Deemed University 2010 M.B.A University: Lingayas University Term: IV Title of the : Strategic Management - Question Paper
Roll No. ..
Lingayas University, Faridabad
MBA 2nd Year (Term-IV)
Examination Nov, 2010)
Strategic Management (BA-201)
[Time: 3 Hours] [Max. Marks: 100]
Before answering the question, candidate should ensure that they have been supplied the correct and complete question paper. No complaint in this regard, will be entertained after examination.
Note: Attempt five questions in all. Attempt any two questions from Section A and any two question from Section B. Section C, case study is compulsory.
SECTION A
Q-1. Define strategic management. What is the process of strategic management.
Q-2. What is internal analysis? What are the different techniques of internal analysis. Describe any two techniques with the help of diagram.
Q-3. Describe PESTLE analysis for the macro environment analysis of the firm. Choose a specific industry and relying solely on your impression, evaluate the impact of the fire forces that drive competition in industry.
SECTION B
Q-4. With the help of diagrams, explain BCG matrix and GE matrix.
Q-5. How functional tactics and short-term objectives help in strategy implementation? Explain with the help of an example.
Q-6. What is strategic control? Explain four basic types of strategic control.
Q-7. Compare and contrast. (Any two) (2x10=20)
(i) Strategy v/s Tactics
(ii) Business strategy v/s Functional strategy
(iii) Vision v/s Mission
SECTION C
Q-8. CASE STUDY (20)
MANAGING HINDUSTAN UNILEVER STRATEGICALLY
Unilever is one of the worlds oldest multinational companies. It is a major fast-moving consumer goods (FMCG) multinational operating in several businesses. In 2004, the Unilever 2010 strategic plan was put into action with the mission to bring vitality to life and to meet everyday needs for nutrition, hygiene and personal care with brands that help people feel good, look good and get more out of life. The corporate strategy is of focusing on core businesses of food, home care and personal care. Unilever operates in more than 100 countries, has a turnover of 39.6 billion and net profit of 3.685 billion in 2006 and derives 41 per cent of its income from the developing and emerging economies around the world. It has 179,000 employees and is a culturally-diverse organization with its top management coming from 24 nations. Nationalisation is based on the principle of local roots with global scale aimed at becoming a multi-local multinational.
Mergers and acquisitions of Lipton (1972), Brooke Bond (1984), Ponds (1986), TOMCO (1993), Lakme (1998) and Modern Foods (2002) have resulted in an organization that is a conglomerate of several businesses that have been continually restructured over the years.
HUL is one of the largest FMCG company in India with total sales of Rs.12,295 crore and net profit of 1855 crore in 2006. There are over 15000 employees, including more than 1300 managers. The present corporate strategy of HUL is to focus on core businesses. These core businesses are in home and personal care and food. There are 20 different consumer categories in these two busineses. For instance, home and personal care is made up of personal wash, laundry, skin care, hair care, oral care, deodorants, colour cosmetics and ayurvedi personal and health care, while food businesses have tea, coffee, ice creams and processed food brands. Apart from the two product divisions, there are separate departments for specialty exports and new ventures.
Strategic management at HUL is the responsibility of the board of directors headed by a chairman. There are five independent and five whole-time directors. The operational management is looked after by a management committee comprising the Vice Chairman, CEO and managing director and executive directors of the two business divisions and functional area. The divisions have a lot of autonomy with dedicated assets and resources. A divisional committee having the executive director and heads of functions of sales, commercial and manufacturing looks after the business level decision-making. The functional-level management is the responsibility of the functional head. For instance, a marketing manager has a team of brand managers looking after the individual brands. Besides the decentralized divisional structure, HUL has centralized some functions such as finance, human resource management, research, technology, information technology and corporate and legal affairs.
Unilever globally and HUL nationally, operate in the highly competitive FMCG markets. The consumer markets for FMCG products are finicky: its difficult to create customers and much more difficult to retain them. Price is often the central concern is a consumer purchase decision requiring producers to be on continual guard against cost increases. Sales and distribution are critical functi9ons organizationally. HUL operates in such a milieu. It has strong competitors such as the multinationals Proctor & Gamble, Nivea or LOreal and formidable local companies such as, Amul, Nirma or the Tata FMCG companies to contend with. Rivals have copies HULs strategies and tactics, especially in the area of marketing and distribution. Its innovations such as new style packaging or distribution through women entrepreneurs are much valued but also copied relentlessly, hurting its competitive advantage.
Indians have always perceived HUL as an Indian company rather than a multinational. HUL has attempted to align its strategies in the past to the special needs of the Indian business environment. Be it marketing or human resource management, HUL has experimented with new ideas suited to the local context. For instance, HUL is known for its capabilities in rural marketing, effective distribution systems and human resource development. But this focus on India seems to be changing. This might indicate a change in the strategic posture as well as a recognition that Indian markets have matured to the extent that they can be dealt with by the global strategies of Unilever. At the corporate level, it could also be an attempt to leverage global scale while retaining local responsiveness to some extent.
In line with the shift in corporate strategy, the locus of strategic decision-making seems to have moved from the subsidiary to the headquarters. Unilever has formulated a new global realignment under which it will develop brands and streamline product offerings across the world and the subsidiaries will sell the products. Other subtle indications of the shift of decision-making authority could be the appointment of a British CEO after nearly forty years during which there were Indian CEOs, the changed focus on a limited number of international brands rather than a large range of local brands developed over the years and the name-change from Hindustan Level to Hindustan Unilever.
The shift in the strategic decision-making power from the subsidiary to headquarters could however, prove to be double-edged sword. An example could be of HUL adopting Unilevers global strategy of focusing on a limited number of products, called the 30 power brands in 2002. That seemed a perfectly sensible strategic decision aimed at focusing managerial attention to a limited set of high-potential products. But one consequence of that was the HULs strong position in the niche soap and detergent markets suffering owing to neglect and the competitors were quick to take advantage of the opportunity. The there are the statistics to deal with: HUL has nearly 80 per cent of sales and 85 per cent of net profits from the home and personal care businesses. Globally, Unilever derives half its revenues from food business. HUL does not have a strong position in the food business in India though the food processing industry remains quite attractive both in terms of local consumption as well as export markets. HULs own strategy of offering low-price, competitive products may also suffer at the cost of Unilevers emphasis on premium priced, high and products sold through modern retail outlets.
There are some dark clouds on the horizon. HULs latest financials are not satisfactory. Net profit is down, sales are sluggish, input costs have been rising and new food products introduced in the market have yet t6o pick up. All this while, in one market segment after another, a competitor pushes ahead. In a company of such a big size and overpowering presence, these might still be minor events or developments in a long history that needs to be taken in stride. But, pessimistically, they could also be pointers to what may come.
Questions
1. State the strategy of Hindustan Unilever in your own words.
2. At what different levels is strategy formulated at HUL?
3. Comment on the strategic decision-making at HUL.
| Earning: Approval pending. |
