Q2- Explain the following:

(a) Core competence

(b) Value chain analysis
Answer (a)

Core Competence

A core competency results from a specific set of skills or production techniques that deliver
additional value to the customer. These enable an organization to access a wide variety of
markets.
In an article from 1990 titled "The Core Competence of the Corporation", Prahalad and Hamel
illustrate that core competencies lead to the development of core products which further can be
used to build many products for end users. Core competencies are developed through the
process of continuous improvements over the period of time rather than a single large change.
To succeed in an emerging global market, it is more important and required to build core
competencies rather than vertical integration. NEC utilized its portfolio of core competencies to
dominate the semiconductor, telecommunications and consumer electronics market. It is
important to identify core competencies because it is difficult to retain those competencies in a
price war and cost-cutting environment. The author used the example of how to integrate core
competences using strategic architecture in view of changing market requirements and evolving
technologies. Management must realize that stakeholders to core competences are an asset
which can be utilized to integrate and build the competencies Competence building is an

outcome of strategic architecture which must be enforced by top management in order to exploit
its full capacity
Please note: according to Prahalad and Hamel's (1990) definition, core competencies are the
"collective learning across the corporation". They can therefore not be applied to the SBU and
represent resource combination steered from the corporate level. Because the term "core
competence" is often confused with "something a company is particularly good at", some
caution should be taken not to dilute the original meaning.
In Competing for the Future, the authors Prahalad and Hamel show how executives can
develop the industry foresight necessary to adapt to industry changes and discover ways of
controlling resources that will enable the company to attain goals despite any constraints.
Executives should develop a point of view on which core competencies can be built for the
future to revitalize the process of new business creation. Developing an independent point of
view of tomorrow's opportunities and building capabilities that exploit them is the key to future
industry leadership.
For an organization to be competitive, it needs not only tangible resources but intangible
resources like core competences that are difficult and challenging to achieve. It is critical to
manage and enhance the competences in response to industry changes in the future. For
example, Microsoft has expertise in many IT based innovations where, for a variety of reasons,
it is difficult for competitors to replicate or compete with Microsoft's core competences.
In a race to achieve cost cutting, quality and productivity, most executives do not spend their
time developing a corporate view of the future because this exercise demands high intellectual
energy and commitment. The difficult questions may challenge their own ability to view the
future opportunities but an attempt to find their answers will lead towards organizational
benefits.
Value Chain Analysis

Achieving Excellence in the Things That Really Matter

(b)

Value Chain Analysis

Value Chain Analysis is a useful tool for working out how you can create the greatest possible
value for your customers.

In business, we're paid to take raw inputs, and to "add value" to them by turning them into
something of worth to other people. This is easy to see in manufacturing, where the
manufacturer "adds value" by taking a raw material of little use to the end-user (for example,

wood pulp) and converting it into something that people are prepared to pay money for (e.g.
paper). But this idea is just as important in service industries, where people use inputs of time,
knowledge, equipment and systems to create services of real value to the person being served
the customer.

And remember that your customers aren't necessarily outside your organization: they can be
your bosses, your co-workers, or the people who depend on you for what you do.

Now, this is really important: In most cases, the more value you create, the more people will be
prepared to pay a good price for your product or service, and the more they will they keep on
buying from you. On a personal level, if you add a lot of value to your team, you will excel in
what you do. You should then expect to be rewarded in line with your contribution.

So how do you find out where you, your team or your company can create value?

This is where the "Value Chain Analysis" tool is useful. Value Chain Analysis helps you identify
the ways in which you create value for your customers, and then helps you think through how
you can maximize this value: whether through superb products, great services, or jobs well
done.

How to Use the Tool

Value Chain Analysis is a three-step process:

Activity Analysis: First, you identify the activities you undertake to deliver your product or
service;
Value Analysis: Second, for each activity, you think through what you would do to add the
greatest value for your customer; and
Evaluation and Planning: Thirdly, you evaluate whether it is worth making changes, and then
plan for action.
Q3- Describe in brief the following environmental factors which a business
strategist considers:
(a) Political factors

(b) Technology

(a) Political factors

The political PESTLE dimension relates to the key political drivers which could influence an
organisation. JISC infoNet advise that for the HE and FE sector these are likely to include
worldwide, European and government directives, funding council policies, national and local
organisations' requirements and institutional policy (JISC infoNet 2009). The Work-with-IT
PES(T)LE investigation identified four broad categories of political factors currently influencing
or likely to influence institutions in the near future: central or devolved government policies; local
policies; efficiency drives; European Union and other international policies. Political policies are
of course intertwined with associated economic factors and together political/economic funding
drivers can have a major effect upon institutions. While funding policies could also be attributed
to the political dimension, they are dealt with under the economic dimension.
Cutting across these factors is a potential change of UK government. While at the time of the
PES(T)LE investigation April-June 2009 the participants were unclear regarding exactly how
this might play out, there was a strong feeling that a change in government would bring a
significant change in education and employment, research and business policies and efficiency
drives. The resultant uncertainty regarding the political landscape was expected to drive
institutions to assess how they might be affected by a variety of potential policy changes
(b) Technology
Technology can be defined as the method or technique for converting inputs to outputs in
accomplishing a specific task. Thus, the terms 'method' and 'technique' refer not only to the
knowledge but also to the skills and the means for accomplishing a task. Technological
innovation, then, refers to the increase in knowledge, the improvement in skills, or the discovery
of a new or improved means that extends people's ability to achieve a given task.
Technology can be classified in several ways. For example, blueprints, machinery, equipment
and oher capital goods are sometimes referred to as hard technology while soft technology
includes management know-how, finance, marketing and administrative techniques. When a
relatively primitive technology is used in the production process, the technology is usually
referred to as labour-intensive. A highly advanced technology, on the other hand, is generally
termed capital-intensive.
Changes in the technological environment have had some of the most dramatic effects on
business. A company may be thoroughly committed to a particular type of technology, and may
have made major investments in equipment and training only to see a new, more innovative and
cost-effective technology emerge.
Q4. Write a brief note on Turnaround strategy.

The concept or meaning of turnaround strategy covers following points:

Turnaround strategy means to convert, change or transform a loss-making company into a
profit-making company.
It means to make the company profitable again.
The main purpose of implementing a turnaround strategy is to turn the company from a negative
point to a positive one.
If a turnaround strategy is not applied to a sick company, it will close down.
It is a remedy for curing industrial sickness.
Turnaround is a restructuring strategy. Here, a loss-bearing company is transformed into a
profit-earning company, by making systematic efforts.
It tries to remove all weaknesses to help a sick company once again become strong, stable and
a profit-making institution.
It tries to reverse the position from loss to profit, from declining sales to increasing sales, from
weakness to strength, and from an instability to stability.
It aids to reduce the brought forward losses of the loss-making company.
It helps the sick company to stand once again in the market.
It is a complete U-turn of a planned strategic economic transition.

Definition of Turnaround Strategy

The definition of turnaround strategy w.r.t different senses is depicted below.

Definition of turnaround strategy
In general, the definition of turnaround strategy can be stated as follows.
Turnaround strategy is a corporate practice designed and planned to protect (save) a lossmaking company and transform it into a profit-making one.
In financial, commercial, corporate or from a business perspective, the turnaround strategy can
be defined as follows.

Turnaround Strategy is a corporate action that is taken (performed) to deal with issues of a
loss-making (sick) company like increasing losses, lower return on capital employed, and
continuous decrease in the value of its shares.
Finally, from an academic point of view, its definition can be stated as under.
Turnaround strategy is an analytical approach to solve the root cause failure of a loss-making
company to decide the most crucial reasons behind its failure. Here, a long-term strategic plan
and restructuring plans are designed and implemented to solve the issues of a sick company.

Q5) Define the term strategic alliance. What are its characteristics and
Objectives?
Definition of the term strategic alliance
Characteristics of strategic alliance
Objectives of strategic alliance
Answer
Definition of the term strategic alliance
A strategic alliance is an agreement between two or more parties to pursue a set of agreed
upon objectives needed while remaining independent organizations. This form of cooperation
lies between mergers and acquisitions and organic growth.
Characteristics of strategic alliance
Some types of strategic alliances include:

Horizontal strategic alliances, which are formed by firms that are active in the same business
area. That means that the partners in the alliance used to be competitors and work together In
order to improve their position in the market and improve market power compared to other
competitors. Research &Development collaborations of enterprises in high-tech markets are
typical Horizontal Alliances.
Vertical strategic alliances, which describe the collaboration between a company and its
upstream and downstream partners in the Supply Chain, that means a partnership between a
company its suppliers and distributors. Vertical Alliances aim at intensifying and improving
these relationships and to enlarge the companys network to be able to offer lower prices.
Especially suppliers get involved in product design and distribution decisions. An example would
be the close relation between car manufacturers and their suppliers.

Intersectional alliances are partnerships where the involved firms are neither connected by a
vertical chain, nor work in the same business area, which means that they normally would not
get in touch with each other and have totally different markets and know-how.
Joint ventures, in which two or more companies decide to form a new company. This new
company is then a separate legal entity. The forming companies invest equity and resources in
general, like know-how. These new firms can be formed for a finite time, like for a certain project
or for a lasting long-term business relationship, while control, revenues and risks are shared
according to their capital contribution.
Equity alliances, which are formed when one company acquires equity stake of another
company and vice versa. These shareholdings make the company stakeholders and
shareholders of each other. The acquired share of a company is a minor equity share, so that
decision power remains at the respective companies. This is also called cross-shareholding and
leads to complex network structures, especially when several companies are involved.
Companies which are connected this way share profits and common goals, which leads to the
fact that the will to competition between these firms is reduced. In addition this makes takeovers by other companies more difficult.
Non-equity strategic alliances, which cover a wide field of possible cooperation between
companies. This can range from close relations between customer and supplier, to outsourcing
of certain corporate tasks or licensing, to vast networks in R&D. This cooperation can either be
an informal alliance which is not contractually designated, which appears mostly among smaller
enterprises, or the alliance can be set by a contract.
Objectives of strategic alliance
Shared risk: The partnerships allow the involved companies to offset their market exposure.
Strategic Alliances probably work best if the companies portfolio complement each other, but
do not directly compete.
Shared knowledge: Sharing skills (distribution, marketing, management), brands, market
knowledge, technical know-how and assets leads to synergistic effects, which result in pool of
resources which is more valuable than the separated single resources in the particular
company.
Opportunities for growth: Using the partners distribution networks in combination with taking
advantage of a good brand image can help a company to grow faster than it would on its own.
The organic growth of a company might often not be sufficient enough to satisfy the strategic
requirements of a company, that means that a firm often cannot grow and extend itself fast
enough without expertise and support from partners
Speed to market: Speed to market is an essential success factor In nowadays competitive
markets and the right partner can help to distinctly improve this.
Complexity: As complexity increases, it is more and more difficult to manage all requirements
and challenges a company has to face, so pooling of expertise and knowledge can help to best
serve customers.
Costs: Partnerships can help to lower costs, especially in non-profit areas like
Research&Development.

Access to resources: Partners in a Strategic Alliance can help each other by giving access to
resources, (personnel, finances, technology) which enable the partner to produce its products
in a higher quality or more cost efficient way.
Access to target markets: Sometimes, collaboration with a local partner is the only way to enter
a specific market. Especially developing countries want to avoid that their resources are
exploited, which makes it hard for foreign companies to enter these markets alone.
Economies of Scale: When companies pool their resources and enable each other to access
manufacturing capabilities, economies of scale can be achieved. Cooperating with appropriate
strategies also allows smaller enterprises to work together and to compete against large
competitors.
Q6) Write short notes on the following:
a) Competitive advantage
b) Porters Competitive threat model
Answer
a) Competitive advantage
Michael Porter defined the two types of competitive advantage an organization can achieve
relative to its rivals: lower cost or differentiation. This advantage derives from attribute(s) that
allow an organization to outperform its competition, such as superior market position, skills, or
resources. In Porter's view, strategic management should be concerned with building and
sustaining competitive advantage.[1]

Competitive advantage seeks to address some of the criticisms of comparative advantage.

Porter proposed the theory in 1985. Porter emphasizes productivity growth as the focus of
national strategies. Competitive advantage rests on the notion that cheap labor is ubiquitous
and natural resources are not necessary for a good economy. The other theory, comparative
advantage, can lead countries to specialize in exporting primary goods and raw materials that
trap countries in low-wage economies due to terms of trade. Competitive advantage attempts to
correct for this issue by stressing maximizing scale economies in goods and services that
garner premium prices (Stutz and Warf 2009).[2]

Term competitive advantage is the ability gained through attributes and resources to perform at
a higher level than others in the same industry or market (Christensen and Fahey 1984, Kay
1994, Porter 1980 cited by Chacarbaghi and Lynch 1999, p. 45).[3] The study of such
advantage has attracted profound research interest due to contemporary issues regarding
superior performance levels of firms in the present competitive market conditions. "A firm is said
to have a competitive advantage when it is implementing a value creating strategy not
simultaneously being implemented by any current or potential player" (Barney 1991 cited by

Clulow et al.2003, p. 221).[4] Successfully implemented strategies will lift a firm to superior
performance by facilitating the firm with competitive advantage to outperform current or potential
players (Passemard and Calantone 2000, p. 18).[5] To gain competitive advantage a business
strategy of a firm manipulates the various resources over which it has direct control and these
resources have the ability to generate competitive advantage (Reed and Fillippi 1990 cited by
Rijamampianina 2003, p. 362).[6] Superior performance outcomes and superiority in production
resources reflects competitive advantage (Day and Wesley 1988 cited by Lau 2002, p. 125).[7]

Above writings signify competitive advantage as the ability to stay ahead of present or potential
competition, thus superior performance reached through competitive advantage will ensure
market leadership. Also it provides the understanding that resources held by a firm and the
business strategy will have a profound impact on generating competitive advantage. Powell
(2001, p. 132)[8] views business strategy as the tool that manipulates the resources and create
competitive advantage, hence, viable business strategy may not be adequate unless it possess
control over unique resources that has the ability to create such a unique advantage.
Summarizing the view points, competitive advantage is a key determinant of superior
performance and it will ensure survival and prominent placing in the market. Superior
performance being the ultimate desired goal of a firm, competitive advantage becomes the
foundation highlighting the significant importance to develop same.
b) Porters Competitive threat model (Five Forces
Porter five forces analysis is a framework to analyse level of competition within an industry and
business strategy development. It draws upon industrial organization (IO) economics to derive
five forces that determine the competitive intensity and therefore attractiveness of a market.
Attractiveness in this context refers to the overall industry profitability. An "unattractive" industry
is one in which the combination of these five forces acts to drive down overall profitability. A
very unattractive industry would be one approaching "pure competition", in which available
profits for all firms are driven to normal profit. This analysis is associated with its principal
innovator Michael E. Porter of Harvard University (as of 2014).

Porter referred to these forces as the micro environment, to contrast it with the more general
term macro environment. They consist of those forces close to a company that affect its ability
to serve its customers and make a profit. A change in any of the forces normally requires a
business unit to re-assess the marketplace given the overall change in industry information. The
overall industry attractiveness does not imply that every firm in the industry will return the same
profitability. Firms are able to apply their core competencies, business model or network to
achieve a profit above the industry average. A clear example of this is the airline industry. As an
industry, profitability is low and yet individual companies, by applying unique business models,
have been able to make a return in excess of the industry average.

Porter's five forces include - three forces from 'horizontal' competition: the threat of substitute
products or services, the threat of established rivals, and the threat of new entrants; and two

forces from 'vertical' competition: the bargaining power of suppliers and the bargaining power of
customers.

Porter developed his Five Forces analysis in reaction to the then-popular SWOT analysis, which
he found unrigorous and ad hoc.[1] Porter's five forces is based on the Structure-ConductPerformance paradigm in industrial organizational economics. It has been applied to a diverse
range of problems, from helping businesses become more profitable to helping governments
stabilize industries.[2] Other Porter strategic frameworks include the value chain and the generic
strategies.