QP CODE : 22101221

BBA DEGREE (CBCS) REGULAR / REAPPEARANCE EXAMINATIONS,

APRIL 2022
Sixth Semester
Bachelor of Business Administration
CORE - BA6CRT29 - STRATEGIC MANAGEMENT
2017 Admission Onwards
ADA276C8
PART A

1. A Strategic Business Unit is a basic organizational unit of the firm that is relatively
autonomous. SBU is an entity responsible for developing its own strategy. An SBU
may be a business unit within a larger corporation or it may be a business unit itself.

2. The specific purpose of an organization, i.e, what the firm will achieve in future and
why they will achieve it is referred to as Strategic intent. It consists of three major
elements - Vision, Mission and Objectives.

3. SWOT stands for Strengths, Weaknesses, Opportunities and Threats.

It views all positive and negative factors inside and outside the firm that affect its
success. Strengths refers to qualities that enable the firm to accomplish its mission.
Weaknesses refers to something a company lacks or does poorly .Opportunities are
external attractive factors that will give a chance to yield more profits. Threats are
those unfavourable factors that can cause trouble to the business

4. IFAS stands for Internal Factors Analysis Summary.

IFAS is a sub component of SWOT analysis that defines a company's internal
strengths and weaknesses. It can be used to evaluate optimal strategic decisions for
the company.

5. Generic or Business strategy is basically a competitive strategy and is concerned more

with how a business competes successfully in the chosen market. It is guided by the
direction set by the corporate strategy.

6. .Human resource strategy is a Functional Level Strategy. A Human Resource Strategy

is the plan that a business creates to manage its human capital in a way that aligns
with the company’s mission and goals. It addresses all essential areas of HR like
recruitment, selection, training, performance appraisal, compensation etc

7. Contingency strategies are formulated to deal with uncertainties that are a natural part
of the business.
8. Strategic Implementation is the process of putting an organization’s various strategies
into action by setting annual or short term objectives, allocating resources, developing
programmes, policies, structures, functional strategies, etc.

9. According to Charles O’Reilly, “Organizational culture is the set of assumptions,

beliefs, values and norms that are shared by an organization’s members.”

10. An amalgamation is a combination of two or more companies into a new entity. In

Amalgamation, a completely new entity is formed to house the combined assets and
liabilities of both companies.

11. Portfolio Strategy is a strategy used by the companies which offer more than one
product and serve more than one customer group , ie, by those companies which have
a portfolio (a basket) of products. It is an analytical tool which views a corporation as
a basket or portfolio of products or business units to be managed for the best possible
returns.

12. Small scale industries (SSI) are those industries in which manufacturing, rendering of
services, and productions are done on a small scale or micro basis. These Industries
make a one - time investment in plant and machinery but it does not exceed Rs 10
Crore and annual turnover does not exceed Rs 50 Crore
PART B

13. The McKinsey 7S framework was developed in the early 1970s by Tom Peters and
Robert Waterman, two consultants working at the McKinsey & Company .Mc Kinsey 7S
Framework consists of 7 elements which are categorized into Hard Elements and Soft
Elements
➢ Hard Elements → easier to define or identify
and management can directly influence them.
It includes Strategy, Structure and Systems
➢ Soft Elements → more difficult to describe and
are less tangible and are more influenced by
culture. It includes Shared values, Skills, Style
and Staff
1. Strategy:- The formulation of strategy is
comparatively easy ,once the external and internal
environmental factors are taken into account.
Strategy may be called as the game plan of the management to achieve its
objectives
2. Structure - Structures describe the hierarchy of authority and accountability in
an organization.
3. Systems - includes all formal and informal systems that allow the organization to
function
4. Shared values- Called “super ordinate goals” .Shared values are the
interconnecting centre of the 7S model.
5. Style- Style refers to the leadership style adopted by the top management. It also
defines the kind of relationship between employers and superiors.
6. Staff - People working in the organization at all levels contribute towards the
success of the organization.
7. Skills- Skills refer to those activities which organizations do best and for which
they are known.

14. The relevance of Corporate Policy may be well seen in the following areas :
1. Policies are needed to carry out the business activities in a smooth manner
2. They provide a clear cut course of attainment of business objectives
3. If a paper explicit policy has been formulated many of the details could be
conveniently handled by the subordinates and management would not
unnecessarily waste its time and energy in doing them
4. Policies provide a guideline and framework for decision making
5. Policies encourage delegation of power of decision making
6. Good policies provide a direction in which all management activities are
focused
7. Policies facilitate evaluation of performance by acting as a standard
8. The sound policies help in building good public image of the business
9. Policies provide the firm with clear objectives with which the managers can
decide about the future cause of action
10. They act as a tool for coordination and control

15. Internal Environment Scanning

Every company has its own personality and specific attributes from its geographical
location, cultural environment and statutory requirements. Scanning the internal
environment involves identifying the business strengths and weaknesses, by analyzing
its competencies. For strategies to be effective the organization must exploit and
expand on its strengths, as well as reduce or eliminate its weaknesses, thus furthering
its competitive advantage in order to achieve profitability.
By effectively identifying the business competencies when conducting an internal
analysis, managers are able to identify its strengths and weaknesses, such as process
efficiencies, powerful machinery, or outdated technology, and thus capitalize on
these, as they are to be factored into the strategy formulation process. By utilizing
strengths and eliminating weaknesses, businesses are able to gain competitive
advantage, which will be reflected on its profitability.

External Environment Scanning

1. Preliminary Assessment – A brochure is prepared mentioning all the external
factors affecting the industry and the company in particular. This Information is
circulated among a group of Executives selected from various functions, such as
Marketing, Production, Human Resources, Administration and Finance.
 2. Cross-functional discussions - The cross functional team members who have the
basic document containing information about the external environment factors
will now sit together for discussions. That cross functional discussions will be
structured to reach conclusions from the previous stage.
3. Consensus of the discussion - The cross functional team meets again with an
internal facilitator to help arrive at a consensus of the various views contained in
the prepared document after the second stage. The discussions are moderated by
the facilitator who is a specialist consultant.
4. Identification of strategic options - Top management team now steps in to
develop strategic options on the basis of the consensus document.

16. The concept of value chain analysis was introduced by Michael E Porter in 1985 in
his seminal book “Competitive advantage” .Value chain views organization as a chain of
value creating activities and are divided into two broad categories, primary activities and
support activities.
Primary Activities
Primary Activities are the foremost and direct sequential activities that create value
for the customers. They consists of the following:
1. Inbound Logistics: Entry of raw materials into the company - Include material
handling, warehousing, inventory control, vehicle scheduling and return of faulty
material suppliers.
2. Operations : refers to conversion of Inputs to Outputs -The process includes all
activities such as production, assembling, packaging, inspection, quality control
and so on
3. Outbound Logistics: These activities are associated with physical distribution of
the finished product to buyers and customers. They include finished goods,
warehousing, material handling, delivery vehicle operations, order processing, etc.
4. Marketing and Sales: This function includes all activities that an organization
uses to market and sell its products to customers. These are the activities related
to advertising, sales promotion, sales force efforts, market research and planning,
distribution channel, and so on.
5. Service: All activities that are associated with providing service to enhance or
maintain the value of the product. Service activities are like installation of
appliances, repair and maintenance, technical assistance etc

17
Nature Horizontal Integration Vertical Integration

1. Meaning A company adds up same type Two or more business units

of product at the same level of engaged in successive stages of
production production in the same industry
join together

2. Economies of Provides economies of scale Does not provide economies of

 Scale scale

3. Objective To eliminate competition To achieve self-sufficiency in

the supply of raw materials

4. Nature of Various units which combine Combining units operate at

units together operate on same level different or successive stages of
of operation in the same manufacture in the same
industry industry

5. Specialization No specialization among Every member in vertical

member units integration specializes in one
process or stages of production

18. The organizational structure refers to an established pattern of relationship among the
components or parts of an organization. There are seven basic types of organizational
structures:
1. Simple Organizational Structure :
➔ Owner manager controls all activities and makes all the decisions
➔ Appropriate for small and young organizations, coordination of tasks is done
through direct supervision
➔ Responsibility of strategy formulation and implementation is solely with the
owner manager
2. Functional Organizational Structure:
➔ Organization is divided into various departments such as finance, marketing,
personnel and production
➔ Commonly found in small companies and also in large companies with single
product line or narrow product ranges
3. Divisional Organizational Structure:
➔ Divisions are formed on the basis of products, markets, distribution channels
or geographical areas.
➔ All divisions are independent of each other - divisions formulate and
implement strategies on their own in consultation with the CEO
4. Strategic Business Unit(SBU) Organizational Structure:
➔ Divisions have some commonality between them in terms of products or
markets etc are placed in one group called SBU
➔ Such divisions have similar opportunities and threats and may foster strategy
formulation and implementation
5. Matrix Organizational Structure
➔ Provides for dual channels of authority, performance responsibility, evaluation
and control
➔ Department heads have functional responsibility for all projects or
programmes while the project managers have project responsibility for
implementing strategy
 6. Network Structure:
➔ A network organization outsources or subcontracts many of its major
functions to separate companies and coordinates their activities from a small
headquarters.
➔ Rather than being housed under one roof, activities like design,
manufacturing, marketing, distribution etc. are outsourced to separate
organizations that are connected electronically to the central office.
7. Virtual Organization:
➔ In this approach, Independent organizations form temporary alliances to
exploit specific opportunities, and then disband when their objectives are met
➔ The virtual organizations consist of a network of independent companies -
suppliers, customers or even competitors - linked together to share skills,
costs, markets and rewards.

19. Turn around means reversing a negative trend for converting a profitable or Sick
business into a profitable one.
Features:
1. Objective :The strategy does not to sell, but works to improve the performance
2. Long term strategy: doesn’t aim at providing temporary relief or short cut
method, studies problem in depth and tries to solve it forever.
3. Scope of turnaround : confined to sick or loss making industrial units having
growth or future prospects
4. Requires cooperative effort : From all parties concerned - employees,
shareholders, banks and FIs, and other concerned parties
5. Involves restructuring : Possible only when the company decides to restructure
its operations
6. Internally or externally : can be undertaken by company’s own experts or by
outside consultants
7. Involves re-planning : Rearranging the structure to convert a loss making unit
into profitable one
8. Involves money : not possible for all companies, especially small companies
which do not have extra resources at their disposal
9. Permanent effect : on the structure and operations of the company
10. Optimum utilization of resources: focus the resources on profitable ventures and
to discontinue the non-profitable ones.

20. According to Robert Camp : “ Benchmarking is the search for industry best
practices that lead to superior performance”.
Types:
1. Strategic benchmarking : is attempted to improve company’s performance in
totality by analyzing long term strategies and plans of best practice companies
2. Functional benchmarking : is attempted for optimizing the functions through
benchmarking with another company in any business sector but engaged in similar
function
 3. Process benchmarking : improving specific, critical activities/ operations and is
compared with companies that practice similar processes
4. Competitive benchmarking : involves identifying best practices of the
competitors
5. Product benchmarking : designing new products or upgrades the current ones
6. Financial benchmarking: Performing a financial analysis and comparing the
results in an effort to assess overall competitiveness.

21. The strategic issues involved in non-profit organizations are as follows:-

1. Strategic Piggybacking - When a non-profit organization develops a new activity to
generate funds needed to make up the deficit in its budget, it is known as
piggybacking.
2. Inter-organizational Linkage - Another strategy adopted by non-profit organizations
is to develop co-operatives ties with other organizations so as to acquire resources and
increase the ability to serve clients efficiently.
3. Linkage with a Profit-making organizations - This strategy is employed to augment
funds, marketing and management. They get funds, guest faculty, jobs for their
graduates, etc.
4. Mission-driven Work culture - In order to be successful, a non-profit organization
must develop mission-driven work culture. Managers and employees must act not in
their self-interest but in the interest of beneficiaries
5. Managing Multiple Stakeholders - These are several stakeholders in a non-profit
organization and each stakeholder group tries to influence its decision making in its
own favor.
6. Mobilization of Resources:- A vast majority of non-profit organizations face
shortage of funds .In order to generate funds they can take the following steps:-
a. Finding new donors and persuading the existing donors to contribute more.
b. Persuading government agencies to give more grants.
7. Generating Institutional Advantage - A non-profit organization is said to have an
institutional advantage when it performs its tasks more effectively than other
comparable organizations.
8. Overcoming Institutional Disadvantages - Non-profit organizations suffer from
some institutional disadvantages. They must organize and employ appropriate
strategies to overcome these disadvantages. Institutional disadvantages arise from the
following sources:

➔ Philanthropic insufficiency- A nonprofit organization may be unable to

generate sufficient sources needed to provide relevant services to the public.
➔ Philanthropic particularism- too many nonprofit organizations may try to
serve a particular region, ethnic, or caste group.
➔ Philanthropic paternalism- too much reliance may be put on the governing
boards to define needs of the community. This situation may encourage the
governing boards to define the activities of the organization in a self-serving
manner.
 ➔ Philanthropic Amateurism - Nonprofit organizations suffering from shortage
of funds may rely too much on volunteer staff which may adopt an amateurish
approach towards clients.
PART C

22. According to Glueck : “ Strategic management is a stream of decisions and

actions which lead to the development of an effective strategy or strategies that help
to achieve corporate objectives”.
Benefits :
1. Ensuring success
2. Encourages innovation and creativity
3. Increasing organizational effectiveness
4. Organizational personnel satisfied
5. Minimizing resistance to change
6. Financial benefits
7. Offsetting uncertainty
8. Improved quality of strategic decisions
9. Competitive advantage
10. Criteria for evaluation

Limitations :
1. Resistance to change
2. Complex and Dynamic environment
3. Expensive
4. Not suitable for small scale organization
5. Lack of expertise and information
6. Lack of realism
7. Lack of flexibility
8. No match in strategy formulation and strategy implementation
9. Lack of commitment
10. Failure of firms adopted strategic management

23. Industry analysis is a tool that facilitates a company's understanding of its position
relative to other companies that produce similar products or services. The basic purpose
of industry analysis is to assess the strengths and weaknesses of a firm related to its
competitors in the industry. It tries to highlight the structure and realities of a particular
industry and the extent of competition within the industry. Through industry analysis, an
organization can find whether the chosen field is attractive or not and assess its own
position within the industry.
Framework for Industry Analysis :
1. Industry setting: Pattern of industries in terms of their stages of evolution, stage
of maturation and geographical dimension from the setting of an industry.
➔ Fragmented Industry - large number of small or medium sized companies,
none of which is in a position to determine industry price.
 ➔ Emerging industries - Are those in the introductory and growth phase of their
life cycle
➔ Mature industries - Those who reached the maturity stage of their life cycle
➔ Declining industries - are those in the transition stage from maturity to
decline
➔ Global industries - are those with manufacturing basis and marketing
operations in several countries.
2. Industry Structure - The economic and technical forces operating in an industry
are called industry structure. It also includes the number of competitors and the
extent of product differentiation. There are 5 types of industry structures:
➔ Pure monopoly : only one seller in the market, no need for product
differentiation
➔ Pure oligopoly : few sellers which have no product differentiation, any price
change by one seller affects the other seller
➔ Pure competition : large number of sellers with no product differentiation,
compete on price basis and no single seller has control over prices
➔ Differentiated oligopoly : few sellers with differentiated products based on
quality, product design, delivery, price, etc
➔ Monopolistic competition : large number of sellers with differentiated
products, firms with the highly differentiated product have high customer
loyalty and enjoy monopoly power

3. Industry attractiveness - Refers to the profitability position of the industry.

Industry attractiveness depends on the following factors - profit potential,
growth prospects, competition, industry barriers, etc
4. Industry performance - An industry’s performance is measured in terms of
Production, Sales, Profitability, Technological Advancements, etc.

24. Strategy formulation is the process of determining appropriate courses of

action for achieving organizational objectives and thereby accomplishing
organizational purpose. The stages of strategy formulation are as follows:-
1. Establishing objectives - The key component of any strategy statement is to set
the long-term objectives of the organization. The objectives should be realistic and
achievable.
2. Analysis of External Environment - External environment analysis is the
process of analyzing the external environment for assessing the opportunities and
threats to the enterprise.
3. Analysis of Internal Environment - Internal analysis involves identifying the
business’ strengths and weaknesses by analyzing its competencies.
4. Fixing Quantitative Targets - In this state a firm may set quantitative target for
some of its objectives. At this stage, the purpose is not to set targets for
comparison with future outcomes, but to set global targets for the firm as a whole.
 5. Relating Targets to Divisional Plans -This step of strategy formulation identifies
the contribution that can be made by each division or product group within the
corporation.
6. Gap Analysis - Gap Analysis is the identification and analysis of a gap between
planned or desired performance and actual performance. It helps to reveal the
extent of gap that exists between the present reality and future aspirations of the
organizations.
7. Choice of strategy - This is the final stage in the formulation of corporate
strategy. Different strategies are evaluated from different angles and the
appropriate strategy is chosen

25. Strategic evaluation and control is the final phase in the process of strategic
management. It may be defined as the process of determining the effectiveness of the
chosen strategy in achieving the organization's objectives and taking corrective
actions whenever necessary.
Barriers in Strategic Evaluation and Control :
1. The limits of control - Dilemma of too much against too less control, poles of
limits are extremes and are dangerous It is really tough task to determine the upper
and lower limits of control
2. Measurement difficulties - Measurement difficulties hover around the basic
issues of reliability and validity of each tool or method of evaluation and control.
As a result the whole evaluation and control system may fail to achieve one
uniform pattern of evaluating and controlling on the basis of the requirements of
accuracy, reliability and validity.
3. Resistance to evaluation - The outperformers are not bothered by any kind of
evaluation and control; it is the vast majority whose performance is average and
below average who are against these norms of evaluation and control and are
bound to resist to hide their inefficiency and laxities.
4. Focus on the short term - Managers focus on immediate results and short term
achievements. They may ignore long term impact of strategy. it is tedious to judge
long term implications and immediate assessment is easier and more convenient
5. Emphasize on efficiency - Efficiency means doing things rightly while
effectiveness means doing the right things. What constitutes effective performance
is not always clear.
Measures to overcome these barriers
One has to overcome these barriers because every problem has a solution. The organization
may take time to find perfect solutions to these barriers. One thing is sure that the evaluation
and control process are necessary appendage of strategy formulation and implementation.
There is control because there is planning. In case everything goes after pre-planning, there is
no need for controlling. However, evaluation is needed to know to what extent there is
variation. The best thing to remove the impact of barriers is to change the attitude of
people, who are subject to evaluation, towards evaluation and control.