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Education

BUSINESS POLICY & STRAEGIC ANALYSIS (CP-301)

Ques 1:- What is Business Policy? How does Business Policy make the Study of
Management more meaningful?
Ans:- Business Policy:The term Business Policy may be used interchangeably
with Strategic Management, corporate planning etc.
Primarily the term Business Policy means a long-term planning for the total business
as a whole.
BUSINESS- Corporate/ Overall functioning
POLICY Planning/ Formulation of Strategies
Thus Business policy means a long-term planning of any Organization for the
purpose of its GROWTH
SURVIVAL
EXPANSION
DIVERSIFICATION ETC.
The planning of the overall Business is done by the top-level managers who have the
relevant skills experience and knowledge to take a strategic decision for the overall
corporate.
Acc to Christensen:Business Policy is the study of the functions and responsibilities of
Senior Management, the crucial problems that affect success in the total enterprise,
and the decision that determine the direction of the Organization and shape its
future.
From the above definition it may be understood that Business Policy attempts to study
what path is the Organization going to take in future.

-------------GAP------------------------Actual Position
Planning

Anticipated Position
Designing

Implementing Steps

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Study of Business Policy

Nature of Business Policy:-

1. Business Policy is a Study:It is a study of a what the top level

Managers do and what guides their activities.
2. Top-Management:Business Policy deals with the long term perspective of the
Organization. These decision are taken by the managers at the senior level of
management. Therefore, Business Policy attempts to Study the functions and
responsibilities of the senior management which primarily concerns itself to the crucial
problems or decisions of the organization.
3. Future Oriented:As the Study of Business Policy entails what should be done
to take a desired future course of position it is future-oriented. The Senior level
managers anticipate and predict the future and take a policy decision in the present.
4. Choice of a Position:The study of a Business Policy involves evaluating
Various courses of action and various desired future positions and ultimately choosing
one of the best suitable future position.
Leader
Follower
Choice of a position
Challenger
Initiator
5. Choice of a Strategy:
It also involves an evaluation and choice of a
Strategy to reach upto the desired future position.
Mergers & Acquisitions
Joint Ventures
Choice of a Strategy
Diversification
Integration
6. Mobilization of Resources:The study of Business Policy is also concerned with the optimum and
mobilization of the available and the required resources in an organisatio9n for the
achievement of the :
Organizational Goals
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Short-term Goals

Long-term Goals

Evaluation of Business Policy:Future

Strategic thinking
1980s
Strategic Management
1960s
Strategy Paradigm
1930-40s
Planned Policy formulation Integration areas
Mid 1930s
Ad-hoc Policy-making
1911
Hartvard Business School introduced an
integrative Course in Management.

In the Initial days managers used to do with day to day planning methods. The first
phase in mid 1930s was the premise of ad-hoc policy-making mainly due to the
nature of the business of that period.
The second phase in 1930s and 1940s was marked by the increasing environmental
changes. Planned Policy formulation replaced ad-hoc policy making, which led to the
emphasis shift to the integration of functional areas.
The third phase during 1960s was based on strategy paradigm. It was the effect and
relationship of the business with the environment, which guided the process of policy
making.
In the early eighties, the patterns changed again companies went global and
competition increased Japanese Companies unleashed a force across the world
along with other Asian companies and possed threats for the U.S. and European
Companies.
Strategic Management
Strategic process of business

Responsibilities of General management

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Importance
The study of Business Policy makes the study of management more meaningful. It completes the study of management for the students, as
it puts together the information of all the functional areas and gives a complete picture
of the organization for determining a comprehensive future policy of an organization.
Thus the Business policy is important for
Students

Executives

For Students:a) Business Policy seeks to integrate the knowledge gained in various functional
areas of management i.e. Finance, Production, Marketing, and Human Relations
etc.
b) All the constraints and complexities of the real life business are studied in the
subject of Business Policy.
c) The study & practice of management becomes more meaning with the integration
of all the functional sub-systems.
For Executives:d) Business Policy helps to create an understanding of how policies are formulated
e) The study makes the executives more receptive to the developments in the
environment to pick ideas and suggestion for implementation purpose.
f) Business Policy prepares the executives at middle-level of management for the
understanding of strategic decision making.
g) It offers a unique perspective to executives to understand the senior
managements viewpoint.
CONCLUSIONS:The purpose of the business policy course is to integrate the knowledge gained in
various functional areas, to adopt a generalist approach and to comprehend the
complex interaction taking place within the organization. It is a core subject that
integrates all the knowledge & experience gained for future of the organization.
Example-1
The study of the planning & activation of a joint venture between
ONGC Mittal Energy (OME) and ONGC Videsh (OVL) as Mittal Steel Group is a
strategic decision.
Example-2
The kolkata based ITC, known primarily for its tobacco products
has taken a strategic decision to enter into Soaps by targeting SEC-A consumers
using products in the Rs. 15/- range.

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Ques. 2:- Differentiate between Vision and a Mission
characteristics of a good mission statement.

Mention the

Ans:- VISION:The promoters of an organization, normally have some aspirations

which guide them in the structuring and functioning of the organization. These
aspirations are expressed in strategic intent means intention. A strategic intent should
lead to on end. That end is the Vision of an organization. It is what the firm or person
would ultimately like to become in the future.
A vision is more dreamt of than it is articulated. Many a times it may not be evident
what vision does the top management holds for its organization. A vision could be as
hazy & vague as a dream. Yet it is a powerful motivator to action.
Acc to Kotler:- Vision is a description of something in the future.
Acc to El-Namaki:- Vision is a mental perception of the mind of environment on
individual, or an organization that aspires to creat within a broad time horizon and the
underlying conditions for the actualization of this perception.
This vision is a future aspiration that leads to an inspiration to be the best in ones
field of action. It acts as a strong motivating factor for the senior level managers as it
provides a direction to the organizational efforts.

Benefits of a VISION:Acc to Parikh:1. Good visions are inspiring.

2. Visions represent a discontinuity and shows the company what is to be achieved
as an ultimate position.
3. Good visions helps in the certain of a common identity and a shared sense of
purpose.
4. Good visions are competitive, original and unique. They give a sense of identity to
all the employees in an organization.
5. Visions foster long-term thinking and guides the organizational working towards a
common philosophy.
6. A Vision represent integrity and may be useful for the benefit of people.
Thus a good Visions may be inspiring & motivating to the management. It may guide
the working of a dream i. e. a Vision. A vision articulates the position that a firm would
like to attain in the distant future.
E.g. :-

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IOCs Vision
Indian Oil aims to achieve international standards of excellence in all aspects of
energy an diversified business with focus on customer delight through quality
products and services.
Thus Vision constitutes future aspirations that lead to an inspiration to be the best
in ones field of activity.
Mission:
A mission is a statement which defines the role that an organization plaus in a
society. It is the link that the organization develops between its existence and the need of
the society.
While the essence of a vision is forward-looking view of what an organization
wishes to become Mission is what an organization is and why it exists.
According to Thomson.
Mission is the essential purpose of the organization concerning particularly why it is in
existence, the nature of the business it is in an the customers it seeks to serve and
satisfy.
According to Hunger:Mission is the purpose or reason for the organizations existence.
Formally

Mission

Informally

Vision

Statement
of
the
reason of existence

Formulated
Dream to be achieved
in future

* CHARACTERISTICS OF A MISSION STATEMENT:

1. Feasible:A mission statement should always aim high should not be an impossible statement.
It should be realistic and achievable.
According to Havells:
VISION:- We are committed to the cause of enriching the quality of life by ensuring
safe, efficient and convenient use of electricity.
MISSION:

Better Technology
Better Quality
Better Tomorrow
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CONCLUSION:Therefore from the above discussion it may be concluded that a vision is a future
dream of the promoters of an organization. Based on this foundation, the top
management designs a statement for the very reason of its existence in the society,
which is called Mission. The two terms are different in concept yet they complement each
other in giving a purpose to the existence of an organization and guides its activities
towards a future position.
Strategic Intent
Vision
Mission
Business (Corporate level)
Objectives
Divisional Objectives
Departmental/ Functional
Objectives
Operational Objectives

Q.3:- What is the concept of Environment in Strategic Management? What aspects

does Environmental Appraisal deal with?
Ans:Environment:
The term basically means the surroundings: external objectives, variables, events
and circumstances under which someone or something exists. In terms of Business,
Environment refers to the culmination of all conditions, events, circumstances and
situations and the various pressures and influences and surround and directly and
indirectly affects the organization.
Circumstances
Influences

Conditions

Environment

Pressure

Situation

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Directly
Environmental
Influence on
organization

Indirectly

*Characteristics of Environment:a) Complex:

The environment consists of a number of factors and variables directly or indirectly
influencing the operations of any business organization. All the factors and conditions
which form a part of the environment are interrelated and interdependent. One factor
influences or get influenced by another factor. Thus environment is a very complex
phenomenon whose parts may be easily understood in isolation but a total picture may
require sufficient understanding and knowledge.
Globalisation
Liberalisation
Technological
advancement

Competition

Infrastructure
development
Environment sub-systems

b) Dynamic:
Due to so many forces operating in the environment the nature of environment is
constantly changing and is thus dynamic in nature.
c) Multi-Faceted:
The character of the environment is understood by the person who is observing it.
It has got many angles. It ultimately depends upon the perception of the observer, what
he derives out of the development of the events. For example the de-licensing of the
industries may be considered as an opportunity by some who want to enter the business.
However the same may be considered as a threat by those who were earlier having a
monopoly in a particular business.
d) Far-reaching impact:
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The developments and events shaping the environment have a far reaching
influence on the operations of a business. For example any change in the tastes & linking
of customers affect the growth & profitability of a firm.
For any business organization the study of environment is of utmost important to
be able to adjust itself to the latest developments and to be able to reap the benefits of
the opportunities arising in the market. The complexities of any environment may be
understood by dividing it into different categories.
Environment
Internal Vs. External

General Vs. Relevant

A) INTERNAL ENVIRONMENT:
The internal environment of a business consists of various factors existing within
an organization which results into building its strengths & weaknesses.
It includes:Employees & their skill base.
Level of Technology available
Availability of various resources like finance, infrastructure etc.
Process
Organizational design and structure
Organizational work culture- Procedures policies.
B) EXTERNAL ENVIRONMENT: The external environment of a business includes all the factors outside the organization.
It is this set of factors which provide an opportunity or pose threats to the organization. It
includes
i) Market Environment: Customers needs, preferences, attitudes, perception,
bargaining & purchasing power, satisfaction etc.
Product: features, functions, ingredients, image, price, differentiation, availability,
substitutes, services etc.
Marketing intermediary: Channel, levels, costs, logistics, delivery, service & financial
schemes etc.
Competitor related factors: types & number of competitors, entry & exit of competitors,
nature & strategy of competition.
ii) Technological Environment:
Sources of technology, cost of technology acquisition,
Technological development, stages of development change & rate of change, research &
development.
Impact of technology on human beings and environmental effort.
Communication & infrastructural technology.
iii) Supplier Environment:Cost, availability & continuity of supply of raw materials, parts & components.
Cost & availability of finance, energy, human resources, machinery, spare parts & after
sales service.
Infrastructural support & ease of availability.
Bargaining power of suppliers & existence of substitutes.
iv) Economic Environment:9

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Stage of economic development of the country.
Structure of economy- Capitalist/Socialist/Mixed
Economic policies- industrial, monetary & fiscal
Economic planning
Economic indicates like national income, GNP per capita income, savings & investment.
Balance of payments, value of exports & investment.
v) Regulatory Environment:Constitutional framework, Directive principles,
fundamental rights, division of powers.
Policies related to licensing, monopoly, foreign investment, financing etc.
Policies related to distribution & pricing
Policies related to imports & exports
Other policies related to the public sector, small scale industries, environmental pollution,
consumer protection etc.
vi) Political Environment: The political system and its features, political parties.
The political structure
Political processes like party system, elections, economic & industrial promotion &
regulation.
Political philosophy, governments role in business etc.
vii) Socio-cultural Environment:- Demographic characteristics e.g. Population and its
density, distribution, change, age composition, interstate, migration, rural-urban mobility
& income distribution.
Environmental pollution, consumerism, corruption, use of mass media etc.
Family, family values & family structure.
Role and position of men, women, children etc.
Educational level, work ethics, role of minority etc.
viii) International environment:Globalisation, global blocks
Global HR, Global information system
Global markets & competitiveness
Global legal system
C)
General Environment:A wider perception of the environment includes all the aspects of the external
environment e.g.
National/ international
Economic
Social/ Demographic
Technological
Political etc. together constitute the general environment. The general environment
affects the business someway or the other and thus all business houses are concerned
about it. The general environment offers a common set of opportunities and poses a
common set of threats to all the players in the industry. However, the organization may
not be influenced by each factor of the general environment.
D) Relevant Environment:Every business organization is concerned with a set of environment aspects, which have
a direct, or an immediate affect on the business. This part of the general environment
which is of an immediate concern to the business is termed as Relevant environment.
What constitutes a relevant envornment depends upon the perception & working of the
business and the industry a firm is in.
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PORTERS FIVE FORCES MODEL OF EXTERNAL ENVIRONMENT

Potential Entrants
Relative power of Unions
and Government etc.

Other
Stockholders
Suppliers

Threat of New Entrants

Industry
Competitors

Buyers
Bargaining power of
suppliers

Bargaining power ofRivalry among existing firms

buyers
Threat of substitute
Products or services

Substitutes
According to Michael Porter:
Competitive strategy must grow out of a sophisticated understanding of the rules of
competition that determine an industrys attractiveness.
CONCLUSION:Thus the study of various aspects of the environment is undertaken by the
strategist in order to determine positive & negative trends that could impact upon
organizational performance. Change is a continuous phenomenon in the external
environment and that change is unpredictable from the perspectives of timing & strength.
A managers ability to recognize and anticipate environmental changes plays a key role
in shaping the companys future. Understanding of the external environment helps to
build the companys base of knowledge and information, which can help improve a
companys competitive position, buffer the company from environmental impacts & build
bridges to influence stakeholders of the company. This will improve the companys
opportunities to successfully adopt its strategic direction to the trend of the environment.
Q.4.: Define SWOT. What is the rationale of performing SWOT?
Ans: SWOT:
Any Business organization for its survival and growth undertakes a detailed SWOT
analysis. SWOT is the shortform for
Strength
Weaknesses
Opportunities &
Threats
In the cut-throat competition faced by the business today a detailed environmental
scanning is a must. The study of Internal & External Environment, General & Relevant
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environment makes a business house adopt itself to the ever changing and ever
demanding surroundings in which the business operates.

Internal
External
Environment
Environment
The strengths & Weaknesses of any organization are inherent and reside in the
internal environment of a business.
The Opportunities & Threats are the development or events which exist in the
external environment and are open to all the players in the industry.
a)

Strengths:
A strength of a business is its capacity or ability to perform or to possess any
resource relevant for the success or otherwise of a firm, which may not be possessed by
a rival player in the industry.
For e.g.
Skilled manpower
Level of technology
Economy of Scales or availability of cheap finance
Intense distribution channels
Raw materials/ components at least cost.
Efficient suppliers etc.
The strengths possessed by a firm gives it a strategic advantage over the other
firms either in the short run or in the long run business can take a risk based on one of its
strengths. This strength, if realized can help strategic planning of a firm.
b)

Weaknesses:
A weakness of a business is its shortcoming or unability to do something or to
possess something which a rival firm may have. This weakness determines the level of
strategic advantage gained by a competitive firm over a business. A weakness could be
poor availability or poor retention of skilled manpower.
High cost of capital
Outdated or expensive technology
High cost of production
Unreliable suppliers.
Shallow distribution channels
Poor state of logistics & physical distribution
Every organization should try to further strengthen its abilities and try to overcome
or hide or compensate its weaknesses. These weaknesses or shortcoming are generally
made known to the customers by competitors. The firm should always have a ready
strength available to be able to compensate any or all of its weaknesses in the eyes or
the customers.
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For example:
Weakness of high cost of production may be justified by unique features, high
quality & durability etc. of the product.
c)

Opportunities:

An opportunity is any chance or an event, which can be utilized and taken

advantage of an opportunity, lies in the external environment and is open to all the
players in the industry serving on the same platform. It primarily depends upon the
perception as well as the resources of the organization that, whether any occurrence is
considered as an opportunity or not. An effective manager is always receptive to
opportunities, which may soon be converted into strengths.
An opportunity may be :Some favourable law passed by the legislature of the country
Entry or exit of a competitor a substitute
Change of the consumer behaviour
Change in the technology compatible to organisational resources
Availability of a cheap finance
Possibility of a joint ventures or takes over
Change in the competitors strategy
Change of a political party in power etc.
Thus if any event or an occurrence is in favour of the organization it is perceived to
be an opportunity by it. Opportunities are taken advantage of to create a competitive
edge or a first movers advantage in the industry.
d)

Threats
Threats exists in the external environment. It is in accordance of an event or the
potential occurrence of an event which may adversely affect the organisations
functioning or potentiality to lead over the competitors in todays time or in future. The
above mentioned opportunities may well act as a threat to an organization
If it is not suiting its style or working, resources or business strategy.
It is very significant for any business organization to do its SWOT analysis on a
regular interval to make use of its strength & opportunities, to overcome its weaknesses
and to avoid the threats in hampering its business.

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Business
Mission

14

Strategic
Formulation

Feedback & Control

Goal
Formulation
Program
Formulation

THE BUSINESS STRATEGIC-PLANNING PROCESS

Internal
Environment

SWOT
Analysis

External
Environment

Implementation

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Indicators of competitive strengths

1. Strong market share
2. Growing customer base and customer loyalty.
3. Above average market visibility
4. Strongly differentiated products
5. Cost advantages
6. Above average profit margins
7. A creative & entrepreneurial alert management
8. Above average technological & innovational capability
Indicators of Competitive Weaknesses
1. Competitive disadvantages
2. Short on financial resources
3. Slipping reputation with customers
4. Lag in new product development
5. High cost of production
6. Weak product quality
7. Losing ground to rival companies
8. Lacking skills & capabilities in key areas
CONCLUSION:
A Successful strategist concentrates his efforts on the understanding of both
external as well as the internal analysis. The knowledge of competitive moves and
counter moves and the recognition of the potential competitive advantages of the
organization. Both are equality important to be realized by a Strategist.
Q.5. Differentiate between BCG and GE matrix tools used for Strategic planning.
Ans:- BCG GROWTH- SHARE MATRIX:
The Boston Consulting Group (BCG) a leading management-consulting firm
developed and popularized a growth share matrix. The matrix comprises of four
quadrants each describing the size and position of the strategic business unit owned by
an organization.
H
Stars

Question Marks

Market
Growth
Rate

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Cash Cow

Dogs

L
L

Relative Market Share

Growth
On the vertical axis is the Market Growth rate of the market in which the business
operates. A market growth rate above 10 percent is considered to be high.
On the horizontal axis is the Relative Market Share. It refers to the Strategic
Business Units market share as compared to the firm, which is its largest competitor in
the segment under consideration. The relative market share serves a measure of the
companys strength in the market segment.
The two axis are divided into high & low. The growth matrix is divided into four
cells each indicating a different type of business profile.
1.

Question marks:

These are Businesses that operate in high- growth markets but have low relative
market shares. A question mark requires a lot of cash because the company has to
spend money on plant, equipment and personnel to keep up with the fast growing market
and because it wants to overtake the market leader. The company has to think hard
about whether to keep on investing money into this business or put an end.
2.

Stars:
It is a market leader in a high growth market. A star does not necessarily produce
a positive cash flow for the company. The company must spend substantial funds to keep
up with the high market growth an to fight off competitor attacks. A star is a potential
business which has the competitive advantage to be a market leader in an industry that is
growing fast.
3. Cash cows:
Stars with a falling growth rate that still have the largest relative market share and
produce a lot of cash for the company is called a cash cow. The company does not have
to finance expansion because the markets growth rate has slowed because the business
is the market leader it enjoys economies of scale and higher profit margins. The company
uses its cash cows to pay bills and support other business.
4.

Dogs
Businesses that have weak market shares in low-growth markets are in the dog
category. The company should consider whether they are expecting a turn around in the
market growth rate or a new chance for market leadership else they should divest this
business. It would be fruitless to spend and money on this matrix business.
G-E MATRIX
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A refined version of the BCG Matrix is the one pioneered by General Electric. An
SBUs appropriate objectives cannot be determined solely by its position I the growth
share matrix. If additional factors are considered the growth-share matrix can be seen as
a special case of multifactor portfolio matrix.

Market Attractiveness

High

Protect position

Invest to build

Build Selectively

Manage
Earnings

Build
Selectivity

Medium

Low

Protect
Refocus

Strong

for Limited
Expansion or
Harves

& Manage
earning

for Divest

Medium
Business Strength

Weak

Market attractiveness Competitive - Position Portfolio

Each business is rated in terms of two major dimensions market attractiveness and
business strength. Companies are successful to the extent that they enter attractive
markets and posses the required business strengths to succeed in the markets. If one of
these fact is missing the business will not produce outstanding results. Neither a strong
company operating in an attractive market will do very well.
To measure the two dimensions, strategic planners must identify the factors underlying
each dimension and find a way to measure them and combine them.
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Market attractiveness varies with the markets size, annual market growth rate,
historical profit margins etc. business strength varies with the companys market share,
share of growth, product, quality etc.
While the BCG matrix considers only two factors, the GE portfolio matrix helps the
strategic planners to look at more factors in evaluating an actual or potential business
than the BCG model does.
As against the BCG matrix the GE matrix is divided into nine cells, which in turn
falls into zones.

Market Attractiveness

High

Medium

Low

Business Strength

The three cells in the upper left corner indicates strong SBUs in which the company
should invest or grow. The diagonal cells stretching from the lower left to the upper right
indicate SBUs that are medium in overall attractiveness.
The company should pursue selectively and manage for earnings. The three cells
in the lower-right corner indicate SBUs that are low in overall attractiveness. The
company should give serious thought to harvesting or divesting these business units.
Apart from the BCG and GE portfolio matrix, three more portfolio matrix are used to
evaluate the strength of business units and facilitate strategic planning.
A) Direction Policy
B) Space Matrix
CONCLUSION:
Portfolio models have helped managers to think more strategically, to understand
the economics of their businesses better, improve the quality of their plans, improve
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communication between business and corporate management, eliminate weaker
businesses & strengthen their investment in more promising businesses.
However, portfolio models must be used cautiously. They may lead the company
to place too much emphasis on market-share growth and entry into high growth
businesses or to neglect its current businesses because may end up in the same cell
position though differ greatly in underlying ratings & weights.
Q.6. : The core of general management is Strategy Elaborate. Also discuss the
role that a strategist play in strategic management.
Ans: STRATEGY:
THE concept of Strategy is central to understanding Business Policy and Strategic
Management. The term Strategy is derived from the Greek word Strategos which
means generalship. The term Strategy means the art of the managing or adopting a
course of action. A course of action may be:
- to take advantage of opportunities
- to devise ways to counter threats etc.
ACCORDING TO ALFRED D. CHANDLER (1962)
A Strategy is the determination of the basic long- term goals and objectives of an
enterprise and the adoption of the courses of action and the allocation of resources
necessary for carrying out these goals.
ACCORDING TO WILLIAM F.GLUECK (1972)
A Strategy is a unified, comprehensive and integrated plan designed to assure that the
basic objectives of the enterprise are achieved.
By combining the above definitions we understand that a Strategy is a plan or
course of action or a set of decision rules forming a pattern or creating a common thread
related to the organizations activities which are derived from its policies, objectives and
goals.
In business the strategy operates at different levels.
Corporate Level
Strategy

Corporate
Office

Business Level
Strategy
SBU 1

SBU 2

SBU 3

Functional Level
Strategy

Production

Operations

Marketing
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Finance

Personnel

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Apart from the three levels mentioned, many a times a strategy may be designed
at higher levels. Such strategies may be called the Societal Strategies.
The strategies may be set at levels lower than the functional level, which are
called Operational Strategies.
The stream of decisions and actions which leads to the development of a an
effective strategy or strategies to help achieve corporate objectives.
-Glueck (1984)
Strategy is the most significant concept in Business policy and Strategic Management. It
guides the functional and operational decisions by defining the broad course of action.
For example, for an old and very well established company, which had been the
market leader for several years, suddenly faces threat from the emergence of
competitors has e.g. Bajaj Scooters faced competition from LML scooters. A course of
action may involve strategies like expansion diversification, focus, turn around, stability or
divestment phases in the Strategic Management.
Establishment
of Strategic
intent

Formulation of
Strategies

Implementation
of Strategies

Strategic
Evaluation

Strategic Control
Role of strategists:
Strategists are individuals or groups who are primarily involved in the formulation,
implementation and evaluation of strategy. For different levels of managers and
sometimes even outside experts are involved.
a)
Board of Directors:
The Board of Directors are the ultimate legal authority which is elected by the
owners of the organization. The board is responsible for providing guidance and
establishing the directives. There may be difference between the role played by the
Boards of different Organisations.
The board activities include:
To direct
Discuss matters of technology collaboration
New product development
Senior management appointments
Reviewing and screening executive decisions
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Setting and accomplishing objectives
Reviewing and evaluating organisational performance

b)

Chief Executive Officer:A CEO may be designated as the Managing Director, Executive Director,
President or General Manager. He is chief Strategist and plays a major role in decisionmaking. He is responsible forExecution of functions of strategic importance
Setting the mission, objectives & goals of the organization
Organisational leader, Organiser, Implementer, Coordinator and controller.
c)

Role of Entrepreneurs:An Entrepreneur is the person who starts a new business and has a high level of
achievement-motivation. Since the entrepreneurs are the initiators and owners they
provide a sense of direction to the organization and set objectives and formulates
strategies to achieve them. An entrepreneur usually play all strategic roles
simultaneously.
d)

Senior Management:The Senior Management consists of managers at the highest level of the
managerial hierarchy. Managers at the senior level may serve the Board of Directors on
rotational basis, may be as a part of executive committees formed to deal with new
project.
They look after:
Modernization
Technology upgradation
Diversification & expansion
Plan implementation & communication
New product development
Assisting the board & the CEO in the formulation, implementation &
evaluation of strategy.
e)

Consultants:There may be Organisations, which do not have corporate planning department

because of small size, infrequent requirements, financial constraints etc. Such
organisations hire external consultants for strategic planning they may be.
Individuals
Academicians
Consultancy companies etc.
They provide professional service by specially trained & experienced persons to
advise and assist managers & administrators to improve their performance &
effectiveness of their Organisations. e.g. A.F.Ferguson, McKinsey & Co.
Conclusion:
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Thus there are various parties involved in the strategy Formulation, Implementation &
evaluation. Strategies give a direction to the company. They coordinate the efforts of all
functions & all levels towards a predetermined common organisational purpose. It
facilitates an optimum resource allocation & helps programming all organisational
activities in advance.
Q.7. What are the different types of Strategies under Corporate- level Strategies (a)
Stability (b) Expansion (c) Retrenchment (d) Combination. Discuss its advantages
& disadvantages.
Ans: CORPORATE LEVEL STRATEGY:Corporate level strategies are basically about choice of direction that a firm adopts
in order to achieve its objectives. These strategies guide decision making related to
allocating resources among the different businesses of a firm, transferring resources from
one set of business to others and managing & nurturing a portfolio of businesses in such
a way that the overall corporate objectives are achieved.
There are different types of grand strategies.
I)

STABILITY STRATEGY
It is a strategy, which aims at an incremental improvement of its functional
performance. It may aim at marginally changing any one aspect of the business:Customer segment
Alternative Technology
Product mix etc.
A stability strategy is adopted because
It is less risky
Environment faced is relatively unstable.
Expansion may not be suitable.
There may be three types of stability strategies.

No-change
Strategy
Proceed with
caution/pause
strategy

Profit strategy

a)

No-change Strategy:It involves a conclusions decision to do nothing new and to continue with the
present business.
b)

Profit Strategy:
There may be a situation when the firm tries to sustain its profitability by reducing
investments, cutting costs, raising prices, increasing productivity etc.
c)

Pause Strategy:22

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It is a strategy to give a pause to the blasting expansion strategy in the past or toe
move cautiously before moving into a new business aspect.
DISADVANTAGES OF STABILITY STRATEGY
-

Acts as a testing ground, before entering into a new venture

Gives a period of rest if the company had been pursuing aggressive expansion.
Suitable when any expansion may be threatening

II

EXPANSIONS STRATEGY:
THIS strategy aims at high growth by substantially broadening the scope of one or
more of its businesses. It aims at the improvement of its overall performance in business.

There may be five types of Expansion Strategies.

Concentration

Cooperation

Integration
Internationalisation

Diversification

a)

Expansion through concentration:It is also called as intensification, focus or specialization strategy. It involves
concentration of resources on one or more of a firm business so that it leads to
expansion
b)

Expansion through Integration:

Integration means combining activities related to present activity of a firm. It is an
expansion strategy which involves integrating to any business activity in the value chain
ahead or backwards existing business of an organisation.
Potato
Backward Integration

Chips

Distribution
Existing business

c)

Forward Integration

Expansion through diversification:Diversification involves a substantial change in the business of the organisation.
Concrete Diversification:- When the new activity is related to existing business activity.

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Marketing
Related

Technology
Related

Marketing &
Technology
related
Conglomerate diversification: A strategy that plans to enter into an unrelated business
activity for eg. Godrej locks/Almirahs/Referigerators/Soaps.
d)

Expansion through Cooperation:it is a strategy which works on the possibility of mutual cooperation with
competitors; with the competition also going at the same time.
Mergers:It is a strategy of two or more organisation in which one acquires the assets and liabilities
of the other in exchange of share or cash.
Conglomerate mergers
(2 unrelated firms)

Horizontal mergers
(2 firms in same business)

Concentric mergers
(2 related firms)

Vertical mergers
(2 firms creating
complementary products)

Takeover:It is a strategy where an attempt is made by one firm to acquire ownership or

control over another firm against the wishes of the latters management.
Joint venture:It is a strategy where two or more companies combine to form a new company in
order to make use of the strengths of the partners to gain access to a new business. Eg.
Maruti-Suzuki.
Strategic alliance:Two or more firms unite to pursue a set of agreed upon goals but remain independent
subsequent to the formation of the alliance.
e)

Expansion through Internationalisation:These are the types of expansion strategies that require firms to market their
products beyond the national market.
High
Cost Pressures

Low

Global
Strategy

Transnational
Strategy

International
Strategy

Multidomestic
Strategy

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O.D.M Computer & Mgt. Education

Low

High

Pressure for local Responsiveness

III

RETRENCHMENT STRATEGY
Retrenchment strategy is followed when organisation aims at a contraction of the
scope of business. It may involve a total or partial withdrawal from an existing business.
A firm may adopt this strategy when faced with adverse external environment eg.
Shrinking market share, diminishing profitability, falling sales, emergence of substitute
products, adverse government policies, tougher competition, changing customer need &
preferences etc.
It involves strategies like.
a)

Turnaround Strategies:It means devising a strategy to reversing the trend, negatively affecting the
organisation. The strategy implemented internally focus on the ways and means of
reversing the process of decline.
b)

Divestment:It is a strategy which cuts-off the loss- making units or divisions, a product list or
any of its decline causing function etc. it involves a sale of a portion of business. It is
adopted in case a turn-around strategy is not successful.
c)

Liquidation:It is a strategy adopted to abandon all its activities completely. It involves closing
down a firm and setting its assets. It is considered to be the last resort for any strategist
as it involves both loss to employees as well as to the organisation.
Advantages of Retrenchment strategy
To move out of loss-making business.
To meet threatening environment (Government/ competitor/ Substitutes/ Economy/
Customers needs & preferences).
Supports profitable businesses by reallocation of resources.
Saves managements efforts by cutting off unprofitable business.
Disadvantages
May be used a short cut to putting hard work
May divest a potentially profitable business.
May be the decline is temporary.
IV
COMBINATION STRATEGIES:It is strategy adopted by an organisation as a mixture of Stability, Expansion &
Retrenchment either at the same time in its different businesses or at different times in
the same business with the aim of improving its performance. In practice it is very difficult
to find any organisation that has run its business on a single strategy.
Simultaneous

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O.D.M Computer & Mgt. Education

Simultaneous &
Sequential

Sequential

Advantage of Combination Strategy

Big organisation facing complex environment cannot run a single strategy.
An organisation has different business.
Each business lies in different industry requiring a different response.
CONCLUSION:Thus, the above discussion shows that there exists various strategic alternatives
before a strategist. Depending on the
Type and nature of business
Growth & future of business
Nature and number of competitors
External environmental variables
Overall philosophy of the top-management
Internal strengths & weaknesses etc; a given strategy or a combination is adopted
**********************************************************************************************
Q.8: Distinguish between the different approaches in Decision Making.

Ans : DECISION MAKING:

The process of decision making is a very complex and an important function. It
involves considering various alternatives to reach to a choice of an alternative which
facilitates the accomplishment of the organisational objective. Strategy formulation
involves a choice amongst alternatives. It is the most important task of the senior
management to take decision on strategic issue.
Decision-making is of two types

Conventional Decision-Making
Objective Setting
Identification alternatives
Evaluation of alternatives
Choosing the best alternative
Routine decisions
Middle & lower levels of management

Strategic Decision-making
More complex & varied decisions
Extremely difficult choice
Responsibility of the Senior level
management
Important issues
Long term impact.

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Variability

Rationality
Creativity
Factors in
Decision making

Individual Vs. Group

decision-making

Person Related factor

APPROACHES TO DECISIONS- MAKING

a)

Rational approach:The rational approach to decision-making involves an intensive effort in all the

steps:Identification of Problem
Diagnosis of the problem
Identification of various alternatives

(Simon)
Bounded
Rationality

Evaluation of alternatives
Choice of an alternative
Implementation of decision
Review & control
This approach holds that all the steps involve an effort to reach to a quality decision.
Extensive information Search and a logical analysis is done by a decision making
function.
However such an approach undermines personal & the psychological factors
which play an important role in the process of decision-making. Not all managers may be
able to collect, consider & analysis the details & the information.
b)

Human Approach:The Human approach of Decision Making maintains that the human factors
plays a significant role in decision making. Not all decisions may be made rationally. A
personal touch, emotional analysis and psychological factors like perception; motivation
& attitude etc. may affect the process of Decision- making.
c)

Combination:The third approach to decision- making is a combination of the two approaches

mentioned above.
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Human
Approach

Rational
Approach

Combination Approach
This approach states that practically decisions are not completely rational or
completely emotional. These are taken in combination of the two. A Strategist tries to
take a decision based on an extensive research however he may have some personal
factors affecting his choice of an alternative. Thus its the combination, which is the most
practical approach of decision-making.
**********************************************************************************************
Q 9. Discuss the Techniques used for Operational Control.

Ans:- Operational Control:Operational control is aimed at the allocation and use of organisational resources
through an evaluation of the performance of the organisational units an to assess their
contribution to the achievement of organisational objectives.
Concerned with actual results or performance
Control
Strategic Control

Operational Control

Strategic Control
Proactive
Continuous questioning of the basic direction of strategy
Focus on external environment
Operational Control
Reactive
Allocation & use of organisation resources
Focus on internal environment

Process of Operational Control

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Strategy /
Plan
objectives

Reformulate
Strategy/plan

Setting
standards of
performance

Check standards

Actual
performance

Check
performance

Measurement
of actual
performance
Analysing
Variance

Feedback
TECHNIQUES FOR OPERATIONAL CONTROL
The techniques for Operational control are based on organisatonal appraisal i.e.
internal environmental performance. Broadly speaking there are three sets of
Techniques.
Internal Analysis
Comparative Analysis

Comprehensive
Analysis

a)

INTERNAL ANALYSIS:it is the analysis of the internal environment of the organisation strengths &
weaknesses etc. this analysis can be done by various methods:i)

Value-chain Analysis:Value chain is the sequence of activities starting from production to marketing. The
value chain analysis focuses on a set of these inter-related activities undertaken in an
organisation. The importance of this technique is that the total tasks of an organisation
are segregated into different parts and then evaluated.
ii)

Quantitative Analysis:It is an operational technique which makes use of a physical unit in quantitative
terms for the purpose of performance assessment. It is one of the most popularly used
methods.
Quantitative techniques
Financial parameters
Ratio Analysis
Economic value-added (EVA)
Activity based costing (ABC)
b)

Physical parameters
Computation of absenteeism
Market ranking
Rate of advertising recall
Total cycle time of production

COMPARATIVE ANALYSIS:-

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The technique mentioned aims at comparing the performance of an organisation
with its past performance. This comparison helps in the operational control. There exists
three techniques:i)

Historical Analysis:The technique of Historical analysis is a very easy to implement and a very
frequently used technique. This aims at comparing the present performance of an
organisation uses past date i.e. historical data for analysis of comparison.
ii)

Industry Norms:This method of comparison uses the standards of leading firms in the same
industry to be used for comparison with the performance achieved by an organisation.
Present performance
Of an organisation.

VS

Industry norms/average
of performance

iii)

Bench marketing:Bench marketing is a comparative technique, where the performance of an

organisation is measured against the best practices in an area.
Performance
Of an organisation

VS

The best practices

in the Industry

c)

COMPREHENSIVE ANALYSIS:As the name suggests, it is a technique, which encompasses total activities of an
organisation for the purpose of analysis.
i)
Balanced Scorecard:This method is based on the identification of four key performance measures of
customer perspective, internal business perspective, innovation & learning perspective &
financial perspective. The performance of an organisation is measured taking into
account various parameters.
ii)

Key Factor Rating:It is a very comprehensive method taking a holistic view of the organisational
performance. It takes into account key factors in several areas & then evaluates
performance.
********************************************************************************************

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Q.10 (a) Write a short note on Industry Analysis.
Ans:- INDUSTRY ANALYSIS:Because Organisations are open system, a number of environment factors
influence these inevitably that is suppliers, competitors and buyers.
Suppliers :- They supply the goods
Competitors:- They have impact on out business. Their every step influence us.
Buyers:- By whom we makes profit.
The industrial environment of the firm.
INTERNATIONAL ENVIRONMENT
Legal Env..

Economic Env.
The industry env.
Social & Cultural
Env.

Suppliers

Political Env.

Competitors

Technological Env.

Natural Env.

Buyers

INDUSTRY CHARACTERISTICS THAT COULD IMPACT FIRMS PERFORMANCE

The number of firms in the industry
The level and pattern of Promotional expenditure.
The rate and nature of technological competition.
The relative size of firm.
Consumer preferences for the product and for related products.
The rate of demand growth.
The extent of demand growth.
The price behaviour of the leading firm.
The minimum efficient scale of production.
Buyers switching costs.
Demand- side economies of scale.
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Specificity of plant and equipment to industry etc.

Threats of
entry

Jockeying
for position

Michael
porters
analysis
Powerful
Suppliers

Substitute
Products

Powerful
buyers

i)
i)
ii)
iii)

Threats of Entry
The economies of scale
Brand identification
Govt. Limitations (License requirement)

ii)
Powerful Buyers:When buyer can force down prices.
iii)
Powerful Suppliers:
When Suppliers can force buyers to pay higher prices
iv)
Substitute Products:By placing a ceiling on the price it can change to substitute products or services and limit
the potential of an industry.
V)
Jockeying for Position:The strongest forces which influence the profitability of a firm become the determining
factors in strategy formulation.
Usefulness of Industry Analysis :A. Industry Attractiveness
B. Competitive Position.
Industry Attractiveness:32

O.D.M Computer & Mgt. Education

a)
b)
c)

Growth potential
Profitability of the industry
Relative abilities of players.

Competitive Position:Where does the firm stand in comparison to others ina particular Industry.
INDUSTRY ANALYSIS
1.

2.

3.

4.

5.

6.

7.

Basic Features:Size of Industry

Product offering
Volume
Industry Environment:Fragmented Industry
Emerging Industry
Nature of Industry
Declining Industry
Global Industry
Industry Structure:
Market Size
Number of players
Shares of players
Nature of competitions.
Industry attractiveness:Profit Potential
Growth Prospects.
Barriers in industry entry
Industry performance:Production
Sales
Profitability
Industry Practices:Product Policy
Pricing Strategies
Promotion Policy
Distribution Policy etc.
Future Scenario:Change in consumer Preferences
Product innovations
Entry or exit of firms in a market.
Rate of growth etc.

Conclusion:For any strategist to plan for a policy for future requires a complete internal as well
as external analysis. In the external environmental analysis special effort is put on
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Industry Analysis. The analysis of the Industry includes the overall variables of the
industry includes the overall variables of the industry incorporating its size, nature,
performance, attractiveness, relative market share etc. by analysing the industry, a
Strategist can very well evaluate whether it should enter into a given business with
investments or refrain from going ahead.
Threat of entry:A new entrant in an industry represents a competitive threat for established firm
(Called as Incumbents) but the likelihood of new entrant is functional of two factors.
New
Entrant

Barriers
to entry

Retaliatio
n from
Incumben
ts
Major Forces in this are:Economics of scale:New entrants have to enter the industry in big way to reap economies of scale. There will
be a risk of a strong retaliation to over come these barriers. Auto mobile manufacturers
have customized their product.
Expected retaliation:Retaliation (Strong) can be expected if incumbent has a major share in industry but
industry growth is slow.

Product differentiation:Product differentiation refers to physical/perceptional differences that make a product

special/Unique. Companies such as Pepsi, Coke spend huge amount on advertisement
and create emotional bondings. It is very difficult to switch customers from them.
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Capital Requirement:Competing in new Industry needs huge capital investment. Even when competing in a
new industry is attractive, the huge capital needed for successful market entry may
create a barrier.
Cost disadvantages;Established companies have cost advantages that new entrants can not duplicate e.g.
favourable locations Mc Donalds.
Switching costs:If a buyer were to change his supplies from an established supplier to new comer then
cost may have to be paid in form of new handling equipment, training cost etc.
b)
Intensity of Rivalry:Firms operating within an industry are mutually dependent. Action takes by one firm
usually attract competitive retaliation in from of price cutting modifications in product or
promotion etc. This variable studies the extent of competition amongst the competing
firms.
c)
Powerful suppliers:A supplier is said to be powerful when:Strong Supplier:It is dominated by a few large companies & is more concentrated than the industry
to which it sells Selling to fragmented buyers means that concentrated suppliers will be
able to exert great influence over price, quality etc. for e.g. pharmaceutical industry.
No Substitute:If there are no substitute products to buyers and if they have no alternative
sources of supply then all buyers are weak in relation to existing suppliers.
Buyers Importance as a Customer:If the buying industry is not an important customer of the supplier then the supplier
is in a strong position for example, McDonald is a much more important customer of soft
drink producer than a small disc would be.
Suppliers ability to enter the buying Industry:When supplier can enter the Industry of their customer, then their bargaining
power is increased. If the firm has its own production, R & D and has no distribution
channel, they can put great pressure on buyers, by threatening them to enter the market.

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d)

Powerful buyers:Customers can force price down demanding better quality or more service & play
competition off against each other, in case they are stronger that the suppliers.
Buyers Concentration:Buyers are concentrated at one place or buy in large quantities related to total
industry sales. In such scenario buyers can get deals stuck in their favour. For e.g.
Computer & Automobile industry.
Price Sensitivity:If the product that the buyers purchase represent a large portion of buyers cost. In
such a case, price is an important issue for buyers. They all are keen to bargain for
favourable terms & indulge in selective buying. For e.g. Refrigerator v/s Cigarettes.
Standardized products:If the products that the buyers purchase are standardized, in such case buyers
have a tendency to play one seller against another. For example steel is a standardized
product, all automobile like Maruti, Hyundai can have bargaining power for that.
e)

Threat of Substitute products:

Substitute products are different goods or services from outside a given industry that
perform similar or the same function as a product that the industry produces. The
presence of substitute products poses a threat on prices that can be changed by an
industry. When relative price of substitute product rise, for example Tea & Coffee, plastic
bag vs paper beg, Oil vs LPG. Customers tend to switch their localities towards the
substitute products because of low price.
CONCLUSION:
After having a view of Porters model we conclude that how a firm can do its competitive
analysis & which can be done to avoid this by studying porters five forces and make
effective strategic planning.

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Future objective
where will emphasis
in future?

Current Strategy
How are we currently
competing?

VS

Response
What will our
competitors do in
future?

Assumptions
Are we operating
under a status quo?

Capabilities
What are our strengths
& weakness?

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GURU HARKRISHAN INSTITUTE OF MANAGEMENT

BUSINESS POLICY & STRAEGIC ANALYSIS (CP-301)
Ques:- What do you mean by competitive advantage? What are the determinants of national
competitive advantage? Explain approaches and types of competitive advantage?
Ans:- Definition:- Competitive Advantage a situation in which there is a match between the
distinctive competencies of a firm and the factors critical for success within its industry that
permits the firm to out per form competitors. Competitive Advantage profile a statement showing
competitive position of an organization in the market place. It is also known as Strategic
Advantage.
Dynamics of National Competitive Advantage:National Competitive Advantage:- Competitive advantage to a country in relation to other
countries. Like each organization , each country is known in terms of its competitive advantage.
For ex.:- USA of computers, credit cards, Japan for electronic & automobiles, Germany for
printing Presses, Switzer land for pharmaceuticals and India for software professionals. The
question is what factors have contributed to generate advantage to these countries in specific
areas? The answer of this question is important for the purpose of generating competitive
advantage at the global level.
According to M.Parter has categories various national attributes in four groups.

Firm Strategy
structure & rivalry

Factor conditions

Demand Condition

Related &
supported
Industries
1. Factor Condition:- Factor that provide base for undertaking various business activities.
These resources can be divide into five broad categories-human resources, knowledge
resource, physic resource, capital resource & infrastructure.
2. Demand Condition:- The nature of demand conditions for an organizations or industrys
product services in the country is important because it determines the rate of and nature

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of improvement & innovation by the organisations. These factors either train organisations
for world-class competitive or fail to adequately prepare them to competent in the global
market place
3. Related & supporting Industries:- Apart from the main industry in which context
competitive advantage is talked about, the conditions of related & supporting industries
also determine industrys competitive advantage. However the Long run , the relationship
between main industry & related & supporting industries becomes reciprocal. For ex.:- If
the main Industry is developed, the relate industries will also develop with a time lag. In
the same way, the related industries will provide support to the further development of the
main industry.
4. Firmstrategy,structure & Rivalry:- Differences in strategy, structure & rivalry create
advantages or disadvantages to firms. Competing in different types of industries in a
nation. The aggregate of these determines national competitive advantage. The way
different firms shape their strategy- ranging from a broad outlook and long-term
profitability to narrow range and short term profitability-determine how the nation will be
competitive. For ex.:- US companies rank return on investment, share price increase, &
market share in that order.
Approaches for Competitive Advantage:These approaches are as follows:1. Generic competitive strategy
2. STRATEGIC intent
3. Bench Marketing
4. Synergistic approach
5. critical success factors approach.
1. Generic competitive strategy:- A basic strategy based on the principle that the achievement of
competitive advantage is at the case of superior market strategy.
COST
BROAD

NARROW

DIFFERENTIATION

Overall cost leadership

Differentiation

Cost Focus
Different ion

Focused

Competitive
& Scope

Competitive Base
(a)

Overall coat leadership:- an organizations position as the Industrys least cost

producer in broadly defined markets or a wide mix of products.
(b)
Cost Focus:- a situation in which an organisation focus on a narrow market
segment & offers product at the lower price than its competitors based on cost
advantage.
(c)
Differentiation:- is the act of designing a set of meaning full differences of
distinguish the organisations offerings from competitors offerings
(d)
Focused Differentiation:- differentiation of activities to generate competitive
advantage in a narrowly defined market/ coustmor segment.
II. Strategic Intent:- ambitions and obsession for winning which are used a means for
generating competitive advantage.
According to Hamel & Prahalad:(a) Building layers of advantage
(b) Searching for loose bricks

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(c) Changing the rules for engagement
(d) Collaborating
III. Bench Marking:- It is another tool which can be used to generate competitive advantage. It
is a process of identifying, understanding, and adapting outstanding practices from within the
same organization or from other business to help improve performance.
Types of Benchmarking:1. Product Benchmarking
2. Competitive bench marking
3. process bench marking
4. strategic benchmarking
5. global benchmarking.
IV. Synergic Approach:- can be used as a means do generating competitive advantage to an
organisation if the managers are sufficiently aware about how synergistic effect is developed.
Synergy is the process of putting two or more elements together to achieve a sum total greater
than the sum total of individual elements separately. This effect is described as 2+2=5 effect.
Areas of synergistic effect:- Production synergy
- Marketing synergy
- Research development synergy
- Financial synergy
- General management synergy
V. Critical Success factors Approach:- characteristics, conditions or variables which when
sustained can have significant impact on the success of an organisation competing in a
particular industry.
Organisational Critical success factors:Mckinsey 7s framework:Strategy, Structure, systems, staffs, skills, style, shared values
Types of competitive Advantage:-

LARGE

FEW

MANY

Volume

Specialized
Size of advantage

SMALL

Stalemated

Fragmented

Number of approaches of competitive advantage

1. Volume:- volume of competitive advantage exists when organisation has very few
advantages but these are quite large in volume.
For ex.:- In luxury car segment, product differentiation in terms of style, comfort, design etc. is
used for generating competitive advantage and cost becomes secondary.
2. Specialized:- specialized competitive advantage exists when an organisation has the
opportunity to adopt many approaches together to generate competitive advantage.
For ex.:- Organisations manufacturing specialized machinery for selected market-segment
can combine both approaches-low cost & product different ion- to be competitive.
3. stalemated:- competitive advantage exists when an organisation operates in an industry in
which meaningful product, differentiation is not possible & industrys cost structure is quite
rigid.
For ex.:- sugar industry, product differentiation does not exist.
4. Fragmented:- competitive advantage exists an organisation has many opportunities but
each opportunity has limited payoff.

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5. For ex. Restaurants.

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