NARSEE MONJEE INSTITUTE OF MANAGEMENT STUDIES (NMIMS)

GLOBAL ACCESS SCHOOL FOR CONTINUING EDUCATION

(NGA-SCE)

INTERNAL ASSIGNMENT

COURSE: STRATEGIC MANAGEMENT

APPLICABLE FOR DECEMBER 2021 EXAMINATION
NMIMS GLOBAL ACCESS SCHOOL FOR CONTINUING EDUCATION (NGA-SCE)
COURSE: STRATEGIC MANAGEMENT
INTERNAL ASSIGNMENT APPLICABLE FOR DECEMBER 2021 EXAMINATION

QUES 1.) You have been appointed as a Strategy Consultant to an International German luxury
brand Philipp Plein wanting to enter the Indian market within the year. The luxury clothing brand
offers high-end clothing for men, women and children.
Which one of Porter’s Generic Strategies would you choose to be operational in India & explain
the reasons in detail behind your choice of strategy? Once the strategy has been chosen, explain
the categories of customers you would target along with the price points? (Please assume that
Covid-19 pandemic is over).
ANSW 1.) MICHEAL PORTER’S GENERIC STRATEGY FOR LUXURY CLOTHING
BRAND
As a strategic consultant to an International German Luxury brand Phillip Plein, the strategy to
be selected for entering the market should de cost leadership strategy. As the market is new and
the tastes and preferences of consumers is not known, so it is necessary to appoint a relatively
easier strategy so that its effects can be easily communicated and understood and whenever and
wherever necessary required changes may be implemented.

COST LEADERSHIP STRATEGY

The term Cost Leadership strategy refers to the mechanism of establishing the competitive
advantage by having lowest cost of operation in the industry where competitive advantage refers
to serving customers better than the competitors. This strategy is especially beneficial in the
market where price is considered as an important factor.
The primary objective of the firm aiming to attain cost leadership is to become the lowest cost
producer in comparison to competitors. This is usually achieved by large scale production which
enables the firm to attain the economies of scale by innovating the production process.
Acquiring raw material at the lowest price is the basic goal of a cost leadership strategy. Further
there is an additional requirement of quality labour who will convert these raw materials into
valuable goods for the consumer. It is mainly done with the objective of ensuring that minimal
price is charged for the goods to be sold thereby maintaining cost advantage. Expenditure
incurred for producing goods is the man concern when it comes to producing any goods or
service, so it should be understood that cost leadership strategy focuses on this main objective
and ensures accomplishment of the same.
REASONS BEHIND CHOICE OF STRATEGY
There are various reasons why cost leadership strategy must be selected which are as follows –

 PROVIDING BETTER PROFITS FOR THE TEAM AND ORGANIZATION

It is evident that cost leadership styles are focused on creating low-cost operations within
the market and industry. Therefore by reducing development and production cost, it
becomes possible for higher profit margin to appear. When the competitive pricing is
available, with greater margins than what other companies want to achieve, then more
business can be gained as you are offering stronger value propositions to customers.

 INCREASING TEAM’s MARKET SHARE

The teams achieving cost leadership style achieves higher profit provided they are able to
achieve an improved market share over period of time. The customers who are conscious
for the budget balance the need for cost with the need for value. If goods and services are
of lower cost, but with an acceptable value, then your items will be considered for
purchase first. Over the time, these leaders can induce more into the business even out of
the mature market.

 IMPROVES SUSTAININBILTY OF BUSINESS

When the costs involved is lower in the business, then there are fewer financial threats
that could put the organizations out of business. This sustainability becomes a great
advantage when the economic circumstances take a turn for the extreme. When the price
or the trade war happens, then due to downturn in the local economy it is the companies
with lowest cost of business that will have the greatest chance of survival.

 MORE CAPITAL FOR GROWTH

More capital can be used for the purpose of growth as there is availability of more capital
resources. Even if the cost of goods or services are low, the higher margins make it
possible to retain capital from each transaction. Many organizations which feature low
cost leadership will use the additional capital for the purpose of investment or fund new
growth.

 REDUCES COMPETITION FROM MARKETPLACE

The companies which are able to implement the cost leadership styles can successfully
give themselves a cost advantage as well. As they are able to offer a superior price model
as well, the new competition in the market is limited because of the reason that
 competitors may struggle to achieve the same price. Unless the competitors are willing to
undercut the company employing the cost leadership, it becomes most impossible to
survive.

CATEGORY OF CUSTOMERS TO TARGET ALONG WITH PRICE POINTS

Now, the major concern is to understand the group of customers which are required to be
targeted for the purpose of implementing the cost leadership strategy. The low income group
customers who cannot invest more in terms of clothing should be targeted for the purpose of
implementation of the cost leadership strategy. It is so because it is the most sensitive form of
customers in the market who can switch to any variation of producers and marketers are per their
convenience.
There are various retail chains and various outlets such as Walmart, McDonald’s, RyanAir etc.
which have various chain of stores for the purpose of conducting their business. It gets really
difficult to manage all of them and for the same uniformity in prices is ensured. The cost
leadership strategy helps in the same and hence the targeted customers get their services in an
efficient and an effective manner.
They are not loyal in terms of the buying behavior and this is the major reason why it is
important to go for a strategy where cost is the major concern for buyers. The pricing points to
be selected for selecting cost leadership strategy should be from low price to high price. Multiple
price points should be formed so that applicable point may be selected by the target group of
customers.
Convenience seeking buyers who are more focused on fulfilling their requirements and not
concerned about savings and meeting future requirements are also included for the purpose of
considering target customers as per cost leadership strategy.

QUES 2.) An International MBA University by the name of INSEAD located in France wishes
to enter India to set up a campus. Conduct a PESTLE analysis for INSEAD in India & suggest
whether INSEAD should enter India or otherwise. (Please assume that Covid-19 pandemic is
over).
ANSW 2.) PESTLE ANALYSIS FOR INSEAD
As per the given situation in the question, a foreign university wants to enter the Indian campus
after conducting the PESTLE analysis for INSEAD. Post analysis, it is also required to be
understood whether the company should enter the market or not. So, firstly it is important to
understand the importance of the term PESTLE analysis. The term PESTLE analysis refers to a
strategic framework which is used to evaluate the external environment of business by breaking
down the opportunities and risks into political, economic, social, technological, environmental
and legal factors. It is necessary for the purpose of Corporate Strategy Planning and for the
purpose of identifying the pros and cons of the business strategy.
In other words it can be understood that PESTLE analysis can be defined as a macro (external)
factors facing an organization. In marketing, before any tactical plan is implemented, it is
fundamental to conduct a full situational analysis.

ELABORATION OF PESTLE ANALYSIS

1.) P – Political Factors

Thus is the first factor of PESTLE analysis. It is undertaken with an objective to understand the
effect of a specific strategic option. For the purpose of expansion and growth of business, it is
important to understand the political issues that may understand the cost, time and effort to the
project.
Analysis of political factors further involves deep analysis of various other sub factors which are
as follows
 Political stability

It refers to how secure the government is. As we know that there are likely to be chance
and subsequent shift in political direction. Whatever the shift is, the uncertainty can
create an issue. There are few questions which needs to be answered for having a
thorough understanding of the political factors.

 Would a shift in political direction affect this decision?

 Would a shift in one direction be more profitable than another?
 What is the level of significance of instability?

 Corruption

Corruption refers to the abuse of entrusted power for private gain. It is the form of
dishonesty created by a person on a specific position for earning benefit from the same
situation. Corruption erodes trust, weakens democracy, hampers the economic
development. It includes both public and private markets.

 Foreign Trade Policy

Foreign trade policy refers to the methods and policies adopted for the purpose of
improving and promoting trade and related activities inside and outside the territorial
 boundaries of a country. It sets various restrictions, traiffs and quotas, the associated costs
of the firm, it further calculates trade barriers in countries.

 Funding Grants

Granting of the funds for the purpose of conducting various activities so as to enhance
trade is also one of the important activity to be undertaken before implementing the
policies.

2.) E – Economic Factors

It takes into account various factor of the economy, an outlook on each area that would impact
business. Various economic indicators that are usually measured and reported by Central Bank
and other Government agencies. It helps to understand how economic factors affect business and
how it is essential to make smart decisions. It includes economic growth rates, interest rates,
exchange rates, inflation, unemployment rates etc. often it is the focus of external environment
analysis. It also includes growth, decline, interest rate, exchange, inflation, credit availability,
cost of living index etc. It helps company to achieve greater heights and it further begins with
understanding the external and environmental factors which further helps to understand how they
can be implemented in the business.
3.) S – Social Factors
PESTLE analysis takes into consideration various social factors, which are related to the cultural
and demographic trends of the society. There are various social norms and pressures which are
key to determining the consumer behavior. There are various factors to be considered which are
as follows –
 Cultural aspects and perception
 Health consciousness
 Population growth rates
 Age distribution
 Career

4.) T – Technological Factors

It is linked to the innovation of the industry, as well as innovation in the overall economy. As we
know that technology is the most important component when it comes to coping up with the
changing business environment. It includes factors such as production techniques, information
and communication resources, production, logistics, marketing and e-commerce technologies
etc. There are various technological factors which includes the rate of technological change, the
evolution of the infrastructure and any Government and institutional research.
Technological factors includes the following
 Research and development activity
 Automation
 Technological incentives
 Rate of change in technology

5.) E – Environmental Factors

The environmental factors concerns the ecological impacts on business. As the weather extremes
becomes more important, it is necessary for the business to adapt to the changes. There are
various key environmental factors which are as follows
 Weather conditions
 Temperature
 Climate change
 Pollution
 Natural disasters etc.
In addition to it, there is an increasing importance of business to be environmentally friendly
with their operations, as evidenced by the rise of Corporate Sustainability Responsibility (CSR)
initiatives.
6.) L – Legal Factors
It generally pertains to any legal forces that defines what a business can do or cannot do. There
are various political factors which involves the relationship between business and the
government. Political and legal factors can intersect when governmental bodies introduce
legislature and policies that affect how business operate. Legal factors includes the changes in
legislation impacting employment, access to materials, quotas, resources, imports/exports and
taxation. These factors have both external and internal sides. Certain laws have an impact on the
business environment as well which are equally contributing as a dominant force for legal
factors.
There are various legal factors which acts as a contributing force for PESTLE analysis as
follows-
 Industry regulation
 Licenses and permits
 Labor laws
 Intellectual property

QUES 3.) You are the CEO of a US based automotive major Ford motors in India. Your
company is facing tough rivals like Hyundai & Kia Motors. You have been operating in India
since several years. During 2021, there has been a steady decline in your revenues &
profitability. Your market share has also fallen from 4.69% to 3.31% during 2021. Your
competitors are eating into your market share slowly & steadily during Covid-19 pandemic
times. (Please assume that Covid-19 pandemic is over).
ANSW 3.) As per the given case study mentioned above, there are various points which are
required to be noted as guiding factor while deciding the various alternatives available which are
as follows –
 The company has been facing tough rivalry from other competitor firms in the market.
 The company has its main business of operation in India since several years.
 There is a steady decline in revenue and the profits of the firm has also declined sharply.
 Competitors are gaining the market share which is a matter of concern for the other
firms operating in the market.
Based on the analysis of above points, it is necessary to understand how the company
will recover from the given situation. For the same an appropriate strategy should be
formulated and implemented so that business may be properly conducted and efficiency
and effectiveness of business operations is maintained.

a. What turnaround strategies can you suggest to arrest the decline of revenues &
profitability of your company?

Answ a.) As per the given scenario, the turnaround strategy to be selected for the purpose
of controlling the decline of revenues and profitability of the company is cost oriented
turnaround strategy.

COST ORIENTED STRATEGY

The cost oriented strategy refers to the strategy which includes reducing the research and
development (R&D) generally a process by which a company obtains a new knowledge
and uses it to improve the existing products and introduce, stretching accounts payable,
eliminating the pay increases etc.

Most companies implement the turnaround recovery strategies so as to ensure cost

effectiveness. Cost oriented strategy entails a varied range of the activities aimed at
producing the quick wins of the companies. The measures may improve a company’s
cashflow or even stabilize its finances even before coming up with the more complex
strategies.

The cost oriented strategies are often implemented first in any recovery strategy.
Companies prefer the turnaround strategy that achieve the cost efficiencies because they
are easy to implement, requires little capital and the effect is almost immediate. It
includes accompanying reduced pressures from debt repayments through financial
restructuring. However such an action carries the risk. Companies rely solely on the cost-
 cutting as a turnaround recovery strategy as it leads to reduction in damage of resources
and these resources are necessary for maintaining the company’s core focus.

The reasons behind choosing the cost oriented strategy are as follows –

 Easy to understand

The cost oriented strategy is easy to understand and comparatively less

complex as compared to the other turnaround strategies. The calculations
involved in the same are much less detailed and lengthy and practically more
feasible.

 Recovery of costs incurred

The costs incurred for implementation of the cost oriented strategy is cheaper
as compared to the other strategies. This further leads to reduction of overall
costs incurred for producing any goods or services. The costs and finances
involved for the implementation of any project is a major consideration while
implementing any project and therefore cost oriented strategy ensures that the
costs incurred may be fully recovered.

 Simplify investment appraisal

It refers to the analysis done to consider the profitability of an investment over

the life of an asset alongside the considerations of affordability and strategic fit.
It is generally considered to expect a return on the amount being invested in
business and cost oriented strategy ensures that the amount utilized may get
recovered.

 Fair and logical understanding of the organization’s short term as well as long
term commitments so as to make sure that organization can achieve the
objectives such as survival and growth. It is considered that profitability and
competitive advantage is also ensured in the long run.
Therefore after considering all the points above it can be concluded that cost oriented strategy is
best suited when it comes to controlling the revenue and profitability of the company.
b. In your opinion, would it be considered appropriate to pursue a Joint Venture
Strategy or should “Ford Motors” go it alone in India? If Yes, state your response
with appropriate justifications & reasons & with which vendor? If No, state your
response with appropriate justifications & reasons?
(Please assume that Covid-19 pandemic is over).

Answ b.) Case 1.) Scenario if “Ford Motors” opts for Joint Venture Strategy along
with Tata Motors.

In case Ford Motors opts for a Joint Venture Strategy, the companion firm to be selected
for the purpose of entering the market should be Tata Motors. Generally, the term Joint
Venture refers to the business arrangement in which two or more parties agree to pool
their resources for the purpose of accomplishment of specific task. And for the same it is
understood that the concern which has same or similar nature of business operations can
enter in collaboration with the other concern. Before entering into a joint venture, it is
necessary that various key points are analyzed. These points are as follows –

 Costs involved

Cost refers to amount of expenditure incurred for the purpose of the producing
any goods or service. While implementing any strategy for both the concerns to
compute the costs involved

 Market situation

It includes research and analysis of your target market, competitors, business

challenges and the company’s competitive differentiators. It is necessary so as
to ensure that the market and the concern function in due conformity with the
market forces of demand and comparatively supply will be increased or
decreased accordingly to function effectively in the market.

 Raw material used

Raw materials used should be similar so that both the organizations can utilize
them which ensures the sharing of resources. It generally includes opening
stock of raw materials, work in progress and finished goods.

 Machinery and equipment required

Now, a joint venture has to compute the costs and requirements of various
plants and machinery for the purpose of producing cars as in case of current
 example which means that as machines are highly expensive so it is necessary
to understand the availability of limited funds and act accordingly.

 Survival and profitability

When it comes to short term objective, survival is the major reason for any
concern to achieve and for long term profitability i.e. earning of profits so that
the amount can be retained and further can be invested in the business.

Case 2.) Scenario if “Ford Motors” opts for solo entry in India

Ford Motors is a big concern and it can enter the market as a solo concern as well
because it has great reputation and goodwill across globe. Joint venture is a less risky
alternative when it comes to acquiring market share as costs but when solo entry is done
then risks and rewards are comparatively more.

Therefore if Ford Motors feel that it can enter the market alone then the most important
thing is acquisition of funds and efficient utilization of resources so that they can survive
in the market and serve customers better than the competitors.