BBA 6th Semester

organization will need a ____________

strategy.
a. business-level
b. organizational
c. operational-level
d. corporate-level

Business Policy & Strategy

Scenario based questions (Q.1to Q. 6)
Colleen invested a dollar in the Powerball
Lottery and won $60 million. Subsequently,
she decides to start her own business
selling lawnmowers.

5. No matter which business Colleen decides

to buy, she intends to operate each business
independently and allow each to determine
its own strategy. This will mean that each
company will be a(n) _____________.
a. operational unit
b. strategic business unit
c. competitive advantage
d. legal subunit

1. Colleen is successful after the first 3 years,

and she is approached by a competitor who
is nearing retirement age. The competitor is
interested in selling his business to Colleen.
For
Colleen,
this
would
be a(n)
__________ strategy.
a. unrelated diversification
b. horizontal integration
c. vertical integration
d. retrenchment

6. Colleen decides that she wants to assemble

lawn mowers. She decides that she wants a
business to develop a distinctive edge in
producing high-quality lawn mowers. This
emphasis on quality is to be so strong that
her company will have a ___________ that
will set her company apart from her
competition.
a. core competence
b. competitive power
c. legal propriety
d. competitive advantage

2. Colleen finds a business opportunity in a

supplier who sells her wheels for
lawnmowers.
This
would
be a(n)
____________ strategy.
a. unrelated diversification
b. horizontal integration
c. vertical integration
d. related diversification
3. Business broker hears that Colleen is
interested in purchasing a business and
approaches her with an offer to sell her a
company that owns a patent on a new
roofing product and who installs this new
roofing in the southwestern United States.
If she buys this firm, she will be using a(n)
_____________ strategy.
a. unrelated diversification
b. horizontal integration
c. vertical integration
d. related diversification

You called the Boston Consulting Group

(BCG), and they have provided you with some
advice based on their famous corporate
portfolio matrix. Your oldest holding, Taco
Rocket, has not grown much in recent years, but
due to low debt, it generates a huge amount of
cash. (Q7 Q9)
7. According to BCG, Taco Rocket would be
considered a ____________.
a.cash cow
b.star
c.question mark
d.dog

4. Initially she begins a business that has a

single-line business. She realizes that this

8. Recently, you purchased a local coffee-cart

chain with 30 locations around the city. You
dont see it growing very much, but then, it
doesnt cost much to operate. BCG would
label this venture a _____________.
a.cash cow
b.star
c.question mark
d.dog

years. As a result, demand for Megabytes

products
and
services has increased
markedly, but so has the level and diversity
of its competition. While Megabytes
customer base has remained fairly loyal,
many longtime customers are beginning to
demand price concessions and enhanced
service levels in return for their continued
business. Additionally, Ariel has learned
recently that several of his former suppliers
and business partners are considering
establishing local sales offices of their own
in Panama City. Ariel knows you are very
knowledgeable about competitive strategy
and calls you asking for advice. You begin
by telling him a little about Michael
Porters five forces theory of competition
and the three generic strategies.

9. You now need to decide how to best

manage and utilize the large number of
assets represented by the numerous
companies you own. For each SBU, you
must create a __________ strategy to
determine how your corporation should
compete in each of its businesses.
a.corporate-level
b.business-level
c.functional-level
d.tactical

10. Demand growth and increasing intensity

and diversity of competition that Ariel is
facing is indicative of which one of Porters
five forces?
a. threat of substitutes
b. threat of new entrants
c. bargaining power of customers
d. current rivalry

Megabyte Center, S.A. (Scenario based

questions Q 10 Q12)
Your old friend, Ariel Eskenazi, is the
owner and general manager of Megabyte
Center, a computer reseller and systems
integrator located in Panama City, Panama.
Since leaving IBM to start a business in his
home country, Ariels company has steadily
grown, due in large part to the business
partnerships hes established over the years
with large foreign computer and software
firms, such as Goldstar and Microsoft.
These relationships have helped his
company win considerable market share
in Panama, as well as in other parts ofLatin
America. However, since the 1999 turnover
of the Panama Canal to the Panamanian
government, there has been a huge influx of
foreign capital into Panama. For example,
several
large
Asian
firms
have
made Panama a beachhead for their
American operations. Tourism is on the
rise, with over a score of new hotels built in
the metropolitan area alone over the past 3

11. Once Ariel has assessed the five forces and

determined the threats and opportunities
that exist in the current environment, you
tell him that he is then ready to select an
appropriate competitive strategy. Porter
outlines three generic strategies: cost
leadership,
differentiation,
and
____________.
a. niche
b. segmentation
c. focus
d. stuck in the middle
12. Because his customers are demanding price
concessions and enhanced service levels in
return for their continued business, Ariel
decides that he wants to compete by
offering unique products that are widely
2

valued by customers.. What strategy is

Ariel following?
a. focus
b. cost leadership
c. differentiation
d. stability

16. Casey
has
been
involved
______________ at a personal level.
a. opportunity analysis
b. risk avoidance
c. strategic planning
d. Stage decision making

13. Ariel is considering forgoing the retail side

of his business entirely. Instead, he will
redirect his resources toward reselling
hardware and software and providing
systems integration services to the Latin
American governmental and industrial
sectors. Such a move would be most
representative of which one of Porters
generic strategies?
a. niche
b. segmentation
c. focus
d. stuck in the middle

in

17. Imagine that you are the president of Taco

Rocket, a new and successful chain of 100
Mexican fast-food restaurants. The success
you have experienced in the last 5 years has
you thinking of what to do with the
business next. You decide to concentrate on
Taco Rockets primary business by only
increasing the menu to include new items
such as enchiladas and rice bowls. This is
an example of what type of growth
strategy?
a. lateral growth
b. horizontal integration
c. concentration
d. related diversification

14. As a process of self-examination during her

senior year of college, Casey decides to
develop a SWOT analysis of her prospects
relative to getting a job.
Casey realizes that she has a personal
characteristic that suggests she is
not comfortable interacting with
strangers. She interprets this as a(n)
___________ if she is to get a job as
a salesperson.
a. alternative
b. strength
c. weakness
d. opportunity

18. Your oldest supplier, Zorro Distributors, is

a family-owned firm. Recently, the firms
president, Diego De La Vega, made the
decision to retire. To his disappointment,
none of his five children stepped forward to
take his place at the helm of the firm. Sr.
De La Vega is concerned that if he sells his
company to a larger distributor, many of his
employees will lose their jobs. You
approach your old friend with a generous
offer to buy Zorro and continue its current
operations. Should your offer be accepted,
Taco Rocket would be undertaking
___________.
a. lateral growth
b. unrelated diversification
c. forward vertical integration
d. backward vertical integration

15. Casey majored in marketing and really

enjoyed studies in market research.
Through research on the Internet and in the
university library, she discovers that this
industry appears to have significant
positive external trends. She interprets this
as a(n) ___________.
a. alternative
b. strength
c. weakness
d. opportunity

19. Youve decided to purchase a controlling

interest in a chain of Oriental fast-food
restaurants, called Honk Kong Fooey.
3

However, you have decided to change the

name of the chain to the Shanghai Grill.
This move is most representative of what
type of growth strategy?
a. lateral growth
b. horizontal integration
c. unrelated diversification
d. related diversification

b. Cost leadership
c. Focus strategy
d. Market follower strategy
24. Diversification is best described as which
of the following _____________
a) Existing products in new markets
b) Existing products in existing
markets
c) New products for new markets
d) New products for existing markets

20. You decide to purchase a local five-store

hardware chain because it was a good
investment. This is an example of
_____________.
a. a lateral growth strategy
b. a combination purchase
c. related diversification
d. unrelated diversification

25. In order to carry out a SWOT analysis, a

company must _________.
a) Identify the main threats in the
external environment
b) Identify the main opportunities
in the external environment
c) Identify the companys main
internal weaknsss
d) All of the above

21. Because of the good profits and a fear of

growing too fast, you decide to keep Taco
Rocket in the same business and do not
change the menu. You hope to retain the
same market share and return-oninvestment record. This is considered a
______________ strategy.
a. stability
b. growth
c. combination
d. diversification

26. What does SBU stands for?

a) Strategic business unit
b) Sales business unit
c) Single business unit
d) Strategic buying unit

22. In SWOT analysis, situations where

organizations are able to convert
weaknesses into strengths and threats into
opportunities, these are called
_____________
a) Strategic windows
b) Strategic leverage
b) Conversion strategy
d)Vulnerability

27. Most large firms typically operate at three

levels. Which is not one of the levels?
a) Business unit level
b) Corporate level
c) Operational level
d) Product level

23. An organization can offer standard products

at acceptable levels of quality, yet still
generate above-average profit margin by
adopting _____________
a. Differentiation

28. The organization type which first utilized

strategy is the:
a) Entertainment organization
4

b) Military organization
c) Retail organization
d) Manufacturing organization

33. All of the following constitute primary

activities EXCEPT:
a) Procurement
b) Marketing and sales
c)outbound logistics
d) operations
34. All of the following constitute support
activities EXCEPT:
a) Technological Development
b) Firms infrastructure
c) service
d) Human resource management
35. The internal audit concentrates on the
availability or lack of critical __________
and the level of __________.
a) capital, skills
b) resources, capabilities
c) financial resources, management
d) skills, resources

29. Corporate social responsibility (CSR) is the

obligation of __________ to make
decisions and act in ways that recognize the
interrelatedness of business and society
a) Competitors
c) Stakeholders
b) Community
d) Organizational decisionmakers
30. Resources that the organization possesses
and capabilities that the organization has
developed, both of which can be developed
into a sustainable competitive advantage,
are known as:
a) weaknesses
b) strengths
c) Opportunities
d)threats

36. The key to using a(n) __________ is to

determine how well or poorly
organizational functions are being
performed:
a) internal audit
b) capabilities assessment profile
c)strategic audit
d) resource audit

31. Which of the following are considered to

be primary activities in a value chain
analysis as outlined by Porter?
a) Inbound logistics
b)Procurement
c) Human resource management
d) Firms infrastructure

37. The ______________ is the chain of

activities which results in the final value of
a businesss products.
a) value chain analysis
b) Internal analysis
c) Resource audit
d) primary analysis

32. The concept of the value chain was

developed by:
a) Milton Friedman
b)Peter Drucker
c) Michael Porter
d) Tom Peters
5

42. ___________ straegies are the decisions of

choices of long term plans from available
alternatives.
a) Stability
b)Expansion
c) Grand
d) Mixed

38. ____________ are those that directly

contribute to production of goods or
services and organizations provision to
customer:
a) Support activity
b) Primary activity
c) Value added Activity
d) Direct activity

43. The term _________ is used to refer to

strategy formulation, implementation, and
evaluation, with _________referring only
to strategy formulation.

39. The summary statement which provides an

overview of advantages and disadvantages
in key areas likely to affect future
operations of the firm ___________
a) Functional Area Profile
b) Value chain activity
c)Strategic Advantage Profile
d) Resource Deployment

a) strategic planning; strategic

management
b) assessment; planning
c) strategic management; strategic
planning
d) management cycle;
brainstorming
44. Developing new digital products is:
a) product development strategy
b) market development strategy.
c ) market penetration strategy
d) none of the above

40. All of the following are approaches to

strategy formulation except
_______________
a) Disjoined Incrementalism
b) key factor approach
c) Intuition
d)Systematic approach

45. Which of the following lists is comprised

of support activities:
a) human resource
management, information
systems, procurement, and
firm infrastructure
b) customer service,
information systems,
technology development,
and procurement
c) human resource
management, technology

41. The change in a broad set of actions and

decisions, e.g., changing relationships and
organization of work is known as
____________
a) Corporate Restructuring
b) Reengineering
c) Business Process Reengineering
d) Outsourcing

development, customer
service, and procurement
d) human resource
management, customer
service, marketing and sales,
and operations

c) Industry attractiveness &

Relative market share
d) Industry Growth & Relative
market share
CASE STUDY:
CASE STUDY -1
Tangy spices Ltd, the countries biggest
spices marketer has decided to launch a
hostile bid for Italys major spice marketer
Chilliano. This is a rare case of an Indian
company making an unsolicited hostile bid
for a foreign company. The Tangy Spices
Ltd. has competencies in Indian spices. The
major destination markets for the Tangy
spices Ltd. exports have been the Europe
and America. The competencies of
Chilliano lie in Italian herbs and spices.
The Indian company with the takeover
wishes to synergies its operations in the
world market. It also wants to take
advantage of the reach enjoyed by the
Italian company in several countries where
its products are not beng sold presently.

46. The competencies or skills that a firm

employs to transform inputs into outputs
are:
a) tangible resources
b)intangible resources
c)organizational capabilities
d)reputational resources
47. The acronym for BCG matrix stands for:
2. a) Boston Calmette Group
b)British Consulting Group
3. c) Boston Corporate Group
d) Boston Consulting Group
48. What does dog symbolize in BCG matrix?
a)Introduction
b) Growth
c) Maturity
d) Decline

The move of hostile takeover follows

Chillianos rejection to an agreement
entered a year back. At that time Chilliano
was suffering losses and it offered majority
shares at a price of 2.25. A total of 20%
shares were transferred at that time. In one
year Chilliano was able to turnaround its
operations and the company made
handsome profits in the last quarter. The
promoters who have residual holding of
35% in the company are reluctant to
transfer the shares now. They have rejected
the agreement with a plea that the earlier
offer price was not sufficient.

49. What does Stars symbolize in BCG matrix?

a) Intoduction
b) Growth
c) Maturity
d) Decline
50. The BCG matrix is based on:
a) Industry attractiveness &
Business strength
b) Industry Growth rate &
Business strength
7

Tangy spices Ltd has revised its offer to

2.95. By this lucrative offer some of the
large shareholders of Chilliano reveal their
interest for selling their stakes. On the other
hand, promoters maintained their position
on this matter. Through the process of
buying of shares in the market the Tangy
spices Ltd. gradually consolidated its
holding in Chilliano to 45%. Being a major
shareholder they were ready for a takeover.
At the same time, Tangy spices Ltd. was
trying hard to improve their position so that
they do not leave any space for Chillianos
promoters in future.

range of electronic instruments from the

ange of mechanical instruments that have
been the mainstay of Meters Limited.

Read the above case and answer the

following questions:

The benefits that will accrue to Meters

Limited will be better utilization of its
installed capacity and appropriate financial
ompensation for the manufacturing effort.
The production manager of Meters Limited
has welcomed the proposal and points out
that it will enable the company to make
profts. The sales manager is doubtful about
the same since the demand for mechanical
instruments in shrinking. The chief
Executive is studying the offer.

The Company has received a firm offer of

cooperation from a competitor who is
similarly placed in respect of product
range. The offer implied the following:
(i) transfer of the manufacturing line from
the competitor to Meters Limited;
(ii) manufacture of mechanical instruments
by Meters Limited for the competitor to the
latter's specifications and brand name; and
(iii) marketing by the competitor.

Q (1) What strategic alternative is followed

by Tangy spices Ltd?
Q (2) Is the hostile takeover by an Indian
company appropriate?
Q.(3) Why the Tangy Spices Ltd. is
interested in this takeover?
Q.(4) Why the promoters are reluctant to
transfer the shares after the agreement?
CASE STUDY-2

Read the above case and answer the

following questions:

Meters Limited is a company engaged in

the
designing,
manufacturing,
and
marketing of instruments like speed meters,
oil pressure gauges, and so on, that are
fitted into two and four wheelers. Their
current investment in assets is around Rs. 5
crores and their last year turnover was Rs.
15 crores, just adequate enough to
breakeven. The company has been
witnessing over the last couple of years, a
fall in their market share prices since many
customers are switching over to a new

Q.(1) What is divestment strategy? Do you

see it being practised in the given case?
Explain.
Q.(2) What is stability strategy? Should
Meters Limited adopt it?
Q(3) What is expansion strategy? What are
the implications for Meters Limited in case
it is adopted?
Q.(4) What are your suggestions to the
Chief Executive?
8

Case Study 3:

than which is highly hierarchical and

formal. Mr. Amit Kapoor disagreed with
Mr, Vikas and told him that the role of
Human Resources Department was only
peripheral to the business and all his
suggestions abot its strategic role were
beyond the purview of Personnel
Administration and Human Resources
Department. After this, Mr. Vikas started
having number of arguments with Mr. Amit
Kapoor in several issues relating to
personnel and industrial relations since he
felt that a person with a degree in Huma
Resources Management was in a far better
position to run Personnel Administration
and Human Resources Department. Mr.
Amit Kapoorthe Chief Personnel
Manager had often shown his displeasure
on Mr. Vikas's argumentative tendency
and had made it known to the General
Manager.

Sahni Auto Industries is a manufacturer and

exporter of Autoparts with an annual
turnover of Rupees one thousand crores. It
employs about 2,00 persons in its factory in
Punjab and its other offices in India and
abroad.
The Personnel Administration and Human
Resources Department of the company is
headed by Mr. Amit Kapoorthe Chief
Personnel Manager. Mr. Amit Kapoor, an
automobile Engineer joined the company 5
years ago as Product Development
Manager. After a successful stint of 4 years
as Product Development Manager, he was
transferred to Personnel Administration and
Human Resources Department as the Chief
Personnel Manager as a part of Carer
development plan. Mr. Vikas, MBA in
Human Resources from a renowned
Business school, joined the company as
Personnel Manager only 3 months back. He
reports to Mr. Amit Kapoorthe Chief
Personnel Manager. He handles all routine
personnel and industrial relations matters.

The General Manager called Mr. Amit

Kapoor in his office to inform him that he
has been elected for an overseas
assignment. He further told him to find a
suitable person as his successor; he even
suggested Mr. Vikas as a possible
candidate. Mr. Amit Kapoor, however,
selected Mr. Balram, who was working as
Training Manager in a Multinational
Company for the last 5 years. Mr. Vikas,
soon started having arguments with Mr.
Balram also over number of issues relating
to industrial relations since he felt that he
had no experience in handling industral
relations matters. Mr. Balram now realised
that Mr. Vikas was trying to make things
difficult for him. After a series of meetings
with the General Manager, Mr. Balram

One day, during informal discussion with

Mr. Amit Kapoor, Mr. Vikas suggested him
of linking Human Resources Management
with Company's strategic goals and
objectives to further improve busness
performance and also to develop
Organisational culture that fosters more
innovative ideas. He also advocated
creating abundant 'Social Capital' on the
ground that people tend to be more
productive in an environment which has
trust and goodwill embedded init rather
9

eventually succeeded in convincing him to

transfer Mr. Vikas to an office outside
Punjab. On learning about his impending
transfer, Mr. Vikas wrote a letter to the
General Manager joining details of various
instances, when Mr. Balram had shown his
incompetence in handling problematic
situations. When asked for explanation by
the General Manager, Mr. Balram had
refuted almost all the allegations. The
General Manager accepted his explanation
and informed Mr. Vikas that most of his
allegations against Mr. Balram were
unwarranted and baseless. He further
advised him to avoid confrontation with
Mr. Balram. Mr. Vikas then wrote a letter to
the Chairman repeating all the allegations
against Mr. Balram. On investigation, the
Chairman found most of the allegations
true. He then called all the threethe
General Manager, the Chief Personnel
Manager and the Personnel Manager in his
office and implored them to forget the past
and henceforth to wor in coordination with
each other in an environment of Trust and
Goodwill.

Management with the company's strategic

goals ? If yes, suggest prominent areas
where Human Resources Department can
play
role
in
this
regard.
SHORT NOTES
i)
ii)
iii)
iv)
v)
vi)
vii)
viii)

Strategic Advantage profile

Economic
and
Political
environment of Indian business
Competitive advantage
Problems
of
unrelated
diversification.
Porter's Five Forces Model
ETOP Analysis
Resource Deployment Matrix
Role of CEO in strategic
management.

DIFFRENCE BETWEEN
i)
ii)
iii)
iv)
v)
vi)

Read the above case and answer the

following questions:

vii)

Q.(1) Identify and discuss the major issues

raised in the case.
Q.(2) Comment on the recruitment of the
two Chief Personnel Managers.
Q.(3) Would you justify Mr. Vikas's
argumentative tendency with the Chief
Personnel Managers ? Give reasons for
your answer.
Q.(4) Do you agree with suggestion offered
by Mr. Vikas to Human Resources

viii)

Diversification and Divestment

Micro Environment of business
and Macro Environment of
business
concentric and conglomerate
diversification
Internal
environment
and
external environment
Mission and Vision
SWOT Analysis and PESTEL
Analysis
Strategic Management and
Business Policy
Vertical
integration
and
horizontal integration

LONG QUESTION
i)

10

Explain the BCG model of

strategic choice. How this
model is similar or different

ii)

iii)

iv)

v)

from a cell matrix or stop light

strategy model?
How to do Strategic Advantage
Analysis?
Choosing
any
industry of your choice, do
Strategic Advantage profile to
illustrate the Strengths and
weaknesses of the Company in
each functional area.
Briefly discuss the major
strategy options available to a
firm. Explain them in brief with
examples.
Describe the process of strategic
management. Draw showing
comprehensively the different
elements management process.
Write a detailed explanatory
note on the methods and

vi)

11

techniques
used
for
organizational appraisal.
Do you agree with the view that
structure follows strategy? Give
reasons for your answer. Also
explain the role of top
management
in
the
implementation of strategy.