customer satisfaction graduated to simply becoming a minimum

requirement in business?
 The minimum requirement to simply stay in business—to survive—is to meet the
expectations of your customers. At this level, your customers have no complaints. They are
satisfied for the moment, but at this point, customer loyalty doesn’t exist. If a competitor
demonstrates that it can and will do more than merely meet their expectations, your customer
will very quickly become an ex-customer. Moreover, if you fail to meet their expectations, they
will leave and give their customer loyalty to someone who can. It can be helpful to observe
your local merchants, the true entrepreneurs.

3. How can customer relationships enhance customer intimacy?

A company truly wants to achieve customer intimacy they need to build a relationship with
the customers. And that means the employees who work directly with them need to be the
most powerful, most knowledgeable, best-paid, best trained people in the company. Which they
are usually not. No decision should be taken without the involvement of Customer Care,
because they are the ones that know the customer best. And only when the company is
oriented towards the needs of the customers, can they actually reap the benefits – a
relationship with the customer that involves loyalty, trust, personal involvement and a large
financial difference.

4. How critical is the role of a supplier?

Suppliers have a hugely important role at every stage of the product lifecycle. From
sourcing raw materials to helping ramp up production, and to finding better options for raw
materials as the market starts becoming saturated, companies need to work closely with their
suppliers to get the best out of their products.

5. What ethical implications can be drawn from the malpractices of suppliers?

A tendency toward unethical behaviours occurs depending upon the hierarchical state of the
market in which the entity operates and the products to be obtained by the buyer. Unethical
behaviours result from imperfect moral values. The source of unethical behaviours in business
can be traced to the ethical climate and policies carried out by the buyer. Unethical practices
observed in many forms include, in addition to outright fraud: unfair competition and
communication, non-respect of agreements, and unfair attitudes and treatment of stakeholders.
Supply chain mapping is an important tool for ensuring ethics run throughout supply networks.
By sending automated requests for information through the supply chain, businesses can get a
better understanding of what's happening and where. However, it's crucial to get the buy-in of
first-tier suppliers, which can then help to identify sub-suppliers.

6. Is JIT applicable here in our country? Why?

JIT is seen as a more cost efficient method of maintaining stock levels. Its purpose is to
minimize the amount of goods you hold at any one time without compromising the production
volumes. And this has numerous advantages such as less space needed, with a faster
turnaround of stock; we don't need as much warehouse or storage space to store goods. Less
stock levels also means lesser investment.

7. Explain fully the statement, the community, in principle, is the rationale behind the
business framework.

Business planning is an important precursor to action in new ventures. By helping firm

founders to make decisions, to balance resource supply and demand, and to turn abstract goals
into concrete operational steps, business planning reduces the likelihood of venture disbanding
and accelerates product development and venture organizing activity.
 8. How can the variables in the local environment help improve the lives of the poor?

The first and the foremost Sustainable Development goal is to “End Poverty in all forms
everywhere”. Each and every country of the world is looking forward to eradicating poverty so
that even the poor and vulnerable people also enjoy equal rights to economic resources,
healthy living conditions as well as access to basic infrastructure and technology. Moreover,
there should not be any doubt that poor nations and poor people are more severely vulnerable
to effects of environmental damage than the rich.

Questions 3.5

1. Explain Michael Porter's Five Forces Model of Industry Competition and discuss each of
the forces.

Porter's Five Forces is a model that identifies and analyzes five competitive forces that
shape every industry and helps determine an industry's weaknesses and strengths. Five Forces
analysis is frequently used to identify an industry's structure to determine corporate strategy.
Porter's model can be applied to any segment of the economy to understand the level of
competition within the industry and enhance a company's long-term profitability.

2. Cite examples for each force, stressing when they present an advantage or otherwise.

Porter's Five Forces is a simple but powerful tool for understanding the competitiveness of
your business environment, and for identifying your strategy's potential profitability.This is
useful, because, when you understand the forces in your environment or industry that can
affect your profitability, you'll be able to adjust your strategy accordingly. For example, you
could take fair advantage of a strong position or improve a weak one, and avoid taking wrong
steps in future.

CHAPTER TEST

MULTIPLE CHOICE

1. B 9. A

2. C 10. C

3. A 11. B

4. B 12. A

5. A 13. A

6. A 14. A

7. C 15.A

8. A
IDENTIFICATION

1. Internal Environment 9. Corrupted Competition

2. Stakeholders 10. Competitor

3. Manana Habit 11. Consumer behavior

4. Government 12. Customer delight

5. Culture 13. Customer intimacy

6. Customer 14. Community

7. Competition 15. Formal arrangement

8. Supplies

Questions 4.1

1. What is the concept of value chain analysis?

Value chain analysis (VCA) is a series of steps, such as product design, purchasing and
distribution, to be used for analyzing how business organizations identify their dominant
valuable factors and activities for related product or services. The basic unit of value chain
analysis is an individual value chain, which reflects the internal business engagements during
the development of products. The theory was originally pointed out by Michael Porter who
studied the differences between primary factors and supportive aspects in terms of business
management.

2. What are the four components of supply chain management?

There are four major elements of supply chain management: integration, operations,
purchasing and distribution. Each relies on the others to provide a seamless path from plan to
completion as affordably as possible.

3. In what ways are sourcing and ordering related to inventory management? Give at.
least two examples.

Inventory management refers to the process of ordering, storing and using a company's
inventory. This includes the management of raw materials, components and finished products,
as well as warehousing and processing such items. For companies with complex supply chains
and manufacturing processes, balancing the risks of inventory gluts and shortages is especially
difficult. To achieve these balances, firms have developed two major methods for inventory
management: just-in-time (JIT) and materials requirement planning (MRP).

4. Describe the production and operations model. What is the relationship between
manufacturing and assembly?

Successful organizations have well defined and efficient line function and support
function. Production comes under the category of line function which directly affects customer
experience and there by future of organization itself. Aim of production function is to add value
to product or service which will create a strong and long lasting customer relationship or
association. And this can be achieved by healthy and productive association between Marketing
and Production people. Marketing function people are frontline representative of the company
and provide insights to real product needs of customers. An effective planning and control on
production parameters to achieve or create value for customers is called production
management.

5. What are the components of the logistics circle? What possible problems can companies
encounter in managing their logistics?

According to a third party logistics study by Capgemini, ‘cutting transportation costs’

makes the top of the list as far as concerns for the logistics industry. Some other obvious pain-
points make the list as well, but perhaps the most important and at times challenging concern is
the need for greater innovations and technology advances while remaining budget-conscious.

6. How should companies conduct the marketing and sales of their products and services?

There is often a great deal of misunderstanding about marketing. People often consider
marketing to be the same as advertising. It's not. Advertising is only one part of marketing.
Very simply put, marketing is the wide range of activities involved in making sure that you're
continuing to meet the needs of your customers and getting value in return. Market analysis
includes finding out what groups of customers (or markets) exist, what their needs are, what
groups of customers you prefer to serve (target markets), what products or services you might
develop to meet their needs, how the customers prefer to use the products and services, what
your competitors are doing, what pricing you should use and how you should distribute
products and services to customers.

Questions 4.2

1. What are growth strategies? What are internal growth strategies?

A growth strategy entails introducing new products or adding new features to existing
products. Sometimes, a small company may be forced to modify or increase its product line to
keep up with competitors. Otherwise, customers may start using the new technology of a
competitive company.

2. When is market penetration a good growth strategy? Give at least two examples.

A market penetration strategy carries a low amount of risk, and is an ideal business growth
strategy for SaaS startups that are bootstrapped or unwilling to invest heavily in more risky
growth strategies. Put simply, it’s a means of planning how to grow in an already thriving
market where similar products exist, and gaining market share by taking your competitors’
subscribers.

3. What specific strategies (at least two) will you propose to a company of your choice to
implement market development?

You can grow by leveraging your product knowledge to reach new customers. More than
likely, you have spent time and money developing your product and service offering. Assuming
you’re happy with your current offering, extending your strategy into new markets is a logical
next step. This is aptly called a market development strategy. If you have identified potential
new markets as opportunities, use these strategies to reach them. Here are some quick
considerations to make before executing a market development strategy: Are you willing to
commit the required time and resources to reach this new market? Can your business be
adapted to the new market?
 4. What does it entail to pursue product development? Come up with a new or
differentiated product for an existing company.

When you understand product development this way, you can see that it is not synonymous
with product management, although many people mistakenly use the terms interchangeably.
Indeed, product development does not refer to a single role at all. In some organizations,
“product development” may be shorthand for the implementation team, comprised primarily of
developers, engineers, and possibly quality assurance.

5. Is it easy to adopt diversification internal growth strategy? Give the challenges allied to
pursuing this strategy. Use an existing company.

Diversification strategies are used to expand firms' operations by adding markets, products,
services, or stages of production to the existing business. The purpose of diversification is to
allow the company to enter lines of business that are different from current operations. When
the new venture is strategically related to the existing lines of business, it is called concentric
diversification. Conglomerate diversification occurs when there is no common thread of strategic
fit or relationship between the new and old lines of business; the new and old businesses are
unrelated.

Questions 4.3

1. How do you define competitive strategies?

Competitive Strategy is defined as the long term plan of a particular company in order to
gain competitive advantage over its competitors in the industry. It is aimed at creating
defensive position in an industry and generating a superior ROI (Return on Investment).

2. When is adopting cost leadership strategy advantageous to the company? Explain your
answer.

Increases Business Sustainability, When the costs of a business are low, it will reduce the
financial threats for a company. If any market collapse occurs for a particular product, the
companies following Cost Leadership will remain on the safer side as there are no high losses.

3. What does a company get when it pursues a competitive differentiation strategy? Give
an example to support your answer.

A successful product differentiation strategy creates brand loyalty among customers. The
same strategy that gains market share through perceived quality or cost savings may create
loyalty from consumers. The company must continue to deliver quality or value to consumers to
maintain customer loyalty.

4. Is the market-niche strategy better than the cost leadership and differentiation
strategies? Why?

Companies that use a cost leadership strategy and those that use a differentiation strategy
share one important characteristic: both groups try to be attractive to customers in general.
These efforts to appeal to a broad range of consumers can be contrasted with strategies that
involve targeting a relatively narrow niche of potential customers. These latter strategies are
known as focus strategies

5. Is innovation strategy a practical strategy to pursue? Explain your answer.

Yes, without an innovation strategy, innovation improvement efforts can easily become a
grab bag of much-touted best practices: dividing R&D into decentralized autonomous teams,
spawning internal entrepreneurial ventures, setting up corporate venture-capital arms, pursuing
external alliances, embracing open innovation and crowdsourcing, collaborating with customers,
and implementing rapid prototyping, to name just a few. There is nothing wrong with any of
those practices per se.

6. What do economies of scale do to a company? Give at least two examples.

Economies of scale are cost advantages reaped by companies when production becomes
efficient. Companies can achieve economies of scale by increasing production and lowering
costs. This happens because costs are spread over a larger number of goods. The larger the
business, the more the cost savings.

7. In what ways do implementing technology strategies help companies?

This advanced planning helps a business anticipate costs, avoid delays and minimize
interruptions to work processes using the previous technology. Employees can also benefit from
knowing when technological resources such as printers or servers will be offline during the
process to plan their work around interruptions.

8. Is operational effectiveness always a practical competitive strategy? Explain your

answer.

The resulting operational improvements have often been dramatic. Yet many companies
have failed to translate those gains into sustainable profitability. Simply improving operational
effectiveness does not provide a robust competitive advantage because rarely are “best
practice” advantages sustainable. Once a company establishes a new best practice, its rivals
tend to copy it quickly. Strategy is about doing things differently, not simply doing them better
than everyone else. And it’s the key to competitive advantage.

9. Can you think of any company that used innovation as a competitive strategy?

You can spend all you want on innovation, but you can't guarantee success. In fact, the most
innovative companies are not necessarily the biggest spenders, according to Booz & Company's
recent global innovation study. What matters instead? The ability to build the right innovation
capabilities to connect with the overall business strategy and other critical capabilities. Top 10
most innovative--Apple, Google, 3M, GE, Toyota, Microsoft, P&G, IBM, Samsung and Intel--are
spending.

Questions 4.4

1. What are the different phases of the life cycle of a product or a service? Suggest
additional strategies for each phase of the life cycle. Give examples.

The product/service life cycle is a process used to identify the stage in which a product or
service is encountering at that time. Its four stages - introduction, growth, maturity, and decline
- each describe what the product or service is incurring at that time.

2. Why do some organizations decide to adopt stability strategies? Explain your answer.

Following are the reasons why a company may adopt a stability strategy: If a firm plans to
consolidate its position in the industry in which it is operating. In case a country in which the
company operates is facing recession or slowdown, and the company wants to save cash rather
than spend it for expansion purposes.

3. Given the three types of retrenchment strategies, what are the advantages and
disadvantages of implementing liquidation or divestment?

In simple terms, a retrenchment strategy involves the abandonment of those products or

services, which are no longer profitable for the organization. It also includes withdrawal of the
business from those markets where even sustenance is difficult. For example, a corporate
hospital may decide to focus only on specialized treatments, and thus, realize higher revenues.
Besides, a retrenchment strategy also results in reduction of the number of employees, and sale
of assets associated with discontinued product or service line.

4. When is an organization in need of a turnabout? Cite examples of turnaround

strategies. Which is the easiest to implement and the hardest to actualize?

Turnaround recovery strategies are a range of measures that companies employ to recover
from a period of a performance decline. The range of measures is important since they mark an
upturn phase of a company after a period of significant negativity. Companies suffer a decline
in their annual reported earnings from time to time. Several factors can cause a downturn in a
business, including new competition entering the market, high costs, inadequate financial
controls, unforeseen demand shift, poor management, and over-management.

Multiple Choice

1. A 11. A

2. A 12. C

3. C 13. A

4. B 14. C

5. B 15. B

6. A 16. B

7. A 17. A

8. A 18. C

9. C 19. C

10. B 20.A

IDENTIFICATION

3. Value chain

1. Purchase order 4. Carrying costs

2. Stock Keeping Unit (SKU) 5. Supply chain management

6. Purchasing or supply management

7. Production and Operation

8. Marketing and Sales

9. Logistics

10. Inventory model

11. Lead time

12.

13. Ordering costs

14. Inventory management

15. Maintenance repair, and operating

Supplies (MRO)

16. JUST In Time(JIT)

17. Assembly

18. Logistics Circle

19. Warehousing

20. Scheduling

21. Growth Strategy

22. Dispatching

23. Diversification

24. Competitive Strategies

25. Broad Differentiation Strategy

26. Life Cycle

27. Stability Strategies

28. Turn - around Strategy

29. Maturity Stage

30. Climate and culture