Noida Institute of Engineering and Technology, Greater Noida

Strategy Formulation
&
Strategic Analysis
Unit: III

Strategic Management
(AMBA 0301)
Harsh Awasthi
MBA III Semester Assistant Professor
MBA
 Introduction of Faculty member
I am an Assistant Professor in the
Department of MBA. Possessing 15 years of
teaching experience in the domain of
Finance, Design Thinking & Value
Education.

I have published 2 books in the Finance

domain and prepared course material for
reputed central universities of India. He has
a keen interest in literature and is also a poet.

I am also Six-Sigma Green Belt certified by

KPMG.

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 Index
S. No. Content
1. Name of Subject with code, Course and Subject
Teacher
2. Brief Introduction of Faculty member with
Photograph
3. Evaluation Scheme
4. Syllabus
5. Branch wise Application
6. Course Objective(s)
7. Course Outcome(s)
8. Program Outcomes (PSOs)
9. Cos and POs Mapping
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 Index
S. No. Content
10. Program Specific Outcomes (PSOs)
11. Cos and PSOs Mapping
12. Program Educational Objectives (PEOs)
13. Result Analysis
14. End Semester Question paper Templates
15. Prequisite/Recap
16. Brief Indtroduction about the Subject with Videos
17. Unit Contents
18. Unit Objectives
19. Topic Objectives/Topic Outcome

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 Index
S. No. Content
20. Lecture related to topic
21. Daily Quiz
22. Weekly Assignment
23. Topic Links
24. MCQs
25. Glossary Questions
26. Old question papers
27. Expected Questions
28. Recap of unit

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 Evaluation Scheme

AMBA0301

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 Syllabus

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 Syllabus

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 Branch Wise Application

• Formulating the right strategy, keeping in mind the

scenario of industry and economy.

• Application of portfolio analysis tools in order to

identify and create appropriate strategy in
consideration with competition.

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 Course Objectives

1. A clear understanding of the key concepts and

principles of strategic management.
2. A set of useful analytical skills, tools and techniques
for analyzing a company strategically.
3. To provide a basic understanding of the nature and
dynamics of the strategy formulation and
implementation processes.
4. To encourage students to think critically and
strategically.
5. The ability to identify strategic issues and design
appropriate courses of action.
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 Course Outcomes
• CO1. Formulate organizational vision, mission, goals,
and values.
• CO2. Develop strategies and action plans to achieve an
organization's vision, mission, and goals.
• CO3. Develop powers of managerial judgment, how to
assess business risk, and improve ability to make sound
decisions and achieve effective outcomes.
• CO4. Evaluate and revise programs and procedures in
order to achieve organizational goals.
• CO5. Consider the ethical dimensions of the strategic
management process.

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 Program Outcomes

1. Apply knowledge of management theories and

practices to solve business problems.
2. Foster analytical and critical thinking abilities for data-
based decision making.
3. Ability to develop value based leadership ability.
4. Ability to understand, analyze and communicate
global, economic, legal and ethical aspects of business.
5. Ability to lead themselves and others in the
achievement of organizational goals, contributing
effectively to a team environment.

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 COs & POs Mapping

S No CO/PO PO1 PO2 PO3 PO4 PO5

1 CO1 2 3 2 3 2

2 CO2 2 3 3 3 3
3 CO3 2 3 2 3 3
4 CO4 2 2 3 2 3
5 CO 5 2 2 3 3 2
Average 2 2.6 2.6 2.8 2.6

*1=Low, *2=Medium, *3=High

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 Program Specific Outcome

Not Applicable

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 COs & PSOs Mapping

Not Applicable

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 Program Educational Objectives
PEO1: Conceptual Knowledge to adapt in rapidly changing
environment and learn new skills and demonstrate
application of management principles in professional work
setting.
PEO2: Apply appropriate tools for decision making for solving
complex managerial problems in local or global context.

PEO3: Exhibit Integrity, social responsibility and teamwork.

PEO4: Exhibit ethics, communication skills, leadership qualities

and entrepreneurial mindset.

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 Result Analysis

Semester: III Session: 2021-22

Subject Total
90
Name Number Pass 40>65 65>75 75>90 Average
& Backlog
& of (%) (%) (%) (%) Marks
Above
Code Students
(%)

Strategic
Management 109 99 61 36 11 0 1 94
(AMBA 0301)

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 End Semester Question Paper Template

Harsh Awasthi AMBA0401 (SM) Unit-3

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 End Semester Question Paper Template

Harsh Awasthi AMBA0401 (SM) Unit-3

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 Prerequisites / Recap

• Analyzing Company’s External Environment:

ETOP,PESTEL analysis, EFE Matrix
• Analyzing Industry Environment:
• Entry & Exit Barriers, Strategic Group analysis.
• Analyzing Company’s Internal Environment
• Analyzing Company’s Resources and Competitive
Position
• Competitive advantage
• Benchmarking

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 Brief Introduction of Subject: Video

• https://www.youtube.com/watch?v=5xD2JLleGqk

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 Unit Content
• Generic Competitive Strategies: Meaning of generic
competitive strategies, Low cost, Differentiation, Focus
– when to use which strategy.
• Grand Strategies: Stability, Growth (Diversification
Strategies, Vertical Integration Strategies, Mergers,
Acquisition & Takeover Strategies, Strategic Alliances),
Retrenchment– Turnaround, Divestment, Liquidation,
Outsourcing Strategies.
• Structural analysis of competitive environment, Strategic
analysis and choice-Criteria for evaluating strategic
alternatives, Tools of strategic analysis, strategic choice-
BCG Matrix, Ansoff Grid, GE 9 Cell grid.
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 Unit Objectives
Objectives of this unit are:

• Understanding & analyzing the competition and

creating the appropriate strategy.
• Understanding the competition and using portfolio
analysis
• Evaluation of various strategic alternatives in
competition.

Harsh Awasthi AMBA0401 (SM) Unit-3

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 COs-POs Mapping
S No CO/PO PO1 PO2 PO3 PO4 PO5

1 CO1 2 3 2 3 2

2 CO2 2 3 3 3 3

3 CO3 2 3 2 3 3
4 CO4 2 2 3 2 3
5 CO 5 2 2 3 3 2
Average 2 2.6 2.6 2.8 2.6

*1=Low, *2=Medium, *3=High

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 Prerequisites and Topic wise Recap

Analyzing Company’s External Environment

(ETOP),PESTEL analysis, EFE Matrix
Analyzing Industry Environment
Entry & Exit Barriers, Strategic Group analysis
Analyzing Company’s Internal Environment
Analyzing Company’s Resources and Competitive Position
Competitive advantage, competitive parity & competitive
disadvantage
Benchmarking as a method of comparative analysis

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 Topic & CO Mapping

S No Topic CO Level
1 Generic Competitive Strategies CO 3 2
2 Grand Strategies: Stability, Growth CO 3 2
(Diversification Strategies, Vertical Integration
Strategies, Mergers, Acquisition & Takeover
Strategies, Strategic Alliances) Retrenchment–
Turnaround, Divestment, Liquidation,
Outsourcing Strategies.
3 Structural analysis of competitive environment CO 3 2
4 Strategic analysis and choice-Criteria for CO 3 2
evaluating strategic alternatives
5 Tools of strategic analysis, strategic choice- CO 3 2
BCG Matrix, Ansoff Grid, GE 9 Cell grid.

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Noida Institute of Engineering and Technology, Greater Noida

(Unit –III) Topic 1

Generic Competitive Strategies

 Topic & CO Mapping

Topic CO Level
Generic Competitive Strategies CO 3 2

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 Topic Objectives And Outcomes

Topic Objectives:
• Understanding generic competitive strategies.

Topic Outcomes:
• Ability to develop generic competitive strategies
• Ability to apply these strategies.

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 Recap

• External environmental scanning

• Internal environmental scanning
• Competitive advantage
• Benchmarking

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 Generic Competitive Strategies

Michael E Porter called the generic strategies as following:

• Cost Leadership
• Differentiation
• Focus

He then subdivided the Focus strategy into two parts:

• Cost Focus
• Differentiation Focus.

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 Porter’s Generic Competitive Strategies

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 Porter’s Generic Competitive Strategies
The Cost Leadership Strategy:

• Increasing profits by reducing costs, while charging

industry-average prices.

• Increasing market share by charging lower prices,

while still making a reasonable profit on each sale
because you've reduced costs.

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 Porter’s Generic Competitive Strategies
The Cost Leadership Strategy:

• Increasing profits by reducing costs, while charging

industry-average prices.

• Increasing market share by charging lower prices,

while still making a reasonable profit on each sale
because you've reduced costs.

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 Business Strategy- Porter’s Generic Strategy
The Differentiation Strategy:
Differentiation involves making your products or
services different from and more attractive than those of
your competitors.

• To make a success of a Differentiation strategy,

organizations need:
• Good research, development and innovation.
• The ability to deliver high-quality products or services.
• Effective sales and marketing, so that the market
understands the benefits offered by the differentiated
offerings.
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 Porter’s Generic Competitive Strategies

Cost Differentiation Strategy

• This strategy is all about pricing your product right. It

should tempt customers to purchase your products
instead of that of the competitors. However, at the
same time, the price should not be too low or too
high.
• If it is exorbitant, then customers would not pay for
it. It is too low; they may think the quality is poor.

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 Business Strategy

Product Differentiation Strategy

In this strategy, you have the leverage to keep the

prices that you deem necessary. The reason behind
this strategy is that your product offers unique or
additional features that your competitors do not.

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 Porter’s Generic Competitive Strategies
The Focus Strategy
• Companies that use Focus strategies concentrate on
particular niche markets and, by understanding the
dynamics of that market and the unique needs of
customers within it, develop uniquely low-cost or
well-specified products for the market.

• As with broad market strategies, it is still essential to

decide whether you will pursue Cost Leadership or
Differentiation once you have selected a Focus
strategy as your main approach

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 Porter’s Generic Competitive Strategies
The Differentiation Strategy:
Differentiation involves making your products or
services different from and more attractive than those of
your competitors.

• To make a success of a Differentiation strategy,

organizations need:
• Good research, development and innovation.
• The ability to deliver high-quality products or services.
• Effective sales and marketing, so that the market
understands the benefits offered by the differentiated
offerings.
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 Porter’s Generic Competitive Strategies

Cost Differentiation Strategy

• This strategy is all about pricing your product right. It

should tempt customers to purchase your products
instead of that of the competitors. However, at the
same time, the price should not be too low or too
high.
• If it is exorbitant, then customers would not pay for
it. It is too low; they may think the quality is poor.

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 Porter’s Generic Competitive Strategies

Product Differentiation Strategy

• In this strategy, you have the leverage to keep the

prices that you deem necessary.

• The reason behind this strategy is that your product

offers unique or additional features that your
competitors do not.

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 Porter’s Generic Competitive Strategies
The Focus Strategy
• Companies that use Focus strategies concentrate on
particular niche markets and, by understanding the
dynamics of that market and the unique needs of
customers within it, develop uniquely low-cost or
well-specified products for the market.

• As with broad market strategies, it is still essential to

decide whether you will pursue Cost Leadership or
Differentiation once you have selected a Focus
strategy as your main approach

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 Summary

• Cost Leadership Strategy

• Differentiation Strategy
• Focus Strategy
– Cost Focus Strategy
– Differentiation Focus Strategy

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 Daily Quiz

1. Discuss the cost leadership strategy.

2. Explain the concept of differentiation strategy.

3. Describe the focus strategy.

4. Discuss the concept of cost focus.

5. Elaborate the premise of differentiation focus.

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 Noida Institute of Engineering and Technology, Greater Noida

(Unit –III) Topic 2

Grand Strategies: Stability, Growth

(Diversification Strategies, Vertical Integration
Strategies
 Topic & CO Mapping

Topic CO Level
Grand Strategies: Stability, Growth CO 3 2
(Diversification Strategies, Vertical Integration
Strategies

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 Topic Objectives And Outcomes
Topic Objectives:
• Understanding various grand strategies of business

Topic Outcomes:
• Developing grand strategies
• Creating competitive edge for business

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 Recap

• Cost Leadership Strategy

• Differentiation Strategy
• Focus Strategy
– Cost Focus Strategy
– Differentiation Focus Strategy

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 Corporate Strategy

• It is primarily about the choice of direction for a firm

as a whole and the management of its business or
product portfolio.

• It includes decisions regarding the flow of financial

and other resources to and from company’s product
lines and business units.

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 Corporate Strategy

Corporate strategy deals with three key issues

facing the corporation as a whole.
1. Directional Strategies
2. Portfolio Analysis
3. Parenting Strategies

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 Corporate Strategy

1. Directional: Firm’s overall orientation towards

growth, stability or retrenchment.

2. Portfolio: Industries or the markets in which the firm

competes through its products & business units

3. Parenting: Manner in which management

coordinates activities and transfers resources and
cultivates capabilities among product lines and
business units

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 Directional Strategy

• Should we expand, cut back or continue the

operations?
• Should we concentrate our activities within our
current industry?
• If we want to grow and expand nationally and/or
globally, should we do so through internal
development or through external acquisitions,
mergers or strategic alliances.

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 Directional Strategy

Directional strategy is composed of three gereral

orientations (some times called Grand Strategies).

• Growth: Expand company’s activities

• Stability: make no change to company’s current
activities.
• Retrenchment: Reduce the company’s level of
activities.

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 1. Directional Strategy

Growth Stability
• Concentration • Pause/Proceed with caution
Vertical growth • No Change
Horizontal growth • Profit
• Diversification
Concentric
Conglomerate

Retrenchment
• Turnaround
• Captive Company
• Sell-out / Divestment
• Bankruptcy / Liquidation
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 Concentration-Vertical Growth

• Full Integration: Firm internally makes 100% 0f its

key supplies and completely controls its distributors.
(British Petroleum & Royal Dutch shell)

• Taper integration: Internally produces less than half

of its own requirements and buys rest from outside
suppliers. (backward taper & Forward Taper)

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 Concentration-Vertical Growth

• Quasi Integration: Not producing any of its key

supplies, purchases most of its requirements from
outside suppliers that are under its partial control.

• Long Term Contracts: Agreements between two

firms to provide agreed upon goods & services to
each other for specified period of time.

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 Horizontal Growth

Expanding the operations into other geographic

locations and / or by increasing the range of products
and services offered to the current market.

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 International Entry Options for Horizontal Growth

• Exporting
• Licensing
• Franchising
• Franchising
• Joint Venture
• Acquisitions
• Green-Field Operations
• Production Sharing
• Turnkey Operations
• BOT Contract
• Management Contracts

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 Horizontal Integration

• A horizontal acquisition is a business strategy where

one company takes over another that operates at the
same level in an industry.

• Horizontal integrations help companies expand in

size, diversify product offerings, reduce competition,
and expand into new markets.

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 Horizontal Integration

• Companies may choose to undergo horizontal

integration in order to increase their size, diversify
product or services offerings, achieve economies of
scale, or reduce competition.

• The result of horizontal integration, when successful,

is the ability to produce more revenue together
compared to if they were to compete independently.

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 Horizontal Integration-Examples
• Marriott's 2016 acquisition of Starwood Hotels &
Resorts Worldwide in the hospitality industry

• Beer company Anheuser-Busch InBev's 2016

acquisition of competitor SABMiller

• AstraZeneca's 2015 acquisition of ZS Pharma

• Facebook's 2012 acquisition of Instagram

• Disney's 2006 acquisition of Pixar

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 Vertical Integration

• A company that undergoes vertical

integration acquires a company that operates in the
production process of the same industry.
•
• Some of the reasons why companies choose to
integrate vertically include strengthening their supply
chain, reducing production costs, capturing upstream
or downstream profits, or accessing new distribution
channels. 

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 Vertical Integration

• Vertical integration involves the acquisition of

business operations within the same production
vertical.

• Vertical integrations can help boost profit and allow

companies more immediate access to consumers.

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 Vertical Integration

Companies can integrate vertically in two ways:

• Backward integration
• Forward Integration

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 Vertical Integration

Backward Integration:
• When a company decides to buy another company
that makes an input product for the acquiring
company's product.

• For example, a car manufacturer is undergoing a

backward integration if it acquires a tire
manufacturer. This ensures the manufacturer it has a
steady supply of tires in order to keep making its
cars.

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 Vertical Integration
Forward Integration:

• When a company decides to take control of the post-

production process.

• So that car manufacturer from the example above

may acquire an automotive dealership through
forward integration—the process of acquiring a
business ahead of its own supply chain. 

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 Vertical Integration-Examples

• Google's 2012 acquisition of smartphone producer

Motorola.

• Ikea's 2015 purchase of forests in Romania to supply

its own raw materials.
•
• Amazon's integration into hardware by producing
Kindle Fire tablets.

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 Diversification

Companies begin thinking about diversification when

their growth has plateaued and opportunities for
growth in the original business have been depleted
(Richard Rumelt)

• Concentric Diversification (Related)

• Conglomerate Diversification (Unrelated)

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 Concentric Diversification (Related)

Growth in a related industry, when a firm has strong

competitive position but industry attractiveness is
low.

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 Concentric Diversification (Related)

Bombardier:
1980: Third largest aircraft manufacturer, started
making light rail equipments beyond the
snowmobiles. (Transportation Company)
1986: Purchased Canadair & entered aircraft business,
purchased Learjet, a business jet manufacturer. In 14
years period launched 14 new aircrafts. Competing
with Airbus & Boeing

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 Snowmobile

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 City Trains

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 High Speed Travel

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 Air Travel

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 Conglomerate Diversification (Unrelated)

Current industry is realizes to be unattractive and

that the firm lacks outstanding abilities or skills that
it could easily transfer to related products or services
in other industries- Go Conglomerate- diversifying
into a industry unrelated to its current one.

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 Mergers & Acquisition
• Mergers and acquisitions (M&A) refer to transactions
between two companies combining in some form.

• In a merger, two companies of similar size combine to

form a new single entity.

• Acquisition is when a larger company acquires a

smaller company, thereby absorbing the business of the
smaller company.

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 Mergers: Types
1. Horizontal
A horizontal merger happens between two companies that
operate in similar industries that may or may not be direct
competitors.
2. Vertical
A vertical merger takes place between a company and its
supplier or a customer along its supply chain. The company
aims to move up or down along its supply chain, thus
consolidating its position in the industry.
3. Conglomerate
This type of transaction is usually done
or diversification reasons and is between companies in
unrelated industries.
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 Acquisition: Types
1. Stock purchase
The acquirer pays the target firm’s shareholders cash
and/or shares in exchange for shares of the target
company. There are certain aspects to be considered in a
stock purchase:

– The acquirer absorbs all the assets and liabilities of the target.
– To receive the compensation by the acquirer, the target’s
shareholders must approve the transaction through a majority
vote.
– Shareholders bear the tax liability as they receive the
compensation directly.

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 Acquisition: Types
2. Asset purchase
The acquirer purchases the target’s assets and pays the
target directly. Aspects to be considered in an asset
purchase, such as:

– Since the acquirer purchases only the assets, it will avoid

assuming any of the target’s liabilities.
– As the payment is made directly to the target, generally, no
shareholder approval is required unless the assets are
significant (e.g., greater than 50% of the company).
– The compensation received is taxed at the corporate level as
capital gains by the target.

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 Mergers & Acquisition: Reasons

• Unlocking synergies
• Higher growth
• Stronger market power
• Diversification
• Tax benefits

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 Takeover

A takeover occurs when one company makes a

successful bid to assume control of or acquire another

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 Takeover: Types
1. Friendly Takeover
When the board of directors from both companies (the
target and acquirer) negotiate and approve the bid.

2. Hostile Takeover
When an acquiring company seeks to acquire another
company – the target company – but the board of
directors from the target company has no desire to be
acquired by, or merged with, another company – or they
find the bid price offered unacceptable.

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 Takeover: Types
3. Reverse Takeover Bid
• When a private company purchases a public company.
The main rationale behind reverse takeovers is to
achieve listing status without going through an initial
public offering (IPO

4. Backflip Takeover Bid

• When the acquirer becomes the subsidiary of the target
company.
• Acquiring company wants to take advantage of the
target’s stronger brand recognition.
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 Strategic Alliances

Arrangement between two companies to undertake a

mutually beneficial project while each retains its
independence.

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 Strategic Alliances: Types
1. Joint Venture
When the parent companies establish a new child
company. For example, Company A and Company B
(parent companies) can form a joint venture by
creating Company C (child company).

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 Strategic Alliances: Types
2. Equity Strategic Alliance
When one company purchases a certain equity
percentage of the other company. If Company A
purchases 40% of the equity in Company B, an equity
strategic alliance would be formed.

3. Non-equity Strategic Alliance

When two or more companies sign a contractual
relationship to pool their resources and capabilities
together.

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 Stability Strategy

Continuing its current activities without any

significant change in direction.

• Pause & Proceed with Caution

• No Change Strategy
• Profit Strategy

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 Pause & Proceed with Caution

An opportunity to rest before continuing a growth or

retrenchment strategy.

Dell- 285% growth in two years

“We grew 285% in two years, and we are having
some growing pains.”
Michael Dell

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 No Change Strategy

• Decision to do nothing new.

• A choice to continue current operations and policies

for the foreseeable future.

• No obvious opportunities or threats or no strengths

or weaknesses.

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 Profit Strategy

Decision to do nothing new in a worsening situation

but instead to act as though the company’s problems
are only temporary.

Attempt to artificially support profit when a

company’s sales are declining by reducing investment
and short-term discretionary expenditures

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 Retrenchment Strategy

When it has weak competitive position in some or all

of its product lines resulting in poor performance-
sales are down and profits are becoming losses.

• Turnaround
• Captive Company
• Divestment / Sell-out
• Bankruptcy / Liquidation

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 Turnaround

• A range of measures that companies employ to recover

from a period of a performance decline.

• The range of measures is important since they mark an

upturn phase of a company after a period of significant
negativity.

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 Turnaround: Types
1. Cost efficiency strategies
• In the pursuit of cost efficiencies.
• The measures may improve a company’s cash flow or
stabilize its finances before coming up with more
complex strategies.

2. Asset retrenchment strategies

• When performance decline is faced.
• The usefulness of retrenching assets as a turnaround
recovery strategy depends on a company’s ability to
generate cash flow.
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 Turnaround: Types
3. Focus on a company’s core activities
• Under the increased focus, companies identify markets,
customers, and products that can potentially generate high
profits, and adopt the measures as the main focus of the firm
activities.

4. Change of leadership
• Companies often replace incumbent CEOs as a turnaround
recovery strategy.
• It is inspired by the idea that CEOs bear the responsibility for
a company’s negative position, and their replacement serves
as a signal of change.
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 Captive Company
When a company becomes dependent on another
company for its survival.

A captive company strategy is suitable when : 

– The company has a single large customer who purchases 75%
of its production.
– The customer also performs many of the functions that the
company is performing.

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 Divestment / Sell-out
• Firm has very week industry position
• It cannot turnaround its performance or become captive
to another company

It can sell its operation to another entity

• The advantage of selling out another company is that the

other company may have the resource and the
competency to turnaround the company and make it
profitable. 

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 Liquidation / Bankruptcy

• Which has none of three strategic options (Turnaround,

Divestment and Captive) available has no other option
but to go in for liquidation or bankruptcy.

• Liquidation is better than a bankruptcy because in the

former case the management has some control whereas
in the latter case the entire control is vested with the
courts.

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 Outsourcing Strategies

• Customer Service Outsourcing

• Finance & Accounting Outsourcing
• Catalogue Management Outsourcing
• Outbound Sales For Growth
• Back Office Outsourcing

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 Summary

• Stability strategy
• Growth strategy
• Retrenchment Strategy

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 Daily Quiz

1. Describe the Growth strategy and its types.

2. Explain various retrenchment strategies.

3. Discuss the Vertical integration.

4. Explain the horizontal integration strategy

5. Describe the Stability strategy. Discuss the moves in

this strategy.

6. Describe the outsourcing strategies.

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Noida Institute of Engineering and Technology, Greater Noida

(Unit –III) Topic 3

Structural analysis of competitive

environment
 Topic & CO Mapping

Topic CO Level
Structural analysis of competitive environment CO 3 2

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 Topic Objectives And Outcomes
Topic Objectives:
• Understanding competitive environment
• Understanding structural analysis

Topic Outcomes:

• Ability to conduct structural analysis of competitive

environment

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 Recap

• Stability strategy
• Growth strategy
• Retrenchment Strategy

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 How Does a Competitive Environment Affect Businesses?

• Product variety
• Product quality
• Pricing
• Innovation
• Research & Development
• Market presence

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 Types of Competitive Environment

• Pure competition
• Monopolistic competition
• Oligopoly
• Monopoly

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 Advantages & Disadvantages of Competition

Advantages: Disadvantages:
• Increased market share • Decreased market share
• Growth potential • Low growth potential
• Visibility • Low demand
• Reputation • High pressure
• Opportunities • Challenged survival

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 Industry & firm Structure Analysis

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 Summary

• Structural analysis
• Advantages & disadvantages of competition
• Industry and firm structure analysis

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 Daily Quiz

1. Discuss the competitive environment.

2. Explain the structural analysis.

3. Elaborate the industry and firm structure analysis.

4. Enumerate the advantages and disadvantages of

competition.

5. Discuss various types of business environemnt.

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 Noida Institute of Engineering and Technology, Greater Noida

(Unit –III) Topic 4

Strategic analysis and choice-Criteria for

evaluating strategic alternatives
 Topic & CO Mapping

Topic CO Level
Strategic analysis and choice-Criteria for CO 3 2
evaluating strategic alternatives

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 Topic Objectives And Outcomes
Topic Objectives:
• Understanding strategic analysis concept
• Understanding the strategic choice

Topic Outcomes:
• Ability to conduct strategic analysis
• Ability to create and leverage strategic choice

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 Recap

• Structural analysis
• Advantages & disadvantages of competition
• Industry and firm structure analysis

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 Strategic Analysis
Strategic analysis refers to the process of researching
an organization and its working environment to
formulate a strategy. 

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 Types of Strategic Analysis
1. Internal Strategic Analysis:
• Organizations look inwards or within the organization
and identify the positive and negative points, and
establish the set of resources that can be used to
improve the company’s image within the market.
•  
• Starts from evaluating the performance of the
organization.

• Evaluating the potential of an organization and its

capacity to grow.
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 Types of Strategic Analysis
2. External Strategic Analysis:
• Organization needs to know about external
factors that can be a hindrance in their growth.

• To do so, they need to know how the market functions

and how consumers react or behave to certain
products or services.

• Measuring customer satisfaction is a common external

analysis method. 

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 Strengths of Strategic Analysis
• Allows to have clarity of the internal positive attributes
of the organization that are under control.

• Helps identify strength of both internal as well as

external resources, such that it leads to an increasing
competitive advantage.

• Offers the internal components that add value or offer a

competitive advantage to your business

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 Weaknesses of Strategic Analysis

• Strategic analysis can generate too many ideas, but

doesn’t help to choose which one is the best.

• Sometimes too much time is spent on existential

problem solving, such that there is little or no time left
for innovating new products or making service level
changes at the organizational level.

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 Framework for Evaluating Options

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 Criteria for Evaluating Options

1. Criteria of Suitability:
Attempts to measure the extent to which the proposed strategies fit
the situation identified in the strategic analysis.

2. Criteria of Feasibility:
Assess the practical implementation and working of the strategy.

3. Criteria of Acceptability:
The firm should assess the strategy to decide whether the
consequences of proceeding with a strategy are acceptable.

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 Summary

• Strategic analysis
• Types of strategic analysis
• Advantages & disadvantages of strategic analysis
• Criteria for evaluating strategic alternatives.

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 Daily Quiz

1. Discuss the concept of strategic analysis.

2. Elaborate the internal strategic analysis.

3. Discuss the rationale behind the external strategic

analysis

4. Discuss the criteria for evaluating the strategic

alternatives.

5. Describe the advantages and disadvantages of

strategic analysis.

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 Noida Institute of Engineering and Technology, Greater Noida

(Unit –III) Topic 5

Tools of strategic analysis, strategic choice-

BCG Matrix, Ansoff Grid, GE 9 Cell grid.
 Topic & CO Mapping

Topic CO Level
Tools of strategic analysis, strategic choice- CO 3 2
BCG Matrix, Ansoff Grid, GE 9 Cell grid.

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 Topic Objectives And Outcomes
Topic Objectives:
• Understanding strategic analysis
• Understanding strategic choice

Topic Outcomes:
• Ability to develop strategic choice
• Analysing:
– BCG Matrix
– Ansoff Grid
– GE 9 cell grid

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 Recap

• Strategic analysis
• Types of strategic analysis
• Advantages & disadvantages of strategic analysis
• Criteria for evaluating strategic alternatives.

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 Strategic Choice
• Strategic choice refers to the decision which determines
the future strategy of a firm.

• It addresses the question “Where shall we go”.

• A SWOT analysis is conducted to examine the strengths

and weaknesses of the firm and opportunities that can be
exploited are also determined.

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 Strategic Choice Parameters

•  Feasibility
• Prudence
• Consensus
• Acceptability

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 Tools of Strategic Analysis

• BCG Matrix
• Ansoff Grid
• GE 9 Cell Grid

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 BCG Matrix

The BCG Growth Share Matrix was evolved in the early

1970s by Bruce Henderson, founder of the Boston
Consulting Group, to help corporations make investment
and disinvestment decisions related to their business
units or product portfolios.

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 BCG Matrix

It plots business units (or products) that form part of a

corporation’s portfolio on a grid of four equal quadrants
on the basis of their market growth and market share
(which is why the BCG Matrix is also called the
“Growth-Share” Matrix).

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 BCG Matrix

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 Stars

• “Stars” are business units that have a high market share

but consume a high amount of cash as they are situated
in a high-growth market.

• Invest in stars in the hope that they become cash cows

and generate funds for the corporation’s future plans.

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 Cash Cows
• “Cash cows” are business units with a high market share
but find themselves in a mature, low-growth market.
Therefore, such units do not require cash but rather
provide cash.

• Invest in cash cows, but only to maintain their level of

productivity, and until they become “dogs.”

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 Dogs
• Dogs have a low market share in a low-growth market.
They neither generate cash nor require investments.

• They are often seen as “cash traps,” in which the

investments already made do not generate profits.

• Sell them off.

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 BCG Matrix: Limitations

• Uses the highs & lows to form four categories.

• Link between market share and profitability is
questionable.
• Growth rate is only one aspect of industry attractiveness.
• Market share is only one aspect of overall competitive
position.
• Product line and business units only in relation to one
competitor.

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 Question Marks
• Question marks, also known as “problem children,” have
small growth rates in a high-growth market. They
demand high investments to capture some market share,
but whether this cash infusion will provide returns will
be known only in the future. However, they have the
potential for growth.

• Invest in them depending on the prospects, but sell them

off if they do not start yielding profits.

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 GE 9 Cell Grid

The General Electric Business Screen was originally

developed to help marketing managers overcome the
problems that are commonly associated with the Boston
Matrix (BCG), such as the problems with the lack of
credible business information, the fact that BCG deals
primarily with commodities not brands or Strategic
Business Units (SBU’s), and that cashflow if often a
more reliable indicator of position as opposed to market
growth/share.

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 Market (Industry) Attractiveness
• Size of market.
• Market rate of growth.
• The nature of competition and its diversity.
• Profit margin.
• Impact of technology, the law, and energy efficiency.
• Environmental impact.
Scale: 1 to 5 (Very unattractive to Very attractive )

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 Competitive Position
• Market share.
• Management profile.
• R & D.
• Quality of products and services.
• Branding and promotions success.
• Place (or distribution).
• Efficiency.
• Cost reduction.
Scale: 1 to 5 (Very weak to Very strong )

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 GE 9 Cell Grid

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 GE 9 Cell Grid: Steps
• One: Identify your products, brands, experiences, solutions, or
SBU’s.
• Two: Answer the question, What makes this market so attractive?
• Three: Decide on the factors that position the business on the GE
matrix.
• Four: Determine the best ways to measure attractiveness and
business position.
• Five: Finally rank each SBU as either low, medium or high for
business strength, and low, medium and high in relation to market
attractiveness.

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 Ansoff Grid

To portray alternative corporate growth strategies Igor

Ansoff presented a matrix that focuses on firm’s present
and potential products and markets.

Ways to grow via:

• Existing Products
• New Products
• Existing Markets
• New Markets

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 Ansoff Grid

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 Market Penetration

Firm seeks to achieve growth by existing products in the

current market segment, aiming to increase its market
share.

• Least risky
• Increased opportunities if competitors reach capacity
limits.

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 Market Development

The firm seeks growth by targeting its existing

products to the new market segments.

• Another market segment or geographical region.

• If core competencies are related to a specific product.

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 Product Development
The firm develops new products targeted to its existing
market segment.

• If firm’s strengths are related to specific customers rather

than specific products.
• More risk than simply increasing market share.

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 Diversification

Firm grows by diversifying into new

businesses by developing new products in
new markets.

• Most risky as it requires both, product & market

development. (Suicide Cell)
• If high risk is compensated by a chance of high rate of
return.

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 Summary

• Tools of strategic analysis

• Strategic choice
• BCG Matrix
• GE 9 Cell Grid
• Ansoff Matrix.

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 Daily Quiz

1. Discuss the importance of strategic analysis.

2. Explain the concept of strategic choice
3. Describe the BCG matrix and its various strategies.
4. Explain the relevance of GE 9 cell grid.
5. Explain the Ansoff matrix and its application in
devising the appropriate strategy.

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 Youtube Links

https://www.youtube.com/watch?v=w9CdIKYyxBM
https://www.youtube.com/watch?v=tyUw0h5i9yI

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 Weekly Assignment

Q1. Describe various generic competitive strategies

with suitable examples.
Q2. Explain the BCG matrix with a neat and clean
diagram.
Q3. Discuss the importance of selecting criteria for
evaluating strategic alternatives
Q4. Explain the GE 9 Grid Cell.
Q5. Describe the Ansoff Matrix with a neat and clean
diagram.

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 Topic Links / References / Video Links

• https://franchise.screenmobile.com/blog/advantages-disadvantage
s-of-competition-in-business/
• https://www.bcg.com/about/overview/our-history/growth-share-m
atrix

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 MCQ s

Q1. BCG in BCG matrix stands for __________

a. Boston Calmette Group
b. British Consulting Group
c. Boston Corporate Group
d. Boston Consulting Group

Q2. The BCG matrix is mainly designed to analyse ______

e. Current strategy of the organization
f. Long-term strategic planning
g. Short-term strategic planning
h. Revenue generated by the organization

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 MCQ s

Q3. What does SBU stand for?

a. Strategic Business Unit.  
b. Strategic Buying Unit.  
c. Strategic Base Unit.
d. Strategic buyout unit

Q4. Ansoff's growth matrix offers four distinct approaches to corporate

growth. They are
e. Market penetration, product development, market development,
diversification.  
f. Market penetration, targeting, product development, separation.  
g. Market penetration, product development, competitive response,
differentiation.
h. None of these
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 MCQ s

Q5. Industrial diversification is justifiable if:

a) it reduces cost.
b) if enhances shareholders' value.
c) it closes failing businesses.
d) it increases firm's size.

Q6. What is NOT an advantage of vertical integration?

a) It helps the firm retain control over proprietary knowledge.
b) It enables the firm cross-subsidize one stage of the value chain by
another.
c) It enables the firm to internationalize quickly.
d) It reduces uncertainties in demand and price.

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 Glossary Questions

Q1. Attempt all the parts: please pick the correct option from
Glossary
(i) Growth
(ii) Stability
(iii) Retrenchment
(iv) Financial

a. Corporate strategy includes decisions regarding the flow of

…………….. resources.
b. …………strategies expand the company’s activities.
c. …………..strategies make no change to the company’s current
activities.
d. ………. strategies reduce the company’s level of activities.
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 Glossary Questions
Q2. Attempt all the parts: please pick the correct option from
Glossary
(i) Joint venture
(ii) illegal
(iii) resources.
(iv) Acquisitions

a. Forming alliance with local partners is a very good way to

overcome deficiencies in …………..
b. Alliances take less financial burden than do ………………
c. Tacit collusion, however, be ……………
d. ………….is a cooperative business strategy.

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 Glossary Questions

Q3. Attempt all the parts: please pick the correct option from
Glossary
(i) lower
(ii) technological advances
(iii) offensive
(iv) Rivals

a. Having a lower-cost position also gives a company a defense

against ……………..
b. A cost leader is able to charge …………price for its products.
c. Late movers may be able to imitate the ……………
d. An …………tactic usually takes place in an established
competitor’s market location.
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 Old Question Papers

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 Old Question Papers

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 Old Question Papers

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 Old Question Papers

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 Old Question Papers

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 Old Question Papers

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 Expected Questions for University Exam

1. Discuss the Porter’s generic strategies.

2. Elaborate the directional strategy.
3. Describe the horizontal and vertical integration.
4. Explain the concept of retrenchment strategies.
5. Describe the criteria for evaluating the strategic alternatives.
6. Describe the GE 9 cell grid.
7. Explain the Ansoff matrix. Discuss various strategies
adopted in this matrix.
8. Explain the BCG Growth Share matrix. Discuss various
strategies of BCG matrix.
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 Recap of Unit

• Generic Competitive Strategies:

• Grand Strategies:
• Structural analysis of competitive environment
• Strategic analysis and choice-Criteria for evaluating
strategic alternatives
• Tools of strategic analysis, strategic choice-
– BCG Matrix
– Ansoff Grid
– GE 9 Cell grid.

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 Thank You

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