BBA 3rd Year Strategy Evaluation Long Question Answer Strategy Evaluation Process, criteria, environmental analysis, resource analysis. Long Study materia Notes Toplic Wise Unit – Wise division of the content Book code- 602
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BBA 1st 2nd 3rd Year Study Material Notes
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(Long Answer Questions)
Q.1. What is value chain approach? Discuss its component.
Ans. Value Chain Approach: The value chain approach or value chain analysis is a concept from business management that was first described and popularised by Michael Porter in 1985. A value chain is a chain of actions used by companies to operate in a particular market industry. It is a logical approach which helps companies to find out the ways of achieving competitive advantage. In value chain analysis, each product should pass through the series of activities and get some value on completion of each activity.
Components of Value Chain: There are two components of value chain analysis, the industry value chain and the firm’s internal value chain.
Industry value chain is complied of all the value-creating activities within the industry, from course development process, to finish the completed delivery of courses and related services to the learner. Porter (1985) identified five competitive forces interacting within a given industry, these forces are:
1. The intensity of rivalry among existing competitors.
2. The barriers to entry for new competitors.
3. The threat of substitute products and services.
4. The bargaining power of suppliers.
5. The bargaining power of buyers.
Analysis of these above forces will reveal the industry’s fundamental attractiveness, expose the industry’s profitability and provide insight to how profitability will evolve in the future. Internal value chain consists of all physically and technologically Distinct activities within the value chain is understand the activities within the organization that create a competitive advantage and the nmanaging those activities better than other organizations in the industry. Porter (1985) suggested that the activities of a business can be grouped under we es of a business can be grouped under two headings. Primary activities, te activities are directly involved with the physical creation and denne and support activities (e.g. human resource management, technology develop uman resource management, technology development) are not directly involved in production, but have the potential to increase effectiveness have the potential to increase effectiveness and efficiency. It is rare for and all primary and support activities. Value chain analysis is thus a means for examining internal processes and identifying which activities are best provided by others.
Inbound Logistics: It is concerned with management transportation of materials you receive from the suppliers. Inbound logistics also include supervision of other resources such as manpower packaging, security etc. These goods are further stored until they are required for production. For example, canned food manufacturer, receives and stores the empty cans and raw food (tomato puree or mango pulp) which arrive separately, here inbound logistic is the management of different material arriving at your premises.
Operations: Operations are concerned with processes of converting input into finished product. This is where goods are manufactured or assembled. There are different separate operations for example packaging food or checking leakage.
Outbound Logistics: Outbound logistics are concerned with storage and distribution of finished products. Once the products are packed they are needed to be sent along the supply chain to wholesalers, retailers or to the final consumer.
Marketing and Sales: This stage is concerned with identification of consumers and generation of sales. At this phase, the company prepares the offering to meet the needs of targeted customers. This area focuses strongly on product promotions.
Services: It has important for company to provide after sales services to its customers. Services include customer support after the products are sold to customers. This includes all areas of service such as installation, after-sales service, complaints handling, training etc.
Firm Infrastructure: This activity includes and is driven by corporate or strategic planning. It includath Management Information System (MIS) and other mechanisms for planning and controlling such as the financial and accounting department, production department, marketing department etc.
Human Resource Management (HRM): Employees are costly but essential resource of organisation. HRM processes the organisations manage the recruitment and selection, training and development and rewards and remuneration activities. The mission and objectives of the organisation Is main force behind the HRM strategy.
Procurement: Procurement is an organisational activity which involves the purchasing of goods, services and materials. In other words, it is a process of acquiring goods, works and services, Covering both acquisitions from third parties and from in house providers. The process spans the whole cycle from identification of need through to the end of the useful life of an asset. The motivation chind procurement is to support the high quality product with lowest price.
0.2. What is Boston Consulting Group (BCG) matrix? Discuss in detail.
Ans. Baston Consulting Group: In the late 1960s the Boston Consulting Group, a leading management consulting company, designed a four-cell matrix known as BCG growth/share matrix This tool was developed to aid companies in the measurement of all their company businesses according to relative market share and market growth. The BCG matrix made a sign and condition to strategic management and continues to be an important strategic tools used by companies today.
The BCG matrix provides a composite picture of the strategic position of each separate business within a company so that the management can determine the strengths and the needs of all sectors of the firm. The development of the matrix requires the assessment of a business portfolio, which includes an organisation’s autonomous division (activities, or profit centers).
The BCG matrix presents graphically the differences among these business units in terms of relative market share and market growth rate.
The vertical axis represents in a linear scale the growth rate of the market in which the business exists. This is generally viewed as the expected growth rate for the next five years of the market in which a particular business competes. The values of the vertical axis are the relevant market growth rates (i.e. 5 per cent, 10 per cent, 15 per cent, 20 per cent etc.) Usually a 10 per cent cut-off level is selected in order to distinguish high from low market growth rate (a 10 per cent value corresponds to doubling current experience in the next five to seven years).
The horizontal axis represents in a logarithmic scale the market share of a business within a firm relative to the market share of the largest competitor in the market. For example, company ‘A’ may have a 10 per cent market share and company B, the leading competitor, holds 40 per cent of the market. Company A’s market share relative to company B’s market share is 25 per cent or 0.25x. If company ‘A’ has a 40 per cent share and company B has a 10 per cent share, company A’s market share is 400 per cent or 4.0x.
Relative market share is an indicator of organisation’s competitive position within the industry and underlines the concept of experience curve. Thus, business organisations with high relative market share tend to have a cost leadership position. Each of a company’s products or a business units is plotted on the matrix and classified as one of four types: question marks, stars, cash cows and dogs.
1. Question Marks
The upper-right quadrant contains question marks, businesses with low relative market share in high-growth markets are called question marks because it is often uncertain what will happen to them. Careful examination by management can help determine how many resources (if any) should be invested in these businesses.