St. Joseph’s College of Commerce (Autonomous)

End Semester Examination- MARCH / April 2014

M.COM – IV Semester

 BUSINESS POLICY AND STRATEGIC MANAGEMENT

Duration:  3 Hours                                                                                      Max. Marks: 100

Section – A

1. Answer any SEVEN questions out of TEN. Each carries 5 marks.          (7 x 5  = 35)
2. Explain the relationship between a company’s strategy and its business model. What makes a strategy a winner?
3. Distinguish between a managed corporation and governed corporation.
4. What is a mission statement? What are the distinct features or characteristics of a mission statement? Write a mission statement of a hypothetical company?
5. Differentiate between competence, core competence and distinctive competence with suitable examples.
6. Explain the strategy implications of BCG Portfolio Model.
7. What is the general strategy of market challengers? Differentiate and explain five attack or offensive strategies?
8. Discuss the strategy orientation in SBU. What are the advantages and disadvantages?
9. Discuss the functional policies, and plans in strategy implementation?
10. What are the four pricing strategies implemented by the companies?
11. Explain the balanced score card approach.

 

Section – B

 

1. Answer Three questions out of five. Each carries 15 marks.                 (3 x 15 = 45)

 

11. What are the different approaches to strategic decision making? Discuss the process of strategic decision making in companies.
12. Enumerate the major environmental factors which influence a Company’s business? Which of these according to you, are more important and why?
13. Discuss the merits of generic strategic options available to companies evolved by Michael Porter. What is the best-cost provider strategy? Explain with suitable examples.
14. Define the features of Strategic alliance. What are the forms and objectives of strategic alliance?
15. Analyze various quantitative criteria for performance evaluation of companies. Distinguish between financial criteria and non financial criteria.

 

 

Section – C

III).        Compulsory question –  Case study                                                     (1 x 20 = 20)

 

16.

Zhang Ruimin, Chairman, Haier Corporation

Zhang Ruimin has emphasized a focus strategy in first building Haier into a well-known maker of refrigerators in China and nowa significant force in the US market and beyond. The result has been a 40% annualized growth in sales so far in this century.

It all started several years ago in China with a sledge hammer. Appointed to run a marginal state owned refrigerator factory , Ruimin quickly saw that “the real problem was that workers had no faith in the company and didn’t care. Quality didn’t even enter into any body’s mind.” So after a customer complained, Ruimin lined up 76 defective models on the factory floor. He picked up a sledge hammer and told those who were responsible to smash them. He included himself in the task.  “The message got through that there is no A, B, C, and D quality,” said Ruimin, “There is only acceptable and  unacceptable.” Fast forward to taking Haier into the United States. Instead of trying to compete in the market for large, high-end refrigerators as it does in China, Ruimin chose a market focus strategy, introducing  a multi purpose mini refrigerator designed for use in college dormitories and as a small wine cellar. Haier’s niche products rapidly gained in popularity.

 

Combined with its legendary commitment to quality control that all started with sledge hammer-wielding Zhang Ruimin emphasizing the importance of quality to his employees, Ruimin’s  Haier has leveraged its FOCUS strategy to move into different product lines and grab market share in the United States by choosing market focus, Haier delivered a clear and unique value proposition to American consumers.

 

Questions:

 

1. Which of the generic strategy has an association with Ruimin’s strategy initiative in Haier? Justify your Answer.

 

2. What focus helped Haier in attaining competitive advantage in the market?

 

3. Of the different levels of strategy orientation, which level was given a proper motivation by Zhang Ruimin. What are the various levels of strategy orientation?

 

 

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End Semester Examination –M.Com. IV Semester March-2014

Scheme-Business Policy and Strategic Management

1. Business model: the revenue-cost-profit-economics of its strategy demonstrates its viability of the business enterprise as a whole. Company’s strategy: relates broadly to its competitive initiatives and business approaches (irrespective of financial outcomes it produces) E.g., contrasting business modes of Microsoft and Red Hat Linux. What makes a strategy a winner: i. how well does the strategy fit the company, (internal) situation, ii.is the strategy helping the company to achieve a sustainable competitive advantage (external), iii. Is the strategy resulting in better company performance.
2. Managed corporation: more like traditional model of a company. Focus is on power equations between management and control (Board –CEO relationship).shareholders role is to throw out board. Governed corporation: answer to problems of corporate governance lies in the governed corporation. The focus is not on power- not in monitoring or controlling and controlling the managers- but in improving decision making.

Major differences between the two is in terms of board’s role, characteristics and policies.

3. Mission statement: it embodies the business philosophy of a company’s decision makers, implies the image the company wishes to project for itself, reflects the company’s self concept; indicates the company’s self-concept; indicates the company’s principal product or service areas and the customers needs the company seeks to satisfy. Features:  i. it should be a declaration of organizational purpose, attitude or outlook. ii. it should have a clear customer orientation. iii. It should be a declaration of the  social objectives or policy. Mission statement of a hypothetical company:……………

4.Competence: is he ability to perform a task or achieve some objectives.  Core competence: special or unique internal competence. A core competence is a competitively important activity that a company performs better than other internal activities. Distinctive competence: A distinctive competence is a competitively valuable activity that a company performs better than its rivals.

5. 1. Stars- continue to increase market share at the expense of short term earnings. 2. Cash cows: Maintain share and cost dealership until further investment becomes marginal. 3. Problem Children: Assess chances of dominating segment; If good, go after share; if bad, redefine business or withdraw. 4. Dogs: plan systematic withdrawal so as to maximize cash flow.
6. Challengers are no. 2 and position and tend to challenge leaders of their supremacy. General strategy is attack. E.g., Samsung Vs. Apple (mobile). Offensive strategies: i. Frontal attack, ii. Flank attack, iii Encirclement attack, iv Guerilla attack, v leaping frog attack.
7. Divisions closely approximate strategic business units in all multi-business organizations. The fundamental factor in SBU is to identify independent product/market segment which require distinct strategies. The divisional structure should be much broder with more than one SBU in each division. Advantage: facilitate strategic management of too many business units.- clear strategic focus- enables measurement of performance- easy to add a new business or and divest unprofitable ones. Disadvantage: with too many SBUs effective management becomes a problem –problems of defining autonomy – conflicts of interest likely.
8. In working out functional policies and plans, companies should take care of alignment of strategies in terms of vertical fit and horizontal fit. Vertical fit: [Between Business strategy and Functional (alignment between higher level and lower level strategies)]. Horizontal fit: is alignment or fit between strategies or activities at the same level.
9. i. cost – based pricing, ii. Demand- based pricing, iii. Competition – based pricing, and Value – based pricing.
10. Balanced score card approach to strategy evaluation combines both quantitative and qualitative criteria. It incorporates the expectation of different stakeholders in relating performance to strategy. Perspectives of Balanced score card approach: i. Financial, ii. internal business perspective, iii. customer perspective, iv. Learning and growth perspective.

 

Section B

11. Approaches to strategic decision making: A. Intuitive-Emotional approach, B. Rational Analytical approach, C. Satisfying approach, D. Political –behavioral approach.  Strategic decision making Process:  i.  Problem awareness, ii. Problem diagnosis, iii. Development of alternative solutions, iv. The selection of a solution and v. Implementation of the solutions.
12. Major external environmental factors: the external environment consists of a large number of factors which influence company’s business. They are: Political- Economic – Sociological – Government policies (Controls) – Technology – Competition – intermediaries and suppliers. Organizations should generally be concerned with relevant environment and operating environment. Operating environment , also known as competitive environment consists of factors in the immediate competitive situation like customer profile, level of competition, industry structure, technology, any specific regulation affecting company or industry so on.
13. 1. Cost leadership: exploiting some aspect of the production process, and executing a cost significantly lower than that of competitors. 2. Focused cost leadership: company occupies a specific niche or niches serving only a part of he total market. 3. Differentiation strategy: offering superior performance (high scale advantage). 4. Focused Differentiation: strategy for small and specialist companies. 5. Best cost strategy: a central strategy striking a middle course between low cost advantage and differentiation advantage and broad market and or niche market on the other.
14. Strategic alliance is co-operation between two or more organizations. Strategic alliance are delicate to manage. Features: common objective- shared control – pooling resource by the partners – contribute technology-process- product –designg –sharing specific individual strength.    Forms: i. Competitive, ii. Pre-competitive, iii.  Pro-competitive,  iv.  Non-competitive.     Objectives: i. Development of a new product, ii. Development of new technology, iii. Reducing manufacturing cost, iv. Entering new markets, v. Marketing and sales, Distribution.
15. Measure results or performance in three ways: Comparing: i. current performance with past performance,  ii. performance with industry standards, iii. performance with competitors. Financial Performance:  ROI -ROE –EPS – Price-earnings – Profitability:  Profit/sales ratio – Profitability: Relative profit growth                     Non-financial Performance: Market share: absolute Market share – Market share: relative Market share – Sales Ratio: actual to target sales- Sales Ratio: relative sales growth

Section-C

16. 1. (Differentiation strategy- seems to be the most appropriate)
17. (Consumer oriented approach- seems to be the most appropriate)
18. (Corporate level, business unit level, Functional level – functional level seems to be the most appropriate)

 

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