MS 11 Strategic Management Sample Paper

MBA - Master of Business Administration

Note: This paper consists of two sections A and B. Attempt any three questions from Section A. Section B is compulsory. All questions carry equal marks.

1. Explain the various steps involved in Strategic Management process in a single business firm.

2. Explain the following:

(a) Types of resources
(b) Strategic importance of resources

3. Discuss the importance of differentiation strategy in the present competitive environment. Explain taking into consideration its advantages and disadvantages.

4. Every strategic alliance incurs certain costs and comes with a set of risks. Explain any five costs/risks of entering into a strategic alliance.

5. Corporate culture plays an important role in the success of an organization. Explain giving suitable example.

SECTION B

NEECO LIMITED

At the end of the recent five-year plan, it was estimated that there would be a considerable demand in the manufacturing capacity of power transformers in the country. It was further projected that the gap between demand and the manufacturing capacity would be even larger in the subsequent plans. Thus, anticipating the country's demand in future, Neeco Limited decided to set up a new unit for manufacturing transformers. This was in addition to the manufacturing capacity already built up at one of the existing factories.

Formal Planning Process

Formal planning was introduced in the very first year of the commencement of activities at the new unit. The planning process at Neeco Limited included the setting up of broad objectives and the preparation of the three-year forecast. In a letter addressed to departmental heads, the General Manager, Mr. S.K. Patel said, "The time has come to put down on paper the objectives and goals of our organisation and to develop a proper framework whereby we can take a more systematic look at the future we are heading for. This, I believe, can be achieved by involvement and cooperation of all the departmental heads in putting into practice a culture of planning." The responsibility for developing a three-year plan was entrusted to the planning cell, which reported directly to the General Manager. There was a separate controller's office, which looked after budget preparation and the subsequent monitoring of actual performance.

Goal Setting

Process Planning began each year in the month of April with the establishment of goals by the top management. The top management group consisted of the General Manager and his various functional heads. The goals were set both in qualitative as well as quantitative terms. The quantitative goals were in terms of growth in sales and profits. Commenting on the quantitative goals, Mr. Patel observed that: "Profit is the primary goal".

The planning cell, after collecting dl the information, consolidated and integrated the data and prepared operating results and cash flow projections for the three-year period.

Exhibit-I
NEECO LIMITED

Before finalising the plans as prepared by the various functional/department heads, a detailed discussion was held. During these discussion was held. During these discussions various departmental heads explained the basis of their respective plans. The final plan was arrived after resolving the conflicting objectives of various departments.

The Planning-Budgeting Linkage

Immediately after the plan was approved b9 the Management Group, the process of preparing a detailed budget for the next year was initiated. The three-year plan set out the broad objectives for the first year and projections for the next two years. A detailed exercise had already been conducted in preparing the broad objectives, which served as a basis for the preparation of a detailed budget for the ensuing year. Thus the first year of the plan document, with necessary modifications, became the budget for the next year. The three - year plan document and the budget were, therefore, closely inter-related. It was said that the preparation of a three - year plan was, in a way, a process of creating an organisational climate for a rigorous and time consuming process of budgeting.

Reactions of Executives

A few executives from the production department had the following comments to make with regard to the formal plan: "The forms are lime-consuming and tiresome. Here, when we are already overburdened with our daily routine, who has got time to fill in figures in these lengthy forms. We are more worried about day-to-day problems, rather than about the 3rd year from now."

Executives from other departments commented: "Planning has led to greater participation in the management process and thus, has created a culture of management by participation. The involvement of all of us in the planning process has given us an opportunity to take a wider perspective and has broadened our horizon. Some of us now understand each other's problems in a better way. This has paved the way for better mutual coordination."

"Some of us now feel more confident of taking up higher responsibilities in future. Planning has helped to groom leaders. It has turned us from technocrats to managers and has prevented us from becoming bureaucrats.''

"Figures by themselves are not very important. Figures without understanding the process of how to obtain them are irrelevant. What is important is the process of planning, rather than filling the figures in prescribed formats. This process had led to greater management participation in shaping the future. Planning has become a frame of mind and a way of thinking. It has become part of our management process,"

Questions:

(a) Evaluate the formal planning process at Neeco Limited.
(b) Critically examine the reactions of the various executives as stated in the case.
(c) Discuss the importance of a three - year plan.