Strategic Management Model Test Paper - 8 (Answers) - CA Intermediate PDF Download

 Page 1


ANSWERS OF MODEL TEST PAPER 8 
PAPER 6B: STRATEGIC MANAGEMENT  
PART I 
1. (A) (i) (b) (ii) (a) (iii)  (d) (iv)  (b) (v)  (a)
1. (B) (i) (b) (ii) (a) (iii)  (d)
PART II 
1. (a)  The Matrix Relationship is the most effective structure for Tech
Innovators Inc. to achieve its vision of leadership in AI technologies. This 
structure promotes cross-functional collaboration, essential for 
managing complex AI projects and fostering innovation. By integrating 
expertise from various departments into temporary, task-based teams, 
the Matrix Relationship supports dynamic project management and 
aligns well with the company’s strategic goals for advancing AI 
technologies. Despite its complexity, this approach provides the 
flexibility and collaboration necessary for a leading-edge AI and ML 
focus. 
Relationship Benefits Drawbacks Suitability for 
AI Leadership 
Functional 
and 
Divisional 
Specialization, clear 
management of 
functions and 
products. 
Potential for 
departmental 
isolation, limited 
collaboration. 
Less effective 
for cross-
functional AI 
projects. 
Horizontal Open 
communication, 
encourages 
innovation and fast 
idea sharing. 
Hard to scale, 
unclear roles 
and 
responsibilities. 
Suitable for 
startups, less 
for large AI 
initiatives. 
Matrix Facilitates cross-
functional 
collaboration, 
flexible resource 
management for 
complex projects. 
Complex 
reporting 
structures, 
potential 
conflicts. 
Ideal for 
managing 
diverse, 
innovative AI 
projects. 
(b) The competitive rivalry will be a significant force in case of company of
Rajiv Arya as all the rivals are similar in sizes and are manufacturing
similar products. It is difficult for any single manufacturer to dominate the
market. Large number of patents will make it difficult for new entrants to
break into the market. Further, as there are a large number of small
suppliers the power that suppliers can exert will also be low.
There is no information relating to substitutes and bargaining power of
customers in the information given in scenario. However, a domestic
vacuum cleaner will directly compete with other options such as house
626
Page 2


ANSWERS OF MODEL TEST PAPER 8 
PAPER 6B: STRATEGIC MANAGEMENT  
PART I 
1. (A) (i) (b) (ii) (a) (iii)  (d) (iv)  (b) (v)  (a)
1. (B) (i) (b) (ii) (a) (iii)  (d)
PART II 
1. (a)  The Matrix Relationship is the most effective structure for Tech
Innovators Inc. to achieve its vision of leadership in AI technologies. This 
structure promotes cross-functional collaboration, essential for 
managing complex AI projects and fostering innovation. By integrating 
expertise from various departments into temporary, task-based teams, 
the Matrix Relationship supports dynamic project management and 
aligns well with the company’s strategic goals for advancing AI 
technologies. Despite its complexity, this approach provides the 
flexibility and collaboration necessary for a leading-edge AI and ML 
focus. 
Relationship Benefits Drawbacks Suitability for 
AI Leadership 
Functional 
and 
Divisional 
Specialization, clear 
management of 
functions and 
products. 
Potential for 
departmental 
isolation, limited 
collaboration. 
Less effective 
for cross-
functional AI 
projects. 
Horizontal Open 
communication, 
encourages 
innovation and fast 
idea sharing. 
Hard to scale, 
unclear roles 
and 
responsibilities. 
Suitable for 
startups, less 
for large AI 
initiatives. 
Matrix Facilitates cross-
functional 
collaboration, 
flexible resource 
management for 
complex projects. 
Complex 
reporting 
structures, 
potential 
conflicts. 
Ideal for 
managing 
diverse, 
innovative AI 
projects. 
(b) The competitive rivalry will be a significant force in case of company of
Rajiv Arya as all the rivals are similar in sizes and are manufacturing
similar products. It is difficult for any single manufacturer to dominate the
market. Large number of patents will make it difficult for new entrants to
break into the market. Further, as there are a large number of small
suppliers the power that suppliers can exert will also be low.
There is no information relating to substitutes and bargaining power of
customers in the information given in scenario. However, a domestic
vacuum cleaner will directly compete with other options such as house
626
maids. Availability of house maids at low cost can significantly disturb 
the sales of products. 
Further, as the products are similar customers can easily shift from one 
company to another. This will only enhance competitive rivalry. 
(c) PQR Ltd. has planned to implement the Strategic Business Unit (SBU)
structure. 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.
The attributes of an SBU and the benefits a firm may derive by using the
SBU Structure are as follows:
? A scientific method of grouping the businesses of a multi – business
corporation which helps the firm in strategic planning.
? An improvement over the territorial grouping of businesses and
strategic planning based on territorial units.
? Strategic planning for SBU is distinct from rest of businesses.
Products/ businesses within an SBU receive same strategic
planning treatment and priorities.
? Each SBU will have its own distinct set of competitors and its own
distinct strategy.
? The CEO of SBU will be responsible for strategic planning for SBU
and its profit performance.
? Products/businesses that are related from the standpoint of
function are assembled together as a distinct SBU.
? Unrelated products/ businesses in any group are separated into
separate SBUs.
? Grouping the businesses on SBU lines helps in strategic planning
by removing the vagueness and confusion.
? Each SBU is a separate business and will be distinct from one
another on the basis of mission, objectives etc.
2. (a)  Strategic management involves developing the company’s vision,
environmental scanning, strategy formulation, implementation, 
evaluation and control. It emphasizes the monitoring and evaluation of 
external opportunities and threats in the light of a company’s strengths 
and weaknesses and designing strategies for survival and growth. It 
helps in the creation of a competitive advantage to outperform the 
competitors and also guides the company successfully through all 
changes in the environment.  
The major benefits of strategic management are: 
627
Page 3


ANSWERS OF MODEL TEST PAPER 8 
PAPER 6B: STRATEGIC MANAGEMENT  
PART I 
1. (A) (i) (b) (ii) (a) (iii)  (d) (iv)  (b) (v)  (a)
1. (B) (i) (b) (ii) (a) (iii)  (d)
PART II 
1. (a)  The Matrix Relationship is the most effective structure for Tech
Innovators Inc. to achieve its vision of leadership in AI technologies. This 
structure promotes cross-functional collaboration, essential for 
managing complex AI projects and fostering innovation. By integrating 
expertise from various departments into temporary, task-based teams, 
the Matrix Relationship supports dynamic project management and 
aligns well with the company’s strategic goals for advancing AI 
technologies. Despite its complexity, this approach provides the 
flexibility and collaboration necessary for a leading-edge AI and ML 
focus. 
Relationship Benefits Drawbacks Suitability for 
AI Leadership 
Functional 
and 
Divisional 
Specialization, clear 
management of 
functions and 
products. 
Potential for 
departmental 
isolation, limited 
collaboration. 
Less effective 
for cross-
functional AI 
projects. 
Horizontal Open 
communication, 
encourages 
innovation and fast 
idea sharing. 
Hard to scale, 
unclear roles 
and 
responsibilities. 
Suitable for 
startups, less 
for large AI 
initiatives. 
Matrix Facilitates cross-
functional 
collaboration, 
flexible resource 
management for 
complex projects. 
Complex 
reporting 
structures, 
potential 
conflicts. 
Ideal for 
managing 
diverse, 
innovative AI 
projects. 
(b) The competitive rivalry will be a significant force in case of company of
Rajiv Arya as all the rivals are similar in sizes and are manufacturing
similar products. It is difficult for any single manufacturer to dominate the
market. Large number of patents will make it difficult for new entrants to
break into the market. Further, as there are a large number of small
suppliers the power that suppliers can exert will also be low.
There is no information relating to substitutes and bargaining power of
customers in the information given in scenario. However, a domestic
vacuum cleaner will directly compete with other options such as house
626
maids. Availability of house maids at low cost can significantly disturb 
the sales of products. 
Further, as the products are similar customers can easily shift from one 
company to another. This will only enhance competitive rivalry. 
(c) PQR Ltd. has planned to implement the Strategic Business Unit (SBU)
structure. 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.
The attributes of an SBU and the benefits a firm may derive by using the
SBU Structure are as follows:
? A scientific method of grouping the businesses of a multi – business
corporation which helps the firm in strategic planning.
? An improvement over the territorial grouping of businesses and
strategic planning based on territorial units.
? Strategic planning for SBU is distinct from rest of businesses.
Products/ businesses within an SBU receive same strategic
planning treatment and priorities.
? Each SBU will have its own distinct set of competitors and its own
distinct strategy.
? The CEO of SBU will be responsible for strategic planning for SBU
and its profit performance.
? Products/businesses that are related from the standpoint of
function are assembled together as a distinct SBU.
? Unrelated products/ businesses in any group are separated into
separate SBUs.
? Grouping the businesses on SBU lines helps in strategic planning
by removing the vagueness and confusion.
? Each SBU is a separate business and will be distinct from one
another on the basis of mission, objectives etc.
2. (a)  Strategic management involves developing the company’s vision,
environmental scanning, strategy formulation, implementation, 
evaluation and control. It emphasizes the monitoring and evaluation of 
external opportunities and threats in the light of a company’s strengths 
and weaknesses and designing strategies for survival and growth. It 
helps in the creation of a competitive advantage to outperform the 
competitors and also guides the company successfully through all 
changes in the environment.  
The major benefits of strategic management are: 
627
? Strategic management gives directions to the company to move 
ahead. It defines the goals and mission.  
? It helps organisations to be proactive instead of reactive in shaping 
their future.  
? It provides frameworks for all major decisions of an enterprise such 
as decisions on businesses, products, markets, manufacturing 
facilities, investments and organisational structure. It provides 
better guidance to the entire organisation on the crucial point - what 
it is trying to do.  
? It helps organisations to identify the available opportunities and 
identify ways and means to achieve them.  
? It serves as a corporate defence mechanism against mistakes and 
pitfalls.  
? It helps to enhance the longevity of the business.  
? It helps the organisation to develop certain core competencies and 
competitive advantages that would facilitate survival and growth.  
(b) The company went through the following stages of the product life cycle 
(PLC): 
 Introduction stage: Initially, the company faced slow sales growth, 
limited markets, and high prices, which are characteristic of the 
introduction stage. During this stage, competition is almost negligible, 
and customers have limited knowledge about the product. 
 Growth stage: Over time, the demand for the product expanded rapidly, 
prices fell, and competition increased. These are typical features of the 
growth stage in the PLC. In this stage, the product gains market 
acceptance, and customers become more aware of the product's 
benefits and show interest in purchasing it. 
3.  (a)  A strategic alliance is a relationship between two or more businesses 
that enables each to achieve certain strategic objectives which neither 
would be able to achieve on its own. The strategic partners maintain their 
status as independent and separate entities, share the benefits and 
control over the partnership, and continue to make contributions to the 
alliance until it is terminated. The advantages of strategic alliance can 
be broadly categorised as follows:  
(a) Organizational: Strategic alliance helps to learn necessary skills 
and obtain certain capabilities from strategic partners. Strategic 
partners may also help to enhance productive capacity, provide a 
distribution system, or extend supply chain.  
(b) Economic: There can be reduction in costs and risks by 
distributing them across the members of the alliance. Greater 
economies of scale can be obtained in an alliance, as production 
volume can increase, causing the cost per unit to decline. The 
628
Page 4


ANSWERS OF MODEL TEST PAPER 8 
PAPER 6B: STRATEGIC MANAGEMENT  
PART I 
1. (A) (i) (b) (ii) (a) (iii)  (d) (iv)  (b) (v)  (a)
1. (B) (i) (b) (ii) (a) (iii)  (d)
PART II 
1. (a)  The Matrix Relationship is the most effective structure for Tech
Innovators Inc. to achieve its vision of leadership in AI technologies. This 
structure promotes cross-functional collaboration, essential for 
managing complex AI projects and fostering innovation. By integrating 
expertise from various departments into temporary, task-based teams, 
the Matrix Relationship supports dynamic project management and 
aligns well with the company’s strategic goals for advancing AI 
technologies. Despite its complexity, this approach provides the 
flexibility and collaboration necessary for a leading-edge AI and ML 
focus. 
Relationship Benefits Drawbacks Suitability for 
AI Leadership 
Functional 
and 
Divisional 
Specialization, clear 
management of 
functions and 
products. 
Potential for 
departmental 
isolation, limited 
collaboration. 
Less effective 
for cross-
functional AI 
projects. 
Horizontal Open 
communication, 
encourages 
innovation and fast 
idea sharing. 
Hard to scale, 
unclear roles 
and 
responsibilities. 
Suitable for 
startups, less 
for large AI 
initiatives. 
Matrix Facilitates cross-
functional 
collaboration, 
flexible resource 
management for 
complex projects. 
Complex 
reporting 
structures, 
potential 
conflicts. 
Ideal for 
managing 
diverse, 
innovative AI 
projects. 
(b) The competitive rivalry will be a significant force in case of company of
Rajiv Arya as all the rivals are similar in sizes and are manufacturing
similar products. It is difficult for any single manufacturer to dominate the
market. Large number of patents will make it difficult for new entrants to
break into the market. Further, as there are a large number of small
suppliers the power that suppliers can exert will also be low.
There is no information relating to substitutes and bargaining power of
customers in the information given in scenario. However, a domestic
vacuum cleaner will directly compete with other options such as house
626
maids. Availability of house maids at low cost can significantly disturb 
the sales of products. 
Further, as the products are similar customers can easily shift from one 
company to another. This will only enhance competitive rivalry. 
(c) PQR Ltd. has planned to implement the Strategic Business Unit (SBU)
structure. 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.
The attributes of an SBU and the benefits a firm may derive by using the
SBU Structure are as follows:
? A scientific method of grouping the businesses of a multi – business
corporation which helps the firm in strategic planning.
? An improvement over the territorial grouping of businesses and
strategic planning based on territorial units.
? Strategic planning for SBU is distinct from rest of businesses.
Products/ businesses within an SBU receive same strategic
planning treatment and priorities.
? Each SBU will have its own distinct set of competitors and its own
distinct strategy.
? The CEO of SBU will be responsible for strategic planning for SBU
and its profit performance.
? Products/businesses that are related from the standpoint of
function are assembled together as a distinct SBU.
? Unrelated products/ businesses in any group are separated into
separate SBUs.
? Grouping the businesses on SBU lines helps in strategic planning
by removing the vagueness and confusion.
? Each SBU is a separate business and will be distinct from one
another on the basis of mission, objectives etc.
2. (a)  Strategic management involves developing the company’s vision,
environmental scanning, strategy formulation, implementation, 
evaluation and control. It emphasizes the monitoring and evaluation of 
external opportunities and threats in the light of a company’s strengths 
and weaknesses and designing strategies for survival and growth. It 
helps in the creation of a competitive advantage to outperform the 
competitors and also guides the company successfully through all 
changes in the environment.  
The major benefits of strategic management are: 
627
? Strategic management gives directions to the company to move 
ahead. It defines the goals and mission.  
? It helps organisations to be proactive instead of reactive in shaping 
their future.  
? It provides frameworks for all major decisions of an enterprise such 
as decisions on businesses, products, markets, manufacturing 
facilities, investments and organisational structure. It provides 
better guidance to the entire organisation on the crucial point - what 
it is trying to do.  
? It helps organisations to identify the available opportunities and 
identify ways and means to achieve them.  
? It serves as a corporate defence mechanism against mistakes and 
pitfalls.  
? It helps to enhance the longevity of the business.  
? It helps the organisation to develop certain core competencies and 
competitive advantages that would facilitate survival and growth.  
(b) The company went through the following stages of the product life cycle 
(PLC): 
 Introduction stage: Initially, the company faced slow sales growth, 
limited markets, and high prices, which are characteristic of the 
introduction stage. During this stage, competition is almost negligible, 
and customers have limited knowledge about the product. 
 Growth stage: Over time, the demand for the product expanded rapidly, 
prices fell, and competition increased. These are typical features of the 
growth stage in the PLC. In this stage, the product gains market 
acceptance, and customers become more aware of the product's 
benefits and show interest in purchasing it. 
3.  (a)  A strategic alliance is a relationship between two or more businesses 
that enables each to achieve certain strategic objectives which neither 
would be able to achieve on its own. The strategic partners maintain their 
status as independent and separate entities, share the benefits and 
control over the partnership, and continue to make contributions to the 
alliance until it is terminated. The advantages of strategic alliance can 
be broadly categorised as follows:  
(a) Organizational: Strategic alliance helps to learn necessary skills 
and obtain certain capabilities from strategic partners. Strategic 
partners may also help to enhance productive capacity, provide a 
distribution system, or extend supply chain.  
(b) Economic: There can be reduction in costs and risks by 
distributing them across the members of the alliance. Greater 
economies of scale can be obtained in an alliance, as production 
volume can increase, causing the cost per unit to decline. The 
628
partners can also take advantage of co-specialization, creating 
additional value. 
(c) Strategic: Rivals can join together to cooperate instead of
competing. 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.
(d) Political: Sometimes strategic alliances are formed with a local
foreign business to gain entry into a foreign market either because
of local prejudices or legal barriers to entry.
(b) Strategic performance measures are essential for organizations for
several reasons:
? Goal Alignment: Strategic performance measures help
organizations align their strategies with their goals and objectives,
ensuring that they are on track to achieve their desired outcomes.
? Resource Allocation: Strategic performance measures provide
organizations with the information they need to make informed
decisions about resource allocation, enabling them to prioritize
their efforts and allocate resources to the areas that will have the
greatest impact on their performance.
? Continuous Improvement: Strategic performance measures
provide organizations with a framework for continuous
improvement, enabling them to track their progress and make
adjustments to improve their performance over time.
? External Accountability: Strategic performance measures help
organizations demonstrate accountability to stakeholders,
including shareholders, customers, and regulatory bodies, by
providing a clear and transparent picture of their performance.
4. (a)  The following are the principal points of distinction between concentric
diversification and conglomerate diversification: 
(i) Concentric diversification occurs when a firm adds related products
or markets. On the other hand, conglomerate diversification occurs
when a firm diversifies into areas that are unrelated to its current
line of business.
(ii) In concentric diversification, the new business is linked to the
existing businesses through process, technology or marketing. In
conglomerate diversification, no such linkages exist; the new
business/product is disjointed from the existing businesses/
products.
(iii) The most common reasons for pursuing concentric diversification
are that opportunities in a firm’s existing line of business are
629
Page 5


ANSWERS OF MODEL TEST PAPER 8 
PAPER 6B: STRATEGIC MANAGEMENT  
PART I 
1. (A) (i) (b) (ii) (a) (iii)  (d) (iv)  (b) (v)  (a)
1. (B) (i) (b) (ii) (a) (iii)  (d)
PART II 
1. (a)  The Matrix Relationship is the most effective structure for Tech
Innovators Inc. to achieve its vision of leadership in AI technologies. This 
structure promotes cross-functional collaboration, essential for 
managing complex AI projects and fostering innovation. By integrating 
expertise from various departments into temporary, task-based teams, 
the Matrix Relationship supports dynamic project management and 
aligns well with the company’s strategic goals for advancing AI 
technologies. Despite its complexity, this approach provides the 
flexibility and collaboration necessary for a leading-edge AI and ML 
focus. 
Relationship Benefits Drawbacks Suitability for 
AI Leadership 
Functional 
and 
Divisional 
Specialization, clear 
management of 
functions and 
products. 
Potential for 
departmental 
isolation, limited 
collaboration. 
Less effective 
for cross-
functional AI 
projects. 
Horizontal Open 
communication, 
encourages 
innovation and fast 
idea sharing. 
Hard to scale, 
unclear roles 
and 
responsibilities. 
Suitable for 
startups, less 
for large AI 
initiatives. 
Matrix Facilitates cross-
functional 
collaboration, 
flexible resource 
management for 
complex projects. 
Complex 
reporting 
structures, 
potential 
conflicts. 
Ideal for 
managing 
diverse, 
innovative AI 
projects. 
(b) The competitive rivalry will be a significant force in case of company of
Rajiv Arya as all the rivals are similar in sizes and are manufacturing
similar products. It is difficult for any single manufacturer to dominate the
market. Large number of patents will make it difficult for new entrants to
break into the market. Further, as there are a large number of small
suppliers the power that suppliers can exert will also be low.
There is no information relating to substitutes and bargaining power of
customers in the information given in scenario. However, a domestic
vacuum cleaner will directly compete with other options such as house
626
maids. Availability of house maids at low cost can significantly disturb 
the sales of products. 
Further, as the products are similar customers can easily shift from one 
company to another. This will only enhance competitive rivalry. 
(c) PQR Ltd. has planned to implement the Strategic Business Unit (SBU)
structure. 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.
The attributes of an SBU and the benefits a firm may derive by using the
SBU Structure are as follows:
? A scientific method of grouping the businesses of a multi – business
corporation which helps the firm in strategic planning.
? An improvement over the territorial grouping of businesses and
strategic planning based on territorial units.
? Strategic planning for SBU is distinct from rest of businesses.
Products/ businesses within an SBU receive same strategic
planning treatment and priorities.
? Each SBU will have its own distinct set of competitors and its own
distinct strategy.
? The CEO of SBU will be responsible for strategic planning for SBU
and its profit performance.
? Products/businesses that are related from the standpoint of
function are assembled together as a distinct SBU.
? Unrelated products/ businesses in any group are separated into
separate SBUs.
? Grouping the businesses on SBU lines helps in strategic planning
by removing the vagueness and confusion.
? Each SBU is a separate business and will be distinct from one
another on the basis of mission, objectives etc.
2. (a)  Strategic management involves developing the company’s vision,
environmental scanning, strategy formulation, implementation, 
evaluation and control. It emphasizes the monitoring and evaluation of 
external opportunities and threats in the light of a company’s strengths 
and weaknesses and designing strategies for survival and growth. It 
helps in the creation of a competitive advantage to outperform the 
competitors and also guides the company successfully through all 
changes in the environment.  
The major benefits of strategic management are: 
627
? Strategic management gives directions to the company to move 
ahead. It defines the goals and mission.  
? It helps organisations to be proactive instead of reactive in shaping 
their future.  
? It provides frameworks for all major decisions of an enterprise such 
as decisions on businesses, products, markets, manufacturing 
facilities, investments and organisational structure. It provides 
better guidance to the entire organisation on the crucial point - what 
it is trying to do.  
? It helps organisations to identify the available opportunities and 
identify ways and means to achieve them.  
? It serves as a corporate defence mechanism against mistakes and 
pitfalls.  
? It helps to enhance the longevity of the business.  
? It helps the organisation to develop certain core competencies and 
competitive advantages that would facilitate survival and growth.  
(b) The company went through the following stages of the product life cycle 
(PLC): 
 Introduction stage: Initially, the company faced slow sales growth, 
limited markets, and high prices, which are characteristic of the 
introduction stage. During this stage, competition is almost negligible, 
and customers have limited knowledge about the product. 
 Growth stage: Over time, the demand for the product expanded rapidly, 
prices fell, and competition increased. These are typical features of the 
growth stage in the PLC. In this stage, the product gains market 
acceptance, and customers become more aware of the product's 
benefits and show interest in purchasing it. 
3.  (a)  A strategic alliance is a relationship between two or more businesses 
that enables each to achieve certain strategic objectives which neither 
would be able to achieve on its own. The strategic partners maintain their 
status as independent and separate entities, share the benefits and 
control over the partnership, and continue to make contributions to the 
alliance until it is terminated. The advantages of strategic alliance can 
be broadly categorised as follows:  
(a) Organizational: Strategic alliance helps to learn necessary skills 
and obtain certain capabilities from strategic partners. Strategic 
partners may also help to enhance productive capacity, provide a 
distribution system, or extend supply chain.  
(b) Economic: There can be reduction in costs and risks by 
distributing them across the members of the alliance. Greater 
economies of scale can be obtained in an alliance, as production 
volume can increase, causing the cost per unit to decline. The 
628
partners can also take advantage of co-specialization, creating 
additional value. 
(c) Strategic: Rivals can join together to cooperate instead of
competing. 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.
(d) Political: Sometimes strategic alliances are formed with a local
foreign business to gain entry into a foreign market either because
of local prejudices or legal barriers to entry.
(b) Strategic performance measures are essential for organizations for
several reasons:
? Goal Alignment: Strategic performance measures help
organizations align their strategies with their goals and objectives,
ensuring that they are on track to achieve their desired outcomes.
? Resource Allocation: Strategic performance measures provide
organizations with the information they need to make informed
decisions about resource allocation, enabling them to prioritize
their efforts and allocate resources to the areas that will have the
greatest impact on their performance.
? Continuous Improvement: Strategic performance measures
provide organizations with a framework for continuous
improvement, enabling them to track their progress and make
adjustments to improve their performance over time.
? External Accountability: Strategic performance measures help
organizations demonstrate accountability to stakeholders,
including shareholders, customers, and regulatory bodies, by
providing a clear and transparent picture of their performance.
4. (a)  The following are the principal points of distinction between concentric
diversification and conglomerate diversification: 
(i) Concentric diversification occurs when a firm adds related products
or markets. On the other hand, conglomerate diversification occurs
when a firm diversifies into areas that are unrelated to its current
line of business.
(ii) In concentric diversification, the new business is linked to the
existing businesses through process, technology or marketing. In
conglomerate diversification, no such linkages exist; the new
business/product is disjointed from the existing businesses/
products.
(iii) The most common reasons for pursuing concentric diversification
are that opportunities in a firm’s existing line of business are
629
available. However, common reasons for pursuing a conglomerate 
growth strategy are that opportunities in a firm's current line of 
business are limited or opportunities outside are highly lucrative.  
(b)  Channels represent the distribution system through which 
organizations distribute their products or provide services to customers. 
They play a pivotal role in reaching target markets, maximizing sales, 
and establishing competitive advantages.  
Channel analysis is important when the business strategy is to scale up 
and expand beyond the current geographies and markets. When a 
business plans to grow to newer markets, they need to develop or 
leverage existing channels to get to new customers. Thus, analysis of 
channels that suit one’s products and customers is of utmost importance. 
There are typically three channels that should be considered: sales 
channel, product channel and service channel. 
? The sales channel - These are the intermediaries involved in 
selling the product through each channel and ultimately to the 
end user. The key question is: Who needs to sell to whom for 
your product to be sold to your end user? For example, many 
fashion designers use agencies to sell their products to retail 
organizations, so that consumers can access them. 
? The product channel - The product channel focuses on the 
series of intermediaries who physically handle the product on its 
path from its producer to the end user. This is true of Australia 
Post, who delivers and distributes many online purchases 
between the seller and purchaser when using eBay and other 
online stores. 
? The service channel - The service channel refers to the entities 
that provide necessary services to support the product, as it 
moves through the sales channel and after purchase by the end 
user. The service channel is an important consideration for 
products that are complex in terms of installation or customer 
assistance. For example, a Bosch dishwasher may be sold in a 
Bosch showroom, and then once sold it is installed by a Bosch 
contracted plumber. 
OR 
Mendelow's Matrix can be used effectively to analyze and manage 
stakeholders through a grid-based approach by the following steps:  
1.  Identify Stakeholders: Begin by identifying all relevant 
stakeholders for your project or organization. This includes 
individuals, groups, or organizations that may be impacted by or 
have an impact on your activities. 
2.  Assess Power and Interest: For each stakeholder, assess their 
power to influence your project or organization and their level of 
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