Subject Name Strategic Management

1) State the subjective factors that influence strategic choice. Ans - Following are the five types of subjective factors that need to be considered while selecting a strategy: Consideration for government policies: Government policies play an important role in setting the various policies and priorities of an organization. They are the deciding factors that have a significant impact on the future prospects of an organization. Strategists within an organization are aware of the importance of the government policies in taking various decisions. Strategic alternatives considered by an organization are seen in the context of government policies. Various cooperate strategies, such as expansion, retrenchment of liquidation, are feasible only if the government policies act as a qualitative factor in selecting alternatives. Perception of critical success factors (CSFs) and distinctive competencies: CSFs and distinctive competencies are important issues in environmental and organizational appraisal. While considering different strategic alternatives, strategists should keep in mind the distinctive competencies possessed by an organization and the CSFs that ensure success in an industry. The main focus is on the extent of compatibility that exists between competencies and the CSFs. Each industry has their own CSFs. If the distinctive competencies of an organization build their strategy around the CSFs, then that organization is considered as successful in its respective industry. Commitment to past strategic actions: Past strategy action also effect strategic choice. Experience shows that hardly any organization breaks away from its past strategies to rely upon a totally new strategy. Strategies try to determine and then eliminate those strategic alternatives that lead

an organization too far away from its existing position. This gives rise to another qualitative factor, that is, decision style and attitude to risk. Strategists decision style and attitude to risk: The decision style adopted by strategists, particularly the CEO, and their attitude to risk is also an important qualitative factor in strategic choice. It is mostly seen that even if the environmental and organizational factors are identical, two organizations follows two strategic paths. One organization acts in an aggressive manner and adopts a positive attitude towards strategy formulation while the other may act defensively and react to changes. This is due to the difference in the decision style and the attitude to risk of the respective strategists. Timing and competitive consideration: Timing element and competition considerations are important qualitative factors that affect strategic choice. Timing helps to answer the question like: o When to exercise a strategic choice? o When a particular strategic choice is to be made? o For what time period strategic choice is to be made? It is necessary that a strategist should consider all the alternatives and environment issues and the diagnosis should indicate that no other feasible alternatives would emerge in the near future. 2) What are the critical ongoing processes of learning organizations? Ans- The implicit message is that learning, information sharing, adaptation, decision making and so on are not shared throughout an organization. In contrast, leading edge organizations recognize the importance of having everyone involved in the process of actively learning and adapting. In todays progressive and ever changing world it becomes intrinsic for an integrated approach at various level of an organization. The person who figures out how to harness the collective genius of the people in his or her organization, according to former Citibank CEO Walter Wriston , is going to blow the competition away.

Successful learning organizations create a proactive, creative approach to the unknown: they actively solicit the involvement of employees at all levels and enable all employees to use their intelligence and apply their imagination. Higher level skills are required for everyone, not just those at the top. A learning environment involves organization-wide commitment to: change, an action orientation, and applicable tools and methods. It must be viewed by everyone as a guiding philosophy and not simply as another change programme. A critical requirement of all learning organization is that everyone feels and supports a compelling purpose. Inspiring and motivating peoples with a mission or purpose is a necessary but sufficient condition for developing an organization that can learn and adapt to a rapidly changing, complex and interconnected environment. There are four critical ongoing processes of learning organization: i) Empowering employees at all levels ii) Accumulating and sharing internal knowledge iii) Gathering and integrating external information iv) Challenging the status quo and encouraging creativity 3) What factors have to be kept in mind while choosing the location of a manufacturing unit? Ans- In order to achieve the twin objectives of cost minimization and quality maintenance, a company should choose the most effective locations for its manufacturing facilities. The location of a manufacturing facility depends on the country, the technology and the product. Country: The host country, i.e., the country receiving the investment, should be economically and politically stable. The company is vulnerable to exchange rate risk when raw materials are sourced from many countries, for manufacturing activity in one or a few countries, and

subsequent export to many markets. The parent company might lose its cost competitiveness if the factory is located in a country with volatile exchange rates. Political stability is another important factor in decision making. Changes in government may entail changes in investment policies. Another factor affecting the location of the factory is the level of infrastructural development of the country. Continuous supply of power, sound telecommunication systems, well developed roads and transport facilities make for a favorable destination. Another important factor in the location decision is the factor costs and productivity in various countries. The factors of production are land, labour, capital and enterprise. The payments for these take the form of rent, wages, interest and profits. MNCs expect to earn some specified return on investment (ROI). Capital and enterprise have become perfectly mobile with the growth in technology and developments in financial markets. So land and labour remain the crucial factors in deciding the location of factories. Technology: By technology we mean manufacturing technology. The cost of the technology can be important in determining the location of a manufacturing facility. The higher the investment required, the stronger the case of manufacturing in a single or a few locations. If the fixed costs of setting up a manufacturing facility are low, then companies can have location closure to the market and thereby responds faster to market demands. Apart from fixed costs, economies of scale can also help in deciding plant location. Economies of scale can be defined as the reduction in the per-unit-cost of production as a result of an increased scale of operation. Thus, the unit cost of production decreases with increase in production.

 Product: There are two features of a product that determine the location of the manufacturing plant. i) Value-to-weight ratio: weight of the product has an impact on the transportation costs. Thus, transportation costs for goods of heavy industries are high and justify the location of plants closure to the market. On the contrary, electronic goods have high value-to-weight ratio, i.e. , they are expensive but less costly to transport since they are not heavy. ii) Nature of need- universal or local: Personal computers and certain industrial products can be manufactured at centralized facilities, for sale in several markets. On the other hand, consumers often have different tastes and preferences relating to food and personal care products. For these products, manufacturing facilities are usually located nearer to the market. 4) Explain five advantages and five disadvantages of control techniques in the strategic management of an organization. Ans- The advantages of control techniques are as follows: Control facilities measuring efficiency: A control technique contains the measures that enables manger to evaluate how efficiently an organization produces goods and services. In case of a change in the method of production, these control techniques provide the mangers with approximate measure for estimating the efficiency and thereby determine the extent of success. Control determines the product quality: Control is important in recognizing the product quality of an organization. It offers feedback on a products quality to managers. If managers consistently measure the number of customer complaints and the number of newly produced goods returned for repairs, they get a good idea to the extent of quality that is involved in their product. Raised level of innovation: Control helps raise the level of innovation in an organization. Deciding the control techniques involves maximum employee participation. This gives a feeling of

belongingness and creativity to the employee and leads to more innovative ideas. Increase responsiveness to customers: Control helps managers to evaluate the customer care to monitor the employee behaviour and increase the organizations responsiveness to customers. Disadvantages of control techniques: Difficulties in measurement: The process of evaluation is burdened with the danger of difficulties in measurement. These mainly relate to the reliability of the measurement techniques used for evaluation, lack of quantifiable objects or performance standards and the inability of the performance system to provide valid information in time. The control system may be misrepresenting and may not give a consistent evaluation or may measure attributes that are not meant for evaluation. Resistance to evaluation: The evaluation process involves controlling the behavior of individuals. This leads to a resistance on the part of managers who may find it difficult to control other peoples behavioral patterns. Nature of short term: To practice control, managers often tend to rely on short-term implications of activities and try to measure the immediate results. This is because immediate evaluation seems to be an easy way than the tedious long-term method of analyzing long-term implications. Relying on efficiency versus effectiveness: Efficiency means doing anything rightly while effectiveness means doing the right things. Managers are often confused regarding the constituents of effective performance. This leads to measuring wrong parameters that may create a situation where the right type of performance does not get rewarded. Conversely, if performance is evaluated on the basis of efficiency alone it that does not really contribute to the achievement may get rewarded.

5) In an MNC, one of the major foreign projects has been closed down by the client leaving eight hundred employees without work. As a human resource manager, what are the initiatives you will take in order to solve this problem. Ans- The initiatives that I will take in order to solve this problem are as follows: Motivating employees. Assigning various other jobs to the employees. Reassuring them that they will be on their jobs. 6) Consider a company going through a difficult time. It needs to cut down on some expenses in order to survive in the market. What suggestions would you give to save on expenses? Ans- If a company is going through bad time it should opt for cost reduction techniques which are as follows: Control plan and eligibility expenses: For most companies identifying and correcting areas of over payment of claims is the most promising area of cost reduction. Manage absences and disability: The HR personnel should be able to manage absenteeism of employees and disability of them to perform the given job. Here in such cases, employees should be retrenched from the organization, thus saving upon the costs. Go green: Nowadays almost all the employees are net savvy and are comfortable with online communication. So this can help the organization to reduce on communication costs by moving everything to online basis. Then come reduction in usage of printers and printing papers, use e-mails in place of traditional mails can save costs up to 25% .