CAT 1

BSG 4207: BUSINESS STRATEGY AND COMPETITIVENESS

DATE: 29 September 2022 Time: 1 Hr

Instructions

Attempt all questions

1. Briefly explain the various lenses through which strategy can be viewed. (8
marks)

2 marks for each lense

a) Strategy as design, which might be likened to an architect’s approach

that is systematic, analytical and logical.
b) Strategy as experience, which recognises that taken-for-granted
assumptions and ways of doing things, biases and routines, will influence
strategy.
c) Strategy as variety, which focuses on new ideas and innovation bubbling
up in unpredictable ways in an organisation.
d) Strategy as discourse, which focuses upon the ways that managers use
language to influence strategy making – that strategy talk matters.

2. The CEO of Serena Hotels has engaged you as a consultant to carry out an
analysis of the industry/ sector in a bid to establish the company’s strategic
position as they draw up a new strategic plan for the company. Based on
your knowledge of sector and industry analysis, write a detailed report on the
sector/ industry in the Kenyan market. (16 marks)

1.5 marks for identification of porters five forces as the technique to be used and
listing of the five forces (total 1.5 marks), 2 marks for definition of the key forces
driving each force (total 10 marks), 0.5 marks for conclusion as to whether each
force is high of low (total 2.5 marks), 1 mark for concluding as to whether industry
is attractive or not (total 1 mark)

Competitive rivalry
• Competitive rivals are organisations aiming at the same customer groups
and with similar products and services (i.e. not substitutes)

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 • The more competitive rivalry there is, the worse it is for incumbents
• Five factors define the extent of rivalry in an industry or market:
a) Competitor concentration and balance - Where competitors are
numerous or of roughly equal size or power there is the danger of intensely
rivalrous behaviour as competitors attempt to gain dominance over others
b) Industry growth rate - In situations of strong growth, an organisation can
grow with the market but, in situations of low growth or decline, any growth
is likely to be at the expense of a rival, and meet with fierce resistance
c) High fixed costs - Industries with high fixed costs, e.g. high investments in
capital equipment or initial research, tend to be highly rivalrous
d) High exit barriers - high barriers to exit (high closure or disinvestment costs)
tends to increase rivalry, especially in declining industries
e) Low differentiation - where products or services are poorly differentiated,
rivalry is increased because there is little to stop customers switching
between competitors and the only way to compete is on price e.g. oil
market

Threat of entry
• How easy it is to enter the industry
• For incumbents, an attractive industry has high barriers to entry that
reduce the threat of new competitors.
• Five important entry barriers
a) Scale and experience e.g. high capital investment requirements for entry,
experience curve giving incumbents a cost advantage, network effects
b) Access to supply or distribution channels - control over supply and/or
distribution channels through vertical integration, customer loyalty, cost or
quality advantages not available to entrants, including access to
proprietary technology (e.g. patents), geographical locations or brand
identity etc.
c) Capital requirements - level of financial resources needed to enter an
industry
d) Legislation or government action e.g. patent protection, regulation of
markets, direct government action (e.g. tariffs)
e) Expected retaliation - retaliation of an existing firm to prevent entry

Threat of substitutes
• Substitutes - products or services that offer the same or a similar benefit to
an industry’s products or services, but have a different nature.
• Substitutes can reduce demand for a particular type of product as
customers switch to alternatives
• The risk of substitution puts a cap on the prices that can be charged in an
industry.
• Two important points to bear in mind about substitutes:
a) Extra-industry effects – If the buyers’ switching costs for the substitute are
low the threat increases. The higher the threat, the less attractive the
industry is likely to be
b) The price/performance ratio - A substitute is still an effective threat even if
more expensive, so long as it offers performance advantages that

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 customers value. It is the ratio of price to performance that matters, rather
than simple price.

Power of buyers
Buyers - organisation’s immediate customers, not necessarily the ultimate
consumers
• If buyers are powerful, then they can demand low prices or costly product
or service improvements
• Instances of high buyer power
a) Concentrated buyers – Few large customers
b) Low switching costs
c) Buyer competition threat – Buyer can supply self/ backward vertical
integration
d) Low buyer profits and impact on quality
➢ if the buyer group is unprofitable and pressured to reduce purchasing
costs; and,
➢ If the quality of the buyer’s product or services is little affected by the
purchased product.

Power of suppliers
Suppliers - those who supply the organisation with what it needs to produce the
product or service.
• Instances of high supplier power
a) Concentrated suppliers – few suppliers
b) High switching costs - If it is expensive or disruptive to move from one
supplier to another
c) Supplier competition threat - Suppliers able to enter the industry
themselves or cut out buyers who are acting as intermediaries/ forward
vertical integration.
d) Differentiated products - When products or services are highly
differentiated, suppliers will be more powerful. Also, if there is no or few
substitutes for the input the supplier group e.g. pilot’s union
Note: If their power is high, suppliers can capture all their buyers’ own potential
profits simply by raising their prices.

a) where the competitive five forces are strong, industries are not attractive
to compete in
b) the whole industry is in focus when making a five forces analysis rather than
an individual firm or group of firms

3. During the Work Based Learning engagement, you worked in an organisation

that had a unique culture. Using illustrative examples, conduct a cultural
analysis of the organisation or any other organisation of your choice (other
than Strathmore University) based on the cultural web. (16 marks)

2 marks for the identification of the 7 elements of the cultural web, 1 mark for
each definition and 1 mark for examples for each element

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1. Paradigm - set of assumptions held in common and taken for granted in
an organisation.
2. Rituals and routines
➢ Routines - ‘the way we do things around here’,
➢ Rituals – particular activities or special events that emphasise, highlight
or reinforce what is important in the culture e.g. training programmes,
promotion and assessment procedures, sales conferences
3. Stories told by members of an organisation to each other, to outsiders, to
new recruits etc. may act to embed the present in its organisational history
and also flag up important events and personalities – on successes,
disasters, heroes, villains and mavericks (who deviate from the norm).
4. Symbols - objects, events, acts or people that convey, maintain or create
meaning over and above their functional purpose e.g. offices and office
layout, cars, job titles, language used have a functional purpose, but are
also typically signal status and hierarchy.
5. Power structures - distributions of power to groups of people in an
organisation. The most powerful individuals or groups are likely to be
closely associated with the paradigm and long-established ways of doing
things
6. Organisational structures - roles, responsibilities and reporting relationships
in organisations - likely to reflect power structures and how they manifest
themselves e.g. Formal, hierarchical and mechanistic reporting
relationships emphasise that strategy rests within formal structures
7. Control systems - formal and informal ways of monitoring and supporting
people within and around an organisation and tend to emphasise what is
seen to be important in the organization e.g. measurements and reward
systems.

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 STRATHMORE INSTITUTE OF MATHEMATICAL SCIENCES

BACHELOR OF SCIENCE IN ACTUARIAL, FINANCE AND FINANCIAL ECONOMICS

(BBS Actuarial, BBS Finance, BBS Financial Economics)

END OF SEMESTER EXAMINATION

BSG 4207: BUSINESS STRATEGY AND COMPETITIVENESS

DATE: 21st November 2018 Time: 2 Hours

Instructions
1. This examination consists of FIVE questions.
2. Answer Question ONE (COMPULSORY) and any other TWO questions.

QUESTION ONE

In the hard-nosed world of commercial enterprise, those institutions based on and committed to
a shared vision and goals will survive and prosper in the face of aggressive competition.
Increasingly, education is becoming an “industry” and schools “businesses” characterised by
competition for resources. In this competitive environment, organisations need to ensure
alignment of visions and goals and their clear and consistent articulation through strategic plans
if they are to gain competitive advantage. There seems to be reluctance in some schools to
embrace planning as a means of positioning themselves in a competitive external environment.

For organisations to survive, they must also have effective governance structures that support
the achievement of set plans and goals. The culture of the organisation has also to be aligned to
strategy to ensure effective strategic implementation.

Based on your knowledge of strategic management:

a) Describe the strategic planning process. (6 marks)

b) Governing bodies such as board of directors play a significant role in strategic management.
Describe the factors that must be taken into account for governance structures to contribute
effectively to strategic management. (6 marks)

c) Culture has significant influence on strategy development as well as implementation.

Describe the layers of culture as described by Edgar Schein. (8 marks)

d) Briefly describe at least three differences for operations of business based in red and blue
oceans. (6 marks)

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e) Briefly describe the resource based and dynamic capabilities views of strategy. (4 marks)

QUESTION TWO

a) It is often argued that the effective implementation of a strategy is driven by a well designed
organisation. What are some of the five aspects that managers can assess in the
organisational design to ensure consistency with strategy? (10 marks)

b) Prof. Michael Porter stipulates the major determinants of competitiveness for countries or
regions. Using an appropriate model as your framework, discuss the major determinants of
competitiveness for Kenya. (10 marks)

QUESTION THREE

a) Contrast the Mendelow matrix and Ansoff’s matrix. (14 marks)

b) Briefly explain the characteristics of a valuable resource. (6 marks)

QUESTION FOUR

a) Ashley’s Jewellers has been facing intense competition from its competitors for a long time
and can no longer afford to lower its prices without incurring losses. Describe the options
that are available to the company in order to continue its operations as well as gain
competitive advantage over other players in the market (10 marks).

b) Chandler asserted that “structure follows strategy.” Analyse Chandler’s strategy-structure

relationship. (10 marks)

QUESTION FIVE

a) PD has traded very successfully for many years. It has built up its reputation for quality and
reliability as a result of supplying products, which are specifically designed to meet the
needs of its customers. However, profits have declined in the last three years with the
company facing cashflow challenges. It has therefore not been able to pay its suppliers and
staff on time and has also defaulted on bank loans. Using relevant examples, discuss the
options available to PD to get back to its feet. (10 marks)

b) Every organisation has a strategy. The method of developing that strategy will depend on a
range of factors from long term planning and risk analysis in the pharmaceuticals and oil
exploration to relatively short time scales due to the dynamics of the market such as
supermarkets and mobile technology. Strategy development may be either intended or
emergent. Discuss the emergent processes of strategy development. (10 marks)

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Page 3 of 3
Potential exam/ CAT questions

1. The analysis of the macro environment would be the same for organizations located in the same
country. Indicate your agreement or otherwise with the above statement and justify your
answer by providing illustrative examples for each component of the macro environment. (10
marks)
2. Using an industry of your choice, conduct a competitive forces analysis indicating the
attractiveness or otherwise of the industry with regard to each force. (10 marks)
3. Conduct a competitive forces analysis of the supermarket sector in Kenya. Indicate whether
each force is strong or weak and provide a conclusion on the attractiveness of the industry. (10
marks)
4. Using a product/ service/ institution of your choice (other than a hospital) evaluate:
a) The threshold resources and capabilities, clearly distinguishing between resources and
capabilities
b) The distinctive resources and capabilities, clearly distinguishing between resources and
capabilities
5. Based on your knowledge of Strathmore University, describe the inimitability aspect of any of its
schools/ products/ services.
6. Using relevant examples, describe the various factors that should be taken into account when
analyzing the value system of an organization
7. Describe how the concept of “dynamic capabilities” have been applied by an organization of
your choice
8. XYZ company has been involved in the photo processing business for a number of years. With
the inclusion of the camera app in smart phones, the company’s performance has been dismal
in the recent past. Management would therefore wish to enter the telecommunication business
which has proved to be profitable in the last few years. Using the power/ attention matrix,
identify the stakeholders that management should involve and map the stakeholders into the
various quadrants for the purpose of pursuing the said strategy.
9. Using the cultural web, analyse the culture of an organization that you are well familiar with
(other than Strathmore University)
10. Using an organisation of your choice as an example, analyse the influence of an organisation’s
history on its strategy. (10 marks)
11. For an industry or public service of your choice consider how the resources and capabilities that
have been the basis of competitive advantage (or best value in the public sector) have changed
over time. Why have these changes occurred? How did the relative strengths of different
companies or service providers change over this period? Why? Did dynamic capabilities play any
role? Which?
12. Undertake a VRIO analysis of the resources and capabilities of an organisation with which you
are familiar in order to identify which resources and capabilities meet the criteria of: (a) value,
(b) rarity, (c) inimitability and (d) organisational support
13. Undertake a value chain or system analysis for an organisation of your choice
14. Prepare a SWOT analysis for an organisation of your choice. Explain why you have chosen each
of the factors you have included in the analysis, in particular their relationship to other analyses
 you have undertaken. What are the conclusions you arrive at from your analysis and how would
these inform an evaluation of strategy.
15. Identify an industry with network effects. Consider what those might involve; why customers
prefer certain services, products and companies over others and why they may not easily switch
to other services and companies.
16. For an organisation of your choice, carry out a PESTEL analysis and identify key opportunities
and threats. For simplicity, choose an organisation that is focused on a limited number of
industries. For the same organisation as a model, construct four scenarios for the evolution of
its macro-environment (or main industry or sector). What implications are there for the
organisation’s strategy?
17. Show how the elements of strategic management differ in:
(a) a small or family business
(b) a large multinational business
(c) a non-profit organisation
18. Identify the key corporate social responsibility issues which are of major concern in industries or
an industry or public service of your choice. Compare the approach of two or more
organisations in that industry, and explain how this relates to their competitive standing.
19. Using the stakeholder mapping power/interests matrix, identify and map out the stakeholders
for an organisation of your choice in relation to:
a current strategies;
b different future strategies of your choice.
What are the implications of your analysis for the strategy of the organisation?
20. Using specific examples suggest how changes in corporate governance and in expectations
about corporate social responsibility may require organisations to deal differently with
environmental opportunities and threats or develop new capabilities.
21. undertake a historical analysis of the strategy development of an organisation of your choice
and consider the question: ‘Does history form strategy?
22. Identify elements of the cultural web for an organisation of your choice.
23. Identify an organisation that, in your view, is in one of the phases of strategic drift. How and
why did it get into this state?
24. Using the Ansoff axes, identify and explain corporate strategic directions for an organization of
your choice.
25. For any large multi-business corporation, explain how the corporate parent should best create
value for its component businesses (as portfolio manager, synergy manager or parental
developer: . Would all the businesses fit equally well?
26. For any large multi-business corporation, plot the business units on a portfolio matrix (e.g. the
BCG matrix:). Justify any assumptions about the relative positions of businesses on the relevant
axes of the matrix. What managerial conclusions do you draw from this analysis?
27. Using either Porter’s generic strategies or the Strategy Clock, identify examples of organisations
following strategies of differentiation, low cost or low price, and stuck-in-the-middle or hybrid.
How successful are these strategies?
28. You have been appointed personal assistant to the chief executive of a major manufacturing
firm, who has asked you to explain what is meant by ‘differentiation’ and why it is important.
Write a brief report addressing these questions.
29. Choose a company that you are familiar with. How do the business model components (value
creation, configuration and capture) apply to the company?
30. Drawing on game theory write a report for the chief executive of a business in a competitive
market explaining when and in what ways cooperation rather than direct competition might
make sense.
31. With reference to internationalization drivers, compare two countries you are familiar with and
analyse how strong each of the drivers is for increased international strategy.
32. Using the CAGE framework, assess the relative ‘distance’ of the USA, China, India and France for
a Kenyan company (or a company from a country of your choice).
33. Using the diverse modes of international market entry classify the entry mode of a company of
your choice into the international space.
34. Use the four international strategies of to classify the international strategy of a multinational
corporation with which you are familiar.
35. Write a short (about ten lines) statement to a chief executive who has asked you to advise
whether or not the company should develop through M&A. Write a similar statement to a chief
executive of a hospital who is considering possible mergers with other hospitals
36. Using the criteria of suitability, acceptability and feasibility undertake an evaluation of the
strategic options that might exist for an organisation of your choice.
37. Explain how the SAFE criteria might differ between public- and private-sector organisations.
38. Suggest why different approaches to strategy development might be appropriate in different
organisations such as a university, a fashion retailer, a diversified multinational
corporation and a high-technology company
39. Assume you were asked to advise a chief executive of a long-established, historic ally successful
multinational business with highly experienced managers that is experiencing declining profits
and falling market share. What might you expect to be the causes of the problems? What
processes of strategy development would you propose to address them?
40. Incremental patterns of strategy development are common in organisations, and managers see
advantages in this. However, there are also risks of strategic drift. Using the different views in
Sections‰13.2 and 13.3, suggest how such drift might be avoided.
41. Use a forcefield analysis to identify blockages and facilitators of change for an organization of
your choice. Identify what aspects of the changes suggested by this analysis can be managed as
part of a change programme and how.
42. Assess the key contextual dimensions of an organization of your choice and consider how they
should influence the design of a programme of strategic change.
43. What would be the key issues for the corporate parent of a diversified organization with a multi-
domestic international strategy wishing to change to a more related portfolio? Consider this in
terms of (a) the strategic capabilities that the parent might require, (b) the implications for
organising and controlling its subsidiaries, (c) the likely blockages to such change and (d) how
these might be overcome.
 STRATHMORE INSTITUTE OF MATHEMATICAL SCIENCES

BACHELOR OF SCIENCE IN ACTUARIAL, FINANCIAL ENGINEERING AND

FINANCIAL ECONOMICS (BBS Actuarial, BBS Financial Engineering, BBS Financial
Economics)

SPECIAL EXAMINATION

BSG 4203: BUSINESS STRATEGY AND COMPETITIVENESS

DATE: April 2022 Time: 2 Hrs

Instructions
1. This examination consists of FIVE questions.
2. Answer Question ONE (COMPULSORY) and any other TWO questions.

QUESTION ONE

Strategic management plays a significant role in the success of otherwise of an organisation.

a) Briefly explain the three elements of strategy. (6 marks)

2 marks for each element

1.The long term

Three horizons framework - organisations should think of their businesses or activities

in terms of different ‘horizons’, defined by time
• Current core activities - defending and extending emerging activities that should
provide new future sources of profit
• Possibilities – more open and for which outcomes are uncertain e.g. risky
research and development (R&D) projects, start-up ventures, test-market pilots
which generate profits a few years from the present
• Can be used to assess the sustainability of an organization’s strategy
2. Strategic direction – based on long term objectives e.g. profit maximization,
service delivery etc.
3. Organisation – stakeholder interest and views (management of relationships),
determination of external boundaries (what to include within the organization and
manage relationships outside)

b) Briefly explain at least three differences between forecasting and scenario analysis. (6
marks)

2 marks for each difference

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 • Scenario analysis typically used in conditions of high uncertainty
• alternatives not presented in terms of finely calculated probabilities – difference
between scenario analysis and alternative futures forecasting
• Focus of scenarios is more to learn than to predict – explore the way in which
environmental factors inter-relate and to help keep managers’ minds open to
alternatives possibilities in the future

c) Briefly describe at least three ways in which strategic lock-ins, relating to locking in
customers, can be created. (6 marks)

2 marks for each

i. First mover advantage – Being the first to enter a market

ii. Network effects - when one customer of a product or service has a positive effect
on the value of that product for other customers. This implies that the more
customers that use the product, the better for everyone in the customer network
e.g. value of online sales websites and platforms.
iii. Complementors - An organisation that enhances your business attractiveness to
customers or suppliers
• On the demand side, if customers value a product or service more when they
also have the other organisation’s product e.g. app providers and device such as
smartphones, ipads; (customers are more attracted to a smartphone if there are
many apps).

• On the supply side, another organisation is a complementor with respect to

suppliers if it is more attractive for a supplier to deliver when it also supplies
the other organization e.g. airlines and plane manufacturers, hardware shops
and suppliers etc.

d) Briefly describe at least three stances that an organisation can take with respect to
Corporate Social Responsibility (6 marks)

2 marks for each stance

Laissez faire Enlightened Forum for Shaper of society

self-interest stakeholder
interaction

Rationale Legal Sound Sustainability or triple Social and market

compliance: business bottom line – social change
make a profit, sense benefits,
pay taxes and environmental
provide jobs benefits, profits
Leadership Peripheral Supportive Champion Visionary

Management Middle- Systems to Board-level issue; Individual

management ensure good organisation-wide responsibility
responsibility practice monitoring throughout the
organisation

Mode Defensive to Reactive to Proactive Defining

outside outside
pressures pressures

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 Stakeholder Unilateral Interactive Partnership Multi-organisation
relationships alliances

e) Briefly discuss at least three reasons why a strategy developed by an organisation may
not be realised. (6 marks)

2 marks for each

• the environment changes and managers decide that the strategy, as planned, should
not be put into effect;
• the plans prove to be unworkable or unacceptable in practice; or
• the emergent strategy comes to dominate.
• Documented plan different from reality

QUESTION TWO

a) Describe the four types of historical relationships between past and present strategy. (10
marks)

2.5 marks for each type

i. Continuity - Very little change
ii. Selection – some elements from an organisation’s history selected for inclusion
in the organisation’s present strategy
iii. Rediscovery - that which rediscovers the old strategy often after the failure of
some newer strategy
iv. Rupture - that which rediscovers the old strategy often after the failure of some
newer strategy

b) Discuss at least four factors that determine the success or otherwise of adopting merger
and acquisition strategies (10 marks)
• Strategic fit - The target or the partner should suit the desired strategy
• Organisational fit - In particular, cultural differences are hard to manage,
especially where people resources are important
• Valuation
➢ Risk of ‘Winner’s curse’ in acquisitions - excessive valuation
➢ for alliances committing too many resources with too little return and too
little control
• Management of process
➢ Negotiation
➢ Right approach to integration
➢ Co-evolution and trust
➢ Termination/ divesture
Note: Necessity for courtship, co-evolution and sensitive termination frequently makes the
strategic alliance process a much more delicate one than simple acquisition

QUESTION THREE

a) Using relevant examples, describe at least four factors that can lead to the development
of new strategy in an organisation. (10 marks)

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 2.5 marks for each point

• New CEO
• External intervention
• Threat of change in ownership
• Performance gap
• Strategic inflection point

b) Application of CAGE framework in assessing attractiveness of the international market

(10 marks)

✓ measures the match between countries and companies

✓ emphasises the importance of cultural, administrative, geographical and economic
distance
• Cultural distance - differences in language, ethnicity, religion and social norms e.g.
similarity in consumer tastes, compatibilities in terms of managerial behaviours
• Administrative and political distance - distance is in terms of incompatible
administrative, political or legal traditions. Colonial ties can diminish differences,
Institutional weaknesses or voids, e.g. slow or corrupt administration – can open up
distance between countries
• Geographical distance - not just a matter of the kilometres separating one country from
another, but other geographical characteristics of the country such as size, sea-access
and the quality of communications infrastructure. Transport infrastructure can shrink or
exaggerate physical distance.
• Economic distance - refers particularly to wealth distances – disposable incomes. There
are huge disparities in wealth internationally

QUESTION FOUR

a) Describe how the following can be used as tools for analysing the resources and
capabilities of an organisation (10 marks)
i. VRIO analysis
ii. Value system analysis
iii. Value chain analysis

4 marks for VRIO analysis, 3 marks for value chain and 3 marks for value system

VRIO analysis
helps to evaluate if, how and to what extent an organisation or company has resources
and capabilities that are (i) valuable, (ii) rare, (iii) inimitable and (iv) supported by the
organization

can be done:
for different functions in an organization e.g. technology, manufacturing, purchasing,
marketing and sales, etc.
for individual resources and capabilities
for different sections of the value chain or system

Value chain

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 Value chain - describes the categories of activities within an organisation which,
together, create a product or service.
• As a generic description of activities
• VRIO analysis of each activity
• Analysis of value and cost of activities

Value system
Value system – the set of inter-organisational links and relationships that are necessary
to create a product or service.
• Identifying activities that can be outsourced
• Cost/price structures of activities
• Profit pools
• Partnering

b) Discuss at least four aspects that can be used as the basis of selecting the strategies to be
adopted by an organisation. (10 marks)

2.5 marks for each

• Suitability
➢ Does a proposed strategy address the key opportunities and threats an
organisation faces?
• Acceptability
➢ Does a proposed strategy meet the expectations of stakeholders?
✓ Is the level of risk acceptable?
✓ Is the likely return acceptable?
✓ Will stakeholder reactions be positive?
• Feasibility
➢ Would a proposed strategy work in practice?
✓ Can the strategy be financed?
✓ Do people and their skills exist or can they be obtained?
✓ Can the required resources be obtained and integrated?
• Evaluation
✓ Which of the strategies that are suitable, acceptable and feasible
satisfies best these three requirements?

QUESTION FIVE

a) Using an organisation of your choice, discuss the elements that characterise a revolution
type of strategic change in an organisation (10 marks)

1 mark for definition of revolution, 3 marks for each characteristic

Revolution - change that requires rapid and major strategic and cultural change
• Clear strategic direction – and decisive action
• Top management changes - replacement of the CEO, senior executives or changes in
board membership
• Culture change - identify those aspects of culture that can be built upon and
developed and those that have to be changed

c) Organising plays a critical role in the ability of an organisation to implement strategy.

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 i. Describe the difference between strategic agility and strategic resilience of an
organisation with respect to organisational change. (4 marks)

2 marks for each

Agile organisations anticipate environmental shifts and act on them as they emerge
Resilient organisations are good at rebounding from significant setbacks.

ii. Discuss at least three types of systems within an organisation (6 marks)

2 marks for each type

• Planning systems - govern the allocation of resources and monitor their utilization,
focus on the direct control of inputs
• Cultural systems - aim to standardise norms of behavior within an organisation in
line with particular objectives, Control exerted on the input of employee.
• Performance targeting systems - focus on the outputs of an organisation (or part of
an organisation), such as product quality, revenues or profits. – often referred to as
key performance indicators (KPIs)
• Markets (Internal) systems - involve some formalised system of ‘contracting’ for
resources or inputs from other parts of an organisation and for supplying outputs
to other parts of an organization, Control focuses on outputs e.g. revenues

Page 6 of 6
 STRATHMORE INSTITUTE OF MATHEMATICAL SCIENCES

BACHELOR OF SCIENCE IN ACTUARIAL, FINANCIAL ENGINEERING AND

FINANCIAL ECONOMICS
END OF SEMESTER EXAMINATION

BSG 4207: BUSINESS STRATEGY AND COMPETITIVENESS

DATE: 13th January 2022 Time: 2 Hours

Instructions
1. This examination consists of FIVE questions.
2. Answer Question ONE (COMPULSORY) and any other TWO questions.

QUESTION ONE

a) “The Covid -19 pandemic has rendered the strategic plans drawn by most business
organisations irrelevant. It is therefore pointless for organisations to write strategic plans
in such a volatile, uncertain, complex and ambiguous environment.”
(i) State your agreement or disagreement with the above statement. (2 marks)
(ii) Provide at least three justifications of your answer by giving relevant examples
based an organisation (s of your choice. (6 marks)

b) Briefly explain the four layers of culture as proposed by Edgar Schein. (8 marks)

c) Briefly explain the McKinsey 7-Ss framework. (14 marks)

QUESTION TWO

a) Locational advantages could favour the internationalisation strategy adopted by an

organisation. Compare and contrast locational advantages as stipulated in the Porters
Diamond and locational advantages as stipulated by the international value system. (10
marks)

b) Strategy can be developed by either deliberate or emergent processes. Using relevant

examples, describe the emergent strategy development processes. (10 marks)

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QUESTION THREE

a) Using relevant examples, describe the categorisation of a corporate’s business based on

the dimensions of “feel” and “benefit”. (10 marks)

b) Using illustrative examples, discuss at least three instances when diversification is an

effective strategy for growth. (10 marks)

QUESTION FOUR

a) An organisation can get competitive advantage through acquisition of resources and

capabilities that are difficult and costly to imitate. Using relevant examples, discuss at
least three sources of inimitability for resources and capabilities. (10 marks)

b) Turn-around strategic change involves rapid change involving a good deal of upheaval
in an organisation, but which still does not fundamentally change the culture or the
business model. Describe the five elements / areas of focus of turn-around strategies.
(10 marks)

QUESTION FIVE

a) Governance systems should be considered in strategy formulation of organisations.

Explain at least three themes that are relevant in relation to ensuring the efficiency and
effectiveness of Boards of Directors. (10 marks)

b) Value system analysis is important in the identification of an organisation’s resources and

capabilities. Discuss three considerations of value system analysis in strategy
development. (10 marks)

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 STRATHMORE SCHOOL OF MATHEMATICAL SCIENCES
BBS Financial Economics; BBS Financial Engineering; BBS Actuarial

CAT 2

BSG 4203: BUSINESS STRATEGY AND COMPETITIVENESS

DATE: 9 December 2021 Time: 1.5 Hours

Instructions

Attempt all questions

QUESTION ONE

Write a brief report to a chief executive who has asked you to advise whether or not the
company should develop through mergers and acquisitions. (10 marks)

2 marks for definitions:

Acquisition is achieved by purchasing a majority of shares in a target company.

A merger is the combination of two previously separate organisations in order to form a new
company.

2 marks for each of the points below:

Choosing between acquisitions, alliances and organic development based upon three key
factors:
1) Urgency. Acquisitions are a rapid method for pursuing a strategy. Alliances too may
accelerate strategy delivery by accessing additional resources or skills, though usually
less quickly than a simple acquisition. Typically organic development (DIY) is slowest:
everything has to be made from scratch.

2) Uncertainty. It is often better to choose the alliance route where there is high
uncertainty in terms of the markets or technologies involved. On the upside, if the
markets or technologies turn out to be a success, it might be possible to turn the alliance
into a full acquisition, especially if a buy option has been included in the initial alliance
contract. If the venture turns out a failure, then at least the loss is shared with the
alliance partner. Acquisitions may also be resold if they fail but often at a much lower
price than the original purchase. On the other hand, a failed organic development might
have to be written off entirely, with no sale value, because the business unit involved has
never been on the market beforehand.

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 3) Type of resources and capabilities. Acquisitions work best when the desired resources
or capabilities are ‘hard’, for example physical investments in manufacturing facilities.
Hard resources such as factories are easier to put a value on in the bidding process
than ‘soft’ resources such as people or brands. Hard resources are also typically easier
to control post-acquisition than people and skills. If Anbang’s bid for Starwood is
entirely about real estate acquisition, then cultural difficulties are likely to be minimal.
However greater ‘soft’ integration might pose the risk of significant cultural problems.

QUESTION TWO

A colleague in your office is arguing that the strategic clock and the three generic strategies are
one and the same thing. Based on your understanding, the two are actually different. Write a
report to describe what the strategic clock is and how it differs from the three generis strategies.
(10 marks)

3 marks for explanation of the generic strategies, 1 mark for definition of strategy clock, 4
marks for explanation of zones, 2 mark for comparison of the clock and generic strategies

Generic strategies

1. Cost leadership - lower costs than competitors e.g. using huge economies of scale and
extremely tight cost discipline
2. Differentiation - products or services that are differentiated from competitors’ products or
services in ways that are so valued by customers that it can charge higher prices that cover
the additional costs of the differentiation e.g. offering a range of quality, fresh and organic
products with relatively higher prices
3. Focus - scope of customers that the business chooses to serve. Businesses can choose to
focus on narrow/ broad customer segments
➢ Differentiation focus - higher price for distinctive products
➢ Cost focus - reduces costs compared to generalist competitors with broader product
ranges

Strategic clock

✓ a tool that allows for a dynamic approach for examining alternative generic strategies and
gives more scope for hybrid strategies
Distinctive features of strategy clock
1. focused on prices to customers rather than costs to the organization
2. circular design of the clock allows for more continuous choices than a sharp contrast
between cost leadership and differentiation
✓ Based on perceived product/ service benefits vs price

The Strategy Clock identifies three zones of feasible strategies, and one zone likely to lead to
ultimate failure:
1. Differentiation (zone 1): contains a range of feasible strategies for building on high
perceptions of product or service benefits among customers
2. Low-price (zone 2): allows for different combinations of low prices and low perceived
value

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 3. Hybrid strategy (zone 3): involve both lower prices than differentiation strategies and
higher benefits than low-price strategies
4. Non-competitive strategies (zone 4). occupies a zone of unfeasible economics, with low
benefits and high prices. Unless businesses have exceptional strategic lock-in, customers
will quickly reject these combinations. Typically these strategies lead to failure

• The Strategy Clock’s focus on price, and its scope for incremental adjustments in strategy,
provides a more dynamic view on strategy than Porter’s generic strategies e.g. an
organisation might start with a low-price strategy to gain market share, later shift to a higher-
priced differentiation with premium strategy in order to reap profits, and then move back to a
hybrid strategy in order to defend itself from new entrants.

QUESTION THREE

Strategic & Co. is a conglomerate that comprises five strategic business units (SBUs), all
operating as subsidiary companies. Information relating to each SBU (and the market leader or
nearest competitor) is given in the following table:

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 Strategic’s Market Nearest Market growth
% Leader Competitor Expected by
% % Strategic & Co.
Cher the Wigg making manufacturer 6 35 Small
(Declining profitability)
Present wrapping service. 1 8 Nil
(Long established, faces strong
competition. Turnover and
profitability over last three years
have been stable but are expected to
decline as competition strengthens)
Gourment food manufacturer 40 10 Slowly declining
producing organic, no-GM foods
exclusively for household
consumption.
(Long established with little new
investment. High levels of turnover
and profitability which are being
sustained)

Interior design contracting company 0.025 0.5 Historically high

(Established three years ago. but now forecast
Continuous capital injections from to slow down
Group over that period. Currently not
making any profit)
IT solutions for dummies. Software 25 18 Rapid
development and supply company
(Acquired two years ago. Market
share expected to increase over next
two years. Sustained investment
from the group but profitability so
far low)

Required
Evaluate Strategic & Co’s overall competitive position by applying the Boston Consulting
Group Growth/Share matrix analysis to its portfolio of SBUs. .In particular, define the
classification of each of the SBUs and advise on the strategic decision that should be taken for
each of the SBUs based on the classification. (15 marks)

2 marks each for correct classification of the SBUs and correct explanation/ justification, 1
mark for advice on strategic decision to be taken for each

Cher the Wigg making company – Dog

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Present Wrapping service – Dog
Gourmet Food manufacturer – Cash cow, maybe dropping from Star. Largely depends upon
the current growth rate
Interior Design Company – Question mark
IT solutions for dummies – Star

1 Representations in all sectors of the matrix with two dogs present. May need to question what
to do with the question mark and the dogs. Dogs may need to be divested. Question mark needs
management attention to stop it becoming a dog.
2 Gourmet food manufacturer (cash cow) will generate cash flows that can be used to fund the
development of the star software company. Little need for strategic investment will see the cash
surpluses arising.
3 Star will need investing in and penetration strategies will be appropriate. Branding strategies
may be initiated with a view to future defence when star becomes the cash cow. Current cash
cow will need defending.
4 SBUs will each need different business strategies as positions vary. Levels of competition and
demand sophistication will vary across the SBU market places and the research and
information systems will become even more important.

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 STRATHMORE INSTITUTE OF MATHEMATICAL SCIENCES

BACHELOR OF SCIENCE IN ACTUARIAL, FINANCIAL ENGINEERING AND

FINANCIAL ECONOMICS (BBS Actuarial, BBS Financial Engineering, BBS Financial
Economics)

END OF SEMESTER EXAMINATION

BSG 4207: BUSINESS STRATEGY AND COMPETITIVENESS

DATE: December 2022 Time: 2 Hrs

Instructions
1. This examination consists of FIVE questions.
2. Answer Question ONE (COMPULSORY) and any other TWO questions.

QUESTION ONE

Strategic management plays a significant role in the success of otherwise of an organisation.

a) Briefly discuss at least three reasons why a strategy developed by an organisation may
not be realised. (6 marks)

2 marks for each

• the environment changes and managers decide that the strategy, as planned, should
not be put into effect;
• the plans prove to be unworkable or unacceptable in practice; or
• the emergent strategy comes to dominate.
• Documented plan different from reality

b) Briefly explain the three elements of strategy. (6 marks)

2 marks for each element

1.The long term

Three horizons framework - organisations should think of their businesses or activities

in terms of different ‘horizons’, defined by time
• Current core activities - defending and extending emerging activities that should
provide new future sources of profit
• Possibilities – more open and for which outcomes are uncertain e.g. risky
research and development (R&D) projects, start-up ventures, test-market pilots
which generate profits a few years from the present

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 •Can be used to assess the sustainability of an organization’s strategy
2. Strategic direction – based on long term objectives e.g. profit maximization,
service delivery etc.
3. Organisation – stakeholder interest and views (management of relationships),
determination of external boundaries (what to include within the organization and
manage relationships outside)

c) Briefly explain at least three differences between forecasting and scenario analysis. (6
marks)

2 marks for each difference

• Scenario analysis typically used in conditions of high uncertainty
• alternatives not presented in terms of finely calculated probabilities – difference
between scenario analysis and alternative futures forecasting
• Focus of scenarios is more to learn than to predict – explore the way in which
environmental factors inter-relate and to help keep managers’ minds open to
alternatives possibilities in the future

d) Briefly describe at least three ways in which strategic lock-ins, relating to locking in
customers, can be created. (6 marks)

2 marks for each

i. First mover advantage – Being the first to enter a market

ii. Network effects - when one customer of a product or service has a positive effect
on the value of that product for other customers. This implies that the more
customers that use the product, the better for everyone in the customer network
e.g. value of online sales websites and platforms.
iii. Complementors - An organisation that enhances your business attractiveness to
customers or suppliers
• On the demand side, if customers value a product or service more when they
also have the other organisation’s product e.g. app providers and device such as
smartphones, ipads; (customers are more attracted to a smartphone if there are
many apps).

• On the supply side, another organisation is a complementor with respect to

suppliers if it is more attractive for a supplier to deliver when it also supplies
the other organization e.g. airlines and plane manufacturers, hardware shops
and suppliers etc.

e) Briefly describe at least three stances that an organisation can take with respect to
Corporate Social Responsibility (6 marks)

2 marks for each stance

Laissez faire Enlightened Forum for Shaper of society

self-interest stakeholder
interaction

Rationale Legal Sound Sustainability or triple Social and market

compliance: business bottom line – social change
sense benefits,

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 make a profit, environmental
pay taxes and benefits, profits
provide jobs

Leadership Peripheral Supportive Champion Visionary

Management Middle- Systems to Board-level issue; Individual

management ensure good organisation-wide responsibility
responsibility practice monitoring throughout the
organisation

Mode Defensive to Reactive to Proactive Defining

outside outside
pressures pressures
Stakeholder Unilateral Interactive Partnership Multi-organisation
relationships alliances

QUESTION TWO

a) Discuss at least four factors that determine the success or otherwise of adopting merger
and acquisition strategies (10 marks)
• Strategic fit - The target or the partner should suit the desired strategy
• Organisational fit - In particular, cultural differences are hard to manage,
especially where people resources are important
• Valuation
➢ Risk of ‘Winner’s curse’ in acquisitions - excessive valuation
➢ for alliances committing too many resources with too little return and too
little control
• Management of process
➢ Negotiation
➢ Right approach to integration
➢ Co-evolution and trust
➢ Termination/ divesture
Note: Necessity for courtship, co-evolution and sensitive termination frequently makes the
strategic alliance process a much more delicate one than simple acquisition

b) Describe the four types of historical relationships between past and present strategy. (10
marks)

2.5 marks for each type

i. Continuity - Very little change
ii. Selection – some elements from an organisation’s history selected for inclusion
in the organisation’s present strategy
iii. Rediscovery - that which rediscovers the old strategy often after the failure of
some newer strategy
iv. Rupture - that which rediscovers the old strategy often after the failure of some
newer strategy

QUESTION THREE

a) Organising plays a critical role in the ability of an organisation to implement strategy.

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 i. Describe the difference between strategic agility and strategic resilience of an
organisation with respect to organisational change. (4 marks)

2 marks for each

Agile organisations anticipate environmental shifts and act on them as they emerge
Resilient organisations are good at rebounding from significant setbacks.

ii. Discuss at least three types of systems within an organisation (6 marks)

2 marks for each type

• Planning systems - govern the allocation of resources and monitor their utilization,
focus on the direct control of inputs
• Cultural systems - aim to standardise norms of behavior within an organisation in
line with particular objectives, Control exerted on the input of employee.
• Performance targeting systems - focus on the outputs of an organisation (or part of
an organisation), such as product quality, revenues or profits. – often referred to as
key performance indicators (KPIs)
• Markets (Internal) systems - involve some formalised system of ‘contracting’ for
resources or inputs from other parts of an organisation and for supplying outputs
to other parts of an organization, Control focuses on outputs e.g. revenues

b) Application of CAGE framework in assessing attractiveness of the international market

(10 marks)

✓ measures the match between countries and companies

✓ emphasises the importance of cultural, administrative, geographical and economic
distance
• Cultural distance - differences in language, ethnicity, religion and social norms e.g.
similarity in consumer tastes, compatibilities in terms of managerial behaviours
• Administrative and political distance - distance is in terms of incompatible
administrative, political or legal traditions. Colonial ties can diminish differences,
Institutional weaknesses or voids, e.g. slow or corrupt administration – can open up
distance between countries
• Geographical distance - not just a matter of the kilometres separating one country from
another, but other geographical characteristics of the country such as size, sea-access
and the quality of communications infrastructure. Transport infrastructure can shrink or
exaggerate physical distance.
• Economic distance - refers particularly to wealth distances – disposable incomes. There
are huge disparities in wealth internationally

QUESTION FOUR

a) Discuss at least four aspects that can be used as the basis of selecting the strategies to be
adopted by an organisation. (10 marks)

2.5 marks for each

• Suitability
➢ Does a proposed strategy address the key opportunities and threats an
organisation faces?
• Acceptability

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 ➢ Does a proposed strategy meet the expectations of stakeholders?
✓ Is the level of risk acceptable?
✓ Is the likely return acceptable?
✓ Will stakeholder reactions be positive?
• Feasibility
➢ Would a proposed strategy work in practice?
✓ Can the strategy be financed?
✓ Do people and their skills exist or can they be obtained?
✓ Can the required resources be obtained and integrated?
• Evaluation
✓ Which of the strategies that are suitable, acceptable and feasible
satisfies best these three requirements?

b) Describe how the following can be used as tools for analysing the resources and
capabilities of an organisation (10 marks)
i. VRIO analysis
ii. Value system analysis
iii. Value chain analysis

4 marks for VRIO analysis, 3 marks for value chain and 3 marks for value system

VRIO analysis
helps to evaluate if, how and to what extent an organisation or company has resources
and capabilities that are (i) valuable, (ii) rare, (iii) inimitable and (iv) supported by the
organization

can be done:
for different functions in an organization e.g. technology, manufacturing, purchasing,
marketing and sales, etc.
for individual resources and capabilities
for different sections of the value chain or system

Value chain
Value chain - describes the categories of activities within an organisation which,
together, create a product or service.
• As a generic description of activities
• VRIO analysis of each activity
• Analysis of value and cost of activities

Value system
Value system – the set of inter-organisational links and relationships that are necessary
to create a product or service.
• Identifying activities that can be outsourced
• Cost/price structures of activities
• Profit pools
• Partnering

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QUESTION FIVE

a) Using relevant examples, describe how the international value system can be source of
locational advantages for a firm that intends to go international. (10 marks)

1 mark for definition on international value system, 2 marks for each of sources, 1
mark for an example in each of the sources

Different locational advantages can be identified:

• Cost advantages - labour costs, transportation and communications costs and
taxation and investment incentives.
• Unique local capabilities - Internationalisation, is increasingly not only about
exploiting an organisation’s existing capabilities in new national markets, but
about developing and drawing on capabilities found elsewhere in the world
• National market characteristics - enable organisations to develop differentiated
product offerings aimed at different market segments e.g. “Made in …”

b) Using an organisation of your choice, discuss the elements that characterise a revolution
type of strategic change in an organisation (10 marks)

1 mark for definition of revolution, 3 marks for each characteristic

Revolution - change that requires rapid and major strategic and cultural change
• Clear strategic direction – and decisive action
• Top management changes - replacement of the CEO, senior executives or changes in
board membership
• Culture change - identify those aspects of culture that can be built upon and
developed and those that have to be changed

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