Directorate of Online Education

ASSIGNMENT
NAME VIJAY BHUSHAN CHANDAN
ROLL NUMBER 2314105151
SESSION JUL - AUG 2024
PROGRAM MASTER OF BUSINESS ADMINISTRATION (MBA)
SEMESTER IV
COURSE CODE & NAME DMBA401 – STRATEGIC MANAGEMENT AND
BUSINESS POLICY

ASSIGNMENT SET – 1

Q. No. 1: Identify and describe key environmental scanning techniques used in strategy
analysis, such as PESTLE analysis, and Porter’s Five Forces.
Ans: Environmental scanning is a crucial process for businesses to understand the external factors
that can impact their operations and strategic decisions. The goal of environmental scanning is
to identify opportunities and threats in the external environment that could influence strategic
choices. Two key techniques used in environmental scanning are PESTLE analysis and
Porter’s Five Forces.
PESTLE Analysis:
P.E.S.T. represents the political, economic, social and technological environment. These
natural forces create opportunities and threats for the organisation. Some strategists
reorganize these dynamics such as social, technical, economic and political, and use the
S.T.E.P. analysis. Each of these categories contains numerous items.
The most common items are as follows:
• Political Analysis
• Political system and stability
• Business legal framework
• Political parties and their views
• Risk of military attacks
• International relations
• Law enforcement and red tape
• Political corruption
• Economic Analysis
• Economic plan
• Economic policies
• Economic indicators
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• Economic markets
• Financial markets
• Industrial infrastructure
• Social Analysis
• Demographics
• Classroom structure
• Family plan
• Levels of education
• Cultures, customs and interests
• Business spirit
• Technical Analysis
• Level of technological progress
• Technology spread rate
• External technology transfer
• Impact of technology on costs, quality and value chain
Porter's Five Forces:
Porter’s Five Forces framework is a tool used to analyse the competitive forces within an
industry and understand the underlying drivers of profitability.
The five forces are:-
Threat of New Entrants: This force assesses how easy or difficult it is for new competitors
to enter an industry. High barriers to entry (such as high capital investment, economies of
scale, or strong brand identity) can reduce the threat of new entrants, whereas low barriers
make it easier for new companies to emerge and increase competition.
Bargaining Power of Suppliers: This force analyzes the power that suppliers have over the
industry. If there are few suppliers or if they provide unique inputs, they can exert significant
power and influence the cost of raw materials or services. A high supplier bargaining power
can reduce industry profitability.
Bargaining Power of Buyers: This force looks at the influence that customers /buyers have
on the business. If buyers have many options or if the product or service is not differentiated,
their bargaining power increases. Powerful buyers can demand lower prices or higher quality,
affecting profitability.
Threat of Substitute Products or Services: This force examines the likelihood that
customers will switch to alternative products or services. The availability of close substitutes
can limit the prices that companies can charge and decrease profit margins.
Industry Rivalry: This force refers to the intensity of competition within the industry. High
levels of rivalry can erode profit margins, while low rivalry can lead to a more stable
competitive environment. Factors such as the number of competitors, rate of industry growth,
and product differentiation can influence rivalry levels.
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Q. No. 2: Explain the strategy formulation process. How does each stage contribute to
creating an effective strategy?
Ans: Strategic formulation is primarily a decision-making process, where the organisation decides
which strategy or strategies it is going to follow. The formulation process has to look into
both, the external and internal, elements, so that a comprehensive strategy can be decided
upon.
The various steps of strategic formulation are:
A. Establishing Objectives: The main element of a corporate strategy is the objectives of
the firm. These act as a foundation or base.
B. Analysing Organisational Environment: Both internal and external environments of
an organisation should be analysed. Assessment of external business environment
includes, political, economic, social, technological, ecological, legal and regulatory, and
global factors etc. Internal assessment includes identifying strengths and weaknesses of
an organisation. It includes identifying competencies and capabilities of an
organisation.
C. Organisational Appraisal: This will help the firm to assess its strengths and
weaknesses, especially in comparison with its competitors.
D. Setting Quantitative Targets: In this state a firm may set quantitative targets for some
of its objectives. These quantitative targets can be set as operational targets for the
various functional departments. This way, the functional heads can also receive timely
feedback.
E. Relating Targets to Divisional Plans: This step of strategy formulation identifies the
contribution that can be made by each division associated with a product or service
group within the corporation. For this purpose, a provisional strategic plan must be
developed for each sub-unit.
F. Strategic Alternatives and Choices: The process of strategic choice is essentially a
decision-making process. The strategic choice is based on various objective and
subjective factors. The objective factors include all the techniques used, and the
subjective factors include the management attitude towards risk, resource availability
and the organisational culture. Focusing on alternatives is to narrow down the choice to
a manageable number of feasible strategies. Focusing on alternatives can also be done
by visualising the future state and analysing business definition. Gap analysis is an
important element of the choice making process.
G. Gap Analysis: Gap Analysis is the identification and analysis of the gap, for an
organisation, between its current position and where it wants to reach in the future.
When an identified gap is not wide, the organisation has the stability strategy as an
option. If the gap is large, due expected environmental opportunities, expansion
strategies are more likely to be followed.
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Now once the strategy has been decided in the strategic formulation phase, it has to be
implemented.
By effectively executing each stage of the strategy formulation process, organizations can
develop and implement strategies that enhance their competitive advantage, drive growth, and
achieve their long-term goals.

Q. No. 3: Explain the process of developing effective business policies.

Ans: The term, policy, comes from the Greek word politeia, which means governance or policy.
Policies are framed by the leader in an authoritarian system. Developing effective business
policies is a critical process for organizations to ensure consistency, clear guidance, and
alignment with overall strategic goals. Business policies provide a framework for decision-
making, setting expectations, and ensuring compliance with legal and ethical standards. The
process of developing effective business policies typically involves several key stages.
Stages to developing effective business policies are:
A. Simple and Clear: A policy is supposed to be clear, simple and free of any ambiguity.
It is written in an easy-to-understand language, avoiding technical jargon. This will help
line managers and other employees to read policies correctly.
B. Adaptable: Policies need to be adaptable which should be reviewed, changed, or
amended on a regular basis. Remember, a policy is expected to be in effect for a long
period. Being adaptable will make a policy practical to be applied in different
situations.
C. Uniformity: A policy must be uniform. Consistency, especially across functions and
management levels, allows employees to operate efficiently while dealing with
repeated issues.
D. Relevance: Policies are relevant to an organization's goals. They are relevant to the
present business environment and applicable in different scenarios.
E. Comprehensive: A policy covers a broader range of business activities, leaving no
concern unaddressed. A thorough policy statement ensures flexibility in decision
making. This also prevents line managers from approaching senior management
unnecessarily.
F. Long-Term: A policy exists on a long-term basis. It has to address business goals,
which in turn are long-term.

Importance of Business Policy:

Well-articulated policies provide significant benefits to an organization. They help make
judgments within a clear set of parameters. Managers can operate efficiently, not requiring
close monitoring by senior management.

The following are some points that illustrates the importance of business policy:
A. Regulation and Management: Policies make it easier to manage and control an
organization's operations effectively. These help in the supervision and control over
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managers at various levels without interfering with their daily operations.

B. Clear Communication: Policies are typically written down, well-drafted statements.
This reduces the risk of misunderstanding or misinterpretation. Policies ensure there
is no room for personal prejudice and bias.
C. Policy Review: It's important to review policies on a regular basis to ensure that
they're still relevant in the current situation. Regular policy reviews allow for the
anticipation of future conditions and situations, as well as the resolution of how to deal
with them.
D. Coordination and Efficiency: Policies ensure that functional activities at all levels of
the organization are coordinated. The actions and responsibilities are assigned in such a
way that all functions of an organization, from operations to support, are successfully
integrated.
E. High Morale of Employees: Well-defined policies allow employees at all levels to
work towards a common goal. This helps build trust and boosts an organization's
overall morale.
F. Understanding the Business Environment: When policies are framed after many
deliberations, they help the entire organization relate with the business and the
environment they work in.
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ASSIGNMENT SET – 2

Q. No. 4: Describe the main business strategies employed by MNCs. How do these strategies
help MNCs adapt to different international markets?
Ans : A multinational corporation (MNC), also known as a multinational enterprise (MNE), is a
company or organization that manages or provides services in many countries. MNCs
continually seek new prospects. These companies conduct risk assessments and closely study
their market environments. They accumulate experience in the culture, politics, economy, and
legal aspects of the countries in which they operate.
An MNC is distinct from other companies with international branches or affiliates, despite the
fact that its concept is still debatable.
The following are the core responsibilities of a traditional multinational's headquarters:
• Strategic Role: It is a policy-making body for global operations.
• Execution: Decisions on how procedures, strategies, and means of action will be
implemented in various countries.
• Control: Since the operations are so large, it's critical to keep a tight grip on global
policies, costs, processes, and operations.
Any multinational must function through subsidiary units, or satellite units. As a result,
multinational corporations have headquarters, as well as subsidiaries.
Multinational corporations (MNCs) employ a variety of business strategies to succeed in
international markets. These strategies help them adapt to different cultural, economic, and
political environments.
Here are some of the main business strategies employed by MNCs:
• Global Standardization Strategy: This involves standardizing products and services
across different markets to achieve economies of scale. By offering the same products
globally, MNCs can reduce costs and ensure consistency in quality. For example, tech
companies like Apple maintain uniformity in their product designs and features
worldwide, leveraging brand recognition and cost efficiencies.
• Localization Strategy: To cater to local tastes, preferences, and regulatory requirements,
MNCs often adapt their products or services for each market. This might involve
modifying ingredients, marketing messages, or packaging. For instance, McDonald’s
tweaks its menu to reflect local culinary traditions, like serving McAloo Tikki burgers in
India.
• Transnational Strategy: This approach combines elements of both global standardization
and localization. MNCs using this strategy seek to achieve global efficiencies while being
locally responsive. They balance standardized operations with localized adaptations to
maximize effectiveness. A classic example is Unilever, which maintains global brands but
tailors its products to meet local needs.
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• Multi-Domestic Strategy: This strategy involves operating as a collection of relatively

independent subsidiaries in each country, allowing for significant local adaptation. This is
often seen in industries like retail, where consumer preferences vary widely from one
country to another. For example, Procter & Gamble often allows its local units to operate
independently to cater to regional markets effectively.
• Regional Strategy: Some MNCs focus on specific regions rather than spreading across the
globe. They tailor their operations and products to meet the needs of the region while
achieving regional synergies. Toyota, for instance, focuses on specific regional markets
like North America or Asia and adapts its strategies accordingly.

Q. No. 5: Explain the different types of strategic alliances. How does each type serve specific
business needs and strategic goals?
Ans : Businesses are required to execute static and dynamic strategies to flourish. These strategies
stem from comprehensive management and business policies. Only then can businesses
function in optimizing resources and associating with consumers and partners to make profit
and meet organizational goals. strategic alliance is a collaboration between two or more
business companies for sharing resources for a jointly constructed venture or project. It
allows two business entities to operate closely to achieve common business targets.
Strategic alliances come in various forms, each designed to achieve different business goals
and meet specific needs.
Here are some common types:
1. Horizontal Strategic Alliances: This type of alliance is established by firms that are
functioning in the same business zone. The partners in such alliances operate together to
enhance their place in the market and increase their market capacity in comparison to
competitors. It is a strategy to sell a product in multiple markets.
2. Vertical Strategic Alliances: In this type of alliance involves an association between a
company and its partners it depends upon. The partners focus on enhancing and
developing relationships and thus broaden the business network by offering the product
at low cost. A vertical strategic alliance is a partnership between a firm and its
suppliers, production vendors, or distributors.
3. The Inter-Sectional Strategic Alliances: These are partnerships wherein business
firms are either linked by a Vertical Supply Chain or a Horizontal Supply Chain. These
alliances function differently for different types of markets. This kind of alliance is
formed when businesses in the same vertical domain decide to work together and share
their competencies for mutual growth.
4. Joint Ventures: This is when two or more companies create a new, jointly owned
entity to pursue a specific project or business activity. Joint ventures are often used for
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large-scale projects requiring significant investment and risk-sharing. They allow

companies to pool resources and expertise.
5. Equity Alliances: In this type of alliance, one company takes an equity stake in
another. This creates a stronger bond between the partners and aligns their interests.
Equity alliances are often used to gain access to new markets or technologies.
6. Non-equity Alliances: These alliances involve cooperation between companies without
any equity investment. They usually take the form of contracts or agreements, such as
licensing, supply chain partnerships, or franchising.
Each type of strategic alliance serves different business needs and goals:
• Joint Ventures and Equity Alliances often focus on significant market entry, risk-
sharing, and access to new technologies or resources.
• Non-equity Alliances provide flexibility and often focus on operational efficiencies
and market reach without significant financial commitment.
• R&D Alliances aim to accelerate innovation and share the high costs and risks
associated with research and development.
• Marketing Alliances enhance brand visibility and market penetration.
• Supply Chain Alliances and Outsourcing Alliances optimize operational efficiencies
and cost savings.

Q. No. 6: Define creativity and innovation in the context of business. How do these two
concepts differ, and why are they essential for business success in today’s competitive
environment?
Ans : Creativity :
Creativity is the work of knowledge, curiosity, thinking, imagination and exploration. More
knowledge and level of curiosity create more ideas, patterns and combinations that can be
achieved, and then can be combined to create new and innovative products and services.
There are three important levels of creativity, i.e., discovery, invention and construction.
Discovery: Discovery is a low level of creativity. As the name implies, this is where one gets
information or stumbles over something.
Invention: Invention is a higher level of creativity.
Creation: Creation is the highest level of creativity.
Innovation:
Innovation, as a concept, refers to the process by which an individual or organization engages
in thinking about new products, processes and ideas, or approaches existing products,
processes and ideas in new ways.
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Key Differences:
• Nature: Creativity is about ideation and generating new ideas, while innovation is
about applying those ideas in practical ways.
• Focus: Creativity focuses on the "what if" and "why not," exploring new possibilities.
Innovation focuses on the "how," turning ideas into actionable and marketable
solutions.
• Outcome: The outcome of creativity is the idea itself, while the outcome of
innovation is a new or improved product, service, or process.
Importance in Today's Competitive Environment:
1. Differentiation: Creativity and innovation enable businesses to differentiate
themselves from competitors by offering unique products or services that stand out in
the market.
2. Adaptability: In a rapidly changing world, businesses that embrace creativity and
innovation can quickly adapt to new trends, technologies, and customer preferences,
staying ahead of the curve.
3. Growth: Innovation drives business growth by opening up new revenue streams,
expanding market share, and improving operational efficiency.
4. Customer Satisfaction: Creative and innovative solutions can enhance customer
experiences, meeting their evolving needs and expectations more effectively.
5. Problem-Solving: Creativity and innovation foster a culture of problem-solving,
enabling businesses to tackle challenges with fresh perspectives and innovative
approaches.
6. Sustainability: Innovative practices can lead to more sustainable business models,
reducing environmental impact and promoting long-term viability.

While creativity involves the generation of novel ideas and solutions, innovation is the
execution of those ideas to create tangible business value. Both are crucial for maintaining
competitiveness, addressing challenges, and capitalizing on opportunities in today's fast-
evolving business landscape. Creativity fuels the generation of ideas, and innovation brings
those ideas to life in ways that contribute to business success and growth. Businesses that
cultivate both creativity and innovation are better equipped to navigate uncertainty, drive
progress, and stay ahead in a highly competitive global market.