MMPC 012 CT
MMPC 012 CT
Note: Attempt all the questions and submit this assignment to the coordinator of your
1h
study centre. Last date of submission for January 2023 session is 30 April, 2023
st
and for July 2023 session is 31 October, 2023.
An organization must first anange its resources to carry out specific tasks to reap the strategic
management benefits. For example, someone who excels at marketing may st:mggle to manage
the organization's public relations. Hence, the management should assess its resources and
select the best one for respective processes.
#3 - Framing Strategies
After selecting the best resource for every process, the organization frames its action plan for
accomplishing the goal. This strategic planning consists of elements needed to achieve the set
objectives effectively. The analysis, assessment, and supervision of processes at every stage
help the business resolve issues, whether internal or external.
#4 - Implementing Strategies
Following the strategy development based on the organization's objectives, the next stage is to
execute them. Every business must train its human resources, from entJ.y-level employees to
managers, to ensure they fully understand the process. It will bring core competencies into
action within the organization for the best possible output.
#5 - Evaluating Effectiveness
The review of strategies is the final step in the process. Looking into each aspect of the business
during the strategy fo1mulation and implementation help the management identify the effo1ts
of every individual. The organization can recognize these eff01ts through perfonnance
appraisal schemes, which are essential aspects of the business.
Examples
Let us understand the concept better with the below-mentioned strategic management
examples:
Example #1
Dave intends to extend his constrained furniture business by introducing a new product
category, i.e., all home decor goods. However, he is unsure how his brand would pe1fo1m as it
took years for him to establish his furniture business due to a delay in identifying negative
factors. Thus, to avoid any risk this time, Dave conducts SWOT (StJ.·engths, Weaknesses,
Oppmtunities, and Threats) analysis as part of the stJ.·ategic management.
He identifies the strong and weak points of business. He also analyzes potential oppmtunities
and threats based on the cunent market trend. Accordingly, Dave strategizes and plans the
processes, staiting from manufactming to aove1tising, ensming that he allocates the right
resources at the 1ight places.
Example #2
The old strategy calendai· is a strategic management approach that signifies the process
execution in isolation without guidance, coordination, or collaboration. As a result of the
disconnect behveen enterprise �trategy and strategic groups ai1d units, many businesses failed
to achieve their goals.
Due to performance concerns, the economic slump, rising expenses, and invading impmts,
Chrysler Group expe1ienced massive losses in 2000. It was when the automotive manufactmer
decided to combine all strategy-related activities into a single functional unit. As a pait of this,
it set up the Office of StJ.·ategy Management. It aided in the management of compai1y stJ.·ategies.
Furthermore, it helped in the development of new products by business units.
The collaboration of employees and management resulted in core competencies required to
achieve business goals. In 2004, the automobile brand successfully launched a series of new
sedans and made a profit of $1.2 billion despite stJ.uggling domestic market.
2. Describe the process for analyzing the external environment.
ANS: External analysis means examining the industJ.y environment of a company, including
factors such as competitive structure, competitive position, dynainics, and histmy. On a macro
scale, external analysis includes macroeconomic, global, political, social, demographic, and
technological analysis. TI1e primai·y purpose of external analysis is to detennine the
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opportunities and threats in an industry or any segment that will drive profitability, growth,
and volatility.
Environmental Scanning- Environmental scanning refers to a process of collecting,
scmtinizing and providing infonnation for strategic purposes. It helps in analyzing the internal
and external factors influencing an organization. After executing the environmental analysis
process, management should evaluate it on a continuous basis and strive to improve it.
Strategy Fo1mulation- Strategy fo1mulation is the process of deciding best course of action for
accomplishing organizational objectives and hence achieving organizational purpose. After
conducting environment scanning, managers formulate corporate, business and functional
strategies.
Strategy Implementation- Strategy implementation implies malting the strategy work as
intended or putting the organization's chosen strategy into action. Strategy implementation
includes designing the organization's structure, distributing resources, developing decision
making process, and managing human resources.
Strategy Evaluation- Strategy evaluation is the final step of strategy management process. The
key strategy evaluation activities are: appraising internal and external factors that are the root
of present strategies, measuring perfonnance, and taking remediaVconective actions.
Evaluation makes sure that the organizational strategy as well as it's implementation meets the
organizational objectives.
TI1ese components are steps that are canied, in chronological order, when creating a new
strategic management plan. Present businesses that have ah-eady created a strategic
management plan will reve1t to these steps as per the situation's requirement, so as to make
essential changes.
ENVIRONMENT STRATEGY STRATEGY STRATEGY
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SCANNING FORMULATION IMPLEMENTATION EVALUATION
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Components of Strategic Management Process
Strategic management is an ongoing process. Therefore, it must be realized that each
component interacts with the other components and that this interaction often happens in
choms.
There are six key factors that determine the level of competition in an industry:
1. Intensity of industry rivalry
It measures the levels of concentration of 1ivals. Factors to detennine the intensity of industry
1ivah-y include product homogeneity, brand loyalty, and consumer switching costs.
2. Threat of potential entrants (Barriers to entry)
It measures the difficulty for newcomers to enter the industry. Factors to dete1mine barriers to
entiy include brand loyalty, excess production capacity, and govermnent regulation.
3. Bargaining power of buyers
This measures how much power consumers have in determining the prevailing ptice in a
market. Buyers' bargaining power is high when buyers are large and concentrated, and buyers'
p1ice sensitivity is high when there are many industi·y competitors and substitutes.
4. Bargaining power of suppliers
This measures how much a supplier of materials is able to restrict the company's business
sti·ategy. The bargaining power of suppliers is high when suppliers are large or concenti·ated.
Purchasers' price inelasticity is high when there are few alternative suppliers and when there
are few substitute inputs.
5. Threat of substitute goods/services
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This measures the chances that competing goods of a similar nature will threaten a company's
offerings. It is more likely to occur when switching costs are low or when substitutes offer
superior p1ice to perfo1mance characte1istics.
6. Power of complementary good/service p1·oviders
It measures the level of impact of companies that produce complementaiy products.
Complements add value to products in an indushy. If complements ai·e weak and unatti·active,
they can become a threat that slows industi·y growth and limits profitability.
3. Explain the Resource Based View Model in light of the resources being the key to
support the organizational performances.
ANS: l11e resource-based view (RBV) is a model that sees resources as key to supe1ior film
perfonnance. If a resource exhibits VRIO atti·ibutes, the resource enables the film to gain and
sustain competitive advantage. RBV is ai1 approach to achieving competitive advantage that
emerged in 1980s ai1d 1990s, after the major works published by Wemerfelt, B. ("The
Resource-Based View of the Film"), Prahalad and Hainel ("The Core Competence of The
Corporation"), Barney, J. ("Film resources and sustained competitive advantage") ai1d others.
The supp011ers of this view ai·gue that organizations should look inside the company to find
the sources of competitive advantage instead of looking at competitive environment for it.
The following model explains RBV and emphasizes the key points of it.
Resource-based view
relies on resources
Tangible Intangible
that must be
Heterogeneous Immobile �
[ ]....--.....
and have VRIO attributes to become
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VRIO resources
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that provide
Competitive advantage
According to RBV proponents, it is much more feasible to exploit external opp011unities using
existing resources in a new way rather than trying to acquire new skills for each different
opp011unity. In RBV model, resources ai·e given the major role in helping compai1ies to achieve
higher organizational perfonnance. l11ere ai·e two types of resources: tangible and intangible.
what makes your business special?
According to the RBV, not all resources have the potential to drive competitive advai1tage. In
order to do so, they must be valuable, rai·e, inimitable and nonsubstitutable. The VRIO
framework, an integral component of this theory, emphasizes the saine qualities except for
"nonsubstitutable," which is replaced with "organization-wide supp011ed".
Resources that enable a company to identify ai1d leverage opportunities while protecting itself
against threats ai·e considered valuable. Those resources also need to be rare and inimitable,
meaning that other companies don't have access to them or cannot easily imitate them. If your
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competitors use the same resources as you, your business cannot achieve superior perfonnance.
For example, resources derived from a company's histmy or culture may be difficult to imitate.
Organizations also need to focus on using resources that cannot be substituted. If other
companies can develop software programs that are similar to yours, then you no longer hold a
competitive advantage. According to the VRIO framework, a firm's resources must be
suppo1ted by its organizational culture, structure and process. Without these elements, your
business would not be able to leverage its assets and exploit the competitive advantage.
4. Describe the various factors involved in formulating the competitive strategy.
ANS: A competitive strategy is a set of policies and procedures that a business uses to gain a
competitive advantage in the market. It's the process of identifying and executing actions that
allow a business to improve its competitive position. Businesses may use va1ious competitive
stI·ategies to raise the value of their products and se1vices for consumers, investors and
employees. They also implement these strategies to gain sustainable revenue streams.
Competitive strategy is important because it affects the overall strategies of a business. If a
business doesn't have a competitive strategy, it may not find a unique advantage against its
competitors. A competitive strategy is cmcial in finding and developing new ideas for products
and se1vices that the company can offer. Other advanta&es of implementing a competitive
strategy include:
• The exploration of new oppmtunities
• The retainment of customer loyalty with better products and se1vices
• Innovation to stay current on technological changes in the market
Deciding on which competitive strategy for a company to implement may require
experimentation and careful thought. Here are some fa<i:tors to consider when choosing a
competitive strategy:
• The business' size: A smaller business may prefer one of the differentiation strategies
to appeal to more localized niches.
• The resources a company has available· You can consider recommending one of the
cost strategies to a business that has ample resources to produce large quantities of
products.
• The existing reputation of a company: A company with a long-established
reputation may consider implementing one of the differentiation strategies as it
attempts to expand into different markets.
OIBER FACTORS:
Changing Customer Needs
Though you can focus your strategy on delive1ing more value to customers than your
competitors, what your customers value may change. You have to continually smvey your
market environment to see if new customers are replacing existing ones in your target markets,
customer expectations are changing or customers want different levels of se1vice than they did
before. Changes in the composition of your target markets and changes in customer needs are
factors that require adjustinents to your strategy to respond to the new customer requirements.
Finding New Suppliers
You may have based parts of your competitive stI·ategy on using a particular supplier if the
goods you buy from the business have unique characteristics. If such a supplier goes out of
business or paitners with one of your competitors, you have to adjust your strategy to
emphasize different competitive advantages.
For example, if the supplier in question had the lowest prices and you were competing on price,
you may have to raise your p1ices ai1d promote your products as the least-expensive ones that
can fulfill certain advanced functions.
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