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MB- 00 52 STRATEGIC MANAGEMENT AND BUSINESS POLICY
UNIT: 1
1. Strategy is the method by which an organisation systematically achieves its future objectives.
2. Strategy is a common direction set for the company and its various components to accomplish a desired position
in the future.
3. Strategy is a plan that is aimed to give a competitive advantage to the organisation over rivals through
differentiation.
4. The different levels of strategies are as follows:
Corporate Strategy: This is regarding the general function and scope of the business to meet the stakeholder's
expectations.
Business Strategy: This is regarding how a business competes effectively in a particular market. It includes
strategic decisions about the selection of products and meeting customer requirements.
Operational Strategy: This is regarding how each part of the business is organized and delivered to the corporate
and business level. Operational strategy focuses on issues of resources and practices of an organisation.
5. The different concepts of strategy are:
It is defined as a plan to direct or guide a course of action
It is a pattern to improve the performance over time
It is a fundamental way to view an organisations performance
It is a scheme to out-maneuver competitor
6. The nature of strategy is as follows:
Strategy is intended to grab the opportunities and face the threats provided by the external factors.
Strategic proceedings are required for new opportunities which might arise in future.
Strategy requires systems and norms for its efficient adoption in any organisation.
Strategy provides framework for guiding the project.
7. Strategy is prepared to achieve the mission of the company by long-term and short-term goals.
8. The different scopes of strategies are:
To fix mission of the
To create constructive internal environment
Analysis and assessment of external environment
SWOT analysis SWOT is a method used for assessment.
To develop an overall strategy
To increase resources and facilities
Evaluation and control
9. The internal environment includes business, financial resource and manpower.
10. A strategic plan gives a clear vision of the goals and objectives to the employees of an organisation.
11. SWOT is a tool for auditing an organisation.
12. The main objectives of a business are:
Survival The purpose of a business is to survive in the competitive market.
Profit maximization to make maximum profit out of the business.
Sales growth To increase the sales and expand the business
13. The acronym SMART stands for Specific, Measurable, Attainable, Realistic and Time-based. It is a tool used to
set goals to achieve planned results.
14. Tactics are the actual ways in which the strategies are executed
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MB- 00 52 STRATEGIC MANAGEMENT AND BUSINESS POLICY
15. Every business enterprise has two fundamental functions marketing and innovation.
16. Objectives are clearly outlined with timelines and budgets.
17. Goals are high level statements that provide overall framework about the purpose of the project.
18. An objective describes tangible products and deliverables that the project delivers.
19. Goals are indefinable and the achievement cannot be measured.
20. A vision statement defines the purpose and principles of an organisation in terms of the values of the
organisation.
21. A mission statement is the extensive definition of the mission of an organisation. Mission statement is the
responsibility by which an organisation aims to serve its stakeholders.
22. The mission statement focuses on the present position of the organisation and the vision statement focuses on
the future of the organisation.
23. A strategic intends is a one-page document that defines the goals of an organisation for a specific period of time
in future.
24. A mission statement conveys the purpose of the organisation to employees and public.
25. The aim of vision statement should be rational and achievable.
26. Core competencies are those skills that are critical for a business to achieve competitive advantage.
27. Core Competencies are not fixed.
28. The characteristics of core competencies are:
To provide potential access to a wide range of market
Should be difficult to imitate by competitors
Should make considerable contribution to the customers
29. Critical success factors (CSFs) are used extensively to identify the key features that an organisation should focus
on to be successful.
30. Critical Success Factors are associated with the strategic goals of an organisation.
31. The chief areas that affect the business are:
Industry - These factors result from specific industry characteristics. The organisation should consider
these factors to remain competitive.
Environmental these are the factors that are the result of environmental influences on an organisation
like the economy, competitors, and technological advancements.
Strategic - These factors are the result of particular competitive strategy selected by the organisation.
Temporal - These factors are the result of the organization's internal influence like challenges and
directions.
32. Core competency is a unique skill or technology that establishes a distinct customer value.
33. They distinctive competencies should be unique and advanced to the competitor capacity.
34. Critical success factor are used to identify the key features that an organisation should focus to be successful.
Unit: 2
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MB- 00 52 STRATEGIC MANAGEMENT AND BUSINESS POLICY
1. Strategic management is a systematic approach of analyzing, planning and implementing the strategy in an
organisation to ensure a continued success.
2. A brief description of need and scope of strategic management is as follows:
Strategic management is required to make crucial decisions in an organisation which helps in
obtaining a long term goal.
Strategic management is required in the organisation to implement any process in a systematic
approach and to allocate the resources in appropriate manner.
Strategic management is assessed to determine the most crucial issues in the organisation in such
a way that it does not harm the mission of the organisation.
Strategic management includes strategists who expertise the strategy effectively to obtain desired
result.
Strategic management commit to the organisations strengths and weakness.
Any changes in the organisation can be handled in an organized manner by implementing
strategic management.
3. The five main features of strategic management are:
Strategic analysis
Strategic choice
Strategic formulation
Strategic implementation
Strategic control and evaluation
4. The first phase of business planning began in the mid 1930.
5. Strategic management considers the strength as the weaknesses of the organisation.
6. Strategists are the silent partners in strategic literature.
7. The various management levels where the roles of strategists can be seen include.
Top level management
Board of directors
Planning staff
8. Planning staff usually called as planning staff personnel are a group of people assigned by the top level
management.
9. The top level management, board of directors and planning staff are the most significant individuals
involved in strategic management.
10. The board of directors is elected by stakeholders of the organisation.
11. The four grand strategies in a corporate level are
Stability and expansion strategy
Retrenchment
Corporate restructuring
Combination strategies concept of synergy
12. The further classification of expansion strategy is as follows:
Diversification - Diversification is a process of entry into a new business in the organisation either
marketwise or technology wise or both
13. The two basic diversification strategies are:
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MB- 00 52 STRATEGIC MANAGEMENT AND BUSINESS POLICY
Concentric diversification : The organisation adopts concentric diversification when it takes up an
activity that relates to the characteristics of its current business activity. It is also called as related
strategy.
Conglometric diversification : The organisation adopts conglometric diversification when it takes up
an activity that does not relate to the characteristics of its current business activity. The
organisation chooses to diversify It is also called as unrelated diversification.
Concentration: Concentric expansion strategy is the first route towards growth in expanding the
present lines of activities in the organisation.
14. The two basic concentration strategies are:
Vertical expansion
Horizontal expansion
15. Different types of retrenchment strategies are:
Turnaround
Captive company strategy
Divestment strategy
Bankruptcy
Liquidation
16. The main aspects of business level strategies are related with:
Business stakeholders
Achieving cost leadership and differentiation
Risk factors
17. According to Porters generic strategy, the organisation that succeeds in cost leadership and differentiation
often has the following internal strengths:
The company possesses the skills in designing efficient products
High level of expertise in the manufacturing process
Well organized distribution channel
Industry reputation for quality and innovation
Strong sales department with the ability to communicate successfully the real strengths of the
product.
18. Risk is the probability of good or bad things that may happen in the business. Risk will impact the objectives
of the organisation. The risk factors in the business strategies include two types - external and internal
risks.
19. Tactical decision means involving or pertaining to actions for short term than those of a larger purpose.
20. The different types of strategies at functional level are:
Procuring and managing
Monitoring and directing resources towards the goal
21. Steps involved in procuring strategy are:
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MB- 00 52 STRATEGIC MANAGEMENT AND BUSINESS POLICY
Identify the need of purchase and the required quantity.
Plan the cost budget of the goods or services being purchased and the procedure of contracting
by checking the cost and requirements with various sellers.
Select the seller who is matching the cost and requirement criteria as per the organisation.
Perform the contract deal with selected seller and monitor the contract.
Close the contract once the goods or services are acquired.
22. Managing is the process of monitoring the strategies that are implemented in the business.23. Monitoring and directing is the essential part of management. Monitoring means knowing what is going on.
Monitoring is also called as measuring.24. Monitoring and directing process of resources sets the organisation to work on the right track by removing
all hurdles and produces effective outcome in reaching the goals of the organisation efficiently.25. Operational level is concerned with successful implementation of strategic decisions made at corporate and
business level. The basic function of this level is translating the strategic decisions into strategic actions.26. The basic aspects in operational level are:
Achieving cost and operational efficiency Optimal utilization of resources Productivity
27. Productivity basically means a relative measure of the efficiency of production in terms of converting the
ratio of inputs to useful outputs.
28. The basic approach of the stability strategy is to maintain the present status of the organisation.
29. Operational level strategy is concerned with successful implementation of strategic decision made at
corporate and business level.
30. Procuring means owing.
31. Strategic management process is a long term process.
32. Considering these issues, the limitations of strategic management are:
Resistance to Change
Dissatisfaction in employees
Time consuming Strategic
Non practical planning
It gives only a
Strategies are only means to achieve the
Political pressure
Ignorance of other managerial functions
33. Dissatisfaction of employees affects the workflow and hampers the growth in the organisation.
34. Strategic management only guides the employees to work in sequence and achieve the success in a proper
direction.
35. The political pressure plays an important role in decision making.
Unit: 3
1. Environmental Appraisal and Scanning Techniques
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MB- 00 52 STRATEGIC MANAGEMENT AND BUSINESS POLICY
Need for environmental appraisal
Environmental Scanning techniques
Competitive and industry analysis
2. Organizational Position and Strategic Advantage Profile
BCG business portfolio matrix
Igor Ansoff growth matrix
McKinsey/GE growth pyramid
3. Strategy analysis is defined as a process of conducting research on the business environment within which
an organisation operates to formulate strategy.
4. Strategy analysis is a key aspect of strategic management.
5. The importance of strategic analysis is as follows:
It gives an understanding of what drives risks, profitability and competitive advantage.
It provides a basis for forecasting future performance.
It gives an idea of how to measure the success of an organisations action.
6. Strategic analysis is a process to formulate and implement strategy.
7. Vision, mission, goal and strategy objectives form the basis for competitive advantage
8. Strategic analysis forms a basis for competitive advantage. True
9. Environmental scanning is the monitoring, evaluation and circulation of information from the external and
internal environments to the key people within the organisation.
10. The societal forces are as follows:
Economic force - Regulates the exchange of material, money, energy and information.
Technological force - Generates problem solving inventions
Political-legal force - Allocates power, regulates and protects the laws
Socio-cultural force - Regulates the values and customs of the society
11. The types of external scanning techniques are as follows:
SWOT analysis
ETOP analysis(environment threats and opportunities profile)
PEST analysis(political, social, environmental and technological)
12. SWOT is an acronym for strength, weakness, opportunities and threats which are strategic factors of an
organisation.
13. Strategic Advantages Profile (SAP)
14. Political factors that have an impact on organisations are the following:
Legislation on employment laws
Voluntary codes and practices
Environment regulations
Trade restrictions and tariffs
Tax policy and political stability
15. Some technological factors are the following:
Research and Development
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MB- 00 52 STRATEGIC MANAGEMENT AND BUSINESS POLICY
Automation
Technology incentives
Rate of technological change
16. The strengths of an organisation are its resources and capabilities that can be used as a basis for developing
competitive advantages.
17. ETOP provides a summary of the environmental factors that are most critical to the company.
18. Political factors create benefits and opportunities for organisations.
19. Michael Porter introduced the concept of value chain analysis in his book, The Competitive Advantage.
20. Primary activities are those that are concerned with creating and delivering the end product.
Operations
Outbound logistics
Marketing and sales
Services
21. The support activities aid the primary activities in helping the organisation achieve its competitive
advantage.
Procurement
Technology development
Human resources
Firm infrastructure
22. Some of the important financial ratios are the following
Liquidity ratio
Profitability ratio
Activity ratio
Leverage ratio
23. Some of the non-financial ratios are:
Employees Attrition or turnover operational
Assets
Customer Number of customers retained and new ones added
Supplier
Core competency
24. The idea of core competency was coined by Prahalad and Gary Hamel. The three tests to identify core
competence are:
Provide potential access to a wide variety of market
Should make a significant contribution to the benefits of the end products
A core competence should be difficult for the competitor to imitate
25. Vellore Institute of Technology (VIT).
26. Quality management aims to reduce costs and improve quality.
27. Benchmarking is a process of systematic evaluation of organizational processes and performance to create
new standards or to improve process.
28. The Balanced Score Card (BSC) is a framework that allows organisations to manage and measure the
delivery of their strategy. This concept was introduced by Robert Kaplan and David Norton in 1992.
29. The four perspectives identified by Kaplan and Norton are as follows:
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MB- 00 52 STRATEGIC MANAGEMENT AND BUSINESS POLICY
Learning & growth perspective
Internal process perspective
Financial perspective
Customer perspective
30. The factors to consider while conducting competitor analysis are as follows:
Who the competitors are
Competitors strategies and planned actions
How competitors react to the actions of the organization
How to influence competitive behavior to the firms advantage
31. The aspects of a competitor on which the Porters framework is based on are:
Competitors objective
Competitors assumption
Competitors strategy
Competitor capabilities
32. Michael E. Porter developed the Five Force Model in his book, Competitive Strategy.
33.
34. Forces driving industry competitions are:
Threat of new entrants
Suppliers
Rivalry among existing firms
Buyers Buyers
Threat of substitute products and services
Other stakeholders
35. Value change analysis describes the activities that take place in a business and relates them to an analysis
of the competitive strength of the business.
36. Industry is a group of companies producing a similar product or service.
37. The objective of benchmarking is to understanding and evaluating current position of a business or
organisation.
38. The BCG matrix is a portfolio management tool used in product life cycle.
39. BCG Growth Share Matrix
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MB- 00 52 STRATEGIC MANAGEMENT AND BUSINESS POLICY
Question Marks (high growth, low market share)
Stars (high growth, high market share)
Cash Cows (low growth, high market share)
Dogs (low growth, low market share)
40. Limitations of BCG matrix:
The use of highs and lows to form four categories is too simple
The correlation between market share and profitability is questionable. Low share business can
also be profitable.
Product lines or business are considered only in relation to one competitor: the market leader.
Small competitors with fast growing shares are ignored.
Growth rate is the only aspect of industry attractiveness
Market share is the only aspect of overall competitive position
41. The Ansoff Growth matrix is a tool that helps organisations to decide about their product and market
growth strategy.
42. The McKinsey/GE matrix is a tool that performs a business portfolio analysis on the Strategic Business units
in an organisation.
43. McKinsey/GE growth pyramid matrix works with 3*3 grids while BCG matrix is 2*2 matrixes.
44. External factors that determine market attractiveness are the following:
Market size
Market growth
Market profitability
Pricing trends
Competitive intensity/rivalry
Overall risk of returns in the industry
Opportunity to differentiate products and services
Segmentation
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MB- 00 52 STRATEGIC MANAGEMENT AND BUSINESS POLICY
Distribution structure (e.g., retail, direct, wholesale)
45. Internal factors that affect competitive strength are the following:
Strength of assets and competencies
Relative brand strength
Market share
Customer loyalty
Relative cost position (cost structure compared to competitors)
Distribution strength
Record of technological or other innovation
Access to financial and other investment resources
46. McKinsey/GE Growth Pyramid
47. Cash cow has higher market value.
48. Market development is a growth strategy where the business seeks to sell its existing products into new
markets.
49. Market attractiveness replaces market growth in Mckinsey/GE Growth matrix.
50. The steps involved in strategic planning model are as follows:
Environmental scanning analysis
Strategy formulation
Strategy implementation
Strategy evaluation and control
51. Strategic management model is as strategic planning model.
52. Strategic formulation is the process of determining suitable course of action to achieve organizational
objectives, and thereby achieve the organizational purpose.
53. Strategy implementation is concerned with the planning of how to apply the choice of strategy in
organisation. True
Unit: 4
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MB- 00 52 STRATEGIC MANAGEMENT AND BUSINESS POLICY
1. Strategic decision making is a tool to do business in a smarter way.
2. steps of decision making process:
a. Creating a constructive environment
b. Generating good alternatives
c. Exploring the chosen alternatives
d. Choosing the best alternative
e. Checking and confirming your decision
f. Communicate your decision and move to action
3. issues involved in taking difficult strategic decisions are:
Uncertainty
Complexity
High-risk consequences
Irrelevant alternatives
Interpersonal
4. The features of strategic choice are as follows:
Focusing on decisions and judgments made in a particular planning situation
Highlighting judgments involved in handling uncertainties
Creating a framework which explicitly balances present and future decisions
Creating a framework for communication and collaboration between different people with different
backgrounds and skills.
5. Strategy formulation is the development of long range plans.
6. Strategic decision making influences the strategy formulation to a considerable extent.
7. Process in Strategy Formulation
Stimulate the identification
Utilization and transfer of useful information as per the business strategies
8. The factors are as follows:
Processes
Data
Detachment
9. Henry Mintzberg believes that management is about applying human skill to system.
10. strategy implementation in the following three aspects:
Organizational structure and systems
Resource procurement
Functional and operational plans
11. The three forms of common organizational structure are as follows:
Tall
Flat
Hierarchical
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MB- 00 52 STRATEGIC MANAGEMENT AND BUSINESS POLICY
12. The following are some of the procurement steps:
Recognition of need for goods/services
Qualify the specifics of the services
Evaluation of potential suppliers
Taking possession of the desired good or service
13. Project detailing is the first step towards resource procurement process. The steps involved in it are as
follows:
Analyze the needs
Find the right designer
Establish priorities
Perform a mock-up
Implement the feedback
Perform test
Prepare the final design
Implement marketing and promotions
Plan for updates or changes
14. The features of procedural issues are as follows:
Setting up guideline development groups
Defining the scope of the groups
Scheduling time for events
Setting up proper strategic planning process for every group
15. The resource allocation process deals with two steps. They are as follows:
Breaking up the project and extracting the task
Assigning the task to the resources
16. Core competence is a management tool that enables an organisation to deliver a unique value to its customers.
17. The benefits of core competencies are as follows:
Designs competitive positions and strategies
Helps employees to understand management priorities
Decides where to allocate resources
Enhances image and builds loyalty of custom
A company interested to develop its core competencies should consider:
Creating an organizational road map that sets goals for competence building
Encouraging communication standards and involvement in core capability development
Preserving its core strengths
18. Critical Success Factor (CSF) is the critical factor required to ensure proper success in a business. CSF is a variable
element.
19. The types of CSFs are as follows: Industry CSF Strategy CSF Environmental CSF Temporal CSF
20. The five key sources of CSFs are as follows:
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MB- 00 52 STRATEGIC MANAGEMENT AND BUSINESS POLICY
The industry
Competitive strategy and industrial position
Environmental factors
Temporal factors
Managerial position
21. The key aspects of a company while working on its CSFs can be listed as follows:
Develop a mission statement
Develop high level goals
Develop a hierarchy of goals and their success factors
List the requirements, problems and assumptions
Implement analysis matrices
Implement problems versus requirements matrix
22. Resource procurement comes after three processes project detailed, procurement issues and resource
allocation.
23. Core competence is a management tool that enables the business to deliver a fundamental customer benefit.
24. Major reasons for strategy failure
Improper communications
Lack of effective leadership
No plan behind the idea
Passive management
Lack of motivation and personal ownership
25. The consequences of financial crisis are the following:
Gradual declination in the growth of the organisation
Systemic instability
Fewer employment opportunities or increased salary cut-offs
Loss of reputation in the global market
26. Methods to overcome strategic failure
Defining your system value
Defining your
Defining your mission
Live from choice
Change management and strategic planning
Employees and managing workers
Create a plan and take substantial action
Turn-around
Replacement of the committee with a mastermind group
27. The major effect of strategic failure is the financial crisis of the organisation.
28. Strategic failure leads to decline in productivity of an organisation.
29. Types of Leadership: Direct Leadership: Sub-ordinates are in close contact Organizational Leadership: Requires staff support
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MB- 00 52 STRATEGIC MANAGEMENT AND BUSINESS POLICY
Strategic Leadership: Utilizes power wisely30. A strategic leader possesses the following qualities:
Loyalty and compassion Judicious use of power Wider perspective or outlook Motivation and reliability Skillful communication Quality of understanding the moods and emotions
31. Strategic leadership is the potential to express a strategic vision.32. The factor that distinguishes successful strategy implementation from failed attempts is the competent
leadership at the top.33. SBU is a business tool whose main concept is to serve a clear and defined market segment with a defined
strategy.34. The features of SBU are as follows:
SBU contains all the needs and corporate capabilities of its organisation. There is managerial and capital resource allocation for serving the overall interest of the organisation. SBU segments the activities of the company in a strategic manner and allocates resources
competitively.35. For an organisation to have an SBU, it must fulfill the following criteria:
Possess different missions Set up original plans Have a definable group of competitors Administer resources in key areas
36. Functions or roles of an SBU Encourages new ways of thinking and acting as a separate autonomous unit Reduces the affect of bureaucracy in the organisation Follows the corporate strategic plan but differs in significant aspects. Planning steps include mission,
market opportunity analysis, target market evaluation, marketing program and impact analysis.37. Benefits of SBU to parent company/MNCs
Optimization of the competitive advantages lies within the company's global network of business units and people.
Reforming the business model and achieving the objective Serving a defined external market where it can conduct strategic planning in relation to products and
markets38. SBU is an autonomous unit which deals with specific business concerns.39. The SBU adds value through parenting advantages by defining its roles and strategic priorities.40. Autonomous: A self governing body which works independently
Unit: 5
1. The core aim of strategic management succeeds only if it generates a positive outcome.
2. The five step process of strategic evaluation and control
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MB- 00 52 STRATEGIC MANAGEMENT AND BUSINESS POLICY
Recognize the activity to be measured
Create the pre-established standards
Measure actual performance
Status of actual performance
Take remedial action
3. The most common negative side effects of strategy evaluation are:
a. Short term arrangement
The top management doesn't realize its importance.
They believe that short term considerations are sufficient and more important.
Lack of time to conduct a long term analysis.
b. Goal displacement
The two types of goal displacement are:
Behavior substitution
Sub-optimization
4. The three most widely used techniques for international performance evaluation are return on investment, budget
analysis and historical comparisons.
5. The methods to evaluate strategies through Return on Investment (ROI) and Earnings per Share (EPS) are becoming
outdated these days.
6. The present value of the predictable future stream of cash flows from the business plus the value of the company if
liquidated.
The most popular methods to measure the share holder's wealth are:
Economic Value Added (EVA) - EVA measures the difference between the pre-strategy and post-strategy value of
a business.
EVA = after tax operating income (total cost of capital)
Market Value Added (MVA): MVA is the difference between the market value of an organisation and the capital
contributed by the shareholders and lenders.
7. The firms MVA is positive if its market value exceeds the total capital. This means that the management is creating
wealth. Negative MVA means that the management is destroying wealth.
8. Robert Kaplan and David Nortons approach of balanced scorecard is especially useful when the non-financial assets
contribute 50 to 80 percent of a firm's value. The balanced scorecard is also a collection of procedures used to
analyses difficulties.
9. These four areas are as follows:
Financial
Customer
Internal business perspective
Innovate and Learning
10. The term scorecard indicates quantified performance measures and balanced indicates that the system is balanced
between:
Short term objectives and long term objectives
Financial and non-financial measures
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MB- 00 52 STRATEGIC MANAGEMENT AND BUSINESS POLICY
Lagging and leading indicators
Internal and external performance perspectives
11. The evaluation process stops if the results of actual performance are within the tolerance range.
12. The most popular methods to measure shareholders wealth are EVA and MVA.
13. Information of the strategic evaluation activities needs to be elaborate and over informative. False
14. The three types of strategic control are:
Feed forward/input controls
Concurrent/behavior controls
Feedback/output controls
15. The guidelines for effective strategic control are:
It should contain only the most important information.
It should examine only meaningful activities and results.
It should be well-timed.
It should use long-term and short-term controls.
It should be able to identify the activities that do not fall within the tolerance range.
It should determine the rewards for meeting or exceeding standards.
16. Strategic control is about tracking the strategy as it is being planned, implemented and takes necessary actions when
it indicates any negative performance.
17. Behavior control focuses on resources like knowledge, skills, abilities, values and motives of employees. False
18. Input, behavior and output controls are not interchangeable. True
19. Operational control is designed for the internal activities of the organisation.
20. The data of strategy control concentrates on the performance result of the future.
21. Operational control focuses on the recent events.
22. Operational control is mostly limited to the information within an organisation.
23. Walt Disney was an entrepreneur with creative skills.
24. According to Goold and Campbell, synergy can take place in 1 to 16 forms. Some of them are:
Shared know-how
Coordinated strategies
Shared tangible resources
Economies of scale or scope
Pooled negotiating power
New business creation
25. Combining multiple products, business lines or markets is an attempt of the organisation to achieve synergy.
26. Synergy is always positive and does not have any negative influences. false
27. Downsizing and the divestiture may result in negative synergy.
28. Key Stakeholders are a subset of Stakeholders who can leave a direct impact on the organisation and can influence the success or failure of the organisations activities.
29. A stake holder table should include the following information.
List and identify all potential stake holders.
Identify the different unconcealed and hidden interests of the stake holders that could affect the
objectives of the project.
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MB- 00 52 STRATEGIC MANAGEMENT AND BUSINESS POLICY
Briefly analyze the impact of their interests on the project.
Specify the relative importance of each stake holder's interests.
30. As the project proceeds, draw a communication strategy that recognizes how, when and what to communicate to
each stake holder group.
31. Share holders are the key stake holders of an organisation. False
32. Stake holders should always be analyzed at the beginning of the project. True
33. Spending a long time buried in the details with stake holders will benefit both the parties. False
34. Synergy : Combined effect
35. Lagging : Delayed, too slow
36. Operational : Functional
37. Concurrent : Simultaneous, synchronized
38. Sub-optimization : Achieving average or less than average
Unit: 6
1. Business policies are the instructions laid by an organisation to manage its activities.
2. Following are the features of an effective business policy:
Specific
Clear
Uniform Policy
Appropriate Policy
Comprehensive Policy
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Flexible Policy Written
Stable Policy serves
3. Policies are developed to assist the organisation to achieve its objectives efficiently.
4. Procedures are written in an outline format.
5. Business process occurs at all levels of an organization.
6. Business policies are important due to the following reasons:
Coordination
Quick decisions
Effective control
Decentralization
7. The policies are articulated by the management.
8. Cooperation helps in ensuring uniformity of action throughout the organisation.
9. Policies help in decentralized as the executive roles and responsibility are clearly identified.
10. Policy is a predefined course of action set up by top level management to provide guidance towards business
strategies and objectives.
11. A procedure is a specific method to achieve a goal. It consists of a series of steps to be followed regularly or in a
cycle to achieve the end result
12. A process is a specific event in a series of business activities.
13. A programme lays down the principle steps to attain a specific objective.
14. Programme provides a sequence of activities in the order in which it is implemented
15. Procedures are a systematic way of handling routine activities.
16. Policies provide a backbone for organizational behavior. The different types of policies in an organisation are:
General and specific policies
Written and implied policies
Originated, imposed and appealed
Organizational and functional policies
17. Functional policies are intended for specific departments of business.
18. Originated policies are formulated by top level managers on their ideas to guide the actions of their
subordinates.
19. Imposed policy is formulated from the influence of external factors.
20. The following are the steps to develop a policy statement: The first step in developing a policy statement is to gather information. The policy statement should have simple words and the concept should be understood by all
departments regardless of their functionality A pilot group is selected to review the policy. This group tests and focuses on questions. Before publishing, a legal review of the policy is conducted to make sure that all legal implications of
controversial nature are deleted or rephrased. It should be decided whether the implementation of the policy requires employee signatures or it will
be added to the current policy manual without signatures The policy statement is included in the employee handbook and is updated every six months.
21. The general guidelines to be followed while writing a safety policy are:
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MB- 00 52 STRATEGIC MANAGEMENT AND BUSINESS POLICY
Identify the risks associated with your workplace. Certain risks are common to many businesses, such
as fire or medical emergencies.
Conduct a meeting with employee and senior management to address the different types of risks.
Write the introduction of the safety policy statement in a simple and clear language.
Focus on each safety risk that is identified and discuss different methods to handle the risk such as
exiting the building, calling the fire department and such other action plans.
Explain the activities that the employees must routinely follow to keep the workplace safe and secure.
22. The three principle parts of a policy statement are as follows:
General statement of intent
Organisation
Arrangements
23. Policy statement is a formal document that outlines the methods in which an organisation intends to perform
the activities.
24. The information in the policy statement is arranged in a clear and readable form.
25. Companies with top down management pattern tend to delegate the policy making.
26. The different features of corporate culture are
Innovation and risk taking
Attention to detail
Outcome orientation
People orientation
Team orientation
Aggressiveness
Stability
27. The hindrances due to corporate culture are:
Cultural difference
Loss of
Existence of
Communication breakdown
28. Corporate culture is the common set of attitude, values and standards that are accepted among organizational
members.
29. Belief, values and norms are shared to create corporate culture.
30. Strategic implementation is about change management.
Unit: 7
1. The different resources in the organisation are:
The property possessed by the organisation The human resources in the organisation Inventories of product and material
2. The three types of competitions are:
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Competition among the organisations which produce similar products Organisations produce products that are substitute of another product The general competition that arise between the organisations like consumer goods,
acquiring customers etc
3. The growth rate of economy in the country lays a heavy impact on the organization's effort.
4. The shaping of business policy depends upon the internal environment of the organisation.
5. Technology includes the use of machinery, processes and products.6. The process of framing policies consists of the following steps:
Definition of purpose Preparation of strategic intelligence policy alternatives Policy analysis Strategic choice Policy review
7. Policy formulation is the process of designing policy. True8. Strategic analysis is the process of selecting the policies that is best suited for the
organisation. False9. The major function of designing the policy relies upon the managers. True10. Policy cycle
11. The policy cycle consists of the following stages:
Setting the policy agenda: Policy agenda is the process of describing the sequence of business activities in the organisation and planning the measures to frame a policy.
Writing policy: It is the process of drafting the policy for the organisation. The policy is drafted based on the various factors discussed in the meetings.
Implementation of policy: The implementation process is necessary to effectively communicate the drafted policies. Policy implementation tasks are:
— Policy legitimating – The proposed policy must obtain authenticity from the team implementing the policy.
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— Constituency structure – The policy must be marketed in such a way that it promotes the relationship between the beneficiaries.
— Resource allocation – The resources that are supporting the implementation of policy must be acquired or reallocated depending on the implementation of the strategy.
— Organizational design and modification – The existing organisation must be re-engineered or modified according to the new policy.
— Resource mobilization – The resources in the organisation must be redirected to provide the capacity to conduct action as per the implemented policy.
Enforcing policy: Enforcing policy is the process of applying the drafted policies in situations that are in compliance between the organisation and the employees
Reviewing the policy: Reviewing the policies is the process of checking whether the policies are matching the business activities in the organisation.
Updating policy: If any changes are made in the process of the business activities then the existing policies also must be changed.
12. The implementation phase includes the process of making the policy visible to the employees in the organisation.
13. The change in the organization's resources such as human resource, privacy issues, safety concerns, finance, etc affects the policy change.
14. The policy decision maker is the key persons to implement new ideas.15. The policies are developed more clearly based on the underlying principles of the
organisation.16. The policy decision makers hold the authority to alter the existing policies and create
a new one according to the changes in organisation.17. Policies are unacceptable statements for decision making. False18. Business policy acts as the linkage between physical factors and personnel. True 19. Business policy does not interrelate to the objectives of the organisation. False20. Strategy is the process of determining the goal and methods to achieve them.21. The separation of strategy and policy generates the risk of obtaining unachievable
strategic objectives.
22. steps involved in implementing policy change:
Steps 1 – The first step involves analyzing the existing policy in the organisation.
Step 2 – In this step the top level decision makers select a subordinate group of decision makers for the new policy.
Step 3 – This step involves gathering data about the changes that relates to taxation, research on new tax laws.
Step 4 – The top level management initializes to form a policy developing team after the decision makers informs regarding the policy change.
Step 5 – This step deals with developing the detailed policies based on the underlying principles of the organisation.
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Step 6 – Once the new policies are developed by the policy development team, the next step involves in presenting the proposed policy change to the top level management for the approval.
Step 7 – The top management approval is obtained when the new policy is ready for release. The copies of the new policies are published and distributed to all the internal stakeholders.
23. Ambiguity : Confusion, no clarity24. Amendments : Revision, corrections, improvements25. Disruption : Disorder, trouble
Unit: 8
1. Steps in Business Continuity Plan
Initiation Business impact analysis (BIA) Disaster readiness strategies Develop and implement the plan Maintenance and testing
2. Business continuity plan (BCP) is a process followed by an organisation to survive in an event that causes disruption to normal business processes.
3. According to the Business Continuity Institute, a Business Continuity Plan (BCP) is defined as:
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“A document containing the recovery timeline methodology, test-validated documentation, procedures, and action instructions developed specifically for use in restoring organisation operations in the event of a declared disaster.
4. BCP is a collection of procedures which is developed, recorded and maintained in readiness for use in the event of an emergency or disaster.
5. BCP restores business organisation in the event of an emergency or disaster. True6. BCP is a collection of procedure and information to be used in event of disaster7. BCP’s require testing. True8. BCP is very important due to the following reasons:
Advanced planning Threats
9. Every company needs a detailed contingency planning that ensures continuous business operations in case of any unforeseen.
10. Hackers could destabilize an organizational entire operation.11. Business Continuity Plans must cover IT, data, voice communication, essential
personnel and offsite location.12. BIA reveals the financial and operational impact of a major disruption. BIA report
describes the potential risks specific to the organisation.13. The disaster readiness strategies include the following activities:
Define business continuity alternatives Estimate cost of business continuity alternatives Recommend disaster readiness strategy
14. Develop and implement the plan includes the following activities:
Emergency response and operations Develop and implement a business continuity plan Apply business unit plans for each department.
15. Maintenance and testing includes the following activities:
Establish a plan exercise program Awareness and training plans Sample emergency response exercises Audit and update the plans regularly
16. An estimation of the resources is necessary for successful resumption of recovery and restoration. True
17. Regular auditing of plans is not required. False18. Business impact areas can be classified as:
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19. Technical impact factors:
Loss of confidentiality Loss of integrity Loss of availability
20. Business impact factors:
Financial damage Reputational damage Loss of privacy
21. Loss of confidentiality includes loss of critical or sensitive data.22. Reputation damage effects on stakeholders. True23. Loss of information commercial sensitive data or intellectual property may result in
legal liabilities.24. A good BCP program fails to identify storage for vital records within the
organizational budget. False25. Logistical difficulties are associated when relocating and accommodating recovery
team members. True26. The cost of implanting and testing a BCP program is high.27. The steps to formulate BCP policy are as follows:
Ensure that the BCP program supports the objectives and culture of the organisation
Decide on the scope of BCP program
28. The contents of BCP policy are as follows:
Introduction Precursors: It gives an organizational understanding of BCM and its
importance. Purpose Concepts and assumptions Process Methods and techniques Outcomes and deliverables Review
29. BCP policy provides guidelines for developing, maintaining and exercising BCP.30. BCP policy is a set of policies and procedures for formalizing business continuity
program. True31. Research on external sources for guidance is one of the methods in BCP policy. True
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32. Contingency planning is a planning strategy that deals with uncertainty by identifying specific responses to possible future conditions.
33. Some of the best practices for contingency planners are as follows:
Consider the widest possible range of possible solutions. Identify which solution helps to address which type of problems. Identify the full cost, benefits and ease of implementation of each possible
solution, and rank them based on cost effectiveness. Establish potential implementation plans for each individual strategy, so they
are ready to be quickly deployed as needed.
34. Contingency plans should overcome the failures and continue the function of the organisation. True
35. Backup plan is capable of remaining functional as long as it takes time to restore primary plan.
36. Whacking : Use of wireless network without authorization to obtain information37. Espionage: Use of illegal means or deceptive practices to gather information.
Unit: 9
1. A business strategy is largely dependent upon long-term goals and the risk involved during investment.
2. A business plan is a complete internal document that summarizes the operational and financial objectives of a business.
3. The strategies for creating a business plan are as follows:
Define your business vision Make a list of your goals Certain things must be kept clear before setting up your goal. Understanding the customer Learn from your competitors Resolving financial matters Identify your marketing strategy
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4. The roles played by a proper business venture in business profits are as follows: Attracts a business partner and assist in getting financial support from a bank or a private
investor. Improves distribution channels by extending market positions. Diversifies product offerings by developing new technologies and utilizing the resources.
5. Creating a plan and establishing business ventures are vital initial steps for a beginner to start his business.
6. A business plan is a complete internal document which contains the detailed plans to accomplish the objectives.
7. Profit of a company depends upon its risk appetite.8. Some elementary ideas which will help you to make effective business investments are:
Use of income to eliminate debt Reinvestment of funds to nurture the business Investment in other businesses
9. Following are the ways to invest successfully: Leave a margin of safety Invest in business which you understand Make assumptions Measure your success Have a clear disposition towards price Allocate capital by opportunity cost
9. Risk might arise during development, execution, administration and making profit.10. The following are the factors which affect the investment strategies of a new business:
Accurate addressing of subjects in the guide Developing certain character Be focused and alert during sudden declination with immediate solutions Available resources
11. The factors implemented by an existing business are as follows: Targeting long-term revenue growth Driving profits by revenue synergies Enhancing geographical footprints Increasing exposure to develop markets globally Consistent growth by acquisition activities
12. Internal methods to rectify faulty investment strategies Internal transformation Corporate restructuring and reorganization Financial restructuring Divestment strategy Expansion strategy Diversification strategy Vertical and horizontal integration strategy Building core competencies and critical success factors
13. Internal transformation takes place in an organisation to sustain constant growth, survival and maintain profitability.
14. The following are the reasons for internal transformation of a company: Pressure on owner to decrease costs Overstaffing Large and complicated company structure Low flexibility of staff Financial instability
15. The main objective of a company which adopts internal transformation is to increase efficiency by reaching the standards in the global market. This is achieved by holding high quality level of productivity.
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16. The essential components of a successful business transformation are as follows: Achievement Improved synergy Aliveness Shared future Corporate restructuring and re-organisation Layoffs and employee termination
17. Corporate restructuring deals with the following factors: Correction of inadequate authority patterns Creation of a more focused diversification strategy Augmentation of strategic control Reduction of trust on bureaucratic control through reduced corporate staff Development of the performance of the firm and shareholder wealth
18. Layoffs mean that the employee would be eligible for rehire or to be brought back to its position if conditions change or improve in the organisation.
19. The following are the reasons which depict how layoffs and downsizing influences the growth of the organisation: Employee layoffs allow the organisation to cut costs while preserving the relationship with
its most critical and valuable employees. It motivates and maintains positive morale of the employees who survive the layoffs. It
creates a better workplace and increases productivity as the future outcome. Employee downsizing and layoffs prepares the dismissed employees to rectify their
mistakes and minimize the damages in the workplace.20. Driving forces of restructuring are as follows:
Globalization of organisation, consumer preferences, supply chains and financial flows Rapid technological changes Changing capital ownership Changing expectations and value systems Growing direct foreign investment Changing demographics
21. Objectives of restructuring are as follows:
Optimizing management processes Enhancing performance Reducing costs Increasing productivity Increasing sales and improving services Controlling costs Maximizing utilization of critical resources
22. Divestment is a form of economizing strategy used by businesses when they downsize/right-size the scope of their business activities.
23. The following are the reasons which make an organisation to divest: Too small market Availability of better Need for increased investment Lack of fit strategy Legal pressures to divest
24. The following are the ways by which a firm implements divestment strategies: Developing a portion of the business and allowing it to operate as an independent business
entity. Selling a portion of the business to another organisation. Closing a portion of the firm’s operations.
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25. Expansion strategy is a business strategy in which business proliferation is achieved by increasing the stores/services and productivity.
26. The four types of expansion strategy are as follows: Legal restructuring Franchising Strategic alliances Mergers and acquisitions
27. The following are the ways by which the expansion of an organisation occurs: Market concentration Innovation Penetration Export Diversification
28. The diversification strategy is a corporate strategy planned to increase profits by increasing sales volume.
29. There are three different types of diversification strategies which are explained as follows: Concentric diversification – In concentric diversification strategy, the technology used in
the industry remains the same, but the marketing plan changes to a significant extent. Horizontal diversification – In horizontal diversification strategy, the applied technology
is not related to the existing business of the company. Lateral diversification – The lateral diversification strategy focuses on the products which
are not related to the existing line of products. 30. Benefits of vertical integration strategy are:
Reduces transportation costs Improves supply chain coordination Captures upstream or downstream profit margins Expands core competencies Facilitates sound investment
31. Factors favoring vertical integration strategy are: Taxes and regulations on market transaction Obstacles to the formulation and monitoring of contracts Sufficiently large production quantities
32. Benefits of horizontal integration strategy are:
Achieves economies of scale by selling more of the same product Achieves economies of scope by sharing resources common to different products Market power increases
33. Developing core competencies and critical success factors rectify the faulty investment strategies in the following ways:
Better human resource planning More effective training programs Help with outsourcing options Guidance for development or change Developing vision of the whole organisation.
34. Investment is defined as the commitment of money in order to generate future returns.35. Faulty and poor investment strategies decline the growth of any organisation.36. Internal transformation is one of the methods to rectify faulty investment strategies. True37. Controlling costs is a part of which strategy? financial restructuring38. Downsizing means that the employees are terminated from job but can be rehired if the
conditions change in the organisation. False
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39. Financial restructuring is the re- organization of the financial assets and responsibilities of a corporation.
40. Divestment strategy is commonly the result of a growth strategy.41. Franchising is type of expansion strategy. True42. Diversification is the most risky strategy.43. The three types of vertical integration strategies are forward, backward and balanced.44. A backward vertical integration strategy is implemented when a company establishes
subsidiaries to supply product inputs.45. A forward vertical integration strategy controls the distribution and marketing of a product.46. A balanced vertical integration strategy is a strategy in which a firm owns the subsidiaries that
produce inputs and also distributes outputs.47. Venture : Endeavor or undertaking48. Obsolete : Entity which is currently not in use or outdated49. Restructure : Rearrange50. Diversify : Expand and bring variety51. Divest : Disassociate or separate
Unit: 10
1. Techniques of employed by MNC to manager markets:
Franchising: Franchising is the process of granting the franchisee permission to use a name,
method, process or trademark. The firm helps the franchisee with the operations like supplies
of raw materials and operations of franchise.
Management contracting: Management contracts are the contracts under which the firm
rents its expertise or knowledge to a government or company.
Contract manufacturing: Contract manufacturing is a method which firms use to enter the
foreign market.
Licensing: Licensing is a process, in which a firm (licensor) grants some type of rights like
rights to a process, a patent, a program, a copyright, or expertise to a foreign entity (licensee).
Direct investment: In a direct investment, a firm invests directly within foreign boundaries
and makes a real commitment of its capital, personnel and assets beyond domestic frames.
2. A multinational corporation is a business organisation that has its facilities and assets in more
than two countries other than its home country, the purpose being to successfully manage production
and deliver products and services.
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3. A multinational corporation (MNC) is an enterprise operating in different countries but is
managed from one home country. The main company which controls other business units from the
home country is called as parent company.
4. A MNC is a firm that is structured in such a way that the business is conducted across several
countries.
5. The headquarters of the corporation is usually called the parent company and its branches are
called the subsidiaries.
6. Multinational corporations are managed at international level.
7. An advantage of MNCs is the patented technical knowledge which enables them to compete
internationally.
8. By accessing raw materials in foreign countries many MNCs lower the input production costs.
9. MNCs are able to influence this brand image by standardized their product lines in different
countries.
10. The limitations of MNCs are as follows:
Business risks
Host country regulations
Direct legal systems
Political risks
11. Major variations in exchange rates can affect the entire profit drastically.
12. In the short run, market mechanisms like and currency swaps and forward contracts allow
MNCs to minimize the movement of exchange rates.
13. Inability to respond properly to local culture has led to failure of products of MNCs.
14. Globalization is the process of integration of the world community into a common economical
or social system.
15. In a domestic country scenario, the control is decentralized.
16. Globalization scenario is a linear systematic process which progresses depending on each
country’s market structure.
17. TransNational Corporation (TNC):TNC is an enterprise comprising of entities in more than
one country which operates under a system of decision-making that permits rational policies and
a common strategy.
18. Global are companies that have invested and are operating in many countries.
19. TNC have investments in foreign operations.
20. MNC operate directly in the foreign country by setting up of partners and through the
ownership of assets located abroad.
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UNIT: 11
1. Types of strategic alliances and business decisions: Joint venture: Joint venture is the most powerful business concept that has the ability to
pool two or more organisations in one project to achieve a common goal. Joint venture
has been the hallmark for most successful organisations in the world.
Merger and acquisition: Merger is the process of combining two or more organisations
to form a single organisation and achieve greater efficiencies of scale and productivity.
Collaboration and co- branding: Collaboration is the process of cooperative agreement
of two or more organisations which may or may not have previous relationship of
working together to achieve a common goal.
Technological partnering: It is the process of associating the technologies of two
different companies to achieve a common goal.
Contractual agreements: It is the process of agreement with specific terms between two
or more organisations which guarantee in performing a specific task in return for a
valuable benefit.
Outsourcing: It is the process of entering into a contract with an organisation or a person
to perform a particular function.
2. Strategic alliance is the process of mutual agreement between the organisations to achieve
objectives of common interest.
3. The various characteristics of strategic alliances are:
The two independent organisations involving in agreement have a similar idea of
achieving objectives with respect to alliances.
The organisations share the advantages and organize the management of alliance until the
agreement lasts.
To develop more areas in alliances, the organisations contribute their own resources like
technology, production, R&D, marketing etc to increase the performance.
According to Faulkner (1995) – Strategic alliance is the inter-organizational relationship
in which the partners make substantial investment in developing a long-term collaborative
effort, and obtain common orientation.
4. different stages of strategic alliances:
Strategy development : It is the process of identifying the objectives of forming
alliances, analyzing the advantages of entering into alliances, observing the major issues,
challenges and development of resource strategies for production.
Partner assessment: This process involves selecting the appropriate partner to join into
alliance.
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Contract negotiation: It is the process of determining the two party’s realistic objectives
such that a high calibre is formed in negotiating between the two organisations.
Alliance operation: This phase involves the commitment of senior management in the
organisation towards forming alliance.
Alliance termination: It is the process of ending the alliance between the organisations
when the objectives are met.
5. Synergy and competitive advantage act as the elements that lead businesses to greater success.
6. The different types of mergers are:
Horizontal merger – The horizontal merger takes place when two organisations
competing in the same market join together.
Vertical merger – This involves the union of a customer with the vendor. It is the
process of combining assets to capture a sector of the market that it fails to acquire as an
individual organisation.
Market-extension merger – It is the process of merging two organisations that sell same
products in different geographical areas.
Product-extension merger – Most of the organisations execute product extension merger
to sell different products of a related category.
Conglomerate merger – This merger involves organisations alliance with unrelated type
of business activities. The organisations under conglomerate merger are not related either
horizontally or vertically.
7. Acquisition is the process of purchasing an organisation by another organisation, either through
the purchase of its shares or assets.
8. The four stages involved in the process of outsourcing are:
Strategic thinking role of business activity outsourcing.
evaluating and
contractual agreement
outsource management
9. Affiliate marketing – It is the process of revenue sharing between the website owner and the
online merchant.
10. The process of combining two or more organisations to form a single organisation is called
merger. True
11. Collaboration is the process of cooperative agreement of two or more organisations to work
together in achieving a common goal. True
12. Affiliate marketing is the process of revenue sharing between the website owner and the
customer. False
13. The lack of trust between the organisation leads to poor performance.
14. The conflicts between the organizations are due to internal issues like personnel, resources.
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15. The organisation suffers benefits due to incoherent goals.
16. Alliance : Agreement or coalition
17. Affiliate : Associate or partner
18. Conglomerate : Business Corporation
UNIT: 12
1. Creativity can be defined as an act of turning new and imaginative ideas into reality. Creativity
includes two processes - thinking and then producing.
2. Innovation can be described as an action or implementation of new ideas which results in gain or
profit.
3. According to “The Courage to Create” written by Rollo May, creativity is defined as,
“Creativity is the process of bringing something new into being...creativity requires passion and
commitment. Out of the creative act is born symbols and myths. It brings to our awareness what
was previously hidden and points to new life. The experience is one of heightened consciousness-
ecstasy."
4. Creativity is a core competency for managers.
5. Creativity is a process that can be managed and a skill that can be developed.
6. The components of creativity are as follows:
Forging – It is to gather information. Information can be gathered by exploring
the environment, getting educated on ideas and developing the abilities and
talents.
Reflecting – It is to generate ideas. Reflecting the ideas can be done by
questioning the information which is gathered, thinking, pondering and
brainstorming and using your imagination.
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Adopting – It is to accept or implement ideas. Ideas can be adopted by selecting
among the generated ideas, borrowing ideas from others, and inventing
innovative ideas.
Nurturing – It is to improve the ideas. Ideas can be improved by evaluating an
idea and simplifying a complicated idea.
Knuckling down- It is to never give up the ideas. Knuckling down means
marketing the ideas, dealing with critics, maturing with courage and patience,
and survive the success.
7. The steps in creativity are as follows:
Preparation
Incubation – It involves working on the issue or the problem.
Illumination
Verification
8. Creativity requires passion and commitment.
9. Reflecting the ideas requires questioning, pondering and brainstorming using your imagination.
10. Preparation is based on study and observation.
11. Innovation is the production or implementation of ideas. Innovation can be described as an
action or implementation which results in an improvement; a gain, or a profit. The National
Innovation Initiative (NII) defines innovation as "The intersection of invention and insight, leading to
the creation of social and economic value."
12. The components of innovations are as follows:
Implementation
Creativity
13. The types of innovation are as follows:
Architectural innovation – This innovation defines the basic configuration of the
product and the process.
Market niche innovation – This innovation involves development of new marketing
methods for the existing products.
Regular innovation – This innovation involves the change that is applied on established
technical and production competence of the existing markets and customers.
Revolutionary innovation: This innovation disrupts and renders established technical
and production competence that out of date, yet it is applied to existing markets and
customers.
14. Business practices used to create and build a creative and innovative business cultures are
as follows:
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Select the most promising innovators, but encourage unexpected surprises
Create “buffer zones” for the most innovative people
Give room to innovators to play
Resist the temptation to look for immediate results
Commitments to drive the best ideas to implement
15. Managers should promote business practices. True
16. Buffer zones are protective cossets around the creative people within an organisation.
17. The practices that are generally adopted by organisations to promote creativity and
innovation are:
Brainstorming
Mind mapping and mind revolution
Out of the box thinking
Rewarding best ideas
Using metaphors/jargons/slogans
18. Brainstorming is an effective way to generate lots of ideas on a specific issue. Brainstorming
works best with a varied group of people. Creativity and relaxation exercises or other fun
activities can help participants to relax their minds before the session.
19. The four important characteristic of mind map are as follows:
The central image represents the subject.
The main ideas of the subject branch out from the central image as main branches.
Minor ideas are linked to the main ideas.
All the branches are connected to form a nodal structure.
20. Mind revolution is used for creative purpose. It relies on the following three conscious thought
movements:
Going to extremes
Establish relationship between
Construct the thought
21. Out of the box thinking can be defined as a thinking that moves in diverging directions so as to
involve a variety of aspects which leads to novel ideas associated with creativity. It describes non-
conformal creative thinking. The 'box', implies rigidity and symbolizes constrained and
unimaginative thinking. This is in contrast to open the mind for unrestricted 'out of the box' or
'blue-sky' thinking.
22. Peter Drucker introduced the successful cases of out of box thinking to the management world.
23. Rewards are motivational tools.
24. The types of rewards are as follows:
Recognition
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Small gifts for every idea
Slightly bigger rewards for more creative
25. Metaphor is a figure of speech and does not literally represent real things.
26. Metaphor is the map and it guides you to find a solution on your own ability.
27. Jargon can be described as a technical language used by a particular profession, group or trade.
28. Slogans are the unsung heroes of an organisation in the business world. Slogans represent an
organisation, a new product, or a client's website.
29. Brainstorming works best with an individual. False
30. Slogans represent an organization's new product. True
31. The importance of creativity and innovation in business management are as follows:
Keeping minds open for new opportunities
Securing competitive advantage
Creativity is a part of a successful innovation
Improving organizational culture
Removing strategic barriers
Changes attitude towards risk
Improves learning and knowledge transfer
32. Creativity is a powerful tool that can improve the performance of an organisation in an amazing
way.
33. The creativity culture of organisation actively encourages interaction.
34. Increased emphasis on exploration and assessing opportunities means that activities can be
undertaken with more risk. False
35. The big challenges for companies over next generation are:
Adaptability Innovation Engagement Hostility Isolation
36. The process of creating a new idea has four stages. They are as follows: Gather stimuli Multiply Create customer concepts Optimize practicality
37. Implementing cost saving ideas includes evaluation the following criteria: How much will it save Problems faced by cost saving
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Effect on the quality 38. Organisations must give more priority to customers than feasibility. True39. Organizational change focuses on the changes in policies, direction and culture of an
organisation.40. Buffer : Shield or cushion for protection41. Metaphor : Representation or a simile42. Entrepreneurship : Starting an own enterprise43. Isolation : Being or working alone without any involvement44. challenges involved in creativity and innovation:
Feasibility, time frame and practicality of the ideas Cost involved in implementing ideas Technical aspects involved in innovation Acceptance of innovation in the market
UNIT: 13
1. Ethics and corporate social responsibility are essential factors which influences business
undertakings and its functional operations.
2. Corporate Social Responsibility (CSR) means operating a business that meets or exceeds the
ethical, legal, commercial and public expectations.
3. Values are the image of, what an organisation stands for and are the basis for the behavior of its
members.
4. Ethics is defined as the rules or standards which govern the conduct of an individual or an
organisation.
5. The roles of ethics management program are as follows:
Establishing ethics committee at the board level
Establishing ethics management committee
Assigning an ethics officer
6. The code of ethics is the written guidelines issued by an organisation to its management which
assists in conducting its actions according to the ethical standards.
7. The following are the guidelines to develop the code of ethics in an organisation:
Reviewing the values that must adhere to the relevant laws and regulations in an
organisation
Reviewing the values which produce the best traits of a highly ethical and successful
product or service
Identifying values that address the current issues in the workplace
Identifying values which needs to undergo proper strategic planning
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Considering the ethical values that are appreciated by stakeholders
8. Roles of business ethics and business values:
Maximizes profit
Efficient utilization of business resources
Creates goodwill in the market
9. Values provide the basis for judgments about important factors.
10. Way of execution of ethical codes creates the difference between ethical and unethical
conduct.
11. Improving professional competence is an unethical conduct. False
12. Unethical conduct decreases productivity and increases misconduct in an organisation.
13. Some of the measurement tools which help an organisation in the analysis of ethical conduct
are as follows:
Employee surveys
Interviews and reviews
Independent audits
Helpline analysis
14. According to Robert Haas, the Chairman of Levi Strauss, an organisation should have its
ethical principles. It should be capable of making profits and making the world a better place to live.
15. Ethical conduct has a positive impact on employee behavior and employee perceptions.
16. An independent audit is a measurement tool which helps in the analysis of ethical conduct in an
organisation. True
17. Business policies are the guidelines developed by an organisation to govern its actions.
18. Corporate Social Responsibilities (CSR)
19. The meaning of CSR has two folds. On one hand, it exhibits the ethical behavior that an
organisation exhibit towards its internal and external stakeholders. And on the other hand, it denotes
the responsibility of an organisation towards the environment and society in which it operates.
20. CSR makes a significant contribution towards sustainability and competitiveness of the
organisation.
21. CSR activities include commitment to product quality, fair pricing policies, providing correct
information to the consumers, resorting to legal assistance in case of unresolved business
problems, so on.
22. The following are the features of CSR:
Improves the quality of an organisation in terms of economic, legal and ethical factors
Builds an improved management system
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MB- 00 52 STRATEGIC MANAGEMENT AND BUSINESS POLICY
Contributes to countries by improving the quality of management
Enhances information security systems and implementing effective security measures
Creates a new value in transportation
Creates awareness towards environmental issues
23. CSR is the continuing obligation by an organisation to behave ethically.
24. CSR denotes the responsibility of an organisation towards the environment and the society in
which it operates. True
25. CSR does not improve the relations with the investment community. False
26. Business profits must be earned with proper adherence to the ethical standards and business
values. True
27. Ethical obligation is one of the business obligations. True
28. An organisation should follow the environment management process as an environment
obligation. True
29. The following are the areas in which social auditing is performed:
Individuals and their well-being
Community and its social capital
Environment and economy
30. The following are the methods to perform a social audit:
Identify key areas to assess the community, economy and environment.
Agree appropriate indicators and draw a plan to obtain such information.
Use appropriate supporting tools.
Carry out your audit in a participatory way.
Check its legalization by an external assessor.
31. Corporate governance is the reflection of the business culture, policies, relationship with the
stakeholders and the organization's commitment to its values.
32. Good corporate governance is the key to the integrity of corporations, financial institutions and
markets.
33. Social audit considers the impact of a business on the community.
34. Social audit is performed in a community environment. True
35. Corporate governance is influenced by the internal and external factors.
36. Obligation : Responsibility to perform some task
37. Dysfunction : Deviation of a process from its original behavior
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MB- 00 52 STRATEGIC MANAGEMENT AND BUSINESS POLICY
UNIT: 14
1. advantages of global competitiveness are:
efficiency
strategies
risks
learning
2. The field of strategic management has significantly improved in gathering information about the
operational and financial performance
3. The organisation must follow certain value that act as the foundation to growth.
4. A well designed strategy management helps the organisation to attain global competitiveness.
5. Strategic change refers to non-routine, non-incremental and discontinuous change which alters
the overall direction and components of the organisation.
6. The various methods to manage strategic change are:
External interface
Mission
Strategy
Managing organizational mission/strategy processes
Task
Prescribed
Organizational process
7. Flexibility is a necessity to cope with complexity and dynamics.
8. The various modes of competencies are:
Cognitive flexibility for alternative strategic
Cognitive flexibility for alternative management processes
Coordination flexibility to configure and deploy resources
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MB- 00 52 STRATEGIC MANAGEMENT AND BUSINESS POLICY
Flexibility of resources to be used in alternative operations
Operating flexibility in applying skills and capabilities to available resources
9. According to James Brien Quinn, most of the large organisations emerge with iterative process
in realizing the probes of future, experiments, and learn from a series of incremental commitments
rather than global formulations of total strategies.
10. It helps the strategic leaders to:
Improve the quality of information used in corporate strategic decisions.
Deal with personal resistance and political pressure if a strategic change encounters.
Create organizational awareness, understanding, and psychological commitment for
effective implementation.
Reduce uncertainties and allow interactive learning between organisation and its various
environments.
Improve the quality of strategic analysis and choice by involving relevant people and
avoid incorrect decisions.
11. Quinn’s approach includes appreciative impact upon people and culture and practically searches
better ways to take up right decisions.
12. Few types of uncertainties are:
Demand uncertainty
Supply uncertainty
Competitive uncertainty and externalities
13. Few types of crises are:
Sudden crises
Smoldering crises – It is defined as a serious problem which is generally not known to the
organisation.
Economic cycle refers to recurring and fluctuating levels of economic activity experienced
over a long period of time. It is also called as a business cycle. The four stages of economic
cycle are economic expansion, slowdown, recession and recovery. These phases depend upon
changing employment, industrial productivity, and interest rates.
14. Environmental issues are in diverse disciplines as economics, sociology, education and
psychology.
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MB- 00 52 STRATEGIC MANAGEMENT AND BUSINESS POLICY
15. The term strategic flexibility is referred as the systemic ability of an organisation to change in
strategically important ways. True
16. Smoldering crises occurs due to a sudden disruption occurred in the organisation without any
warning. False
17. Supply uncertainty arises due to internal operations and external developments in the technology.
True
18. The process of liberalization privatization and globalization are contributing to the increasing
applications of strategy management in organisations.
19. Liberalization refers to relaxation of government restrictions in the areas of social and economic
policies.
20. Privatizations refers to transfer of service functions or assets from public to private ownership
and the opening of certain closed areas to private sector entry.
21. Electronic commerce refers to a broad range of online business activities of various products and
services.
22. The processes enhanced in e-business are as follows:
Production process
Customer focused process
Internal management process
23. science, technology, engineering, and mathematics (STEM)
24. The major challenges over next generation are:
Adaptability – It is the process of building an environment that suits various conditions.
Innovation – Mobilizing the imagination of each individual in the organisation.
Engagement – It is the process of creating an environment that emotionally and
intellectually makes individuals to apply their capabilities at work.
25. Information management strategy refers to managing any kind of information.
26. The technological aspects of innovation focus on research to create ideas.
27. Knowledge management: Generates value from information assets
Information management: Strengthens information usage
Intellectual property management: Subject to laws and rights
28. Crises : Calamities or emergencies
29. Chaos : Disorder or confusion
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MB- 00 52 STRATEGIC MANAGEMENT AND BUSINESS POLICY
UNIT: 15
1. Strategic thinking is the concept of broad innovative thinking on a daily basis to achieve overall
goals in the team and organisation.
2. Features of strategic thinking are as follows:
Clarifying the direction and vision of the organisation along with its critical success
measures
Identifying relationships that support the whole organisation and its vision
Identifying influential points within the organisation
3. Features adopted by an individual through proper strategic thinking are as follows:
Develop abilities to observe the challenges in the organisation
Apply new concepts and skills
Increase an individual’s and organization's competency
Find value in the learning experience
Earns motivation and modify the functions
4. The critical success factors for strategic thinking are as follows:
Use of wider boundaries for thinking, planning, executing and evaluating the task
Precise thinking about what is to be done for the task and how to execute the task
Prepare all objectives satisfying the ideal vision and mission of an organisation
5. Strategic thinking assists in enhancing the synergy of the people working together in an
organisation to achieve a common goal.
6. Strategic thinkers have broader boundaries to think, plan, perform, analyze and evaluate. True
7. Organizational culture is a collection of organizational values and norms shared by the
personnel in an organisation.
8. An organizational design includes the structure, processes and behaviors practiced in an
organisation which holds the key for the progress of business strategies.
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MB- 00 52 STRATEGIC MANAGEMENT AND BUSINESS POLICY
9. The redesigning programme methodology includes the following steps:
Strategic assessment
Defining the criteria
Defining the options
Model possibilities
Defining new behaviors
Implementation
10. Redesigning of a process occurs when there is a problem with the current state in an organisation.
True
11. Diagnosing organizational development process involves the following steps:
Planning for the goal
Deciding the need
Gathering senior management data
Gathering the staff’s data
Giving priorities to the feedback
Perform the action plan
Implementing the process
Reviewing the process
12. The characteristics of an organizational development process are as follows:
Focusing on the culture of an organisation
Encouraging relationship between the organizational leaders and members
Focusing on the social issues of an organisation
Focusing on universal change in an organisation
Focusing on imparting problems and solving skills to the organisation
13. Sustainable competitive advantage is the central fact of a corporate strategy in an organisation.
14. According to stakeholder theory, the aim of a firm is to maximize its value by taking interest in
stakeholders including supplier, customer, and employee and also considering the shareholders.
15. Organizational development focuses primarily on the human and social side of the organisation.
16. Innovation gives an organisation a sustainable competitive advantage.
17. Change management is an organized approach to deal with change, from the viewpoint of an
organisation and an individual.
18. The principles of change management are:
Senders and receivers
Resistance and comfort
Authority for change
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MB- 00 52 STRATEGIC MANAGEMENT AND BUSINESS POLICY
Incremental versus radical change
Change is a process
19. The different approaches to change management are:
Behavioral approach
Cognitive or intellectual approach
Psychodynamic approach
20. The psychodynamic approach is used by the managers who want to understand the reactions of
their team members during the change process.
21. CM is an organized approach to deal with change, both from the viewpoint of an organisation and
an individual.
22. Every change can be considered from the point of view of a sender and receiver.
23. The following leadership styles implemented by leaders under different circumstances
indicate its model of effectiveness on influence:
Autocratic leadership – In autocratic leadership, leaders have complete power over their
team members.
Bureaucratic leadership – Bureaucratic leaders follow rules rigorously and ensure that their
staffs also follow the procedures accurately.
Charismatic leadership – In charismatic leadership, leaders adds a lot of passion in their
team and is very energetic in driving the members forward.
Democratic leadership or participative leadership – A democratic leader invites team
members to contribute in decision making process.
Laissez-faire leadership – Laissez-faire is a French phrase describing leadership in which
the leaders leave their team members to work on their own.
People oriented leadership or relations oriented leadership – In people-oriented
leadership, leaders are totally focused on organizing, supporting, and developing the people in
their teams.
Servant leadership – It describes a leader who is not often recognized.
Task oriented leadership – Task oriented leaders’ focus only on completing their tasks and
are autocratic in nature.
Transactional leadership – Transactional leadership starts with the idea that the team
members totally agree to obey their leader when they accept a job.
Transformational leadership – People with this type of leadership style are true leaders who
constantly inspire their teams with a shared vision of the future.
24. The following are the disciplines of a learning organisation:
Systemic thinking
To be personal mastery
Implementing mental models
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MB- 00 52 STRATEGIC MANAGEMENT AND BUSINESS POLICY
Building shared visions
enhancing team learning
25. Learning organisations are healthier places to work because of the following reasons:
Collects independent thoughts
Increases the ability to manage change
Improves quality
Develops a committed work force
Encourages the people
Extends recognized limits
26. The process of creating a learning organisation is as follows:
Creating a communication system
Developing an atmosphere that garners learning
Creating a vision for the organisation
Establishing training and awareness programs
Integrating human and technical systems
Emphasizing team learning by initiating new practices
Allowing employees to question key business practices and assumptions
Developing workable expectations in the organisation – Developing
27. The three aspects of leadership leading a learning organization are as follows:
Leader as a designer
Leader as a steward – A leader becomes a steward of the vision of an organisation and their
task is to manage the vision for the benefit of the organisation.
Leader as a teacher
28. Servant leadership is not a type of leadership style followed by leaders. False
29. Task-oriented leaders focus only on getting the job done and they can be autocratic. True
30. The three dimensions of strategic management in a globalised economy are:
Strategy context – Every strategy background is unique and flexible to analysis in terms
of policies, structure and boundaries. With increasing globalization, the traditional ways
of approaching strategy context has also changed
Strategy content – Strategy content is the product of strategy process.
This is expressed in documented plans as the four levels of the organisation which are
functional, business, corporate and network levels.
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MB- 00 52 STRATEGIC MANAGEMENT AND BUSINESS POLICY
Strategy process – Due to the realities of global economy, the strategy process in
seriously challenged.
31. A global economy is considered as a world economy with a combined market for all goods
produced across the world.
32. Autocratic : Dominating and dictatorial
33. Bureaucratic : Administrative and rigid
34. Cognitive : Related to mental processes and thinking abilities
35. Steward : Helping agent
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MB- 00 52 STRATEGIC MANAGEMENT AND BUSINESS POLICY
BEST OF LUCK
48
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