Strategic Management Model Test Paper - 3 (Answers) - CA Intermediate PDF Download

 Page 1


ANSWER S OF MODEL TEST PAPER 3  
PAPER 6B: STRATEGIC MANAGEMENT 
PART I 
1. (A) (i) (c) (ii) (c) (iii)  (d) (iv)  (b) (v)  (a)
1. (B) (i) (c) (ii) (b) (iii)  (d)
PART II 
1. (a)  In this scenario, the most appropriate strategic approach to help Dharam
Veer Singh formulate a robust and coherent business roadmap aligned 
with his vision for sustainable growth would be to focus on values or a 
value system. Emphasizing values such as quality, integrity, and 
sustainability can guide decision-making and attract like-minded 
investors and clients. By embedding these values into the company's 
culture and operations, Dharam can differentiate his business in the 
market, ensuring long-term success and structural longevity in 
construction projects. This value-driven strategy will also help in building 
a strong brand reputation and fostering trust among stakeholders. 
(b) Considering Porter's generic strategies, there are three different bases:
cost leadership, differentiation, and focus. Ravi and Arjun are
contemplating pricing for their product.
Ravi is trying to have a low price and high volume, thereby aiming for
cost leadership. Cost leadership emphasizes producing standardized
products at a very low per unit cost for consumers who are price
sensitive.
Arjun 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.
(c) XYZ Corporation is shifting to a network structure. This is a newer and
more radical organizational design, sometimes referred to as a "non-
structure" because it virtually eliminates in-house business functions and
outsources many of them. An organization structured in this way is often
called a virtual organization, composed of a series of project groups or
collaborations linked by constantly changing, non-hierarchical, cobweb-
like networks.
The network structure becomes most useful when a firm's environment
is unstable and expected to remain so. Under such conditions, there is
a strong need for innovation and quick response. Instead of having
salaried employees, the company may contract with individuals for
specific projects or periods. Long-term contracts with suppliers and
distributors replace services the company might otherwise provide
through vertical integration. This structure provides increased flexibility
598
Page 2


ANSWER S OF MODEL TEST PAPER 3  
PAPER 6B: STRATEGIC MANAGEMENT 
PART I 
1. (A) (i) (c) (ii) (c) (iii)  (d) (iv)  (b) (v)  (a)
1. (B) (i) (c) (ii) (b) (iii)  (d)
PART II 
1. (a)  In this scenario, the most appropriate strategic approach to help Dharam
Veer Singh formulate a robust and coherent business roadmap aligned 
with his vision for sustainable growth would be to focus on values or a 
value system. Emphasizing values such as quality, integrity, and 
sustainability can guide decision-making and attract like-minded 
investors and clients. By embedding these values into the company's 
culture and operations, Dharam can differentiate his business in the 
market, ensuring long-term success and structural longevity in 
construction projects. This value-driven strategy will also help in building 
a strong brand reputation and fostering trust among stakeholders. 
(b) Considering Porter's generic strategies, there are three different bases:
cost leadership, differentiation, and focus. Ravi and Arjun are
contemplating pricing for their product.
Ravi is trying to have a low price and high volume, thereby aiming for
cost leadership. Cost leadership emphasizes producing standardized
products at a very low per unit cost for consumers who are price
sensitive.
Arjun 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.
(c) XYZ Corporation is shifting to a network structure. This is a newer and
more radical organizational design, sometimes referred to as a "non-
structure" because it virtually eliminates in-house business functions and
outsources many of them. An organization structured in this way is often
called a virtual organization, composed of a series of project groups or
collaborations linked by constantly changing, non-hierarchical, cobweb-
like networks.
The network structure becomes most useful when a firm's environment
is unstable and expected to remain so. Under such conditions, there is
a strong need for innovation and quick response. Instead of having
salaried employees, the company may contract with individuals for
specific projects or periods. Long-term contracts with suppliers and
distributors replace services the company might otherwise provide
through vertical integration. This structure provides increased flexibility
598
and adaptability to cope with rapid technological change and shifting 
patterns of international trade and competition. 
2. (a)  Four specific criteria of sustainable competitive advantage that firms can
use to determine those capabilities that are core competencies. 
Capabilities that are valuable, rare, costly to imitate, and non-
substitutable are core competencies. 
i. Valuable: Valuable capabilities are the ones that allow the firm to
exploit opportunities or avert the threats in its external environment.
A firm created value for customers by effectively using capabilities
to exploit opportunities. Finance companies build a valuable
competence in financial services. In addition, to make such
competencies as financial services highly successful requires
placing the right people in the right jobs. Human capital is important
in creating value for customers.
ii. Rare: Core competencies are very rare capabilities and very few of
the competitors possess these. Capabilities possessed by many
rivals are unlikely to be sources of competitive advantage for any
one of them. Competitive advantage results only when firms
develop and exploit valuable capabilities that differ from those
shared with competitors.
iii. Costly to imitate: Costly to imitate means such capabilities that
competing firms are unable to develop easily.
iv. Non-substitutable: Capabilities that do not have strategic
equivalents are called non-substitutable capabilities. This final
criterion for a capability to be a source of competitive advantage is
that there must be no strategically equivalent valuable resources
that are themselves either not rare or imitable.
(b) XYZ Electronics has opted to implement a Stability strategy. Stability
strategies are designed to safeguard the existing interests and strengths
of a business. This involves pursuing established and tested objectives,
continuing on the chosen path, and maintaining operational efficiency. A
stability strategy is pursued when a firm continues to serve the same or
similar markets and deals in the same products and services. Although
few functional changes are made in the products or markets, it is not a
‘do nothing’ strategy. This strategy is typical for mature business
organizations. Additionally, some small organizations frequently use
stability as a strategic focus to maintain a comfortable market or profit
position.
Major reasons for a Stability strategy include:
• A product has reached the maturity stage of the product life cycle.
• The staff feels comfortable with the status quo as it involves fewer
changes and less risk.
• It is opted for when the environment in which an organization
operates is relatively stable.
599
Page 3


ANSWER S OF MODEL TEST PAPER 3  
PAPER 6B: STRATEGIC MANAGEMENT 
PART I 
1. (A) (i) (c) (ii) (c) (iii)  (d) (iv)  (b) (v)  (a)
1. (B) (i) (c) (ii) (b) (iii)  (d)
PART II 
1. (a)  In this scenario, the most appropriate strategic approach to help Dharam
Veer Singh formulate a robust and coherent business roadmap aligned 
with his vision for sustainable growth would be to focus on values or a 
value system. Emphasizing values such as quality, integrity, and 
sustainability can guide decision-making and attract like-minded 
investors and clients. By embedding these values into the company's 
culture and operations, Dharam can differentiate his business in the 
market, ensuring long-term success and structural longevity in 
construction projects. This value-driven strategy will also help in building 
a strong brand reputation and fostering trust among stakeholders. 
(b) Considering Porter's generic strategies, there are three different bases:
cost leadership, differentiation, and focus. Ravi and Arjun are
contemplating pricing for their product.
Ravi is trying to have a low price and high volume, thereby aiming for
cost leadership. Cost leadership emphasizes producing standardized
products at a very low per unit cost for consumers who are price
sensitive.
Arjun 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.
(c) XYZ Corporation is shifting to a network structure. This is a newer and
more radical organizational design, sometimes referred to as a "non-
structure" because it virtually eliminates in-house business functions and
outsources many of them. An organization structured in this way is often
called a virtual organization, composed of a series of project groups or
collaborations linked by constantly changing, non-hierarchical, cobweb-
like networks.
The network structure becomes most useful when a firm's environment
is unstable and expected to remain so. Under such conditions, there is
a strong need for innovation and quick response. Instead of having
salaried employees, the company may contract with individuals for
specific projects or periods. Long-term contracts with suppliers and
distributors replace services the company might otherwise provide
through vertical integration. This structure provides increased flexibility
598
and adaptability to cope with rapid technological change and shifting 
patterns of international trade and competition. 
2. (a)  Four specific criteria of sustainable competitive advantage that firms can
use to determine those capabilities that are core competencies. 
Capabilities that are valuable, rare, costly to imitate, and non-
substitutable are core competencies. 
i. Valuable: Valuable capabilities are the ones that allow the firm to
exploit opportunities or avert the threats in its external environment.
A firm created value for customers by effectively using capabilities
to exploit opportunities. Finance companies build a valuable
competence in financial services. In addition, to make such
competencies as financial services highly successful requires
placing the right people in the right jobs. Human capital is important
in creating value for customers.
ii. Rare: Core competencies are very rare capabilities and very few of
the competitors possess these. Capabilities possessed by many
rivals are unlikely to be sources of competitive advantage for any
one of them. Competitive advantage results only when firms
develop and exploit valuable capabilities that differ from those
shared with competitors.
iii. Costly to imitate: Costly to imitate means such capabilities that
competing firms are unable to develop easily.
iv. Non-substitutable: Capabilities that do not have strategic
equivalents are called non-substitutable capabilities. This final
criterion for a capability to be a source of competitive advantage is
that there must be no strategically equivalent valuable resources
that are themselves either not rare or imitable.
(b) XYZ Electronics has opted to implement a Stability strategy. Stability
strategies are designed to safeguard the existing interests and strengths
of a business. This involves pursuing established and tested objectives,
continuing on the chosen path, and maintaining operational efficiency. A
stability strategy is pursued when a firm continues to serve the same or
similar markets and deals in the same products and services. Although
few functional changes are made in the products or markets, it is not a
‘do nothing’ strategy. This strategy is typical for mature business
organizations. Additionally, some small organizations frequently use
stability as a strategic focus to maintain a comfortable market or profit
position.
Major reasons for a Stability strategy include:
• A product has reached the maturity stage of the product life cycle.
• The staff feels comfortable with the status quo as it involves fewer
changes and less risk.
• It is opted for when the environment in which an organization
operates is relatively stable.
599
• Expansion may be perceived as threatening and not advisable.
• After rapid expansion, a firm might want to stabilize and consolidate
itself.
3. (a)  Yummy foods are proactive in its approach. On the other hand, Tasty
Food is reactive. Proactive strategy is planned strategy whereas reactive 
strategy is 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 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. 
(b) Change management is essential during digital transformation to ensure
the success of the process. Here are some key strategies to navigate
change effectively:
• Specify the digital transformation's aims and objectives:
Clearly defining the intended outcomes and objectives helps
ensure everyone is aligned and working towards the same goals.
• Always communicate: Regular and transparent communication is
crucial to help people understand the goals of digital transformation
and how it will impact various stakeholders, including employees,
clients, and other parties.
• Be ready for resistance: Change, even if beneficial, can be met
with resistance. Having a strategy in place to address resistance is
important for overcoming challenges and ensuring a smooth
transition.
• Implement changes gradually: Instead of making all changes at
once, gradual implementation allows individuals to adapt to new
ways of doing things without feeling overwhelmed by too much
change simultaneously.
• Offer assistance and training: Providing support, guidance, and
training for employees is crucial as they navigate new procedures,
software applications, and other aspects of digital transformation.
In conclusion, meticulous planning and effective change management 
are vital for the successful completion of digital transformation projects. 
Without proper change management, these efforts are more likely to fail, 
and organizations can enhance the integration of new digital systems by 
anticipating and managing the necessary changes. 
600
Page 4


ANSWER S OF MODEL TEST PAPER 3  
PAPER 6B: STRATEGIC MANAGEMENT 
PART I 
1. (A) (i) (c) (ii) (c) (iii)  (d) (iv)  (b) (v)  (a)
1. (B) (i) (c) (ii) (b) (iii)  (d)
PART II 
1. (a)  In this scenario, the most appropriate strategic approach to help Dharam
Veer Singh formulate a robust and coherent business roadmap aligned 
with his vision for sustainable growth would be to focus on values or a 
value system. Emphasizing values such as quality, integrity, and 
sustainability can guide decision-making and attract like-minded 
investors and clients. By embedding these values into the company's 
culture and operations, Dharam can differentiate his business in the 
market, ensuring long-term success and structural longevity in 
construction projects. This value-driven strategy will also help in building 
a strong brand reputation and fostering trust among stakeholders. 
(b) Considering Porter's generic strategies, there are three different bases:
cost leadership, differentiation, and focus. Ravi and Arjun are
contemplating pricing for their product.
Ravi is trying to have a low price and high volume, thereby aiming for
cost leadership. Cost leadership emphasizes producing standardized
products at a very low per unit cost for consumers who are price
sensitive.
Arjun 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.
(c) XYZ Corporation is shifting to a network structure. This is a newer and
more radical organizational design, sometimes referred to as a "non-
structure" because it virtually eliminates in-house business functions and
outsources many of them. An organization structured in this way is often
called a virtual organization, composed of a series of project groups or
collaborations linked by constantly changing, non-hierarchical, cobweb-
like networks.
The network structure becomes most useful when a firm's environment
is unstable and expected to remain so. Under such conditions, there is
a strong need for innovation and quick response. Instead of having
salaried employees, the company may contract with individuals for
specific projects or periods. Long-term contracts with suppliers and
distributors replace services the company might otherwise provide
through vertical integration. This structure provides increased flexibility
598
and adaptability to cope with rapid technological change and shifting 
patterns of international trade and competition. 
2. (a)  Four specific criteria of sustainable competitive advantage that firms can
use to determine those capabilities that are core competencies. 
Capabilities that are valuable, rare, costly to imitate, and non-
substitutable are core competencies. 
i. Valuable: Valuable capabilities are the ones that allow the firm to
exploit opportunities or avert the threats in its external environment.
A firm created value for customers by effectively using capabilities
to exploit opportunities. Finance companies build a valuable
competence in financial services. In addition, to make such
competencies as financial services highly successful requires
placing the right people in the right jobs. Human capital is important
in creating value for customers.
ii. Rare: Core competencies are very rare capabilities and very few of
the competitors possess these. Capabilities possessed by many
rivals are unlikely to be sources of competitive advantage for any
one of them. Competitive advantage results only when firms
develop and exploit valuable capabilities that differ from those
shared with competitors.
iii. Costly to imitate: Costly to imitate means such capabilities that
competing firms are unable to develop easily.
iv. Non-substitutable: Capabilities that do not have strategic
equivalents are called non-substitutable capabilities. This final
criterion for a capability to be a source of competitive advantage is
that there must be no strategically equivalent valuable resources
that are themselves either not rare or imitable.
(b) XYZ Electronics has opted to implement a Stability strategy. Stability
strategies are designed to safeguard the existing interests and strengths
of a business. This involves pursuing established and tested objectives,
continuing on the chosen path, and maintaining operational efficiency. A
stability strategy is pursued when a firm continues to serve the same or
similar markets and deals in the same products and services. Although
few functional changes are made in the products or markets, it is not a
‘do nothing’ strategy. This strategy is typical for mature business
organizations. Additionally, some small organizations frequently use
stability as a strategic focus to maintain a comfortable market or profit
position.
Major reasons for a Stability strategy include:
• A product has reached the maturity stage of the product life cycle.
• The staff feels comfortable with the status quo as it involves fewer
changes and less risk.
• It is opted for when the environment in which an organization
operates is relatively stable.
599
• Expansion may be perceived as threatening and not advisable.
• After rapid expansion, a firm might want to stabilize and consolidate
itself.
3. (a)  Yummy foods are proactive in its approach. On the other hand, Tasty
Food is reactive. Proactive strategy is planned strategy whereas reactive 
strategy is 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 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. 
(b) Change management is essential during digital transformation to ensure
the success of the process. Here are some key strategies to navigate
change effectively:
• Specify the digital transformation's aims and objectives:
Clearly defining the intended outcomes and objectives helps
ensure everyone is aligned and working towards the same goals.
• Always communicate: Regular and transparent communication is
crucial to help people understand the goals of digital transformation
and how it will impact various stakeholders, including employees,
clients, and other parties.
• Be ready for resistance: Change, even if beneficial, can be met
with resistance. Having a strategy in place to address resistance is
important for overcoming challenges and ensuring a smooth
transition.
• Implement changes gradually: Instead of making all changes at
once, gradual implementation allows individuals to adapt to new
ways of doing things without feeling overwhelmed by too much
change simultaneously.
• Offer assistance and training: Providing support, guidance, and
training for employees is crucial as they navigate new procedures,
software applications, and other aspects of digital transformation.
In conclusion, meticulous planning and effective change management 
are vital for the successful completion of digital transformation projects. 
Without proper change management, these efforts are more likely to fail, 
and organizations can enhance the integration of new digital systems by 
anticipating and managing the necessary changes. 
600
4. (a)  Product Life Cycle is an important concept in strategic choice and S-
shaped curve which exhibits the relationship of sales with respect of time 
for a product that passes through the four successive stages.  
The first stage of PLC is the introduction stage in which competition is 
almost negligible, prices are relatively high and markets are limited. The 
growth in sales is also at a lower rate.  
The second stage of PLC is the growth stage, in which the demand 
expands rapidly, prices fall, competition increases, and market expands. 
The third stage of PLC is the maturity stage, where in the competition 
gets tough and market gets stabilized. Profit comes down because of 
stiff competition. 
The fourth stage is the declining stage of PLC, in which the sales and 
profits fall down sharply due to some new products replacing the existing 
product. 
Product Life Cycle 
PLC can be used to diagnose a portfolio of products (or businesses) in 
order to establish the stage at which each of them exists. Particular 
attention is to be paid on the businesses that are in the declining stage. 
Depending on the diagnosis, appropriate strategic choices can be made. 
For instance, expansion may be a feasible alternative for businesses in 
the introductory and growth stages. Mature businesses may be used as 
sources of cash for investment in other businesses which need 
resources. A combination of strategies like selective harvesting, 
retrenchment, etc. may be adopted for declining businesses. In this way, 
a balanced portfolio of businesses may be built up by exercising a 
strategic choice based on the PLC concept. 
(b) The business environment consists of both the macro environment and
the micro environment. Following are the differences between the two:
• The micro environment refers to the forces that are very close to
the company and affect its ability to do routine functions. Macro
environment refers to all forces that are part of the larger periphery
and distantly affect organization and micro environment.
• Micro environment includes the company itself, its suppliers,
marketing intermediaries, customer markets and competitors.
Whereas macro environment includes demography, economy,
natural forces, technology, politics, legal and socio-cultural.
601
Page 5


ANSWER S OF MODEL TEST PAPER 3  
PAPER 6B: STRATEGIC MANAGEMENT 
PART I 
1. (A) (i) (c) (ii) (c) (iii)  (d) (iv)  (b) (v)  (a)
1. (B) (i) (c) (ii) (b) (iii)  (d)
PART II 
1. (a)  In this scenario, the most appropriate strategic approach to help Dharam
Veer Singh formulate a robust and coherent business roadmap aligned 
with his vision for sustainable growth would be to focus on values or a 
value system. Emphasizing values such as quality, integrity, and 
sustainability can guide decision-making and attract like-minded 
investors and clients. By embedding these values into the company's 
culture and operations, Dharam can differentiate his business in the 
market, ensuring long-term success and structural longevity in 
construction projects. This value-driven strategy will also help in building 
a strong brand reputation and fostering trust among stakeholders. 
(b) Considering Porter's generic strategies, there are three different bases:
cost leadership, differentiation, and focus. Ravi and Arjun are
contemplating pricing for their product.
Ravi is trying to have a low price and high volume, thereby aiming for
cost leadership. Cost leadership emphasizes producing standardized
products at a very low per unit cost for consumers who are price
sensitive.
Arjun 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.
(c) XYZ Corporation is shifting to a network structure. This is a newer and
more radical organizational design, sometimes referred to as a "non-
structure" because it virtually eliminates in-house business functions and
outsources many of them. An organization structured in this way is often
called a virtual organization, composed of a series of project groups or
collaborations linked by constantly changing, non-hierarchical, cobweb-
like networks.
The network structure becomes most useful when a firm's environment
is unstable and expected to remain so. Under such conditions, there is
a strong need for innovation and quick response. Instead of having
salaried employees, the company may contract with individuals for
specific projects or periods. Long-term contracts with suppliers and
distributors replace services the company might otherwise provide
through vertical integration. This structure provides increased flexibility
598
and adaptability to cope with rapid technological change and shifting 
patterns of international trade and competition. 
2. (a)  Four specific criteria of sustainable competitive advantage that firms can
use to determine those capabilities that are core competencies. 
Capabilities that are valuable, rare, costly to imitate, and non-
substitutable are core competencies. 
i. Valuable: Valuable capabilities are the ones that allow the firm to
exploit opportunities or avert the threats in its external environment.
A firm created value for customers by effectively using capabilities
to exploit opportunities. Finance companies build a valuable
competence in financial services. In addition, to make such
competencies as financial services highly successful requires
placing the right people in the right jobs. Human capital is important
in creating value for customers.
ii. Rare: Core competencies are very rare capabilities and very few of
the competitors possess these. Capabilities possessed by many
rivals are unlikely to be sources of competitive advantage for any
one of them. Competitive advantage results only when firms
develop and exploit valuable capabilities that differ from those
shared with competitors.
iii. Costly to imitate: Costly to imitate means such capabilities that
competing firms are unable to develop easily.
iv. Non-substitutable: Capabilities that do not have strategic
equivalents are called non-substitutable capabilities. This final
criterion for a capability to be a source of competitive advantage is
that there must be no strategically equivalent valuable resources
that are themselves either not rare or imitable.
(b) XYZ Electronics has opted to implement a Stability strategy. Stability
strategies are designed to safeguard the existing interests and strengths
of a business. This involves pursuing established and tested objectives,
continuing on the chosen path, and maintaining operational efficiency. A
stability strategy is pursued when a firm continues to serve the same or
similar markets and deals in the same products and services. Although
few functional changes are made in the products or markets, it is not a
‘do nothing’ strategy. This strategy is typical for mature business
organizations. Additionally, some small organizations frequently use
stability as a strategic focus to maintain a comfortable market or profit
position.
Major reasons for a Stability strategy include:
• A product has reached the maturity stage of the product life cycle.
• The staff feels comfortable with the status quo as it involves fewer
changes and less risk.
• It is opted for when the environment in which an organization
operates is relatively stable.
599
• Expansion may be perceived as threatening and not advisable.
• After rapid expansion, a firm might want to stabilize and consolidate
itself.
3. (a)  Yummy foods are proactive in its approach. On the other hand, Tasty
Food is reactive. Proactive strategy is planned strategy whereas reactive 
strategy is 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 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. 
(b) Change management is essential during digital transformation to ensure
the success of the process. Here are some key strategies to navigate
change effectively:
• Specify the digital transformation's aims and objectives:
Clearly defining the intended outcomes and objectives helps
ensure everyone is aligned and working towards the same goals.
• Always communicate: Regular and transparent communication is
crucial to help people understand the goals of digital transformation
and how it will impact various stakeholders, including employees,
clients, and other parties.
• Be ready for resistance: Change, even if beneficial, can be met
with resistance. Having a strategy in place to address resistance is
important for overcoming challenges and ensuring a smooth
transition.
• Implement changes gradually: Instead of making all changes at
once, gradual implementation allows individuals to adapt to new
ways of doing things without feeling overwhelmed by too much
change simultaneously.
• Offer assistance and training: Providing support, guidance, and
training for employees is crucial as they navigate new procedures,
software applications, and other aspects of digital transformation.
In conclusion, meticulous planning and effective change management 
are vital for the successful completion of digital transformation projects. 
Without proper change management, these efforts are more likely to fail, 
and organizations can enhance the integration of new digital systems by 
anticipating and managing the necessary changes. 
600
4. (a)  Product Life Cycle is an important concept in strategic choice and S-
shaped curve which exhibits the relationship of sales with respect of time 
for a product that passes through the four successive stages.  
The first stage of PLC is the introduction stage in which competition is 
almost negligible, prices are relatively high and markets are limited. The 
growth in sales is also at a lower rate.  
The second stage of PLC is the growth stage, in which the demand 
expands rapidly, prices fall, competition increases, and market expands. 
The third stage of PLC is the maturity stage, where in the competition 
gets tough and market gets stabilized. Profit comes down because of 
stiff competition. 
The fourth stage is the declining stage of PLC, in which the sales and 
profits fall down sharply due to some new products replacing the existing 
product. 
Product Life Cycle 
PLC can be used to diagnose a portfolio of products (or businesses) in 
order to establish the stage at which each of them exists. Particular 
attention is to be paid on the businesses that are in the declining stage. 
Depending on the diagnosis, appropriate strategic choices can be made. 
For instance, expansion may be a feasible alternative for businesses in 
the introductory and growth stages. Mature businesses may be used as 
sources of cash for investment in other businesses which need 
resources. A combination of strategies like selective harvesting, 
retrenchment, etc. may be adopted for declining businesses. In this way, 
a balanced portfolio of businesses may be built up by exercising a 
strategic choice based on the PLC concept. 
(b) The business environment consists of both the macro environment and
the micro environment. Following are the differences between the two:
• The micro environment refers to the forces that are very close to
the company and affect its ability to do routine functions. Macro
environment refers to all forces that are part of the larger periphery
and distantly affect organization and micro environment.
• Micro environment includes the company itself, its suppliers,
marketing intermediaries, customer markets and competitors.
Whereas macro environment includes demography, economy,
natural forces, technology, politics, legal and socio-cultural.
601
• The elements of micro environment are specific to the said
business and affects it’s working on short term basis. The elements
of macro environment are general environment and affect the
working of all the firms in an industry.
OR 
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 organization, instead or mere narrowly circumscribed
activities of sub-units. For example, procuring specific items for
inventory is a matter of operational control, in contrast to inventory
management as a whole.
(ii) Many of the control systems in organizations 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.
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