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Key Concepts

Q1. Discuss merging the strategic vision objectives and strategy into a strategic plan.
Answer=Strategic planning is a well-organized effort aiming at fulfilling business objectives in a
systematic manner. It is a forward looking exercise which determines the future posture of the
enterprise.
The strategic management process encompasses three phases which together involve a number of
systematic steps. These three phases are strategy formulation, Implementation, evaluation and
control.
I. Strategy Formulation
Strategic formulation Involves four Important steps, determination of mission and objectives,
analysis of strengths and weaknesses of the firm and the environmental opportunities and threats
(SWOT), generation of alternative strategies and choosing ,the most appropriate strategy.
Determination of Mission and Objectives: Strategy is a means to achieve the objectives. It is,
therefore, quite obvious that determining the mission (which influences objectives) and objectives is
the first step in strategy formulation.
SWOT analysis: The strengths and weaknesses of the firm and opportunities and threats (SWOT) in
the environment will indicate the portfolio strategy and other strategies it should pursue.
An organization should address questions such as what are the changes, including possible future
changes, in the environment which have implications for us and how should we respond to them?
What are the opportunities in the environment; which can be exploited utilizing our strength?
What are the threats and do we have the strength to combat the threats? How can we mass up our
strength? What are our weaknesses? Can we overcome or minimize the weaknesses?
Strategic Alternatives: Given the mission and objectives and having analyzed the strengths and
weaknesses of the firm and the environmental opportunities and threats, the strategists should
proceed to generate possible alternative strategies. There may be different strategic options for
accomplishing a particular objective. For example, growth in business may be achieved by increasing
the share in existing markets or by entering new markets, by horizontal integration or by a
combination of these.
Evaluation and choice: The purpose of considering different strategic options is to adopt the most
appropriate strategy. This necessitates the evaluation of the strategic alternatives with reference to
certain criteria. Criteria such as suitability, feasibility and acceptability are commonly employed to
evaluate the strategic options.
II. Implementation
Operationalizing the strategy requires transcending the various components of the strategy to
different levels; mobilization and allocation of resources; structuring authority, responsibility, tasks
and information flows; and establishing policies.
Implementation of strategy involves a number of administrative and operational decisions.

III. Evaluation and Control


Evaluation and Control is the last phase of the strategic management process. The objective is to
examine whether the strategy as implemented is meeting its objectives and if not take corrective
measures. Continuous monitoring of the environment and implementation of the strategy is
essential. Strategic management is a continuous process, the evaluation providing the feedback for
modifications.

Q2.Discuss Industry driving forces.


Answer=Driving forces are forces outside the firm that activate the change of strategy in an
organization. Industry conditions change because important forces are driving industry participants to
makes changes in their actions, and thus the driving forces in an industry are the major underlying
causes of changing industry and competitive conditions. The key driving forces for any industry are
as follows:
1-Internet and new e-commerce opportunities
2- Globalization
3-Changes in the long-run industry growth rate
4-Changes in customer needs and values
5-Product innovation
6-Technological change
7-Market innovation
8- Diffusion of technical know-how across more companies and more countries
9- Changes in cost and efficiency
10- Government regulations and policies
11-Changing societal concerns, attitudes, and lifestyles;
However, the most important forces that drive an industry are as follows:
1-Bargaining power of the buyers: Buying power provides customers the chance to negotiate for
cheaper prices, ask for better quality on the products they are buying or ask for better and more
services they are receiving. All these will lead to reduced margins of companies in an industry.
Buyers can gain higher bargaining power when, they are few in number, product is undifferentiated,
the buyers can easily switch from one product to another, the buyer is concerned with cost cutting,
buyer is not very concerned about the quality of the product, and the buyers have good information
about the market and industry.
2-Bargaining power of suppliers: The suppliers can have a good bargaining power over their
buyers when, there is concentration of sellers, the product is unique, the product supplied is of great
importance to the buyer,the cost of switching is high for the buyers.
3-Threats from potential entrants: Potential competitors are companies that are currently not
competing in the industry but have the capability to do so. New entry into an industry expands
supply. This in turn depressed prices and profits. Thus a high risk of new entry constitutes a strategic
threat. Firms could have high amount of threat from potential entrants when customers are not loyal,
companies lack economies of scale etc.
4-The degree of rivalry among established companies: Strong rivalry constitutes a threat to
established companies, whereas weak rivalry constitutes an opportunity to raise prices and earn
greater returns. Extent of rivalry amongst firms depends on demand conditions, exit barriers, and
industry competitive structure.
5-Threat from substitute products and services: Substitute products limit the price that companies
in an industry can charge without losing their customers to makers of substitutes. The closer the
substitutes, the greater the threat they pose.

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