Biyani's Think Tank

Concept based notes

Strategic Management
(BBA Part-II)

Dr. Neha Pandey

Professor

Deptt. of Commerce and Management,

Biyani Girls College, Jaipur

Revised By

Ms. Aditi Pareek

Deptt. of Management

Biyani Girls College, Jaipur

Published by :

Think Tanks

Biyani Group of Colleges

Concept & Copyright :

Biyani Shikshan Samiti Sector-3, Vidhyadhar Nagar, Jaipur-302 023 (Rajasthan)

Ph : 0141-2338371, 2338591-95 Fax : 0141-2338007

E-mail : [email protected]

Website :www.gurukpo.com; www.biyanicolleges.org

ISBN :- 978 – 93 – 83343 – 11 – 9

Edition: 2012

Revised Edition 2022

While every effort is taken to avoid errors or omissions in this Publication, any mistake or
omission that may have crept in is not intentional. It may be taken note of that neither the
publisher nor the author will be responsible for any damage or loss of any kind arising to anyone
in any manner on account of such errors and omissions.

Leaser Type Setted by :

Biyani College Printing Department

 Preface
I am glad to present this book, especially designed to serve the needs of the
students. The book has been written keeping in mind the general weakness in
understanding the fundamental concepts of the topics. The book is self-
explanatory and adopts the “Teach Yourself” style. It is based on question- answer
pattern. The language of book is quite easy and understandable based on scientific
approach.

Any further improvement in the contents of the book by making corrections,

omission and inclusion is keen to be achieved based on suggestions from the
readers for which the author shall be obliged.
I acknowledge special thanks to Mr. Rajeev Biyani, Chairman & Dr. Sanjay
Biyani, Director (Acad.) Biyani Group of Colleges, who are the backbones and
main concept provider and also have been constant source of motivation
throughout this Endeavour. They played an active role in coordinating the various
stages of this Endeavour and spearheaded the publishing work.
I look forward to receiving valuable suggestions from professors of various
educational institutions, other faculty members and students for improvement of
the quality of the book. The reader may feel free to send in their comments and
suggestions to the under mentioned address.

Author

□□□
 University of Rajasthan, Jaipur BBA Part II

Paper-I - Strategic Management

Minimum Pass Marks: 36 3 Hours duration

Unit-1

Introduction: Meaning of Strategic Management, Role of SM, Process of SM,

Limitations of SM, Organisational Mission, Vision, and Objectives & Goals.

Unit-II

Environmental Scanning: Appraisal of External Environment, Appraisal of

external Environment, Dynamics of internal Environment, Organisational
Capabilities and Appraisal, Core Competence.

Unit-III

Strategy Formulation: Corporate Level Strategy, Business Level Strategy,

Functional Level Strategy.

Unit-IV

Strategy Implementation: Aspects of Strategy Implementation, Procedural

Implementation, Resource Allocation, Organisational Design and Change,
Corporate Culture.

Unit - V

Strategic Evaluation and Control: Meaning of Strategic Evaluation and Control,

Criteria and Techniques of Strategic Evaluation and Control.
 Contents

S. No. Chapter Name

1 Strategic Management- An Introduction

2 Strategy and Tactics

3 Environment-External Analysis and Appraisal

4 Functional Strategy

5 Human Resource Strategy

6 Strategy Implementation

7 Strategic Evaluation And Control

8 Previous Year Question Paper

1 Biyani`s Think Tank

Chapter 1
Strategic Management- An Introduction
Q.1 Define term “Strategic Management”. What are the important
features/Characteristics? Discuss its nature and scope.

Ans. In simple words- strategic management is a process of relating the

organization with environment through strategy formulation and
implementation. This emphasizes that there is continuous interaction between
organization and its environment and have open systems approach.

The definitions of strategic management given by prominent authors are-

1. According to Pearce and Robinson- “Strategic Management is defined

as the set of decisions and action in formulation and implementation of
strategies designed to achieve the objectives of an organization”.
2. According to Jauch and Glueck- “Strategic Management is a stream of
decisions and action which lead to the development of an effective
strategy or strategies to help achieve corporate objectives. The strategic
management process is the way in which strategists determine objectives
and make strategic decisions”.
3. Lloyd L.Byasis has defined it as “Strategic Management is the process
of managing the organization mission while managing the relationship
of the organization to its environment”.
4. According to Ansoff‟s- “Strategic Management is a systematic approach
to a major and increasingly important responsibility of general
management to position and relate the firm to its environment in a way
which will assume it continued success and make it secure from
surprise”.
5. According to Sharplin- “Strategic Management is the formulation and
implementation of plans and carrying out of activities relating to the
matters which are of vital, pervasive or continuing importance to the total
organization”.
6. According to Steiner- “Strategic Management is primarily concerned
with relating to the organization to its environment, formulating
strategies to adapt to that environment and assuming that implementation
of strategies takes place”.
7. According to Stoner and Freeman- “Strategic Management is distinct
management process that involves an organization engaging in strategic
planning and then acting on those plans”.
 Strategic Management 2

On the basis of above definition we may define strategic management as

follows- Strategic Management is a set of rules aimed at taking decisions for
sustaining and growth of an organization in a given environment.

Basically strategic management can be broken down into two stages-

Strategic planning and strategy implementation.

I. Strategic Planning is concerned with making decision in following areas-

a. Organization mission determination

b. Policies formulation to guide the organization in establishing
objectives, choosing a strategy and implementing the chosen strategy.
c. For achieving the organization’s mission, setting and establishing of
long term and short term objectives.
d. Strategy determination for achieving the organization objectives.

II. Strategy implementation - Concerned with making decision with regard to

a. Organizational structure developing to achieve the strategy.

b. Effectively performing the activities necessary to accomplish the
strategy.
c. Monitoring the effectiveness of the strategy in achieving the
organization objectives.

Features/Characteristics of Strategic Management

1. It is pervasive, integrated and coordinated management process.

2. It is concerned with ends as well as means.
3. It is resources planning.
4. It takes into process the environment, market conditions and activities
of competitors.
5. It is adopted only in specific situation or unafavourable situations.
6. It is basically a top management function.
7. It is an effective organizational response and initiative system.
8. It is based on corporate objectives.
9. It is based on long term mission of the organization.
10. The success of strategic management is depending to a large extent on
its effective formulation and implementation.
11. It is concerned with strategic issues.
12. Its nature is: multifunctional and multi business.
13. It is a continuous process.
14. It is different from operative management and Administrative
Management.
3 Biyani`s Think Tank

15. It is the highest level of managerial activity.

16. It provides overall direction to the enterprise.
17. It is closely related to the field of “Organization studies”.
18. It involves both conceptual and analytical thought process.
19. It is complex.
20. It affects the enterprise organization.

Scope of Strategic Management

1. It includes Strategy, Concepts, Characteristics, functions.

2. It includes corporate strategy, business level strategy, functional level
strategy and operating level strategy.
3. It includes strategic management nature, scope, characteristics,
process, and components.
4. It includes various kinds of environment such as:- Micro, Macro,
Internal, External, political, social, cultural, technological, legal,
competitive environment.
5. It includes stability strategy, expansion strategy, retrenchment
strategy, combination strategy.
6. Strategic Audit and managing technology.
7. Corporate culture
8. Leadership
9. Culture guiding
10. Evaluating strategy
11. Training strategy
12. Strategic change management
13. Integration.
14. Mergers
15. Acquisitions
16. Diversifications
17. Includes analysis such as-
 Organizational analysis
 Company profile analysis
 Industry analysis
 Strategic analysis
 Choice making analysis
18. Strategic evaluation and control
 Strategic Management 4

Q.2 Explain the need for strategic management.

Ans. Strategic Management is needed due to following reasons/causes-

1. For full exploitation of opportunities.

2. Provides better guidance to the entire organization.
3. Helps in unifying the organization.
4. Creates a more proactive management posture.
5. It is the way to systematic the most important of business decisions.
6. It serves as a road map to the organization.
7. It helps in building competitive advantages.
8. Help in knowing true actual position of business.
9. Due to rapidly changing business environment.
10. It helps in systematizing an organizations strategic decisions & action.
11. It facilitates Research and Development.
12. It promotes effective resource allocation among the business units.
13. Lot of competition in business market now a day.
14. New invention, discoveries and enhancement of technologies.
15. For high and sufficient profits.

Q.3 What are the benefits, advantages and merits of strategic management
study?

Ans. Advantages/Merits/Benefits of Strategic management-

1. Strategic decisions are for the future.

2. Strategic decisions have multifunctional and multi business effects.
3. It helps in environment scanning.
4. Helps in carrying out corporate appraisal.
5. It provides relevant data essential for taking decisions.
6. It serves as a road map for an organization.
7. It insures that a firm chooses its products & markets in a wise manner.
8. It provides better guidance to the whole enterprise.
9. It prepares a firm to face the future and mould the future in its favour.
10. It helps a firm to innovate so that the firm may avail itself of the new
opportunities.
11. It creates a frame work for internal communication among the staff.
12. It unifies the organization.
13. It helps in building strategic knowledge of the management.
14. Strategic planning ensures a rational allocation of resources.
5 Biyani`s Think Tank

15. Strategic planning improves coordination between various decisions

of the organization.
16. Strategies provide the frame work for plans by operating decision and
after predicting them.
17. It helps in clarity of direction of activities.
18. It helps in increase of organizational effectiveness.
19. It helps in providing satisfaction to the personnel of the organization.
20. It helps in evaluating results.

Q.4 What are the disadvantages or drawbacks of strategic management? Or

What are the limitations of the Strategic Management?

Ans. Disadvantages/drawbacks of the strategic management-

1. It is complex process.
2. It is cumbersome and complicated exercise.
3. It requires a high level of imagination, analytical ability, courage,
foresight
4. It is a costly exercise.
5. It involves a lot of time.
6. It is in effective to overcome current crisis.
7. Strategic plans are based on assumptions.
8. Lack of accuracy as it is based on forecasting of future events which
are uncertain and lazy.
9. Strategic manager should be a effective leader as well.
10. Poor rewards do not encourage the use of strategic management.
11. Due to poor information system and lack of awareness, managers
cannot judge the company‟s position correctly.
12. If a firm is already successful, the manager may think that the use of
strategic management is unnecessary and a waste of time.

13. In today`s fast changing environment, managers find it difficult to do

any long range planning.
14. The goals and objectives of managers are usually not clear.
15. There are many reasons behind the success of a firm. Strategic
management in just one of the many reasons.
16. In real life, many firms are prospering without planning and strategies
management.
 Strategic Management 6

17. Some other reasons for the failure of the strategic management are-
a. Poor communication system
b. Failure to manage change
c. Failure to coordinate
d. Over estimation of resource competence
e. Inability to predict environmental reaction
f. Failure to obtain employee commitment
g. Failure to obtain senior management commitment
h. Failure to understand the customer.

Q.5 Explain the role of Strategic Management in business organization?

Ans. Role of Strategic Management in business organization-

1. It gives direction to business.

2. It gives sense of identity and unity towards business objectives.
3. It helps an organization in achieving its goals in an efficient and
effective manner.
4. It helps in getting rid of the threats or else neutralizes them.
5. It enables organization to grasp every opportunity that is available in
the market.
6. Strategic management decisions are usually made in a rational and in
a logical manner.
7. It helps in forecasting.
8. It helps in grasping every opportunity that is available in the market.
9. It helps in maintain past profits trends and helps as well in increasing
the future profits.
10. It helps and assists in coping with uncertain environments.
11. It helps in increasing performance level.

Q.5 What do you mean by non business organization? Explains the role of
strategic management in non business organization?

Ans. Non business or Not For Profit (NFP) organizations include

a. Private non-profit corporations such as: Private colleges, charitable

institutions, trusts, hospitals, institutions
b. Public government units or agencies such as: State Universities,
prisons, welfare departments Till now studies in strategic management
have dealt with profit making firms to the exclusion of non profit or
7 Biyani`s Think Tank

government organizations. This however is changing.More and more

number of not for profit organizations are adopting strategic
management.

Reasons why it is difficult to apply the strategic management here-

i) It is hard to measure service.

ii) Service is intangible many a times.
iii) Existence of multiple service objectives developed to satisfy multiple
sponsors.
iv) There may be weak client influence.
v) Often the organization has a local monopoly.
vi) Clients payments may be a very small source of funds.
 Strategic Management 8

Chapter 2
Strategy and Tactics
Q.1 What do you mean by strategy? Or Define Strategy?
Ans. Strategy-
1. It is an ancient concept.
2. Originally, the word “strategy‟ is derived from the Greek word-
“STRATEGEIA‟. It means “the art of the general‟.
3. There is no single definition which is universally accepted. Various
authors and managers use the term differently.
4. Some of the important definitions of strategy are as follows-
Definitions-
a. According to Alfred Chandler:- Defined Strategy as, “the
determination of the basic long- term goals and objectives of an
enterprise, and the adoption of courses of action and allocation of
resources necessary for carrying out there goals”
b. According to Andrews, “strategy is the patron of objectives, purpose
or goals and major policies and plan for achieving these goals, stated
in such a way so as to define what business the company is in or is to
be and kind of company it is or is to be”
c. According to Henry Mint Z berg- He defined strategy as, “a pattern in
a stream of decisions and actions.”
d. Melvin J. Stanford defines, “Strategy is the way in which management
chooses to utilize the firm‟s resources within its environment to reach
its objectives. Strategy thus involve multilateral relationships among
the firm, its objectives and the environment”.
Definition- A strategy is a set of decision making rules which guides and links
the human and other resources of an organization and with the challenges and
risks posed by the outer world. It deals with the direction and choice that the
company or business enterprise desires to follows. ”Strategy is a course of
action through which an organization relates itself to environment to attain its
objectives.‟

Q.2 What are the elements of strategy? Or What are the important features
of strategy?
Ans. Elements of Strategy or Features of Strategy-
9 Biyani`s Think Tank

1. It depicts the relationship of the business organization with its

environment.
2. It is best utilization/optimum utilization of a firm resource in a rapidly
changing environment.
3. It is a course of action through which an organization relates itself to
environment to attain its objectives.
4. It is developed at higher [level
5. It is planning for long term.
6. It is forward looking
7. It helps in direction giving before making plans
8. A choice of particular activities or action.
9. Basic issue of a strategy is-
1. Business- What it is?
2. It`s products?
3. It`s function?
4. It`s markets?
5. It`s objectives?
10. It is a broader term
11. It is formed and implemented in a very uncertain environment
12. It involves fewer people
13. It requires such information which in easily not available
14. It requires fewer details
15. It is highly important because it decides the future of an organization
as a whole.
16. It is more than just a blue print for winning customers.
17. It is a broad programme for achieving organizations objectives.
18. It helps in implementing a mission of business.
19. It has also a component of „competitive advantage.‟

Q .3 What is the importance of strategy?

Ans. Strategy: importance-
1. Gives direction
2. Helps in knowing exactly what work is to be done
3. Facilitate optimum utilization of resources and there allocation.
4. Helps in coordination of business activities.
5. Increases efficiency of men, machines.
6. Better time utilization of workers in production process minimization
of idle time.
7. Helps in avoiding overlapping, conflicting and contradictory behavior
 Strategic Management 10

8. It helps in setting priorities

9. Strategy is interactive
10. It helps in critical analysis of internal & external business environment
11. It helps in operational control.

Q.4 What are the levels of strategy?

Ans. Strategies are operated at different levels in a organization. There are
four levels of strategy. They are-
I. Corporate level strategy. II. Business level strategy
III. Functional level strategy IV. Operating level strategy
I. Corporate level strategy-
Formulated where At the corporate level
Formulated by Top management
To oversee the interests and operation of
Formulated why?
organizations
Position It occupies the highest level of Decision making
Level of decision It occupies the highest level of strategic decision
making making
Cover action dealing with the objectives of firm,
Covers what acquisition and allocation of resources, and
coordination of strategy of various units
Applicability It applies to the enterprise as a whole
It explains the business in which a firm will compete
Explains what?
and how it should utilize its resources.
Level It is highest level of strategy

II. Business level Strategy-

Planned by whom Managers
Concerned with Concerned with managing the interests and operations
what? of a particular line of business.
What type of plan? A managerial game plan for a single business.
1. Business competition in market
2. Business offer of products and services
Deals with
3. Customers to serve
questions
4. Distribution of company resource with is the
business
Builds Competitively valuable capabilities
III. Functional level strategy-
11 Biyani`s Think Tank

Definition- A functional strategy is a short term game plan for a key

functional area within a company.
Implements- Functional strategies help in implementing grand strategy.
Focus- on external environment
Decision making- At operational level with respect to specific functional
areas-
- Production - Marketing
- Personnel - Finance etc.
Types of functional strategies-
1. Marketing strategy.
2. Operations strategy
3. R & D (Research & Development Strategy)
4. Information system strategy
5. HR strategy (Human Resource)
6. Financial Strategy
IV. Operating level Strategy-
Concerned with- The regulation of day-to-day activities of departmental and
supervisory managers
Approach-
- For managing key operating units such as plants, sales etc
- Handling daily task with strategic significance.
Concepts deal with-
1. Manufacture of a product
2. Production process
3. Deployment of physical resources
4. Level of technology.
New Revolutionary changes-
1. Diversification of business activities.
2. Use of computer-integrated design and manufacturing
3. Computer system
4. Automation
5. Robotics
6. Just in time system
Decision area in operations strategies-
 Strategic Management 12

i. Structured decisions
- Process technology
- Capacity
- Facilities
- Supply network
ii. Infrastructure decisions-
- Planning and control
- Quality
- Human resources
- New product development
- Performance measurement.

Q .5 What are the elements of the strategic management process?

Ans. Strategic management process is a flow of information regarding the
inter-connected stages of analysis which aims at attaining the objective.
Elements of strategic management process or steps are-
I. Establishing strategic foundation- The following are established for
laying down the foundation of the strategic management-
 Vision  Mission
 Business definition  Business objectives
 Business goals  Business models
II. Strategy Formulation- It involves steps.
 Environmental Analysis
 Organizational Analysis
 Corporate Analysis
 SWOT Analysis
 Strategies- Corporate and business level
 Strategic Analysis/appraisal and choice of strategy
 Strategy final plan.
III. Implementation of strategies-
- The design of organizational structure
- Project implementation
- Procedural implementation
- Structural implementation
- Resource allocation implementation
13 Biyani`s Think Tank

- Behavioral implementation
- Functional implementations
IV. Evaluation and Control of Strategic implementation-
- Direction right or not
- Results-positive or negative
- Favorable or unfavorable
- Evaluation of strategies implemented
- Measurement of organizational performance
- Feedback from strategic evaluation leads to control of strategy
- Strategies may be reformulated if necessary or required.

Q.6 What do you mean by tactics? What are its characteristics?

Ans. “Tactics”
1. Tactics is a means through which predicated plan are executed.
2. It is best and optimal utilization of various organizational resources
committed through strategy
3. Some people are of the opinion „Strategies and tactics have same
meaning and can be used in place of other.”
4. Both these terms are quite different.
5. Tactics is only a part of strategy by which predetermined plan are
executed.
6. Tactics is usually short term decisions
7. Tactics are short duration, adaptive action interaction realignments
that opposing forces use to accomplish goals.
8. Tactics is developed at lower levels.
9. Tactics is a part of strategy
10. Tactics is normally free from subjective values
11. Less alternatives available
12. Tactics problems nature of structured nature
13. Tactics follow strategy
14. Tactics involves a large number of people
15. Tactics formulated on functional concepts
16. Tactics are of less importance
17. Tactical decisions are the frame set by the strategy
18. Tactics: normal importance is there
19. Easier to evaluate
20. Requires higher details
21. Repetitive in nature
 Strategic Management 14

22. Information required is of easy to get nature.

Q .7 Differentiate between Strategy and Tactics?

Ans:-
S. No. Strategy Tactics
1 It is developed at higher levels It is developed at lower levels
2 Strategy is a broader term Tactics is a part of strategies
3 Nature : original Nature : tactics is follows Strategy
Strategic problems are not Tactics are structured in nature
4 structured
Strategies involves fewer people Tactics involves a large number
5 of people
Strategies have more personal Tactics is normally free from
6 subjective values values of such type
Total range of alternatives is Total range of alternatives is less
7 far greater in comparison
Strategy requires information Tactics requires normal information
8
which is easily not available
It covers long time period. But Short term period
9 time limit is flexible as per
requirement
10 It required fewer details It requires more details
Strategy is formulated & Tactical decisions more certain
11 implemented in a highly uncertain
environment
12 Formulated on “corporate concept‟ Formulated on “functional concept‟
Strategy is highly important because It is less important because it is
13 it decides the future of an related to a particular of the
organization as a whole. organization.

Q8 Define “Mission‟ or organizational mission‟. What are its characteristics?

Ans. “Mission‟ Definitions-
a. According to Thompsori , “Mission may be defined as an important
goal of an organization which is related with things that why is it
existence, in which business he, and what customers desire he wants
to serve and satisfy.”
b. Hunger and Whalen, defined mission as, “Mission is the purpose or
reason for the organization existence”.
c. According to Koontz and O‟ Donnell, “Mission is the fundamental
work given by the society to an organization”.
15 Biyani`s Think Tank

d. According to Daulton .e.McFarland, “The word mission is a general

term describing an organizations fundamental reason for existence.”
e. Jauch and Glueck defines as, “Mission can be seen as a link between
performing some social function and more specific targets or objectives
of the organization.”
A firm`s mission should be clear and concise and distinguish it from any firm
and should contain the following concepts.
1. Organization purpose
2. Principal business units of the organization key beliefs
3. Company values
4. List of major stakeholders in business
5. Define the code of conduct of employees.
Example how they have to behave in organization
Mission characteristics- Mission is-
1. A very comprehensive term
2. The basis of objectives, goals, and strategies.
3. Long term commitment of an organization
4. Dynamic
5. Changed according to change in environment
6. A fundamental responsibility and work given by society to an
organization.
7. Used to show about the organization the following
- Character - Principles
- Values - Philosophy
8. Firms self concept
9. Focused on customer linking, preferences, utilities.
10. Grand design of the corporation
11. Basis or standard for allocating organizational resources.
12. Helping in assessment and control of cost, time, and performance
parameters of an organization.
13. Used in establishing a general tone or organizational climate.
14. Comprised of the following-
a. A purpose b. A strategy
c. A set of values d. Behaviors e. Standards
 Strategic Management 16

Q9 What is mission statement? What are the components of a mission

statement? What are the characteristics of a mission statement? What are the
uses of a mission statement?
Ans. According to Thompson, “Mission statement defines what business the
company presently in and conveys the essence of „who are we, what we do
and where we are now? It provides a basis for long term course; make a choice
about where we are going.” With the mission statement, an organization
proves its existence and authenticity in society.
Components of a mission statement-
1. What the company is?
2. What the company does?
3. What is the position of a company at present now?
4. Where the company is going?
5. How the company will conduct business
6. What are the company`s, major products or services?
7. Who are the customers of the company?
8. Company is dealing in which market, Domestic? Regional?
International?
9. Company`s state of technology i.e. advanced, normal, old,
outdated, progressive, computerized etc.
10. Company`s future growth prospects?
11. Company`s profitability present and future?
12. Company`s
 Beliefs  Values  guideline
 Ethical priorities  Vision
13. Company`s future prospects of growth and success.
14. Employees, staff of the company.
Mission statement-
1. Mission word should be real and must be able to achieve.
2. Should be precise
3. Should not be longer
4. Should not be meaningless
5. A mission should be clear on which action can be taken.
6. „Mission‟ word should be motivation for the society and members of
the organization.
7. Organizations mission should be unique and distinctive from other
firms and organizations.
8. Mission should be inspiring
17 Biyani`s Think Tank

9. Mission should be flexible enough so that it is adopted in changing

present scenario.

Q11 Explain the concept of Goals? Or Define the term “Goal”? What is the
importance of goal setting? Discuss the major characteristics of effective
goals?
Ans. Goals
1. Are those plans which give direction to the actions of a firm? Are the
future states of affairs?
2. Are the guidelines on which management has to work?
3. Are the targets to be achieved by a company or organization?
4. Are temporary?
5. Are specific?
6. Should be easy to understand
7. Should be measurable
8. Should be relative
9. Should be challenging but practical
10. Are for short term?
11. Are having public relations values?
12. Helps in goodwill building with suppliers, customers, public & govt.
13. Should be realistic and challenging
14. Goals may be official or operational

Q12 Difference between goals and objectives?

Ans
Basis of
Objectives Goals
Differentiation
Achievements which can be
Long term person which a
Meaning attained if the attempts are
person strives to achieve
made in a particular direction
Basis Facts Ideas
Time frame Short or medium term Long term
Measurement Easy Comparatively difficult
Action Specific Generic
 Strategic Management 18

Q13 Define Vision? What are its Characteristics?

Ans. Vision is a future-oriented concept of the business. Forming a strategic
vision is an exercise in thinking about where a company needs to head to be
successful. A vision is a mental image of a possible and desirable future state
of the organization. A vision describes aspirations for the future – a
destination for the organization. An organization’s vision, which is often
called ‘purpose of the organization’, is designed to express the fundamental
reason for the organization’s existence. A vision statement is used to refer to
an understanding of why the organization exists. It provides direction for the
organization.
Characteristics:-
• Graphic: The vision should draw a picture that can reveal where the
company is heading and can also indicate clearly the market position.
• Directional: It is able to provide clear direction to the managers and
employees as well as describe a forward-looking picture of the
company.
• Focused: It can specifically guide managers in decision making and
allocating resources of the company.
• Flexible: It must be flexible enough so that with changes in the products
or technology or market, the vision itself can also be changed to keep
pace with the changing situations.
• Feasible: It should portray an expectation for the future that is
achievable – not just spelling out an expectation for the sake of telling
about an expectation.
• Desirable: It should be able to indicate; ‘why the chosen path makes
good business sense’.
• Easy to communicate: The vision must be worded in such a way that it
can be communicated easily to the stakeholders, especially the
shareholders, employees, and customers.
Examples of Vision Statements of Various Organizations
Name of the
Vision Statements
Organization
To help people and businesses throughout the world
Microsoft
realize their full potential.
To organize the world’s information and make it
Google
universally accessible and useful.
19 Biyani`s Think Tank

Q12 Difference between vision and mission statement?

Ans:-
Basis Mission Statement Vision Statement
A Mission statement talks about
HOW you will get to where you A Vision statement outlines
want to be. Defines the purpose WHERE you want to be.
About
and primary objectives related Communicates both the purpose
to your customer needs and and values of your business.
team values.
It answers the question, “What
It answers the question, “Where
Answer do we do? What makes us
do we aim to be?”
different?”
A mission statement talks about A vision statement talks about
Time
the present leading to its future. your future.
It lists the broad goals for which
the organization is formed. Its
It lists where you see yourself
prime function is internal; to
some years from now. It inspires
define the key measure or
Function you to give your best. It shapes
measures of the organization's
your understanding of why you
success and its prime audience
are working here.
is the leadership, team and
stockholders.
As your organization evolves,
you might feel tempted to change
Your mission statement may
your vision. However, mission or
change, but it should still tie
Change vision statements explain your
back to your core values,
organization's foundation, so
customer needs and vision.
change should be kept to a
minimum.
What do we do today? For
Where do we want to be going
Developing whom do we do it? What is the
forward? When do we want to
a benefit? In other words, Why
reach that stage? How do we
statement we do what we do? What, For
want to do it?
Whom and Why?
Purpose and values of the Clarity and lack of ambiguity:
organization: Who are the Describing a bright future (hope);
Features of
organization's primary "clients" Memorable and engaging
an
(stakeholders)? What are the expression; realistic aspirations,
effective
responsibilities of the achievable; alignment with
statement
organization towards the organizational values and
clients? culture.
 Strategic Management 20

Chapter 3
Environment-External Analysis
and Appraisal
Q.1 Explain the concept of environment. What is Internal and External
Environment?

Ans. Environment consists of all the conditions, circumstances and influences

surrounding and effecting an organization in its totality.

Environment is related with totality of all those external factors and events
which affect success and efficiency of a business undertaking and are beyond
the capacity of its management. Due to this reason, a firm tries to adjust itself
according to its environment and change its strategy accordingly to achieve
its goals.

Environment is a complex and wider term. By large the business environment

is external.

The environment can be divided into two categories-

I. Internal Environment OR Micro Environment:- Micro environment is

related with internal environment in which an organization operates and
which is directly controlled by business firm

The micro environment or Internal Environment refers to-

a. Work place b. Work culture

c. Colleague relations d. Office dynamics
e. Organization structure f. Working system
g. Organizational strength & weakness etc. h. Goal

II. Macro Environment OR External Environment: - The word

“macro‟ means large, global and can be used to describe the aggregate of
factors that surround the organization.

The components of macro environment OR External environment are-

a. Physical environment b. Economic environment

c. Social environment d. Political-legal environment
e. Technological environment f. Global environment
21 Biyani`s Think Tank

Q.2 Discuss the Physical Environment of business?

Ans. The main or basis of operation of business is the physical environment.

It sets natures boundaries.

The following factors are included in physical environment: -

1. Natural Resources- Water, minerals, land, raw materials etc.

2. Climate- Rain, humidity and coolness etc.
3. Infrastructure- Warehousing, water, electricity, transport, bank,
insurance etc.
4. Energy- Solar energy, gas water, coal, petrol, atomic, energy.
5. Public utilities- Water, post and telegram, electricity, transport.
6. Topography- Topology and locational aspects of business.
7. Ecology- Includes all human beings, human and non human. Physical
conditions affect demand structure, pricing, flow of supply,
structuring and functioning of business.

The problems related to physical environment of a business are-

a. Urbanization b. Improper utilization of natural resources

c. Environmental pollution d. Regional imbalances
e. Economic disparity f. Centralization of business

Q.3 Discuss the Social Environment of business?

Ans. Social Environment of Business:- Business is a social institution & it is

influenced by social environment. The components of social environment are-

1. Population expansion and its characteristics. Sex ratio (male,

female), caste, religion, education, income, age structure etc.
2. Family structure may be nuclear or joint.
3. Level of public responsibilities, mutual cooperation and
organization, labour union, welfare organization, religious socio
organization, public faith in cooperative organization.
4. Responsibility of public
5. Mentality of public towards work
6. Attitude towards management
7. Traditional and scientific approach
8. Customs
9. A business cannot ignore the values, beliefs and style prevailing in
the society
 Strategic Management 22

10. Educational institutions

11. Religion
12. Tastes and preferences
13. Buying and consumption habits of people.
14. Language of people

The social environment refers to how people and communities behave their
relationships, education and occupation, and the condition in which they live.
The social environment factor consists of human relationships.

Culture determines the types of goods and services a business should produce.
The type of goods people eat, the clothes they ever and building materials
they use to construct house vary from culture to culture.

Therefore, firms should understand cultural preferences and provide products

and services accordingly. The values and beliefs associated with colour also
vary from culture to culture.

Newer attitude on the part of workers and employee about how many hours
they wish to work, the environment quality they want at work, and the kind
of management style they expect effects the strategy of formulation of
business. The consumer movement due to passing of consumer protection act
also forces to make adjustments in the business strategy.

Q.4 Discuss the Ethical Environment of business?

Ans. Ethical Environment of Business-

1. Business has to follow ethical values of the society.

2. Ethics refers to the code of conduct that guides an individual in dealing
with others.
3. Ethical rules differ from legal rules. Ethical rules are not enforced by
Public authority where as legal rules are enforced by public authority.
4. Society expects businessman to act ethically.
5. The best way is to encourage business to frame their own codes of
conduct and adhere to them.
6. Business ethics includes issues such as-
a. Product quality
b. Customer satisfaction
c. Employee wages and benefits
d. Community
e. Honesty
23 Biyani`s Think Tank

f. Trust
g. Organizations work culture
7. Social objectives of ethics in business-
a. To produce and supply goods of standard quality.
b. Avoidance of following anti social practices-
- Hoardings
- Black marketing
- Smuggling
- Over charging
c. Provides employments and helps increasing standard of living.
d. Business community should have a positive approach towards,
the policies of the government of the country.
e. The business should use the national resources of the country in
the best interest of the country.
8. Effects of good business ethics on society-
a. Better business relations
b. Better cooperation
c. Societal integration
d. Wealth creation
e. Make up the moral foundation
f. Economic stability
g. Development and stability of upcoming society
9. Effects of bad business ethics on society
a. Societal system breakdown
b. Business practices can cause a lot of unnecessary losses,
setbacks.
c. Recession, breakdown, downfall of societies in history
d. Spark off serious disorder, mistrust, loss of reputation.
e. War
f. Huge financial losses
g. Descript the regular flow of commercial activity

Q.5 Describe the economic and non economic components of external

business environment.

Ans. Economic Environment and its components: -

Economic Environment is generally related to those external factors which

have direct economic effect upon business. Economic factors are the factors
 Strategic Management 24

which affect business to a large extent. Major factors of the economic

environment are-

(i) Economic conditions (ii) Economic policies

(iii) Economic systems

The components of the economic environment are-

1. Natural Resources 2. Human Resources

3. Social and cultural systems 4. Political system
5. Market conditions 6. Economic laws
7. Transport and communication 8. Education system
9. Technological development 10. Government policies
11. Capital and money market 12. International conditions
13. Entrepreneur and innovation 14. Population
Non economic external environment and its components- Non economic
environment is constituted of those non economic components under which
the business institutions of the country works. The components are-

1. Physical environment 2. Socio cultural environment

3. Political environment 4. Legal environment
5. Technological environment 6. Educational environment
7. Historical environment 8. Ethical environment
9. Cultural environment 10. Ecological environment
11. International environment

Q.6 Discuss the Technological Environment of business?

Ans. Technological Environment of Business: -

1. “Technology‟

a. It is the knowledge of methods to perform certain task or solve the

problems linked to products or services.
b. It can be defined as all the knowledge about products, processes, tools,
methods and systems employed in the creation of goods or in
providing services.
c. It is the way to do things
d. It is the practical implementation of knowledge
e. Basically, it refers to the sum total of knowledge providing ways to
do things.
25 Biyani`s Think Tank

f. It is defined by JK Galbraith as, “Technology means systematic

application of scientific or other organized knowledge to practical
tasks”.

2. Technological Environment - Features and characteristics

a. It has far reaching effects. People cannot escape technological change

whether they are prepared for it or not.
b. It is different from science. Science is systematized body of
knowledge. Application of this knowledge/such knowledge is
technology.
c. With advances in science new technology developed.
d. Requirement of new technology leads to the new scientific inventions
in discoveries
e. Technological environment goes on changing frequently and again
and again.
f. Changes come very fast.
g. Its effects are widespread
h. It is self reinforcing

3. Choice of technology - Factors to be considered in the selection of

technology are-

a. Customer`s likings, preferences and desires.

b. Speed of introduction of new process and production
c. Market potential
d. Product competitiveness
e. Great technology gap between India and outside.
f. Availability of technology for import in strategic areas.
g. Out flow of resources
h. Out flow of foreign currency

4. Kinds of Technology- Technology can be classified as-

a. New Technology- Any new technology to any newly introduced or

implemented technology. Example- New computer software, New
internet website for marketing company product
b. Emerging Technology- It is technology which is not yet fully
commercialized but will become so within 4/5 years to come. It is
currently in little use but is expected to evolve significantly. Emerging
technologies create new industries and may make existing ones
obsolete.
 Strategic Management 26

c. High Technology- High technology or High-tech refers to advanced

or sophisticated technologies. It employs highly educated people such
as scientists and engineers.
d. Low Technology- Normal educated people can work on it. Low
research expenditure required.
e. Appropriate Technology- The term appropriate technology is used to
indicate a good match between the technology utilized and the
resources required for its optimal use.

Present Scenario- Now it has become essential for top managers that they
must have close watch on technological changes that may affect their business
to a large extent. Top managers should work closely with R & D People to
encourage more market oriental research.

Q.7. Discuss the legal environment of business.

Ans. Legal Environment of Business-

1. Legal system of a country is framed by the government of that country.

2. The laws which are paned by the government for business operation
called legal environment.
3. In every country, the government of that country has authority to
regulate business activities. These regulations of the government are
considered as legal environment.
4. The dimensions of the legal environment are-
a. The domestic laws of home country.
b. The domestic laws of each of foreign markets & countries.
c. International law
5. Legal system of one country is different from that of the another.
6. Domestic laws govern marketing within a country i.e. consumer
protection act relating to purity, safety, or performance of the product.
Domestic market also governs the marketers in the areas of product
packaging, marketing and labeling.

The Government Acts and Government policies relating to legal environment

for business operations are-

1. Constitutional provisions
2. Laws related to social control, nationalization, socialization,
privatization
3. Pollution control laws.
27 Biyani`s Think Tank

4. Industrial and labour laws- The factories Act, 1948, The minimum
wages Act, 1948
5. Tax laws and policies
6. Justice laws
7. Economic policies
8. Economic laws- MRTP Act, FEMA, SEBI
9. Monetary policy
10. Industrial policy
11. Agricultural policy
12. Environment Protection Act, 1986
13. The Weights and Measures Act
14. The Consumer Protection Act, 1986
15. The income Tax Act, 1961
16. The Indian Companies Act, 1956
17. The Sale of Goods Act.

Legal Environment Components-

1. Legal environment is the legal surrounding that affect management

activities. The legal surroundings may include Acts, regulations, rules,
precedent, institutions and processes.

2. Objectives of legal environment are-

a. Protect the interest and rights of consumers, society, organization,

employees.
b. Encourage those who follow laws restrict & punish those who break
laws.
c. Regulate activities by legal provisions. The concepts regulated
includes-

- Labour relations - Wages

- Licensing - Monopoly
- Foreign investment - Environment protection
- Import and Export - Pricing
- Taxation
3. Law- It includes laws enacted by the central and state government.

Courts- are institutions established to solve legal disputes.

Law administrators - Government agencies, lawyers, police and fast

play an important role in law administration.

 Strategic Management 28

Q.8. Explain the Global Environment of Business.

Ans. Global Business Environment OR International Business Environment

It includes all commercial transactions that take place between two or more
than two nations. The commercial transactions includes many aspects some
of them are-

a. Government transactions b. Capital investment

c. Logistics i.e. warehousing of goods d. Sales

e. Transportation

These transactions may be for probes or political gains or profits. Global

business environment involves differences in the following aspects and
concepts-

a. Language differences
b. Accounting standard differences among nations
c. Living standard of labour
d. Culture and traditions differences.
e. Economic, Industrial, Agricultural, Monetary policy differences
f. Work culture
g. Corporate culture
h. Foreign currency exchange
i. Export and Import rules, regulations and Acts
j. Climatic differences
k. Educational level and standard differences.

According to ICFAI centre for Management Research, “Global Business

Environment is the environment in different sovereign countries, with factors
exogenous to the home environment of the organization influencing decision
making on resource use and capabilities. This includes the social, political,
economic, regulatory, tax, cultural, legal and technological environments”.

Nature of Global Business Environment

1. Managing and conducting international (Global) trade operations is a

crucial and difficulty task due to differences or variations in factors
such as- cultural, educational, technical, political, social, and natural.
2. If people of one country has poor economic conditions they will prefer
to buy “Loss costly products”. If people, population of a country is
rich and has higher ability to buy then they will purchase “high quality
29 Biyani`s Think Tank

high priced products‟. Goods by multinationals are marketed keeping

in mind there concepts.
3. An international trade house requires accurate information to make
appropriate forecasts and decisions.
4. International trade houses wants to get timely information i.e.
appropriate information at appropriate time for quick decisions.
5. For having impacts on the foreign economies, the size of the
international trade should be large.
6. On the basis of geographical basis segmentation, the most of the
international trade houses markets are segmented.
7. The domestic market has less potential than international market.

Elements of Global Business Environment-

1. International ecological/natural environment

2. International political environment
3. International economic environment
4. International technological environment
5. International social environment
6. International legal environment
7. International cultural environment

International Business Environment includes the following concepts-

1. International Ecological/Natural Environment- Environment effected a

lot by increasing population, high degree of urbanization, and steep rise in
energy use. By ecological/natural environment we mean all living and non
living things around us within which we live and work. Individual effects
environment & environment effects individual.

The management team must keep in mind in their decision making process,
the ecological factors such as, soil, water, air, land, etc. There relationship
shall be understood.

The managers should have a sound knowledge of the country‟s environment

for making decision about advertising and promotional activities.

2. International Political Environment-

i. It refers to-

o Type of government
 Government relation with business and businessman
 Strategic Management 30

 The political risk in a country

ii. It is dealing with different types of relationships, levels of risks and

types of governments.

iii. Under types of government Government may be-

 Monarchies
 Dictatorships (military and nonmilitary)
 Single party data
 Multiparty democracies
 Government changes by different methods, by elections, death, coup or
war

3. Global Technological Environment-

Technological advances impacts the all aspects of marketing process.

The advances in the electronic communications has revolutionized the-

 Management control capabilities

 Practicalities of carrying out the business function internationally
 The ability to gather data on markets.

4. Global Social Environment- All jobs and workplace have to be

designed according to the changing life style. The traditional life style has
been changing owing to the differing life styles.

5. International Economic environment- All nations have different types

of economic environment. The country may be either developed country or
developing country and emerging economics developed country means rich
country. Developing country means poor country emerging economics means
country moving from poorer to richer.

6. Global Legal and Regulatory Environment- Organizations operating in

different countries required to know and comply with the laws of the domestic
country as well as the host countries they operate in.

7. Global Cultural Environment- National culture is the body of beliefs

and values that includes factors such as-

a. History b. Religion
c. Language d. Geographic location
e. Government f. Education
31 Biyani`s Think Tank

The firms companies do the analysis of culture by seeking to understand there

factors. Culture analysis is a must for production decision making such as
what to produce? How much to produce? For whom to produce etc.

Q.9. What are the major sources of external environmental information?

Ans. The strategists can use the following techniques in collecting and
analyzing external environmental information.

I. Information Gathering

1. Verbal information- It may be gathered from sources.

a. Audio Visual media

b. Conversation among
 Competitors
 Wholesalers
 Retailers
 Dealers
 Customers
 Employees
 Managers
 Supervisors
 Subordinates

2. Written and documentary information from there

a. International Publications -

The following international organization provide information-

 International Labour Organization (ILO)

 UNESCO
 WHO
 UNDP
 World Bank
 IMF
 World Economic Survey
 UNICEF
 Asian Development Bank
 Red Cron International
 Strategic Management 32

b. Government of India Publications-

 Five years plans
 Census Reports
 Economic survey
 Export Import policies
 Annual report published by different govt. departments
 RBI Annual reports.
c. Institutional Publications-

- ASSOCHAM (Federation of Indian Chamber of Commerce and

Industry)

 National council for applied economic research

 The centre for monitoring India economy
 The Bombay stock exchange directory
d. Periodicals, Newspapers, Journal Books, Magazines - Books

Books in public, business, schools, colleges and university library.

Magazines

 Business India
 Business World
 Business Today
 Forbes
 Fortune

Journal

 Wall street journal

 Trade journals

Newspapers

 Economic Times
 Financial Express
 Business Standard
 The Times of India
e. Man Media- It includes
 Internet
 Television
 TV networks all
 Radio
 Tape Recorders Cassettes
33 Biyani`s Think Tank

 Online information
 Tablet Pcs./Laptops/Computers
f. Legal Research databases
g. Spying-

In large companies, experts or spies are appointed by the top management to

know-

o Secrets of competitors, dealers, customers

o Important matters of competitors, dealers, customers

The use of spying is increasing a lot in all kind of industries in India and
world.

II. Forecasting-

Forecasting is done by corporate planning staff on the basis of part

experience. Future trends in the economy, products and technology are
predicted.

The techniques of forecasting are-

 Single variable extrapolation

 Dynamic models
 Mapping
 Delphi method
 Models
 Networks
 Factor analysis
 Probability

Q10 What is core competence?

Ans :- these are the distinctive capabilities of an organisation which

differentiate them from their competitors. It is an essential component of
marketing strategy which leads to business growth and brand recognition. The
term got the first experience in Harvard business review in 1990 by C.K
Prahalad.

For Example:- Apple While any software and device manufacturing business
would claim to be innovative, Apple has other Characteristics that distinguish
it from the competition. This American conglomerate handles everything
 Strategic Management 34

from product design to sales of innovative products and services. As a result,

when consumers invest in its products, they know they are investing in a
brand that never compromises customer benefits by outsourcing production
and sales to a third party. The core competencies of Apple include:

 Unique, innovative, and creative technology

 Integration of software and devices
 User-friendly interface
 Ergonomic and eye-catchy product designs
 Premium electronics brand
 Access to user data
 Artificial intelligence-enabled devices
 Worldwide sales and distribution channel
35 Biyani`s Think Tank

Chapter 4
Functional Strategy
Q.1 What is functional strategy

Ans. Pearson and Robinson defines “A functional strategy is the short term
game plan for a key functional area within a company. Such strategies
clarifies grand strategy by providing more specific details about how key
specific details about how key functional areas are to be managed in thenear
future. ”The major key functional areas are marketing, production, finance
and personnel

Functional strategy characteristics-

1. It includes activities to be undertaken “now” or in the time to come

immediately.
2. Time duration generally two to four years.
3. Emphasis on present tense i.e. what is to be done now for making the
business strategy work.
4. Due to changes in the business scenario the adjustments and
readjustments can be done by managers easily.
5. Specific functional strategy for each functional area, and each
functional head.
6. Primary involvement of operating managers in functional strategies
formulation & implementation.
7. functional strategy objectives-
a. Maximum production at minimum cost
b. Profit maximization
c. High quality staff and officers
d. Best and optimum utilization of available resources
e. Standard quality production of goods and services.
f. New product innovation and design.
8. Types of functional strategy-
a. Marketing strategy
b. Operational strategy
c. Research and Development (R & D) strategy
d. Information system strategy
e. H.R. strategy
f. Financial strategy
 Strategic Management 36

Q.2 Define the term „Marketing Strategy‟.

Ans. „Marketing‟ is a comprehensive term and it includes all resources and a

set of activities necessary to direct and facilities the flow of goods and
services from producer to customer in the process of distribution.

„Marketing‟ is managing profitable customer relationships. Marketing

strategy includes

(a) - attracting new customers by promising superior value and

(b) - to keep and grow current customers by delivering satisfaction.

“Management strategy‟ is the art and science of finding, retaining and

growing profitable customers.

Marketing strategy

1. It is a firms plan

2. It is for attaining the marketing objectives of a firm.

3. It is concept of resource allocation in such an appropriate manner, that

the marketing objectives of the firm are achieved.

4. Marketing strategy includes these sub strategies -

a. Competitive position
b. Distribution channel and policy
c. Pricing policy
d. Market positioning
e. Target markets- Local, domestic, regional, national, international
f. promotion strategies

5. P‟s of marketing are-

a. Product
b. Price
c. Place
d. Promotion
e. Position
f. Packaging
g. People
37 Biyani`s Think Tank

6. C‟s of marketing are-

a. Customer solution
b. Cost
c. Convenience
d. Communication

7. Marketing strategy includes issues such as-

a. Product line
b. Product mix
c. Channel of distribution
d. Pricing of products and services
e. Sales promotion
f. Marketing mix.

8. Marketing strategy deals with-

a. Pricing of a product
b. Selling of a product
c. Distribution of a product

9. Product- Major policy issues are-

a. Product mix
b. market segmentation
c. Product positioning
d. Branding

a. Product mix- A company product mix has a certain width, length, depth
and consistency.

Width - Company can add new product lines.

Length - The Company can lengthen each product line.
Depth - The Company can add more product variants to each
product
Consistency - Single field or several fields‟ product line.
b. Marketing segmentation- Market segmentation refers to the act of
dividing a market into distinct groups of buyers who might require separate
products or marketing mixes.

Market segmentation can be done on the basis of variables.

 Strategic Management 38

 Socio-Economic characteristics of buyer group

 Age
 Sex
 Income
 Education
 Geographic basis
 Buyer behavior basis.

c. Product positioning- Positioning involves a choice to serve a market

segment. Position is the act of designing the company`s offer and image so
that it occupies a distinct and valued place in the target customers mind.

Product can be differentiated in a dozen i.e. features, performance, quality,

conformance etc.

d. Branding- “A brand is name item, sign, symbol, or design or a

combination of them, intended to identify the goods or services of one seller
or a group of sellers and to differentiate them from those of competitors.

Manufacturers, who brand their products, can use following brand name
strategies.

 Individual brand name

 family brand name
 private brand name

10. Marketing strategy can be either

 Push strategies
 Pull strategies.

Q.3 Write a note on “components of marketing strategy”

Ans. Components of marketing strategy

1. Product 2. Price
3. Channel of distribution 4. Product promotion.
1. Product-

- Product satisfy customer wants

- Products are to be manufactured keeping in mind the liking,
preference, desire of the customers/consumers.
39 Biyani`s Think Tank

- Mixing of a product includes concepts product physical existence,

product services, and product branding and product package.

2. Product price- Product price is printed on packing cover. Maximum

Retail Price, MRP is mentioned.

Price of the product may be changed as per market price strategy for attracting
by giving trade discount, sale discount, allowance, liberal and free dealings,
credit sales etc.

3. Channel of distribution- Channel of distribution includes-

a. Interdependent manufacturers b. Retailers

c. Wholesalers d. Authorized agents
e. Authorized dealers f. Company sales outlets
g. Consignment agents

The proper placement of product is done through channels of distribution

4. Product Promotion- Promotion is the process of marketing

communication involving information, persuasion and influence. Promotion
has three specific purposes:-

a. It communicates marketing information to consumers, users & resellers.

b. It persuades and convinces the buyer

c. Promotional efforts act as powerful tool of competition providing the

cutting edge of its entire marketing. Promotion strategy consists of five major
tools-

a. Advertising b. Public relations and publicity

c. Sales promotion d. Personnel selling
e. Direct marketing
 Strategic Management 40

Chapter 5
Human Resource Strategy
Q.1 Explain in detail the concept of Human Resource Strategy. Ans.
Human Resource Strategy-

HR Strategy deals with one of the most precious resources-human resources

in the organization. It is the people who decide the organizational strategies,
and carry out its various functions and implement them. In the achievement
of strategic goals, human resources play a vital role.

Human Resource (HR) Strategy- Characteristics-

1. It is linked to objectives of the organization.

2. It must be prepared in easy and understandable language.
3. It must be clear and comprehensive.
4. It must depict future action plans.
5. HR strategy must be flexible enough to make adjustment as per
requirements of the time.
6. HR strategy must be fair, just, and equitable for all concerned.
7. It should encourage self development among staff and employees.
8. It must be reasonable and appropriate.
9. Appropriate number of HR strategies must be developed.
10. It must be based on
- reasoning - facts - figures
- logic - sound judgment
11. It must be reviewed at appropriate time internal

Components for Developing Human Resource Strategy-

1. Basic objective of human resource strategy is- Organization require

“right person‟ at the “right place‟ and at “right time‟.

2. Career Planning and Development- Carrier planning means helping

the employee for planning about their career in term of three capabilities and
organizational needs career development to defined as the interaction of
psychological, sociological, Physical, cultural, economic and chance factors
that shape the sequence of jobs, occupation/profession or career that a person
may engage in throughout a lifetime.
41 Biyani`s Think Tank

Career development means the process of increasing an employee potential

for advancement and career change.

In present contest every organization provides career development

opportunities to its employees.

3. Human Resource Planning- it includes.

a. Resources available & its planning for utility b. future forecasting

c. work scheduling d. job design

e. career & job management f. corporate culture

g. environmental scanning h. skills of labour

i. labour- productivity, absenteeism and turnover

4. Procedure and method of work-

- How to do work - job specification

- job analysis - motion study

- time study - standard work procedure

- technology used - computer access

- advance techniques of production

5. Fair Employment Practices-

a. Minority races- No employment discrimination should be made in the

form of white & black, male and female, general caste and schedule cast etc.

b. Employment Records- should be maintained in all organization.

c. Female Employees- Organization should provide equal employment

opportunity for females.

d. No sexual harassment.

e. Old Aged Employees- Old employees are the assets of the organization.
No age discrimination shall be there.

f. Nationalities- Globalization and growing role of Multinational

Corporation have made the issue of nationalities more important. Whole work
 Strategic Management 42

has changed in a „global village‟; management must formulate its personal

HR strategy in global perspective.

g. Handicapped employees- It is legal and social responsibility of

management to provide employment to handicapped employees.

6. Staffing- staffing related aspects are-

a. Appropriate match between strategic goals to be achieved.

b. Kind of people employed.

Staffing includes-

a. There is necessity of recruiting and maintaining the required number of

workforce.

b. It is necessary to endure that the quantity of people employed are skilled

and competent and are appropriate to the specific requirements of the strategy.

Methods or sources of Recruitment-

Internal Sources- includes-

a. Personnel already employed in the organization.

b. Personnel available through; Transfer, Promotion, Demotion, Upgradation.

c. Retired employees

d. Retrenched employees

e. Relatives of personnel

External sources-

a. Cell phones b. Labour union

c. Schools d. Colleges

e. Universities f. Casual applicants

g. Nepotism h. Leasing

i. Employment Agencies j. Advertising in Newspapers

k. Advertising on websites
43 Biyani`s Think Tank

STEPS IN SELECTION PROCEDURE ARE-

1. Bio-Data/CV receiving in the employment office

2. Preliminary interview

3. Blank Application

4. Scrutiny of Application Received.

5. Selection Test

6. Main interview by Employment Office

7. Reference checking of the candidate

8. Medical examination

9. Fund Acceptance by department head

10. Introduction

Interview-

a. It is a face to face interaction between two persons for a particular purpose.

b. It is most widely used technique in selection.

c. Interview is the only way to see the candidate in action.

d. One of the ways to predict the candidate‟s job performance.

Purposes of an employment interview are-

a. To find appropriate candidate for a specified job.

b. To get more information about the candidate

c. To give the candidate-

- an accurate picture of the job

- Details of term and conditions of the job.

- Some idea about organization employment policies and employer

employee relations.
 Strategic Management 44

7. Training Policy- Training policy of the company. Training is process

by which people learn knowledge and skill for doing a specific job. Training
may be on the job training or off the job training.

Training benefits increase in

(i) Efficiency of work performance of the employees.

(ii) Minimize wastage and spoilage and scrap of materials

(iii) Improve level of performance

(iv) Establish uniformity in work methods and procedures

(v) Helps to improve the quality of product and service.

(vi) Reduce cost and wastage.

8. Motivation system- Every employer has a separate need, drives,

motives which motivate him to work.

Motivation system should be-

(i) Flexible

(ii) Comprehensive

(iii) Competitive

(iv) Simple and easy to understand

(v) Develop a spirit of mutual operation.

9. Personnel mobility- It is in the form of-

- Promotion - Demotion

- Transfer - Separation

- Deputation - Departmental Transfer

- Sectional Transfer - Inter-plant Transfer

10. Industrial Relations-

Industrial relation is one of the most delicate and complex problems of

modern industrial society. Labour unions, trade unions
45 Biyani`s Think Tank

Main objective of the Industrial relations is the-

(a) Maintenance of the harmonious relationship between management &

labour.

(b) To safe guard interests of the both labour and the management

(c) Industrial democracy establishing

(d) Ensure industrial peace

(e) Minimize or avoid industrial unrest, lockouts, strikes etc.

Q.2 Explain the concept financial strategy.

Ans. FINANCIAL STRATEGY- Finance is the foundation of business. No

business can be started without neither finance nor is its development

possible. It is treated as life blood of business. It is important for industry and

commerce as lubricant for wheels. The success of business depends upon
sufficient furnace and its effective management.

Finance Requirements may be for-

1. Fixed Assets-

a. Plant and machinery b. Furniture and Fixtures

c. Land and Buildings d. Other fixed Assets

2. Current Assets-

a. Cash balance b. Stock

c. Book debts and bills and acceptance

3. Promotion Expenses Operating Expenses Cost of Financing

Sources of Finance-

I. Internal Sources of Finance

II. External Sources of Finance

III. Sources of Fixed Capital

 Strategic Management 46

IV. Sources of Working Capital

I. Internal Sources of Finance

a. Depreciation fund b. Ploughing back of profits

c. owned funds

II. External sources of furnace

a. Shares - Equity shares and Preference shares

b. Debentures c. Commercial banks

d. Public deposits e. Loan from financial institution

f. Trade credit g. Leave finance

h. Private loan i. customer`s Advance

j. Indigenous bankers

III. Sources of Fixed Capital-

a. Owned capital b. Debentures

c. Shares d. Loan from financial institutions

e. Public deposit

IV. Sources of working capital-

a. Customers Advance received b. Fund linked

c. Banker`s d. Trade Credit

e. Commercial Banks

Investment decisions or uses of funds- Uses of Funds-

1. Funds lost in trading due to loss

2. Redemption of debentures

3. Redemption of preference shares

4. Repayment of long term loans taken in the past

5. Payment of tax
47 Biyani`s Think Tank

6. Payment of dividend on shares

7. Non business payments

8. Purchase of Fixed Assets-Examples-

a. Factory equipments b. Electrical installation

c. Furniture and fixture d. Vehicles

e. Plant and machinery

9. Current Assets- Examples-

a. Investors/stock - Raw Material, Work in progress and Finished goods

b. Cash in hand c. Cash at Bank

d. Current investment e. Loans and advances

f. Trade creditors

Working Capital Management-

Working capital refers to the portion of capital which is employed in the

business to carry on its day-to day activities. It is used by the business to
perform its operating activities. Therefore, the capital invested into the
business to carry on the continuous operational activities of a concern is called
the working capital working capital is the life blood of every business concern
working capital of a business is invested in its current Assets and current
liabilities.

Importance of working capital-

1. Smooth and successful ongoing of business operating day to day

activities.
2. An uninterrupted or continuous flow of production.
3. Ensure continuous supply of raw materials in time at least price.
4. Efficient utilization of fixed assts.
5. Easy availability of short term loans.
6. Easy availability of bank overdraft.
7. Regularity in payment of dividend to shareholders.

Classification of working capital-

I. On the basis of concept-

 Strategic Management 48

1. Gross working capital

2. Net working capital

a. Positive working capital b. Negative working capital

II. On the basis of time-

1. Permanent working capital 2. Temporary working capital

Sources of working capital-

I. Sources of Permanent Working capital

1. External Sources-

a. Issue of shares b. Issue of debentures

c. Rising of long-term loan.

II. Internal sources-

a. Ploughing back of profit or reinvestment of funds

II. Sources of temporary working capital-

i. External Sources-

a. Short-term public deposits b. outstanding wages

c. Outstanding expenses d. Bank overdraft
e. Short Term borrowing f. Advance from customers
g. Trade creditors

ii. Internal Sources-

a. Provision for taxation b. Provision for depreciation

Determinants of working capital-

1. Business size 2. Nature of business

3. Operating cycle length 4. Policy of production
5. Price level charges 6. Divided Policy
7. Requirements of cash Reserve 8. Levels of Taxes
9. Depreciation Policy and methods 10. Seasonal variation
11. Business: Expression and growth 12. Credit policy
13. Production policy
49 Biyani`s Think Tank

Dividend Policy Decision-

That portion of divisible profits which is received by the shareholders in

proportion to their holdings is called as dividend. The term devisable profit
refers to that profit of the company which can be distributed in the form of
dividend among its shares holders.

Provision of the Indian companies Act, 1956 in respect of dividend.

1. A company cannot pay dividend out of its capital in carry condition.

2. Dividend can be paid only out of-
a. Profits of current year
b. Undistributed profits of previous years.
3. We must follow the provisions of Memorandum of Association and
Articles of Association while declaring and distributing dividend.
4. Payment of dividend only from profits
5. Dividend can be paid only in cash.
6. Payments of dividend can be done only to specified person.
7. Dividend should be paid within 30 days of its declaration.
 Strategic Management 50

Chapter 6
Strategy Implementation
Q1 Write Short note on Corporate Culture and Resource Allocation?

Ans Corporate culture refers to the values, beliefs, and behaviors that
determine how a company's employees and management interact, perform,
and handle business transactions. Often, corporate culture is implied, not
expressly defined, and develops organically over time from the cumulative
traits of the people that the company hires.

Importance of Corporate Culture

A carefully considered, even innovative, corporate culture can elevate

companies above their competitors and support long-lasting success. Such
a culture can:

• Provide for a positive workplace environment

• Create an engaged, enthusiastic, and motivated workforce
• Attract high-value employees
• Reduce turnover
• Drive and improve performance quality and productivity
• Result in favorable business results
• Underpin a company's longevity
• Strengthen return on investment (ROI)
• Provide an implacable competitive advantage
• Clarify for employees the goals of their positions, departments, & a
company overall
• Contribute to the diversification of the workforce

Resource Allocation

Resource allocation is the process of strategically selecting and assigning

available resources to a task or project in support of business objectives.

• Effective resource allocation should ensure work is divided evenly

among all resources to prevent staff burnout
• Effective resource allocation should empower teams by ensuring
resources have the skills, knowledge, and training necessary to
complete allocated work
51 Biyani`s Think Tank

• Effective resource allocation should ensure engagement performance

is optimised by matching the right resources, to the right task, at the
right time.

Resource allocation process is key in order to empower teams, prevent

burnout, and ensure engagement performance. In this context, resource
allocation is not only an essential resource management process, it is also a
critical lever for growth and success. The ability to effectively and
consistently allocate the right resources to the right task, at the right time is at
the core of every successful and profitable client engagement.

When a firm allocates its resources, it’s actually matching the resources that
will be dedicated to achieving client and business objectives.

Q2 What do you mean by Strategy Implementation and what are the various
aspects of strategic implementation?

Ans. Strategy implementation is a process of translating the formulated

strategies into organizational actions for achieving desired goals. It is one
which is concerned with proper execution of all plans and policies that
ensures accomplishment of long-term objectives. Strategic implementation is
a crucial step in strategy management process that carries out all activities
needed for reaching goals. It addresses who, when, where and how of
attaining targets.

1. Building a strategic budget which provide all required resources for

carrying out the key activities that determine success of business.
2. Organization need to supplied with qualified and experienced
personnel.
3. The key functions of business are carried out by employing leading
practices.
4. Strategy execution is ensured by confirming that procedures and
policies assist in doing so.
5. A favourable work climate and culture is developed for effective
strategy implementation.
6. A communication and information system is set up for facilitating work
in delivering their roles effectively
 Strategic Management 52

Chapter 7
Strategic Evaluation and Control
Q1 What do you mean by strategic evaluation and control ?

Ans ‘Strategy evaluation’ is the process through which the strategists know
the extent to which a strategy is able to achieve its objectives. In the words
of Professor William F. Glueck and Lawrence R. Jauch, “Evaluation of
strategy is that phase of strategic management process in which the top
managers determine whether their strategic choice as implemented is meeting
the objectives of the enterprise.”

Strategy evaluation is that phase of the strategic management process in

which manager tries to assure that the strategic choice is properly
implemented and is meeting the objectives of the enterprise.

In other words strategy evaluation and control is that phase of strategic

management process which comprises of those activities that ensures that a
given strategic choice is implemented in letter and spirit by the managers who
are entrusted with the task of implementing a chosen strategy so as to meet
the overall vision, mission, goals and objectives of the organisation.

Strategic controls are intended to steer the company towards its long-term
strategic direction. After a strategy is selected, it is implemented over time so
as to guide a firm within a rapidly changing environment. Strategies are
forward-looking, and based on management assumptions about numerous
events that have not yet occurred.

Q2 Explain the various techniques of strategic evaluation and control?

Ans Various Techniques of Strategic Evaluation and Control are:-

• Strategic Momentum Control:- The evaluation techniques of strategic

momentum control are those at aims at assuring the strategists that the
strategies formulated and implemented are still acceptable as their
assumptions or premises have not changed as they are valid to date.

1) Responsibility Control Centres – Responsibility control centre is a sub-

unit of an organisation which is called as responsibility centre whose head is
called responsibility centre manager and is held responsible for all the
53 Biyani`s Think Tank

activities and events that come under his purview. These responsibility
centres are built around revenue, expense, profit and investment.

2) Underlying Success Factors – We have already studied about key

success factors earlier. It suffices to say here that these underlying success
factors are those that help the organisation to focus only on key success
factors which are most important and unavoidable to achieve the goals behind
the chosen strategy. In other words, these are traced and taken care of that
contribute to the greatest success of a strategy.

3) Generic Strategies Approach – Strategic control works on the

postulation that the strategies followed by similar organisations are
comparable as these firms are competitive. It is a logic of “general to
particular’ and “particular to general”.

• Strategic Leap Control:- In case of those organisations which are

working under turbulent water or rough whether, there is no option than to
take leap or skip with a view to bring in change in organisational strategy to
match the organisation to the environment which is unstable.

1. Strategic Issue Management – SIM is to identify one or more strategic

issue and implications on the organisation. According to Professor H.I.
Ansoff, a strategic issue is “a forthcoming development either inside or
outside the organisation, which is likely to have an important impact on the
ability of the enterprise to meet its objectives”.

2. Strategic Field Analysis – This is that kind of examination or scrutiny

which examines the nature and extent of synergies that exist or are lacking
between the components of an organisation. The strategists can assess the
ability of the firm to take full advantage of the synergies that exist wherever
and whenever.

3. Systems Modelling – Systems modelling is founded on computer based

models that simulate the essential features of the organisation and its
environment.

4. Writing of Scenarios – Scenario writing we have referred as a part of

environmental analysis. Scenario is a perception of the likely environment a
form is likely to face in future. There will set of scenarios which written with-
various permutations and combinations of environmental forcers.
 Strategic Management 54

• Operational Control Techniques

1) Financial Techniques – These financial techniques are mainly relate to

financial analysis of an organisation. Here, only a passing reference is given
as they have been discussed earlier in this book. The different financial
techniques are –

 Budgetary Control
 Zero Based Budgeting
 Financial Analysis

2) Net Work Techniques – The net work techniques are part of operations
research and the most common versions are PERT, CPM and networks. These
are used extensively in allocation of resources to different projects where
scheduling and its control is a must. The experts have been able to c ombine
these network techniques with those of cost accounting to have effective
operational control over projects-namely their costs and performance.

3) Management by Objectives – The basic idea of MBO is utterly simple;

yet more and more managers and academicians have misunderstood it than
grasped it in its right perspective. In very simple terms MBO is an approach
to planning that helps to overcome some of the barriers. It was in 1954, for
the first line, Management Guru Dr. P.F. Drucker used it in his book “The
Practice of Management.” Managing by objectives is a strategy of planning
and getting results in the direction that management wishes and needs to take
while meeting the goals and satisfaction of its participants.

Q3 Explain the process of Strategic Evaluation and Control ?

Ans

1 Fixing Benchmark of Performance:- While fixing the benchmark,

strategists encounter questions such as – what benchmarks to set, how to set
them and how to express them. In order to determine the benchmark
performance to be set, it is essential to discover the special requirements for
performing the main task.

The performance indicator that best identify and express the special
requirements might then be determined to be used for evaluation. The
55 Biyani`s Think Tank

organization can use both quantitative and qualitative criteria for

comprehensive assessment of performance.

A quantitative criterion includes determination of net profit, ROI, earning per

share, cost of production, rate of employee turnover etc. Among the
Qualitative factors are subjective evaluation of factors such as – skills and
competencies, risk taking potential, flexibility etc.

2. Measurement of Performance:- The standard performance is a bench mark

with which the actual performance is to be compared. The reporting and
communication system help in measuring the performance. If appropriate
means are available for measuring the performance and if the standards are
set in the right manner, strategy evaluation becomes easier.

But various factors such as managers’ contribution are difficult to measure.

Similarly divisional performance is sometimes difficult to measure as
compared to individual performance. Thus, variable objectives must be
created against which measurement of performance can be done.

The measurement must be done at right time else evaluation will not meet its
purpose. For measuring the performance, financial statements like – balance
sheet, profit and loss account must be prepared on an annual basis.

3. Analyzing Variance:- While measuring the actual performance and

comparing it with standard performance there may be variances which must
be analyzed. The strategists must mention the degree of tolerance limits
between which the variance between actual and standard performance may
be accepted.

The positive deviation indicates a better performance but it is quite unusual

exceeding the target always. The negative deviation is an issue of concern
because it indicates a shortfall in performance. Thus in this case the strategists
must discover the causes of deviation and must take corrective action to
overcome it.

4. Taking Corrective Action:- Once the deviation in performance is identified,

it is essential to plan for a corrective action. If the performance is consistently
less than the desired performance, the strategists must carry a detailed
analysis of the factors responsible for such performance. If the strategists
discover that the organizational potential does not match with the
performance requirements, then the standards must be lowered.
 Strategic Management 56

BBA (PART II) EXAMINATION, 2019

STRATEGIC MANAGEMENT

Q1 Define Strategic Management? Why it is important for all the business

managers to study strategic management?

OR

How does mission of an organisation differ from its vision? State the main
characteristics of a good mission?

Q2What is Environmental Scanning? Discuss in brief the major factors of

environmental scanning?

OR

Distinguish between core competence and competitive advantage. What are

the different routes which a firm can use to build competitive advantage?

Q3 Define the concept of corporate strategy? Discuss its nature and scope?

OR

Corporate strategy and business strategy are mutually interdependent.

Explain at what level and by whom these strategies are formulated?

Q4 What are the 5C’s of effective implementation? Discuss the inter

relationship between strategic formulation and strategy implementation?

OR

What is meant by corporate culture? State its kinds. How does it develop?

Q5 Give the meaning and objectives of strategic evaluation and discuss the
steps in the process of evaluation?

OR

Explain the different techniques of strategic control in brief?

57 Biyani`s Think Tank

BBA (PART II) EXAMINATION, 2018

STRATEGIC MANAGEMENT

Q1 what do you mean by Strategic Management? Discuss its role in present

global scenario?

OR

Describe the process of strategic management? And why it is important for

all the business managers to study strategic management?

Q2What do you mean by external environment? Why external environment

appraisal is is important?

OR

What do you mean by organisational appraisal? How does it help in strategy

formulation?

Q3 Define the concept of corporate strategy? Discuss its nature and scope
clearly?

OR

Write a short note on Functional Level Strategy?

Q4 What do you mean by strategy implementation? What are the major issues
involved in it?

OR

What do you understand by organisational change? What are the major

internal and external forces including the change?

Q5 what is meant by strategic evaluation and control? Explain the different

techniques of strategic control?

OR

Evaluation of strategy is a difficult exercise. Explain and discuss the major

elements in the strategic evaluation process?
 Strategic Management 58

BBA (PART II) EXAMINATION, 2017

STRATEGIC MANAGEMENT

Q1 what do you understand by strategy? Discuss the process of strategic

management?

OR

Define and differentiate between

a) Organisation mission and vision

b) Organisation objectives and goals

c) Organisation mission and vision

Q2 Discuss the relationship between organisation and its internal

environment? How organisation strategically respond to their environment?

OR

Why the scanning of internal environment is necessary before strategy

formulation? How an organisation may convert its competitors into core
competencies?

Q3 Strategy is party proactive and party reactive? Comment. Discuss the

various stages in strategic formulation?

OR

What is human resource management? Discuss the role in implementation of

strategy human resource management?

Q4 Discuss the issues in strategy implementation?

OR

Write a short note on organisational design and change?

Q5 Differentiate between strategic control and operational control?

OR

Explain the techniques of strategic evaluation and control?