QUESTION BANKAdditional 15 questions will be given after the sessional examination

Include questions from 1st & 2nd sessional in your question bank.

1. What is a learning organization?

A learning organization is an organization skilled at Creating, Acquiring, and Transferring knowledge, and at modifying its behaviour to reflect new knowledge and insights. Learning organizations are skilled at four main activities: (1) systematic problem solving, (2) experimenting with new approaches, (3) learning from their own experience and past history as well as from the experiences of others, and (4) transferring knowledge quickly and efficiently throughout the organization. This means that people at all levels, not just top management, need to be involved in strategic management - by helping to scan the environment for critical information, suggesting changes to strategies and programs to take advantage of environmental shifts, and working with others to continuously improve work methods, procedures, and evaluation techniques. Organizations that are willing to experiment and able to learn from their experiences are more successful than are those which do not.

2. Why are strategic decisions different from other types of decisions?

Strategic decisions deal with the long-run future of the entire organization and have three characteristics which differentiate them from other types of decisions: (1) They are rare. Strategic decisions are unusual and typically have no precedent to follow; (2) They are consequential. Strategic decisions commit substantial resources and demand a great deal of commitment; (3) They are directive. Strategic decisions set precedents for lesser decisions and future actions throughout the organization. Also see Strategic Decision-Making Process.

3. When is the planning mode of strategic decision making superior to the entrepreneurial and adaptive modes?

The planning mode is generally superior to the entrepreneurial and adaptive modes when the organization is fairly large, when knowledge is spread throughout the organization, and when the organization has at least a moderate amount of time to engage in strategic planning. Most of the Strategists proposes that the planning mode is more rational and thus a better way of making most strategic decisions. It may not, however, always be possible. The entrepreneurial mode can be very useful when time is short, one person or group is able to grasp the essentials of the business and its environment, and that person or group is able to influence the rest of the organization to accept its strategic decision. The adaptive mode seems to be the fallback mode when entrepreneurial or planning modes can't operate effectively because of political infighting or lethargy.

4. What are the various Theories of Organizational Adaptation? Discuss.

Population Ecology, Institution theory, Strategic Choice Perspective & Organizational Learning Theory.

5. What is the Basic Model of Strategic Management? Discuss each block with its elements.

Environmental Scanning – Internal (Culture + Structure + Resources) & External (Task + Societal)Strategy Formulation – Vision, Mission, Objectives, Strategies, PoliciesStrategy Implementation – Programs, Budgets, ProceduresEvaluation & Control – Performance.

Details of each element may be checked from each chapter.

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6. Difference between Vision & Mission, Objective & Goal.

Given in the earlier presentation (power point)

7. What is Hierarchy of Strategy? What are the different types of strategy?

Discussed in detail (in class). Refer to the class notes.

8. How will you analyze the Industrial Environment? Explain the various forces.

The Industrial analysis can be done through the Porter Model. This Model consists of 5+1(proposed by Ed Freeman) namely;

-Threat of new entrants-Rivalry among existing firms-Threat of substitute products or services-Bargaining power of buyers-Bargaining power of suppliers-Relative power of other stakeholders

9. Define Competitive Intelligence (CI). What is the Mission of CI?

CI as defined by SCIP (Society for Competitive Intelligence Professionals) – It as a systematic and ethical process for gathering and analyzing information about the competition’s activities and general business trends to further a business’ own goals. Three basic mission of CI program:

- General understanding of co. and its competitors.- To know vulnerability areas of competitors and impact of strategic action on

them.- Potential moves of competitors and its impact on market.

10. How can value chain analysis help identify a company's strengths and weaknesses?

Value chain analysis, as proposed by Porter, is a way of examining the nature and extent of the synergies that do or do not exist between the internal activities of a corporation. The systematic examination of individual value activities can lead to a better understanding of a corporation's strengths and weaknesses. Its advantage over other methods of analyzing a firm's internal environment is its ability to visualize a company in terms of strings of product value chains which can be tied together in places to achieve economies of scope.

11. In what ways may a corporation's structure and culture be internal strengths or weaknesses?

If a corporation's structure is compatible with present and potential strategies, it can be viewed as an internal corporate strength. If, however, the structure is not compatible with either present or potential strategies, it is a definite weakness and will act to constrain strategy formulation. For example, if a corporation is structured on the basis of function, this may be a weakness if the firm wishes to grow by acquiring other profitable corporations. In order to implement such a strategy, the strategy formulators may have to reorganize on a divisional basis. To the extent that top and middle managers have no experience with such a structure, a lot of unforeseen problems can emerge which may seriously affect the success of the strategy.

12. How is the path laid for Company resources / discuss the Resource triangle.

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Company resources – Competitive capabilities – Core & Distinctive Competencies – Strategic assets & Market achievements – Competitive Advantage.

13. Discuss the Company Value Chain.

The company value chain can be categorized into two- 1. Primary Activities & Cost2. Secondary Activities & Cost

Primary Activities & Cost – Purchased Supplies and Inbound Logistics – Operations – Distribution & Outbound Logistics – Sales & Marketing – Services – Profit Margin

Secondary Activities & Cost – Product R&D, Technology & Systems Development. – Human resource management – General administration

14. Is it possible for a company or business unit to follow a cost leadership strategy and a differentiation strategy simultaneously? Why or why not?

Michael Porter argues that a business unit which is unable to achieve one of the competitive strategies is likely to be "stuck in the middle" of the competitive marketplace with no competitive advantage. That unit, according to Porter, is doomed to below-average performance. Research by Greg Dess and Peter Davis as well as by Rod White, suggests however, that this may not be the case. Examples can be found of businesses which have been able to jointly follow overall low cost and high quality differentiation strategy. Japanese companies such as Toyota in automobiles and Matsushita (Panasonic and National) in consumer electronics are good examples. Their offer of low price and high quality created serious problems for those companies following only cost leadership in the U.S.

15. What is the value of the TOWS Matrix in strategy formulation? Do you agree with this way of generating strategic alternatives? Why or why not?

The TOWS Matrix illustrates how management can match the external opportunities and threats facing a particular corporation with its internal strengths and weaknesses to yield four sets of strategic alternatives. The real value of this technique is not to suggest a particular strategy the firm should follow, but to act as a brainstorming tool to help create a series of alternative strategies management might not otherwise consider. It forces strategic managers to develop both growth and retrenchment strategies, even though they might not believe that both sets of strategies are applicable to their corporation's situation. The TOWS Matrix is a logical extension of SWOT Analysis and helps keep strategic managers flexible in terms of possible options.

16. How does horizontal growth differ from vertical growth as a corporate strategy? from concentric diversification?

(Question alternatively can be put as) – show a similarity between horizontal + vertical with concentric.

Horizontal growth is the expanding of a firm's activities into other geographic regions and/or by increasing the range of products and services offered to current markets. It often involves the acquisition of another firm in the same industry (an example of external growth), but it could also be through the expansion of a firm's products in its current markets (e.g., through line extensions) or expansion into another geographic region (an example of internal growth). Vertical growth, in contrast, involves a firm's taking over a function previously performed by a supplier or a distributor. This would typically involve the addition of activities in other industries either forward (downstream) or backward (upstream) on the industry value chain of current products or services. The additions are primary justified in terms of support of the current product lines regardless of their being in other industries (and thus can be argued to be diversification). Concentric diversification, in contrast, is the addition of products or divisions which are related to the corporation's main business, but are added because of the attractiveness of other industries rather than because they support the activities of the current product lines. The additions may be through acquisition or through internal development. The firm buys or develops another division which is similar to its present product-

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line.

17. What are the tradeoffs between an internal and an external growth strategy? Which approach is best as an international entry strategy?

As pointed out in the text, research suggests that there is no significant sales or profits advantage to either external or internal growth. There are, however, some tradeoffs for each approach. Here are some of them:

Internal Growth

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Pros

More likely to be based on some proprietary development giving competitive advantage.

More likely to fit well with current business units/products

Can finance slowly out of returned earnings. If plan no good, can always cut losses before in

too deep.

Cons

May take a long time to develop a new product or new concept.

May be hard to get current managers to try something new.

May ignore other uses of money with quicker return.

Favored program may take time away from current businesses

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External Growth

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Pros Can grow quickly. Good way to use financial leverage to boost

EPS. Don't have to build anything from scratch. Can generate a lot of excitement on Wall Street

and boost stock price.

Cons

All or nothing gamble. Need a lot of money and/or financial moxie to do

it right. Can purchase someone else's problems. 50% of all acquisitions fail to achieve the

purchaser's objective.

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18. Is stability really a strategy or is it just a term for no strategy?

An argument can be made that stability is not really a strategy in itself, but is just a pause between strategies. Since one way to view strategy is as a direction the corporation is taking in order to reach its objectives, standing still has no direction and thus is not a strategy. The text takes the position, however, that stability is a strategy in itself. Just as no decision is the same as making a decision, it is argued that even though stability may be viewed as not choosing a strategy, it is therefore a strategy by default. Stability may be a very appropriate long-term strategy for a small business in which the owner/manager does not want the corporation to grow beyond his/her abilities to manage it personally and is very happy with the level of life style the business provides. Typically, however, stability is perceived only as a viable short-term strategy while strategic managers are waiting for key factors needed for growth to fall into place. Nevertheless, to the extent that stability helps explain the movement of a corporation toward its objectives, it deserves to be called a strategy.

19. How is corporate parenting different from portfolio analysis? How is it alike? Is it a useful concept in a global industry?

The basic difference between these two approaches to corporate strategy lies in the questions they attempt to answer. Portfolio analysis attempts to answer the following two questions:

• How much of our time and money should we spend on our best products and business units in order to ensure that they continue to be successful?

• How much of our time and money should we spend developing new costly products, most of which will never be successful?

The basic theme of portfolio analysis is its emphasis on cash flow. Portfolio analysis puts corporate headquarters into the role of an internal banker. In portfolio analysis, top management views its product lines and business units as a series of investments from which it expects to get a profitable return. The product lines/business units form a portfolio of investments which top management must constantly juggle to ensure the best return on the corporation's invested money.

Corporate parenting attempts to answer two similar, but different questions:

• What businesses should this company own and why?

• What organizational structure, management processes, and philosophy will foster superior performance from the company's business units?

Portfolio analysis attempts to answer these questions by examining the attractiveness of various industries and by managing business units for cash flow, that is, by using cash generated from mature units to build new product lines. Unfortunately, portfolio analysis fails to deal with the question of what industries a corporation should enter or with how a corporation can attain synergy among its product lines and business units. As suggested by its name, portfolio analysis tends to primarily take a financial point of view and views business units and product lines as if they were separate and independent investments. Corporate parenting, in contrast, views the corporation in terms of resources and capabilities that can be used to build business unit value as well as generate synergies across business units. The central job of corporate headquarters is not to be a banker, but to coordinate diverse units to achieve synergy. This is especially important in a global industry in which a corporation must manage interrelated business units for global advantage. Corporate parenting is similar to portfolio analysis in that it attempts to manage a set of diverse product lines/business units to achieve better overall corporate performance. It attempts to use Economies of scale and scope to further a business’ goal

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20. What is the value of portfolio analysis? Its dangers?

Portfolio analysis is a popular approach to aid the integration and evaluation of environmental data. It is just as useful for a single business corporation with a number of separate products as it is for a large corporation with autonomous operating divisions. By carefully examining both market or industry factors and business strengths or market share, it is possible to pinpoint factors of strategic importance to corporate or divisional success. Portfolio analysis thus serves as a convenient technique for comparing external opportunities and threats with internal strengths and weaknesses. The advantages and limitations of portfolio analysis are listed in the chapter.

21. Are functional strategies interdependent, or can they be formulated independently of other functions?

Functional strategy is the approach a functional area takes to achieve corporate and business unit objectives and strategies by maximizing resource productivity. It is concerned with developing and nurturing a distinctive competence to provide a company or business unit with a competitive advantage. Each company or business unit has its own set of functional departments, each with its own functional strategy. Because the orientation of each functional strategy is dictated by its parent unit’s business strategy, functional strategies must interrelate if they are to be successful. For example, a company’s business competitive strategy of differentiation through high quality means that each functional strategy must support high quality. Distribution (part of marketing strategy) will probably be through quality distributors and retailers that emphasize customer service and support. Operations will probably emphasize highly skilled employees and flexible manufacturing to adjust production to customer requests. Even though both of these functional strategies can be formulated independently, they will need to mesh with each other if the competitive strategy is to be properly supported. This has traditionally been a job of the general manager in charge of the parent SBU, it is increasingly being managed by cross-functional teams composed of managers from each of the functional areas.

22. Why is penetration pricing more likely than skim pricing to raise a company's or a business unit's operating profit in the long run?

When pricing a new product, a company or business unit can follow a marketing strategy of skim pricing or penetration pricing. For new product pioneers, skim pricing offers the opportunity to skim the cream from the top of the demand curve while the product is novel and competitors are few. Penetration pricing offers the pioneer the opportunity to utilize the experience curve to gain market share and dominate the industry. Skim pricing is purely a short-term phenomenon and is used to gain high profits quickly in order to pay for expensive R&D and marketing costs before new entrants engage in price competition. It therefore cannot be used to raise long term operating profits unless the firm follows a differentiation strategy of continually entering markets early through exceptional R&D and exiting before the heavy-hitting late movers like IBM or Procter & Gamble force margins down.

23. What is the relationship of policies to strategies?

Generally speaking, the text views policies as the link between strategy formulation and implementation. They are the broad guidelines to be used in the implementation of strategy. The text takes the position that the dividing line between formulation and implementation is the difference between the planning activities of formulation and the action-oriented activities of organizing, directing, and controlling. Since the development of policies primarily involves planning, not action, they more properly belong within strategy formulation.

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24. What are the advantages and disadvantages of the devil's advocate, dialectical inquiry, and consensus approaches to making strategic choices?

Research generally indicates that either the devil's advocate or dialectical inquiry methods are superior to consensus in decision making. The drive in consensus to get everyone to agree on an alternative can result in "groupthink" - a situation when all try to overcome their personal reservations in order to show unanimity and be a team player even if the alternative chosen is defective. On the positive side, however, consensus results in a positive team approach to implementation. Both devil's advocate and dialectical inquiry are conflict-oriented and can create problems in implementation. Nevertheless, both work to ensure that an alternative is critically evaluated before agreement is reached. Both need to be set up in advance of the discussion. In the case of the devil's advocate, one person or group is assigned the task of finding everything wrong with a particular alternative. The advocate must propose nothing - only criticize the alternative in question. In contrast, dialectical inquiry requires two separate proposals be developed. Both sides must defend their own alternative and attack the alternative presented by the other.

The limitations of the devil's advocate are: (a) Only one proposal is presented. It is either accepted or rejected. Thus, participants don't have an opportunity to compare the alternative under consideration with another possibility. (b) Since the devil's advocate defends nothing, the person(s) taking this position may be criticized for "taking cheap shots" at an alternative everyone likes and may hesitate to continue the attack in the face of group pressure. Thus, the devil's advocate must have the strong support of the leader of the group in order to be effective.

The limitations of dialectical inquiry are: (a) Two people or groups must spend much time preparing their position for debate in front of an audience. The emphasis may turn to presentation skills and "scoring points" over serious analysis. (b) The win-lose nature of this approach may create ill feelings and conflict among participants. Thus, people on the losing side may find difficulty joining the "winners" in implementing the alternative chosen.

25. How is the cellular organization different from the network structure?

As per Miles and Snow, the evolution of organizational forms is leading from the matrix and the network to the cellular. According to them, "a cellular organization is composed of cells (self-managing teams, autonomous business units, etc.) that can operate alone but that can interact with other cells to produce a more potent and competent business mechanism." It is this combination of independence and interdependence which allows the cellular organizational form to generate and share the knowledge and expertise to produce continuous innovation. The cellular form includes the dispersed entrepreneurship of the divisional structure, customer responsiveness of the matrix, and self-organizing knowledge and asset sharing of the network. As proposed, the cellular structure is similar to a current trend in industry of using internal joint ventures to temporarily combine specialized expertise and skills within a corporation to accomplish a that task individual units alone could not accomplish.

In contrast, the network structure is really a sort of non-structure by its virtual elimination of in-house business activities. Long-term contracts with suppliers and other strategic alliances replace the services the company could provide for itself.

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