Strategic Management

Chapter 1: INTRODUCTION TO STRATEGIC MANAGEMENT

a) Strategic Management - An Overview

Strategic management is the comprehensive collection of ongoing activities and processes that organizations use to systematically analyze, formulate, implement, and evaluate strategies aimed at achieving organizational goals and sustained competitive advantage. It is the art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives.

Key Characteristics of Strategic Management:

1. Future-Oriented: It looks ahead, anticipating future opportunities and threats.

2. Long-Term Focus: Strategies often span years, guiding long-term resource allocation.

3. Cross-Functional: It involves coordination across all functional areas (marketing, finance, HR, production).

4. Competitive Advantage: Its ultimate goal is to create and sustain a unique advantage over competitors.

Broad Types of Strategy (Levels of Strategy)

Strategic decisions are made at different hierarchical levels within an organization, ensuring alignment from the top vision to the daily operations.

1. Corporate-Level Strategy:

   • Focus: The overall scope and direction of the corporation.

   • Questions Addressed: In which businesses should we compete? What portfolio of businesses maximizes shareholder value? (e.g., Diversification, merger, acquisition, joint ventures).

2. Business-Level Strategy (Competitive Strategy):

   • Focus: How a specific business unit competes within its chosen industry or market.

   • Questions Addressed: How should we compete in this business? How do we achieve competitive advantage? (e.g., Cost leadership, differentiation, focus).

3. Functional-Level Strategy:

   • Focus: The action plans for the efficient and effective management of resources within specific functional areas.

   • Questions Addressed: What actions must we take in the marketing department, finance department, etc., to support the chosen business-level strategy? (e.g., developing a marketing plan, managing inventory).

b) Process of Strategic Management

The strategic management process is a logical, sequential, and disciplined approach to developing and executing strategies. It is often viewed as a continuous cycle of analysis, decision-making, and action.

1. Strategy Formulation: This involves developing a vision and mission, identifying external opportunities and threats, determining internal strengths and weaknesses, establishing long-term objectives, generating alternative strategies, and selecting specific strategies to pursue.

2. Strategy Implementation: This is the action stage. It requires the organization to mobilize employees and managers to put formulated strategies into action. Activities include establishing annual objectives, devising policies, motivating employees, and allocating resources.

3. Strategy Evaluation (Review and Control): This final stage ensures the strategy is achieving its intended objectives. It involves measuring organizational performance, reviewing the internal and external bases of current strategies, and taking corrective actions.

c) Role of a Strategist

A strategist is an individual or group responsible for setting the direction and managing the strategic process of an organization. In large firms, this includes the CEO, board of directors, and strategic planning team.

Key Responsibilities:

• Visionary Leadership: Articulating the organization’s vision and inspiring stakeholders.

• Environmental Scanning: Continuously analyzing the competitive landscape, industry trends, and macro-environmental forces.

• Resource Allocation: Determining where financial, human, and technological resources should be deployed to achieve strategic goals.

• Change Agent: Driving necessary organizational changes to adapt to the evolving environment.

• Risk Management: Assessing and mitigating strategic risks associated with new initiatives.

d) Business Policy (Evaluation, Nature, Importance, Purpose & Objectives)

Business policy focuses on defining the long-term direction of an organization. Historically, it was a precursor to strategic management.

• Evaluation: Business policy typically evolves from operational decisions (day-to-day rules) to grand strategies (long-term direction).

• Nature: It is prescriptive, providing guidelines for decision-making across all functional areas. It acts as a framework to ensure consistency.

• Importance: It helps managers deal with recurring problems efficiently, ensures decisions are aligned with corporate strategy, and promotes discipline within the organization.

• Purpose & Objectives: To integrate the activities of functional departments, provide direction, and ensure that organizational resources are utilized effectively toward common goals.

e) Mission

The mission statement is a short, concise description of the organization's fundamental purpose—what it does, for whom it does it, and the principles that guide its operations. It answers the question: "What is our business?"

Key Components of an Effective Mission Statement:

• Customers

• Products or Services

• Markets

• Technology

• Philosophy (values and beliefs)

• Concern for survival, growth, and profitability

• Public image

• Concern for employees

f) Vision

The vision statement is a future-oriented, inspirational declaration of the organization's desired long-term position. It answers the question: "What do we want to become?"

It should be ambitious, easy to communicate, and provide a sense of direction for all employees. It defines the company's aspirations.

g) Goals and Objectives (Necessity of Formal Objectives, Goals Vs Objectives)

Necessity of Formal Objectives

Formal, written objectives are essential because they:

1. Provide Direction: They clearly define what the organization is trying to achieve.

2. Aid Evaluation: They serve as benchmarks against which performance can be measured.

3. Motivate Employees: Clear targets inspire employees to work toward a common outcome.

4. Facilitate Planning: They form the basis for resource allocation and tactical planning.

Goals Vs Objectives

While often used interchangeably, in a strategic context, they have distinct meanings:

Feature

Goal:

Scope-Broad, general targets

Time Frame- Long-term (3-5 years or more)

Measurability- Difficult to measure or non-quantifiable

Example- To become the market leader in Asia.

Objective

Scope- Narrow, precise targets

Time Frame- Short-term (annual or less)

Measurability- Specific, Measurable, Achievable, Relevant, Time-bound (SMART)

Example- To increase market share in Japan by 10% within the next 18 months.

Chapter 2: ENVIRONMENTAL, EXTERNAL AND INTERNAL RESOURCE ANALYSIS

a) Concept of Organizational Environment: Internal & External Environment

The organizational environment consists of all the forces, factors, and institutions that affect the organization’s performance, operations, and decision-making processes.

• Internal Environment: Factors within the organization that strategists can control. This includes the organization's resources, capabilities, culture, organizational structure, HR skills, and financial strength. These factors determine the Strengths and Weaknesses.

• External Environment: Factors outside the organization that strategists generally cannot control. It is often divided into the General/Macro Environment and the Industry/Competitive Environment. These factors determine the Opportunities and Threats.

b) Need for Environmental Analysis (External Environment)

Environmental analysis is crucial for:

1. Identifying Opportunities: Spotting emerging trends, new technologies, or unmet customer needs that can be leveraged for growth.

2. Identifying Threats: Recognizing potential risks, new competitors, adverse regulatory changes, or economic downturns that must be mitigated.

3. Direction Setting: Ensuring the strategy is relevant and aligned with external realities.

4. Forecasting: Predicting future market conditions and resource requirements.

c) External Factor Evaluation Matrix (EFEM)

The EFEM is a strategic management tool used to evaluate the major external opportunities and threats in an organization's specific business functions. It involves five steps: listing factors, assigning weights (0.0 to 1.0), assigning ratings (1 to 4), calculating weighted scores, and determining the total weighted score (TWS). A TWS of 4.0 is excellent, 2.5 is average, and 1.0 is poor.

d) Process of SWOT Analysis

SWOT analysis is a foundational framework used to evaluate an organization's internal and external environments.

1. Scan the Internal Environment: Identify the organization's Strengths (S) and Weaknesses (W).

2. Scan the External Environment: Identify the potential Opportunities (O) and Threats (T).

3. Analyze the Matrix: Use the results to develop strategic alternatives (SO, WO, ST, WT).

e) Opportunities & Threats

• Opportunities (External): Favorable external trends or conditions that an organization can exploit for competitive advantage (e.g., new technology, deregulation, economic boom, market need).

• Threats (External): Unfavorable external trends or conditions that could damage an organization's performance or position (e.g., new competition, rising interest rates, technological obsolescence, adverse government policy).

f) Internal Resource Analysis

Internal resource analysis involves scrutinizing the organization's assets and capabilities to identify what it does well and where it is vulnerable. The VRIO Framework (Value, Rarity, Imitability, Organization) is often used to determine if a resource or capability is a source of sustainable competitive advantage.

g) Strengths & Weaknesses

• Strengths (Internal): Resources, skills, or other advantages relative to competitors that are sources of competitive advantage (e.g., proprietary technology, strong brand loyalty, superior supply chain).

• Weaknesses (Internal): Limitations, deficiencies, or disadvantages that inhibit performance (e.g., poor management, outdated equipment, limited R&D budget, weak cash flow).

h) Marketing

Marketing functional analysis evaluates the effectiveness of market research, product positioning, pricing, distribution channels, and sales force.

• Strategic Focus: Product-market fit, market share, brand equity, and customer retention strategies.

i) Finance

Financial analysis reviews cash flow, profitability, debt-to-equity ratio, capital structure, and funding sources.

• Strategic Focus: Capital budgeting decisions, managing working capital, securing financing for new ventures, and dividend policies.

j) Production (Operations)

Operations analysis assesses the efficiency of manufacturing, inventory management, logistics, quality control, and capacity utilization.

• Strategic Focus: Improving efficiency, reducing costs through process optimization, capacity planning, and supply chain reliability.

k) HR (Human Resources)

HR analysis evaluates the effectiveness of recruitment, training, compensation, performance appraisal, and employee morale.

• Strategic Focus: Developing core competencies, talent retention, aligning HR practices with strategy, and fostering a strong organizational culture.

l) Global Competitiveness

This involves analyzing how the organization's resources and capabilities compare with global rivals. It requires benchmarking against the best in the world and developing strategies to compete across borders.

m) Role of Strategic Management in the Above Mentioned Areas

Strategic management ensures that all functional areas (Marketing, Finance, HR, Production) are aligned and coordinated to execute the overarching business and corporate strategies. It provides the policies, budgets, and operational targets necessary for function heads to execute their plans effectively.

n) Key Environmental Variable Factors (PESTEL)

The PESTEL framework is a tool for analyzing the macro-environmental factors that affect a business.

• Political: Government stability, taxation, trade regulations.

• Economic: GDP trends, interest rates, inflation, consumer disposable income.

• Socio-cultural: Demographics, lifestyle changes, cultural values, consumer attitudes.

• Technological: R&D activity, automation, innovation, pace of technological change.

• Environmental: Climate change, sustainability, waste disposal laws, corporate social responsibility.

• Legal: Employment laws, competition laws, health and safety regulations.

o) Strategic Advantage Profile (SAP)

The SAP is a tool that profiles the firm's strengths and weaknesses across critical functional areas (Marketing, Finance, Operations, HR, R&D). It helps management see where the organization holds a strategic advantage (or disadvantage) relative to competitors.

p) Organization Structure and Control

• Organization Structure: The arrangement of responsibilities, authority, and relationships within a firm. Structure must follow strategy. Common types include functional, divisional, matrix, and geographic structures.

• Control Systems: Mechanisms (e.g., budgets, performance targets, incentive systems) that monitor and correct organizational performance to ensure activities align with strategy.

q) Environmental Scanning Techniques

SWOT/TOWS Analysis

• SWOT: See section (d).

• TOWS Matrix: Takes the internal (S/W) and external (O/T) factors and systematically pairs them to generate four types of strategic options:

  • SO (Strengths-Opportunities): Maximize both. (Aggressive)

  • ST (Strengths-Threats): Use strengths to minimize threats. (Defensive)

  • WO (Weaknesses-Opportunities): Overcome weaknesses by exploiting opportunities. (Turnaround)

  • WT (Weaknesses-Threats): Minimize both (A highly defensive strategy, often leading to retrenchment).

Boston Consulting Group Matrix (BCGM)

The BCGM is a portfolio planning tool that evaluates a company's business units based on two dimensions: Market Growth Rate (y-axis) and Relative Market Share (x-axis).

• Stars: High market share, high growth. (Require heavy investment, future leaders).

• Cash Cows: High market share, low growth. (Generate more cash than they consume, fund other units).

• Question Marks (Problem Children): Low market share, high growth. (Require careful analysis; either invest heavily to turn into Stars or divest).

• Dogs: Low market share, low growth. (Consume resources, candidates for divestiture or liquidation).

Strategic Position and Action Evaluation Matrix (SPACE)

The SPACE matrix is a four-quadrant framework that determines the appropriate strategic posture (aggressive, conservative, defensive, or competitive) for an organization.

It evaluates four dimensions:

1. Financial Strength (FS): Internal position.

2. Competitive Advantage (CA): Internal position.

3. Environmental Stability (ES): External position.

4. Industry Strength (IS): External position.

r) Internal Factor Evaluation Matrix (IFEM)

The IFEM is a strategic management tool used to evaluate the major internal strengths and weaknesses in an organization's functional areas. Similar to the EFEM, it assigns weights and ratings to internal factors to calculate a total weighted score, providing a summary of the internal strategic position. A total weighted score of 2.5 is average.

s) Competitive Profile Matrix (CPM)

The CPM identifies a firm's major competitors and compares them using critical success factors (CSFs). The analysis reveals the relative strengths and weaknesses of the firm against its competitors, helping managers focus their strategic efforts where their competitor is weakest.

t) Quantitative Strategic Planning Matrix (QSPM)

The QSPM is a quantitative tool used in the strategy selection stage. It objectively determines the relative attractiveness of various strategy alternatives based on the internal (IFEM) and external (EFEM) factors. It calculates an Attractiveness Score (AS) and Total Attractiveness Score (TAS) for each strategy to provide a clear preference ranking.

u) Porter’s Five Forces Analysis and Porter Diamond Model

Porter’s Five Forces Analysis

This model analyzes the intensity of competition within an industry. It helps determine the industry's attractiveness and the potential for long-term profitability.

The five forces are:

1. Threat of New Entrants: How easy is it for new firms to enter the industry?

2. Bargaining Power of Suppliers: How much leverage do suppliers have to raise prices or reduce quality?

3. Bargaining Power of Buyers: How much leverage do customers have to demand lower prices or higher quality?

4. Threat of Substitute Products or Services: How likely are customers to switch to alternatives from outside the industry?

5. Rivalry Among Existing Competitors: How intense is the competition among established firms?

Porter Diamond Model

The Diamond Model analyzes the factors that determine why some nations succeed in particular industries and the role of the home country environment in fostering global competitive advantage.

The four interconnected determinants are:

1. Factor Conditions: The nation’s endowment with resources (e.g., skilled labor, infrastructure).

2. Demand Conditions: The nature of home-market demand for the industry's product or service.

3. Related and Supporting Industries: The presence or absence of internationally competitive supplier industries.

4. Firm Strategy, Structure, and Rivalry: The conditions governing how companies are created, organized, and managed, and the nature of domestic rivalry.

Chapter 3: STRATEGIC PLANNING & FORMULATION

Strategy formulation involves developing an actionable plan to achieve the organization's goals. Strategies can be broadly grouped into four categories: Intensification, Integrative, Diversification, and Restructuring/Retrenchment.

INTENSIFICATION STRATEGIES (Growth in current business)

These strategies involve increasing market penetration or developing products and markets within the existing or related business lines.

a) Market Penetration

Seeks to increase market share for current products or services in current markets through greater marketing efforts. (e.g., launching an aggressive advertising campaign, offering sales promotions).

b) Market Development

Involves introducing current products or services into new geographic areas or new markets (e.g., expanding nationally or internationally, targeting a new demographic).

c) Product Development

Seeks increased sales by improving or modifying current products or services (e.g., developing new features, launching a new flavor, or upgrading software).

d) Innovation

Focuses on creating entirely new offerings or business models that disrupt the existing market structure. Innovation can be radical (creating a new industry) or incremental (improving existing processes).

INTEGRATIVE STRATEGIES (Gaining control over supply chain)

Integrative strategies involve gaining ownership or increasing control over distributors, suppliers, or competitors.

a) Vertical Integration

Involves gaining control over different stages of production or distribution.

• Forward Integration: Gaining ownership/control over distributors (e.g., a manufacturer opening its own retail stores).

• Backward Integration: Gaining ownership/control over suppliers (e.g., a car manufacturer buying a tire company).

b) Horizontal Integration

Involves gaining ownership or increased control over competitors (e.g., mergers, acquisitions, or takeovers of rival firms). This is done to achieve economies of scale and increase market power.

DIVERSIFICATION STRATEGIES (Entering new businesses)

Diversification involves moving into new lines of business, often outside the existing industry.

a) Concentric Diversification (Related)

Adding new, but related, products or services that have meaningful technological or marketing synergies with the firm's existing products (e.g., a calculator manufacturer diversifying into personal computers).

b) Conglomerate Diversification (Unrelated)

Adding new products or services that are unrelated to the firm's current technology, products, or markets. This is done purely for financial returns (e.g., a tobacco company acquiring a packaged food company).

RESTRUCTURING / RETRENCHMENT STRATEGIES (Dealing with decline or change)

These strategies are undertaken when an organization is performing poorly, experiencing decline, or needs to refocus its core business.

a) Liquidation

Selling off all of a company's assets, in parts, for their tangible worth. This represents the ultimate form of retrenchment and is an admission of strategic failure.

b) Turnaround

A strategy designed to revitalize a firm that is facing serious problems. It typically involves two phases:

1. Contraction: Downsizing, reducing costs, and improving efficiency.

2. Consolidation: Stabilizing the firm, developing a new strategy, and preparing for renewed growth.

c) Divestment

Selling a division or a major part of the organization. It is often used to exit a non-core business or when a business unit requires more resources than the company can provide.

d) Acquisition (Takeover)

A corporate action in which one company purchases most or all of another company's shares to gain control of that company.

e) Merger/Combination

Two organizations of roughly equal size combining to form one new entity. The goal is to create synergy where the combined value is greater than the sum of the individual parts.

f) Joint Venture (JV)

A temporary partnership or an agreement between two or more firms to form a separate entity to achieve a specific strategic goal (e.g., entering a new market or developing a new technology).

Chapter 4: POLICIES IN FUNCTIONAL AREAS

Policy

A policy is a broad guideline or rule designed to guide the thinking and decision-making of managers in recurring situations. Policies ensure that decisions are consistent, uniform, and supportive of the overall strategy.

Product Policies

These policies guide decisions related to the product or service offering.

• Scope: Product mix, diversification, branding, packaging, quality control, R&D priorities, and product lifecycle management.

• Example: A policy dictating that all new products must use at least 50% recycled material (supporting a differentiation strategy based on sustainability).

Personnel Policies (HR)

These policies govern the management of human resources within the organization.

• Scope: Recruitment and selection methods, training and development programs, performance appraisal standards, compensation and benefits structure, and employee disciplinary procedures.

• Example: A policy that mandates internal promotion for all managerial vacancies (supporting a strategy based on deep institutional knowledge).

Functional Policies

This refers to the collective body of policies across all specific operational areas, ensuring coherence.

Financial Policies

These policies govern the acquisition, use, and management of financial resources.

• Scope: Capital structure (debt vs. equity mix), investment appraisal criteria (e.g., minimum required rate of return for new projects), dividend payout ratio, inventory valuation methods, and working capital management.

• Example: A policy that requires all business unit expansion projects to achieve a minimum 15% ROI (supporting a conservative/growth strategy).

Marketing Policies

These policies guide how the organization interacts with its market and customers.

• Scope: Pricing strategies (e.g., cost-plus vs. value-based), distribution channel selection (e.g., direct sales vs. resellers), advertising budgets, and sales territory management.

• Example: A policy that prohibits price matching (supporting a premium/differentiation strategy).

Public Relations Policies

These policies govern the organization's communications and relationship management with the public, media, government, and community.

• Scope: Crisis communication procedures, corporate social responsibility (CSR) initiatives, media contact protocols, and transparency guidelines.

• Example: A policy mandating the release of an annual sustainability report (supporting a positive public image strategy).

Chapter 5: STRATEGIC IMPLEMENTATION, REVIEW AND EVALUATION

a) Interrelationship between Formulation & Implementation

Strategy formulation and strategy implementation are inextricably linked. They are often described as two sides of the same coin:

1. Formulation (The Thinking Phase): Focuses on effectiveness—doing the right things.

2. Implementation (The Action Phase): Focuses on efficiency—doing things right.

Interdependence: Poor implementation can ruin a well-formulated strategy, and an excellent implementation of a poor strategy will still lead to failure. Implementation often uncovers new information that requires the reformulation or modification of the initial strategy.

b) Project Implementation Resource Allocation

Strategy implementation requires the efficient allocation of resources (financial, human, physical, and technological) to specific projects and initiatives.

• Resource Allocation: This involves prioritizing strategic projects (e.g., R&D for a new product, or training for a sales force) and distributing limited resources based on their potential contribution to the strategic objectives.

• Key Challenge: Matching resource requirements to availability and ensuring cross-functional resource sharing is aligned with strategic priorities.

c) McKinsey’s 7-S Model

The 7-S Model provides a framework for diagnosing how well an organization is aligned to effectively implement its strategy. It emphasizes that strategy cannot succeed without the proper supporting organizational elements.

The model divides organizational elements into two groups:

• Hard S's (Easy to define and manage):

  1. Strategy: The plan for competitive success.

  2. Structure: The organizational chart and reporting hierarchy.

  3. Systems: The processes and procedures (e.g., performance measurement, IT systems).

• Soft S's (Harder to define and manage): 4. Skills: The core competencies of the employees and the organization. 5. Staff: The people (demographics, motivation, recruitment). 6. Style (Shared Values): The dominant culture and management style. 7. Shared Values (Superordinate Goals): The central, guiding concepts of the organization.

d) Measure Organizational Performance

Performance measurement involves tracking key metrics to assess how well the organization is achieving its objectives.

• Key Metrics: Financial (ROI, profit margin, revenue growth) and Non-financial (market share, customer satisfaction, employee turnover, product quality).

• Balanced Scorecard: A modern approach that measures performance across four perspectives: Financial, Customer, Internal Business Processes, and Learning and Growth.

e) Take Corrective Actions

Evaluation and measurement are useless unless they lead to necessary changes. Corrective actions are required when performance deviates significantly from established objectives.

• Actions may include: Altering the organizational structure, revising the mission/vision, improving efficiency (e.g., Six Sigma), adjusting performance incentives, or even reformulating the strategy itself.

f) Competitive Dynamics

Competitive dynamics involve the series of competitive actions and responses among rival firms. Strategic implementation requires managers to anticipate, execute, and react to competitors' moves.

• Action: A move to improve market position (e.g., price cut, new product launch).

• Response: A countermove by a rival to defend its position.

• Goal: To achieve a sustainable advantage while minimizing the negative impact of rivals' moves.

g) Corporate Governance

Corporate governance refers to the system of rules, practices, and processes by which a company is directed and controlled. It involves the relationships between a company's management, its board of directors, its shareholders, and other stakeholders.

• Strategic Role: Ensures that management's actions are aligned with the long-term interests of shareholders and that the company is managed ethically and responsibly. Key elements include the independence and expertise of the board of directors.

h) Group Oral Presentation of Company’s Final Marketing Proposal

This is often the final phase of a strategy course or project where the functional strategy (Marketing) is presented.

• Purpose: To clearly articulate the marketing-level policies and actions (4 P's: Product, Price, Place, Promotion) that will support the business-level strategy.

• Key Content: Market segmentation, target market profile, positioning statement, proposed marketing budget, and expected sales forecasts/results. The presentation ensures all stakeholders understand and commit to the chosen course of action.

Important Questions for full subject:

Chapter 1: INTRODUCTION TO STRATEGIC MANAGEMENT

1. Definition and Scope: Define Strategic Management. Explain the four key characteristics and outline the three distinct levels of strategy: Corporate, Business, and Functional.

2. The Process: Describe the three major stages of the Strategic Management Process (Formulation, Implementation, and Evaluation). Why is this process considered a continuous cycle?

3. Vision and Mission: Distinguish clearly between an organization's Mission statement and its Vision statement. What key components must an effective mission statement include?

4. Goals vs. Objectives: Explain the necessity of formal objectives. Compare and contrast Goals and Objectives, focusing on differences in scope, time frame, and measurability (SMART criteria).

5. Role of a Strategist: What are the core responsibilities of a Strategist in an organization, particularly concerning environmental scanning and resource allocation?

Chapter 2: ENVIRONMENTAL, EXTERNAL AND INTERNAL RESOURCE ANALYSIS

1. Environmental Analysis: Differentiate between the Internal and External Organizational Environments. How do these two environments relate to the identification of an organization’s Strengths, Weaknesses, Opportunities, and Threats?

2. Macro-Environment: Describe the six categories of the PESTEL framework. Explain why analyzing these key environmental variable factors is crucial for strategic direction setting.

3. Industry Analysis: Explain Porter’s Five Forces Analysis. Discuss how the strength of each force determines the overall attractiveness and long-term profitability of an industry.

4. Integration of Analysis: Explain the purpose and methodology of the TOWS Matrix. How does it use the findings from the SWOT analysis to systematically generate specific strategic alternatives (SO, WO, ST, WT)?

5. Portfolio Management: Explain the Boston Consulting Group Matrix (BCGM). Describe the characteristics of the four categories (Stars, Cash Cows, Question Marks, and Dogs) and the resource allocation implications for each.

6. Quantitative Tools: Explain the difference in purpose between the External Factor Evaluation Matrix (EFEM), the Internal Factor Evaluation Matrix (IFEM), and the Quantitative Strategic Planning Matrix (QSPM) in the process of strategy selection.

Chapter 3: STRATEGIC PLANNING & FORMULATION

1. Intensification Strategies: Discuss the three primary Intensification Strategies—Market Penetration, Market Development, and Product Development—providing a real-world example for each.

2. Integrative Strategies: What is Vertical Integration? Differentiate between Forward Integration and Backward Integration and explain how both strategies aim to increase control over the supply chain.

3. Diversification: Define diversification strategies. What is the fundamental difference between Concentric (Related) Diversification and Conglomerate (Unrelated) Diversification?

4. Restructuring and Retrenchment: When is a Retrenchment strategy necessary? Detail the two phases of a Turnaround strategy and distinguish between Divestment and Liquidation.

5. Cooperation vs. Control: Compare the competitive outcome of Horizontal Integration (Acquisition/Merger) versus the collaborative nature of a Joint Venture (JV).

Chapter 4: POLICIES IN FUNCTIONAL AREAS

1. Role of Policy: What is a business policy, and why are policies essential for effective strategy implementation? How do they promote consistency and discipline across the organization?

2. Alignment of Functions: Choose two functional areas (e.g., Marketing, HR, or Finance). Discuss the scope of their respective policies and provide an example of how a policy in each area must align to support a Cost Leadership business strategy.

3. Financial Policies: Discuss the strategic focus of Financial Policies. What are the key areas covered by financial policies, such as capital structure and investment appraisal criteria?

4. External Relations: Explain the importance of Public Relations Policies, especially in managing corporate social responsibility (CSR) and handling crisis communications.

Chapter 5: STRATEGIC IMPLEMENTATION, REVIEW AND EVALUATION

1. Formulation-Implementation Link: Explain the critical interrelationship between strategy formulation and strategy implementation. Why is implementation often considered the more challenging phase?

2. Organizational Alignment: Describe the McKinsey’s 7-S Model. Explain how the model is used to diagnose whether an organization is properly aligned (Structure, Systems, Shared Values) to successfully implement a new strategy.

3. Control and Correction: Discuss the importance of Measuring Organizational Performance. What is the purpose of taking Corrective Actions, and what types of organizational elements might need to be altered?

4. Strategic Leadership: Explain the strategic role of Corporate Governance. How does a strong governance structure ensure that management's actions are aligned with the long-term interests of shareholders?

5. Competitive Reaction: Define Competitive Dynamics. How does a firm’s success in strategic implementation depend on its ability to anticipate and respond to the competitive actions of its rivals?

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