Strategic Management Model Test Paper - 7 (Answers) - CA Intermediate PDF Download

 Page 1


ANSWERS OF MODEL TEST PAPER 7
PAPER 6B: STRATEGIC MANAGEMENT 
PART I 
1. (A) (i) (c) (ii) (c) (iii)  (d) (iv)  (b) (v)  (d)
1. (B) (i) (a) (ii) (c) (iii)  (b)
PART II 
1. (a)  The scenario being referred to is culture in Jupiter Electronics. Strong
culture promotes good strategy execution when there’s fit and impels 
execution when there’s negligible fit. A culture grounded in values, 
practices, and behavioral norms that match what is needed for good 
strategy execution helps energize people throughout the organization to 
do their jobs in a strategy-supportive manner. A culture built around such 
business principles as listening to customers, encouraging employees to 
take pride in their work, and giving employees a high degree of decision-
making responsibility. This is very conducive to successful execution of 
a strategy of delivering superior customer service.  
A strong strategy-supportive culture makes employees feel genuinely 
better about their jobs and work environment and the merits of what the 
company is trying to accomplish. Employees are stimulated to take on 
the challenge of realizing the organizational vision, do their jobs 
competently and with enthusiasm, and collaborate with others. 
(b) To maintain a competitive edge in the face of increased competition,
Reshuffle Corp can differentiate its products in several ways:
• Tangible and Intangible Aspects: Reshuffle Corp can focus on the
tangible aspects of its products, such as using high-quality materials
and innovative designs to create furniture that is both functional and
aesthetically pleasing. Additionally, they can emphasize the intangible
aspects of their products, such as excellent customer service and a
strong brand reputation for reliability and durability.
• Pricing Strategies: While market prices are often dictated by
competition, Reshuffle Corp can work on cost optimization to maintain
profitability. They can also consider offering value-added services,
such as free installation or extended warranties, to justify a higher
price point.
• Product Features: By continually optimizing their product features
based on customer feedback and market trends, Reshuffle Corp can
ensure that their products deliver maximum satisfaction to their target
customers. This may include features that enhance functionality,
design, quality, and overall user experience.
• Product Centric Approach: Reshuffle Corp should keep their
products at the center of their strategic activities, ensuring that all
621
Page 2


ANSWERS OF MODEL TEST PAPER 7
PAPER 6B: STRATEGIC MANAGEMENT 
PART I 
1. (A) (i) (c) (ii) (c) (iii)  (d) (iv)  (b) (v)  (d)
1. (B) (i) (a) (ii) (c) (iii)  (b)
PART II 
1. (a)  The scenario being referred to is culture in Jupiter Electronics. Strong
culture promotes good strategy execution when there’s fit and impels 
execution when there’s negligible fit. A culture grounded in values, 
practices, and behavioral norms that match what is needed for good 
strategy execution helps energize people throughout the organization to 
do their jobs in a strategy-supportive manner. A culture built around such 
business principles as listening to customers, encouraging employees to 
take pride in their work, and giving employees a high degree of decision-
making responsibility. This is very conducive to successful execution of 
a strategy of delivering superior customer service.  
A strong strategy-supportive culture makes employees feel genuinely 
better about their jobs and work environment and the merits of what the 
company is trying to accomplish. Employees are stimulated to take on 
the challenge of realizing the organizational vision, do their jobs 
competently and with enthusiasm, and collaborate with others. 
(b) To maintain a competitive edge in the face of increased competition,
Reshuffle Corp can differentiate its products in several ways:
• Tangible and Intangible Aspects: Reshuffle Corp can focus on the
tangible aspects of its products, such as using high-quality materials
and innovative designs to create furniture that is both functional and
aesthetically pleasing. Additionally, they can emphasize the intangible
aspects of their products, such as excellent customer service and a
strong brand reputation for reliability and durability.
• Pricing Strategies: While market prices are often dictated by
competition, Reshuffle Corp can work on cost optimization to maintain
profitability. They can also consider offering value-added services,
such as free installation or extended warranties, to justify a higher
price point.
• Product Features: By continually optimizing their product features
based on customer feedback and market trends, Reshuffle Corp can
ensure that their products deliver maximum satisfaction to their target
customers. This may include features that enhance functionality,
design, quality, and overall user experience.
• Product Centric Approach: Reshuffle Corp should keep their
products at the center of their strategic activities, ensuring that all
621
business processes, from production to sales and marketing, are 
aligned to meet customer needs and expectations. 
• Product Life Cycle Management: Reshuffle Corp should be aware 
of the life cycle of their products and plan for reinvention or 
replacement accordingly. They can introduce new product lines or 
upgrade existing ones to keep up with changing customer 
preferences and market trends. 
(c)  By concentrating primarily on the market for consultancy services in 
environmental management, the firm is pursuing a focus strategy. Its 
provision of audit services, which rival firms do not offer, highlights a 
differentiation strategy within this specific market niche. Therefore, the 
firm is following a focused differentiation strategy. 
A focused differentiation strategy involves offering unique features that 
cater to the specific needs of a narrow market segment. As with the 
focused low-cost strategy, narrow markets can be defined differently 
depending on the context. For instance, some firms using this strategy 
focus on a particular sales channel, such as exclusively selling online, 
while others may target specific demographic groups. Firms that 
compete on uniqueness while addressing the needs of a narrow market 
exemplify the focused differentiation strategy. 
2. (a)  As industry’s Key Success Factors (KSFs) are those things that most 
affect industry members’ ability to prosper in the marketplace – the 
particular strategy elements, product attributes, resources, 
competencies, competitive capabilities and business outcomes that spell 
the difference between profit & loss and ultimately, between competitive 
success or failure. KSFs by their very nature are so important that all 
firms in the industry must pay close attention to them. They are the 
prerequisites for industry success, or, to put it in another way, KSFs are 
the rules that shape whether a company will be financially and 
competitively successful. 
(b)  SBU is a part of a large business organization that is treated separately 
for strategic management purposes. The concept of SBU is helpful in 
creating an SBU organizational structure. It is a separate part of large 
business serving product markets with readily identifiable competitors. It 
is created by adding another level of management in a divisional 
structure after the divisions have been grouped under a divisional top 
management authority based on the common strategic interests.  
 Very large organisations, particularly those running into several 
products, or operating at distant geographical locations that are 
extremely diverse in terms of environmental factors, can be better 
managed by creating strategic business units. SBU structure becomes 
imperative in an organisation with increase in number, size and diversity. 
SBUs helps such organisations by: 
• Establishing coordination between divisions having common 
strategic interest. 
622
Page 3


ANSWERS OF MODEL TEST PAPER 7
PAPER 6B: STRATEGIC MANAGEMENT 
PART I 
1. (A) (i) (c) (ii) (c) (iii)  (d) (iv)  (b) (v)  (d)
1. (B) (i) (a) (ii) (c) (iii)  (b)
PART II 
1. (a)  The scenario being referred to is culture in Jupiter Electronics. Strong
culture promotes good strategy execution when there’s fit and impels 
execution when there’s negligible fit. A culture grounded in values, 
practices, and behavioral norms that match what is needed for good 
strategy execution helps energize people throughout the organization to 
do their jobs in a strategy-supportive manner. A culture built around such 
business principles as listening to customers, encouraging employees to 
take pride in their work, and giving employees a high degree of decision-
making responsibility. This is very conducive to successful execution of 
a strategy of delivering superior customer service.  
A strong strategy-supportive culture makes employees feel genuinely 
better about their jobs and work environment and the merits of what the 
company is trying to accomplish. Employees are stimulated to take on 
the challenge of realizing the organizational vision, do their jobs 
competently and with enthusiasm, and collaborate with others. 
(b) To maintain a competitive edge in the face of increased competition,
Reshuffle Corp can differentiate its products in several ways:
• Tangible and Intangible Aspects: Reshuffle Corp can focus on the
tangible aspects of its products, such as using high-quality materials
and innovative designs to create furniture that is both functional and
aesthetically pleasing. Additionally, they can emphasize the intangible
aspects of their products, such as excellent customer service and a
strong brand reputation for reliability and durability.
• Pricing Strategies: While market prices are often dictated by
competition, Reshuffle Corp can work on cost optimization to maintain
profitability. They can also consider offering value-added services,
such as free installation or extended warranties, to justify a higher
price point.
• Product Features: By continually optimizing their product features
based on customer feedback and market trends, Reshuffle Corp can
ensure that their products deliver maximum satisfaction to their target
customers. This may include features that enhance functionality,
design, quality, and overall user experience.
• Product Centric Approach: Reshuffle Corp should keep their
products at the center of their strategic activities, ensuring that all
621
business processes, from production to sales and marketing, are 
aligned to meet customer needs and expectations. 
• Product Life Cycle Management: Reshuffle Corp should be aware 
of the life cycle of their products and plan for reinvention or 
replacement accordingly. They can introduce new product lines or 
upgrade existing ones to keep up with changing customer 
preferences and market trends. 
(c)  By concentrating primarily on the market for consultancy services in 
environmental management, the firm is pursuing a focus strategy. Its 
provision of audit services, which rival firms do not offer, highlights a 
differentiation strategy within this specific market niche. Therefore, the 
firm is following a focused differentiation strategy. 
A focused differentiation strategy involves offering unique features that 
cater to the specific needs of a narrow market segment. As with the 
focused low-cost strategy, narrow markets can be defined differently 
depending on the context. For instance, some firms using this strategy 
focus on a particular sales channel, such as exclusively selling online, 
while others may target specific demographic groups. Firms that 
compete on uniqueness while addressing the needs of a narrow market 
exemplify the focused differentiation strategy. 
2. (a)  As industry’s Key Success Factors (KSFs) are those things that most 
affect industry members’ ability to prosper in the marketplace – the 
particular strategy elements, product attributes, resources, 
competencies, competitive capabilities and business outcomes that spell 
the difference between profit & loss and ultimately, between competitive 
success or failure. KSFs by their very nature are so important that all 
firms in the industry must pay close attention to them. They are the 
prerequisites for industry success, or, to put it in another way, KSFs are 
the rules that shape whether a company will be financially and 
competitively successful. 
(b)  SBU is a part of a large business organization that is treated separately 
for strategic management purposes. The concept of SBU is helpful in 
creating an SBU organizational structure. It is a separate part of large 
business serving product markets with readily identifiable competitors. It 
is created by adding another level of management in a divisional 
structure after the divisions have been grouped under a divisional top 
management authority based on the common strategic interests.  
 Very large organisations, particularly those running into several 
products, or operating at distant geographical locations that are 
extremely diverse in terms of environmental factors, can be better 
managed by creating strategic business units. SBU structure becomes 
imperative in an organisation with increase in number, size and diversity. 
SBUs helps such organisations by: 
• Establishing coordination between divisions having common 
strategic interest. 
622
• Facilitate strategic management and control.
• Determine accountability at the level of distinct business units.
• Allow strategic planning to be done at the most relevant level within
the total enterprise.
• Make the task of strategic review by top executives more objective
and more effective.
• Help to allocate resources to areas with better opportunities.
3. (a)  Capabilities that are valuable, rare, costly to imitate, and non-
substitutable are core competencies. A small chemist shop has a local 
presence and functions within a limited geographical area. Still, it can 
build its own competencies to gain competitive advantage. Rohit Patel 
can build competencies in the areas of: 
(i) Developing personal and cordial relations with the customers.
(ii) Providing home delivery with no additional cost.
(iii) Developing a system of speedy delivery that can be difficult to
match by online sellers. Being in the central part of the city, he can
create a network to supply at wider locations in the city.
(iv) Having extended working hours for convenience of buyers.
(v) Providing easy credit or a system of monthly payments to the
patients consuming regular medicines.
(b) The vision describes a future identity while the Mission serves as an on-
going and time-independent guide.
The vision statement can galvanize the people to achieve defined
objectives, even if they are stretch objectives, provided the vision is
specific, measurable, achievable, and relevant and time bound. A
mission statement provides a path to realize the vision in line with its
values. These statements have a direct bearing on the bottom line and
success of the organization.
A mission statement defines the purpose or broader goal for being in
existence or in the business and can remain the same for decades if
crafted well while a vision statement is more specific in terms of both the
future state and the time frame. Vision describes what will be achieved
if the organization is successful.
4. (a)  Vikram Patel is facing declining sales due to a significant shift of
customers toward online platforms. Although he employs strategic 
management tools, they cannot always overcome every obstacle or 
guarantee success. The limitations of strategic management in Vikram’s 
situation include: 
? The environment in which strategies are developed is highly
complex and unpredictable. The entry of online bookstores, a new
623
Page 4


ANSWERS OF MODEL TEST PAPER 7
PAPER 6B: STRATEGIC MANAGEMENT 
PART I 
1. (A) (i) (c) (ii) (c) (iii)  (d) (iv)  (b) (v)  (d)
1. (B) (i) (a) (ii) (c) (iii)  (b)
PART II 
1. (a)  The scenario being referred to is culture in Jupiter Electronics. Strong
culture promotes good strategy execution when there’s fit and impels 
execution when there’s negligible fit. A culture grounded in values, 
practices, and behavioral norms that match what is needed for good 
strategy execution helps energize people throughout the organization to 
do their jobs in a strategy-supportive manner. A culture built around such 
business principles as listening to customers, encouraging employees to 
take pride in their work, and giving employees a high degree of decision-
making responsibility. This is very conducive to successful execution of 
a strategy of delivering superior customer service.  
A strong strategy-supportive culture makes employees feel genuinely 
better about their jobs and work environment and the merits of what the 
company is trying to accomplish. Employees are stimulated to take on 
the challenge of realizing the organizational vision, do their jobs 
competently and with enthusiasm, and collaborate with others. 
(b) To maintain a competitive edge in the face of increased competition,
Reshuffle Corp can differentiate its products in several ways:
• Tangible and Intangible Aspects: Reshuffle Corp can focus on the
tangible aspects of its products, such as using high-quality materials
and innovative designs to create furniture that is both functional and
aesthetically pleasing. Additionally, they can emphasize the intangible
aspects of their products, such as excellent customer service and a
strong brand reputation for reliability and durability.
• Pricing Strategies: While market prices are often dictated by
competition, Reshuffle Corp can work on cost optimization to maintain
profitability. They can also consider offering value-added services,
such as free installation or extended warranties, to justify a higher
price point.
• Product Features: By continually optimizing their product features
based on customer feedback and market trends, Reshuffle Corp can
ensure that their products deliver maximum satisfaction to their target
customers. This may include features that enhance functionality,
design, quality, and overall user experience.
• Product Centric Approach: Reshuffle Corp should keep their
products at the center of their strategic activities, ensuring that all
621
business processes, from production to sales and marketing, are 
aligned to meet customer needs and expectations. 
• Product Life Cycle Management: Reshuffle Corp should be aware 
of the life cycle of their products and plan for reinvention or 
replacement accordingly. They can introduce new product lines or 
upgrade existing ones to keep up with changing customer 
preferences and market trends. 
(c)  By concentrating primarily on the market for consultancy services in 
environmental management, the firm is pursuing a focus strategy. Its 
provision of audit services, which rival firms do not offer, highlights a 
differentiation strategy within this specific market niche. Therefore, the 
firm is following a focused differentiation strategy. 
A focused differentiation strategy involves offering unique features that 
cater to the specific needs of a narrow market segment. As with the 
focused low-cost strategy, narrow markets can be defined differently 
depending on the context. For instance, some firms using this strategy 
focus on a particular sales channel, such as exclusively selling online, 
while others may target specific demographic groups. Firms that 
compete on uniqueness while addressing the needs of a narrow market 
exemplify the focused differentiation strategy. 
2. (a)  As industry’s Key Success Factors (KSFs) are those things that most 
affect industry members’ ability to prosper in the marketplace – the 
particular strategy elements, product attributes, resources, 
competencies, competitive capabilities and business outcomes that spell 
the difference between profit & loss and ultimately, between competitive 
success or failure. KSFs by their very nature are so important that all 
firms in the industry must pay close attention to them. They are the 
prerequisites for industry success, or, to put it in another way, KSFs are 
the rules that shape whether a company will be financially and 
competitively successful. 
(b)  SBU is a part of a large business organization that is treated separately 
for strategic management purposes. The concept of SBU is helpful in 
creating an SBU organizational structure. It is a separate part of large 
business serving product markets with readily identifiable competitors. It 
is created by adding another level of management in a divisional 
structure after the divisions have been grouped under a divisional top 
management authority based on the common strategic interests.  
 Very large organisations, particularly those running into several 
products, or operating at distant geographical locations that are 
extremely diverse in terms of environmental factors, can be better 
managed by creating strategic business units. SBU structure becomes 
imperative in an organisation with increase in number, size and diversity. 
SBUs helps such organisations by: 
• Establishing coordination between divisions having common 
strategic interest. 
622
• Facilitate strategic management and control.
• Determine accountability at the level of distinct business units.
• Allow strategic planning to be done at the most relevant level within
the total enterprise.
• Make the task of strategic review by top executives more objective
and more effective.
• Help to allocate resources to areas with better opportunities.
3. (a)  Capabilities that are valuable, rare, costly to imitate, and non-
substitutable are core competencies. A small chemist shop has a local 
presence and functions within a limited geographical area. Still, it can 
build its own competencies to gain competitive advantage. Rohit Patel 
can build competencies in the areas of: 
(i) Developing personal and cordial relations with the customers.
(ii) Providing home delivery with no additional cost.
(iii) Developing a system of speedy delivery that can be difficult to
match by online sellers. Being in the central part of the city, he can
create a network to supply at wider locations in the city.
(iv) Having extended working hours for convenience of buyers.
(v) Providing easy credit or a system of monthly payments to the
patients consuming regular medicines.
(b) The vision describes a future identity while the Mission serves as an on-
going and time-independent guide.
The vision statement can galvanize the people to achieve defined
objectives, even if they are stretch objectives, provided the vision is
specific, measurable, achievable, and relevant and time bound. A
mission statement provides a path to realize the vision in line with its
values. These statements have a direct bearing on the bottom line and
success of the organization.
A mission statement defines the purpose or broader goal for being in
existence or in the business and can remain the same for decades if
crafted well while a vision statement is more specific in terms of both the
future state and the time frame. Vision describes what will be achieved
if the organization is successful.
4. (a)  Vikram Patel is facing declining sales due to a significant shift of
customers toward online platforms. Although he employs strategic 
management tools, they cannot always overcome every obstacle or 
guarantee success. The limitations of strategic management in Vikram’s 
situation include: 
? The environment in which strategies are developed is highly
complex and unpredictable. The entry of online bookstores, a new
623
type of competitor, introduced a different dynamic to the book retail 
industry. These online platforms, with their extensive reach and 
pricing power, have dominated the market, posing a formidable 
challenge to traditional bookstores. 
? Another limitation of strategic management is the difficulty in 
forecasting future developments. Despite his strategic 
management efforts, Vikram Patel did not anticipate the extent to 
which online bookstores would impact his sales. 
? While strategic management is a time-consuming process, it is 
crucial for Vikram to continue managing strategically. These 
challenging times demand increased effort and adaptability on his 
part. 
? Strategic management can be costly. Vikram Patel might consider 
hiring experts to understand customer preferences better and 
adjust his strategies to offer more personalized services. These 
customized offerings could be difficult for online stores to replicate, 
giving him a competitive edge. 
? The bookstores owned by Vikram Patel are much smaller in scale 
compared to online stores. This makes it challenging for him to 
predict how online platforms will manoeuvre strategically. 
(b)  In the BCG growth-share matrix portfolio of investments are represented 
in two-dimensional space. The vertical axis represents market growth 
rate, and the horizontal axis represents relative market share. The 
strategic implications for various business types under BCG in the 
corporate portfolio are: 
Stars are products or businesses that are growing rapidly and are the 
best opportunity for expansion. Stars may follow the Build strategy. They 
need heavy investments to maintain their position and finance their rapid 
growth potential.  
Cash Cows are low-growth, high market share businesses or products. 
They generate cash and have low costs. They are established, 
successful, and need less investment to maintain their market share. A 
strategic alternative advocated for cash cows is Harvest. 
Question Marks are low market share businesses in high-growth 
markets. A strategic option for them is Hold for which they need heavy 
investments. Question marks if left unattended are capable of becoming 
cash traps.  
 Dogs are low-growth, low-share businesses and products. The relevant 
strategy is Divest. Dogs may generate enough cash to maintain 
themselves, but do not have much future. Dogs should be minimized by 
means of divestment or liquidation. 
624
Page 5


ANSWERS OF MODEL TEST PAPER 7
PAPER 6B: STRATEGIC MANAGEMENT 
PART I 
1. (A) (i) (c) (ii) (c) (iii)  (d) (iv)  (b) (v)  (d)
1. (B) (i) (a) (ii) (c) (iii)  (b)
PART II 
1. (a)  The scenario being referred to is culture in Jupiter Electronics. Strong
culture promotes good strategy execution when there’s fit and impels 
execution when there’s negligible fit. A culture grounded in values, 
practices, and behavioral norms that match what is needed for good 
strategy execution helps energize people throughout the organization to 
do their jobs in a strategy-supportive manner. A culture built around such 
business principles as listening to customers, encouraging employees to 
take pride in their work, and giving employees a high degree of decision-
making responsibility. This is very conducive to successful execution of 
a strategy of delivering superior customer service.  
A strong strategy-supportive culture makes employees feel genuinely 
better about their jobs and work environment and the merits of what the 
company is trying to accomplish. Employees are stimulated to take on 
the challenge of realizing the organizational vision, do their jobs 
competently and with enthusiasm, and collaborate with others. 
(b) To maintain a competitive edge in the face of increased competition,
Reshuffle Corp can differentiate its products in several ways:
• Tangible and Intangible Aspects: Reshuffle Corp can focus on the
tangible aspects of its products, such as using high-quality materials
and innovative designs to create furniture that is both functional and
aesthetically pleasing. Additionally, they can emphasize the intangible
aspects of their products, such as excellent customer service and a
strong brand reputation for reliability and durability.
• Pricing Strategies: While market prices are often dictated by
competition, Reshuffle Corp can work on cost optimization to maintain
profitability. They can also consider offering value-added services,
such as free installation or extended warranties, to justify a higher
price point.
• Product Features: By continually optimizing their product features
based on customer feedback and market trends, Reshuffle Corp can
ensure that their products deliver maximum satisfaction to their target
customers. This may include features that enhance functionality,
design, quality, and overall user experience.
• Product Centric Approach: Reshuffle Corp should keep their
products at the center of their strategic activities, ensuring that all
621
business processes, from production to sales and marketing, are 
aligned to meet customer needs and expectations. 
• Product Life Cycle Management: Reshuffle Corp should be aware 
of the life cycle of their products and plan for reinvention or 
replacement accordingly. They can introduce new product lines or 
upgrade existing ones to keep up with changing customer 
preferences and market trends. 
(c)  By concentrating primarily on the market for consultancy services in 
environmental management, the firm is pursuing a focus strategy. Its 
provision of audit services, which rival firms do not offer, highlights a 
differentiation strategy within this specific market niche. Therefore, the 
firm is following a focused differentiation strategy. 
A focused differentiation strategy involves offering unique features that 
cater to the specific needs of a narrow market segment. As with the 
focused low-cost strategy, narrow markets can be defined differently 
depending on the context. For instance, some firms using this strategy 
focus on a particular sales channel, such as exclusively selling online, 
while others may target specific demographic groups. Firms that 
compete on uniqueness while addressing the needs of a narrow market 
exemplify the focused differentiation strategy. 
2. (a)  As industry’s Key Success Factors (KSFs) are those things that most 
affect industry members’ ability to prosper in the marketplace – the 
particular strategy elements, product attributes, resources, 
competencies, competitive capabilities and business outcomes that spell 
the difference between profit & loss and ultimately, between competitive 
success or failure. KSFs by their very nature are so important that all 
firms in the industry must pay close attention to them. They are the 
prerequisites for industry success, or, to put it in another way, KSFs are 
the rules that shape whether a company will be financially and 
competitively successful. 
(b)  SBU is a part of a large business organization that is treated separately 
for strategic management purposes. The concept of SBU is helpful in 
creating an SBU organizational structure. It is a separate part of large 
business serving product markets with readily identifiable competitors. It 
is created by adding another level of management in a divisional 
structure after the divisions have been grouped under a divisional top 
management authority based on the common strategic interests.  
 Very large organisations, particularly those running into several 
products, or operating at distant geographical locations that are 
extremely diverse in terms of environmental factors, can be better 
managed by creating strategic business units. SBU structure becomes 
imperative in an organisation with increase in number, size and diversity. 
SBUs helps such organisations by: 
• Establishing coordination between divisions having common 
strategic interest. 
622
• Facilitate strategic management and control.
• Determine accountability at the level of distinct business units.
• Allow strategic planning to be done at the most relevant level within
the total enterprise.
• Make the task of strategic review by top executives more objective
and more effective.
• Help to allocate resources to areas with better opportunities.
3. (a)  Capabilities that are valuable, rare, costly to imitate, and non-
substitutable are core competencies. A small chemist shop has a local 
presence and functions within a limited geographical area. Still, it can 
build its own competencies to gain competitive advantage. Rohit Patel 
can build competencies in the areas of: 
(i) Developing personal and cordial relations with the customers.
(ii) Providing home delivery with no additional cost.
(iii) Developing a system of speedy delivery that can be difficult to
match by online sellers. Being in the central part of the city, he can
create a network to supply at wider locations in the city.
(iv) Having extended working hours for convenience of buyers.
(v) Providing easy credit or a system of monthly payments to the
patients consuming regular medicines.
(b) The vision describes a future identity while the Mission serves as an on-
going and time-independent guide.
The vision statement can galvanize the people to achieve defined
objectives, even if they are stretch objectives, provided the vision is
specific, measurable, achievable, and relevant and time bound. A
mission statement provides a path to realize the vision in line with its
values. These statements have a direct bearing on the bottom line and
success of the organization.
A mission statement defines the purpose or broader goal for being in
existence or in the business and can remain the same for decades if
crafted well while a vision statement is more specific in terms of both the
future state and the time frame. Vision describes what will be achieved
if the organization is successful.
4. (a)  Vikram Patel is facing declining sales due to a significant shift of
customers toward online platforms. Although he employs strategic 
management tools, they cannot always overcome every obstacle or 
guarantee success. The limitations of strategic management in Vikram’s 
situation include: 
? The environment in which strategies are developed is highly
complex and unpredictable. The entry of online bookstores, a new
623
type of competitor, introduced a different dynamic to the book retail 
industry. These online platforms, with their extensive reach and 
pricing power, have dominated the market, posing a formidable 
challenge to traditional bookstores. 
? Another limitation of strategic management is the difficulty in 
forecasting future developments. Despite his strategic 
management efforts, Vikram Patel did not anticipate the extent to 
which online bookstores would impact his sales. 
? While strategic management is a time-consuming process, it is 
crucial for Vikram to continue managing strategically. These 
challenging times demand increased effort and adaptability on his 
part. 
? Strategic management can be costly. Vikram Patel might consider 
hiring experts to understand customer preferences better and 
adjust his strategies to offer more personalized services. These 
customized offerings could be difficult for online stores to replicate, 
giving him a competitive edge. 
? The bookstores owned by Vikram Patel are much smaller in scale 
compared to online stores. This makes it challenging for him to 
predict how online platforms will manoeuvre strategically. 
(b)  In the BCG growth-share matrix portfolio of investments are represented 
in two-dimensional space. The vertical axis represents market growth 
rate, and the horizontal axis represents relative market share. The 
strategic implications for various business types under BCG in the 
corporate portfolio are: 
Stars are products or businesses that are growing rapidly and are the 
best opportunity for expansion. Stars may follow the Build strategy. They 
need heavy investments to maintain their position and finance their rapid 
growth potential.  
Cash Cows are low-growth, high market share businesses or products. 
They generate cash and have low costs. They are established, 
successful, and need less investment to maintain their market share. A 
strategic alternative advocated for cash cows is Harvest. 
Question Marks are low market share businesses in high-growth 
markets. A strategic option for them is Hold for which they need heavy 
investments. Question marks if left unattended are capable of becoming 
cash traps.  
 Dogs are low-growth, low-share businesses and products. The relevant 
strategy is Divest. Dogs may generate enough cash to maintain 
themselves, but do not have much future. Dogs should be minimized by 
means of divestment or liquidation. 
624
OR 
Strategic alliances are formed if they provide an advantage to all the 
parties in the alliance. These advantages can be broadly categorised as 
follows:   
(i) Organizational: Strategic alliances may be formed to learn
necessary skills and obtain certain capabilities from the strategic
partner. Strategic partners may also help to enhance productive
capacity, provide a distribution system, or extend supply chain. A
strategic partner may provide a good or service that complements
each other, thereby creating a synergy. If one partner is relatively
new or untried in a certain industry, having a strategic partner who
is well-known and respected will help add legitimacy and
creditability to the venture.
(ii) Economic: Alliances can reduce costs and risks by distributing
them across the members of the alliance. Partners can obtain
greater economies of scale in an alliance, as production volume
increases, causing the cost per unit to decline. Finally, partners can
take advantage of co-specialization, where specializations are
bundled together, creating additional value.
(iii) Strategic: Organizations may join to cooperate instead of
competing. Alliances may also create vertical integration where
partners are part of the supply chain. Strategic alliances may also
be useful to create a competitive advantage by the pooling of
resources and skills. This may also help with future business
opportunities and the development of new products and
technologies. Strategic alliances may also be used to get access to
new technologies or to pursue joint research and development.
(iv) Political: Sometimes there is need to form a strategic alliance with
a local foreign business to gain entry into a foreign market either
because of local prejudices or legal barriers to entry. Forming
strategic alliances with politically influential partners may also help
improve overall influence and position.
625