STRATEGIC MANAGEMENT

CHAPTER- 1
INTRODUCTION TO STRATEGIC MANAGEMENT
Multiple Choice Questions
1. Strategy is a game plan used for which of the following?
a. To take market position
b. To attract and satisfy customers
c. To respond to dynamic and hostile environment
d. All of the above

2. Which of the following is correct?

a. Strategy is always pragmatic and not flexible
b. Strategy is not always perfect, flawless and optimal
c. Strategy is always perfect, flawless and optimal
d. Strategy is always flexible but not pragmatic

3. Strategy is-
a. Proactive in action
b. Reactive in action
c. A blend of proactive and reactive actions
d. None of the above

4. Reactive strategy can also be termed as-

a. Planned strategy
b. Adaptive strategy
c. Sound strategy
d. Dynamic strategy

5. Formulation of strategies and their implementation in a strategic management process is undertaken by-
a. Top level executives
b. Middle level executives
c. Lower level executives
d. All of the above

6. Which of the following are responsible for formulating and developing realistic and attainable strategies?
a. Corporate level and business level managers
b. Corporate level and functional level managers
c. Functional managers and business level managers
d. Corporate level managers, business level managers and functional level managers

7. Which of the following managers’ role is to translate the general statements/ strategies into concrete
strategies of their individual businesses-
a. Supervisor
1
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

b. Functional Manager
c. CEO of the company
d. All of the above

8. Which statement should be created first and foremost?

a. Strategy
b. Vision
c. Objectives
d. Mission

9. Strategic management enables an organization to __________, instead of companies just responding to

threats in their business environment.
a. be proactive
b. determine when the threat will subside
c. avoid the threats
d. defeat their competitors

10. Read the following three statements:

(i) Strategies have short-range implications.
(ii) Strategies are action oriented.
(iii) Strategies are rigidly defined.
From the combinations given below select an alternative that represents statements that are true:
a. (i) and (ii)
b. (i) and (iii)
c. (ii) and (iii)
d. (i), (ii) and (iii)

11. What involves formulating, implementing, and evaluating cross-functional decisions that enable an
organization to achieve its objectives?
a. Strategy formulation
b. Strategy evaluation
c. Strategy implementation
d. Strategic management

12. Strategic management allows an organization to be more

a. Authoritative
b. Participative
c. Commanding
d. Proactive
13. The term MANAGEMENT is used to represent:
a. Key group in an organization
b. Set of interrelated functions
c. Human resource Management
d. Both a & b
2
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

14. Which of the following functions come under management?

a. Planning
b. Organising
c. Directing
d. All the above
15. the term ‘strategy’is
a. A Short range blueprint of an organization’s desired image, direction and destination
b. A Medium range blueprint of an organization’s desired image, direction and destination
c. A long range blueprint of an organization’s desired image, direction and destination
d. None of the above
16. Strategy is a unified, comprehensive and integrated plan designed to assure that the basic objectives
of the enterprise are achieved was defined by:
a. Peter Drucker
b. William F. Glueck
c. Micheal Portor
d. C.K.Prahalad
17. Corporate strategies are formulated by the _____managers and include plans for expansion
a. Lower Level
b. Top Level
c. Middle Level
d. All the above
18. The overall objectives of strategic management are
a. To create competitive advantage
b. To guide the company successfully through all changes in the environment Middle Level
c. Both A & B
d. None of the above
19. Survival of the fittest was propagated by
a. Peter Drucker
b. Charles Darwin
c. Micheal Portor
d. C.K.Prahalad
20. _________ implies the blueprint of the company’s future position
a. Strategy
b. Vision
c. Objectives
d. Mission
21. __________ delineates the firm’s business, its goals and ways to reach the goals
a. Strategy
b. Vision
c. Objectives
d. Mission
22. __________________ is the purpose that an organisation aims to achieve
a. Strategic Intent
b. Strategic target
3
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

c. Strategic Management
d. None of the Above
23. ______ are the deep-rooted principles which guide an organisation’s decisions and actions
a. Vision
b. Objectives
c. Mission
d. Values
24. The entrepreneurial challenge in developing a strategic vision is to think _________ about how to
prepare a company for the future
a. Innovatively
b. Proactively
c. Creatively
d. Reactively
25. _______statement clearly illuminates the direction in which organization is headed
a. Vision
b. Objectives
c. Mission
d. Values
26. A ________ is an answer to the basic question ‘what business are we in and what we do’
a. Vision
b. Objectives
c. Mission
d. Values
27. _____________statement should reflect the philosophy of the organizations
a. Vision
b. Objectives
c. Mission
d. Values
28. __________emphasised that as the first step in the business planning endeavour every business firm
must clarify the corporate mission
a. Peter Drucker and Theodore Levitt
b. C.K.Prahalad & Gary Hamel
c. Glueck & Jauch
d. Micheal E Portor
29. _____________ are organization’s performance targets – the results and outcomes it wants to
achieve
a. Objectives
b. Goals
c. Metrics
d. Values
30. Objectives should be_________
a. Understandable
b. Concrete & Specific
c. related to a time frame
4
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

d. All the Above

31. ____________features a grid-like structure of levels in an organisation
a. Functional
b. Divisional
c. Matrix
d. Horizontal
32. All positions, from top management to staff-level employees, are in the same hierarchical position
a. Functional
b. Divisional
c. Matrix
d. Horizontal
33. ________is an independent relationship, where each function or a division is run independently
headed by the function/division head
a. Functional & Divisional
b. Matrix
c. Horizontal
d. Vertical
34. A ______________ Level manager’s sphere of responsibility is generally confined to one
organizational activity
a. Corporate level managers
b. business level managers
c. functional level managers
d. All the above
35. __________ Role is to translate the direction and intent that come from the corporate level into
concrete strategies for individual businesses
a. Corporate level managers
b. business level managers
c. functional level managers
d. All the above
Answer to MCQ based Questions
1 d 11 d 21 d 31 c
2 b 12 d 22 a 32 d
3 c 13 d 23 d 33 b
4 b 14 d 24 c 34 c
5 d 15 c 25 a 35 b
6 d 16 b 26 c
7 b 17 b 27 c
8 b 18 c 28 a
9 a 19 b 29 a
10 a 20 b 30 d
5
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

Scenario Based Questions

1. Mr. Raj has been hired as a CEO by XYZ ltd a FMCG company that has diversified into affordable
cosmetics. The company intends to launch Feelgood brand of cosmetics. XYZ wishes to enrich the lives
of people with its products that are good for skin and are produced in ecologically beneficial manner
using herbal ingredients. Draft vision and mission statement that may be formulated by Raj.
Answer:
Feelgood brand of cosmetics may have following vision and mission:
Vision: Vision implies the blueprint of the company’s future position. It describes where the organisation
wants to land. Mr. Raj should aim to position “Feelgood cosmetics” as India’s beauty care company. It may
have vision to be India’ largest beauty care company that improves looks, give extraordinary feeling and bring
happiness to people.
Mission: Mission delineates the firm’s business, its goals and ways to reach the goals. It explains the reason
for the existence of the firm in the society. It is designed to help potential shareholders and investors
understand the purpose of the company:
Mr. Raj may identify mission in the following lines:
 To be in the business of cosmetics to enhance the lives of people, give them confidence to lead.
 To protect skin from harmful elements in environment and sun rays.
 To produce herbal cosmetics using natural ingredients.

2. Yummy Foods and Tasty Foods are successfully competing in the business of ready to eat snacks in
Patna. Yummy has been pioneer in introducing innovative products. These products will give them
good sale. However, Tasty Foods will introduce similar products in reaction to the products introduced
by the Yummy Foods taking away the advantage gained by the former.
Discuss the strategic approach of the two companies. Which is superior?
Answer:
Yummy foods is proactive in its approach. On the other hand, Tasty Food is reactive. A proactive strategy is a
planned strategy whereas reactive strategy is an adaptive reaction to changing circumstances. A company’s
strategy is typically a blend of proactive actions on the part of managers to improve the company’s market
position and financial performance and reactions to unanticipated developments and fresh market
conditions.
If organisational resources permit, it is better to be proactive rather than reactive. Being proactive in aspects
such as introducing new products will give you an advantage in the mind of customers.
At the same time, crafting a strategy involves stitching together a proactive/intended strategy and then
adapting first one piece and then another as circumstances surrounding the company’s situation change or
better options emerge-a reactive/adaptive strategy. This aspect can be accomplished by Yummy Foods.

3. Ramesh Sharma has fifteen stores selling consumer durables in Delhi Region. Four of these stores were
opened in last three years. He believes in managing strategically and enjoyed significant sales of
refrigerator, televisions, washing machines, air conditioners and like till four years back. With shift to
the purchases to online stores, the sales of his stores came down to about seventy per cent in last four
years.
Analyse the position of Ramesh Sharma in light of limitations of strategic management.
6
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

Answer:
Ramesh Sharma is facing declining sales on account of large-scale shift of customers to online stores. While
he is using the tools of strategic management, they cannot counter all hindrances and always achieve
success. There are limitations attached to strategic management as follows:
 Environment under which strategies are made is highly complex and turbulent. Entry of online stores, a
new kind of competitor brought a different dimension to selling consumer durables. Online stores with
their size power could control the market and offer stiff competition to traditional stores.
 Another limitation of strategic management is that it is difficult to predict how things will shape-up in
future. Ramesh Sharma, although managing strategically failed to see how online stores will impact the
sales.
 Although, strategic management is a time-consuming process, he should continue to manage
strategically. The challenging times require more efforts on his part.
 Strategic management is costly. Ramesh Sharma may consider engaging experts to find out preferences
of the customers and attune his strategies to better serve them in a customized manner. Such
customized offerings may be difficult to match by the online stores.
 The stores owned by Ramesh Sharma are much smaller than online stores. It is very difficult for him to
visualize how online stores will be moving strategically.

4. Dharam Singh, the procurement department head of Cyclix, a mountain biking equipment company,
was recently promoted to look after sales department along with procurement department. His seniors
at the corporate level have always liked his way of leadership and are assured that he would ensure
the implementation of policies and strategies to the best of his capacity but have never involved him in
decision making for the company.
Do you think this is the right approach? Validate your answer with logical reasoning around
management levels and decision making.
Answer:
Functional managers provide most of the information that makes it possible for business and corporate level
managers to formulate realistic and attainable strategies.
This is so because functional managers like Dharam Singh are closer to the customers/suppliers/ operations
than the typical general manager is. A functional manager may generate important ideas that subsequently
may become major strategies for the company. Thus, it is important for general managers to listen closely to
the ideas of their functional managers and invoice them in decision making.
An equally great responsibility for managers at the operational level is strategy implementation: the
execution of corporate and business level plans, and if they are involved in formulation, the clarity of
thoughts while implementation can benefit too.
Thus, the approach of Cylcix Corporate management is not right. They should involve Dharam Singh, as well
as other functional managers too in strategic management.

5. ABC Limited is in a wide range of businesses which include apparels, lifestyle products, furniture, real
estate and electrical products. The company is looking to hire a suitable Chief Executive Officer.
Consider yourself as the HR consultant for ABC limited. You have been assigned the task to enlist the
activities involved with the role of the Chief Executive Officer. Name the strategic level that this role
belongs to and enlist the activities associated with it.
Answer:
7
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

The role of Chief Executive Officer pertains to corporate level.

The corporate level of management consists of the Chief Executive Officer (CEO) and other top-level
executives. These individuals occupy the apex of decision making within the organization.
The role of Chief Executive Officer (Top Management/Corporate Level Managers) is to:
1. oversee the development of strategies for the whole organization;
2. defining the mission and goals of the organization;
3. determining what businesses it should be in;
4. allocating resources among the different businesses;
5. formulating, and implementing strategies that span individual businesses;
6. providing leadership for the organization;
7. ensuring that the corporate and business level strategies which company pursues are consistent with
maximizing shareholders wealth; and
8. managing the divestment and acquisition process.

Descriptive Questions
1. What is Strategic Management? What benefits accrue by following a strategic approach to managing?
Answer:
The term ‘strategic management’ refers to the managerial process of developing a strategic vision, setting
objectives, crafting a strategy, implementing and evaluating the strategy, and initiating corrective
adjustments were deemed appropriate.
The overall objective of strategic management is two-fold:
 To create competitive advantage, so that the company can outperform the competitors in order to have
dominance over the market.
 To guide the company successfully through all changes in the environment.
The following are the benefits of strategic approach to managing:
 Strategic management helps organisations to be more proactive instead of reactive in shaping its future.
Organisations are able to analyse and take actions instead of being mere spectators. Thereby they are
able to control their own destiny in a better manner. It helps them in working within vagaries of
environment and shaping it, instead of getting carried away by its turbulence or uncertainties.
 Strategic management provides frameworks for all the major decisions of an enterprise such as decisions
on businesses, products, markets, manufacturing facilities, investments and organisational structure. It
provides better guidance to entire organisation on the crucial point - what it is trying to do.
 Strategic management is concerned with ensuring a good future for the firm. It seeks to prepare the
corporation to face the future and act as pathfinder to various business opportunities. Organisations are
able to identify the available opportunities and identify ways and means as how to reach them.
 Strategic management serves as a corporate defence mechanism against mistakes and pitfalls. It helps
organisations to avoid costly mistakes in product market choices or investments. Over a period of time
strategic management helps organisation to evolve certain core competencies and competitive
advantages that assist in its fight for survival and growth.

2. Are there any limitations attached to strategic management in organizations? Discuss.

Answer:
The presence of strategic management cannot counter all hindrances and always achieve success. There are
limitations attached to strategic management. These can be explained in the following lines:
8
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

 Environment is highly complex and turbulent. It is difficult to understand the complex environment and
exactly pinpoint how it will shape-up in future. The organisational estimate about its future shape may
awfully go wrong and jeopardise all strategic plans.
 Strategic management is a time-consuming process. Organisations spend a lot of time in preparing,
communicating the strategies that may impede daily operations and negatively impact the routine
business.
 Strategic management is a costly process. Strategic management adds a lot of expenses to an
organization. Expert strategic planners need to be engaged, efforts are made for analysis of external and
internal environments devise strategies and properly implement. These can be really costly for
organisations with limited resources.
 In a competitive scenario, where all organisations are trying to move strategically, it is difficult to clearly
estimate the competitive responses to a firm’s strategies.

3. Explain the difference between three levels of strategy formulation.

Answer:
A typical large organization is a multidivisional organisation that competes in several different businesses. It
has separate self-contained divisions to manage each of these. There are three levels of strategy in
management of business - corporate, business, and functional.
The corporate level of management consists of the chief executive officer and other top-level executives.
These individuals occupy the apex of decision making within the organization. The role of corporate-level
managers is to oversee the development of strategies for the whole organization. This role includes defining
the mission and goals of the organization, determining what businesses it should be in, allocating resources
among the different businesses and so on rests at the Corporate Level.
The development of strategies for individual business areas is the responsibility of the general managers in
these different businesses or business level managers. A business unit is a self-contained division with its own
functions - For example, finance, production, and marketing. The strategic role of business-level manager,
head of the division, is to translate the general statements of direction and intent that come from the
corporate level into concrete strategies for individual businesses.
Functional-level managers are responsible for the specific business functions or operations such as human
resources, purchasing, product development, customer service, and so on. Thus, a functional manager’s
sphere of responsibility is generally confined to one organizational activity, whereas general managers
oversee the operation of a whole company or division.

4. “Strategy is partly proactive and partly reactive.” Discuss.

Answer:
Strategy is partly proactive and partly reactive. In proactive strategy, organizations will analyze possible
environmental scenarios and create strategic framework after proper planning and set procedures and work
on these strategies in a predetermined manner. However, in reality no company can forecast both internal
and external environment exactly. Everything cannot be planned in advance. It is not possible to anticipate
moves of rival firms, consumer behaviour, evolving technologies and so on.
There can be significant deviations between what was visualized and what actually happens. Strategies need
to be attuned or modified in the light of possible environmental changes. There can be significant or major
strategic changes when the environment demands. Reactive strategy is triggered by the changes in the
environment and provides ways and means to cope with the negative factors or take advantage of emerging
opportunities.
9
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

CHAPTER- 2
STRATEGIC ANALYSIS: EXTERNAL ENVIRONMENT
Multiple Choice Questions
1. The term PESTLE analysis is used to describe a framework for analyzing:
a. Macro Environment
b. Micro Environment
c. Both Macro and Micro Environment
d. None of above
2. Which of the following constitute Demographic Environment?
a. Nature of economy i.e. capitalism, socialism, Mixed
b. Size, composition, distribution of population, sex ratio
c. Foreign trade policy of Government
d. Economic policy i.e., fiscal and monetary policy of Government
3. All are elements of Macro environment except:
a. Society
b. Government
c. Competitors
d. Technology
4. KSFs stand for:
a. Key strategic factors
b. Key supervisory factors
c. Key success factors
d. Key sufficient factors
5. Competitive landscape requires the application of-
a. Competitive advantage
b. Competitive strategy
c. Competitive acumen
d. Competitive intelligence
6. Attractiveness of firms’ while conducting industry analysis should be seen in-
a. Relative terms
b. Absolute terms
c. Comparative terms
d. All of the above
7. What is not one of Michael Porter’s five competitive forces?
a. New entrants
b. Rivalry among existing firms
c. Bargaining power of unions
d. Bargaining power of suppliers
8. The emphasis on product design is very high, the intensity of competition is low, and the market growth
rate is low in the ______ stage of the industry life cycle.
a. Maturity
b. Introduction
10
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

c. Growth
d. Decline
9. A current strategy is the result of several little choices taken over a protracted period of time
a. Over a point of time
b. over a protracted period of time
c. immediately
d. From competitors
10. In practice, strategic analysis necessitates creating a reasonable balance between_______ factors
a. Internal
b. External
c. Internal & External
d. None
11. Which is not a factor of Performance analysis
a. Profitability
b. Sales
c. Customer satisfaction
d. Technology
12. ______________refers to all external factors, influences, or situations that in some way affect business
decisions, plans, and operations
a. Business environment
b. Competitive Landscape
c. Industry Outlook
d. Business defenition
13. _____________are significant aspects of business management and are essential for the success and
continued existence
a. Strategic Plans
b. Strategic Choices
c. Strategic decisions
d. Strategic Management
14. ___________represents a complex group of factors such as social traditions, values and beliefs, level and
standards of literacy, the ethical standards and state of society, the extent of social stratification, conflict,
cohesiveness and so forth
a. Technological Environment
b. Socio Cultural Environment
c. Legal Environment
d. Global Environment
15. Consumer attitudes and opinions are example of
a. Socio Cultural factors
b. Legal factors
c. Demographic factors
d. Political factors
16. Products are
a. tangible
b. intangible
c. Either a. or b
d. None
11
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

17. Products are

a. goods
b. Services
c. Either a. or b
d. None
18. Telecom services, banking, insurance, or repair services are examples of
a. tangible
b. intangible
c. Either a. or b
d. None
19. The market price is the price at which quantity ________ equals quantity _______
a. Provided, Consumed
b. Produced, Supplied
c. Provided, Desired
d. Demanded, Produced
20. The second stage of a product life cycle is _______
a. Decline
b. Introduction
c. Growth
d. Maturity
21. The Final stage of a product life cycle is _______
a. Decline
b. Introduction
c. Growth
d. Maturity
22. Product life cycle is _______ Shaped Curve
a. V-Shaped
b. X-Shaped
c. S-Shaped
d. Y-Shaped
23. In _____________ stage, the competition gets tough, and market gets stabilised.
a. Decline
b. Introduction
c. Growth
d. Maturity
24. _____stage of PLC is the with slow sales growth, in which competition is almost negligible.
a. Decline
b. Introduction
c. Growth
d. Maturity
25. In the ____________ stage, the demand expands rapidly, prices fall, competition increases, and market
expands.
a. Decline
b. Introduction
12
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

c. Growth
d. Maturity
26. _____________approach is that it can be used to diagnose a portfolio of products in order to establish
the stage at which each of them exists.
a. Value Chain Analysis
b. Porter’s 5 Forces Model
c. Products Life cycle
d. Mendelow’s Model
27. _____________ has been widely used as a means of describing the activities within and around an
organization and relating them to an assessment of the competitive strength of an organization.
a. Porter’s 5 Forces Model
b. Value Chain Analysis
c. Products Life cycle
d. Mendelow’s Model
28. __________________ collect, store and distribute the product to customers.
a. Inbound Logistics
b. Outbound Logistics
c. Marketing
d. After Sale Services
29. __________ transform these various inputs into the final product or service
a. Inbound Logistics
b. Outbound Logistics
c. Operations
d. Marketing
30. __________are all those activities, which enhance or maintain the value of a product/service, such as
installation, repair, training and spares.
a. Inbound Logistics
b. Outbound Logistics
c. Marketing
d. After Sale Services
31. _______________refers to the systems of planning, finance, quality control, information
management, etc.
a. Inbound Logistics
b. Outbound Logistics
c. Infrastructure
d. Human resource Management

32. __________ refers to the processes for acquiring the various resource inputs.
a. Inbound Logistics
b. Procurement
c. Human resource Management
d. Infrastructure
33. _________ provide the means whereby consumers/users are made aware of the product/service and
are able to purchase it
13
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

a. Inbound Logistics
b. Outbound Logistics
c. Marketing & Sales
d. After Sale Services
34. ___________ is a particularly important area which transcends all primary activities.
a. Inbound Logistics
b. Procurement
c. Human resource Management
d. Infrastructure
35. ____________ are the activities concerned with receiving, storing and distributing the inputs to the
product/service
a. Inbound Logistics
b. Procurement
c. Human resource Management
d. Infrastructure
36. __________can reduce industry profitability because they add new production capacity leading to
increase supply of the product even at a lower price and can substantially erode existing firm’s market
share position
a. New entrants
b. Rivalry among existing firms
c. Bargaining power of buyers
d. Bargaining power of suppliers
37. The ________________determines the cost of raw materials and other inputs of the industry and,
therefore, industry attractiveness and profitability.
a. New entrants
b. Rivalry among existing firms
c. Bargaining power of buyers
d. Bargaining power of suppliers
38. The __________________influences not only the prices that the producer can charge
a. New entrants
b. Rivalry among existing firms
c. Bargaining power of buyers
d. Bargaining power of suppliers
39. ________________products are a latent source of competition in an industry
a. New entrants
b. Rivals
c. Substitutes
d. Suppliers
40. __________refer to the decline in the per-unit cost of production as volume grows
a. Cost Leadership
b. Economies of Scale
c. Value creation
d. Product Differentiation
14
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

41. __________refers to the physical or perceptual differences, that make a product special or unique in the
eyes of customers.
a. Cost Leadership
b. Economies of Scale
c. Value creation
d. Product Differentiation
42. ___________ is particularly important for infrequently purchased products that carry a high unit cost to
the buyer
a. Access to distribution channel
b. Brand Identity
c. Value creation
d. Product Differentiation
43. _______________ by incumbents can deter entry by other firms into an existing industry
a. Access to distribution channel
b. Brand Identity
c. Capital Requirements
d. Theat of aggressive retaliation
44. _____________ can discourage price wars by disciplining initiators of such activity.
a. New entrants
b. Industry Leaders
c. Government
d. Competition Commission
45. ______________causes profitability to fall for all firms in the industry as firms seek to produce more to
cover costs.
a. Price cutting
b. Cost Cutting
c. Product Differentiation
d. Exit Barriers
46. __________________is based on the concept, “we learn as we grow”.
a. Value Chain Analysis
b. Experience Curve
c. Products Life cycle
d. Mendelow’s Model
47. ________________ was introduced primarily for providing products and services to the customers with
more worth.
a. Cost Leadership
b. Economies of Scale
c. Value creation
d. Product Differentiation
48. _____________ is something that customers get from a product.
a. Price
b. Cost
c. Utility
d. Value
15
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

49. A __________is a place for interested parties, buyers and sellers, where items and services can be
exchanged for a price
a. Market
b. Industry
c. Forum
d. Union
50. The term ________ encompasses a wide range of operations, including research, designing, pricing,
promotion, transportation, and distribution.
a. Distribution
b. Supply Chain
c. Marketing
d. Manufacturing
51. Experience curve akin to a ____________
a. Marginal Cost curve
b. Learning curve
c. Demand Curve
d. Average Cost Curve

52. How profitable a company becomes depends on which of the following factors:
i. The value customers place on the company’s products;
ii. The price that a company charges for its products; and
iii. The costs of creating those products
a. 1 & 2
b. 2 & 3
c. 1 & 3
d. 1, 2 & 3
53. According to Porter’s, ____________means the capability to provide customers superior and special
value in the form of product’s special features and quality or in the form of aftersales customer service.
a. Cost Leadership
b. Focus Strategy
c. Best Cost Provider
d. Product Differentiation
54. Michael Porter used the concept of _________ to explore closer different functions of the organisations
and mutual interactions among those functions
a. Porter’s 5 Forces Model
b. Value Chain Analysis
c. Products Life cycle
d. Portfolio Analysis
55. ________oriented businesses that believe that customers choose low price products.
a. Production
b. Sales
c. Service
d. Market
16
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

56. __________oriented businesses believe that if they spend enough money on advertisement, sales and
promotion, customers can be persuaded to make a purchase
a. Production
b. Sales
c. Service
d. Market
57. _______________ identifies target clients, determines their wants, and then defines how the product
meets those needs.
a. Customer Analysis
b. Market Analysis
c. Industry Analysis
d. Competitor Analysis
58. Advertisement, peer recommendations or social norms are examples of
a. Internal Influences
b. External Influences
c. Decision Making
d. Both A & B
59. Consumer behaviour is influenced by_____
a. Internal Influences
b. External Influences
c. Decision Making
d. Both A & B
60. Key success factors vary from industry to industry and even from time to time within the same industry.
a. True for Industry not for time
b. Completely True
c. Completely False
d. True for time not for time

Answer to MCQ based Questions

1 a 11 d 21 a 31 c 41 d 51 b
2 b 12 a 22 c 32 b 42 b 52 d
3 c 13 c 23 d 33 c 43 d 53 d
4 c 14 b 24 b 34 c 44 d 54 b
5 d 15 a 25 c 35 a 45 a 55 a
6 a 16 c 26 c 36 a 46 b 56 b
7 c 17 c 27 b 37 d 47 c 57 a
8 b 18 b 28 b 38 c 48 c 58 b
9 b 19 c 29 c 39 c 49 a 59 d
10 c 20 c 30 d 40 b 50 c 60 b
17
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

Scenario Based Questions

a. Suresh Singhania is the owner of an agri-based private company in Sangrur, Punjab. His unit is
producing puree, ketchups and sauces. While its products have significant market share in the northern
part of country, the sales are on decline in last couple of years. He seeks help of a management expert
who advises him to first understand the competitive landscape.
Explain the steps to be followed by Suresh Singhania to understand competitive landscape.
Answer:
Steps to understand the competitive landscape:
(i) Identify the competitor: The first step to understand the competitive landscape is to identify the
competitors in the firm’s industry and have actual data about their respective market share.
(ii) Understand the competitors: Once the competitors have been identified, the strategist can use market
research report, internet, newspapers, social media, industry reports, and various other sources to
understand the products and services offered by them in different markets.
(iii) Determine the strengths of the competitors: What is the strength of the competitors? What do they do
well? Do they offer great products? Do they utilize marketing in a way that comparatively reaches out to
more consumers? Why do customers give them their business?
(iv) Determine the weaknesses of the competitors: Weaknesses (and strengths) can be identified by going
through consumer reports and reviews appearing in various media. After all, consumers are often willing
to give their opinions, especially when the products or services are either great or very poor.
(v) Put all of the information together: At this stage, the strategist should put together all information about
competitors and draw inference about what they are not offering and what the firm can do to fill in the
gaps. The strategist can also know the areas which need to be strengthen by the firm.

b. Eco-carry bags Ltd., a recyclable plastic bags manufacturing, and trading company has seen a potential
in the ever-growing awareness around hazards of plastics and the positive outlook of the society
towards recycling and reusing plastics.
A major concern for Eco-carry bags Ltd. are paper bags and old cloth bags. Even though they are
costlier than recyclable plastic bags, irrespective, they are being welcomed positively by the
consumers.
Identify and explain that competition from paper bags and old cloth bags fall under which category of
Porter’s Five Forces Model for Competitive Analysis?
Answer: Eco-carry bags Ltd. faces competition from paper bags and old cloth bags and falls under Threat of
Substitutes force categories in Porter’s Five Forces Model for Competitive Analysis. Paper and cloth bags are
substitutes of recyclable plastic bags as they perform the same function as plastic bags. Substitute products
are a latent source of competition in an industry. In many cases, they become a major constituent of
competition. Substitute products offering a price advantage and/or performance improvement to the
consumer can drastically alter the competitive character of an industry.
c. Baby Turtle is a children's clothing brand that has been created a new age demand for washable
diapers. The major benefit for the brand has been that not many companies have shown interest in the
product, thinking it is not viable, however, customers, majorly working mothers are loving their
product. The core material needed for production is also used in many other water proofing products
in various industries. Baby Turtle sources this material from a renowned supplier at comparatively low
prices. Which of the five forces of competitive pressure would Baby Turtle experience due to above
18
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

setup and what are major factors that create such pressure for a product? Do you think Baby Shark has
an advantage in some way to fight off this pressure?

Answer: Baby Turtle would experience, Bargaining Power of Suppliers, as a competitive pressure for their
washable diaper product. This is because the core material for production is sourced from a single supplier,
who is renowned and in a position to create pressure in terms of prices.
Further, other factors that lead to such pressure are:
1. Their products are crucial to the buyer and substitutes to the material required for production are not
available.
2. Suppliers can manipulate switching cost as the brand is in inception stage and making margins are
important.
An advantage that Baby Turtle has is even though the material required has no substitutes, but it used to
make many other products and thus there are many other suppliers who can provide that material. It might
affect operations in short term but will help to fight off the pressure created by existing supplier.

Descriptive Questions
6. Explain the concept of Experience Curve and highlight its relevance in strategic management.
Answer:
Experience curve is similar to learning curve which explains the efficiency gained by workers through
repetitive productive work. Experience curve is based on the commonly observed phenomenon that unit
costs decline as a firm accumulates experience in terms of a cumulative volume of production. It is
represented diagrammatically as shown in the next page.
The implication is that larger firms in an industry would tend to have lower unit costs as compared to those of
smaller organizations, thereby gaining a competitive cost advantage. Experience curve results from a variety
of factors such as learning effects, economies of scale, product redesign and technological improvements in
production.
The concept of experience curve is relevant for a number of areas in strategic management. For instance,
experience curve is considered a barrier for new firms contemplating entry in an industry. It is also used to
build market share and discourage competition.

7. Explain Porter’s five forces model as to how businesses can deal with the competition.
Answer:
To gain a deep understanding of a company’s industry and competitive environment, managers do not need
to gather all the information they can find and waste a lot of time digesting it. Rather, the task is much more
focused. A powerful and widely used tool for systematically diagnosing the significant competitive pressures
in a market and assessing the strength and importance of each is the Porter’s five-forces model of
competition. This model holds that the state of competition in an industry is a composite of competitive
pressures operating in five areas of the overall market:
 Competitive pressures associated with the market manoeuvring and jockeying for buyer patronage that
goes on among rival sellers in the industry.
 Competitive pressures associated with the threat of new entrants into the market.
 Competitive pressures coming from the attempts of companies in other industries to win buyers over to
their own substitute products.
 Competitive pressures stemming from supplier bargaining power and supplier-seller collaboration.
Competitive pressures stemming from buyer bargaining power and seller-buyer Collaboration.
19
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

CHAPTER- 3
STRATEGIC ANALYSIS: INTERNAL ENVIRONMENT
Multiple Choice Questions
1. ‘Strategic group mapping’ helps in-
a. Identifying the strongest rival companies
b. Identifying weakest rival companies
c. Identifying weakest and strongest rival companies
d. None of the above
2. The goal of SWOT analysis is to ________ the organization's opportunities and strengths while ________
its threats and ________ its weaknesses.
a. avoid; neutralizing; correcting
b. exploit; neutralizing; correcting
c. avoid; capitalizing; neutralizing
d. exploit; avoiding; ignoring
3. SWOT analysis is an evaluation of the organization's ________ strengths and weaknesses and its
________ opportunities and threats.
a. external; internal
b. internal; internal
c. external; external
d. internal; external
4. External opportunities and threats are usually:
a. the minor cause of organizational demise or success
b. least important for CEOs and the board of directors
c. not as important as internal strengths and weaknesses
d. largely uncontrollable activities outside the organization
5. The sustainability of competitive advantage and a firm’s ability to earn profits from its competitive
advantage depends upon:
a. Durability, reliability, transferability, approximately
b. Appropriability, durability, transferability, imitability
c. Transferability, imitability, reliability, approximately
d. Imitability, durability, reliability, appropriability
6. Internal __________ are activities in an organization that are performed especially well.
a. Opportunities
b. Competencies
c. Strengths
d. Management
7. In Michael Porter’s generic strategy _____________ emphasizes producing standardized products at a
very low per unit-cost for consumers who are price sensitive.
a. Cheap leadership
b. Inferior product leadership
c. Cost leadership
20
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

d. Cost benefit
8. Differentiation Strategy can be achieved by following measures:
1. Match products with tastes and preferences of customers.
2. Elevate the performance of the product.
3. Rapid product innovation
Which of the above is true:
a. (1) and (2)
b. (1) and (3)
c. (2) and (3)
d. (1), (2) and (3)
9. What are the three different bases given by Michael Porter’s Generic Strategies to gain competitive
advantage?
a. differentiation, integration and compensation
b. integration, focus and differentiation
c. compensation, integration and focus
d. cost leadership, differentiation and focus
10. A firm successfully implementing a differentiation strategy would expect:
a. Customers to be sensitive to price increases.
b. To charge premium prices.
c. Customers to perceive the product as standard.
d. To automatically have high levels of power over suppliers.
11. ___________________refers to the sum total of people – individuals and groups, stakeholders,
processes- input-throughput-output, physical infrastructure- space, equipment and physical conditions of
work, administrative apparatus
a. External environment
b. Internal environment
c. Business environment
d. Social Environment
12. ______________involves understanding of the ethics, principles, work environment, employee
friendliness, confidence of investors and other philosophical and cultural aspects of business, which aim
for the success of the organisation
a. Internal environment
b. Business environment
c. External environment
d. Social Environment
13. ______________are all those individuals and entities that have a stake in its success and can impact it as
well.
a. Shareholders
b. Investors
c. Stakeholders
d. Employees
14. ____________________ is also known as the Stakeholder Analysis matrix.
a. Ansoff’s Product Growth Matrix
b. Portors Value chain Matrix
21
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

c. ADL Matrix
d. Mendlow’s Matrix
15. The Mendelow Stakeholder matrix is also known as _______________
a. Growth-Share Matrix
b. Power-Interest Matrix
c. Product-Growth Matrix
d. Block Chain Matrix
16. As per categorisation of stakeholders into four groups by Mendelow’s matrix High power, less interested
people should be________________
a. Keep Satisfied
b. Key Players
c. Low Priority
d. Keep Informed
17. As per categorisation of stakeholders into four groups by Mendelow’s matrix High power, High interested
people should be________________
a. Keep Satisfied
b. Key Players
c. Low Priority
d. Keep Informed
18. As per categorisation of stakeholders into four groups by Mendelow’s matrix Low power, less interested
people should be________________
a. Keep Satisfied
b. Key Players
c. Low Priority
d. Keep Informed
19. As per categorisation of stakeholders into four groups by Mendelow’s matrix Low power, High interested
people should be________________
a. Keep Satisfied
b. Key Players
c. Low Priority
d. Keep Informed
20. Business magazines, media houses, etc fall under ___________
a. Keep Satisfied
b. Key Players
c. Low Priority
d. Keep Informed
21. ____________grouping is based on the primary product that a company makes or sells
a. Market
b. Industry
c. Customer
d. Organization
22. A ______________ is defined as the sum total of all the buyers and sellers in the area or region under
consideration
a. Market
22
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

b. Industry
c. Customer
d. Organization
23. The ________________consider what differentiates an organisation from its competitors
a. Strategic Management
b. Strategic drivers
c. Industry
d. Customer
24. The market may be
a. Physical entity
b. Virtual like e-commerce websites
c. Both A & B
d. None of the above
25. A _____________consists of those rival firms which have similar competitive approaches and positions in
the market
a. Industry
b. Strategic group
c. Market
d. Organization
26. An industry contains ____________strategic group/(s) when all sellers pursue essentially identical
strategies and have comparable market positions
a. Only one
b. Two
c. Three
d. Many
27. There are _______________strategic groups as there are competitors when each rival pursues a
distinctively different competitive approach and occupies a substantially different competitive position in
the marketplace
a. Only one
b. Two
c. Three
d. As Many
28. A tool used to identify one’s position as compared to the competitors, who can be of equal size and
value, or bigger in size and value or even smaller and newer
a. BCG Growth-Share Matrix
b. Strategic Group Mapping
c. Ansoff’s Product-Growth Matrix
d. Power-Interest Matrix
29. _________ can also be differentiated on the basis of size, shape, colour, packaging, brand names, after-
sales service and so on
a. Products
b. Price
c. Place
d. Promotions
23
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

30. The _________channel focuses on the series of intermediaries who physically handle the product on its
path from its producer to the end user
a. Sales
b. Product
c. Service
d. All the Above
31. __________marketing is a market-coverage strategy in which a firm goes after a large share of one or
few sub-markets.
a. Social
b. Relationship
c. Concentrated
d. Enlightened
32. ________ marketing is process of creating, maintaining, and enhancing strong, value-laden relationships
with customers and other stakeholders
a. Social
b. Relationship
c. Concentrated
d. Enlightened
33. _______ is a marketing philosophy holding that a company’s marketing should support the best long-run
performance of the marketing system that is beyond the prevailing mindset
a. Social
b. Relationship
c. Concentrated
d. Enlightened
34. ________________ type of marketing includes additional customer services and benefits that a product
can offer besides the core and actual product.
a. Concentrated
b. Augmented
c. Relationship
d. Enlightened

35. According to C.K. Prahalad and Gary Hamel, major core competencies are identified in______ areas –
a. Competitor differentiation,
b. Customer value
c. Application to other markets
d. All the above
36. ___________ is defined as a combination of skills and techniques rather than individual skill or separate
technique
a. Value Chain
b. Competency
c. Core competencies
d. Portfolio
37. ____________ has to be the integration of many resources
a. Value Chain
24
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

b. Competency
c. Core competencies
d. Portfolio
38. When purchasing a product or service it has to deliver a fundamental benefit for the end customer in
order to be a core competence. Which of the following areas represent the same.
a. Competitor differentiation,
b. Customer value
c. Application to other markets
d. All the above
39. Core competence must be applicable to __________organization
a. one particular skill in
b. specified area of an
c. the whole of an
d. None of the above
40. ____are created by superior integration of technological, physical and human resources
a. Value Chain
b. Competency
c. Core competencies
d. Portfolio
41. Capabilities that do not have strategic equivalents are called________
a. Valuable
b. Rare
c. Costly to Imitate
d. Non-Substitutable
42. Capabilities that competing firms are unable to develop easily
a. Valuable
b. Rare
c. Costly to Imitate
d. Non-Substitutable
43. _____ capabilities are the ones that allow the firm to exploit opportunities or avert the threats in its
external environment
a. Valuable
b. Rare
c. Costly to Imitate
d. Non-Substitutable
44. Core competencies are _______ capabilities and very few of the competitors possess this
a. Valuable
b. Rare
c. Costly to Imitate
d. Non-Substitutable
45. ______________ shall be implemented before all company actions, whether it is exploring new
initiatives, revamping internal policies, considering opportunities to grow or alter a plan midway.
a. Portfolio Analysis
b. SWOT Analysis
25
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

c. TOWS Analysis
d. External Analysis
46. SWOT analysis is a _____
a. Comparison of factors
b. Comparative framework
c. Solution of External Analysis
d. Competitive Analysis
47. SWOT Analysis is a tool which is used for
a. Both Internal and External Analysis
b. Internal analysis
c. External Analysis
d. Competitive Analysis
48. “If you don’t have a competitive advantage, don’t compete” - a statement made by
a. Michael Portor
b. Jack Welch
c. Gary Hamel
d. William F Gluck
49. If a company’s strategies result in superior performance, it is said to have a
a. Competencies
b. Core competencies
c. Competitor differentiation
d. Competitive advantage
50. ______________is a set of unique features of a company and its products that are perceived by the
target market as significant and superior to the competition
a. Competencies
b. Competitive advantage
c. Core competencies
d. Competitor differentiation
51. The competitive advantage is the ________ advantage over rivals
a. Purchased
b. Achieved
c. Gathered
d. Added
52. ___________ refers to the ability of the firm’s owners to appropriate the returns on its resource base
a. Durability
b. Transferability
c. Imitability
d. Appropriability
53. ______________is a strategy aimed at producing products and services considered unique industry-wide
and directed at consumers who are relatively price-insensitive
a. Cost leadership
b. Differentiation
c. Focus
d. All the Above
26
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

54. Which of the following characteristics are supposed to be present to achieve competitive advantage.
i. Durability
ii. Transferability
iii. Imitability
iv. Appropriability
a. I & II
b. I & IV
c. II & III
d. All the above
55. Which of the following characteristics are not supposed to be present to achieve competitive advantage.
i. Durability
ii. Transferability
iii. Imitability
iv. Appropriability
a. I & II
b. I & IV
c. II & III
d. All the above

56. ________means producing products and services that fulfil the needs of small groups of consumers with
very specific taste.
a. Cost leadership
b. Differentiation
c. Focus
d. Best Cost Provider
57. _______are able to absorb greater price increases before it must raise price to customers
a. Cost leaders
b. Differentiators
c. Focus Provider
d. Best Cost Providers
58. _____________ does not guarantee competitive advantage, especially if standard products sufficiently
meet customer needs or if rapid imitation by competitors is possible.
a. Cost leadership
b. Differentiation
c. Focus
d. Best Cost Provider
59. Risk of pursuing a differentiation strategy is
a. unique product may not be valued high enough by customers to justify the higher price
b. competitors may develop ways to copy the differentiating features quickly
c. Both The statements are true
d. None of the above
60. Maximizing the power of a brand, is ___________ differentiation
a. Product
b. Organisation
27
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

c. Price
d. Place
61. A ________strategy requires offering unique features that fulfill the demands of a narrow market
a. Differentiation
b. Focused Cost leadership
c. Focused differentiation
d. Best Cost provider
62. ________strategy requires competing based on price to target a narrow market
a. Differentiation
b. Focused Cost leadership
c. Focused differentiation
d. Best Cost provider
63. Micheal Porters are also called as
a. Corporate Level Strategies
b. Grand Strategies
c. Base generic strategies
d. Directional Strategies
64. ______________ is directed towards giving customers more value for the money by emphasizing both
low cost and upscale differences
a. Cost leadership
b. Differentiation
c. Focus
d. Best Cost Provider
65. The objective of Best cost providers can be done through:
a. offering products at lower price than what is being offered by rivals for products with comparable
quality and features or
b. charging similar price as by the rivals for products with much higher quality and better features.
c. Both the Options are true
d. None of the above

Answer to MCQ based Questions

1 c 11 b 21 b 31 c 41 d 51 b 61 c
2 b 12 a 22 a 32 b 42 c 52 d 62 b
3 d 13 c 23 b 33 d 43 a 53 b 63 c
4 d 14 d 24 c 34 b 44 b 54 b 64 d
5 b 15 b 25 b 35 d 45 b 55 c 65 c
6 c 16 a 26 a 36 b 46 b 56 c
7 c 17 b 27 d 37 c 47 a 57 a
8 d 18 c 28 b 38 b 48 b 58 b
9 d 19 d 29 a 39 c 49 d 59 c
10 b 20 c 30 b 40 c 50 b 60 b
28
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

Scenario Based Questions

1. Rohit Sodhi runs a charitable organisation for promotion of sports in the country. His organisation
conducts regular free training camps for youths interested in playing cricket, football, hockey,
badminton and so on. Many of his trainees have reached national level contests. Rohit noticed that
with success of IPL (Cricket) tournament there is an increasing trend to extend similar format in other
sports as well. He wishes to know how the development is going help sports and to which industries it
will offer opportunities and threats.
Answer: With the success of IPL, league matches are taking place in other sports as well. These are held in a
grandeur manner between several teams. For example, league matches in magnificent manner now take
place in Football, Kabaddi and Hockey in India. These events are profit and entertainment driven. These are
going to help sports in India by generating interest in sports, making them more popular, increasing quality of
competition and bringing money into sports.
A number of entities and processes are involved in these events from various industries offering
opportunities and threats to them. An opportunity is a favourable condition in the organisation’s
environment which enables it to strengthen its position. On the other hand, a threat is an unfavourable
condition in the organisation’s environment which causes a risk for, or damage to, the organisation’s
position. An opportunity is also a threat in case internal weaknesses do not allow organization to take their
advantage in a manner rival can. It will offer opportunity and threats to the following:
Opportunities
 Stadia.
 Manufacturers of sports goods.
 Media Industry – Sports channels / television, advertisers.
 Hotel Industry linking events with their offerings.
Threats
 Entertainment industry engaged in TV serials, cinema theatres, Entertainment theme parks as
competitors will be fighting for the same viewers/target customers.
 Event Management organisation engaged in non-sports events.
2. Mr. Banerjee is head of marketing department of a manufacturing company. His company is in direct
competition with thirteen companies at national level. He wishes to study the market positions of rival
companies by grouping them into like positions.
Name the tool that may be used by Mr. Banerjee? Explain the procedure that may be used to
implement the technique.
Answer: A tool to study the market positions of rival companies by grouping them into like positions is
strategic group mapping. Grouping competitors is useful when there are many competitors such that it is not
practical to examine each one in-depth. In the given scenario there are thirteen competitors. A strategic
group consists of those rival firms which have similar competitive approaches and positions in the market.
The procedure for constructing a strategic group map and deciding which firms belong in which strategic
group is as follows:
 Identify the competitive characteristics that differentiate firms in the industry typical variables that are
price/quality range (high, medium, low); geographic coverage (local, regional, national, global); degree of
vertical integration (none, partial, full); product-line breadth (wide, narrow); use of distribution channels
(one, some, all); and degree of service offered (no-frills, limited, full).
 Plot the firms on a two-variable map using pairs of these differentiating characteristics.
 Assign firms that fall in about the same strategy space to the same strategic group.
29
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

 Draw circles around each strategic group making the circles proportional to the size of the group's
respective share of total industry sales revenues.
3. Mohan has joined as the new CEO of XYZ Corporation and aims to make it a dominant technology
company in the next five years. He aims to develop competencies for managers for achieving better
performance and a competitive advantage for XYZ Corporation. Mohan is well aware of the importance
of resources and capabilities in generating competitive advantage. Discuss the four major
characteristics of resources and capabilities required by XYZ Corporation to sustain the competitive
advantage and its ability to earn profits from it.
Answer:
XYZ Corporation is aiming to transform into a dominant technology company under the leadership of Mohan,
the new CEO. He aims to develop competencies for managers for achieving better performance and a
competitive advantage for the corporation. Mohan is also well aware of the importance of resources and
capabilities in generating and sustaining the competitive advantage. Therefore, he must focus on
characteristics of resources and capabilities of the corporation.
The sustainability of competitive advantage and a firm’s ability to earn profits from it depends, to a great
extent, upon four major characteristics of resources and capabilities which are as follows:
 Durability: The period over which a competitive advantage is sustained depends in part on the rate at
which a firm’s resources and capabilities deteriorate. In industries where the rate of product innovation is
fast, product patents are quite likely to become obsolete. Similarly, capabilities which are the result of
the management expertise of the CEO are also vulnerable to his or her retirement or departure. On the
other hand, many consumer brand names have a highly durable appeal.
 Transferability: Even if the resources and capabilities on which a competitive advantage is based are
durable, it is likely to be eroded by competition from rivals. The ability of rivals to attack position of
competitive advantage relies on their gaining access to the necessary resources and capabilities. The
easier it is to transfer resources and capabilities between companies, the less sustainable will be the
competitive advantage which is based on them.
 Imitability: If resources and capabilities cannot be purchased by a would-be imitator, then they must be
built from scratch. How easily and quickly can the competitors build the resources and capabilities on
which a firm’s competitive advantage is based? This is the true test of imitability. Where capabilities
require networks of organizational routines, whose effectiveness depends on the corporate culture,
imitation is difficult.
 Appropriability: Appropriability refers to the ability of the firm’s owners to appropriate the returns on its
resource base. Even where resources and capabilities are capable of offering sustainable advantage,
there is an issue as to who receives the returns on these resources.

4. Airlines industry in India is highly competitive with several players. Businesses face severe competition
and aggressively market themselves with each other.
Luxury Jet is a private Delhi based company with a fleet size of 9 small aircrafts with seating capacity
ranging between 6 seats to 9 seats. There aircrafts are chartered by big business houses and high net
worth individuals for their personalised use. With customised tourism packages their aircrafts are also
often hired by foreigners. Identify and explain the Michael Porter’s Generic Strategy followed by
Luxury Jet.
30
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

Answer: The Airlines industry faces stiff competition. However, Luxury Jet has attempted to create a niche
market by adopting focused differentiation strategy. A focused differentiation strategy requires offering
unique features that fulfil the demands of a narrow market.
Luxury Jet compete in the market based on uniqueness and target a narrow market which provides business
houses, high net worth individuals to maintain strict schedules. The option of charter flights provided several
advantages including, flexibility, privacy, luxury and many a times cost saving.
Apart from conveniences, the facility will provide time flexibility. Travelling by private jet is the most
comfortable, safe and secure way of flying your company’s senior business personnel.
Chartered services in airlines can have both business and private use.
Personalized tourism packages can be provided to those who can afford it.
5. Gennex is a company that designs, manufactures and sells computer hardware and software. Gennex is
well known for its innovative products that has helped the company to have advantage over its
competitors. It also spends on research and development and concerned with innovative softwares.
Often the unique features of their product, that are not available with their competitors helps them to
gain competitive advantage. Gennex using the strategy is consistently gaining its position in the
industry over its competitors.
Identify and explain the Porter’s generic strategy which Gennex has opted to gain the competitive
advantage.
Answer: According to Porter, strategies allow organizations to gain competitive advantage from three
different bases: cost leadership, differentiation, and focus. Porter called these base generic strategies.
Gennex has opted differentiation strategy. Its products are designed and produced to give the customer
value and quality. They are unique and serve specific customer needs that are not met by other companies in
the industry.
Highly differentiated and unique hardware and software enables Gennex to charge premium prices for its
products hence making higher profits and maintain its competitive position in the market.
Differentiation strategy is aimed at broad mass market and involves the creation of a product or service that
is perceived by the customers as unique.
The uniqueness can be associated with product design, brand image, features, technology, dealer network or
customer service.
6. Sohan and Ramesh are two friends who are partners in their business of making biscuits. Sohan believe
in making profits through selling more volume of products. Hence, he believes in charging lesser price
to the customers. Ramesh, however, of the opinion that higher price should be charged to create an
image of exclusivity and for this, he proposes that the product to undergo some change.
Analyse the nature of generic strategy used by Sohan and Ramesh.
Answer:
Considering the generic strategies of Porter there are three different bases: cost leadership, differentiation
and focus. Sohan and Ramesh are contemplating pricing for their product.
Sohan is trying to have a low price and high volume is thereby trying for cost leadership. Cost leadership
emphasizes producing standardised products at a very low per unit cost for consumers who are price
sensitive Ramesh desires to create perceived value for the product and charge higher prices. He is trying to
adopt differentiation. Differentiation is aimed at producing products and services considered unique industry
wide and directed at consumers who are relatively price insensitive.
7. Infant care is a successful store chain that caters products for expectant mothers and new moms. They
offer everything from nursing classes to strollers, toys, infant clothes, diapers and baby furniture. Due
31
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

to a one-stop shop for infants, they are charging a premium for its products. Identify and explain how
the strategy adopted by infant care.
Answer:
Infant care is opting for differentiation strategy. A one-stop shop is a benefit for this type of customers,
seeking convenience in a time. Infant care is catering the products only related to an infant that is perceived
by the customers as unique. Because of differentiation, the Infant care is charging a premium for its product.
8. A century-old footwear company “Mota Shoes” had an image of being the footwear choice for formal
occasions. In an attempt to reinvent its brand, it tied up with a foreign footwear giant “Buffrine” to
manufacture and sell its Hideseek brand in the country. Putting its best foot forward, it launched extra
soft, casual and relaxed footwear for young. Aiming at a brand and image makeover the “Mota Shoes”
decided to price the Hide Seek products at premium.
What kind of Michael Porter business level strategy is being used by “Mota Shoe company”? State its
advantages.
Answer:
Mota shoes is trying to use differentiation. This strategy is aimed at broad mass market and involves the
creation of a product or service that is perceived by the customers as unique. The uniqueness can be
associated with product design, brand image, features, technology, dealer network or customer service.
Because of differentiation, the business can charge a premium for its product.
A differentiation strategy has definite advantages as it may help to remain profitable even with rivalry, new
entrants, suppliers’ power, substitute products, and buyers’ power.
a. Rivalry: Brand loyalty acts as a safeguard against competitors. It means that customers will be less
sensitive to price increases, as long as the firm can satisfy the needs of its customers.
b. Buyers: They do not negotiate for price as they get special features and also, they have fewer options in
the market.
c. Suppliers: Because differentiators charge a premium price, they can afford to absorb higher costs of
supplies and customers are willing to pay extra too.
d. New entrants: Innovative features are expensive to copy. So, new entrants generally avoid these features
because it is tough for them to provide the same product with special features at a comparable price.
e. Substitutes: Substitute products can’t replace differentiated products which have high brand value and
enjoy customer loyalty.
9. Rohit Patel is having a small chemist shop in the central part of Ahmedabad.
What kind of competencies Rohit can build to gain competitive advantage over online medicine
sellers?
Answer:
Capabilities that are valuable, rare, costly to imitate, and non-substitutable are core competencies. A small
chemist shop has a local presence and functions within a limited geographical area. Still, it can build its own
competencies to gain competitive advantage. Rohit Patel can build competencies in the areas of:
(i) Developing personal and cordial relations with the customers.
(ii) Providing home delivery with no additional cost.
(iii) Developing a system of speedy delivery that can be difficult to match by online sellers. Being in central
part of city, he can create a network to supply at wider locations in the city.
(iv) Having extended working hours for convenience of buyers.
(v) Providing easy credit or a system of monthly payments to the patients consuming regular medicines.
32
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

10. ‘Value for Money’ is a leading retail chain, on account of its ability to operate its business at low costs.
The retail chain aims to further strengthen its top position in the retail industry. Marshal, the CEO of
the retail chain is of the view that to achieve the goals they should focus on lowering the costs of
procurement of products.
Highlight and explain the core competence of the ‘Value for Money’ retail chain.
Answer:
A core competence is a unique strength of an organization which may not be shared by others. Core
competencies are those capabilities that are critical to a business achieving competitive advantage. In order
to qualify as a core competence, the competency should differentiate the business from any other similar
businesses. A core competency for a firm is whatever it does is highly beneficial to the organisation.
‘Value for Money’ is the leader on account of its ability to keep costs low. The cost advantage that ‘Value for
Money’ has created for itself has allowed the retailer to price goods lower than competitors. The core
competency in this case is derived from the company’s ability to generate large sales volume, allowing the
company to remain profitable with low profit margin.

Descriptive Questions
11. What is the purpose of SWOT analysis? Why is it necessary to do a SWOT analysis before selecting a
particular strategy for a business organization?
Answer:
An important component of strategic thinking requires the generation of a series of strategic alternatives, or
choices of future strategies to pursue, given the company’s internal strengths and weaknesses and its
external opportunities and threats. The comparison of strengths, weaknesses, opportunities, and threats is
normally referred to as SWOT analysis.
 Strength: Strength is an inherent capability of the organization which it can use to gain strategic
advantage over its competitors
 Weakness: A weakness is an inherent limitation or constraint of the organization which creates strategic
disadvantage to it.
 Opportunity: An opportunity is a favourable condition in the organisation’s environment which enables it
to strengthen its position.
 Threat: A threat is an unfavourable condition in the organisation’s environment which causes a risk for,
or damage to, the organisation’s position.
SWOT analysis helps managers to craft a business model (or models) that will allow a company to gain a
competitive advantage in its industry (or industries).
Competitive advantage leads to increased profitability, and this maximizes a company’s chances of surviving
in the fast-changing, competitive environment. Key reasons for SWOT analysis are:
 It provides a logical framework.
 It presents a comparative account.
 It guides the strategist in strategy identification.
33
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

CHAPTER- 4
STRATEGIC CHOICES
Multiple Choice Questions
1. Which strategy is implemented after the failure of turnaround strategy?
a. Expansion strategy
b. Diversification strategy
c. Divestment strategy
d. Growth strategy
2. Retrenchment strategy in the organization can be explained as
a. Reducing trenches (gaps) created between individuals.
b. Divesting a major product line or market.
c. Removal of employees from job through the process of reorganization.
d. Removal of employees from job in one business to relocate them in other business.
3. An organisation diversifies in backward sequence in the product chain and enters specific
product/process to be used in existing products. It is:
a. Forward diversification.
b. Vertical diversification.
c. Horizontal diversification.
d. Reactive diversification.
4. Corporate strategy includes:
i. expansion and growth, diversification, takeovers and mergers
ii. Vertical and horizontal integration, new investment and divestment areas
iii. determination of the business lines
From the combinations given below select a correct alternative:
a. (i), and (ii)
b. (i) and (iii)
c. (ii) and (iii)
d. (i) (ii) and (iii)
5. Vertical integration may be beneficial when
a. Lower transaction costs and improved coordination are vital and achievable through vertical
integration.
b. Flexibility is reduced, providing a more stationary position in the competitive environment.
c. Various segregated specializations will be combined.
d. The minimum efficient scales of two corporations are different.
6. Stability strategy is a ____strategy.
a. SBU level
b. Corporate level
c. Business level
d. Functional level
7. Conglomerate diversification is another name for which of the following?
a. Related diversification
b. Unrelated diversification
34
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

c. Portfolio diversification
d. Acquisition diversification
8. Diversification primarily helps to:
a. Reduce competition
b. Reduce risk
c. Reduce taxes
d. Reduce costs
9. If suppliers are unreliable or too costly, which of these strategies may be appropriate?
a. Horizontal integration
b. Backward integration
c. Market penetration
d. Forward integration
10. __________involves well thought of decision making and cover actions dealing with the objective of
the firm, shareholders and allocation of resources and coordination of strategies of various business
units for optimal performance
a. Strategic Management
b. Strategy formulation
c. Strategy Implementation
d. Strategic Choices
11. ______________of the organization makes strategic decisions
a. Corporate Level
b. Business Level
c. Functional Level
d. All the above

12. _____suggested competitive strategies including Cost Leadership, Differentiation, Focus Cost
Leadership and Focus Differentiation
a. William F Glueck
b. Lawrence Jauch
c. Michael E. Porter
d. Jack Welch
13. Stability, growth, retrenchment, and combination were discussed by
a. William F Glueck
b. Lawrence Jauch
c. Michael E. Porter
d. Both A & B
14. ________ are meant for strategic management of distinct functions such as Marketing, Financial,
Human Resource, Logistics, Production etc.
a. Corporate Level
b. Business Level
c. Functional Level
d. All the above
15. Firm stays with its current businesses and product in _________Strategy
a. Stability
35
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

b. Growth
c. Retrenchment
d. Combination
16. Firm drops the business as such through sell-out in _________Strategy
a. Stability,
b. Growth
c. Retrenchment
d. Combination
17. ________strategy is followed by entering new business that are related/unrelated to existing
businesses

a. Stability,
b. Expansion
c. Retrenchment
d. Combination
18. One of the important goals of a business enterprise to safeguard its existing interests and
strengths in _________Strategy
a. Stability
b. Growth
c. Retrenchment
d. Combination
19. The endeavour is to enhance functional efficiencies in an incremental way, through better
deployment and utilization of resources in _________Strategy
a. Stability
b. Growth/Expansion
c. Retrenchment
d. Combination
20. __________ strategy is NOT A ‘DO NOTHING’ STRATEGY.
a. Stability
b. Expansion
c. Retrenchment
d. Combination
21. Stability is basically a ______________strategy
a. safety-oriented,
b. status quo oriented
c. Both A & B
d. Growth oriented
22. _________Strategy is followed when a product has reached the maturity stage of the product life
cycle.
a. Stability
b. Growth
c. Retrenchment
d. Combination
23. __________ strategy involves a redefinition of the business of the corporation
a. Stability
36
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

b. Expansion
c. Retrenchment
d. Combination
24. _______ strategy is a highly versatile strategy; it offers several permutations and combinations for
growth
a. Stability
b. Expansion
c. Retrenchment
d. Combination
25. Advantages from the experience curve and scale of operations may accrue in _________Strategy
a. Stability,
b. Growth
c. Retrenchment
d. Combination
26. _____________ involves substantial modification of existing products or creation of new but related
items that can be marketed to current customers through establish channels
a. Market Penetration
b. Market Development
c. Product Development
d. Diversification
27. _______ consists of marketing present products, to customers in related market areas by adding
different channels of distribution or by changing the content of advertising or the promotional media
a. Market Penetration
b. Market Development
c. Product Development
d. Diversification
28. In ________ The firm directs its resources to the profitable growth of its existing product in the
existing market
a. Market Penetration
b. Market Development
c. Product Development
d. Diversification
29. ________is a reason for diversification
a. Synergistic advantage
b. Competitive Advantage
c. Corporate Advantage
d. Strategic Advantage
30. __________ takes place when the products are related. In this diversification, the new business that
is it diversifies into is linked to the existing businesses through Process, Technology or Marketing.
a. Vertical Integration
b. Horizontal Integration
c. Concentric Diversification
d. Conglomerate diversification
37
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

31. The firm remains in the same process sequence moves forward or backward in the chain and enters
specific product/process steps with the intention of making them into new businesses for the firm
a. Vertical Integration
b. Horizontal Integration
c. Concentric Diversification
d. Conglomerate diversification
32. ________ is concerned with creation of effective supply by entering business of input providers
a. Forward Integration
b. Backward Integration
c. Concentric Diversification
d. Conglomerate diversification
33. ________ will take place where organizations enter into businesses of distribution channels
a. Forward Integration
b. Backward Integration
c. Concentric Diversification
d. Conglomerate diversification
34. In _______ no linkages related to product, market or technology exist; the new businesses /
products are disjointed from the existing businesses
a. Vertical Integration
b. Horizontal Integration
c. Concentric Diversification
d. Conglomerate diversification
35. __________ drives upgradation of existing product lines or processes, leading to increased market
share, revenues, profitability and most important, customer satisfaction.
a. Inventions
b. Innovation
c. Mergers
d. Acquisitions
36. What is one of the primary advantages of acquisitions or mergers for achieving expansion?
a. Reduced competition
b. Quick and immediate growth
c. Lower financial risks
d. Enhanced brand reputation
37. In the context of mergers and acquisitions, what does "synergy" refer to?
a. The competition between parent and acquired enterprises
b. The duplication of resources in merged organizations
c. The positive combined effects of merged resources
d. The potential for conflict during the merger process
38. How would you define mergers and acquisitions in simple terms?
a. A process of increasing competition among organizations
b. A strategy for minimizing risks and challenges in business growth
c. A process of combining two or more organizations
d. A method for eliminating competition in the market
38
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

39. What is a horizontal merger in business terms?

a. A merger of organizations at different production stages.
b. A merger of unrelated organizations.
c. A merger to achieve economies of scale with a direct competitor.
d. A merger of organizations associated with production processes.
40. What is the principal objective of a horizontal merger?
a. To increase working capital.
b. To acquire unrelated organizations.
c. To achieve economies of scale and reduce duplication.
d. To diversify product lines.
41. What is the primary outcome of a horizontal merger often involving direct competitors?
a. Decreased synergies.
b. Increased competition.
c. Improved cost efficiency.
d. No change in the market position.
42. Which type of merger involves organizations that are unrelated in terms of customer groups,
functions, and technologies?
a. Vertical merger.
b. Conglomerate merger.
c. Related merger.
d. Non-profit merger.
43. 43. In a horizontal merger, what is the purpose of shedding duplication of installations and functions?
a. To reduce production costs.
b. To create more competition.
c. To increase working capital.
d. To diversify product lines.
44. What's the key characteristic of a vertical merger?
a. It involves organizations at different production stages.
b. It includes unrelated organizations.
c. It aims to create economies of scale with competitors.
d. It has no common factors between merging organizations.
45. What is a strategic alliance in the business context?
a. A merger of two or more companies into a single entity.
b. A temporary partnership formed by businesses to achieve specific strategic goals.
c. A legal obligation for companies to share their profits.
d. An agreement that forces businesses to relinquish their independence.
46. How do strategic partners typically maintain their status within a strategic alliance?
a. By merging into a single company.
b. By completely relinquishing their independence.
c. By sharing control and benefits of the partnership.
d. By terminating the alliance immediately.
47. Where are strategic alliances often formed in the business world?
a. Only within the same region or country.
b. Exclusively between direct competitors.
39
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

c. Primarily in the global marketplace across different regions.

d. Solely within one specific industry.
48. What is a major drawback associated with strategic alliances?
a. Decreased competition
b. Enhanced resource sharing
c. Increased trade secret protection
d. Sharing of resources and profits
49. How can organizations protect their trade secrets when forming strategic alliances?
a. By avoiding trade secret sharing
b. By relying on court enforcement
c. Through written agreements
d. By not forming alliances
50. What potential issue may arise in a strategic alliance when one party becomes a competitor in the
future?
a. Enhanced collaboration
b. Improved resource sharing
c. Decreased competition
d. The emergence of a competitor
51. What is the primary focus of Stage One in a turnaround strategy?
a. Developing a preliminary action plan
b. Implementing an emergency action plan
c. Assessing current problems and identifying root causes
d. Restructuring the business
52. In which stage of the turnaround strategy should an organization establish a positive operating cash
flow as quickly as possible?
a. Stage Two
b. Stage Three
c. Stage Four
d. Stage Five
53. Which of the following is NOT mentioned as part of Stage Four in the turnaround strategy?
a. Analyzing assets and debts
b. Changing the product mix
c. Closing some facilities
d. Building employee morale
54. In the final stage of the turnaround strategy, what is emphasized for the organization to show signs
of profitability and return on investments?
a. Asset liquidation for generating cash
b. Initial credibility-building actions
c. Increasing market share
d. Core product restructuring
55. Which of the following is NOT listed as one of the important elements of a turnaround strategy?
a. Quick cost reductions
b. Changes in the top management
c. Neutralizing external pressures
40
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

d. Expanding into new markets

56. What is the primary objective of a divestment strategy?
a. To increase market share
b. To acquire new businesses
c. To sell or liquidate a portion of the business
d. To diversify the product portfolio
57. Under what circumstances might a firm consider divestment as a strategy?
a. When they want to acquire a mismatched business
b. When they need to increase their market share
c. When persistent negative cash flows are causing financial problems
d. When they want to enhance technological upgradation
58. What are the characteristics of a divestment strategy?
a. It always involves selling the entire business.
b. Divestment is not considered a part of corporate strategy.
c. It may involve selling or liquidating some business activities.
d. Divestment should be stigmatized.
59. Which of the following is NOT a major reason for implementing a retrenchment/turnaround
strategy?
a. Technological upgradation is necessary for survival.
b. A better alternative for investment is available.
c. The business has been acquired and integrated successfully.
d. Continuous losses and unviability.
60. In what situation might a firm choose to divest a portion of its unprofitable businesses?
a. When they want to increase competition in that sector.
b. When technological upgradation is feasible.
c. When a better alternative for investment is unavailable.
d. When the business proves to be a mismatch.
61. What is the primary purpose of using a portfolio approach in strategic decision-making for multi-
product, multi-business firms?
a. To identify the most profitable products in the portfolio.
b. To streamline resource allocation to businesses with the greatest potential.
c. To reduce the number of businesses in the firm's portfolio.
d. To analyze the competition within each business.
62. In which type of firms is a portfolio approach primarily used for competitive analysis and strategic
planning?
a. Small, single-product firms.
b. Large multi-product, multi-business firms.
c. Non-profit organizations.
d. Start-up companies.
63. How can a diversified company benefit from adopting a portfolio approach in resource allocation?
a. By maximizing profits in all businesses.
b. By investing equally in all its businesses.
c. By diverting resources from less profitable businesses to more prospective ones.
d. By avoiding strategic planning altogether.
41
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

64. What is the primary focus of Market Penetration in Ansoff's product market growth matrix?
a. Expanding into new geographical markets
b. Developing new products for existing markets
c. Selling existing products into existing markets
d. Marketing new products in new markets
65. Which growth strategy involves selling existing products into new markets?
a. Market Penetration
b. Market Development
c. Product Development
d. Diversification
66. What should be the strategic approach for a product in the red zone of the GE Matrix?
a. Expand and invest
b. Exercise caution and discretion
c. Retrench, divest, or liquidate
d. Harvest and protect
67. What is the key challenge a business may face when pursuing Market Development?
a. Developing new products for existing markets
b. Identifying and developing new markets for current products
c. Overcoming competition in a mature market
d. Expanding its position in established markets
68. Which growth strategy is considered risky because it involves marketing new products in new
markets?
a. Market Penetration
b. Market Development
c. Product Development
d. Diversification
69. What is the ADL matrix primarily based on?
a. Market share and profitability
b. Product life cycle
c. Market segmentation
d. Competitive pricing
70. 70. How does the ADL matrix categorize products or SBU's based on competitive position?
a. By analyzing market share
b. By assessing environmental sustainability
c. By evaluating business strengths
d. By considering stage of industry maturity
71. 71. In the ADL matrix, what does the "Dominant" competitive position imply?
a. A company is vulnerable to competition
b. The industry is fragmented
c. There is a monopoly or strong technological leadership
d. The market leaders are weak
72. 72. Which competitive position in the ADL matrix offers a company a considerable degree of freedom
in choosing its strategies?
a. Weak
42
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

b. Tenable
c. Strong
d. Favorable
73. What characterizes firms categorized as "Tenable" in the ADL matrix?
a. Unsatisfactory performance with no room for improvement
b. Strong market leadership
c. Vulnerability to competition from stronger companies
d. Satisfactory performance with potential for improvement
74. What does the vertical axis on the BCG growth-share matrix represent?
a. Market share
b. Market attractiveness
c. Business strength
d. Future potential
75. What does a "Cash Cow" represent on the BCG matrix?
a. Low-growth, high market share products
b. High-growth, high market share products
c. High-growth, low market share products
d. Low-growth, low market share products
76. Which type of business in the BCG matrix requires heavy investment with low potential to generate
cash?
a. Stars
b. Cash Cows
c. Question Marks
d. Dogs
77. What is the primary objective of the "Build" strategy in the BCG matrix?
a. Increase market share
b. Preserve market share
c. Increase short-term cash flow
d. Sell or liquidate the business
78. In the BCG matrix, what is the recommended action for "Dogs"?
a. Increase market share
b. Preserve market share
c. Increase short-term cash flow
d. Sell or liquidate the business
79. What is the main limitation of the BCG matrix according to the provided content?
a. Difficulty in classifying current businesses
b. Focus on future planning
c. Lack of emphasis on market-share growth
d. Difficulty in implementing and measuring market share and growth
80. According to the content, what type of business is capable of becoming a "Cash Trap" if left
unattended?
a. Stars
b. Cash Cows
c. Question Marks
43
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

d. Dogs
81. What is the primary objective of the "Hold" strategy in the BCG matrix?
a. Increase market share
b. Preserve market share
c. Increase short-term cash flow
d. Sell or liquidate the business
82. What is the GE Model's primary purpose in strategic planning?
a. To identify potential traffic problems
b. To assess the color of traffic lights
c. To evaluate business strength and market attractiveness
d. To recommend different traffic control methods
83. How is the GE Model different from the BCG growth-share matrix?
a. It uses different colors to categorize products.
b. It focuses on market growth instead of market attractiveness.
c. It assesses competitive strength instead of market share.
d. It evaluates brand image instead of profit margin.
84. In the GE Matrix, what does the green section signify?
a. A need for managerial discretion
b. An advantageous business position
c. A requirement for caution
d. A need for liquidation
85. What factors contribute to market attractiveness in the GE Model?
a. Market share and distribution efficiency
b. Profit margin and customer loyalty
c. Size of the market and competitive intensity
d. Demand variability and pricing trends

Answer to MCQ based Questions

1 c 16 c 31 a 46 c 61 b 76 c
2 b 17 b 32 b 47 c 62 b 77 a
3 b 18 a 33 a 48 d 63 c 78 d
4 d 19 a 34 d 49 c 64 c 79 d
5 a 20 a 35 b 50 d 65 b 80 c
6 b 21 c 36 b 51 c 66 c 81 b
7 b 22 a 37 c 52 b 67 c 82 c
8 b 23 b 38 c 53 d 68 d 83 c
9 b 24 b 39 c 54 c 69 b 84 b
10 b 25 b 40 c 55 d 70 c 85 c
11 a 26 c 41 c 56 c 71 c
12 c 27 b 42 b 57 c 72 c
13 d 28 a 43 a 58 c 73 d
14 c 29 a 44 a 59 c 74 b
15 a 30 c 45 b 60 c 75 a
44
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

Scenario Based Questions

1. Gautam and Siddhartha, two brothers, are the owners of a cloth manufacturing unit located in
Faridabad. They are doing well and have substantial surplus funds available within the business. They
have different approaches regarding corporate strategies to be followed to be more competitive and
profitable in future.
Gautam is interested in acquiring another industrial unit located in Faridabad manufacturing stationery
items such as permanent markers, notebooks, pencils and pencil sharpeners, envelopes and other
office supplies. On the other hand, Siddhartha desires to start another unit to produce readymade
garments.
Discuss the nature of strategic choices being suggested by the two brothers with reference to the
payoffs and the risks involved.
Answer:
Gautam wishes to diversify in a business that is not related to their existing line of product and can be termed
as conglomerate diversification. He is interested in acquiring another industrial unit located in Faridabad
manufacturing stationery items such as permanent markers, notebooks, pencils and pencil sharpeners,
envelopes and other office supplies, which is not related to their existing product. In conglomerate
diversification, the new businesses/ products are disjointed from the existing businesses/products in every
way; it is an unrelated diversification. In process/ technology/ function, there is no connection between the
new products and the existing ones. Conglomerate diversification has no common thread at all with the
firm's present position.
On the other hand, Siddhartha seeks to move forward in the chain of existing product by adopting
vertically integrated diversification/ forward integration. The cloth being manufactured by the
existing processes can be used as raw material of garments manufacturing business. In such
diversification, firms opt to engage in businesses that are related to the existing business of the firm.
The firm remains vertically within the same process and moves forward or backward in the chain. It
enters specific product/process steps with the intention of making them into new businesses for the
firm. The characteristic feature of vertically integrated diversification is that here, the firm does not
jump outside the vertically linked product-process chain.
Both types of diversifications have their own risks. In conglomerate diversification, there are no
linkages with customer group, customer marketing functions and technology used, which is a risk. In
the case of vertical integrated diversification, there is a risk of lack of continued focus on the original
business.
2. XYZ Company is facing continuous losses. There is decline in sales and product market share. The
products of the company became uncompetitive and there is persistent negative cash flow. The
physical facilities are deteriorating, and employees have low morale. At the board meeting, the board
members decided that they should continue the organization and adopt such measures such that the
company functions properly. The board has decided to hire young executive Shayamli for improving
the functions of the organization. What corporate strategy should Shayamli adopt for this company
and what steps need to be taken to implement the strategic choice adopted by Shayamli?
Answer:
XYZ Company is facing continuous losses, decline in sales and product market share, persistent negative cash
flow, uncompetitive products, declining market share, deterioration in physical facilities, low morale of
employees. In such a scenario, Shayamli may choose turnaround strategy as this strategy attempts to reverse
the process of decline and bring improvement in organizational health. This is also important as Board has
decided to continue the company and adopt measures for its proper functioning.
For success, Shayamli needs to focus on the short and long-term financing needs as well as on
strategic issues. During the turnaround, the “product mix” may be changed, requiring the
organization to do some repositioning. A workable action plan for turnaround would involve:
45
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

Stage One – Assessment of current problems: In the first step, assess the current problems and get to the
root causes and the extent of damage.
Stage Two – Analyze the situation and develop a strategic plan: Identify major problems and opportunities,
develop a strategic plan with specific goals and detailed functional actions.
Stage Three – Implementing an emergency action plan: If the organization is in a critical stage, an
appropriate action plan must be developed to stop the bleeding and enable the organization to survive.
Stage Four – Restructuring the business: If the core business is irreparably damaged, then the
outlook for the entire organization may be bleak. Efforts to be made to position the organization for
rapid improvement.
Stage Five – Returning to normal: In the final stage of turnaround strategy process, the organization
should begin to show signs of profitability, return on investments and enhancing economic value-
added.
3. Organo is a large supermarket chain. It is considering the purchase of a number of farms that provides
Organo with a significant amount of its fresh produce. Organo feels that by purchasing the farms, it will
have greater control over its supply chain. Identify and explain the type of diversification opted by
Organo?
Answer:
Organo is a large supermarket chain. By opting backward integration and purchase a number of farms, it will
have greater control over its supply chain. Backward integration is a step towards, creation of effective
supply by entering business of input providers. Strategy employed to expand profits and gain greater control
over production of a product whereby a company will purchase or build a business that will increase its own
supply capability or lessen its cost of production.
4. With the global economic recession Soft Cloth Ltd. incurred significant losses in all its previous five
financial years. Currently, they are into manufacturing of cloth made of cotton, silk, polyster, rayon,
lycra and blends. Competition is also intense on account of cheap imports. The company is facing cash
crunch and has not been able to pay the salaries to its employees in the current month.
Suggest a grand strategy that can be opted by Soft Cloth Ltd.
Answer: Soft Cloth Ltd. is facing internal as well as external challenges. The external environment is in
economic recession and the organization is facing cash crunch. The company needs to work on retrenchment
/ turnaround strategy. The strategy is suitable in case of issues such as:
 Persistent negative cash flow.
 Uncompetitive products or services
 Declining market share
 Deterioration in physical facilities
 Overstaffing, high turnover of employees, and low morale
 Mismanagement
The company may consider to substantially reduce the scope of its activity. This is done through an
attempt to find out the problem areas and diagnose the causes of the problems. Next, steps are
taken to solve the problems.
These steps result in different kinds of retrenchment strategies. If the organization chooses to focus
on ways and means to reverse the process of decline, it adopts at turnaround strategy. If it cuts off
the loss-making units, divisions, or SBUs, curtails its product line, or reduces the functions
performed, it adopts a divestment strategy. If none of these actions work, then it may choose to
abandon the activities totally, resulting in a liquidation strategy.
5. X Pvt. Ltd. had recently ventured into the business of co-working spaces when the global pandemic
struck. This has resulted in the business line becoming unprofitable and unviable, and a failure of the
existing strategy. However, the other businesses of X Pvt. Ltd. are relatively less affected by the
pandemic as compared to the recent co-working spaces. Suggest a strategy for X Pvt. Ltd. with reasons
to justify your answer.
46
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

Answer:
It is advisable that divestment strategy should be adopted by X Pvt. Ltd.
In the given situation where the business of co-working spaces became unprofitable and unviable
due to Global pandemic, the best option for the company is to divest the loss-making business.
Retrenchment may be done either internally or externally. Turnaround strategy is adopted in case of
internal retrenchment where emphasis is laid on improving internal efficiency of the organization,
while divestment strategy is adopted when a business turns unprofitable and unviable due to some
external factors. In view of the above, the company should go for divestment strategy.
Further, divestment helps address issues like:
1. Persistent cash flows from loss making segment could affect other profit-making segments, which is the
case in the given scenario.
2. Inability to cope from the losses, which again is uncertain due to pandemic.
3. Better investment opportunity, which could be the case if X Pvt. Ltd. can invest the money it generates
from divestment.
6. Atrix Ltd. is a company engaged in the designing, manufacturing, and marketing of mechanical
instruments like speed meters, oil pressure gauges, and so on. Their products are fitted into two and four
wheelers. During the last couple of years, the company has been observing a fall in the market share. This
is on account of shift to the new range of electronic instruments. The customers are switching away
mechanical instruments that have been the backbone of Atrix Ltd.
As a CEO of Atrix Ltd., what can be the strategic options available with you.
Answer:
Atrix is having a product portfolio that is evidently in the decline stage. The product is being replaced with the
technologically superior product. Strategically the company should minimize their dependence on the
existing products and identify other avenues for the survival and growth. As a CEO of Atrix Ltd., following can
be the strategic options available with the CEO:
 Invest in new product development and switchover to the new technology. Atrix Ltd. also need time to
invest in emerging new technology.
 They can acquire or takeover a competitor provided they have or are able to generate enough financial
resources.
 They may also consider unrelated growth and identify other areas for expansion. This will enable Atrix
Ltd. to spread their risks.
 In longer run, they should divest the existing products. However, they may continue with the existing
products in a limited manner for such time there is demand for the product.
Descriptive Questions
1. Describe the construction of BCG matrix and discuss its utility in strategic management.
Answer: Companies that are large enough to be organized into strategic business units face the challenge of
allocating resources among those units. In the early 1970’s the Boston Consulting Group developed a model
for managing portfolio of different business units or major product lines. The BCG growth- share matrix
facilitates portfolio analysis of a company having invested in diverse businesses with varying scope of profits
and growth.
The BCG matrix can be used to determine what priorities should be given in the product portfolio of
a business unit. Using the BCG approach, a company classifies its different businesses on a two-
dimensional growth share matrix. Two dimensions are market share and market growth rate. In the
matrix:
 The vertical axis represents market growth rate and provides a measure of market attractiveness.
 The horizontal axis represents relative market share and serves as a measure of company’s strength in
the market.
Thus, the BCG matrix depicts quadrants as shown in the following table:
47
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

BCG Matrix
Different types of business represented by either products or SBUs can be classified for portfolio
analyses through BCG matrix. They have been depicted by meaningful metaphors, namely:
(a) Stars are products or SBUs that are growing rapidly. They also need heavy investment to maintain their
position and finance their rapid growth potential. They represent best opportunities for expansion.
(b) Cash Cows are low-growth, high market share businesses or products. They generate cash and have low
costs. They are established, successful, and need less investment to maintain their market share. In long
run when the growth rate slows down, stars become cash cows.
(c) Question Marks, sometimes called problem children or wildcats, are low market share business in high-
growth markets. They require a lot of cash to hold their share. They need heavy investments with low
potential to generate cash. Question marks if left unattended are capable of becoming cash traps. Since
growth rate is high, increasing it should be relatively easier. It is for business organisations to turn them
stars and then to cash cows when the growth rate reduces.
(d) Dogs are low-growth, low-share businesses and products. They may generate enough cash to maintain
themselves, but do not have much future. Sometimes they may need cash to survive. Dogs should be
minimised by means of divestment or liquidation.
The BCG matrix is useful for classification of products, SBUs, or businesses, and for selecting
appropriate strategies for each type as follows.
(a) Build with the aim for long-term growth and strong future.
(b) Hold or preserve the existing market share.
(c) Harvest or maximize short-term cash flows.
(d) Divest, sell or liquidate and ensure better utilization of resources elsewhere.
2. An industry comprises of only two firms-Soorya Ltd. and Chandra Ltd. From the following
information relating to Soorya Ltd., prepare BCG Matrix:
Product Revenues Percent Profits Percent Percentage Percentage
(in Rs.) Revenues (in Rs.) Profits Market Share Industry
Growth
rate
A 6 crore 48 120 lakh 48 80 + 15
B 4 crore 32 50 lakh 20 40 + 10
C 2 crore 16 75lakh 30 60 -20
D 50 lakh 4 5 lakh 2 5 -10
Total 12.5 crore 100 250 lakh 100
48
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

Answer:
Using the BCG approach, a company classifies its different businesses on a two dimensional growth-share
matrix. In the matrix, the vertical axis represents market growth rate and provides a measure of market
attractiveness. The horizontal axis represents relative market share and serves as a measure of company
strength in the market. With the given data on market share and industry growth rate of Soorya Ltd, its four
products are placed in the BCG matrix as follows:

Retain Market Share

Product A is in best position as it has a high relative market share and a high industry growth rate.
On the other hand, product B has a low relative market share, yet competes in a high growth
industry. Product C has a high relative market share but competes in an industry with negative
growth rate. The company should take advantage of its present position that may be difficult to
sustain in long run. Product D is in the worst position as it has a low relative market share and
competes in an industry with negative growth rate.
3. Aurobindo, the pharmaceutical company wants to grow its business. Draw Ansoff’s Product Market
Growth Matrix to advise them of the available options.
Answer:
The Ansoff’s product market growth matrix (proposed by Igor Ansoff) is a useful tool that helps businesses
decide their product and market growth strategy. With the use of this matrix, a business can get a fair idea
about how its growth depends upon its markets in new or existing products in both new and existing
markets.

The Ansoff’s product market growth matrix is as follows:

Ansoff’s Product Market Growth Matrix

Based on the matrix, Aurobindo may segregate its different products. Being in pharmaceuticals,
development of new products is result of extensive research and involves huge costs. There are also
49
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

social dimensions that may influence the decision of the company. It can adopt penetration, product
development, market development or diversification simultaneously for its different products.
Market penetration refers to a growth strategy where the business focuses on selling existing
products into existing markets. It is achieved by making more sales to present customers without
changing products in any major way.
Market development refers to a growth strategy where the business seeks to sell its existing
products into new markets. It is a strategy for company growth by identifying and developing new
markets for the existing products of the company.
Product development refers to a growth strategy where business aims to introduce new products
into existing markets. It is a strategy for company growth by offering modified or new products to
current markets.
Diversification refers to a growth strategy where a business markets new products in new markets.
It is a strategy by starting up or acquiring businesses outside the company’s current products and
markets.
As market conditions change overtime, a company may shift product-market growth strategies. For
example, when its present market is fully saturated a company may have no choice other than to
pursue new market.

4. In the context of Ansoff’s Product-Market Growth Matrix, identify with reasons, the type of growth
strategies followed in the following cases:
(i) A leading producer of tooth paste, advises its customers to brush teeth twice a day to keep breath
fresh.
(ii) A business giant in hotel industry decides to enter into dairy business.
(iii) One of India’s premier utility vehicles manufacturing company ventures to foray into foreign
markets.
(iv) A renowned auto manufacturing company launches ungeared scooters in the market.
Answer:

The Ansoff’s product market growth matrix (proposed by Igor Ansoff) is a useful tool that helps businesses
decide their product and market growth strategy. This matrix further helps to analyse different strategic
directions. According to Ansoff there are four strategies that organisation might follow.
(i) Market Penetration: A leading producer of toothpaste, advises its customers to brush teeth twice a day
to keep breath fresh. It refers to a growth strategy where the business focuses on selling existing
products into existing markets.
(ii) Diversification: A business giant in hotel industry decides to enter into dairy business. It refers to a
growth strategy where a business markets new products in new markets.
(iii) Market Development: One of India’s premier utility vehicles manufacturing company ventures to foray
into foreign markets. It refers to a growth strategy where the business seeks to sell its existing products
into new markets.
Product Development: A renowned auto manufacturing company launches ungeared scooters in the market.
It refers to a growth strategy where business aims to introduce new products into existing markets.
50
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

CHAPTER- 5
STRATEGY IMPLEMENTATION AND EVALUATION
Multiple Choice Questions
1. leadership style may be appropriate in turbulent environment.
a. Transactional
b. Transformational
c. Autocratic
d. None of these
2. An organizational structure with constricted middle level is:
a. Divisional structure
b. Network structure
c. Hour Glass structure
d. Matrix structure
3. You are the head of operations of a company. When you focus on total or aggregate management
functions in the sense of embracing the integrated activities of a complete department et al, you are
practicing: -
a. Strategic Control
b. Management control
c. Administrative Control
d. Operations Control
4. Which of the following would be chosen by the core strategist to implement operational control: -
a. Premise Control
b. Special Alert Control
c. Implementation Control
d. Budgetary Control
5. Compliance, Identification and Internalization are the three processes involved in:
a. Refreezing
b. Defreezing
c. Changing behavior patterns
d. Breaking down old attitudes
6. Which one is NOT a type of strategic control?
a) Operational control
b) Strategic surveillance
c) Special alert control
d) Premise control
7. What are the key components of the strategic planning process?
a. Annual objectives, competition analysis, and financial projections
b. Vision, mission, values, goals, and key performance measures
c. Marketing strategies, organizational structure, and employee training
d. Budget allocation, market research, and customer feedback
8. Why is the strategic management process considered dynamic and continuous?
a. To ensure that strategies are only evaluated annually
b. To respond to changes in the economy and competition
c. To minimize the need for back-and-forth discussions
51
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

d. To guarantee long-term success without any adjustments

9. What does the provided model of strategic management represent?
a. A guarantee of sure-shot success in any organization
b. A step-by-step process that all organizations should follow
c. A clear and practical approach for formulating, implementing, and evaluating strategies
d. A static framework that doesn't adapt to changing circumstances
10. How is the strategic management process typically conducted within organizations?
a. In a rigid, lockstep fashion with no room for creativity
b. With minimal communication and feedback between stages
c. In an iterative manner with back-and-forth considerations
d. Only during semi-annual formal meetings
11. What is the primary purpose of planning in management?
a. Evaluating past performance
b. Choosing a path of action to achieve defined goals
c. Analyzing competitors' strategies
d. Monitoring daily activities
12. What is the key focus of strategic planning?
a. Current deployment of resources
b. Long-term success of the organization
c. Short-term operational efficiency
d. Routine business functions
13. Who is responsible for developing strategic plans in an organization?
a. Middle-level managers
b. Functional managers
c. Senior management
d. Operational staff
14. How does strategic planning differ from operational planning?
a. Strategic planning is focused on short-term goals, while operational planning is focused on long-term
goals
b. Strategic planning deals with current deployment of resources, while operational planning deals with
future resources
c. Strategic planning shapes the organization and its resources, while operational planning deals with
current resource deployment
d. Strategic planning develops tactics, while operational planning develops overall objectives
52
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

15. What is the definition of strategic planning mentioned in the content?

a. Determining daily tasks for employees
b. Formulation of policies to govern resource acquisition and use
c. Evaluating short-term market trends
d. Allocating resources for immediate needs
16. How can organizations deal with strategic uncertainty according to the content?
a. Ignoring potential trends and events
b. Building internal resilience and strengthening risk management capabilities
c. Avoiding collaboration with other organizations
d. Sticking rigidly to the existing business model
17. What is the impact of strategic uncertainty on businesses, as mentioned in the content?
a. It does not impact established businesses
b. It only affects potential businesses
c. It can have an impact on present, proposed, and potential businesses
d. It only impacts businesses that do not diversify their product portfolio
18. What is the responsibility of operational planning according to the content?
a. Developing overall objectives and strategies
b. Modifying business functions fundamentally
c. Projecting current operations into the future
d. Assessing the impact of environmental variables
19. What does corporate strategy refer to in the context of the content?
a. Specific plans for individual departments
b. Game plan that directs the company towards success
c. Short-term goals of the organization
d. Financial projections for the next year
20. Who is responsible for making operational plans in an organization?
a. Senior management
b. Functional managers
c. Middle and lower-level management
d. External consultants
21. What is the primary focus of strategy implementation?
a. Developing strategic alternatives
b. Analyzing market trends
c. Translating a strategic decision into action
53
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

d. Conducting market research

22. What does strategic implementation involve in terms of resource allocation?
a. Crafting new strategies
b. Analyzing competition
c. Allocating resources to new courses of action
d. Assessing market opportunities
23. In the context of strategy implementation, what does "making it work" refer to?
a. Creating strategic plans
b. Executing strategic decisions
c. Designing organizational structures
d. Identifying market opportunities
24. What is the key reason for many managers' failure in achieving organizational success?
a. Inadequate strategy formulation skills
b. Lack of strategic design
c. Failure in distinguishing between strategy formulation and implementation
d. Blaming the strategy model for company failures
25. According to the provided content, what is essential for a company to be successful?
a. Successful strategic design
b. Excellent strategy formulation
c. Proper strategy model
d. Sound strategy formulation and excellent implementation
26. What are forward linkages in strategy formulation primarily associated with?
a. Past strategic actions
b. Environmental appraisal
c. Organizational structure modification
d. Incremental changes
27. How do past strategic actions influence the choice of strategy in organizations?
a. By determining environmental appraisal
b. By causing reformulation of existing strategies
c. By affecting the style of leadership
d. By influencing the present resources and additional efforts
28. Which of the following best describes the relationship between formulation and implementation of
strategies?
a. Formulation has no impact on implementation, and vice versa.
54
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

b. Formulation and implementation are entirely separate processes.

c. Formulation is influenced by past strategic actions, while implementation requires organizational
changes.
d. Formulation and implementation are entirely interdependent.
29. What do implementation tasks in strategy require a strategist to have?
a. Technical skills
b. Financial acumen
c. Knowledge, skills, attitudes, and abilities
d. Marketing expertise
30. Which of the following is NOT a component of a program?
a. Policies
b. Procedures
c. Funding
d. Organizational structure
31. What distinguishes a project from a program in strategy implementation?
a. Projects have predetermined time schedules and costs.
b. Programs have specific objectives.
c. Projects consist of multiple programs.
d. Programs require capital budgeting.
32. What is the purpose of structural implementation in strategy implementation?
a. Allocation of resources
b. Development of functional policies
c. Designing organizational structure
d. Installing systems
33. What should be done to ensure the transition from strategy formulation to implementation is smooth,
especially in larger organizations?
a. Keep middle and lower-level managers out of the process.
b. Minimize involvement of divisional and functional managers.
c. Involve divisional and functional managers as much as possible in strategy formulation.
d. Avoid strategists' involvement in strategy-implementation activities.
34. What are some management issues central to strategy implementation?
a. Establishing competitor focus
b. Minimizing resistance to change
c. Developing strategic intent
55
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

d. Increasing the number of middle managers

35. Why is strategists' personal commitment to strategy implementation important?
a. It reduces the need for middle managers' involvement.
b. It minimizes resistance to change.
c. It motivates managers and employees.
d. It enhances financial acumen.
36. What is the first step in initiating strategic change in a business?
a. Create a shared vision to manage change
b. Institutionalize the change
c. Recognize the need for change
d. Conduct a SWOT analysis
37. What is the primary role of senior managers in the process of initiating strategic change?
a. Implement the changed strategy
b. Conduct SWOT analysis
c. Create a shared vision
d. Monitor and review the change process
38. What is a crucial requirement for ensuring the success of a changed culture in a business?
a. Conducting a one-time SWOT analysis
b. Regularly monitoring and reviewing the change process
c. Maintaining the old ways of thinking and doing things
d. Avoiding communication of the new vision to employees
39. What is the first phase of Kurt Lewin's change process for organizations?
a. Unchanging
b. Changing
c. Refreezing
d. Unfreezing
40. What is the purpose of the unfreezing phase in the change process?
a. To enforce new rules
b. To maintain traditions
c. To prepare for change
d. To make individuals aware of the necessity for change
41. How can organizations help prepare their members for change during the unfreezing phase?
a. By implementing sudden and unannounced changes
b. By maintaining the status quo
56
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

c. By promoting the ideas throughout the organization

d. By making announcements, holding meetings, and promoting the ideas throughout the organization
42. In the changing phase, what method involves enforcing the reward and punishment strategy for behavior
change?
a. Compliance
b. Identification
c. Internalization
d. Compliance
43. What is the purpose of the identification method in the changing phase?
a. To provide freedom to learn and adapt to new behaviors
b. To enforce strict rules and regulations
c. To identify the need for change
d. To make members psychologically identify with role models and adopt their behavior
44. When does refreezing occur in the change process?
a. Before the unfreezing phase
b. After the organization is completely changed
c. During the changing phase
d. When the new behavior becomes a normal way of life
45. Why is continuous reinforcement important for the refreezing phase?
a. To extinguish the new acquired behavior
b. To prevent any change from happening
c. To maintain the former behavior
d. To ensure the new acquired behavior does not diminish or extinguish
46. What is "digital transformation" in the context of organizations?
a. A type of company structure
b. The use of traditional methods for business improvement
c. The use of digital technologies to enhance or create new procedures, products, or services
d. The process of rebranding a company
47. What is the role of change management in digital transformation?
a. It is not necessary for digital transformation.
b. It helps reduce risks and disruptions during the transformation process.
c. It is only useful for governmental bodies.
d. It is primarily focused on technology implementation.
57
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

48. What are the four essential elements of change management in the context of digital transformation?
a. Planning, execution, review, and reporting
b. Setting objectives, conducting market research, designing products, and marketing
c. Defining goals, assessing the current state, creating a roadmap, and implementing change
d. Budgeting, HR management, legal compliance, and customer service
49. What is a common characteristic of change management models and methods?
a. Keeping changes hidden from stakeholders
b. Avoiding the need for a clear vision for the change
c. Involving stakeholders, creating a change plan, and monitoring results
d. Making the change process as complicated as possible
50. Why is change management important in the current business landscape, especially in the context of
digital transformation?
a. It only benefits large enterprises.
b. It helps organizations resist change and maintain the status quo.
c. It ensures that digital transformation projects are successful and organized.
d. It is a complex and unnecessary process.
51. What is one of the most critical areas of focus for ensuring a successful transformation in businesses?
a. Technology adoption
b. Financial management
c. Change management
d. Customer acquisition
52. Why is it important for leadership to be on the same page about the company's future when managing
change?
a. It ensures higher profits.
b. It generates and promotes a motivating culture.
c. It reduces employee turnover.
d. It simplifies daily operations.
53. What is a key strategy for reducing workplace disruption during the implementation of change?
a. Keeping employees uninformed about upcoming changes.
b. Minimizing communication with the IT department.
c. Preparing employees for possible interruptions.
d. Ignoring the concerns of change agents.
54. What does effective communication during times of change help achieve within an organization?
a. Increased employee turnover
58
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

b. Reduced efficiency
c. A negative impact on culture
d. Keeping everyone on the same page
55. How should businesses view change in their operations, according to the provided content?
a. As a temporary project
b. As the exception to the rule
c. As a continuous, ongoing process
d. As a one-time event
56. What is a crucial step in ensuring the success of digital transformation?
a. Regular meetings
b. Employee surveys
c. Change management
d. Financial analysis
57. How can organizations make it easier for everyone to understand and work towards the same digital
transformation objectives?
a. Create more complex objectives
b. Avoid sharing objectives with employees
c. Specify clear aims and objectives
d. Keep objectives secret
58. Why is it important to implement changes gradually during digital transformation?
a. To make the process more complicated
b. To create confusion among employees
c. To maximize resistance
d. To allow people to adjust to the new way of doing things
59. 59. What is the primary purpose of the McKinsey 7S Model?
a. To evaluate external market conditions
b. To analyze an organization's organizational design
c. To assess individual employee performance
d. To measure financial performance and profit margins
60. Which of the following elements are considered "Hard elements" in the McKinsey 7S Model?
a. Shared Values and Staff
b. Strategy, Style, and Skills
c. Strategy, Structure, and Systems
d. Structure, Style, and Systems
59
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

61. What do the Soft elements in the McKinsey 7S Model primarily depend on?
a. Management control and decision-making
b. The availability of resources
c. Organizational culture and values
d. The development of daily tasks and operations
62. Which element in the McKinsey 7S Model represents the core values reflected within an organization's
culture?
a. Skills
b. Systems
c. Shared Values
d. Staff
63. What is one of the limitations of the McKinsey 7S Model mentioned in the content?
a. It focuses on the external environment.
b. It is a flexible model for decision making.
c. It ignores the importance of organizational structure.
d. It is criticized for missing gaps in conceptualization and execution of strategy.
64. Which element in the McKinsey 7S Model involves the leadership style and its influence on the
organization's strategic decisions?
a. Style
b. Strategy
c. Staff
d. Structure
65. What do the Hard elements in the McKinsey 7S Model consist of?
a. Shared Values and Staff
b. Structure, Skills, and Systems
c. Strategy, Staff, and Style
d. Strategy, Structure, and Systems
66. 66. What is the primary reason for changes in corporate strategy often necessitating changes in
organizational structure?
a. To increase executive order
b. To centralize decision-making
c. To better allocate resources for strategic objectives
d. To reduce employee participation
60
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

67. According to Chandler's findings, what relationship exists between organizational structure and strategy?
a. Structure is irrelevant to strategy
b. Structure follows strategy
c. Strategy follows structure
d. Structure and strategy are independent
68. Which statement best describes the relationship between organizational structure and industry-specific
practices?
a. Organizations in the same industry always have the same structure.
b. Successful firms in a given industry tend to organize themselves in a similar way.
c. There is no correlation between industry and organizational structure.
d. Every organization has a unique structure.
69. How does the complexity of organizational structure typically change as organizations grow and evolve?
a. It becomes less complex.
b. It remains the same.
c. It becomes more complex.
d. It becomes unpredictable.
70. What role does organizational structure play in shaping strategy according to the provided content?
a. Structure is irrelevant to strategy development.
b. Structure shapes the choice of strategy.
c. Structure is a minor consideration in strategy development.
d. Strategy has no impact on organizational structure.
71. Which type of organizational structure is most suitable for companies implementing focused cost
leadership or focused differentiation strategies?
a. Functional Structure
b. Divisional Structure
c. Simple Structure
d. Multidivisional Structure
72. In a simple organizational structure, who makes all major decisions directly and monitors all activities?
a. Chief Executive Officer
b. Functional Line Managers
c. Corporate Staff
d. Owner-Manager
73. What does a functional structure promote within an organization?
a. Specialization of labor
61
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

b. Local control of situations

c. Rapid decision making
d. Clear accountability
74. What is a potential disadvantage of the divisional structure?
a. Lack of local control
b. Difficulty in maintaining consistent practices
c. Reduced top management control
d. Clear accountability
75. When might a divisional structure by customer be the most effective way to implement strategies?
a. When offering only a few products or services
b. When geographic dispersion is a challenge
c. When specific products or services need special emphasis
d. When well-qualified individuals are required
76. What is the primary purpose of a Multidivisional (M-form) structure?
a. To centralize all decision-making processes within the corporate office.
b. To delegate responsibility for day-to-day operations and business unit strategy to division managers.
c. To eliminate the need for separate divisions and create a flat organizational structure.
d. To reduce the number of divisions within a company and improve overall efficiency.
77. What problem did the Multidivisional structure aim to solve in large firms during the 1920s?
a. Lack of innovation in product development.
b. Coordination- and control-related issues among distinct product lines and markets.
c. Overemphasis on long-term strategic issues.
d. Inability to establish a corporate hierarchy.
78. How does the Strategic Business Unit (SBU) structure differ from the Multidivisional structure?
a. The SBU structure eliminates the need for division managers.
b. The SBU structure groups related businesses for effective strategic planning.
c. The SBU structure centralizes decision-making at the corporate headquarters.
d. The SBU structure focuses solely on short-term operational control.
79. What is a key characteristic of an SBU according to the provided content?
a. It must be a part of a territorial unit for strategic planning purposes.
b. It has its own set of competitors and a manager responsible for strategic planning and profit
performance.
c. It can include unrelated products/businesses to diversify the portfolio.
d. It does not require independent planning and can rely on the corporate headquarters for strategy formulation.
62
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

80. What issue does the SBU structure address that the territorial unit approach does not?
a. Vagueness and confusion in grouping businesses for strategic planning.
b. Lack of communication between division managers and corporate officers.
c. Overemphasis on short-term operational control.
d. Inability to handle diverse technologies within a single unit.
81. What is a key characteristic of a matrix structure in an organization?
a. Vertical flows of authority and communication
b. Only vertical flows of authority
c. Horizontal flows of authority and communication
d. Vertical and horizontal flows of authority and communication
82. In which situation is the matrix structure often found within an organization or an SBU?
a. When resources are abundant
b. When there is a single product line
c. When external environment is stable
d. When abilities to process information need improvement
83. What is a primary advantage of a network structure in an organization?
a. High centralization of business functions
b. In-house management of all activities
c. Reduced transaction costs through outsourcing
d. Clear and permanent product structures
84. What is a potential disadvantage of the network organization structure?
a. Concentration on distinctive competencies
b. Difficulty in finding potential partners
c. High degree of synergy among activities
d. Overemphasis on innovation and adaptation
85. What is the third and final phase of matrix development, according to Davis and Lawrence?
a. Cross-functional task forces
b. Product/brand management
c. Mature matrix
d. Dual-authority structure
86. What is a key characteristic of the hourglass organization structure?
a. A wide middle-management layer
b. Specialized middle-level managers
c. Fast decision-making due to decentralized authority
63
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

d. Reduced promotion opportunities for lower levels

87. In the hourglass organization structure, how do managers in the middle layer differ from traditional
middle-level managers?
a. They focus on a specific area of expertise.
b. They handle a wide variety of tasks.
c. They primarily coordinate lower-level activities.
d. They are not responsible for cross-functional issues.
88. What is a potential drawback of the hourglass organization structure?
a. Reduced costs and enhanced responsiveness
b. Monotony and lack of interest at the same level
c. High promotion opportunities for lower-level employees
d. Specialized middle-level managers
89. What does corporate culture refer to in a business organization?
a. The company's profits and financial performance
b. The physical work environment and office layout
c. The organization's values, beliefs, and ways of operating
d. The company's stock market performance
90. What socio-logical forces contribute to the development of corporate culture within an organization?
a. Marketing strategies
b. Employee recruitment
c. Forces operating within the organization's boundaries
d. Customer preferences
91. When does an organization's culture become an obstacle to successful strategy execution?
a. When the culture is aligned with the strategy
b. When the culture is built around values and norms
c. When the culture conflicts with the company's direction or strategy
d. When the culture promotes creativity and change
92. How does a strong corporate culture promote better strategy execution?
a. By stifling creativity and change
b. By emphasizing employee conformity
c. By aligning with strategy-supportive values and practices
d. By discouraging customer engagement
93. What is the first step in changing a company's culture to align with its strategy?
a. Swiftly implementing visible, aggressive actions
64
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

b. Diagnosing which aspects of the culture need to be changed

c. Sustained commitment from the chief executive
d. Talking openly to employees about the need for change
94. Why is changing a problem culture difficult in an organization?
a. People are emotionally attached to the old and familiar culture
b. Managers are resistant to change
c. Employees resist change due to personal magnetism
d. The culture is easily modified
95. What is necessary for creating and sustaining a strategy-supportive culture in an organization?
a. Charisma and personal magnetism
b. Talking to many departmental groups from an office
c. A commitment from the whole management team
d. An overnight transformation
96. What is the primary role of a manager with strategic leadership skills?
a. Managing daily operations
b. Maintaining short-term financial stability
c. Guiding the company through change
d. Delegating responsibilities to subordinates
97. Which of the following is NOT one of the responsibilities of a strategic leader?
a. Making strategic decisions
b. Formulating policies and action plans
c. Managing human capital
d. Conducting financial audits
98. What does transformational leadership style emphasize?
a. Controlling organizational activities
b. Maintaining the current situation
c. Stretching followers' abilities and promoting innovation
d. Exchanging rewards for compliance
99. In which type of environment is transactional leadership style more likely to be appropriate?
a. Turbulent and poorly performing organizations
b. Settled and growing industries
c. Industries at the end of their life-cycles
d. Organizations with a need for dramatic change
65
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

100. What is a key aspect of transactional leadership style?

a. Offering excitement and vision
b. Enhancing the existing culture and practices
c. Promoting innovation throughout the organization
d. Motivating through charisma and enthusiasm
101. What is the purpose of strategic leadership in terms of guiding the company?
a. Maintaining the current strategy and culture
b. Embracing major changes and inspiring followers
c. Focusing on short-term financial stability
d. Monitoring daily operational tasks
102. What is the primary purpose of the control function in management?
a. To create plans and standards
b. To monitor the organization's growth and development
c. To establish norms and standards
d. To ensure the performance of planned activities and goal achievement
103. What is the key element of strategic control focused on verifying the validity and accuracy of the
premises on which a strategy is built?
a. Strategic surveillance
b. Special alert control
c. Premise control
d. Implementation control
104. Which type of control involves general monitoring of various sources of information to uncover
unanticipated information having a bearing on the organizational strategy?
a. Premise control
b. Strategic surveillance
c. Special alert control
d. Implementation control
105. What is the primary purpose of management control in an organization?
a. To monitor operational tasks
b. To regulate external conditions
c. To achieve enterprise goals effectively and efficiently
d. To assess individual transactions
106. Which form of control is directed towards assessing the need for changes in the overall strategy in light
of unfolding events and results associated with incremental steps and actions?
66
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

a. Premise control
b. Strategic surveillance
c. Special alert control
d. Implementation control
107. What is the primary focus of operational control?
a. Monitoring the entire organization
b. Regulating external conditions
c. Assessing individual tasks or transactions
d. Achieving enterprise goals effectively and efficiently
108. In strategic control, what are the dual questions that need to be addressed?
a. Whether the strategy is being formulated as planned and whether it is cost-effective.
b. Whether the strategy is being implemented as planned and whether it is innovative.
c. Whether the strategy is being implemented as planned and whether the results produced are
intended.
d. Whether the strategy is being developed as planned and whether it is environmentally friendly.
109. What is the purpose of strategic surveillance in the context of strategic control?
a. To assess the need for immediate strategy changes
b. To monitor the basic direction of the strategy
c. To identify and verify premises
d. To implement strategy in sequential actions
110. What is the primary purpose of Strategic Performance Measurement (SPM) in organizations?
a. To create internal rivalry among divisions
b. To establish a common language among all divisions
c. To preserve empires within the organization
d. To track progress towards strategic goals and offer a system for performance measurement
111. What is a crucial consideration when selecting Key Performance Indicators (KPIs) for strategy
implementation?
a. Creating internal rivalry
b. Ensuring paralysis by over analysis
c. Establishing a clear cause and effect relationship with strategic outcomes
d. Limiting openness and communication
112. Which of the following is NOT a type of Strategic Performance Measure mentioned in the content?
a. Operational Measures
b. Employee Measures
c. Market Measures
67
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

d. Environmental Measures
113. Why are Strategic Performance Measures essential for organizations, according to the content?
a. To foster internal rivalry
b. To establish a secretive atmosphere within the organization
c. To demonstrate accountability to stakeholders and align strategies with goals
d. To create barriers between different divisions
114. What is the impact of political forces on the implementation of a strategy, according to the content?
a. They encourage openness, communication, and self-analysis
b. They promote knowledge retention and selective communication
c. They lead to immediate implementation of all strategies
d. They have no influence on strategy implementation
Answer: B) They promote knowledge retention and selective communication
115. Which factor is NOT mentioned as a consideration when choosing the right Strategic Performance
Measures?
a. Data Availability
b. Relevance to goals and objectives
c. Complexity of the measure
d. Data Quality

Answer to MCQ based Questions

1 b 21 c 41 d 61 c 81 d 101 b
2 c 22 c 42 d 62 c 82 d 102 d
3 b 23 b 43 d 63 d 83 c 103 c
4 d 24 c 44 d 64 a 84 b 104 b
5 c 25 d 45 d 65 d 85 c 105 c
6 a 26 c 46 c 66 c 86 c 106 d
7 b 27 d 47 b 67 b 87 b 107 c
8 b 28 c 48 c 68 b 88 b 108 c
9 c 29 c 49 c 69 c 89 c 109 b
10 c 30 d 50 c 70 b 90 c 110 d
11 b 31 a 51 c 71 c 91 c 111 c
12 b 32 c 52 b 72 d 92 c 112 a
13 c 33 c 53 c 73 a 93 b 113 c
14 c 34 b 54 d 74 b 94 a 114 b
15 b 35 c 55 c 75 c 95 c 115 c
16 b 36 c 56 c 76 b 96 c
17 c 37 c 57 c 77 b 97 d
18 c 38 b 58 d 78 b 98 c
19 B 39 D 59 B 79 B 99 B
20 c 40 D 60 C 80 A 100 B
68
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

Scenario Based Questions

1. Ramesh, is owner of a popular brand of Breads. Yashpal, his son after completing Chartered
Accountancy started assisting his father in running of business. The approaches followed by father and
son in management were very different. While Ramesh preferred to use authority and having a formal
system of defining goals and motivation with explicit rewards and punishments, Yashpal believed in
involving employees and generating enthusiasm to inspire people to deliver in the organization.
Discuss the difference in leadership style of father and son.
Answer: Ramesh is a follower of transactional leadership style that focuses on designing systems and
controlling the organization’s activities. Such a leader believes in using authority of its office to exchange
rewards, such as pay and status. They prefer a more formalized approach to motivation, setting clear goals
with explicit rewards or penalties for achievement or non-achievement. Transactional leaders try to build on
the existing culture and enhance current practices. The style is better suited in persuading people to work
efficiently and run operations smoothly.
On the other hand, Yashpal is follower of transformational leadership style. The style uses charisma and
enthusiasm to inspire people to exert them for the good of the organization. Transformational leaders offer
excitement, vision, intellectual stimulation and personal satisfaction. They inspire involvement in a mission,
giving followers a ‘dream’ or ‘vision’ of a higher calling so as to elicit more dramatic changes in organizational
performance. Such a leadership motivates followers to do more than originally affected to do by stretching
their abilities and increasing their self-confidence, and also promote innovation throughout the organization.
2. Suresh Sinha has been recently appointed as the head of a strategic business unit of a large
multiproduct company. Advise Mr Sinha about the leadership role to be played by him in execution of
strategy.
Answer: Leading change has to start with diagnosing the situation and then deciding which of several ways to
handle it. Managers have five leadership roles to play in pushing for good strategy execution:
i) Staying on top of what is happening, closely monitoring progress, solving out issues, and learning what
obstacles lie in the path of good execution.
ii) Promoting a culture of esprit de corps that mobilizes and energizes organizational members to execute
strategy in a competent fashion and perform at a high level.
iii) Keeping the organization responsive to changing conditions, alert for new opportunities, bubbling with
innovative ideas, and ahead of rivals in developing competitively valuable competencies and capabilities.
iv) Exercising ethical leadership and insisting that the company conduct its affairs like a model corporate
citizen.
v) Pushing corrective actions to improve strategy execution and overall strategic performance.
3. KaAthens Ltd., a diversified business entity having business operations across the globe. The company
leadership has just changed as Mr. D. Bandopadhyay handed over the pedals to his son Aditya
Bandopadhyay, due to his poor health. Aditya is a highly educated with an engineering degree from IIT,
Delhi. However, being very young he is not clear about his role and responsibilities,
In your view, what are the responsibilities of Aditya Bandopadhyay as CEO of the company.
Answer:
Aditya Bandopadhyay, an effective strategic leader of KaAthens Ltd. must be able to deal with the diverse
and cognitively complex competitive situations that are characteristic of today’s competitive landscape.
A Strategic leader has several responsibilities, including the following:
 Making strategic decisions.
 Formulating policies and action plans to implement strategic decision.
 Ensuring effective communication in the organisation.
 Managing human capital (perhaps the most critical of the strategic leader’s skills).
 Managing change in the organisation.
 Creating and sustaining strong corporate culture.
 Sustaining high performance over time.
69
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

4. Manoj started his telecom business in 2010. Over next five years, he gradually hired fifty people for
various activities such as to keep his accounts, administration, sell his products in the market, create
more customers, provide after sales service, coordinate with vendors.
Draw the organization structure Manoj should implement in his organization and name it.
Answer:
Manoj has started a telecom business. Accounts, Administration, Marketing (customer creation, after sales
service, vendor coordination) are the functional areas that are desired in the organisational structure. Further
there is inherent need to have a department for the management of telecom services/ operations.
Thus, the functional structure in the telecom business of Manoj can be as follows:
Chairman (Managing
Director/ CEO)

Administration
Telecom Accounts
Operations and Finance Marketing
Human
Resource, etc.

Sales
(Customer After Sales Vendor
Service Coordination
Creation)

5. Moonlight Private Limited deals in multi-products and multi-businesses. It has its own set of
competitors. It seems impractical for the company to provide separate strategic planning treatment to
each one of its product or businesses. As a strategic manager, suggest the type of structure best
suitable for Moonlight Private Limited and state its benefits.
Answer:
It is advisable for Moonlight Private Limited to follow the strategic business unit (SBU) structure.
Moonlight Private Limited has a multi-product and multi-business structure where, each of these businesses
has its own set of competitors. In the given case, Strategic Business Unit (SBU) structure would best suit the
interests of the company.
SBU is a part of a large business organization that is treated separately for strategic management purposes. It
is separate part of large business serving product markets with readily identifiable competitors. It is created
by adding another level of management in a divisional structure after the divisions have been grouped under
a divisional top management authority based on the common strategic interests.
Very large organizations, particularly those running into several products, or operating at distant
geographical locations that are extremely diverse in terms of environmental factors, can be better managed
by creating strategic business units, just as is the case for Moonlight Private Limited. SBU structure becomes
imperative in an organization with increase in number, size and diversity.
Benefits of SBUs:
1. Establishing coordination between divisions having common strategic interest.
2. Facilitate strategic management and control.
3. Determine accountability at the level of distinct business units.
4. Allow strategic planning to be done at the most relevant level within the total enterprise.
5. Make the task of strategic review by top executives more objective and more effective.
6. Help to allocate resources to areas with better opportunities.
Thus, an SBU structure with its set of advantages would be most suitable for the company with the given
diverse businesses having separate identifiable competitors, but a common organizational goal.
70
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

6. Sanya Private Limited is an automobile company. For the past few years, it has been observed that the
progress of the company has become stagnant. When scrutinized, it was found that the planning
department was performing fairly well but the plans could not be implemented due to improper use of
resources, undesirable tendencies of workers and non-conformance to norms and standards. You are
hired as a Strategic Manager. Suggest the elements of process of control to overcome the problem.
Answer:
Sanya Private Limited deteriorating performance due to poor implementation of plans that is improper use of
resources, undesirable tendencies of the workers, and non-conformance to norms and standards, all point
towards weak controls in the organization. Implementation of plans cannot assure results unless strong and
sufficient controls are put in place. The management of the company should focus diligently on developing
controls especially in the identified problem areas.
The process of control has the following elements:
a) Objectives of the business system which could be operationalized into measurable and controllable
standards.
b) A mechanism for monitoring and measuring the performance of the system.
c) A mechanism (i) for comparing the actual results with reference to the standards (ii) for detecting
deviations from standards and (iii) for learning new insights on standards themselves.
d) A mechanism for feeding back corrective and adaptive information and instructions to the system, for
effecting the desired changes to set right the system to keep it on course.
Above elements of control would ensure a proper check on improper use of resources, undesirable
tendencies of the workers, and non-conformance to norms and standards and ensure a result oriented
implementation of plans.
Descriptive Questions
1. What is a strategic business unit? What are its advantages?
Answer:
A strategic business unit (SBU) is any part of a business organization which is treated separately for strategic
management purposes. The concept of SBU is helpful in creating an SBU organizational structure. It is
discrete element of the business serving product markets with readily identifiable competitors and for which
strategic planning can be concluded. It is created by adding another level of management in a divisional
structure after the divisions have been grouped under a divisional top management authority based on the
common strategic interests.
Advantages of SBU are:
 Establishing coordination between divisions having common strategic interests.
 Facilitates strategic management and control on large and diverse organizations.
 Fixes accountabilities at the level of distinct business units.
 Allows strategic planning to be done at the most relevant level within the total enterprise.
 Makes the task of strategic review by top executives more objective and more effective.
 Helps allocate corporate resources to areas with greatest growth opportunities.

2. Draw 'Divisional Structure' with the help of a diagram. Also, give advantages and disadvantages of this
structure in brief.
Answer:
Divisional structure is that organizational structure which is based on extensive delegation of authority and
built on division basis. The divisional structure can be organized in one of the four ways: by geographic area,
by product or service, by customer, or by process. With a divisional structure, functional activities are
performed both centrally and in each division separately.
71
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

Chief Executive

Corporate Finance Corporate Legal/PR

General Manager Division A General Manager Division B

Marketing Marketing

Production Production

Personnel Personnel

Figure: Divisional Structure

Advantages of Divisional Structure
 Accountability is clear: Divisional managers can be held responsible for sales and profit levels. Because a
divisional structure is based on extensive delegation of authority, managers and employees can easily see
the results of their good or bad performances and thus their morale is high.
 Other advantages: It creates career development opportunities for managers, allows local control of local
situations, leads to a competitive climate within an organization, and allows new businesses and products
to be added easily.
Disadvantages of Divisional Structure
 Higher cost: Owing to following reasons: (i). requires qualified functional specialist at different divisions
and needed centrally (at headquarters); (ii). It requires an elaborate, headquarters –driven control
system.
 Conflicts between divisional managers: Certain regions, products, or customers may sometimes receive
special treatment, and it may be difficult to maintain consistent, company-wide practices.
3. What is an ‘hourglass structure’? How can this structure benefit an organization?
Answer:
In the recent years information technology and communications have significantly altered the functioning of
organizations. The role played by middle management is diminishing as the tasks performed by them are
increasingly being replaced by the technological tools. Hourglass organization structure consists of three
layers in an organisation structure with constricted middle layer. The structure has a short and narrow middle
management level.

Information technology links the top and bottom levels in the organization taking away many tasks that are
performed by the middle level managers. A shrunken middle layer coordinates diverse lower level activities.
Hourglass structure has obvious benefit of reduced costs. It also helps in enhancing responsiveness by
simplifying decision making. Decision making authority is shifted close to the source of information so that it
is faster. However, with the reduced size of middle management, the promotion opportunities for the lower
levels diminish significantly.
72
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

4. How can you differentiate between transformational and transactional leaders?

Answer:
Difference between transformational and transactional leadership
1. Transformational leadership style uses charisma and enthusiasm to inspire people to exert them for the
good of organization. Transactional leadership style uses the authority of its office to exchange rewards
such as pay, status symbols etc.
2. Transformational leadership style may be appropriate in turbulent environment, in industries at the very
start or end of their cycles, poorly performing organisations, when there is a need to inspire a company
to embrace major changes. Transactional leadership style can be appropriate in static environment, in
growing or mature industries and in organisations that are performing well.
3. Transformational leaders inspire employees by offering excitement, vision, intellectual stimulation and
personal satisfaction. Transactional leaders prefer a more formalized approach to motivation, setting
clear goals with explicit rewards or penalties for achievement and non- achievement. Transactional
leaders focus mainly to build on existing culture and enhance current practices.

5. What is strategic change? Explain the change process proposed by Kurt Lewin that can be useful in
implementing strategies?
Answer:
The changes in the environmental forces often require businesses to make modifications in their existing
strategies and bring out new strategies. Strategic change is a complex process and it involves a corporate
strategy focused on new markets, products, services and new ways of doing business.
To make the change lasting, Kurt Lewin proposed three phases of the change process for moving the
organization from the present to the future. These stages are unfreezing, changing and refreezing.
a) Unfreezing the situation: The process of unfreezing simply makes the individuals or organizations aware
of the necessity for change and prepares them for such a change. Lewin proposes that the changes
should not come as a surprise to the members of the organization. Sudden and unannounced change
would be socially destructive and morale lowering. The management must pave the way for the change
by first “unfreezing the situation”, so that members would be willing and ready to accept the change.
Unfreezing is the process of breaking down the old attitudes and behaviours, customs and traditions so
that they start with a clean slate. This can be achieved by making announcements, holding meetings and
promoting the ideas throughout the organization.
b) Changing to New situation: Once the unfreezing process has been completed and the members of the
organization recognise the need for change and have been fully prepared to accept such change, their
behaviour patterns need to be redefined. H.C. Kellman proposed three methods for reassigning new
patterns of behavior as compliance, identification and internalisation.
c) Refreezing: Refreezing occurs when the new behaviour becomes a normal way of life. The new behaviour
must replace the former behaviour completely for successful and permanent change to take place. In
order for the new behaviour to become permanent, it must be continuously reinforced so that this newly
acquired behaviour does not diminish or extinguish.
Change process is not a one time application but a continuous process due to dynamism and ever
changing environment. The process of unfreezing, changing and refreezing is a cyclical one and remains
continuously in action.

6. What are the differences between operational control and management control?
Answer:
Differences between Operational Control and Management Control are as under:
i) The thrust of operational control is on individual tasks or transactions as against total or more
aggregative management functions. When compared with operational, management control is more
inclusive and more aggregative, in the sense of embracing the integrated activities of a complete
department, division or even entire organisation, instead or mere narrowly circumscribed activities of
sub-units. For example, procuring specific items for inventory is a matter of operational control, in
73
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

contrast to inventory management as a whole.

ii) Many of the control systems in organisations are operational and mechanistic in nature. A set of
standards, plans and instructions are formulated. On the other hand, the basic purpose of management
control is the achievement of enterprise goals – short range and long range – in an effective and efficient
manner.
7. What is strategic control? Briefly explain the different types of strategic control.
Answer:
Strategic Control focuses on the dual questions of whether: (1) the strategy is being implemented as planned;
and (2) the results produced by the strategy are those intended.
There are four types of strategic control:
 Premise control: A strategy is formed on the basis of certain assumptions or premises about the
environment. Premise control is a tool for systematic and continuous monitoring of the environment to
verify the validity and accuracy of the premises on which the strategy has been built.
 Strategic surveillance: Strategic surveillance is unfocussed. It involves general monitoring of various
sources of information to uncover unanticipated information having a bearing on the organizational
strategy.
 Special alert control: At times, unexpected events may force organizations to reconsider their strategy.
Sudden changes in government, natural calamities, unexpected merger/acquisition by competitors,
industrial disasters and other such events may trigger an immediate and intense review of strategy.
 Implementation control: Managers implement strategy by converting major plans into concrete,
sequential actions that form incremental steps. Implementation control is directed towards assessing the
need for changes in the overall strategy in light of unfolding events and results.
8. What is implementation control? Discuss its basic forms.
Answer:
Managers implement strategy by converting major plans into concrete, sequential actions that form
incremental steps. Implementation control is directed towards assessing the need for changes in the overall
strategy in light of unfolding events and results associated with incremental steps and actions.
Strategic implementation control is not a replacement to operational control. Strategic implementation
control, unlike operational controls continuously
monitors the basic direction of the strategy. The two basic forms of implementation control are:
i) Monitoring strategic thrusts: Monitoring strategic thrusts help managers to determine whether the
overall strategy is progressing as desired or whether there is need for readjustments.
ii) Milestone Reviews. All key activities necessary to implement strategy are segregated in terms of time,
events or major resource allocation. It normally involves a complete reassessment of the strategy. It also
assesses the need to continue or refocus the direction of an organization.
74
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

CASE STUDY BASED-MCQS

CASE SCENARIO-1
LUXHEAL is a new age healthcare equipment designing and manufacturing company, with its
founders being top Indian medical academicians. The company has been backed by a Pune based
venture capital firm, that has invested approximately 115 crores as capital requirement fund.
The company has recently developed an automated mind mapped wheelchair called WHEELIX,
which has been awarded at various forums around the world and even won the Industry
Differentiator Award at an international conclave.
Dr. Budhiraja, was appointed as the CEO last year, when the company was unable to make a mark
for itself in the industry. Under his leadership, the company turned around to be a leader in
innovation. He has been instrumental in bringing about a culture of oneness and inspiration
amongst the employees. Recently, he introduced a company-wide competition for the best
innovation.
One of the key highlights of the company’s strategies has been, that they use very advanced
benchmarking processes. However, in eagerness to hit the markets and showcase their product
range to the world, the company missed on implementing the inferences and conclusions.
WHEELIX, on the other hand would make them a niche player in the market for elderly rich. The
company has already been approached by WeGO, the world leader in wheelchair production, to
let them use its branding and facilities for a share in profit. The Board is willing to accept the offer.
However, WeGO is stuck in a legal litigation with its distribution channel partners and thus,
LUXHEAL will have to work immensely of stacking its own channels.
With the increasing number of elderly rich and the ever increasing demand for luxury medical
equipment, LUXHEAL has a clear winning path in its vision and just needs to focus on
implementing its ideas.

Based on the above case scenario, answer the multiple choice questions.

1. LUXHEAL envisages to be the most admired and responsible healthcare equipment company
with international footprint. Is this a vision or a mission? If this is LUXHEAL’s vision, then which of
the following is not essential while drafting the strategic vision?
a. It should clearly illuminate the direction in which the organisation is headed.
b. It should create enthusiasm among members of the organization.
c. It should be rigidly defined to prepare the organisation for the future.
d. This is a mission statement and not a vision statement

2. Which of the following steps in benchmarking did LUXHEAL skip, which eventually lead to the
failure of the benchmarking process?
a. Identifying the need for benchmarking.
b. Comparing the own process and performance with that of others.
c. Identifying best process.
d. Reporting and implementing the steps to bridge the gaps identified.

3. Dr. Budhiraja has been instrumental in bringing about monumental changes in the company’s
structure and working culture. He has been very approachable yet feared by employees at all
levels. What kind of leadership style can his style be termed as?
75
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

a. Transactional leadership style

b. Autocratic leadership style
c. Diplomatic leadership style
d. Transformational leadership style

4. The recent international recognition that the company has got for WHEELIX, has turned around
its strategy all together. Which of the following Michael Porter’s generic strategies should
LUXHEAL follow?
a. Cost leadership
b. Focused differentiation
c. Differentiation
d. Focused cost leadership

5. Which of the following is a key entry barrier for LUXHEAL?

a. Brand identity
b. Capital requirement
c. Access to distribution channels
d. Product differentiation

CASE SCENARIO-2
Strong Girls Private Limited, is an all female-led early stage health drink company, operating out of
Bangalore. The company is aware of the two important things with respect to their business; first,
the youth is really conscious about health, and second, there are plethora of options available in
the market to cater their demands.
With these pointers in mind, they launched their flagship product, Avajuice, a health drink made
with Amla, Papaya, Aloe Vera and Neem, targeted at increasing immunity of young teenage girls.
The unique selling proposition has been to make these drinks taste good with added organic
flavours.
To achieve advantage in market segment the production process has been standardised. The
benefit has reflected in improved margins and better negotiating power. This product has been
identified by the strategy team, as a Star, as per BCGs growth matrix, for its rapid growth and
immense fund needs.
The marketing team has been one of the most influential in mapping the success of Avajuice. The
existing health drink companies have had a very low customer loyalty and retention ratio. The
company had to work to win over this shortcoming. For this, they have setup collaborations with
major schools of Karnataka as well as got into an agreement with the State Government of
Karnataka to provide Avajuice to girls of government schools at subsidised rate at just one rupee
each.
This has been instrumental in bringing about free publicity from local as well as national media.
With media coverage, the company very smartly placed the tagline, ‘We Offer Tasty Health for our
Teens’, and this was further pushed as a trend on social media to spread awareness of brand.
Effectively, the company has been able to position itself in the niche market domain and has been
making really good margins.
76
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

Based on the above case scenario, answer the multiple choice questions.
1. As per Peter Drucker, it is important to have a meaningful answer to the question, ‘what
business are we in?’. Through Avajuice, the company answered the following as ’We Offer
Tasty Health for our Teens’. Among which of the following does this statement fall?
a. Vision
b. Mission
c. Business definition
d. Action plan

2. The processes have been standardised as a strategy to improve margins and gain more
negotiation power in the market. Which of the generic strategies by Michael Porter has the
company deployed to create a favourable scenarios for itself?
a. Differentiation
b. Focussed differentiation
c. Cost leadership
d. Focussed cost leadership

3. Igor Ansoff developed a framework which describes the intensification options available to a
firm. Which of the following did Strong Girls Private Ltd. use for intensifying Avajuice?
a. Market penetration
b. Product development
c. Market development
d. Diversification strategy

4. Which of the following was used to increase the saleability, based on industry analysis of the
existing customer retention success rate? The marketing team could thus, track the open gaps
and focus on the niche teenage girls segment to win over competition.
a. Triggers of change
b. Benchmarking
c. Business process reengineering
d. Strategy audit

5. Avajuice can be identified as a Star as per BCG’s Growth Matrix, basis the rapid growth it has shown
and the enormous funds it demanded to maintain market and fuel the growth potential. What would
Avajuice turn into, as per the matrix, when its growth slows down?
a. Dog
b. Question mark
c. Will remain a star
d. Cash cow
77
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

CASE SCENARIO-3
After graduating from IIT in computer science, sisters, Shakti and Stuti, following their passion for
computers, started “Code Consulting”. They faced innumerable survival challenges in a highly
dynamic IT market. But with combined efforts of a highly dedicated team of data scientists, their
core business of big data analytics gained a prominent market presence.
From inception, Code Consulting has been a women-centric organization. The sisters ensured that
women were provided with ample opportunities in the organization. Given the option of Work
From Home as mandated by recent legal regulations, majority of the female workforce availed the
option. To avoid drop in sales, the sisters expeditiously lead a crisis management team to
accommodate adoption of the required technology to meet the changes of time.
Code Consulting, having reached a reputable market standing, was now observing cut-throat
competition from foreign giants in its niche. The sisters resolved to make an effort into their long
aspired dream to diversify into the innovative market space of 3D printing. Code Consulting,
lacking the requisite experience, went for a merger with a startup named “CreatyVT” known for its
technical know how. They have a strong skill-based team, but the long-standing startup had
relatively small market share in 3D printing arena.
Early on, the management observed that the businesses of big data analytics and 3D printing had
distinct markets. So, they split the company into different business units to independently identify
their performance. Separation into business units helped in simplifying the control related
problems too. Whereas, the challenge to grow the company's market share was successfully met
by introducing ingenious 3D printers with easily refillable cartridges. The new product was
supported by an aggressive online advertisement campaign. The customers pleased by the
products helped reach the desired sales targets in no time.
Having shown a never giving up attitude coupled with wise leadership skills, the business of Code
Consulting sustained a turbulent patch and placed itself as a renowned brand in the Indian IT.
Based on the above case scenario, answer the multiple choice questions.
1. Applying BCG matrix, identify the correct investment category for the new “3D printing”
business of Code Consulting, at the time of merger?
a. Star
b. Cash cow
c. Dog
d. Question mark

2. Which strategy has been adopted by Code Consulting to overcome the difficulties of low-
market share for its “3D printing” business?
a. Dynamic strategy
b. Adaptive strategy
c. Intended strategy
d. Sound strategy

3. Mark the correct growth and expansion strategy employed by Code Consulting in merging with
the startup named “CreatyVT”?
a. Horizontal merger
b. Vertical merger
c. Co-generic merger
d. Conglomerate merger
78
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

4. What has been the rationale behind Code Consulting’s management for treating big data
business and 3D printing business amenable to separate strategic treatment?
a. The businesses were unrelated
b. The businesses were unmanageable
c. The businesses were related
d. The businesses were identical

5. Which type of strategic control was adopted by Code Consulting when a new legal regulation
proposed that women workers shall have the option to work from home?
a. Premise control
b. Special alert control
c. Strategic surveillance
d. Implementation control

CASE SCENARIO-4
The teenage fashion industry has been speculated to reach $14Trillion by 2021 with a profitability
index of over 25%. Riding on thiswave of assumed growth in the industry, Miss Sumita Ahuja,
starteda clothing label named Hens of Fashion (HoF) in 2017. She beganwith a pop range of
clothing for teenage girls and diversified her wayto boys clothing. Her brand clocked revenue of
over fifty lacs in thevery first year, and to her excitement, she got an investment from abig brand
label to expand pan India.
She along with her core team found a niche consumer base, studiedthe industry in depth,
strategized to fight off competition and evenimplemented these strategies to win. Her instincts
and belief havebeen too strong for the clothing segment and her brand per se.
Mr. Ramit Arora, who began as a consultant with Miss Ahuja, was made the Head of Boys clothing
segment and was given full freedom to think like an owner of the business segment and
experiment for expansion. He took up the challenge and partnered with major foreign labels to
bring Hens of Fashion (HoF) to mainstream consumers.
The brand was doing great until a Japanese clothing brand by the name of Kimachee disrupted the
low cost teenage clothing and apparel industry with its global fame and pocket friendly pricing.
Hens of Fashion saw its revenues drop to at least half of what they were expecting.
An emergency strategy meeting amongst the leaders was called upon but Miss Ahuja was
adamant on sticking to the idea of selling the brand as India’s homegrown brand while other
leaders including Mr. Ramit wanted to partner with Kimachee to sustain the business. The team
eventually resorted to sticking with Miss Ahuja’s ideas and marketed the brand as the desi brand
for teenagers.
Like every business faces a challenge when the environment changes and throws opportunities or
threats to the management, Hens of Fashion has had its own set of principles and leadership
styles to sustain the business in these challenging times.
Based on the above case scenario, answer the multiple choice questions.
1. Miss Ahuja took a decision to enter teenage clothing industry based on which of the following
important industry attractiveness considerations?
a. Less uncertainty in industry
b. Growth potential of the industry
c. Instinct and entrepreneurial belief
d. Potential to capitalize weaker existing businesses
79
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

2. Mr. Ramit Arora is an/a ______, while Miss Sumita Ahuja is an/a ______?
a. Entrepreneur and Intrapreneur
b. Manager and Senior leader
c. Intrapreneur and Entrepreneur
d. Visionary and Incomeptent leader

3. Which step of Strategic Management is skipped by Hens of Fashion?

a. Environmental analysis
b. Formulation of strategy
c. Evaluation and control
d. Implementation of strategy

4. Kimachee blocked the industry with its global branding and disrupted Hens of Fashion. What
kind of strategy control could have saved the brand from such a big impact?
a. Premise control
b. Special alert control
c. Milestone reviews
d. Monitoring strategic thrusts

5. In times of distress, the core of organisational structure helps an organisation to think

holistically. Which of the following principles was highly ignored by Hens of Fashion?
a. Ideal organisational structure is one where leaders take final decision
b. Ideal organisational structure is one where executive order is valued over participation
c. Ideal organisational structure is one where source of idea carries more weight than the
merit
d. Ideal organisational structure is one where ideas filter up as well down.

CASE SCENARIO-5
Bhartiya Cricket Premier League (BCPL) is one of the most valued sports events which is held every
year. Started in 2007 by Board of Indian Cricket, the cricket tournament became a model for
success with strong revenue flows both for the parent company i.e. Board, team owners,
broadcasters and players. According to an estimate valuation of the prestigious sports brand was
approximately Rs 50000 crore. Approximately 60 % of the revenue comes from sponsorship rights,
10 percent from ticket sales, 5 % from merchandise sale and balance 25% from selling broadcast
rights. The sponsorship rights sold for 5 years had jumped from Rs 40 cr annually in 2007 to Rs 400
crores in 2019 and the Broadcast rights for five years were sold at staggering Rs 16000 crore. The
annual event held so much attention when held in India that almost all the major companies
wanted to associate with it in some or the other way. In fact TV broadcasters started charging
astronomical amounts for 10 second spot advertisements and the viewership was enhanced in
quantum proportions. The event was organized in multiple cities in India where paying capacity
was there, good infrastructure existed like hotels, sports complexes, gymnasiums, shopping malls
etc.
In March 2020, Government of India looking at the growth of Covid 19 virus announced lock down
aimed to curb movement and gathering of people. All flights were cancelled and sports, cultural
events were banned. There was border tension with neighboring countries as well.
80
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

The management of Board of Indian Cricket were in fix as to cancellation of the event. There was
immense pressure from politicians and media to cancel the event in view of global pandemic and
border tensions. According to prevailing opinion safety of players and spectators would have been
compromised in case the event is held. Cancellation meant loss of annual revenue from
sponsorships, broadcast rights and gate collections. Many members of the Board wondered that
in case spectators are not allowed for whom the event should be held? An emergency Board
meeting was held to take crucial decisions and the CEO was asked to present to the Board various
options. The CEO, a bright student with Management and CA background quickly did number
crunching, studied various processes and prepared different options.

Based on the above case scenario, answer the multiple choice questions.
1. The Premier League, in the current situation has to undertake what kind of analysis to arrive at
one of the choices provided by the CEO ?
a. Risk analysis
b. Competitive analysis
c. Industry analysis
d. Business analysis

2. Choose the appropriate options provided by the CEO on behalf of the board:
a. Cancel the event in the absence of scope of spectators.
b. Hold the event in India at an isolated location despite inadequate facilities.
c. Hold the event outside India to enhance earning through broadcast and sponsorships.
d. Postpone for the current period of pandemic.

3. Critical Business Processes that should be the first priority for the board to enhance revenue
incase the event is physically held-
a. Information technology enabled processes involving audience and sponsors.
b. Cost -effective hotel accommodation and travel.
c. Reduced revenue share to stakeholders.
d. Downsizing the composition of delegations.

4. The decisions that are going to be considered by the board for overcoming the situation can be
strategic only if :
a. No reliance on external environment as they change and cannot be predicted.
b. The league should generate revenue to meet its operational costs.
c. The stakeholders are duly compensated in the short run.
d. Significantly impact on the long-term prosperity of the league.

5. According to the case, who are the chief customers in this scenario?
a. Sponsors
b. Spectators
c. Channel partners
d. Sports retailers
81
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

CASE SCENARIO-6
Over 3 billion people worldwide drink coffee every day, and about 18% of Indians prefer coffee
over tea. These numbers are growing at a CAGR of 11% and HotKopi wants to lead the way ahead
in budget coffee stores in the Indian subcontinent. With many new brands mushrooming out to
make money from the growing industry, HotKopi’s unique selling proposition (USP) is its hand
blended coffee, roasted on cow dung.
The business is not easy, getting quality cow dung, training individuals, packing organically and
maintaining hygiene has been a constant issue. However, their customer reach and relationship
management has been a winner in the market. This has helped them grow slow and steady even
with enormous competition in the coffee segment.
In their annual finance meeting, the CFO of the company targeted to achieve 30% growth in
customers and 7% increase in net profits as soon as possible. On these lines, the company planned
to expand its operations and team size to nearly thrice of what they were in the beginning of the
year.
The business of HotKopi seemed sustainable but as the environment is dynamic and competition
is fierce, the management had been keeping an eye on competition very closely. The promotions
from competitors were flocking between being organic to dropping prices, offering free corporate
parties, student discounts and souvenirs for high purchasers. The team knew these were costly
promotions and were denting their competition economically but getting them business and a big
share of the market.
More so, ChocoJoe, the biggest coffee brand in North America, was due to enter India in the
coming months. They had already partnered with one of HotKopi’s competitors and the business
sustainability of HotKopi seemed weak. The team sat down for a round table meeting and decided
to offer their entire business to ChocoJoe for a 120% premium and exit the business.
ChocoJoe recently accepted their offering and the deal shall finalise by year end.
HotKopi has been a short success story which shall now hide behind the mega branding of
ChocoJoe. Nonetheless, businesses are meant to be practical at times rather than being
emotional. Whether the decision to sell off and exit was a wise one or not, only time would tell.

Based on the above case scenario, answer the multiple choice questions.

1. Which of the following aspects of Value Chain Analysis has been a crisis area for HotKopi?
a. Inbound logistics and Transformational operations
b. Outbound logistics and Transformational operations
c. Marketing and Sales
d. Service and Inbound logistics

2. Differentiation has been core to HotKopi’s business, but it has its own weaknesses. Which of
the following could be the weakest of them all for HotKopi?
a. Price point war
b. Sustainability of uniqueness
c. Inevitability of offering proposition
d. Switching costs for customers

3. Which core characteristic in CFO’s objective of achieving 30% growth in customers and 7%
increase in net profits is missing?
82
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management
 STRATEGIC MANAGEMENT

a. Being concrete and specific

b. Providing standard for performance appraisal
c. Challenging in nature
d. Time frame specific

4. Had they not offered their business to ChocoJoe, HotKopi would have to pursue their plans of
expansion. Which of the following would best suit their organizational structure?
a. Divisional structure
b. Multidivisional structure
c. Functional structure
d. Strategic business unit structure

5. HotKopi opted for liquidation. What kind of strategic control helped them get money out of
the business at the right time?
a. Strategic surveillance
b. Special alert control
c. Premise control
d. Management control

Questions
Case 1 2 3 4 5
1 C D D B C
2 B D C B D
3 D C C A B
4 B C C A D
5 A C A D C
6 A B D C B

83
Page

SHRESHTA For CA and CMA | SHRESHTA Professional Courses | CA Inter (New)| P6B Strategic Management