BBA 3rd Year Corporate Strategy Short Questions Answer Third Year Semester – VI Stategic Management and Business Policy (Book code-602) 3 mock papers for self – assessment Unit – wise division of the content
BBA 3rd Year Corporate Strategy Short Questions Answer
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BBA 1st Second 2nd 3rd Year Questions Answers Study Notes
(Short Answer Questions)
Q.1. Write a detailed note on corporate analysis.
Ans. Corporate Analysis: Corporate analysis is described as a process of evaluating key entities of a company to determine its strengths and weaknesses. Generally, corporate analysis covers all aspects of the company, including finances, profit margins, organisational structure and growth opportunities. The idea behind the analysis is that investors and industry analysts can easily review company’s position and determine if they provide solid growth opportunities to outside investors. Corporate analysis also gives an understanding of the general, corporate health and prospects for future growth of the company. From this perspective, corporate analysis can be seen as a fundamental tool that an investor can use to plan both short-term and long-term investments in the company.
Q.2. Give the reasons for conducting a corporate analysis.
Ans. The reasons for conducting a corporate analysis are given below:
1. By conducting corporate analysis managers can identify areas which can be improved in
some way to increase the overall efficiency and productivity of the business.
2. Corporate analysis also helps to indentify the policies and procedures associated with
particular department of business which would work evenly well with other department of the company.
3. Corporate analysis gives motivation to research department to modify the key products or to create new ideas in order to gain more market share.
4. Corporate analysis can provide significant information about the current strength of the
operation as well as provide valuable hints to business for becoming more profitable and for leading in the market sector.
5. Investors and industry analysts can also make productive use of the independent corporate
analysis of a given company to understand the actual position of business and man investment strategies. For any company it is difficult to run business operations if resources are not enough. Resources are the necessary input which help to execute business operations and other related activities.
The resource-based approach is a tool used to find out the strategic resources available to company. The resource based approach of a company defines its ability to deliver sustainable competitive advantage. If company is capable of managing its resources efficiently, it will be difficult merely impossible to imitate the outcomes of the firm, which will ultimately construct a competitive barrier between you and your competitor. Following are some criterion fulfilled by the resources:
(a) A resource must facilitate a company to employ a useful strategy, by either performing
better than its competitors or reducing its weaknesses. It is important for a company to estimate the future cost related investment on resources, this cost should not elevate the discounted future costs.
(b) If resources are controlled by only one company it could be a source of a competitive advantage. This advantage could be sustainable if competitors are not able to copy your resource and its outcome. The term isolating mechanism was introduced by ‘Rumelt’ to explain why firms might not be able to imitate a resource to degree that they are able to compete with the firm having the valuable resource. An important underlying factor of imitability is causal ambiguity, which occurs if the source from which a firm’s competitive advantage stem is unknown.
(C) A resource must not have any substitute, if competitors are able to counter the firm’s
value-creating strategy with a substitute, prices are driven down to the point that the price equals the discounted future rents-resulting in zero economic profits.