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Spring 2014

MBA Semester 4

MB0052 Strategic Management and Business Policy

Q1. Define the term strategy. Explain the concept of strategic window.

The word strategy comes from Greek strategies, which refers to a military general and
combines stratus (the army) and ago (to lead). The concept and practice of strategy and
planning started in the military, and, over time, it entered business and management. The
key or common objective of both business strategy and military strategy is the same, i.e., to
secure competitive advantage over the rivals or opponents.

Strategic window

Companies need to evolve and adapt to changing situations, as is clear from the example of
Shell that you read in the beginning of the unit. They should always look for opportunities
and make the best of them at the right time. Here, we are referring to strategic windows, the
concept which was introduced by Abell (1978). The basic idea behind the concept of a
strategic window is this:

there are only limited periods during which the fit or the match between the key requirements
of a market and the particular competencies of the firm are at the optimum. Companies
should exploit such optimum opportunities or windows. Strategic windows arise as a result
of business or market evolution.

Businesses and markets are never static. They are constantly evolving. Businesses and
markets may evolve because of Development of new product (new demand);

Emergence of new competing technologies; and
Market redefinition or changes.

Due to such evolution, it is recommended that investment in a product line or market area
should be made to coincide with the period(s) during which a strategic window is open.
Companies which do this, optimize returns. For example, Maruti-Suzuki entered the Indian
car market at the right time. The strategic window was open because of the obsolescence of
technology of Premier Padmini (earlier Fiat), which was the only available passenger car in
the market. (There was also Ambassador, but that was used more as an official car). Even
after Marutis entry, the strategic windows for cars remained open, and other car
companiesGeneral Motors, Tata Motors, Ford, Honda, Hyundai all entered the Indian
car market. Maruti, however, was the first mover and continues to be the market leader.

Strategic windows are also important for timing the exit from a product or a market. There
are times when it is advisable, and also possible, to divert a business which a company

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cannot operate profitably any longer. This means that the strategic window for exit is open,
that is, there are buyers or companies, who are willing to acquire the business, and, the
company should act on it.

Q2. The essence of business continuity is that businesses need to be planned not
only for today, but also for tomorrow, that is, for the future.
Write the meaning and importance of business continuity planning. Explain any two
strategies for business continuity planning.

Business continuity planning means proactively working out a means or method of
preventing or mitigating the consequences of a disasternatural or manmade (sabotage or
terrorism) and managing it to limit to the level or degree that a business unit can afford.

Strategies for Business Continuity Planning

Because of the possibility of different kinds of impacts, and depending on the nature of
damage or disaster, appropriate strategies should be developed and used to deal with
particular situations. Five different strategies should be developed for five different
situations/actions. These are:

1. Prevention
2. Response
3. Resumption
4. Recovery
5. Restoration

Prevention

Conventionally, prevention is the best strategy; this means taking steps or actions to prevent
or minimize the chances of occurring of a disaster. Companies can adopt many preventive
control measures as safeguards. Common preventive control measures are:

(a) Security controls: These involve controls by setting up barriers to protect the site and
prevent unauthorized entry into the premises. This means, in other words, manned
surveillance at the location.

(b) Infrastructure controls: These include appropriate infrastructural facilities like
UPS/back-up power, smoke/fire detectors, fire extinguishers, weather forecasting systems ,
etc.

(c) Personnel controls: Skilled/trained personnel are posted to man sensitive zones where
key or critical resources may be located.

(d) Software controls: These involve modern methods of controls through computerized
systems or software. These include authentication,encryption, firewall, intrusion detection
systems, etc.

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Response

Prevention is a pre-emptive measure; response is a reactive step. If prevention is not
possible, fast response is the next best alternative strategy. After an interruption or damage
has taken place, the BCP team should immediately inform the management and the
Damage Assessment Team. Two other teams would also be involved: the Technical Team
and the Operations Team. The Damage Assessment Team would assess the nature and
magnitude of the damage. More specifically, the team should investigate into:

The cause of disruption or damage
The scope for preventing additional damage
What can be salvaged
What repairs, restorations and replacements are required
Based on the report of the Damage Assessment Team, the Technical Team and Operations
Team should get into action. The Technical Team is the key decision maker for further
actions of the BCP and the Operations Team executes the actual damage control operations
of BCP.

Q3. Write a brief note on Strategic Audit.

Q4. Price or market competitiveness of a product or business depends on its cost
competitiveness. Cost competitiveness implies two things: cost efficiency and cost
effectiveness. Explain the concept of cost efficiency of an organization. Anal yze the
major factors of cost efficiency.

Q5. Write short notes on the following:
(a) Divestment strategy
(b) Liquidation strategy

Q6. Describe the different approaches to business ethics.

Remaining answers are available in the full assignments.

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