MODEL TEST PAPER 1

PAPER 6B: STRATEGIC MANAGEMENT

1. The question paper comprises two parts, Part I and Part II.
2. Part I comprises case scenario based multiple choice questions (MCQs)
3. Part II comprises questions which require descriptive type answers.
PART I – Case scenario based MCQs (15 Marks)
Question 1.(A) (Compulsory)
1. (A) In the fiercely competitive automotive industry, Zing, a promising
newcomer, set out on a strategic journey with ambitions of making a
substantial impact. Recognizing the significance of a robust distribution
network early on, Zing forged partnerships with established dealerships,
offering them attractive margins. This strategic move significantly
enhanced Zing's reach, with a presence in 80% of the nation's
dealerships by 2022, expanding its coverage significantly.
To differentiate themselves from competitors, Zing adopted two key
strategies. Firstly, they prioritized product design, investing heavily in
aesthetics and incorporating innovative features and environmentally
friendly technologies. This focus on design led to their vehicles receiving
excellent reviews and achieving an impressive 15% year-on-year growth
in sales.
Secondly, Zing implemented switching costs to discourage customers
from switching to other brands. Their vehicles featured branded
software, making it both expensive and cumbersome for customers to
transition to alternative brands. This strategic move effectively protected
Zing's market share.
Zing's overarching goal was to position itself as a premium automotive
brand, blending luxury with sustainability. However, their execution fell
down as they challenged with maintaining consistent quality and service
levels, resulting in mixed customer reviews.
Despite their best efforts, Zing's differentiation strategy fell short due to
issues with inconsistent quality and service. Negative word-of-mouth and
declining customer satisfaction scores tarnished their brand image,
leading to stagnating sales. This failure to deliver on their brand promise
proved to be a significant setback.
As Zing's reputation suffered from execution failures, securing additional
funds for international expansion became challenging. Consequently,
they made the difficult decision to postpone their global ambitions for the
next five years, focusing instead on stabilizing their finances and
rebuilding their brand image.
In summary, Zing's strategic journey illustrates the importance of not
only crafting a compelling differentiation strategy but also executing it

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 flawlessly. In the competitive automotive landscape, maintaining
consistent quality and service is paramount to sustaining brand loyalty
and achieving long-term success.
Based on the above Case Scenario, answer the Multiple Choice
Questions.
(i) What key strategic approach did Zing use to expand its market
presence in the automotive industry?
(a) Product innovation and design
(b) Cost leadership strategy
(c) Entering new international markets
(d) Vertical integration (2 Marks)
(ii) How did Zing protect its market share from potential competitors?
(a) Price-cutting strategy
(b) Branded software and switching costs
(c) Aggressive marketing campaigns
(d) International expansion (2 Marks)
(iii) Why did Zing's differentiation strategy fall short in the market?
(a) Intense price competition
(b) Poor marketing strategy
(c) Inconsistent quality and service
(d) Lack of international expansion (2 Marks)
(iv) Forging partnerships with established dealerships to enhance its
distribution network falls under which level of strategy?
(a) Corporate level strategy
(b) Business level strategy
(c) Functional level strategy
(d) Competitive level strategy (2 Marks)
(v) How did Zing initially expand its market presence across the
nation?
(a) Aggressive marketing campaigns
(b) Developing low-cost vehicles
(c) Partnering with established dealerships
(d) Launching a luxury brand (2 Marks)
(B) Compulsory Application Based Independent MCQs
(i) TechMex Inc., a leading technology company, offers a diverse
portfolio of products ranging from established cash cows to

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 promising question marks. As part of its strategic planning process,
the company aims to assess its product portfolio's performance and
allocate resources effectively. In which quadrant of the BCG Matrix
would TechMex's new innovative product, recently launched in a
rapidly growing market, likely fall into?
(a) Cash Cow
(b) Dog
(c) Question Mark
(d) Star (2 Marks)
(ii) BlueSky Enterprises, a multinational corporation specializing in
renewable energy solutions, is undergoing a strategic
transformation to enhance its competitive position in the market. As
part of this initiative, the company is reevaluating its organizational
structure, processes, and culture. Which aspect of the McKinsey
7S Model is most relevant for BlueSky Enterprises during this
strategic transformation?
(a) Strategy
(b) Structure
(c) Systems
(d) Skills (2 Marks)
(iii) The threat of substitutes is high when:
(a) There are few substitute products available
(b) Switching costs are low
(c) Suppliers have high bargaining power
(d) There is strong brand loyalty (1 Mark)

PART II – Descriptive Questions (35 Marks)

Question No. 1 is compulsory.
Attempt any two questions out of the remaining three questions.
1. (a) Swati is the marketing manager at a software company. She is
responsible for developing and implementing marketing strategies for
the company’s products. Swati leads a team of marketing professionals
and works closely with the product development and sales teams to
ensure that the company's products are effectively promoted in the
market. She also analyzes market trends and customer feedback to
refine the marketing strategies. Which level is she working at, discuss
the roles and responsibilities of this level in organization? (5 Marks)
(b) ABC Corp, a multinational consumer electronics company, is planning to
expand its operations into a new country. The company's senior
management is evaluating the potential risks and opportunities of

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 entering this new market. As part of their analysis, they decide to use
the PESTLE framework to assess the external factors that could impact
their decision. How can the PESTLE framework help ABC Corp assess
the external factors affecting its decision to expand into a new country?
(5 Marks)
(c) Imagine you are a consultant advising a small manufacturing company
embarking on a digital transformation journey. The company's leadership
is concerned about managing the change effectively. Using the best
practices for managing change in small and medium-sized businesses,
outline a strategy to help the company navigate this transformation
successfully. (5 Marks)
2. (a) Imagine you are a strategic consultant advising a retail company that is
facing increasing competition from online retailers. The company is
considering several strategic options to improve its market position.
Using the concept that strategy is partly proactive and partly reactive,
explain how the company can develop a strategic approach to address
this challenge. (5 Marks)
(b) You are a strategic manager for a tech company launching a new
smartphone model. The company wants to target tech-savvy consumers
who value innovation and cutting-edge technology. Using the concept of
customer behavior, develop a marketing strategy to promote the new
smartphone. (5 Marks)
3. (a) A beverage company is launching a new line of energy drinks targeted
at health-conscious consumers. The strategic manager wants to study
the market position of rival companies in the energy drink segment.
Which tool can be used for this analysis, and what is the procedure to
implement it effectively? (5 Marks)
(b) The CEO of a textile mill believes that his company, currently operating
at a loss, can be turned around. Develop an action plan outlining steps
the CEO can take to achieve this turnaround. (5 Marks)
4. (a) Why Strategic Performance Measures are essential for organizations?
(5 Marks)
(b) How can Mendelow's Matrix be used to analyze and manage the
stakeholders effectively?
OR
Distinguish between Concentric Diversification and Conglomerate
Diversification. (5 Marks)

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 MODEL TEST PAPER 2
PAPER 6B: STRATEGIC MANAGEMENT

1. The question paper comprises two parts, Part I and Part II.
2. Part I comprises case scenario based multiple choice questions (MCQs)
3. Part II comprises questions which require descriptive type answers.
PART I – Case scenario based MCQs (15 Marks)

Question 1.(A) (Compulsory)

1. (A) Café Delight, a thriving restaurant chain known for its unique blend of
Australian and Indian culinary experiences, embarked on a remarkable
journey from its humble beginnings as a small café in Australia to
becoming a renowned player in the Indian restaurant industry. This case
study digs into the strategic decisions and market dynamics that fueled
Café Delight's growth, highlighting its transition from a single café in
Powai, Mumbai, to a flourishing chain with a presence in five cities and
over 25 stores. It explores how Café Delight effectively leveraged social
media and adapted its pricing strategy to compete with global brands
while maintaining a healthy profit margin.
In 2005, Café Delight was founded in Melbourne, Australia, by a
passionate entrepreneur with a vision to bring the flavors of Australia
and India together. The first café established in Powai, Mumbai, received
accolades for its unique menu, blending Australian coffee culture with
Indian culinary traditions. Over the course of five years, Café Delight
expanded to three stores in Mumbai, driven by exceptional mouth
publicity, customer loyalty, and consistent quality.
As the social media landscape evolved, Café Delight recognized the
power of online platforms in reaching a wider audience. By effectively
utilizing social media and online marketing, Café Delight expanded its
presence to five cities across India and established over 25 stores.
Customer engagement through social media platforms enabled the
brand to create a strong and vibrant community, driving organic growth.
Café Delight's customer-centric approach involved continuously evolving
its menu to cater to the changing tastes and dietary preferences of its
patrons. By understanding the evolving needs of its customers, Café
Delight could offer personalized menu items, seasonal specials, and
dietary alternatives. This approach created a sense of loyalty and
engagement among customers, strengthening the brand's appeal. Not
just customers but High-power, low-interest stakeholders, including
regulatory authorities, were addressed with careful compliance and

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adherence to industry standards. Low-power, high-interest stakeholders,
like potential customers and local communities, were engaged through
targeted marketing campaigns and community involvement initiatives.
This meticulous stakeholder analysis allowed Café Delight to build and
maintain strong relationships with each group, effectively managing their
influence and impact on the brand.
With its expanding presence and increasing popularity, Café Delight
underwent a shift in its pricing strategy. It transitioned from a pocket -
friendly pricing model to a skimming strategy, capitalizing on its unique
blend of Australian and Indian flavors to position itself as a premium
restaurant. Café Delight faced stiff competition from global brands
entering the Indian market but maintained a profit margin of
approximately 30% through menu engineering and targeted pricing.
In one of its kind, using strategic tools enabled Café Delight to identify
and act on opportunities while mitigating threats, contributing to its long-
term success in the highly competitive restaurant industry.
Based on the above Case Scenario, answer the Multiple-Choice
Questions.
(i) Café Delight effectively leveraged social media and adapted its
pricing strategy as it stepped into which phase of business life cycle
of operations?
(a) Introduction Stage
(b) Growth Stage
(c) Maturity Stage
(d) Decline Stage (2 Marks)
(ii) What stakeholder group did Café Delight engage through targeted
marketing campaigns and community involvement initiatives?
(a) High-power, high-interest stakeholders
(b) Low-power, low-interest stakeholders
(c) Low-power, high-interest stakeholders
(d) High-power, low-interest stakeholders (2 Marks)
(iii) What best describes Café Delight's initial expansion strategy when
it expanded from one café to three in Mumbai?
(a) Aggressive price reduction
(b) Leveraging customer loyalty and word-of-mouth publicity
(c) Extensive online marketing
(d) Embracing global branding strategies (2 Marks)

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 (iv) At which level of strategic management does Café Delight's
transition from a pocket-friendly pricing model to a skimming
strategy fit?
(a) Corporate level
(b) Business level
(c) Functional level
(d) Operational level (2 Marks)
(v) What type of strategy did Café Delight use to differentiate itself from
competitors in the Indian restaurant industry?
(a) Cost leadership strategy
(b) Focused differentiation strategy
(c) Cost focus strategy
(d) Hybrid strategy (2 Marks)
(B) Compulsory Application Based Independent MCQs
(i) Shamita joined GlobalX Consulting firm as an Analyst in financial
fraud mitigation. In her very first assignment she faced an integrity
dilemma where her subordinates had missed calling out a potential
financial risk which could impact the overall fraud rating of the
organisation. She quickly reached out to her seniors who
appreciated her diligence and immediately reported the same to
senior management. In this scenario which element, soft or hard,
is acting in favor of GlobalX?
(a) Strategy
(b) Systems
(c) Shared Value
(d) Staff (2 Marks)
(ii) Chocopo, an ice cream company run by Shri Shyam Kumar since
1985, now had its management change to his two daughters, who
came in and wanted to experiment with a lot of flavors. They
introduced 21 new flavors in a span of 6 months while not losing
out of 2 legendary flavors of their dad i.e. Stick Kulfi and Mango
Bar. After year 1 of operations, 9 out of the 21 flavors had to be
stopped, while 10 flavors were still kept, extending the
experimentation. The early sense from market was that they would
have to be stopped too, but the sisters decided to extend their
timelines. What category as per BCG Matrix would the 10 flavors
fall into?
(a) Cash Cow

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 (b) Dog
(c) Question Mark
(d) Star (2 Marks)
(iii) A company negotiating the best prices and quality from its suppliers
to add to customer’s delight is an example of?
(a) Value Creation by improving primary activity
(b) Value Creation by improving support activity
(c) Competitive Advantage Creation
(d) Stakeholder Management (1 Mark)

PART II – Descriptive Questions (35 Marks)

Question No. 1 is compulsory.
Attempt any two questions out of the remaining three questions.
1. (a) ABC retail chain regularly monitors consumer trends and supply chain
flexibility. The retail chain tracks consumer trends to adjust its offerings,
ensuring they meet customer needs. Simultaneously, it maintains a
flexible supply chain to respond swiftly to demand fluctuations. This
strategy enables ABC retail chain to anticipate market shifts and adapt
to them effectively, ensuring its competitiveness and customer
satisfaction. Which type of strategy is the retail chain employing?
(5 Marks)
(b) A Mumbai-based conglomerate, PQR Ltd., has announced a major
restructuring of its business operations. The company has decided to
split its business into four separate units: Manufacturing, Retail,
Services, and Technology. Each unit will operate as a separate
business, with delegated responsibility for day-to-day operations and
strategy to the respective unit managers. Identify the organization
structure that PQR Ltd. has planned to implement. Discuss any four
attributes and the benefits the firm may derive by using this organization
structure. (5 Marks)
(c) GreenThrift Inc., a sustainable clothing retailer, is experiencing a surge
in popularity due to the growing awareness of environmental issues
among consumers. The company specializes in selling second-hand
clothing and upcycled garments, offering an eco-friendly alternative to
traditional fast fashion.
A major concern for GreenThrift Inc. is the emergence of new
sustainable fashion brands in the market. These brands focus on using
organic and recycled materials, as well as ethical manufacturing
practices, which align with the values of environmentally conscious
consumers.

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 Identify and explain that competition from new sustainable fashion
brands falls under which category of Porter’s Five Forces Model for
Competitive Analysis? (5 Marks)
2. (a) “Each organization must build its competitive advantage keeping in mind
the business warfare. This can be done by following the process of
strategic management.” Considering this statement, explain major
benefits of strategic management. (5 Marks)
(b) Reshuffle Corp is a company that manufactures and sells office furniture.
They offer a range of products, from desks and chairs to cabinets and
shelves. Recently, the company has been facing increased competition
from online retailers offering similar products at lower prices.
Analyzing the characteristics of products in the furniture industry,
discuss how Reshuffle Corp can differentiate its products to maintain a
competitive edge in the market. (5 Marks)
3. (a) EasyLife Corporation, a leading manufacturer of consumer electronics,
is considering launching a new line of smart home devices. As a strategic
manager, conduct a SWOT analysis for EasyLife Corporation to assess
the feasibility and potential success of this new venture. Consider both
internal and external factors that could impact the success of the new
product line. (5 Marks)
(b) Explain the concept of forward and backward linkages between strategy
formulation and implementation in strategic management, using relevant
examples. How do these linkages impact the overall strategic decision -
making process of an organization? (5 Marks)
4. (a) Define Strategic Performance Measures (SPM). Explain various types of
strategic performance measures. (5 Marks)
(b) StarTech Solutions, an aerospace technology firm, operates in a highly
competitive industry. Despite the fierce competition in the aerospace
sector, StarTech has carved out a niche for itself by focusing on serving
unique, high-end clients. Unlike its competitors, StarTech has chosen
not to diversify its target market and instead specializes in providing
cutting-edge solutions to this niche market.
Identify and explain the strategy adopted by StarTech Solutions. Discuss
the advantages and disadvantages of this strategy.
OR
Strategic alliances are formed if they provide an advantage to all the
parties in the alliance. Do you agree? Explain in brief the advantages of
a strategic alliance. (5 Marks)

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 MODEL TEST PAPER 3
PAPER 6B: STRATEGIC MANAGEMENT

1. The question paper comprises two parts, Part I and Part II.
2. Part I comprises case scenario based multiple choice questions (MCQs)
3. Part II comprises questions which require descriptive type answers.
PART I – Case scenario based MCQs (15 Marks)
Question 1.(A) (Compulsory)
1. (A) Dr. Mikesh Gupta, Agriculture Management Guru at a leading
management school in Patna, has been driving the business of E-
Bandhu with seven of his students since 2017. This business has two
core objectives: first, sustainable farming awareness and second,
seasonal availability of agricultural inputs. It is a technology driven
business wherein they have a one stop shop for all agricultural products
available to farmers at competitive prices. Business is quite challenging,
given the fact that farmers in the region are not well aware of the use of
technology.
In the summer of 2019, the team decided to redefine their business
strategy to succeed in the agricultural sector. They formulated a new
definition and made strategic decisions to leverage their core
competencies.
Firstly, they shifted their target market from directly serving farmers to
onboarding wholesalers and retailers into the system and selling
products to them. This strategic move was based on the
understanding that wholesalers and retailers could influence
technology adoption among farmers.
Secondly, they outsourced logistics to MaalGaadi, a rural supply chain
management company. This decision helped E-Bandhu reduce asset
procurement costs and corresponding debt, thus strengthening their
position in the market.
Thirdly, they introduced a new service-based product, ChaaraVidya,
in their application. ChaaraVidya aims to educate farmers about the
latest sustainable farming practices being implemented around the
world. This addition could potentially be a game-changer for E-Bandhu
in the agro startup circle, further enhancing their core competency in
promoting sustainable farming practices and technology adoption.
The team is enthusiastic about the strategic changes brought in by
Dr. Mikesh and anticipates a more sustainable future for their idea.

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Based on the above case scenario, answer the multiple-choice
questions.
(i) Switching from direct selling to marketing through wholesalers
and retailers was a strategic decision taken by the management.
Such decisions help an organization to be more of which of the
following?
(a) Authoritative
(b) Futuristic
(c) Proactive
(d) Regularised (2 Marks)
(ii) ChaaraVidya was brought into the market to increase farmer
awareness of soil quality and the latest sustainable farm
practices from around the world? What kind of growth strategy
will it fall under?
(a) Market penetration
(b) Market development
(c) Product development
(d) Diversification of business (2 Marks)
(iii) One of the most strategically advantageous decisions for E-
Bandhu was to get into a contract with MaalGaadi. Which of the
following could not be an advantage for E-Bandhu from this
alliance?
(a) Cost savings
(b) Reduced delivery time
(c) Improved customer satisfaction
(d) Increased inventory of products (2 Marks)
(iv) How does E-Bandhu utilize Michael Porter's Five Forces model
in its strategic decision-making process?
(a) By focusing on industry rivalry and competitive pricing
(b) By analyzing the bargaining power of suppliers and buyers
(c) By assessing the threat of new entrants and substitutes
(d) All of the above (2 Marks)
(v) What are the core objectives of E-Bandhu, as mentioned in the
case study?
(a) Sustainable farming awareness and seasonal availability of
agricultural inputs
(b) Technology-driven solutions and competitive pricing
(c) Onboarding wholesalers and retailers into the system

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 (d) All of the above (2 Marks)
(B) Compulsory Application Based Independent MCQs
(i) Swabhaav, a social media marketing firm introduced an AI based
management tool that has the capabilities of managing teams
across functions all while being creative. What is the most likely
organisational structure post this implementation?
(a) Divisional Structure
(b) Matrix Structure
(c) Hourglass Structure
(d) Network Structure (2 Marks)
(ii) A tea farm owners plan to open tea cafes in tourist spots and to sell
their own premium tea to build a brand. Which of the following can
this be termed as?
(a) Backward Integration
(b) Forward Integration
(c) Diversification
(d) Horizontal Integration (2 Marks)
(iii) The process of creating, maintaining, and enhancing strong, value-
laden relationships with customers and other stakeholder is:
(a) Social marketing
(b) Augmented marketing
(c) Direct marketing
(d) Relationship marketing (1 Mark)

PART II – Descriptive Questions (35 Marks)

Question No. 1 is compulsory.
Attempt any two questions out of the remaining three questions.
1. (a) In his pursuit to expand the family business to Dubai, Dharam Veer
Singh, the successor of the renowned architect Late Shri Lala Ram Pal
Singh, faced a dilemma. Despite receiving positive feedback from
various potential investors, a common trend emerged where the
emphasis was primarily on swift construction, neglecting the importance
of structural longevity. Dharam finds himself at a crossroads. What
strategic approach could assist him in formulating a robust and coherent
business roadmap that aligns with his vision for sustainable growth?
(5 Marks)
(b) Ravi and Arjun are two friends who are partners in their business of
manufacturing premium coffee. Ravi believes in making profits through
selling higher volumes of products, hence he advocates for charging

247
 lower prices to customers. Arjun, however, believes that higher prices
should be charged to create an image of exclusivity and proposes that
the product undergo some changes to justify this pricing.
Analyze the nature of the generic strategy used by Ravi and Arjun.
(5 Marks)
(c) Due to the reoccurrence of various variants of the coronavirus, XYZ
Corporation is facing an unstable environment and has begun
unbundling and disintegrating its activities. It has also started relying on
outside vendors to perform these activities. Identify the organizational
structure XYZ Corporation is shifting to. Under what circumstances does
this structure become useful? (5 Marks)
2. (a) There are four specific criteria of sustainable competitive advantage that
firms can use to determine those capabilities that are known as core
competencies. Explain. (5 Marks)
(b) XYZ Electronics has discovered that its products have reached their
maturity stage, and the company is experiencing overcapacity.
Consequently, it focuses on maintaining the operational efficiency of its
manufacturing facilities. Identify the strategy implemented by XYZ
Electronics and provide the reasons for this strategy. (5 Marks)
3. (a) Yummy Foods and Tasty Foods are successfully competing in the
business of ready to eat snacks in Patna. Yummy has been pioneer in
introducing innovative products. These products will give them good
sale. However, Tasty Foods will introduce similar products in reaction to
the products introduced by the Yummy Foods taking away the advantage
gained by the former.
Discuss the strategic approach of two companies. Which is superior?
(5 Marks)
(b) Why is change management crucial during digital transformation, and
what are some key strategies for navigating change effectively?
(5 Marks)
4. (a) Write a short note on the Product Life Cycle (PLC) and its significance
in portfolio diagnosis. (5 Marks)
(b) Distinguish between Micro Environment and Macro Environment.
OR
Distinguish between Operational Control and Management Control.
(5 Marks)

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 MODEL TEST PAPER 4
PAPER 6B: STRATEGIC MANAGEMENT
1. The question paper comprises two parts, Part I and Part II.
2. Part I comprises case scenario based multiple choice questions (MCQs)
3. Part II comprises questions which require descriptive type answers.
PART I – Case scenario based MCQs (15 Marks)
Question 1. (A) (Compulsory)
1. (A) Kriti Pvt. Ltd. has been importing French gourmet cheeses under the
brand name of 'Fromage' since 2017. The company was amongst the
first in India to introduce innovative unbreakable cheese packaging.
Their affiliate, a French company owning Fromage, had entered into a
progressive deal, wherein products would be sourced to India via their
logistics, and all marketing expenditures would be covered by them.
However, customer management and nationwide distribution would be
taken care of by Kriti Pvt. Ltd. This required an English-speaking skilled
workforce, which has been a constant challenge for the company in
India.
The owners of Kriti Pvt. Ltd. have been regular attendees at industry-
relevant conclaves, both national and international. Leaders of the
company are passionate readers of business magazines. Following that,
it was observed that the recent sentiment of the country towards ‘Vocal
for Local’ could disrupt their French brand’s marketability. An
extraordinary meeting was set up, and the steps ahead were planned.
The outcome of the meeting was to partner with local producers of
traditional Indian cheeses in phase one of the change strategy. For this,
seven state governments were approached. The team was successful in
taking contracts from all the government departments of these seven
states and could position themselves fairly in the market. To fund this
new investment, they have planned to slowly sell off their French
business assets as well as the brand, to probable buyers.
This timely shift is proving to be a game-changer for the company, and
the leadership is quite happy with better than before earnings and a
much greater response from the customers. They find it easier to operate
with domestic producers and vendors, and a sense of patriotism is
instilled in the consumers’ minds.
Based on the above Case Scenario, answer the Multiple-Choice
Questions.
(i) Which of the following actions taken by Kriti Pvt. Ltd. is an example
of a proactive strategy?
(a) Selling off their French business assets.

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 (b) Responding to the 'Vocal for Local' sentiment by partnering
with local cheese producers.
(c) Managing customer relations and nationwide distribution.
(d) Covering all marketing expenditures for 'Fromage' in India.
(2 Marks)
(ii) Which of the following types of strategic control did the owners and
leadership of Kriti Pvt. Ltd. deploy that eventually turned out to be
one of the most effective strategic decisions for the company?
(a) Premise control
(b) Special alert control
(c) Implementation control
(d) Strategic surveillance (2 Marks)
(iii) ‘Vocal for Local’ is a market sentiment that changed customers’
preferences for the majority of products across all industries. Based
on that, Kriti Pvt. Ltd. gauged the competition it might face in the
coming months and agreed to change its own product. Which of the
following forces, as per Michael Porter’s five forces of competitive
analysis, is most relevant in this case?
(a) Threat of new entrants
(b) Nature of rivalry in the industry
(c) Threat of substitutes
(d) Bargaining power of the buyer (2 Marks)
(iv) Which of the following aspects of value chain analysis was the most
challenging for Kriti Pvt. Ltd. at the time of selling the Fromage
brand?
(a) Manufacturing
(b) Outsourcing
(c) Customer service
(d) Procurement (2 Marks)
(v) To strategically revamp their business, partnerships were done with
Indian local producers from seven states, and to fund it, the existing
arm of the business was to be sold off. Which of the following
strategies has Kriti Pvt. Ltd. opted for?
(a) Turnaround strategy
(b) Divestment strategy
(c) Liquidation strategy

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 (d) Intensification strategy (2 Marks)
(B) Compulsory Application Based Independent MCQs
(i) TechWave, a software development firm, aims to gain a
competitive edge in the rapidly evolving tech industry. To achieve
this, they focus on building their strength in artificial intelligence (AI)
and machine learning (ML). TechWave invests heavily in R&D,
hires top talent with specialized skills, and forms partnerships with
leading AI research institutions. They also provide continuous
training for their employees to keep them updated with the latest
advancements. By developing these, TechWave can create
innovative AI-driven solutions that differentiate them from
competitors and attract a growing number of clients seeking
cutting-edge technology. What strategy is TechWave using to gain
a competitive edge in the tech industry?
(a) Market segmentation
(b) Diversification
(c) Core competency building
(d) Cost leadership (2 Marks)
(ii) StreamlineCo is examining its internal capabilities to ensure that
employees possess advanced knowledge of emerging
technologies crucial for the company's future success. This
involves investing in specialized training programs and updating job
roles to match the latest industry standards. Which aspect of
StreamlineCo is being enhanced through specialized training and
updated job roles?
(a) Structure
(b) Systems
(c) Skills
(d) Style (2 Marks)
(iii) XYZ Corporation has launched AlphaTech to enter the consumer
electronics industry with a focus on offering high-performance
devices and innovative features at competitive prices. Which
competitive strategy is AlphaTech employing?
(a) Differentiation strategy
(b) Cost leadership strategy
(c) Best-cost provider strategy
(d) Focus strategy (1 Mark)

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 PART II – Descriptive Questions (35 Marks)
Question No. 1 is compulsory.
Attempt any two questions out of the remaining three questions.
1. (a) Mr. Arun has been hired as the CEO by ABC Ltd, a pharmaceutical
company that has diversified into affordable wellness supplements. The
company intends to launch the HealthPlus brand of supplements. ABC
wishes to enhance the well-being of people with its products that are
beneficial for health and are produced in an environmentally sustainable
manner using natural ingredients. Draft a vision and mission statement
that may be formulated by Arun. (5 Marks)
(b) GreenGardens, a small but growing organic farm, is assessing its
business environment to strategically plan for future growth. The farm
boasts high-quality, pesticide-free crops, but faces challenges with its
limited distribution channels. As the demand for organic products
continues to rise, GreenGardens recognizes the potential to broaden its
market reach. However, unpredictable weather conditions and
competition from larger farms present significant obstacles. To
effectively navigate these challenges and opportunities, GreenGardens
needs to conduct a comprehensive evaluation. Identify the type of
analysis GreenGardens should conduct to strategically plan for its future
growth and outline the grid. (5 Marks)
(c) FreshDelight, renowned for its organic fruit juices, aims to expand its
market presence by identifying emerging markets in countries where
organic products are gaining popularity. To achieve this, FreshDelight
launches targeted marketing campaigns and partners with local
distributors to introduce its juices to these new regions. This strategy
involves adapting product packaging and marketing messages to align
with local preferences and regulations. By entering these new markets,
FreshDelight hopes to increase its customer base and drive sales
growth. What strategy is FreshDelight using to expand its market
presence? (5 Marks)
2. (a) The CEO of a textile mill is convinced that his loss-making company can
be turned around. Suggest an action plan for a turnaround to the CEO.
(5 Marks)
(b) Write a short note on Matrix Structure. (5 Marks)
3. (a) "Understanding the competitive landscape is important to build upon a
competitive advantage". Explain. (5 Marks)

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 (b) XYZ Corporation operates in a diverse range of industries, including
fashion, lifestyle products, furniture, real estate, and electrical goods.
The company is seeking to hire a suitable Chief Executive Officer. As
the HR consultant for XYZ Corporation, you have been tasked with
outlining the activities involved in the role of the Chief Executive Officer.
Identify the strategic level associated with this role and list the activities
it encompasses. (5 Marks)
4. (a) Buyers can exert considerable pressure on business. Do you agree?
Discuss. (5 Marks)
(b) Major core competencies are identified in three areas - competitor
differentiation, customer value and application to other markets.
Discuss.
OR
What factors should organizations consider when choosing strategic
performance measures, and why are these factors important?
(5 Marks)

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 MODEL TEST PAPER 5
PAPER 6B: STRATEGIC MANAGEMENT
1. The question paper comprises two parts, Part I and Part II.
2. Part I comprises case scenario based multiple choice questions (MCQs)
3. Part II comprises questions which require descriptive type answers.
PART I – Case scenario based MCQs (15 Marks)
Question 1. (Compulsory)
1. (A) Sneha Rao, founder and CEO of DEF Technologies, is renowned for her
technological insight and visionary leadership style. She cultivates a
culture of collaboration, continuous learning, and innovative problem-
solving, encouraging her employees to think outside the box and
embrace new challenges. Her exceptional ability to foresee
technological trends and navigate complex market dynamics has
propelled DEF Technologies to impressive growth over the past decade.
Sneha started DEF Technologies in 2010 as a small software
development firm. With a vision to transform DEF Technologies into a
leading tech company, she initially focused on developing custom
software solutions for local businesses. However, intense competition
and limited market demand led to financial difficulties. Undeterred,
Sneha pivoted the business towards developing cloud-based solutions,
leveraging the growing trend of digital transformation. This strategic shift,
along with aggressive marketing, helped DEF Technologies capture a
significant market share and become a leader in cloud services, setting
new industry standards.
In 2015, Sneha's brother, Raj, joined the company, and together they
crafted an ambitious expansion strategy. DEF Technologies entered the
global market, partnering with international tech firms to launch a new
line of AI-driven cybersecurity solutions. This venture was highly
successful, establishing DEF Technologies as a global brand and a key
player in the cybersecurity industry.
Raj then led the company’s diversification into the healthcare sector with
a new brand, MedTech Solutions. Recognizing the potential for
technology to revolutionize healthcare, Sneha and Raj focused on
developing affordable telemedicine platforms and AI-driven diagnostic
tools. Their approach disrupted the market, providing high-quality
healthcare solutions at lower costs and gaining widespread trust from
healthcare providers and patients alike. MedTech Solutions experienced
rapid growth, especially during the COVID-19 pandemic, as demand for
remote healthcare services surged.
At the beginning of 2023, DEF Technologies launched another new
business, GreenTech Innovations, to address environmental challenges
through technology. DEF Technologies continues to explore new
opportunities and ventures to stay at the forefront of the tech industry.

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Based on the above Case Scenario, answer the Multiple-Choice
Questions.
(i) Sneha Rao's vision to transform DEF Technologies into a leading
tech company illustrates which type of strategic intent?
(a) Goal
(b) Mission
(c) Vision
(d) Objective (2 Marks)
(ii) Sneha’s leadership style, which promotes collaboration, continuous
learning, and innovative problem-solving, can best be described as:
(a) Transactional leadership
(b) Transformational leadership
(c) Autocratic leadership
(d) Laissez-faire leadership (2 Marks)
(iii) When DEF Technologies expanded into the global market with AI-
driven cybersecurity solutions, which of Porter's Five Forces was
most likely mitigated by forming partnerships with international tech
firms?
(a) Threat of Substitute Products or Services
(b) Bargaining Power of Suppliers
(c) Threat of New Entrants
(d) Intense Rivalry Among Existing Competitors (2 Marks)
(iv) By entering the global market and launching AI-driven
cybersecurity solutions, DEF Technologies pursued which
expansion strategy from Ansoff’s Product-Market Growth Matrix?
(a) Diversification
(b) Market Penetration
(c) Product Development
(d) Market Development (2 Marks)
(v) MedTech Solutions’ focus on developing affordable telemedicine
platforms and AI-driven diagnostic tools reflects which of the
following competitive strategies?
(a) Differentiation strategy
(b) Cost leadership strategy
(c) Best-cost provider strategy
(d) Focus Strategy (2 Marks)

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 (B) Compulsory Application Based Independent MCQs
(i) A traditional desi ghee company modernized its production and
introduced pro-biotic desi ghee, facing initial market doubts.
Aggressive marketing campaigns highlighted its benefits, gaining
acceptance. During which stage of the product life cycle did the
desi ghee company face doubts but gained acceptance through
aggressive marketing campaigns?
(a) Introduction stage
(b) Growth stage
(c) Maturity stage
(d) Decline stage (2 Marks)
(ii) ValueMart is a discount retail chain that targets budget-conscious
consumers by offering a wide range of products at the lowest
possible prices. The company achieves this by sourcing goods in
bulk, negotiating lower prices with suppliers, and maintaining lean
operations. ValueMart's goal is to dominate the market by attracting
price-sensitive customers from competitors. Which of Michael
Porter’s Generic Strategies is ValueMart primarily employing?
(a) Differentiation
(b) Focused Cost Leadership
(c) Cost Leadership
(d) Focused Differentiation (2 Marks)
(iii) A women’s clothing brand recognized new opportunities and
researched emerging trends and consumer preferences. They
introduced a new clothing line, received positive feedback from
initial trials, and grew through strategic partnerships and targeted
advertising. What strategic choice best describes this approach?
(a) Product Development
(b) Market Development
(c) Market Penetration
(d) Diversification (1 Mark)

PART II – Descriptive Questions (35 Marks)

Question No. 1 is compulsory.
Attempt any two questions out of the remaining three questions.
1. (a) TechNova, a leading software development firm known for its cutting-
edge operating systems, is developing a groundbreaking new platform.
ElectroWave, an emerging player in the electronics and hardware
industry, specializes in manufacturing advanced devices. TechNova and
ElectroWave have decided to join forces to design innovative laptops

256
 and smartphones, aiming to tap into new markets and broaden their
business horizons. What kind of external growth strategy is being
considered by TechNova and ElectroWave? (5 Marks)
(b) Vikram Patel owns a chain of ten bookstores across the Mumbai region.
Three of these stores were launched in the past two years. He has
always believed in strategic management and enjoyed robust sales of
books, magazines, and educational materials until about five years ago.
However, with the increasing preference for online shopping, the sales
at his physical stores have declined by approximately sixty percent over
the last five years. Analyze Vikram Patel's current position in light of the
limitations of strategic management. (5 Marks)
(c) Orion Tech Solutions Pvt. Ltd. is renowned for its ability to launch
groundbreaking software products. Despite the relaxed and casual work
environment at Orion, there is a strong commitment to meeting
deadlines. Employees at Orion believe in the "work hard, play hard"
ethic. The company has shifted from a formal, hierarchical structure to a
more results-oriented approach. Employees are deeply committed to the
company’s strategies and work diligently to achieve them. They
safeguard innovations and maintain strict confidentiality and secrecy in
their operations. Their work culture is closely aligned with the
organization's values, practices, and norms. What aspects of an
organization are being discussed? Explain. (5 Marks)
2. (a) Analyze the role of Key Success Factors (KSFs) in determining
competitive success within an industry. (5 Marks)
(b) What are distribution channels, and why is analyzing them crucial for
business expansion? Describe the three main types of channels
explaining their roles in ensuring products reach customers efficiently
and with the necessary support. (5 Marks)
3. (a) What is a strategic vision, and what are the essential components that
make it an effective tool for guiding an organization's future? (5 Marks)
(b) Which strategy is implemented by redefining the business, by enlarging
its scope of business and substantially increasing investment in the
business? Explain the major reasons for adopting this strategy.(5 Marks)
4. (a) Describe the principal aspects of strategy-execution process, which are
included in most situations. (5 Marks)
(b) How does the PESTLE framework assist in analyzing the macro-
environment?
OR
A manufacturing company is in direct competition with fifteen companies
at the national level. The head of marketing department of this company
wishes to study the market position of rival companies by grouping them
into like positions. Name the tool that may be used by him/her. Explain
the procedure that may be used to implement the techniques. (5 Marks)

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 MODEL TEST PAPER 6
PAPER 6B: STRATEGIC MANAGEMENT
1. The question paper comprises two parts, Part I and Part II.
2. Part I comprises case scenario based multiple choice questions (MCQs)
3. Part II comprises questions which require descriptive type answers.
PART I – Case scenario based MCQs (15 Marks)
Question 1. (A) (Compulsory)
1. (A) EcoForge, a startup specializing in eco-friendly building materials crafted
from agricultural waste, entered the highly competitive manufacturing
industry with a vision of promoting sustainability. Despite its innovative
approach, the company faced significant challenges as a new entrant,
including high production costs, limited market visibility, regulatory
hurdles, and fierce competition from established players. However,
through strategic planning and effective execution, EcoForge
successfully navigated these obstacles and positioned itself for
sustainable growth.
The company’s leadership recognized the importance of understanding
its internal strengths and weaknesses, along with external opportunities
and threats. This analysis revealed EcoForge’s core advantage in
sustainability and innovation, contrasted with scalability issues and
market pressure from cheaper alternatives. Additionally, market analysis
uncovered the potential of urban housing projects as an opportunity,
while intense competition posed a significant threat.
EcoForge’s leadership focused on creating unique value propositions by
emphasizing its eco-friendly materials. This differentiation helped the
company appeal to environmentally conscious builders and developers.
To expand its market reach, EcoForge adopted strategies to deepen its
presence in existing markets and explore new ones. Concurrently, it
analyzed the industry landscape and identified the critical influence of
regulatory policies and socio-cultural factors shaping consumer
preferences.
Internally, EcoForge implemented structural and cultural changes to
enhance its operational efficiency and responsiveness. By adopting a
Strategic Business Unit (SBU) model, the company streamlined its
decision-making process, allowing each product line to adapt quickly to
market demands.
Recognizing the need for collaborative leadership, EcoForge’s CEO,
Ms. Aarti Mehra, invested in leadership training programs for senior
managers. This shifted the company’s culture from hierarchical to team-
driven, encouraging innovation and cross-functional collaboration.
To enhance its competitiveness, EcoForge optimized its production and
supply chain processes by addressing inefficiencies and partnering with
technology providers. These efforts significantly reduced costs and

258
improved product quality. Simultaneously, the company pursued green
certifications and localized marketing efforts to build brand recognition,
attracting environmentally conscious clients. Over three years, these
initiatives enabled EcoForge to expand into new markets, secure
partnerships with leading developers, and increase its revenue by 40%.
By integrating market analysis, operational improvements, and a focus
on cost efficiency, EcoForge transitioned from a struggling startup to a
leader in sustainable building materials, setting a benchmark for
innovation and environmental stewardship in the industry.
Based on the above Case Scenario, answer the Multiple-Choice
Questions.
(i) The SBU model adopted by EcoForge is an example of strategic
decision-making at which level?
(a) Corporate Level
(b) Business Level
(c) Functional Level
(d) Operational Level (2 Marks)
(ii) EcoForge’s strategy of appealing to environmentally conscious
builders and developers by emphasizing its eco-friendly materials
is an example of which type of generic strategy by Michael Porter?
(a) Cost Leadership
(b) Differentiation
(c) Focussed Cost Leadership
(d) Focussed Differentiation (2 Marks)
(iii) The case mentions EcoForge identifying “critical influence of
regulatory policies and socio-cultural factors shaping consumer
preferences.” Which strategic analysis framework is most relevant
here?
(a) SWOT Analysis
(b) Value Chain Analysis
(c) PESTLE Analysis
(d) Ansoff’s Matrix (2 Marks)
(iv) EcoForge’s strategy to deepen its presence in existing markets and
explore new ones corresponds to which growth strategy in Ansoff’s
Matrix?
(a) Market Penetration
(b) Market Development
(c) Product Development
(d) Diversification (2 Marks)

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 (v) Which key industry force, as per Porter’s Five Forces, is reflected
in EcoForge’s challenges from cheaper alternatives and intense
competition?
(a) Threat of New Entrants
(b) Bargaining Power of Suppliers
(c) Bargaining Power of Buyers
(d) Threat of Substitutes (2 Marks)
(B) Compulsory Application Based Independent MCQs
(i) The CEO of GoFlyHigh Airlines has built a high-performance team
over five years by closely monitoring performance metrics, setting
clear expectations, and motivating employees through rewards and
structured improvement plans. Her disciplined and results-focused
approach has driven organizational success by fostering
accountability and maintaining high standards. This leadership
style emphasizes achieving defined goals through a structured
framework, balancing performance recognition with corrective
measures for sustained excellence. What strategic leadership style
does the CEO exhibit?
(a) Entrepreneur Leadership
(b) Transformational Leadership
(c) Transactional Leadership
(d) Intrapreneur Leadership (2 Marks)
(ii) UN&T reached out to Mukesh S, an entrepreneur from India to get
his team to work on a mega solar energy project and enter India’s
deccan plateau which enjoys an abundance of sunshine. What
strategy is UN&T trying to implement?
(a) Market Penetration
(b) Market Development
(c) Strategic Alliance
(d) Diversification (2 Marks)
(iii) Urbankey has a unique capability in rapid prototyping, allowing
them to bring new products to market faster than the competitors.
Such an advantage can be termed as?
(a) Market Expansion Strategy
(b) Core Competency
(c) Cost Leadership Strategy
(d) Appropriate SWOT Analysis (1 Mark)

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 PART II – Descriptive Questions (35 Marks)
Question No. 1 is compulsory.
Attempt any two questions out of the remaining three questions.
1. (a) Chic Threads, a boutique fashion brand renowned for its commitment to
sustainability and ethical practices, has recently launched a new line of
eco-friendly clothing made from recycled materials. The brand
recognizes the growing influence of environmentally conscious
consumers who actively shape industry standards through their
advocacy and purchasing decisions. These consumers align with Chic
Threads' values and have a significant impact on its market position and
reputation. How should Chic Threads effectively manage its relationship
with environmentally conscious consumers, considering their high power
and high interest in shaping the brand's success? (5 Marks)
(b) You are a strategic manager for a tech company launching a new
smartphone model. The company wants to target tech-savvy consumers
who value innovation and cutting-edge technology. Using the concept of
customer behavior, develop a marketing strategy to promote the new
smartphone. (5 Marks)
(c) GreenEdge Solutions, a mid-sized technology company, has
implemented a new strategic plan focused on achieving sustainable
growth and strengthening its market presence. The leadership team is
determined to monitor the effectiveness of their strategies to ensure they
align with the organization’s overall goals and objectives. They seek a
systematic approach to assess key performance areas critical to their
success. What are Strategic Performance Measures (SPM), and how
can GreenEdge Solutions effectively use them to evaluate and enhance
the success of their strategic plan? (5 Marks)
2. (a) Connect Group was one of the leading makers of the mobile handsets
till a few years ago and which went at the bottom of the heap. Connect
Group didn't adapt to the current market trends, which eventually led to
its downfall. Which would have helped Connect Group to change, adapt
and survive? Explain the steps to initiate the change. (5 Marks)
(b) Define strategic management. Also discuss the limitations of strategic
management. (5 Marks)
3. (a) Easy Access is a marketing services company providing consultancy to
a range of business clients. Easy Access and its rivals have managed to
persuade the Government to require all marketing services companies
to complete a time-consuming and bureaucratic registration process and
to comply with an industry code of conduct. Do you think that by doing
this Easy Access and its rivals has an advantage in some ways to fight
off competitors? Explain. (5 Marks)
(b) Explain in brief the various basis of differentiation strategies. (5 Marks)

261
4. (a) Leatherite Ltd. was started as a leather company to manufacture
footwear. Currently, they are in the manufacturing of footwears for males
and females. The top management desires to expand the business in
leather manufacturing goods. To expand they decided to purchase more
machines to manufacture leather bags for males and females. Identify
and explain the strategy opted by the top management of Leatherite Ltd.
(5 Marks)
(b) Major core competencies are identified in three areas - competitor
differentiation, customer value and application to other markets.
Discuss.
OR
Differentiation between Strategic Planning and Operational Planning.
(5 Marks)

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 MODEL TEST PAPER 7
PAPER 6B: STRATEGIC MANAGEMENT
1. The question paper comprises two parts, Part I and Part II.
2. Part I comprises case scenario based multiple choice questions (MCQs)
3. Part II comprises questions which require descriptive type answers.

PART I – Case scenario based MCQs (15 Marks)

Question 1. (A) (Compulsory)

1. (A) Galaxy Enterprises Limited (GEL) operates as a diversified

conglomerate with a significant presence in various industries, including
electronics, packaged foods, textiles, heavy machinery, and renewable
energy. Leveraging its substantial free reserves of ₹85,000 crores, GEL
has built a strong brand reputation, largely driven by its market
leadership across multiple sectors.
In the renewable energy sector, GEL has been the industry leader for
over 15 years. The division’s recent performance has been exceptional.
A significant market development occurred when two competitors, Nova
Green Energy Limited and Zenith Solar Limited – previously ranked
second and third in market share, respectively – merged to create a new
entity, Synergy Renewables Ltd (SRL). Following the merger, SRL has
claimed the top spot in market share, intensifying competition.
Against this backdrop, the Chairman of GEL convened a strategic
meeting with the Board of Directors, divisional heads, marketing
executives, and the Group CFO. The meeting focused on formulating
growth strategies for the renewable energy division, identifying
opportunities for diversification, and announcing an interim dividend in
honour of GEL’s platinum jubilee celebrations.
Mr. Arvind Malhotra, CEO of the renewable energy division, emphasized
the industry's slow pace of modernization compared to global standards.
He highlighted the potential in emerging product categories, such as
next-generation solar panels, energy storage systems, and advanced
wind turbines. He proposed a modernization initiative requiring an
investment of ₹7,000 crores. This transformation is projected to reduce
operational costs by 20% and minimize wastage by 12%.
The CFO presented an analysis revealing that competitors are unlikely
to invest in significant upgrades or expansions for the next 6–8 years
due to financial constraints. In response, the Board approved the
modernization initiative and allocated an additional ₹1,500 crores to
strengthen the division's supply chain.
Another proposal discussed was GEL’s entry into the electric vehicle
(EV) segment. The Board approved this diversification strategy,
allocating ₹8,000 crores to establish a foothold in this rapidly growing

263
 market. Additionally, the Board authorized the distribution of an interim
dividend of ₹75 per share to commemorate GEL’s platinum jubilee.
In preparing for these strategic initiatives, the Board also evaluated key
stakeholders to determine their influence and interest. Shareholders and
the Board of Directors emerged as primary stakeholders with both high
influence and interest, necessitating active engagement to secure their
support. Regulatory authorities were recognized as influential but less
interested in the immediate plans, requiring regular updates to ensure
compliance. Customers and employees, while not as powerful, were
identified as highly interested stakeholders, particularly concerning the
renewable energy division’s modernization and the entry into the EV
market.
Based on the above Case Scenario, answer the Multiple-Choice Questions.
(i) GEL has approved significant investments in modernizing its renewable
energy division and entering the electric vehicle segment. Analyze the level
of strategy these decisions represent and identify the correct justification for
your answer.
(a) Functional level, as these are related to operational improvements within
the renewable energy division.
(b) Business level, as these initiatives align with the goals of a single division
to gain a competitive edge.
(c) Corporate level, as they involve decisions impacting the overall portfolio
and diversification of GEL.
(d) Operational level, as these focus on day-to-day activities within the
divisions. (2 Marks)
(ii) With the merger of Nova Green Energy Limited and Zenith Solar Limited into
Synergy Renewables Ltd (SRL), how does this development influence GEL’s
strategic priorities in the renewable energy sector under Porter’s Five Forces
framework?
(a) The merger reduces the threat of substitutes by consolidating competing
technologies.
(b) It increases the bargaining power of buyers by providing them with a
stronger alternative supplier.
(c) It heightens the intensity of industry rivalry by creating a stronger
competitor with greater market share.
(d) The merger strengthens the bargaining power of suppliers due to greater
reliance on key inputs. (2 Marks)
(iii) GEL’s decision to enter the EV market represents a diversification strategy.
Evaluate which type of diversification strategy is being pursued and the
reasoning behind this classification.
(a) Concentric diversification, as the EV market shares synergies with
renewable energy technologies.

264
 (b) Vertical integration, as GEL seeks to integrate upstream or downstream
activities in the automotive value chain.
(c) Horizontal diversification, as GEL expands into a market unrelated to its
existing renewable energy operations.
(d) Conglomerate diversification, as GEL enters an entirely unrelated and
independent business segment. (2 Marks)
(iv) GEL identified shareholders and the Board of Directors as key stakeholders.
Analyze the rationale for classifying them as both high influence and high
interest and how this influences strategic communication.
(a) They directly impact compliance with regulatory standards, necessitating
regular updates.
(b) Their vested interest in dividends and long-term value creation makes
their engagement essential for approval of key initiatives.
(c) They represent the end consumers whose perceptions directly influence
GEL’s market reputation.
(d) Their role in operational execution requires constant communication and
support for strategy implementation. (2 Marks)
(v) By approving modernization in renewable energy and diversification into EVs,
what corporate strategy is GEL pursuing, and how does it position the
company as per Ansoff’s product market growth matrix?
(a) Cost leadership, to lower operational expenses and offer competitive
pricing.
(b) Product differentiation, by leveraging innovation in both existing and new
markets.
(c) Market penetration, through deeper investments in existing product
lines.
(d) Market expansion and diversification, to capture growth opportunities
across unrelated industries. (2 Marks)
(B) Compulsory Application Based Independent MCQs
(i) Harish, a middle manager, is confused about the difference between flexibility
and resilience while working around an uncertain situation in the organization.
Can you help find the right difference between the two?
(a) Flexibility is about adapting to new things quickly, while resilience is
about holding on to the current position of the things for the short-term
as the organisation is confident of its efficiencies.
(b) Flexibility is a subset of resilience, and to be flexible means to be
resilient.
(c) Flexibility is the opposite of resilience, where, if the organisation is
flexible, it changes and if it is resilient it doesn’t change at all.
(d) Both are the same. (2 Marks)

265
(ii) Suman, the marketing head of Jalwa Music Co., was doing research on the
online music streaming business in India for her new age music for
youngsters. She analyzed that though the players in the market were
innovating rapidly, it was difficult to maintain a sustainable competitive
advantage. Which aspect of strategic management best reflects this
challenge?
(a) The need for continuous innovation.
(b) The importance of understanding the competitive landscape.
(c) The dynamic and unpredictable nature of the industry.
(d) The difficulty in estimating competitors' responses. (2 Marks)
(iii) During which stage of the Product Life Cycle would you typically expect the
highest marketing expenditure per unit sold as companies aggressively
promote their product?
(a) Maturity
(b) Introduction
(c) Growth
(d) Decline (1 Mark)

PART II – Descriptive Questions (35 Marks)

Question No. 1 is compulsory.
Attempt any two questions out of the remaining three questions.
1. (a) Jupiter Electronics Ltd. is known for its ability to come out with path-
breaking products. Though the work environment at Jupiters is relaxed
and casual, there is a very strong commitment to deadlines. The
employees believe in a “work hard play hard" ethic. The organisation has
moved away from formal and hierarchical set up to a more results-driven
approach. Employees are committed to strategies and work towards
achieving them. They guard innovations, maintain confidentiality and
secrecy in their work. They are closely related to values, practices, and
norms of organisations. What aspects of an organization are being
discussed? Explain. (5 Marks)
(b) Reshuffle Corp is a company that manufactures and sells office furniture.
They offer a range of products, from desks and chairs to cabinets and
shelves. Recently, the company has been facing increased competition
from online retailers offering similar products at lower prices.
Analyzing the characteristics of products in the furniture industry,
discuss how Reshuffle Corp can differentiate its products to maintain a
competitive edge in the market. (5 Marks)
(c) A business consultancy firm focuses on providing specialized services
in environmental management consultancy. It assists client companies
in establishing robust environmental management accounting systems

266
 for the measurement, recording, and analysis of environmental costs. A
significant portion of the firm’s operations involve conducting
environmental audits to verify compliance with international assurance
standards in environmental management—an exclusive service not
offered by its competitors. While the firm also undertakes other
management consultancy projects, these constitute only a minor share
of its total annual revenue. Identify the strategy categories by Michael
Porter which best describes the strategy of this firm. (5 Marks)
2. (a) Analyze the role of Key Success Factors (KSFs) in determining
competitive success within an industry. (5 Marks)
(b) How the 'Strategic Business Unit’ (SBU), structure becomes imperative
in an organization with increase in number, size and diversity of
divisions? (5 Marks)
3. (a) Rohit Patel has a small chemist shop in the central part of Ahmedabad.
What kind of competencies Rohit can build to gain competitive
advantage over online medicine sellers? (5 Marks)
(b) Distinguish between Vision and Mission. (5 Marks)
4. (a) Vikram Patel owns a chain of ten bookstores across the Mumbai region.
Three of these stores were launched in the past two years. He has
always believed in strategic management and enjoyed robust sales of
books, magazines, and educational materials until about five years ago.
However, with the increasing preference for online shopping, the sales
at his physical stores have declined by approximately sixty percent over
the last five years. Analyze Vikram Patel's current position in light of the
limitations of strategic management. (5 Marks)
(b) Explain the strategic implications of each of the following types of
business in a corporate portfolio:
(a) Stars (b) Question Marks (c) Cash Cows (d) Dogs
OR
Strategic alliances are formed if they provide an advantage to all the
parties in the alliance. Do you agree? Explain in brief the advantages of
a strategic alliance. (5 Marks)

267
 MODEL TEST PAPER 8
PAPER 6B: STRATEGIC MANAGEMENT
1. The question paper comprises two parts, Part I and Part II.
2. Part I comprises case scenario based multiple choice questions (MCQs)
3. Part II comprises questions which require descriptive type answers.
PART I – Case scenario based MCQs (15 Marks)
Question 1. (A) (Compulsory)
1. (A) Once upon a time in the land of sun, sand, and vibrant cultures, there
existed a company named "MuseoGoa" - a company that managed
museums in the beautiful state of Goa. MuseoGoa had a vision to
celebrate the rich history and culture of Goa, but their journey was not
without its fair share of challenges.
MuseoGoa had chosen a picturesque location in a quaint village to build
their first museum. However, this initial enthusiasm was met with an
uproar from the local communities. The villagers were concerned about
the impact on their way of life and traditions. They worried that the influx
of tourists might disrupt their peaceful existence.
To address this challenge, MuseoGoa applied Mendelow's matrix,
identifying the local communities as key stakeholders. They decided to
engage in open dialogues, understanding and respecting the villagers'
concerns. MuseoGoa initiated community-building activities, such as
involving locals in museum operations, supporting local artisans, and
organizing cultural events that showcased the village's heritage. Slowly
but steadily, the company transformed from being perceived as a threat
to a valued partner within the community.
While MuseoGoa had successfully resolved their initial issues with the
local community, they faced another challenge. Their location, although
idyllic, was a bit off the beaten path. Tourists typically preferred the
bustling beaches closer to the city, and this posed a real challenge.
MuseoGoa decided to employ a pricing strategy. They priced their tickets
affordably, significantly cheaper than the city's attractions. This strategy
attracted budget-conscious tourists who were looking for unique
experiences in Goa without burning a hole in their pockets. As word
spread about the cultural gem tucked away in the village, visitors started
flocking in, drawn not just by the museum's charm but also the
economical ticket prices.
In the age of social media, MuseoGoa knew that word-of-mouth was no
longer limited to whispers. They tapped into the power of social media
to promote their unique museum experience. MuseoGoa ran interactive
campaigns, encouraging visitors to share their experiences on various
platforms. One particular Instagram post featuring a vibrant Goan mural
in the museum went viral. This was the turning point. The picture-perfect
aesthetics of the museum attracted influencers, bloggers, and travel
enthusiasts, making MuseoGoa a social media sensation. Visitors came
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pouring in, not just from India but from across the globe, eager to capture
their own moments at the "Instagrammable Museum of Goa."
With success came ambition. MuseoGoa decided to expand its footprint
beyond Goa. To guide this expansion, they conducted a strategy audit
and trend analysis. They identified emerging cultural and tourism trends
and found potential markets in Pune and Trivandrum.
In Pune, MuseoGoa curated a special exhibition that celebrated the
fusion of Goan and Maharashtrian cultures. They strategically partnered
with local influencers and travel agencies to market the new experience.
The expansion into Pune was met with resounding success.
For Trivandrum, MuseoGoa recognized the importance of local traditions
and the distinct flavor of Kerala. They tailored their offerings to
harmonize with the regional culture. MuseoGoa became the gateway for
tourists to explore Kerala's rich heritage, with the museum acting as a
bridge between Goa and Kerala's cultural tapestry.
MuseoGoa's journey from initial uproar to expansion was a testament to
their commitment to community building, strategic pricing, social media
savvy, and a keen eye for trends. The company continued to flourish,
celebrating the diverse cultural tapestry of India and making history
come alive in every location they touched.
Based on the above Case Scenario, answer the Multiple Choice
Questions.
(i) Which strategic management concept did MuseoGoa use to
address the initial concerns of the local community?
(a) SWOT analysis
(b) Mendelow's matrix
(c) Cost leadership strategy
(d) Porter's Five Forces model (2 Marks)
(ii) MuseoGoa's idyllic location in a quaint village posed a challenge as
tourists preferred beaches closer to the city. To attract visitors,
MuseoGoa priced their tickets affordably, cheaper than city
attractions, drawing budget-conscious tourists looking for unique
experiences. What business strategy did MuseoGoa employ to
attract more tourists?
(a) Cost leadership strategy
(b) Differentiation strategy
(c) Focus strategy
(d) Diversification strategy (2 Marks)
(iii) How did MuseoGoa approach its expansion into new markets such
as Pune and Trivandrum?
(a) Outsourcing strategy
(b) Franchising strategy
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 (c) Product diversification strategy
(d) Market development strategy (2 Marks)
(iv) Which element of the 7S McKinsey model is demonstrated by
MuseoGoa's strategic use of social media and pricing strategies to
attract visitors?
(a) Style
(b) Strategy
(c) Shared Values
(d) Skills (2 Marks)
(v) What played a crucial role in MuseoGoa's success in Pune and
Trivandrum?
(a) Strategic partnerships
(b) Aggressive advertising
(c) Product differentiation
(d) Vertical integration (2 Marks)
(B) Compulsory Application Based Independent MCQs
(i) Jaago Lights, a successful brand from Jalandhar, aimed to enter
the Middle East market by teaming up with major industry players.
They needed to reorganize internal operations and refine product
designs, facing pressure to expand quickly and turbulence in
existing operations. What is the primary limitation of strategic
management highlighted in the business case?
(a) Lack of senior management support
(b) Time-consuming and complex nature
(c) Inability to adapt to market changes
(d) Excessive focus on short-term goals (2 Marks)
(ii) A traditional desi ghee company modernized its production and
introduced pro-biotic desi ghee, facing initial market doubts.
Aggressive marketing campaigns highlighted its benefits, gaining
acceptance. During which stage of the product life cycle did the
desi ghee company face doubts but gained acceptance through
aggressive marketing campaigns?
(a) Introduction stage
(b) Growth stage
(c) Maturity stage
(d) Decline stage (2 Marks)
(iii) Alpha Corp is undergoing a shift to foster a culture that encourages
innovative thinking and team collaboration. To achieve this, the
company is focusing on how leaders interact with their teams and

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 set examples for behavior, aiming to align leadership practices with
desired cultural outcomes. Which aspect of AlphaCorp is being
adjusted to foster a culture of innovation and collaboration?
(a) Structure
(b) Systems
(c) Skills
(d) Style (1 Mark)

PART II – Descriptive Questions (35 Marks)

Question No. 1 is compulsory.
Attempt any two questions out of the remaining three questions.
1. (a) Tech Innovators Inc., a rapidly expanding technology company, aims to
lead in artificial intelligence (AI) and machine learning (ML). With recent
growth, the company is evaluating which organizational structure will
best support its vision for innovation and leadership in AI technologies.
They are considering three options: the Functional and Divisional
Relationship for specialization, the Horizontal Relationship for flat,
collaborative management, and the Matrix Relationship for cross-
functional teams. Which of these relationships—Functional and
Divisional, Horizontal, or Matrix—will most effectively achieve Tech
Innovators Inc.’s strategic goals, and why? (5 Marks)
(b) Rajiv Arya owns an electrical appliance company specializing in the
manufacture of domestic vacuum cleaners. The market is competitive,
with four other manufacturers offering similar products and achieving
comparable sales volumes. Additionally, these rival firms hold several
patents related to the vacuum cleaner technology. The supplier base for
raw materials is extensive, with multiple suppliers available. Identify and
explain the significant forces from Porter’s Five Forces framework that
are relevant to Rajiv Arya’s company. (5 Marks)
(c) A Mumbai-based conglomerate, PQR Ltd., has announced a major
restructuring of its business operations. The company has decided to
split its business into four separate units: Manufacturing, Retail,
Services, and Technology. Each unit will operate as a separate
business, with delegated responsibility for day-to-day operations and
strategy to the respective unit managers. Identify the organization
structure that PQR Ltd. has planned to implement. Discuss any four
attributes and the benefits the firm may derive by using this organization
structure. (5 Marks)
2. (a) Strategic management helps an organization to work through changes
in the environment to gain competitive advantage. In light of statement
discuss its benefits. (5 Marks)

271
 (b) A company has recently launched a new product in the market. Initially,
it faced slow sales growth, limited markets, and high prices. However,
over time, the demand for the product expanded rapidly, prices fell, and
competition increased. Identify the stages of the product life cycle (PLC)
that the company went through. (5 Marks)
3. (a) What do you understand by Strategic Alliance? Discuss its advantages.
(5 Marks)
(b) Why Strategic Performance Measures are essential for organizations?
(5 Marks)
4. (a) Distinguish between Concentric Diversification and Conglomerate
Diversification. (5 Marks)
(b) What are channels? Why is channel analysis important? Explain the
different types of channels?
OR
How can Mendelow's Matrix be used to analyze and manage the
stakeholders effectively? (5 Marks)

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 ANSWERS OF MODEL TEST PAPER 1
PAPER 6B: STRATEGIC MANAGEMENT
PART I

1. (A) (i) (a) (ii) (b) (iii) (c) (iv) (b) (v) (c)
(B) (i) (c) (ii) (b) (iii) (b)

PART II
1. (a) Swati operates at the functional level of management, specifically as the
marketing manager at a software company. Functional managers like
Swati oversee specific departments or functions within an organization,
such as marketing, finance, or operations. Their primary responsibilities
include implementing corporate strategies and policies within their area
of expertise and ensuring that daily operations are conducted efficiently
and effectively.
In Swati's case, as a marketing manager, her role involves developing
and executing marketing strategies for the company's products. This
includes leading a team of marketing professionals, collaborating with
product development and sales teams, and analyzing market trends and
customer feedback to refine strategies. By working closely with these
teams, Swati ensures that the company's products are effectively
promoted in the market and that marketing efforts align with overall
business goals.
Functional managers like Swati play a critical role in the organization by
bridging the gap between corporate strategy and daily operations. They
are responsible for translating high-level strategic goals into actionable
plans for their departments and ensuring that these plans are executed
effectively. Additionally, they are often key decision-makers within their
areas of responsibility, making strategic choices that impact on the
company's success. Overall, Swati's role as a marketing manager
exemplifies the importance of functional managers in driving the success
of their organizations.
(b) The PESTLE framework can help ABC Corp assess the external factors
affecting its decision to expand into a new country by considering the
following aspects:
• Political Factors: These include the stability of the government,
government policies on foreign investment, trade agreements, and
regulatory frameworks. By analyzing these factors, ABC Corp can
assess the political risks associated with entering the new market.
• Economic Factors: Economic factors such as GDP growth rate,
inflation rate, exchange rates, and economic stability can impact ABC
Corp's decision. By analyzing these factors, the company can

583
 understand the economic environment of the new market and its
potential impact on business operations.
• Social Factors: Social factors such as cultural norms,
demographics, and lifestyle trends can influence consumer behavior
and demand for ABC Corp's products. Understanding these factors
can help the company tailor its marketing strategies to the new
market.
• Technological Factors: Technological factors such as
infrastructure, technological advancements, and the level of
technology adoption in the new market can impact ABC Corp's
operations. By assessing these factors, the company can determine
the technological requirements for entering the new market.
• Legal Factors: Legal factors such as laws and regulations related to
foreign investment, intellectual property rights, and labor laws can
impact ABC Corp's decision. By analyzing these factors, the company
can ensure compliance with legal requirements in the new market.
• Environmental Factors: Environmental factors such as climate
change, environmental regulations, and sustainability practices can
impact ABC Corp's operations and reputation. By considering these
factors, the company can assess the environmental risks and
opportunities in the new market.
Overall, the PESTLE framework can provide ABC Corp with a
comprehensive analysis of the external factors that could impact its
decision to expand into a new country, helping the company make
informed and strategic decisions.
(c) To help the small manufacturing company navigate its digital
transformation successfully, we would recommend the following
strategy:
1. Begin at the top: The leadership team should be united and
committed to the digital transformation. They should communicate a
clear vision for the future of the company and lead by example.
2. Ensure that the change is necessary and desired: Before
implementing any changes, the company should assess its current
state and identify areas where digital transformation can add value.
It's important to involve employees in this process to ensure their buy-
in.
3. Reduce disruption: Employee perceptions of change can vary, so
it's important to minimize disruption. This can be done by
communicating early and often about the changes, providing training
and support for employees, and empowering change agents within
the organization.

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 4. Encourage communication: Create channels for employees to ask
questions and provide feedback. Encourage collaboration between
departments to share ideas and innovations. Effective communication
can help alleviate fears and keep everyone aligned.
5. Recognize that change is the norm: Digital transformation is not a
one-time project but an ongoing process. The company should be
prepared to adapt to new technologies and market conditions
continuously.
By following these best practices, the small manufacturing company can
successfully navigate its digital transformation and position itself for
future growth and success.
2. (a) The retail company can develop a strategic approach that is both
proactive and reactive to address the challenge of increasing
competition from online retailers. To achieve this, the company can:
• Proactive Strategy: The company can proactively analyze market
trends and customer preferences to identify opportunities for growth.
For example, it can invest in market research to understand what
customers value in a retail experience and tailor its offerings to meet
those needs. This proactive approach can help the company stay
ahead of competitors and attract new customers.
• Reactive Strategy: In addition to proactive measures, the company
should also be prepared to react to changes in the market
environment. For example, if a competitor launches a new online
shopping platform, the company should quickly assess the impact on
its business and develop a response. This reactive strategy can help
the company adapt to changing market conditions and maintain its
competitiveness.
By combining proactive and reactive strategies, the retail company can
develop a comprehensive approach to addressing the challenge of
increasing competition from online retailers. This approach will allow the
company to capitalize on opportunities for growth while also mitigating
risks and responding to threats in the market.
(b) To target tech-savvy consumers for the new smartphone model, the tech
company can develop a marketing strategy based on customer behavior.
Consumer behaviour may be influenced by a number of things. These
elements can be categorised into the following conceptual domains:
• External Influences: Utilize online platforms and tech forums to
generate buzz around the new smartphone. Partner with tech
influencers and bloggers to review the product and create awareness
among tech-savvy consumers.
• Internal Influences: Appeal to the desire for innovation and
advanced features among tech-savvy consumers. Highlight the

585
 unique selling points of the new smartphone, such as its cutting-edge
technology, performance, and design.
• Decision Making: Recognize that tech-savvy consumers are early
adopters who value functionality and performance. Provide detailed
specifications and comparisons with other smartphones to help them
make an informed decision.
• Post-decision Processes: Offer excellent customer service and
support to address any technical issues or concerns. Encourage
customers to provide feedback and reviews to build credibility and
trust among tech-savvy consumers.

External Factors
Market Stimuli
Environmental
Factors Purchase and
Decision Post Purchase
Making Actions

Internal Factors

Figure: Process of consumer behaviour

By understanding the behavior of tech-savvy consumers and aligning the
marketing strategy with their preferences, the tech company can
effectively promote the new smartphone and attract this demographic.
3. (a) To study the market position of rival companies in the energy drink
segment, the strategic manager can use strategic group mapping. This
tool helps identify strategic groups, which consist of rival firms with
similar competitive approaches and positions in the market. The
procedure for implementing strategic group mapping effectively is as
follows:
1. Identify the competitive characteristics that differentiate firms in
the industry typical variables that are price/quality range (high,
medium, low); geographic coverage (local, regional, national,
global); degree of vertical integration (none, partial, full); product-
line breadth (wide, narrow); use of distribution channels (one,
some, all); and degree of service offered (no-frills, limited, full).
2. Plot the firms on a two-variable map using pairs of these
differentiating characteristics.

586
 3. Assign firms that fall in about the same strategy space to the
same strategic group.
4. Draw circles around each strategic group making the circles
proportional to the size of the group's respective share of total
industry sales revenues.
By following these steps, the strategic manager can gain valuable
insights into the competitive landscape of the energy drink segment and
identify potential positioning strategies for the new line of energy drinks
targeted at health-conscious consumers.
(b) A workable action plan for turnaround of the textile mill would involve:
• Stage One – Assessment of current problems: In the first step,
assess the current problems and get to the root causes and the
extent of damage.
• Stage Two – Analyze the situation and develop a strategic
plan: Identify major problems and opportunities, develop a
strategic plan with specific goals and detailed functional actions
after analyzing strengths and weaknesses in the areas of
competitive position.
• Stage Three – Implementing an emergency action plan: If the
organization is in a critical stage, an appropriate action plan must
be developed to stop the bleeding and enable the organization to
survive.
• Stage Four – Restructuring the business: If the core business is
irreparably damaged, then the outlook for the entire organization
may be bleak. Efforts to be made to position the organization for
rapid improvement.
• Stage Five – Returning to normal: In the final stage of turnaround
strategy process, the organization should begin to show signs of
profitability, return on investments and enhancing economic value-
added.
4. (a) Strategic performance measures are essential for organizations for
several reasons:
♦ Goal Alignment: Strategic performance measures help
organizations align their strategies with their goals and objectives,
ensuring that they are on track to achieve their desired outcomes.
♦ Resource Allocation: Strategic performance measures provide
organizations with the information they need to make informed
decisions about resource allocation, enabling them to prioritize their

587
 efforts and allocate resources to the areas that will have the greatest
impact on their performance.
♦ Continuous Improvement: Strategic performance measures
provide organizations with a framework for continuous
improvement, enabling them to track their progress and make
adjustments to improve their performance over time.
♦ External Accountability: Strategic performance measures help
organizations demonstrate accountability to stakeholders, including
shareholders, customers, and regulatory bodies, by providing a
clear and transparent picture of their performance.
(b) Mendelow's Matrix can be used effectively to analyze and manage
stakeholders through a grid-based approach by the following steps:
1. Identify Stakeholders: Begin by identifying all relevant
stakeholders for your project or organization. This includes
individuals, groups, or organizations that may be impacted by or
have an impact on your activities.
2. Assess Power and Interest: For each stakeholder, assess their
power to influence your project or organization and their level of
interest in its success. Power can be assessed based on factors
such as authority, resources, and expertise, while interest can be
gauged by their level of involvement, expectations, and potential
benefits or risks.
3. Plot Stakeholders on the Grid: Create a grid with Power on one
axis and Interest on the other. Plot each stakeholder on the grid
based on your assessment. Stakeholders with high power and high
interest are placed in the "Key Players" quadrant, those with high
power but low interest are in the "Keep Satisfied" quadrant, those
with low power but high interest are in the "Keep Informed"
quadrant, and those with low power and low interest are in the "Low
Priority" quadrant.

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 KEEP KEY PLAYER

High
Manage Closely
SATISFIED Involve in decision making
Consult often Engage regularly and
Increase their interest build strong relationship
Can be hindrance to new
Power / Influence ideas or strategic choices

LOW KEEP
PRIORITY INFORMED
Monitor only, Utilise the high interest by
no engagement engaging in decisions
General occasional Consult in their areas of
communication expertise and interest

Low Interest in the Organisation High

w
4. Develop Strategies for each Quadrant: Based on the placement
of stakeholders in the grid, develop specific strategies for managing
each quadrant:
• Key Players: Fully engage with these stakeholders, seek
their input, and keep them informed. They are crucial for the
success of your project, so their needs and expectations
should be a top priority.
• Keep Satisfied: These stakeholders have significant power
but may not be as interested in your project. Keep them
satisfied by providing regular updates and addressing any
concerns they may have to prevent them from becoming
detractors.
• Keep Informed: While these stakeholders may not have
much power, they are highly interested in your project. Keep
them informed to ensure they remain supportive and to
leverage their insights and feedback.
• Low Priority: These stakeholders have low power and
interest. Monitor them for any changes but allocate minimal
resources to managing their expectations.
5. Monitor and Adapt: Continuously monitor the power and interest
of stakeholders and adjust your strategies accordingly.
Stakeholders may move between quadrants based on changing
circumstances, so it's important to remain flexible and responsive.

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By using Mendelow's Matrix as a grid-based tool, you can effectively
analyze and manage stakeholders by tailoring your engagement
strategies to their specific needs and expectations, ultimately increasing
the likelihood of project success.
OR
The following are the principal points of distinction between concentric
diversification and conglomerate diversification:
(i) Concentric diversification occurs when a firm adds related products
or markets. On the other hand, conglomerate diversification occurs
when a firm diversifies into areas that are unrelated to its current
line of business.
(ii) In concentric diversification, the new business is linked to the
existing businesses through process, technology or marketing. In
conglomerate diversification, no such linkages exist; the new
business/product is disjointed from the existing businesses/
products.
(iii) The most common reasons for pursuing concentric diversification
are that opportunities in a firm’s existing line of business are
available. However, common reasons for pursuing a conglomerate
growth strategy are that opportunities in a firm's current line of
business are limited or opportunities outside are highly lucrative.

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 ANSWERS OF MODEL TEST PAPER 2
PAPER 6B: STRATEGIC MANAGEMENT
PART I - Case Scenario based MCQs

1. (A) (i) (b) (ii) (c) (iii) (b) (iv) (b) (v) (b)
(B) (i) (c) (ii) (b) (iii) (b)

PART II - Descriptive Questions

1. (a) The retail chain is employing a strategy that combines both proactive
and reactive elements. Monitoring consumer trends and adjusting
product offerings accordingly demonstrates a proactive approach to
anticipate and meet customer needs. On the other hand, maintaining a
flexible supply chain to respond quickly to changes in demand reflects a
reactive strategy to address unforeseen shifts in the market.
This combination allows the retail chain to both anticipate future trends
and react effectively to immediate market changes, making its strategy
partly proactive and partly reactive. This dual strategy of proactive trend
monitoring and reactive supply chain flexibility enables the retail chain to
anticipate market shifts and adapt to them effectively, ensuring its
competitiveness and customer satisfaction.
(b) PQR Ltd. has planned to implement the Strategic Business Unit (SBU)
structure. Very large organisations, particularly those running into
several products, or operating at distant geographical locations that are
extremely diverse in terms of environmental factors, can be better
managed by creating strategic business units. SBU structure becomes
imperative in an organisation with increase in number, size and diversity.
The attributes of an SBU and the benefits a firm may derive by using the
SBU Structure are as follows:
 A scientific method of grouping the businesses of a multi – business
corporation which helps the firm in strategic planning.
 An improvement over the territorial grouping of businesses and
strategic planning based on territorial units.
 Strategic planning for SBU is distinct from rest of businesses.
Products/ businesses within an SBU receive same strategic
planning treatment and priorities.
 Each SBU will have its own distinct set of competitors and its own
distinct strategy.
 The CEO of SBU will be responsible for strategic planning for SBU
and its profit performance.

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  Products/businesses that are related from the standpoint of
function are assembled together as a distinct SBU.
 Unrelated products/ businesses in any group are separated into
separate SBUs.
 Grouping the businesses on SBU lines helps in strategic planning
by removing the vagueness and confusion.
 Each SBU is a separate business and will be distinct from one
another on the basis of mission, objectives etc.
(c) Competition from new sustainable fashion brands falls under the "Threat
of New Entrants" category of Porter’s Five Forces Model for Competitive
Analysis. These new entrants pose a threat to existing sustainable
clothing retailers like GreenThrift Inc. by increasing competition and
potentially eroding market share. The emergence of these brands,
focusing on using organic and recycled materials along with ethical
manufacturing practices, aligns with the values of environmentally
conscious consumers, making them strong competitors in the
sustainable fashion market.
2. (a) Each organization has to build its competitive advantage over the
competitors in the business warfare in order to win. This can be done
only by following the process of strategic management. Strategic
Management is very important for the survival and growth of business
organizations in dynamic business environments. Other major benefits
of strategic management are as follows:
 Strategic management helps organizations to be more proactive
rather than reactive in dealing with its future. It facilitates to work
within vagaries of environment and remains adaptable with the
turbulence or uncertain future. Therefore, they are able to control
their own destiny in a better way.
 It provides better guidance to entire organization on the crucial
point – what it is trying to do. Also provides frameworks for all major
business decisions of an enterprise such as on businesses,
products, markets, organizational structures, etc.
 It facilitates to prepare the organization to face the future and act
as pathfinder to various business opportunities. Organizations are
able to identify the available opportunities and identify ways and
means as how to reach them.
 It serves as a corporate defence mechanism against mistakes and
pitfalls. It helps organizations to avoid costly mistakes in product
market choices or investments.

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  Over a period of time strategic management helps organization to
evolve certain core competencies and competitive advantages that
assist in the fight for survival and growth.
(b) To maintain a competitive edge in the face of increased competition,
Reshuffle Corp can differentiate its products in several ways:
• Tangible and Intangible Aspects: Reshuffle Corp can focus on the
tangible aspects of its products, such as using high-quality materials
and innovative designs to create furniture that is both functional and
aesthetically pleasing. Additionally, they can emphasize the intangible
aspects of their products, such as excellent customer service and a
strong brand reputation for reliability and durability.
• Pricing Strategies: While market prices are often dictated by
competition, Reshuffle Corp can work on cost optimization to maintain
profitability. They can also consider offering value-added services,
such as free installation or extended warranties, to justify a higher
price point.
• Product Features: By continually optimizing their product features
based on customer feedback and market trends, Reshuffle Corp can
ensure that their products deliver maximum satisfaction to their target
customers. This may include features that enhance functionality,
design, quality, and overall user experience.
• Product Centric Approach: Reshuffle Corp should keep their
products at the center of their strategic activities, ensuring that all
business processes, from production to sales and marketing, are
aligned to meet customer needs and expectations.
• Product Life Cycle Management: Reshuffle Corp should be aware
of the life cycle of their products and plan for reinvention or
replacement accordingly. They can introduce new product lines or
upgrade existing ones to keep up with changing customer
preferences and market trends.
3. (a) SWOT Analysis for EasyLife Corporation’s New Smart Home Devices
Venture:
Strengths Weaknesses
• Strong brand reputation in • Limited experience in the
consumer electronics. smart home devices
• Established distribution market.
network. • May require additional
• Access to technological investments in research
expertise for product and development.
development.

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 • Financial resources to support • Potential challenges in
product launch and marketing. integrating a new product
line with existing offerings.
• Lack of established
customer base for smart
home devices.
Opportunities Threats
• Growing market for smart • Intense competition from
home devices due to established players in the
increasing consumer interest smart home devices
in home automation. market.
• Possibility of partnering with • Rapid technological
existing smart home platform advancements lead to
providers. short product life cycles.
• Potential to leverage brand • Potential for cybersecurity
loyalty from existing threats in connected
customers. devices.
• Ability to differentiate through • Economic factors
innovative features and impacting consumer
design. spending on discretionary
items.
The SWOT analysis highlights that while EasyLife Corporation has
several strengths that can support the launch of a new smart home
devices line, there are also significant weaknesses and threats to
consider. To maximize the chances of success, EasyLife Corporation
should focus on leveraging its brand reputation and distribution network
while carefully addressing the weaknesses and threats identified.
Additionally, staying informed about technological developments and
consumer trends will be essential for maintaining competitiveness in the
dynamic smart home devices market.
(b) The concept of forward and backward linkages between strategy
formulation and implementation in strategic management highlights the
interconnected nature of these two phases and their impact on the
overall strategic decision-making process of an organization.
Forward Linkages: Forward linkages refer to the impact of strategy
formulation on strategy implementation. When an organization
formulates a new strategy or revises an existing one, it sets the direction
for the organization's future actions. For example, if a company decides
to expand its product line to target a new market segment, this decision
will require changes in the organization's structure, resources allocation,
and possibly its leadership style. These changes are necessary to align
the organization's operations with the new strategic direction. Thus, the
formulation of strategies has forward linkages with their implementation,
as it sets the stage for how the strategy will be executed.

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 Backward Linkages: Backward linkages, on the other hand, refer to the
impact of implementation on strategy formulation. As an organization
implements its strategies, it gains valuable insights and feedback from
the implementation process. This feedback can influence future strategic
decisions. For example, if a company faces unexpected challenges or
discovers new opportunities during the implementation of a strategy, it
may need to reevaluate its strategic choices. Similarly, past strategic
actions and their outcomes can also influence the formulation of future
strategies. Over time, these incremental changes in strategy and
implementation take the organization from its current state to where it
aims to be, reflecting the dynamic nature of strategic management.
In conclusion, the forward and backward linkages between strategy
formulation and implementation highlight the iterative and
interconnected nature of strategic management. By understanding and
leveraging these linkages, organizations can enhance their strategic
decision-making process and improve their overall performance.
4. (a) Strategic Performance Measures (SPM) are metrics used by
organizations to evaluate and track the effectiveness of their strategies
in achieving strategic goals and objectives. SPM provides a framework
for measuring the performance of key areas critical to the success of the
organization's strategy. These measures help in assessing whether the
organization is progressing towards its desired outcomes and allow for
adjustments to be made to improve performance.
Types of Strategic Performance Measures
There are various types of strategic performance measures, including:
♦ Financial Measures: Financial measures, such as revenue growth,
return on investment (ROI), and profit margins, provide an
understanding of the organization's financial performance and its
ability to generate profit.
♦ Customer Satisfaction Measures: Customer measures, such as
customer satisfaction, customer retention, and customer loyalty,
provide insight into the organization's ability to meet customer
needs and provide high-quality products and services.
♦ Market Measures: Market measures, such as market share,
customer acquisition, and customer referrals, provide information
about the organization's competitiveness in the marketplace and its
ability to attract and retain customers.
♦ Employee Measures: Employee measures, such as employee
satisfaction, turnover rate, and employee engagement, provide
insight into the organization's ability to attract and retain talented
employees and create a positive work environment.

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 ♦ Innovation Measures: Innovation measures, such as research and
development (R&D) spending, patent applications, and new product
launches, provide insight into the organization's ability to innovate
and create new products and services that meet customer needs.
♦ Environmental Measures: Environmental measures, such as
energy consumption, waste reduction, and carbon emissions,
provide insight into the organization's impact on the environment
and its efforts to operate in a sustainable manner.
(b) The strategy adopted by StarTech Solutions is Focused differentiation.
This strategy involves targeting a specific segment of the market with
unique products or services that are perceived as valuable by customers
in that segment. By specializing in serving unique, high-end clients,
StarTech is able to differentiate itself from competitors and create a
competitive advantage.
Advantages of Focused Differentiation:
• Strong Customer Loyalty: By catering to a specific niche
market, StarTech can build strong relationships with its customers,
leading to higher customer loyalty and retention.
• Higher Profit Margins: Serving a niche market allows StarTech
to command higher prices for its specialized products or services,
leading to higher profit margins.
• Reduced Competition: By focusing on a niche market that other
firms are not targeting, StarTech faces less competition, allowing it
to establish itself as a leader in that segment.
• Better Resource Allocation: Focusing on a specific market
segment allows StarTech to allocate its resources more efficiently,
concentrating on areas that will provide the greatest return on
investment.
Disadvantages of Focused Differentiation:
• Limited Market Size: The niche market that StarTech is targeting
may be limited in size, restricting the company's potential for
growth.
• Risk of Market Changes: Changes in the market or customer
preferences could impact on the demand for StarTech's specialized
products or services, leading to potential revenue loss.
• Higher Costs: Serving a niche market may require specialized
resources and expertise, leading to higher costs of operation.
• Imitation by Competitors: If StarTech's success in the niche
market attracts competitors, they may attempt to imitate its
strategy, eroding its competitive advantage.

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Overall, the focused differentiation strategy adopted by StarTech
Solutions has allowed it to differentiate itself in a competitive industry
and build a strong position in the market. However, the company must
be aware of the potential challenges and risks associated with this
strategy and continue to innovate and adapt to maintain its competitive
edge.
OR
Strategic alliances are formed if they provide an advantage to all the
parties in the alliance. These advantages can be broadly categorised as
follows:
(i) Organizational: Strategic alliances may be formed to learn
necessary skills and obtain certain capabilities from the strategic
partner. Strategic partners may also help to enhance productive
capacity, provide a distribution system, or extend supply chain. A
strategic partner may provide a good or service that complements
each other, thereby creating a synergy. If one partner is relatively
new or untried in a certain industry, having a strategic partner who
is well-known and respected will help add legitimacy and
creditability to the venture.
(ii) Economic: Alliances can reduce costs and risks by distributing
them across the members of the alliance. Partners can obtain
greater economies of scale in an alliance, as production volume
increase, causing the cost per unit to decline. Finally, partners can
take advantage of co-specialization, where specializations are
bundled together, creating additional value.
(iii) Strategic: Organizations may join to cooperate instead of compete.
Alliances may also create vertical integration where partners are
part of supply chain. Strategic alliances may also be useful to
create a competitive advantage by the pooling of resources and
skills. This may also help with future business opportunities and the
development of new products and technologies. Strategic alliances
may also be used to get access to new technologies or to pursue
joint research and development.
(iv) Political: Sometimes there is need to form a strategic alliance with
a local foreign business to gain entry into a foreign market either
because of local prejudices or legal barriers to entry. Forming
strategic alliances with politically-influential partners may also help
improve overall influence and position.

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 ANSWERS OF MODEL TEST PAPER 3
PAPER 6B: STRATEGIC MANAGEMENT

PART I
1. (A) (i) (c) (ii) (c) (iii) (d) (iv) (b) (v) (a)
1. (B) (i) (c) (ii) (b) (iii) (d)

PART II
1. (a) In this scenario, the most appropriate strategic approach to help Dharam
Veer Singh formulate a robust and coherent business roadmap aligned
with his vision for sustainable growth would be to focus on values or a
value system. Emphasizing values such as quality, integrity, and
sustainability can guide decision-making and attract like-minded
investors and clients. By embedding these values into the company's
culture and operations, Dharam can differentiate his business in the
market, ensuring long-term success and structural longevity in
construction projects. This value-driven strategy will also help in building
a strong brand reputation and fostering trust among stakeholders.
(b) Considering Porter's generic strategies, there are three different bases:
cost leadership, differentiation, and focus. Ravi and Arjun are
contemplating pricing for their product.
Ravi is trying to have a low price and high volume, thereby aiming for
cost leadership. Cost leadership emphasizes producing standardized
products at a very low per unit cost for consumers who are price
sensitive.
Arjun desires to create perceived value for the product and charge higher
prices. He is trying to adopt differentiation. Differentiation is aimed at
producing products and services considered unique industry-wide and
directed at consumers who are relatively price insensitive.
(c) XYZ Corporation is shifting to a network structure. This is a newer and
more radical organizational design, sometimes referred to as a "non-
structure" because it virtually eliminates in-house business functions and
outsources many of them. An organization structured in this way is often
called a virtual organization, composed of a series of project groups or
collaborations linked by constantly changing, non-hierarchical, cobweb-
like networks.
The network structure becomes most useful when a firm's environment
is unstable and expected to remain so. Under such conditions, there is
a strong need for innovation and quick response. Instead of having
salaried employees, the company may contract with individuals for
specific projects or periods. Long-term contracts with suppliers and
distributors replace services the company might otherwise provide
through vertical integration. This structure provides increased flexibility

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 and adaptability to cope with rapid technological change and shifting
patterns of international trade and competition.
2. (a) Four specific criteria of sustainable competitive advantage that firms can
use to determine those capabilities that are core competencies.
Capabilities that are valuable, rare, costly to imitate, and non-
substitutable are core competencies.
i. Valuable: Valuable capabilities are the ones that allow the firm to
exploit opportunities or avert the threats in its external environment.
A firm created value for customers by effectively using capabilities
to exploit opportunities. Finance companies build a valuable
competence in financial services. In addition, to make such
competencies as financial services highly successful requires
placing the right people in the right jobs. Human capital is important
in creating value for customers.
ii. Rare: Core competencies are very rare capabilities and very few of
the competitors possess these. Capabilities possessed by many
rivals are unlikely to be sources of competitive advantage for any
one of them. Competitive advantage results only when firms
develop and exploit valuable capabilities that differ from those
shared with competitors.
iii. Costly to imitate: Costly to imitate means such capabilities that
competing firms are unable to develop easily.
iv. Non-substitutable: Capabilities that do not have strategic
equivalents are called non-substitutable capabilities. This final
criterion for a capability to be a source of competitive advantage is
that there must be no strategically equivalent valuable resources
that are themselves either not rare or imitable.
(b) XYZ Electronics has opted to implement a Stability strategy. Stability
strategies are designed to safeguard the existing interests and strengths
of a business. This involves pursuing established and tested objectives,
continuing on the chosen path, and maintaining operational efficiency. A
stability strategy is pursued when a firm continues to serve the same or
similar markets and deals in the same products and services. Although
few functional changes are made in the products or markets, it is not a
‘do nothing’ strategy. This strategy is typical for mature business
organizations. Additionally, some small organizations frequently use
stability as a strategic focus to maintain a comfortable market or profit
position.
Major reasons for a Stability strategy include:
• A product has reached the maturity stage of the product life cycle.
• The staff feels comfortable with the status quo as it involves fewer
changes and less risk.
• It is opted for when the environment in which an organization
operates is relatively stable.

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 • Expansion may be perceived as threatening and not advisable.
• After rapid expansion, a firm might want to stabilize and consolidate
itself.
3. (a) Yummy foods are proactive in its approach. On the other hand, Tasty
Food is reactive. Proactive strategy is planned strategy whereas reactive
strategy is adaptive reaction to changing circumstances. A company’s
strategy is typically a blend of proactive actions on the part of managers
to improve the company’s market position and financial performance and
reactions to unanticipated developments and fresh market conditions.
If organisational resources permit, it is better to be proactive rather than
reactive. Being proactive in aspects such as introducing new products
will give you advantage in the mind of customers.
At the same time, crafting a strategy involves stitching together a
proactive/intended strategy and then adapting first one piece and then
another as circumstances surrounding the company’s situation change
or better options emerge-a reactive/adaptive strategy. This aspect can
be accomplished by Yummy Foods.
(b) Change management is essential during digital transformation to ensure
the success of the process. Here are some key strategies to navigate
change effectively:
• Specify the digital transformation's aims and objectives:
Clearly defining the intended outcomes and objectives helps
ensure everyone is aligned and working towards the same goals.
• Always communicate: Regular and transparent communication is
crucial to help people understand the goals of digital transformation
and how it will impact various stakeholders, including employees,
clients, and other parties.
• Be ready for resistance: Change, even if beneficial, can be met
with resistance. Having a strategy in place to address resistance is
important for overcoming challenges and ensuring a smooth
transition.
• Implement changes gradually: Instead of making all changes at
once, gradual implementation allows individuals to adapt to new
ways of doing things without feeling overwhelmed by too much
change simultaneously.
• Offer assistance and training: Providing support, guidance, and
training for employees is crucial as they navigate new procedures,
software applications, and other aspects of digital transformation.
In conclusion, meticulous planning and effective change management
are vital for the successful completion of digital transformation projects.
Without proper change management, these efforts are more likely to fail,
and organizations can enhance the integration of new digital systems by
anticipating and managing the necessary changes.

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4. (a) Product Life Cycle is an important concept in strategic choice and S-
shaped curve which exhibits the relationship of sales with respect of time
for a product that passes through the four successive stages.
The first stage of PLC is the introduction stage in which competition is
almost negligible, prices are relatively high and markets are limited. The
growth in sales is also at a lower rate.
The second stage of PLC is the growth stage, in which the demand
expands rapidly, prices fall, competition increases, and market expands.
The third stage of PLC is the maturity stage, where in the competition
gets tough and market gets stabilized. Profit comes down because of
stiff competition.
The fourth stage is the declining stage of PLC, in which the sales and
profits fall down sharply due to some new products replacing the existing
product.

Product Life Cycle

PLC can be used to diagnose a portfolio of products (or businesses) in
order to establish the stage at which each of them exists. Particular
attention is to be paid on the businesses that are in the declining stage.
Depending on the diagnosis, appropriate strategic choices can be made.
For instance, expansion may be a feasible alternative for businesses in
the introductory and growth stages. Mature businesses may be used as
sources of cash for investment in other businesses which need
resources. A combination of strategies like selective harvesting,
retrenchment, etc. may be adopted for declining businesses. In this way,
a balanced portfolio of businesses may be built up by exercising a
strategic choice based on the PLC concept.
(b) The business environment consists of both the macro environment and
the micro environment. Following are the differences between the two:
• The micro environment refers to the forces that are very close to
the company and affect its ability to do routine functions. Macro
environment refers to all forces that are part of the larger periphery
and distantly affect organization and micro environment.
• Micro environment includes the company itself, its suppliers,
marketing intermediaries, customer markets and competitors.
Whereas macro environment includes demography, economy,
natural forces, technology, politics, legal and socio-cultural.

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• The elements of micro environment are specific to the said
business and affects it’s working on short term basis. The elements
of macro environment are general environment and affect the
working of all the firms in an industry.
OR
Differences between Operational Control and Management Control
are as under:
(i) The thrust of operational control is on individual tasks or
transactions as against total or more aggregative management
functions. When compared with operational, management control
is more inclusive and more aggregative, in the sense of embracing
the integrated activities of a complete department, division or even
entire organization, instead or mere narrowly circumscribed
activities of sub-units. For example, procuring specific items for
inventory is a matter of operational control, in contrast to inventory
management as a whole.
(ii) Many of the control systems in organizations are operational and
mechanistic in nature. A set of standards, plans and instructions
are formulated. On the other hand, the basic purpose of
management control is the achievement of enterprise goals – short
range and long range – in an effective and efficient manner.

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 ANSWERS OF MODEL TEST PAPER 4
PAPER 6B: STRATEGIC MANAGEMENT
PART I
1. (A) (i) (b) (ii) (d) (iii) (c) (iv) (c) (v) (b)
1. (B) (i) (c) (ii) (c) (iii) (c)
PART II
1. (a) The HealthPlus brand of wellness supplements may have the following
vision and mission:
Vision: Vision implies the blueprint of the company’s future position. It
describes where the organization wants to land. Mr. Arun should aim to
position “HealthPlus” as India’s leading wellness supplements brand. It
may have the vision to be India’s largest wellness supplements company
that enhances health, promotes extraordinary well-being, and brings
happiness to people.
Mission: Mission delineates the firm’s business, its goals, and ways to
reach the goals. It explains the reason for the existence of the firm in
society. It is designed to help potential shareholders and investors
understand the purpose of the company. Mr. Arun may identify the
mission in the following lines:
 To be in the business of wellness supplements to enhance the lives
of people and give them the confidence to lead a healthy life.
 To protect health by providing supplements that counteract harmful
elements in the environment.
 To produce wellness supplements using natural ingredients in an
environmentally sustainable manner.
(b) GreenGardens should conduct a SWOT analysis to strategically plan for
future growth. This analysis will help them understand their internal
strengths and weaknesses, as well as external opportunities and threats.
SWOT Analysis Grid for GreenGardens:
Strengths Weaknesses
High-quality, pesticide-free Limited distribution channels
produce
Strong brand reputation for Small scale of operations
organic products
Dedicated and knowledgeable Limited marketing and sales reach
workforce
Opportunities Threats
Rising demand for organic Unpredictable weather conditions
products
Potential to expand into new Intense competition from larger
markets farms

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 Increased consumer Regulatory changes affecting
awareness of health and organic farming
sustainability
By systematically evaluating these areas, GreenGardens can leverage
its strengths, address its weaknesses, capitalize on opportunities, and
mitigate threats. This strategic planning will guide them toward
sustainable growth and success in the organic farming industry.
(c) FreshDelight is employing a market development strategy to expand
its market presence. This approach involves introducing their existing
organic fruit juices to new markets, specifically targeting countries where
the demand for organic products is on the rise. To achieve this,
FreshDelight is launching targeted marketing campaigns and partnering
with local distributors to effectively introduce their products to these new
regions. Additionally, they are adapting their product packaging and
marketing messages to align with local preferences and regulations,
ensuring their offerings resonate with the new customer base. By
entering these emerging markets, FreshDelight aims to increase its
customer base and drive sales growth, leveraging the growing popularity
of organic products.
2. (a) A workable action plan for turnaround of the textile mill would involve:
• Stage One – Assessment of current problems: In the first step,
assess the current problems and get to the root causes and the
extent of damage.
• Stage Two – Analyze the situation and develop a strategic
plan: Identify major problems and opportunities, develop a
strategic plan with specific goals and detailed functional actions
after analyzing strengths and weaknesses in the areas of
competitive position.
• Stage Three – Implementing an emergency action plan: If the
organization is in a critical stage, an appropriate action plan must
be developed to stop the bleeding and enable the organization to
survive.
• Stage Four – Restructuring the business: If the core business is
irreparably damaged, then the outlook for the entire organization
may be bleak. Efforts to be made to position the organization for
rapid improvement.
• Stage Five – Returning to normal: In the final stage of turnaround
strategy process, the organization should begin to show signs of
profitability, return on investments and enhancing economic value-
added.

(b) In matrix structure, functional and product forms are combined

simultaneously at the same level of the organization. Employees have
two superiors, a product / project manager and a functional manager.

604
 The “home” department - that is, engineering, manufacturing, or
marketing - is usually functional and is reasonably permanent. People
from these functional units are often assigned temporarily to one or more
product units or projects.
The product units / projects are usually temporary and act like divisions
in that they are differentiated on a product-market basis. The matrix
structure may be very appropriate when organizations conclude that
neither functional nor divisional forms, even when combined with
horizontal linking mechanisms like strategic business units, are right for
the implementation of their strategies. Matrix structure was developed to
combine the stability of the functional structure with flexibility of the
product form. It is very useful when the external environment (especially
its technological and market aspects) is very complex and changeable.
A matrix structure is most complex of all designs because it depends
upon both vertical and horizontal flows of authority and communication.
It may result in higher overhead costs due to more management
positions.
The matrix structure is often found in an organization when the following
three conditions exist:
1. Ideas need to be cross-fertilized across projects or products;
2. Resources are scarce; and
3. Abilities to process information and to make decisions need to be
improved.
3. (a) Competitive landscape is a business analysis which identifies
competitors, either direct or indirect. Competitive landscape is about
identifying and understanding the competitors and at the same time, it
permits the comprehension of their vision, mission, core values, niche
market, strengths and weaknesses.
An in-depth investigation and analysis of a firm’s competition allows it to
assess the competitors’ strengths and weaknesses in the marketplace
and helps it to choose and implement effective strategies that will
improve its competitive advantage.
Steps to understand the competitive landscape for building competitive
advantage are:
(i) Identify the competitor: The first step to understanding the
competitive landscape is to identify the competitors in the firm’s
industry and have actual data about their respective market share.
(ii) Understand the competitors: Once the competitors have been
identified, the strategist can use market research report, internet,
newspapers, social media, industry reports, and various other
sources to understand the products and services offered by them
in different markets.

605
 (iii) Determine the strengths of the competitors: What are the
strengths of the competitors? What do they do well? Do they offer
great products? Do they utilize marketing in a way that
comparatively reaches out to more consumers? Why do customers
give them their business?
(iv) Determine the weaknesses of the competitors: Weaknesses
(and strengths) can be identified by going through consumer
reports and reviews appearing in various media. After all,
consumers are often willing to give their opinions, especially when
the products or services are either great or very poor.
(v) Put all of the information together: At this stage, the strategist
should put together all information about competitors and draw
inference about what they are not offering and what the firm can do
to fill in the gaps. The strategist can also know the areas which
need to be strengthened by the firm.
(b) The role of Chief Executive Officer pertains to corporate level.
The corporate level of management consists of the Chief Executive
Officer (CEO) and other top-level executives. These individuals occupy
the apex of decision making within the organization.
The role of Chief Executive Officer is to:
1. oversee the development of strategies for the whole organization;
2. defining the mission and goals of the organization;
3. determining what businesses, it should be in;
4. allocating resources among the different businesses;
5. formulating, and implementing strategies that span individual
businesses;
6. providing leadership for the organization;
7. ensuring that the corporate and business level strategies which
company pursues are consistent with maximizing shareholders
wealth; and
8. managing the divestment and acquisition process.
4. (a) Buyers of an industry’s products or services can sometimes exert
considerable pressure on existing firms to secure lower prices or better
services. This is evident in situations where buyers enjoy a superior
position than the seller of the product. This leverage is particularly
evident when:
(i) Buyers have full knowledge of the sources of products and their
substitutes.
(ii) They spend a lot of money on the industry’s products, i.e., they are
big buyers.

606
 (iii) The industry’s product is not perceived as critical to the buyer’s
needs and buyers are more concentrated than firms supplying the
product. They can easily switch to the substitutes available.
(b) According to C.K. Prahalad and Gary Hamel, major core competencies
are identified in three areas - competitor differentiation, customer value,
and application to other markets.
 Competitor differentiation: The company can consider having a
core competence if the competence is unique and it is difficult for
competitors to imitate. This can provide a company an edge
compared to competitors. It allows the company to provide better
products or services to market with no fear that competitors can
copy it.
 Customer value: When purchasing a product or service it has to
deliver a fundamental benefit for the end customer in order to be a
core competence. It will include all the skills needed to provide
fundamental benefits. The service or the product has to have real
impact on the customer as the reason to choose to purchase them.
If customer has chosen the company without this impact, then
competence is not a core competence.
 Application of competencies to other markets: Core
competence must be applicable to the whole organization; it cannot
be only one particular skill or specified area of expertise. Therefore,
although some special capability would be essential or crucial for
the success of business activity, it will not be considered as core
competence, if it is not fundamental from the whole organization’s
point of view. Thus, a core competence is a unique set of skills and
expertise, which will be used throughout the organisation to open
up potential markets to be exploited.
OR
Organizations should consider the following factors when choosing
strategic performance measures:
1. Relevance: The measure should be relevant to the organization's
goals and objectives, providing actionable and meaningful
information. This ensures that the performance measures are
directly aligned with what the organization aims to achieve, and that
the information obtained can drive improvements and strategic
decisions.
2. Data Availability: The measure should be based on data that is
readily available and can be collected and analyzed in a timely
manner. This is important to ensure that the organization can
efficiently gather and utilize data without significant delays or
obstacles.
3. Data Quality: The measure should be based on high-quality data
that is accurate and reliable. Accurate and reliable data are crucial

607
 for making informed decisions and assessing the true performance
of the organization.
4. Data Timeliness: The measure should be based on data that is
current and up-to-date. Timely data allows organizations to make
informed decisions quickly, enabling them to respond promptly to
changes and emerging challenges.
These factors are important because they provide a framework for
organizations to assess the success of their strategies, identify areas for
improvement, and make informed decisions about resource allocation
and strategic adjustments. Effective strategic performance measures
should be relevant, meaningful, easy to understand, and regularly
reviewed and updated to ensure their continued alignment with the
organization's goals and objectives.

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 ANSWERS OF MODEL TEST PAPER 5
PAPER 6B: STRATEGIC MANAGEMENT
PART I

1. (A) (i) (c) (ii) (b) (iii) (c) (iv) (a) (v) (c)
1. (B) (i) (a) (ii) (c) (iii) (a)
PART II
1. (a) The collaboration between TechNova, a software development firm, and
ElectroWave, an electronics and hardware manufacturing company,
represents a co-generic merger. This type of external growth strategy
involves the merger of companies from related but non-competing
industries, allowing them to leverage complementary strengths and
diversify their product offerings.
TechNova specializes in creating cutting-edge software, while
ElectroWave focuses on manufacturing advanced electronic devices. By
joining forces, they can combine their expertise to design innovative
laptops and smartphones, creating products that neither company could
have developed as effectively on their own. This strategic partnership
allows them to enter new markets, enhance their competitive advantage,
and explore synergies between software and hardware.
The co-generic merger provides significant opportunities for both
companies to capitalize on shared technologies, streamline their
operations, and expand their customer base. It is a strategic move that
enables them to diversify while maintaining a strong focus on their core
competencies, ultimately helping them to grow and compete more
effectively in the global market.
(b) Vikram Patel is facing declining sales due to a significant shift of
customers toward online platforms. Although he employs strategic
management tools, they cannot always overcome every obstacle or
guarantee success. The limitations of strategic management in Vikram’s
situation include:
 The environment in which strategies are developed is highly
complex and unpredictable. The entry of online bookstores, a new
type of competitor, introduced a different dynamic to the book retail
industry. These online platforms, with their extensive reach and
pricing power, have dominated the market, posing a formidable
challenge to traditional bookstores.
 Another limitation of strategic management is the difficulty in
forecasting future developments. Despite his strategic
management efforts, Vikram Patel did not anticipate the extent to
which online bookstores would impact his sales.
 While strategic management is a time-consuming process, it is
crucial for Vikram to continue managing strategically. These

609
 challenging times demand increased effort and adaptability on his
part.
 Strategic management can be costly. Vikram Patel might consider
hiring experts to understand customer preferences better and
adjust his strategies to offer more personalized services. These
customized offerings could be difficult for online stores to replicate,
giving him a competitive edge.
 The bookstores owned by Vikram Patel are much smaller in scale
compared to online stores. This makes it challenging for him to
predict how online platforms will manoeuvre strategically.
(c) The scenario being referred to is the organizational culture at Orion Tech
Solutions Pvt. Ltd. A strong culture encourages effective strategy
execution when there is alignment and drives performance even when
there is minimal alignment. A culture rooted in values, practices, and
behavioural norms that align with the requirements for successful
strategy execution energizes employees across the organization to
perform their roles in a manner that supports the strategy. Orion's
culture, built around principles such as listening to customers,
encouraging employees to take pride in their work, and providing a high
degree of decision-making autonomy, is highly conducive to successfully
executing a strategy focused on delivering superior software solutions.
A strong strategy-supportive culture at Orion makes employees feel
genuinely better about their jobs, work environment, and the
organization's goals. It motivates them to embrace the challenge of
realizing the company’s vision, perform their duties competently and
enthusiastically, and collaborate effectively with others.
2. (a) As industry’s Key Success Factors (KSFs) are those things that most
affect industry members’ ability to prosper in the marketplace – the
particular strategy elements, product attributes, resources,
competencies, competitive capabilities and business outcomes that spell
the difference between profit & loss and ultimately, between competitive
success or failure. KSFs by their very nature are so important that all
firms in the industry must pay close attention to them. They are the
prerequisites for industry success, or, to put it in another way, KSFs are
the rules that shape whether a company will be financially and
competitively successful.
(b) Channels represent the distribution system through which
organizations distribute their products or provide services to customers.
They play a pivotal role in reaching target markets, maximizing sales,
and establishing competitive advantages.
Channel analysis is important when the business strategy is to scale up
and expand beyond the current geographies and markets. When a
business plans to grow to newer markets, they need to develop or
leverage existing channels to get to new customers. Thus, analysis of
channels that suit one’s products and customers is of utmost importance.

610
 There are typically three channels that should be considered: sales
channel, product channel and service channel.
♦ The sales channel - These are the intermediaries involved in
selling the product through each channel and ultimately to the end
user. The key question is: Who needs to sell to whom for your
product to be sold to your end user? For example, many fashion
designers use agencies to sell their products to retail organizations,
so that consumers can access them.
♦ The product channel - The product channel focuses on the series
of intermediaries who physically handle the product on its path from
its producer to the end user. This is true of Australia Post, who
delivers and distributes many online purchases between the seller
and purchaser when using eBay and other online stores.
♦ The service channel - The service channel refers to the entities
that provide necessary services to support the product, as it moves
through the sales channel and after purchase by the end user. The
service channel is an important consideration for products that are
complex in terms of installation or customer assistance. For
example, a Bosch dishwasher may be sold in a Bosch showroom,
and then once sold it is installed by a Bosch contracted plumber.
3. (a) A strategic vision serves as a roadmap for a company’s future, detailing
the specifics of technology, customer focus, geographic and product
markets, and the capabilities the organization aims to develop. It
answers the critical question, “Where are we going?” and provides a
compelling rationale for the chosen direction, ensuring it aligns with the
company’s long-term objectives.
A strategic vision outlines the organization’s aspirations, offering a
broad, panoramic view of where it aims to be. It provides a clear
direction, charts a strategic path for future endeavors, and helps in
shaping the organizational identity.
Essentials of a strategic vision
♦ The entrepreneurial challenge in developing a strategic vision is to
think creatively about how to prepare a company for the future.
♦ Forming a strategic vision is an exercise in intelligent
entrepreneurship.
♦ A well-articulated strategic vision creates enthusiasm among the
members of the organization.
♦ The best-worded vision statement clearly illuminates the
direction in which organization is headed.
(b) The strategy in question is the growth/expansion strategy.
The Growth/Expansion strategy involves redefining the business,
expanding its scope, and significantly increasing investments. This
dynamic and vigorous approach is synonymous with promise and

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 success. It entails a substantial reformulation of goals, major initiatives,
and strategic moves, including investments, exploration into new
products, technologies, and markets, and innovative decision-making.
While promising growth, this strategy navigates the enterprise through
relatively unknown and risky paths, rich with potential but also pitfalls.
Major Reasons for Adopting Growth/Expansion Strategy:
• It may become imperative when environment demands increase in
pace of activity.
• Strategists may feel more satisfied with the prospects of growth
from expansion; chief executives may take pride in presiding over
organizations perceived to be growth-oriented.
• Expansion may lead to greater control over the market vis-a-vis
competitors.
• Advantages from the experience curve and scale of operations may
accrue.
• Expansion also includes intensifying, diversifying, acquiring and
merging businesses.
4. (a) Implementation or execution is an operations-oriented, activity aimed
at shaping the performance of core business activities in a strategy-
supportive manner. In most situations, strategy-execution process
includes the following principal aspects:
♦ Developing budgets that steer ample resources into those
activities that are critical to strategic success.
♦ Staffing the organization with the needed skills and expertise,
consciously building and strengthening strategy-supportive
competencies and competitive capabilities and organizing the work
effort.
♦ Ensuring that policies and operating procedures facilitate
rather than impede effective execution.
♦ Using the best-known practices to perform core business
activities and pushing for continuous improvement.
♦ Installing information and operating systems that enable
company personnel to better carry out their strategic roles day in
and day out.
♦ Motivating people to pursue the target objectives
energetically.
♦ Creating culture and climate conducive to successful strategy
implementation and execution.
♦ Exerting the internal leadership needed to drive implementation
forward and keep improving strategy execution.

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(b) The PESTLE framework assists in analyzing the macro-environment by
systematically evaluating six external factors that impact an
organization’s operations and strategy.
1. Political Factors: This includes government policies, regulations,
political stability, and taxation. Understanding these factors helps
organizations anticipate regulatory changes and government
interventions that could affect their business environment.
2. Economic Factors: This involves assessing economic conditions
such as interest rates, inflation, exchange rates, and economic
growth. These factors influence business costs, consumer
purchasing power, and overall market conditions.
3. Social Factors: This examines demographic trends, lifestyle
changes, cultural norms, and consumer attitudes. Insights into
social factors help businesses align their products and services
with evolving consumer preferences and societal trends.
4. Technological Factors: This includes technological advancements,
innovation rates, and technological infrastructure. These factors
impact production processes, product development, and competitive
positioning.
5. Legal Factors: This involves understanding business laws,
employment regulations, health and safety standards, and compliance
requirements. Legal factors are crucial for ensuring regulatory
compliance and avoiding legal risks.
6. Environmental Factors: This covers ecological issues, sustainability
practices, and environmental regulations. Awareness of
environmental factors helps businesses adapt to climate change and
meet sustainability goals.
By analyzing these factors, the PESTLE framework provides a
comprehensive understanding of the macro-environment, helping
organizations anticipate changes, adapt strategies, and make
informed decisions.
OR
A tool to identify the market positions of rival companies by grouping
them into like positions is strategic group mapping. A strategic group
consists of those rival firms which have similar competitive approaches
and positions in the market.
The procedure for constructing a strategic group map and deciding
which firms belong in which strategic group are as follows:
1. Identify the competitive characteristics that differentiate firms in
the industry typical variables that are price/quality range (high,
medium, low); geographic coverage (local, regional, national,
global); degree of vertical integration (none, partial, full); product-
line breadth (wide, narrow); use of distribution channels (one,
some, all); and degree of service offered (no-frills, limited, full).

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2. Plot the firms on a two-variable map using pairs of these
differentiating characteristics.
3. Assign firms that fall in about the same strategy space to the
same strategic group.
4. Draw circles around each strategic group making the circles
proportional to the size of the group's respective share of total
industry sales revenues.

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 ANSWERS OF MODEL TEST PAPER 6
PAPER 6B: STRATEGIC MANAGEMENT
PART I
1. (A) (i) (a) (ii) (b) (iii) (c) (iv) (b) (v) (d)
1. (B) (i) (c) (ii) (c) (iii) (b)
PART II
1. (a) According to Mendelow's Matrix, environmentally conscious consumers
who influence industry standards fall into the Key Players quadrant.
These stakeholders possess both high power and high interest, making
them crucial to the success of Chic Threads’ sustainability-focused
initiatives. Their high interest stems from their alignment with the brand's
ethical and eco-friendly values, while their high power arises from their
ability to shape market trends, advocate for sustainable practices, and
impact on the brand’s reputation through their purchasing decisions and
influence within the industry.
As Key Players, these consumers require active engagement. Chic
Threads must focus on satisfying their expectations by providing regular
updates on sustainability efforts, maintaining transparent
communication, and incorporating their feedback to ensure continued
support. The brand should actively involve these stakeholders in its
decision-making processes by seeking their input on product design and
sustainability measures. Additionally, building strong relationships
through targeted marketing campaigns, collaborations, and awareness
initiatives will further solidify their trust and advocacy. Effectively
managing this stakeholder group is vital, as their support and satisfaction
directly contribute to the success of the brand’s eco-friendly clothing line.
(b) To target tech-savvy consumers for the new smartphone model, the tech
company can develop a marketing strategy based on customer behavior.
Consumer behaviour may be influenced by a number of things. These
elements can be categorised into the following conceptual domains:
• External Influences: Utilize online platforms and tech forums to
generate buzz around the new smartphone. Partner with tech
influencers and bloggers to review the product and create awareness
among tech-savvy consumers.
• Internal Influences: Appeal to the desire for innovation and
advanced features among tech-savvy consumers. Highlight the
unique selling points of the new smartphone, such as its cutting-edge
technology, performance, and design.
• Decision Making: Recognize that tech-savvy consumers are early
adopters who value functionality and performance. Provide detailed
specifications and comparisons with other smartphones to help them
make an informed decision.

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 • Post-decision Processes: Offer excellent customer service and
support to address any technical issues or concerns. Encourage
customers to provide feedback and reviews to build credibility and
trust among tech-savvy consumers.

External Factors
Market Stimuli
Environmental
Factors Purchase and
Decision Post Purchase
Making Actions

Internal Factors

Figure: Process of consumer behaviour

By understanding the behavior of tech-savvy consumers and aligning the
marketing strategy with their preferences, the tech company can
effectively promote the new smartphone and attract this demographic.
(c) Strategic Performance Measures (SPM) are metrics organizations use
to evaluate and track the effectiveness of their strategies in achieving
their goals and objectives. SPM provides a framework for monitoring key
areas critical to the organization’s success, ensuring progress toward
desired outcomes and enabling timely adjustments to improve
performance. For GreenEdge Solutions, various types of SPM can be
utilized:
• Financial Measures: Metrics like revenue growth, return on
investment (ROI), and profit margins help evaluate the company’s
financial health and profitability.
• Customer Satisfaction Measures: Assessments of customer
satisfaction, retention, and loyalty indicate how well the company
meets customer needs.
• Market Measures: Market share, customer acquisition, and referral
rates reflect competitiveness and market position.
• Employee Measures: Employee satisfaction, engagement, and
turnover rate help track workplace culture and talent retention.
• Innovation Measures: R&D spending, patent filings, and new
product launches gauge the company’s innovation capabilities.
• Environmental Measures: Monitoring energy consumption, waste
reduction, and carbon emissions ensures the company aligns with
sustainability goals.

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 Using these measures, GreenEdge Solutions can systematically assess
its strategy and make informed decisions to drive sustainable growth and
success.
2. (a) Connect Group has to make strategic changes for its survival. The
changes in the environmental forces often require businesses to make
modifications in their existing strategies and bring out new strategies.
Strategic change is a complex process that involves a corporate strategy
focused on new markets, products, services and new ways of doing
business. Unless companies embrace change, they are likely to freeze
and unless companies prepare to deal with sudden, unpredictable,
discontinuous, and radical change, they are likely to be extinct.
Three steps for initiating strategic change are:
(i) Recognise the need for change – The first step is to diagnose the
which facets of the present corporate culture are strategy
supportive and which are not.
(ii) Create a shared vision to manage change – Objectives of both
individuals and organisation should coincide. There should be no
conflict between them. This is possible only if the management and
the organisation members follow a shared vision.
(iii) Institutionalise the change – This is an action stage which
requires the implementation of the changed strategy. Creating and
sustaining a different attitude towards change is essential to ensure
that the firm does not slip back into old ways of doing things.
(b) The term ‘strategic management’ refers to the managerial process of
developing a strategic vision, setting objectives, crafting a strategy,
implementing and evaluating the strategy, and initiating corrective
adjustments were deemed appropriate.
The presence of strategic management cannot counter all hindrances
and always achieve success as there are limitations attached to strategic
management. These can be explained in the following lines:
♦ The environment is highly complex and turbulent. It is difficult
to understand the complex environment and exactly pinpoint how it
will shape up in future. The organisational estimate about its future
shape may awfully go wrong and jeopardise all strategic plans. The
environment affects as the organisationhas to deal with suppliers,
customers, governments and other external factors.
♦ Strategic management is a time-consuming process.
Organisations spend a lot of time preparing, communicating the
strategies that may impede daily operations and negatively impact
on routine business.
♦ Strategic management is a costly process. Strategic
management adds a lot of expenses to an organization. Expert
strategic planners need to be engaged, efforts are made for
analysis of external and internal environments devise strategies

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 and properly implement. These can be really costly for
organisations with limited resources particularly when small and
medium organisation create strategies to compete.
♦ Competition is unpredictable. In a competitive scenario, where
all organisations are trying to move strategically, it is difficult to
clearly estimate the competitive responses to the strategies.
3. (a) Yes, Easy Access and its rivals get advantage by this move. The new
bureaucratic process is making it more complicated for organizations to
start up and enter the Easy Access market, increasing barriers to entry
and thereby reducing the threat of new entrants. New entrants can
reduce an industry’s profitability, because they add new production
capacity, leading to increase in supply of the product, sometimes even
at a lower price and can substantially erode existing firm’s market share
position. However, New entrants are always a powerful source of
competition. The new capacity and product range they bring in throws
up a new competitive pressure. The bigger the new entrant, the more
severe the competitive effect. New entrants also place a limit on prices
and affect the profitability of existing players, which is known as Price
War.
(b) There are several basis of differentiation, major being: Product, Pricing
and Organization.
Product: Innovative products that meet customer needs can be an area
where a company has an advantage over competitors. However, the
pursuit of a new product offering can be costly – research and
development, as well as production and marketing costs can all add to
the cost of production and distribution. The payoff, however, can be great
as customers’ flocks are among the first to have the new product.
Pricing: It fluctuates based on its supply and demand and may also be
influenced by the customer’s ideal value for a product. Companies that
differentiate based on product price can either determine to offer the
lowest price or can attempt to establish superiority through higher prices.
Organisation: Organisational differentiation is yet another form of
differentiation. Maximizing the power of a brand or using the specific
advantages that an organization possesses can be instrumental to a
company’s success. Location advantage, name recognition and
customer loyalty can all provide additional ways for a company to
differentiate itself from the competition.
4. (a) Leatherite Ltd. is currently manufacturing footwears for males and
females and its top management has decided to expand its business by
manufacturing leather bags for males and females. Both the products
are similar in nature within the same industry. The strategic
diversification that the top management of Leatherite Ltd. has opted for
is concentric in nature. They were in business manufacturing leather
footwear and now they will manufacture leather bags as well. They will
be able to use existing infrastructure and distribution channels.

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 Concentric diversification amounts to related diversification.
In concentric diversification, the new business is linked to the existing
businesses through process, technology or marketing. The new product
is a spin-off from the existing facilities and products/processes. This
means that in concentric diversification too, there are benefits of synergy
with the current operations.
(b) According to C.K. Prahalad and Gary Hamel, major core competencies
are identified in three areas - competitor differentiation, customer value,
and application to other markets.
♦ Competitor differentiation: The company can consider having a
core competence if the competence is unique and it is difficult for
competitors to imitate. This can provide a company an edge
compared to competitors. It allows the company to provide better
products or services to market with no fear that competitors can
copy it.
♦ Customer value: When purchasing a product or service it has to
deliver a fundamental benefit for the end customer in order to be a
core competence. It will include all the skills needed to provide
fundamental benefits. The service or the product has to have real
impact on the customer as the reason to choose to purchase them.
If customer has chosen the company without this impact, then
competence is not a core competence.
♦ Application of competencies to other markets: Core
competence must be applicable to the whole organization; it cannot
be only one particular skill or specified area of expertise. Therefore,
although some special capability would be essential or crucial for
the success of business activity, it will not be considered as core
competence, if it is not fundamental from the whole organization’s
point of view. Thus, a core competence is a unique set of skills and
expertise, which will be used throughout the organisation to open
up potential markets to be exploited.
OR

Strategic planning Operational planning

Strategic planning shapes Operational planning deals with
the organisation and its current deployment of
resources. resources.
Strategic planning Operational planning develops
assesses the impact of tactics rather than strategy.
environmental variables.
Strategic planning takes a Operational planning projects
holistic view of the current operations into the
organisation. future.

619
Strategic planning develops Operational planning makes
overall objectives and modifications to the business
strategies. functions but not fundamental
changes.
Strategic planning is Operational planning is
concerned with the long- concerned with the short-term
term success of the success of the organisation.
organisation.
Strategic planning is a Operational planning is the
senior management responsibility of functional
responsibility. managers.

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 ANSWERS OF MODEL TEST PAPER 7
PAPER 6B: STRATEGIC MANAGEMENT
PART I

1. (A) (i) (c) (ii) (c) (iii) (d) (iv) (b) (v) (d)
1. (B) (i) (a) (ii) (c) (iii) (b)
PART II
1. (a) The scenario being referred to is culture in Jupiter Electronics. Strong
culture promotes good strategy execution when there’s fit and impels
execution when there’s negligible fit. A culture grounded in values,
practices, and behavioral norms that match what is needed for good
strategy execution helps energize people throughout the organization to
do their jobs in a strategy-supportive manner. A culture built around such
business principles as listening to customers, encouraging employees to
take pride in their work, and giving employees a high degree of decision-
making responsibility. This is very conducive to successful execution of
a strategy of delivering superior customer service.
A strong strategy-supportive culture makes employees feel genuinely
better about their jobs and work environment and the merits of what the
company is trying to accomplish. Employees are stimulated to take on
the challenge of realizing the organizational vision, do their jobs
competently and with enthusiasm, and collaborate with others.
(b) To maintain a competitive edge in the face of increased competition,
Reshuffle Corp can differentiate its products in several ways:
• Tangible and Intangible Aspects: Reshuffle Corp can focus on the
tangible aspects of its products, such as using high-quality materials
and innovative designs to create furniture that is both functional and
aesthetically pleasing. Additionally, they can emphasize the intangible
aspects of their products, such as excellent customer service and a
strong brand reputation for reliability and durability.
• Pricing Strategies: While market prices are often dictated by
competition, Reshuffle Corp can work on cost optimization to maintain
profitability. They can also consider offering value-added services,
such as free installation or extended warranties, to justify a higher
price point.
• Product Features: By continually optimizing their product features
based on customer feedback and market trends, Reshuffle Corp can
ensure that their products deliver maximum satisfaction to their target
customers. This may include features that enhance functionality,
design, quality, and overall user experience.
• Product Centric Approach: Reshuffle Corp should keep their
products at the center of their strategic activities, ensuring that all

621
 business processes, from production to sales and marketing, are
aligned to meet customer needs and expectations.
• Product Life Cycle Management: Reshuffle Corp should be aware
of the life cycle of their products and plan for reinvention or
replacement accordingly. They can introduce new product lines or
upgrade existing ones to keep up with changing customer
preferences and market trends.
(c) By concentrating primarily on the market for consultancy services in
environmental management, the firm is pursuing a focus strategy. Its
provision of audit services, which rival firms do not offer, highlights a
differentiation strategy within this specific market niche. Therefore, the
firm is following a focused differentiation strategy.
A focused differentiation strategy involves offering unique features that
cater to the specific needs of a narrow market segment. As with the
focused low-cost strategy, narrow markets can be defined differently
depending on the context. For instance, some firms using this strategy
focus on a particular sales channel, such as exclusively selling online,
while others may target specific demographic groups. Firms that
compete on uniqueness while addressing the needs of a narrow market
exemplify the focused differentiation strategy.
2. (a) As industry’s Key Success Factors (KSFs) are those things that most
affect industry members’ ability to prosper in the marketplace – the
particular strategy elements, product attributes, resources,
competencies, competitive capabilities and business outcomes that spell
the difference between profit & loss and ultimately, between competitive
success or failure. KSFs by their very nature are so important that all
firms in the industry must pay close attention to them. They are the
prerequisites for industry success, or, to put it in another way, KSFs are
the rules that shape whether a company will be financially and
competitively successful.
(b) SBU is a part of a large business organization that is treated separately
for strategic management purposes. The concept of SBU is helpful in
creating an SBU organizational structure. It is a separate part of large
business serving product markets with readily identifiable competitors. It
is created by adding another level of management in a divisional
structure after the divisions have been grouped under a divisional top
management authority based on the common strategic interests.
Very large organisations, particularly those running into several
products, or operating at distant geographical locations that are
extremely diverse in terms of environmental factors, can be better
managed by creating strategic business units. SBU structure becomes
imperative in an organisation with increase in number, size and diversity.
SBUs helps such organisations by:
• Establishing coordination between divisions having common
strategic interest.

622
 • Facilitate strategic management and control.
• Determine accountability at the level of distinct business units.
• Allow strategic planning to be done at the most relevant level within
the total enterprise.
• Make the task of strategic review by top executives more objective
and more effective.
• Help to allocate resources to areas with better opportunities.
3. (a) Capabilities that are valuable, rare, costly to imitate, and non-
substitutable are core competencies. A small chemist shop has a local
presence and functions within a limited geographical area. Still, it can
build its own competencies to gain competitive advantage. Rohit Patel
can build competencies in the areas of:
(i) Developing personal and cordial relations with the customers.
(ii) Providing home delivery with no additional cost.
(iii) Developing a system of speedy delivery that can be difficult to
match by online sellers. Being in the central part of the city, he can
create a network to supply at wider locations in the city.
(iv) Having extended working hours for convenience of buyers.
(v) Providing easy credit or a system of monthly payments to the
patients consuming regular medicines.
(b) The vision describes a future identity while the Mission serves as an on-
going and time-independent guide.
The vision statement can galvanize the people to achieve defined
objectives, even if they are stretch objectives, provided the vision is
specific, measurable, achievable, and relevant and time bound. A
mission statement provides a path to realize the vision in line with its
values. These statements have a direct bearing on the bottom line and
success of the organization.
A mission statement defines the purpose or broader goal for being in
existence or in the business and can remain the same for decades if
crafted well while a vision statement is more specific in terms of both the
future state and the time frame. Vision describes what will be achieved
if the organization is successful.
4. (a) Vikram Patel is facing declining sales due to a significant shift of
customers toward online platforms. Although he employs strategic
management tools, they cannot always overcome every obstacle or
guarantee success. The limitations of strategic management in Vikram’s
situation include:
 The environment in which strategies are developed is highly
complex and unpredictable. The entry of online bookstores, a new

623
 type of competitor, introduced a different dynamic to the book retail
industry. These online platforms, with their extensive reach and
pricing power, have dominated the market, posing a formidable
challenge to traditional bookstores.
 Another limitation of strategic management is the difficulty in
forecasting future developments. Despite his strategic
management efforts, Vikram Patel did not anticipate the extent to
which online bookstores would impact his sales.
 While strategic management is a time-consuming process, it is
crucial for Vikram to continue managing strategically. These
challenging times demand increased effort and adaptability on his
part.
 Strategic management can be costly. Vikram Patel might consider
hiring experts to understand customer preferences better and
adjust his strategies to offer more personalized services. These
customized offerings could be difficult for online stores to replicate,
giving him a competitive edge.
 The bookstores owned by Vikram Patel are much smaller in scale
compared to online stores. This makes it challenging for him to
predict how online platforms will manoeuvre strategically.
(b) In the BCG growth-share matrix portfolio of investments are represented
in two-dimensional space. The vertical axis represents market growth
rate, and the horizontal axis represents relative market share. The
strategic implications for various business types under BCG in the
corporate portfolio are:
Stars are products or businesses that are growing rapidly and are the
best opportunity for expansion. Stars may follow the Build strategy. They
need heavy investments to maintain their position and finance their rapid
growth potential.
Cash Cows are low-growth, high market share businesses or products.
They generate cash and have low costs. They are established,
successful, and need less investment to maintain their market share. A
strategic alternative advocated for cash cows is Harvest.
Question Marks are low market share businesses in high-growth
markets. A strategic option for them is Hold for which they need heavy
investments. Question marks if left unattended are capable of becoming
cash traps.
Dogs are low-growth, low-share businesses and products. The relevant
strategy is Divest. Dogs may generate enough cash to maintain
themselves, but do not have much future. Dogs should be minimized by
means of divestment or liquidation.

624
 OR
Strategic alliances are formed if they provide an advantage to all the
parties in the alliance. These advantages can be broadly categorised as
follows:
(i) Organizational: Strategic alliances may be formed to learn
necessary skills and obtain certain capabilities from the strategic
partner. Strategic partners may also help to enhance productive
capacity, provide a distribution system, or extend supply chain. A
strategic partner may provide a good or service that complements
each other, thereby creating a synergy. If one partner is relatively
new or untried in a certain industry, having a strategic partner who
is well-known and respected will help add legitimacy and
creditability to the venture.
(ii) Economic: Alliances can reduce costs and risks by distributing
them across the members of the alliance. Partners can obtain
greater economies of scale in an alliance, as production volume
increases, causing the cost per unit to decline. Finally, partners can
take advantage of co-specialization, where specializations are
bundled together, creating additional value.
(iii) Strategic: Organizations may join to cooperate instead of
competing. Alliances may also create vertical integration where
partners are part of the supply chain. Strategic alliances may also
be useful to create a competitive advantage by the pooling of
resources and skills. This may also help with future business
opportunities and the development of new products and
technologies. Strategic alliances may also be used to get access to
new technologies or to pursue joint research and development.
(iv) Political: Sometimes there is need to form a strategic alliance with
a local foreign business to gain entry into a foreign market either
because of local prejudices or legal barriers to entry. Forming
strategic alliances with politically influential partners may also help
improve overall influence and position.

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 ANSWERS OF MODEL TEST PAPER 8
PAPER 6B: STRATEGIC MANAGEMENT
PART I

1. (A) (i) (b) (ii) (a) (iii) (d) (iv) (b) (v) (a)
1. (B) (i) (b) (ii) (a) (iii) (d)
PART II
1. (a) The Matrix Relationship is the most effective structure for Tech
Innovators Inc. to achieve its vision of leadership in AI technologies. This
structure promotes cross-functional collaboration, essential for
managing complex AI projects and fostering innovation. By integrating
expertise from various departments into temporary, task-based teams,
the Matrix Relationship supports dynamic project management and
aligns well with the company’s strategic goals for advancing AI
technologies. Despite its complexity, this approach provides the
flexibility and collaboration necessary for a leading-edge AI and ML
focus.
Relationship Benefits Drawbacks Suitability for
AI Leadership
Functional Specialization, clear Potential for Less effective
and management of departmental for cross-
Divisional functions and isolation, limited functional AI
products. collaboration. projects.
Horizontal Open Hard to scale, Suitable for
communication, unclear roles startups, less
encourages and for large AI
innovation and fast responsibilities. initiatives.
idea sharing.
Matrix Facilitates cross- Complex Ideal for
functional reporting managing
collaboration, structures, diverse,
flexible resource potential innovative AI
management for conflicts. projects.
complex projects.
(b) The competitive rivalry will be a significant force in case of company of
Rajiv Arya as all the rivals are similar in sizes and are manufacturing
similar products. It is difficult for any single manufacturer to dominate the
market. Large number of patents will make it difficult for new entrants to
break into the market. Further, as there are a large number of small
suppliers the power that suppliers can exert will also be low.
There is no information relating to substitutes and bargaining power of
customers in the information given in scenario. However, a domestic
vacuum cleaner will directly compete with other options such as house

626
 maids. Availability of house maids at low cost can significantly disturb
the sales of products.
Further, as the products are similar customers can easily shift from one
company to another. This will only enhance competitive rivalry.
(c) PQR Ltd. has planned to implement the Strategic Business Unit (SBU)
structure. Very large organisations, particularly those running into
several products, or operating at distant geographical locations that are
extremely diverse in terms of environmental factors, can be better
managed by creating strategic business units. SBU structure becomes
imperative in an organisation with increase in number, size and diversity.
The attributes of an SBU and the benefits a firm may derive by using the
SBU Structure are as follows:
♦ A scientific method of grouping the businesses of a multi – business
corporation which helps the firm in strategic planning.
♦ An improvement over the territorial grouping of businesses and
strategic planning based on territorial units.
♦ Strategic planning for SBU is distinct from rest of businesses.
Products/ businesses within an SBU receive same strategic
planning treatment and priorities.
♦ Each SBU will have its own distinct set of competitors and its own
distinct strategy.
♦ The CEO of SBU will be responsible for strategic planning for SBU
and its profit performance.
♦ Products/businesses that are related from the standpoint of
function are assembled together as a distinct SBU.
♦ Unrelated products/ businesses in any group are separated into
separate SBUs.
♦ Grouping the businesses on SBU lines helps in strategic planning
by removing the vagueness and confusion.
♦ Each SBU is a separate business and will be distinct from one
another on the basis of mission, objectives etc.
2. (a) Strategic management involves developing the company’s vision,
environmental scanning, strategy formulation, implementation,
evaluation and control. It emphasizes the monitoring and evaluation of
external opportunities and threats in the light of a company’s strengths
and weaknesses and designing strategies for survival and growth. It
helps in the creation of a competitive advantage to outperform the
competitors and also guides the company successfully through all
changes in the environment.
The major benefits of strategic management are:

627
 ♦ Strategic management gives directions to the company to move
ahead. It defines the goals and mission.
♦ It helps organisations to be proactive instead of reactive in shaping
their future.
♦ It provides frameworks for all major decisions of an enterprise such
as decisions on businesses, products, markets, manufacturing
facilities, investments and organisational structure. It provides
better guidance to the entire organisation on the crucial point - what
it is trying to do.
♦ It helps organisations to identify the available opportunities and
identify ways and means to achieve them.
♦ It serves as a corporate defence mechanism against mistakes and
pitfalls.
♦ It helps to enhance the longevity of the business.
♦ It helps the organisation to develop certain core competencies and
competitive advantages that would facilitate survival and growth.
(b) The company went through the following stages of the product life cycle
(PLC):
Introduction stage: Initially, the company faced slow sales growth,
limited markets, and high prices, which are characteristic of the
introduction stage. During this stage, competition is almost negligible,
and customers have limited knowledge about the product.
Growth stage: Over time, the demand for the product expanded rapidly,
prices fell, and competition increased. These are typical features of the
growth stage in the PLC. In this stage, the product gains market
acceptance, and customers become more aware of the product's
benefits and show interest in purchasing it.
3. (a) A strategic alliance is a relationship between two or more businesses
that enables each to achieve certain strategic objectives which neither
would be able to achieve on its own. The strategic partners maintain their
status as independent and separate entities, share the benefits and
control over the partnership, and continue to make contributions to the
alliance until it is terminated. The advantages of strategic alliance can
be broadly categorised as follows:
(a) Organizational: Strategic alliance helps to learn necessary skills
and obtain certain capabilities from strategic partners. Strategic
partners may also help to enhance productive capacity, provide a
distribution system, or extend supply chain.
(b) Economic: There can be reduction in costs and risks by
distributing them across the members of the alliance. Greater
economies of scale can be obtained in an alliance, as production
volume can increase, causing the cost per unit to decline. The

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 partners can also take advantage of co-specialization, creating
additional value.
(c) Strategic: Rivals can join together to cooperate instead of
competing. Strategic alliances may also be useful to create a
competitive advantage by the pooling of resources and skills. This
may also help with future business opportunities and the
development of new products and technologies. Strategic alliances
may also be used to get access to new technologies or to pursue
joint research and development.
(d) Political: Sometimes strategic alliances are formed with a local
foreign business to gain entry into a foreign market either because
of local prejudices or legal barriers to entry.
(b) Strategic performance measures are essential for organizations for
several reasons:
♦ Goal Alignment: Strategic performance measures help
organizations align their strategies with their goals and objectives,
ensuring that they are on track to achieve their desired outcomes.
♦ Resource Allocation: Strategic performance measures provide
organizations with the information they need to make informed
decisions about resource allocation, enabling them to prioritize
their efforts and allocate resources to the areas that will have the
greatest impact on their performance.
♦ Continuous Improvement: Strategic performance measures
provide organizations with a framework for continuous
improvement, enabling them to track their progress and make
adjustments to improve their performance over time.
♦ External Accountability: Strategic performance measures help
organizations demonstrate accountability to stakeholders,
including shareholders, customers, and regulatory bodies, by
providing a clear and transparent picture of their performance.
4. (a) The following are the principal points of distinction between concentric
diversification and conglomerate diversification:
(i) Concentric diversification occurs when a firm adds related products
or markets. On the other hand, conglomerate diversification occurs
when a firm diversifies into areas that are unrelated to its current
line of business.
(ii) In concentric diversification, the new business is linked to the
existing businesses through process, technology or marketing. In
conglomerate diversification, no such linkages exist; the new
business/product is disjointed from the existing businesses/
products.
(iii) The most common reasons for pursuing concentric diversification
are that opportunities in a firm’s existing line of business are
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 available. However, common reasons for pursuing a conglomerate
growth strategy are that opportunities in a firm's current line of
business are limited or opportunities outside are highly lucrative.
(b) Channels represent the distribution system through which
organizations distribute their products or provide services to customers.
They play a pivotal role in reaching target markets, maximizing sales,
and establishing competitive advantages.
Channel analysis is important when the business strategy is to scale up
and expand beyond the current geographies and markets. When a
business plans to grow to newer markets, they need to develop or
leverage existing channels to get to new customers. Thus, analysis of
channels that suit one’s products and customers is of utmost importance.
There are typically three channels that should be considered: sales
channel, product channel and service channel.
♦ The sales channel - These are the intermediaries involved in
selling the product through each channel and ultimately to the
end user. The key question is: Who needs to sell to whom for
your product to be sold to your end user? For example, many
fashion designers use agencies to sell their products to retail
organizations, so that consumers can access them.
♦ The product channel - The product channel focuses on the
series of intermediaries who physically handle the product on its
path from its producer to the end user. This is true of Australia
Post, who delivers and distributes many online purchases
between the seller and purchaser when using eBay and other
online stores.
♦ The service channel - The service channel refers to the entities
that provide necessary services to support the product, as it
moves through the sales channel and after purchase by the end
user. The service channel is an important consideration for
products that are complex in terms of installation or customer
assistance. For example, a Bosch dishwasher may be sold in a
Bosch showroom, and then once sold it is installed by a Bosch
contracted plumber.
OR
Mendelow's Matrix can be used effectively to analyze and manage
stakeholders through a grid-based approach by the following steps:
1. Identify Stakeholders: Begin by identifying all relevant
stakeholders for your project or organization. This includes
individuals, groups, or organizations that may be impacted by or
have an impact on your activities.
2. Assess Power and Interest: For each stakeholder, assess their
power to influence your project or organization and their level of

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 interest in its success. Power can be assessed based on factors
such as authority, resources, and expertise, while interest can be
gauged by their level of involvement, expectations, and potential
benefits or risks.
3. Plot Stakeholders on the Grid: Create a grid with Power on one
axis and Interest on the other. Plot each stakeholder on the grid
based on your assessment. Stakeholders with high power and high
interest are placed in the "Key Players" quadrant, those with high
power but low interest are in the "Keep Satisfied" quadrant, those
with low power but high interest are in the "Keep Informed"
quadrant, and those with low power and low interest are in the "Low
Priority" quadrant.

KEEP KEY PLAYER

High

SATISFIED Manage Closely

Involve in decision making
Consult often Engage regularly and
Increase their interest build strong relationship
Can be hindrance to new
ideas or strategic choices
Power / Influence

LOW KEEP
PRIORITY INFORMED
Monitor only, Utilise the high interest by
no engagement engaging in decisions
General occasional Consult in their areas of
communication expertise and interest

Low Interest in the Organisation High

4. Develop Strategies for each Quadrant: Based on the placement

of stakeholders in the grid, develop specific strategies for managing
each quadrant:
• Key Players: Fully engage with these stakeholders, seek
their input, and keep them informed. They are crucial for the
success of your project, so their needs and expectations
should be a top priority.
• Keep Satisfied: These stakeholders have significant power
but may not be as interested in your project. Keep them
satisfied by providing regular updates and addressing any
concerns they may have to prevent them from becoming
detractors.

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 • Keep Informed: While these stakeholders may not have
much power, they are highly interested in your project. Keep
them informed to ensure they remain supportive and to
leverage their insights and feedback.
• Low Priority: These stakeholders have low power and
interest. Monitor them for any changes but allocate minimal
resources to managing their expectations.
5. Monitor and Adapt: Continuously monitor the power and interest
of stakeholders and adjust your strategies accordingly.
Stakeholders may move between quadrants based on changing
circumstances, so it's important to remain flexible and responsive.
By using Mendelow's Matrix as a grid-based tool, you can
effectively analyze and manage stakeholders by tailoring your
engagement strategies to their specific needs and expectations,
ultimately increasing the likelihood of project success.

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