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Examination Paper of Business Communication
IIBM Institute of Business Management
• This section consists of multiple choices and Short Notes type questions.
• Answer all the questions.
• Part one questions carry 1 mark each & Part two questions carry 5 marks each.
IIBM Institute of Business Management
Subject Code-B109
Examination Paper Business Communication
MM.100
Section A: Objective Type & Short Questions (30 marks)
Part one:
Multiple choice:
I.The most important goal of business communication is_________. (1)
a) favorable relationship between sender and receiver
b) organizational goodwill
c) receiver response
d) receiver understanding
II. Down ward communication flows from_________ to_________. (1)
e) Upper to lower
f) Lower to upper
g) Horizontal
h) Diagonal
III. Horizontal communication takes place
between_________. (1)
a. superior to subordinate
b. subordinate to superior
c. employees with same status
d. none of these
IV. The study of communication through touch is_________. (1)
a. chronemics
b. haptics
c. proxemics
d. semantic
V._____________ channel of communication is known as grapevine (1)
a. Formal
b. Informal
c. Horizontal
d. Vertical
VI. The following is (are) the most effective ways of communication. (1) a. Verbal b. Non verbal c. Written d. All of the above
Examination Paper of Business Communication
IIBM Institute of Business Management
END OF SECTION A
• This section consists of Caselets.
• Answer all the questions.
• Each Caselet carries 20marks.
• Detailed information should form the part of your answer (Word limit 150 to 200 words).
VII. The handshake that conveys confidence
is (1)
a. Limp
b. Firm
c. Loose
d. Double
VIII. ________ of the letter consists of main
message. (1)
a. Heading
b. Body
c. Greeting
d. Closing
IX. Body of a letter is divided into ________
parts. (1)
a. 1
b. 2
c. 3
d. 4
X. X. A persuasive message will fail if_____ (1)
a. it does not focus on what is in it for
the reader
b. it only lists facts
c. it moves too slowly
d. all of the above
Part Two:
1. Brief Grapevine communication? (5)
2. List the 7 C’s of Communication? (5)
3. Describe the various barriers of communication? (5)
4. Write the negotiation process. (5)
Section B: Caselets (40 marks)
Caselet 1
Barry and Communication Barriers Effective Communication as a Motivator One common
complaint employees voice about supervisors is inconsistent messages – meaning one
supervisor tells them one thing and another tells them something different. Imagine you are the
supervisor/manager for each of the employees described below. As you read their case, give
Examination Paper of Business Communication
IIBM Institute of Business Management
consideration to how you might help communicate with the employee to remedy the conflict. Answer the critical thinking questions at the end of the case then compare your answers to the Notes to Supplement Answers section. Barry is a 27-year old who is a foodservice manager at a casual dining restaurant. Barry is responsible for supervising and managing all employees in the back of the house. Employees working in the back of the house range in age from 16 years old to 55 years old. In addition, the employees come from diverse cultural and ethnic backgrounds. For many, English is not their primary language. Barry is Serv Safe® certified and tries his best to keep up with food safety issues in the kitchen but he admits it’s not easy. Employees receive “on the job training” about food safety basics (for example, appropriate hygiene and hand washing, time/temperature, and cleaning and sanitizing). But with high turnover of employees, training is often rushed and some new employees are put right into the job without training if it is a busy day. Eventually, most employees get some kind of food safety training. The owners of the restaurant are supportive of Barry in his food safety efforts because they know if a food safety outbreak were ever linked to their restaurant; it would likely put them out of business. Still, the owners note there are additional costs for training and making sure food is handled safely. One day Barry comes to work and is rather upset even before he steps into the restaurant. Things haven’t been going well at home and he was lucky to rummage through some of the dirty laundry and find a relatively clean outfit to wear for work. He admits he needs a haircut and a good hand scrubbing, especially after working on his car last evening. When he walks into the kitchen he notices several trays of uncooked meat sitting out in the kitchen area. It appears these have been sitting at room temperature for quite some time. Barry is frustrated and doesn’t know what to do. He feels like he is beating his head against a brick wall when it comes to getting employees to practice food safety. Barry has taken many efforts to get employees to be safe in how they handle food. He has huge signs posted all over the kitchen with these words: KEEP HOT FOOD HOT AND COLD FOOD COLD and WASH YOUR HANDS ALWAYS AND OFTEN. All employees are given a thermometer when they start so that they can temp food. Hand sinks, soap, and paper towels are available for employees so that they are encouraged to wash their hands frequently.
Questions
1. What are the communication challenges and barriers Barry faces? (10)
2. What solutions might Barry consider in addressing each of these challenges and barriers? (10)
Caselet 2
Mr. Dutta, newly appointed president of century Airlines, knew the company’s survival depended on customer service, which in turn depended on motivated employees. So he created the Century Spirit program to build team spirit by encouraging employee participation, individual initiative, and open communication. Among the program’s early successes was newspaper started by a group of flight attendants. The plane truth published information about benefits and work conditions as well as feature stories and humorous articles. It quickly became popular not only with flight attendant but with pilot, machinists, and baggage handlers.
As time went on, though, the plane truth began to run articles critical of the company. When management cut back worker’s hours, the, newspaper questioned what sacrifices the executive were making. When the technical services department releases figures showing long turnaround times, the paper questioned the machinist’s work ethic. Worried that customer might see the newspaper; Mr. Dutta wanted to cancel it. The president of the flight attendants union also wanted to see it was stirring up trouble with the machinists.
Examination Paper of Business Communication
IIBM Institute of Business Management
• This section consists of Applied Theory Questions.
• Answer all the questions.
• Each question carries 15marks.
• Detailed information should form the part of your answer (Word limit 200 to 250 words).
END OF SECTION C
Ms. Rachel, Century’s human resource director, was asked to stop the publication. But she hesitated. She knew the employee morale was on the brink, but she did not know whether the newspaper was venting worker’s frustrations and reinforcing team spirit or stirring up old animosities and bringing the whole company down. Was it creating more tension than unity or vice-versa?
Questions
1. What Communication issues are involved at Century Airlines? (10)
2. What Communication Channels are being Utilized (10)
Section C: Applied Theory (30 marks)
1. Explain the various non verbal communications with an example in business
Scenario? (15)
2. Delineate the types of parts of business report writing? (15)
S-2-010619
Examination Paper of Management Information Systems
IIBM Institute of Business Management
IIBM Institute of Business Management
SubjectCode-B110
Examination Paper
Management Information Systems
MM.100
Section A: Objective Type & Short Questions (30 marks)
Part one:
Multiple choice:
I.A person machine-system and a highly integrated grouping of information-processing functions designed to provide management with a comprehensive picture of specific operation is called (1)
a) DSSB
b) MISC
c) IISD
II. Which one of the following is not an important characteristic of useful and effective information? (1)
a) Accuracy
b) Timelines
c) Completeness
d) Economy
d) All of the above
III. The most important reason for failure of MIS is (1)
a) Use of improper tools for design
b) Noninvolvement of end-user
c) Improper specification
d) None of the above
IV. Top level Managers use (1)
a) Strategic information
b) Tactical information
c) Operational information
d) None of these
V.System is an important factor of MIS. There are various types of systems. Which one of the following is not a system? (1)
a) Physical system
b) Integrated system
c) Open system
d) Open system
VI. Which one of the following is not an approach for development of MIS? (1) a) Hierarchical approach b) Integrative approach c) Modular approach d) Elective approach
This section consists of multiple choices and Short Notes type questions.
Answer all the questions.
Part one questions carry 1 mark each & Part two questions carry 5 marks each.
Examination Paper of Management Information Systems
IIBM Institute of Business Management
VII. Management is linked to information by (1)
a. Decisions
b. Data
c. Both [A] And [B]
d. None Of The Above
VIII. Which pattern reflects a pure executive form of management?
(1)
a. Functional
b. Line
c. Line and Staff
d. Committee
IX. The term financial engineering is related to (1)
a) Cost of production
b) Financial restructuring
c) Product planning
d) Capital issue
X. The goal of financial management is to (1)
a) Maximize the wealth of preference share holders
b) Maximize the wealth of debenture holders
c) Maximize the wealth of equity share holders
d) All of the above
Part Two:
1. What is purpose of information system from a business perspective? (5)
2. What are Enterprise System? How do they benefit businesses? (5)
3. Differentiate DSS from MIS. (5)
4. What do you mean by Data visualizations? (5)
Section B: Caselets (40 marks)
END OF SECTION A
This section consists of Caselets.
Answer all the questions.
Each Caselet carries 20marks.
Detailed information should form the part of your answer (Word limit 150 to 200 words).
IIBM Institute of Business Management
Examination Paper of Management Information System
Caselet -1
A waiter takes an order at a table, and then enters it online via one of the six terminals located in the restaurant dining room. The order is routed to a printer in the appropriate preparation area: the cold item printer if it is a salad, the hot-item printer if it is a hot sandwich or the bar printer if it is a drink. A customer’s meal check-listing (bill) the items ordered and the respective prices are automatically generated. This ordering system eliminates the old three-carbon-copy guest check system as well as any problems caused by a waiter’s handwriting. When the kitchen runs out of a food item, the cooks send out an ‘out of stock’ message, which will be displayed on the dining room terminals when waiters try to order that item. This gives the waiters faster feedback, enabling them to give better service to the customers. Other system features aid management in the planning and control of their restaurant business. The system provides up-to-the-minute information on the food items ordered and breaks out percentages showing sales of each item versus total sales. This helps management plan menus according to customers’ tastes. The system also compares the weekly sales totals versus food costs, allowing planning for tighter cost controls. In addition, whenever an order is voided, the reasons for the void are keyed in. This may help later in management decisions, especially if the voids consistently related to food or service. Acceptance of the system by the users is exceptionally high since the waiters and waitresses were involved in the selection and design process. All potential users were asked to give their impressions and ideas about the various systems available before one was chosen.
Questions
1. What would make the system a more complete MIS rather than just doing transaction processing? (10)
2. Explain the probable effects that making the system more formal would have on the customers and the management? (10)
Caselet 2
The Company is considered to be a leader in the design and production of industrial and commercial air-conditioning equipment. While most of the products were standard items, a considerable number involving large sales volume were specially designed for installation in big office buildings and factories. Besides being an innovator in product design and having an exceptionally good customer service department, the company is well known for its high-quality products and its ability to satisfy the customer requirements promptly.
Because of its rapid growth, the company had to be careful with its cash requirements, especially for accounts receivable and for inventories. For many years, the company had kept inventories under close control at a level equal to 1.7 times the monthly sales, or a turnover of nearly 6 times per year. But, all of a sudden, inventories soared to triple monthly sales, and the company found itself with Rs.30 crores of inventories above a normal level. Calculating a cost of carrying inventory at 30 percent of the value of
IIBM Institute of Business Management
Examination Paper of Management Information System
inventories (including the cost of money, storage and handling, and obsolescence), it was estimated that this excess inventory was costing the company Rs.9 crores per year in profits before taxes. In addition, it forced the to call on its bank for more loans than had company been expected.
Mr. Dcepak Mehra, president of Connair, was understandably worried and incensed when this matter came to his attention. He was told that the primary reasons for this rise in inventory were excessive buying of raw materials in advance because of anticipated shortages and the failure of a new computer software, with the result the people in the production and purchasing departments were not having complete information as to what was happening to inventory for several months.
Mr. Mehra, taking the stand that no company should let something like this surplus inventory occur without advance notice and that no manager can be expected to control a business on the basis of history, instructed his vice-president for finance to come up with a program to get better control of inventories in the future.
Questions for Discussion:
1. What do you find wrong with Connair's controls? (10)
2. Are there any other techniques or approaches to control that you would suggest? (10)
Section C: Applied Theory (30 marks)
1. List and describe the information systems serving each of the major functional areas of business? (15)
2. What are the characteristics of MIS? How MIS do differs from TPS? (15)
S-2-010619
This section consists of Applied Theory Questions.
Answer all the questions.
Each question carries 15marks.
Detailed information should form the part of your answer (Word limit 200 to 250 words).
END OF SECTION C
END OF SECTION B
Examination Paper of Production and Operations Management
IIBM Institute of Business Management
IIBM Institute of Business Management
Subject Code-B107 Examination Paper
Production and Operations Management
MM.100
Section A: Objective Type & Short Questions (30 marks)
Part one:
Multiple choice:
I.The purpose of the transportation approach for locational analysis is to minimize (1)
a) Total costs
b) Total shipping costs
c) Total variable costs
d) Total fixed costs
II. Which of the following would not generally be a motive for a firm to hold inventories? To (1)
e) Take advantage of quantity discounts
f) Minimize holding costs
g) Reduce stock out risks
h) Decouple production from distribution
III. Which of the following are assignable cause? (1)
a. Large variations in hardness of material
b. Tool wear
c. Errors in setting
d. All of the above
IV. Like roots of a tree, ________of organization is hidden from direct view.
(1)
a. Goodwill
b. Core competence
c. Higher management
d. Capital investment
This section consists of multiple choices and Short Notes type questions.
Answer all the questions.
Part one questions carry 1 mark each & Part two questions carry 5 marks each.
Examination Paper of Production and Operations Management
IIBM Institute of Business Management
V.Inadequate production capacity ultimately leads to (1)
a. Poor quality
b. Poor Customer Service
c. Poor inventory control
d. All of the above
VI. Limitations of Traditional cost accounting are (1) a. Assumes factory as an isolated entity b. It measures only the cost of producing c. Both (A) and (B) d. None of the above
VII. Business is rated on which dimensions
(1)
a. Market attractiveness
b. Business strength
c. Both (A) and (B)
d. None of the above
VIII. How does ‘structure’ reduce external uncertainty arising out of human behavior (1)
a. Research and planning
b. Forecasting
c. Both (A) and (B)
d. None of the above
IX. Objective of Work Study is to improve _______ (1)
a. Cycle time
b. Productivity
c. Production
d. All of the above
X. Which of the following are activities of corrective maintenance? (1)
a. Overhauling
b. Emergency repairs
c. Modifications and improvements
d. All of the above
Part Two:
1. What are the dimensions of quality? (5)
2. What is Quality? (5)
3. What is Materials Planning? (5)
4. Need for Inventory Management - Why do Companies hold inventories? (5)
Section B: Caselets (40 marks)
END OF SECTION A
This section consists of Caselets.
Answer all the questions.
Each Caselet carries 20marks.
Detailed information should form the part of your answer (Word limit 150 to 200 words).
IIBM Institute of Business Management
Examination Paper of Production and Operations Management
Caselet 1
The pizza business did well and by 1965, Thomas was able to open two more stores in the town -Pizza King and Pizza from the Prop. Within a year, Varti opened a pizza store in a neighborhood town with the same name, DomiNick's Pizza. Thomas decided to change the name of his first store, DomiNick's Pizza, and one of his employees suggested the name Domino's Pizza(Domino's). The advantage of this name Thomas felt was that it would be listed after DomiNick in the directory. Domino's philosophy rested on two principles - limited menu and delivering hot and fresh pizzas within half-an-hour. In 1967, it opened the first franchise store in Ypsilanti, and in 1968, a franchise store in Burlington, Vermont. However, the company ran into problems when its headquarters (the first store) and commissary were destroyed by fire. In the early 1970s, the company faced problems again when it was sued by Amstar, the parent company of Domino Sugar for trademark infringement. Thomas started looking for a new name and came up with Red Domino's and Pizza's Dispatch. However, there wasn't any need for it because Domino's won the lawsuit in 1980.In 1982, Domino's Pizza established Domino's Pizza International (DPI) that was made responsible for opening Domino's stores internationally. The first store was opened in Winnipeg, Canada. Within a year, DPI spread to more than 50 countries and in 1983, it inaugurated its1000th store. Around the same time, new pizza chains like Pizza Hut and Little Caesar established themselves in the USA. Domino's Pizza faced intense competition because it had not changed its menu of traditional hand-tossed pizza. The other pizza chains offered low-priced breadsticks, salads and other fast food apart from pizzas. Domino's faced tough competition from Pizza Hut in the home delivery segment also. Little Caesar was eating into Domino's market share with its innovative marketing strategies. By 1989, Domino's sales had reduced significantly and cash flows were affected due to the acquisition of assets. In 1993, Thomas took measures to expand Domino's product line, in an attempt to revive the company and tackle competition. The company introduced pan pizza and bread sticks in the USA. In late 1993, Domino's introduced the Ultimate Deep Dish Pizza and Crunchy Thin Crust Pizza. In 1994, it rolled out another non-pizza dish - Buffalo wings. Though Domino's did not experiment with its menu for many years, the company adopted innovative ways in managing a pizza store. Thomas gave about 90% of the franchisee agreements in the USA to people who had worked as drivers with Domino's. The company gave ownership to qualified people, after they had successfully managed a pizza store for a year and had completed a training course. Domino's also gave franchises to candidates recommended by existing franchisees. Outside the USA, most of Domino's stores were franchise-owned. Domino's was also credited for many innovations in the pizza industry and setting standards for other pizza companies. It has developed dough trays, corrugated pizza boxes, insulated bags for delivering pizzas, and conveyor ovens.
In 1993, Domino's withdrew the guarantee of delivering pizzas within 30-minutes of order andstarted emphasizing on Total Satisfaction Guarantee (TSG) which read: "If for any reason, you are dissatisfied with your Domino's Pizza dining experience, we will re-make your pizza or refund your money." Domino's entered India in 1996 through a franchise agreement with VamBhartia Corp in Delhi. With the overwhelming success of the first outlet, the company opened another outlet in Delhi. By 2000, Domino's had outlets in all major cities in India. When
IIBM Institute of Business Management
Examination Paper of Production and Operations Management
Domino's entered India, the concept of home delivery was still in its nascent stages. It existed only in some major cities and was restricted to delivery by the friendly neighborhood fast food outlets. Eating out at 'branded' restaurants was more common. To penetrate the Indian market, Domino's introduced an integrated home delivery system from a network of company outlets within 30 minutes of the order. Goutham Advani (Advani), Chief of Marketing, Domino's Pizza India, said, "What really worked its way into the Indian mind set was the promised 30-minute delivery." Domino's also offered compensation: Rs.30/- off the price tag if there was a delay in delivery. For the first 4 years in India, Domino's concentrated on its 'Delivery' strategy.
Domino's Logistics Model
Analysts felt that Domino's took a cue from McDonald's supply chain model. However, they opined that the level of complexity in McDonald's system in India was not as high as that of Domino's. Commented Bhatia ,"McDonald's operations are not as spread out as ours. They are in four cities while we are in 16.Centralizing wouldn't work on such a geographical scale”. The logistics model adopted by Domino's offered some obvious benefits including lower transportation costs, cheaper procurement and economies of scale. Domino's had already cut out the duplication in procurement and processing of raw materials across each of the three commissaries. The old model of self-contained commissaries had another disadvantage: adding new outlets did not translate into greater economies of scale. Bhatia planned to extend the model to other parts of the country as well. The commissary was to be located near the largest market in that region. Bhatia said, "Our roll-out began only after we mapped out our procurement strategy." Based on the agricultural map of India, Domino's looked McDonald's had one of the best logistics models in India. To maintain consistency and quality of its products, McDonald's shipped all the raw materials lettuce, patties et al to a cold storage close to the main market. Based on a daily demand schedule that was prepared a day in advance, the required amount of raw material was transported to individual outlets to get the best product at the lowest cost.
Thus, tomatoes would come from Bhubaneswar, spices from the south, baby corn from Nepal (where it's 40% cheaper than in India) and vegetables from Sri Lanka. Similarly, Domino's India planned to extend its operations to Nepal, Sri Lanka and Dhaka. The company planned to establish a commissary in Sri Lanka. Domino's also identified specialty crops in each region. The commissary in that region was entrusted with the task of processing that specialty crop. For instance, the commissary for the eastern region in Kolkata was responsible for buying tomatoes, processing them and then sending them to all the other commissaries. Similarly, the northern commissary had to deliver pizza bases. This way, Domino's minimized duplication as well as the dangers of perish ability. Once the new model was formalized, Bhatia planned to use Domino's 25 refrigerated trucks to transport products for other companies on the same route. For instance, if an operator in Kochi(Kerala) needed to transport specialty cheese, he could use the Domino's fleet to transport his products. Said Bhatia, "Not too many people have refrigerated trucks in the country. And we can offer them quality service because we will be giving them standards we use for ourselves." Company sources said that enquiries from clients for such transport facilities had started coming in. Bhatia said he was in the process of selecting a person to head the logistics operation, which would be spun off as a separate profit centre. Bhatia seemed confident that the profit centre had the potential to bring in Rs 10 by 2006. However, he said the profit center would not be allowed to impede the growth of the pizza
IIBM Institute of Business Management
Examination Paper of Production and Operations Management
business, Domino's core operation. Only those deliveries that did not delay or deroute the truck would be considered
Questions
1. Describe about the Article for Logistics and Operations Management Domino’s Pizza’s Process Technology (20)
Caselet 2
ABC Ltd. is the country’s largest manufacturer of spun yarn with well-established market. ABC Ltd. has good reputation for quality and service. Their marketing department identified that the potential for global market is expanding rapidly and hence the company undertook exercise for expansion of the capacity for export market. The company formed team of Marketing and Materials department to study the global logistics possibilities. After extensive study, the team came up with a report on global logistics and submitted that global logistics is essentially same as domestic due to following similarities: • The conceptual logistics framework of linking supply sources, plants, warehouses and customers is the same. • Both systems involve managing the movement and storage of products. • Information is critical to effective provision of customer service, management of inventory, vendor product and cost control. • The functional processes of inventory management, warehousing, order processing, carrier selection, procurement, and vendor payment are required for both. • Economic and safety regulations exist for transportation. The company had very economical and reliable transportation system in existence. For exports as well they decided to evaluate capabilities of their existing transporter and entrusted them with the job of transport till port. For customs formalities they engaged a good CHA after proper cost evaluation and entered into contract for freight with shipping company agent. The response for company’s export was very good and the company could get as many as 15 customers within first two months and reached to a level of USD 250,000 per month by the end of first half of the year. Based on this response the export volumes were expected to grow to a level of USD 400,000 per month by the end of the year. When the review was made at the end of the year, company found that export volumes had in fact come down to the level of USD 120,000 which was much lower than it had reached in the first half of the year. The managing committee had an emergency meeting to discuss this and the export manager was entrusted with the task of identifying the reasons for this decline. Mr. Ganesh decided to visit the customers for getting the first hand information. When he discussed the matter with the customers, the feedback on the quality and price were good but the customers were very upset on the logistic services due to delayed shipments, frequent changes in shipping schedules, improper documentation, improper identifications, package sizes, losses due to transit damages etc. After coming back, the export manager checked the dispatch schedules and found that production and ex-works schedules were all proper. Then he studied the logistics systems and found that the logistics cost was very high and all the logistics people were demotivated due to the overwork and were complaining of total lack of co-ordination and the system had become totally disorganized.
Questions
1. Explain the problems experienced by ABC Ltd. What is the main cause of these problems? (20)
END OF SECTION B
IIBM Institute of Business Management
Examination Paper of Production and Operations Management
Section C: Applied Theory (30 marks)
1. The Advantages & Disadvantages of Economic Order Quantity (EOQ)? (15)
2. Distinguish between just-in-time and just-in-case as stock management systems?(15)
S-2-010619
This section consists of Applied Theory Questions.
Answer all the questions.
Each question carries 15marks.
Detailed information should form the part of your answer (Word limit 200 to 250 words).
END OF SECTION C
Examination Paper of Strategic Management
IIBM Institute of Business Management
IIBM Institute of Business Management
SubjectCode-B108 Examination Paper
Strategic Management
MM.100
Section A: Objective Type & Short Questions (30 marks)
Part one:
Multiple choice:
I. Horizontal integration is concerned with
(1)
a) Production
b) Quality
c) Product planning
d) All of the above
II. It refers to formal and informal rules, regulations and procedures that complement the company structure (1)
a) Strategy
b) Systems
c) Environment
d) All of the above
III. Strategic management is mainly the responsibility of (1)
a. Lower management
b. Middle management
c. Top management
d. All of the above
IV. Formal systems are adopted to bring ________ & amalgamation of decentralized units into product groups.
(1)
a. Manpower
b. Co-ordination
c. Production
d. All of the above
This section consists of multiple choices and Short Notes type questions.
Answer all the questions.
Part one questions carry 1 mark each & Part two questions carry 5 marks each.
Examination Paper of Strategic Management
IIBM Institute of Business Management
IV.Like roots of a tree, ________of organization is hidden from direct view. (1)
a. Performance
b. Strategy
c. Core competence
d. All of the above
V. The actual performance deviates positively over the budgeted performance. This is an indication of ……….. Performance. (1) a. Superior b. Inferior c. Constant d. Any of the above
VI. Criteria for making an evaluation is (are)
(1)
a. Consistency with goals
b. Consistency with environment
c. Money
d. All of the above
VII. Changes in company ………. also necessitates changes in the systems in various degrees (1)
a. structure
b. system
c. strategy
d. turnover
VIII. Micro environment is the ………. environment of a company. (1)
a. Working
b. Human
c. External
d. Internal
X Techniques used in environmental appraisal are (1)
a.Single-variable
extrapolation/multivariable
interaction analysis
b.Structured/ unstructured
expert/inexpert opinion
c.Dynamic modes and mapping
d.All of the above
Part Two:
1. Distinguish between a strategy and tactics. (5)
2. Give an outline of relation between ‘Strategy and Customer’ in brief? (5)
3. Explain in brief the concept of strategic thinking? (5)
4. What are the basic elements of planning? (5)
Section B: Caselets (40 marks)
END OF SECTION A
This section consists of Caselets.
Answer all the questions.
Each Caselet carries 20marks.
Detailed information should form the part of your answer (Word limit 150 to 200 words).
IIBM Institute of Business Management
Examination Paper of Strategic Management
Caselet 1
Apple’s profitable but risky strategy
When Apple’s Chief Executive – Steven Jobs – launched the Apple iPod in 2001 and the iPhone in 2007, he made a significant shift in the company’s strategy from the relatively safe market of innovative, premium-priced computers into the highly competitive markets of consumer electronics. This case explores this profitable but risky strategy.
Early beginnings
To understand any company’s strategy, it is helpful to begin by looking back at its roots. Founded in 1976, Apple built its early reputation on innovative personal computers that were particularly easy for customers to use and as a result was priced higher than those of competitors. The inspiration for this strategy came from a visit by the founders of the company – Steven Jobs and Steven Wozniack – to the Palo Alto research laboratories of the Xerox Company in 1979. They observed that Xerox had developed an early version of a computer interface screen with the drop-down menus that are widely used today on all personal computers. Most computers in the late 1970s still used complicated technical interfaces for even simple tasks like typing – still called ‘word-processing’ at the time.
Jobs and Wozniack took the concept back to Apple and developed their own computer – the Apple Macintosh (Mac) – that used this consumer-friendly interface. The Macintosh was launched in 1984. However, Apple did not sell to, or share the software with, rival companies. Over the next few years, this non-co-operation strategy turned out to be a major weakness for Apple.
Battle with Microsoft
Although the Mac had some initial success, its software was threatened by the introduction of Windows 1.0 from the rival company Microsoft, whose chief executive was the well-known Bill Gates. Microsoft’s strategy was to make this software widely available to other computer manufacturers for a license fee – quite unlike Apple. A legal dispute arose between Apple and Microsoft because Windows had many on-screen similarities to the Apple product. Eventually, Microsoft signed an agreement with Apple saying that it would not use Mac technology in Windows 1.0. Microsoft retained the right to develop its own interface software similar to the original Xerox concept.
Coupled with Microsoft’s willingness to distribute Windows freely to computer manufacturers, the legal agreement allowed Microsoft to develop alternative technology that had the same on-screen result. The result is history. By 1990, Microsoft had developed and distributed a version of Windows that would run on virtually all IBM-compatible personal computers – see Case 1.2. Apple’s strategy of keeping its software exclusive was a major strategic mistake. The company was determined to avoid the same error when it
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came to the launch of the iPod and, in a more subtle way, with the later introduction of the iPhone.
Apple’s innovative products
Unlike Microsoft with its focus on a software-only strategy, Apple remained a full-line computer manufacturer from that time, supplying both the hardware and the software. Apple continued to develop various innovative computers and related products. Early successes included the Mac2 and PowerBooks along with the world’s first desktop publishing program – PageMaker. This latter remains today the leading program of its kind. It is widely used around the world in publishing and fashion houses. It remains exclusive to Apple and means that the company has a specialist market where it has real competitive advantage and can charge higher prices.
Not all Apple’s new products were successful – the Newton personal digital assistant did not sell well. Apple’s high price policy for its products and difficulties in manufacturing also meant that innovative products like the iBook had trouble competing in the personal computer market place.
Apple’s move into consumer electronics
Around the year 2000, Apple identified a new strategic management opportunity to exploit the growing worldwide market in personal electronic devices – CD players, MP3 music players, digital cameras, etc. It would launch its own Apple versions of these products to add high-value, user-friendly software. Resulting products included iMovie for digital cameras and I DVD for DVD-players. But the product that really took off was the iPod – the personal music player that stored hundreds of CDs. And unlike the launch of its first personal computer, Apple sought industry co-operation rather than keeping the product to itself.
Launched in late 2001, the iPod was followed by the iTunes Music Store in 2003 in the USA and 2004 in Europe – the Music Store being a most important and innovatory development. iTune was essentially an agreement with the world’s five leading record companies to allow legal downloading of music tracks using the internet for 99 cents each. This was a major coup for Apple – it had persuaded the record companies to adopt a different approach to the problem of music piracy. At the time, this revolutionary agreement was unique to Apple and was due to the negotiating skills of Steve Jobs, the Apple Chief Executive, and his network of contacts in the industry. Apple’s new strategy was beginning to pay off. The iPod was the biggest single sales contributor in the Apple portfolio of products.
In 2007, Apple followed up the launch of the iPod with the iPhone, a mobile telephone that had the same user-friendly design characteristics as its music machine. To make the iPhone widely available and, at the same time, to keep control, Apple entered into an exclusive contract with only one national mobile telephone carrier in each major country – for example, AT&T in the USA and O2 in the UK. Its mobile phone was premium priced – for
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example, US$599 in North America. However, in order to hit its volume targets, Apple later reduced its phone prices, though they still remained at the high end of the market. This was consistent with Apple’s long-term, high-price, high-quality strategy. But the company was moving into the massive and still-expanding global mobile telephone market where competition had been fierce for many years.
And the leader in mobile telephones – Finland’s Nokia – was about to hit back at Apple, though with mixed results. But other companies, notably the Korean company Samsung and the Taiwanese company, HTC, were to have more success later.
So, why was the Apple strategy risky?
By 2007, Apple’s music player – the iPod – was the premium-priced, stylish market leader with around 60 per cent of world sales and the largest single contributor to Apple’s turnover. Its iTune download software had been re-developed to allow it to work with all Windows-compatible computers (about 90 percent of all PCs) and it had around 75 percent of the world music download market, the market being worth around US$1000 million per annum. Although this was only some 6 percent of the total recorded music market, it was growing fast. The rest of the market consisted of sales of CDs and DVDs direct from the leading recording companies.
In 2007, Apple’s mobile telephone – the iPhone – had only just been launched. The sales objective was to sell 10 million phones in the first year: this needed to be compared with the annual mobile sales of the global market leader, Nokia, of around 350 million handsets. However, Apple had achieved what some commentators regarded as a significant technical breakthrough: the touch screen. This made the iPhone different in that its screen was no longer limited by the fixed buttons and small screens that applied to competitive handsets. As readers will be aware, the iPhone went on to beat these earlier sales estimates and was followed by a new design, the iPhone 4 in 2010.
The world market leader responded by launching its own phones with touch screens. In addition, Nokia also launched a complete download music service. Referring to the new download service, Rob Wells, senior Vice President for digital music at Universal commented: ‘This is a giant leap toward where we believe the industry will end up in three or four years’ time, where the consumer will have access to the celestial jukebox through any number of devices.’ Equally, an industry commentator explained: ‘[For Nokia] it could be short-term pain for long-term gain. It will steal some of the thunder from the iPhone and tie users into the Nokia service.’ Readers will read this comment with some amazement given the subsequent history of Nokia’s smart phones that is described in Case 9.2.
‘Nokia is going to be an internet company. It is definitely a mobile company and it is making good progress to becoming an internet company as well,’ explained Olli PekkaKollasvuo, Chief Executive of Nokia. There also were hints from commentators that Nokia was likely to make a loss on its new download music service. But the company was determined to ensure that Apple was given real competition in this new and unpredictable market.
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Examination Paper of Strategic Management
Here lay the strategic risk for Apple. Apart from the classy, iconic styles of the iPod and the iPhone, there is nothing that rivals cannot match over time. By 2007, all the major consumer electronics companies – like Sony, Philips and Panasonic – and the mobile phone manufacturers – like Nokia, Samsung and Motorola – were catching up fast with new launches that were just as stylish, cheaper and with more capacity. In addition, Apple’s competitors were reaching agreements with the record companies to provide legal downloads of music from websites.
Apple’s competitive reaction
As a short term measure, Apple hit back by negotiating supply contracts for flash memory for its iPod that were cheaper than its rivals. Moreover, it launched a new model, the iPhone 4 that made further technology advances. Apple was still the market leader and was able to demonstrate major increases in sales and profits from the development of the iPod and iTunes. To follow up this development, Apple launched the Apple Tablet in 2010 – again an element of risk because no one really knew how well such a product would be received or what its function really was. The second generation Apple tablet was then launched in 2011 after the success of the initial model. But there was no denying that the first Apple tablet carried some initial risks for the company.
All during this period, Apple’s strategic difficulty was that other powerful companies had also recognized the importance of innovation and flexibility in the response to the new markets that Apple itself had developed. For example, Nokia itself was arguing that the markets for mobile telephones and recorded music would converge over the next five years. Nokia’s Chief Executive explained that much greater strategic flexibility was needed as a result: ‘Five or ten years ago, you would set your strategy and then start following it. That does not work anymore. Now you have to be alert every day, week and month to renew your strategy.’
If the Nokia view was correct, then the problem for Apple was that it could find its market-leading position in recorded music being overtaken by a more flexible rival – perhaps leading to a repeat of the Apple failure 20 years earlier to win against Microsoft. But at the time of updating this case, that looked unlikely. Apple had at last found the best, if risky, strategy.
Questions
1. using the concepts in this chapter undertake a competitive analysis of both Apple and Nokia – who is stronger? (10)
2. What are the problems with predicting how the market and the competition will change over the next few years? What are the implications for strategy development? (10)
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Caselet 2
Mr. Ashwin is the marketing manager of the cosmetics. division of the Medwin Drug Company. The company was well known as a leader in new proprietary drug and toiletry products and had a good record of profitability. The cosmetics division had been especially successful in women's toiletries and .1/4.-o..,unctitk.:s and in the introduction of new products, It always based its new-product development on market research respect to what Would appeal to women and, after almost invariably test marketing a new product in a few almost invarariably test marketing a new product in selected cities, launched it with a heavy advertising and sales promotion program. It had hoped in this way not only to get a large initial share of the markets but also to become so well entrenched that competitors. who soon copy a successful product would not dislodge it from its market share.
After being cautioned by the president of Medwin Drug about the necessity for watching costs more carefully, the division manager became increasingly concerned with two opposing factors in his marketing strategy: ( 1) test marketing of new products (offering them for sale first in a few test cities with area advertising and sales programs) tended increasingly to give competitors advance information on new products, and certain competitors had been able to copy a product almost as soon as Medwin could offer it nationally and profited thereby from Medwin's advertising; and (2) national advertising and sales promotion expenses were rising so fast that a single major product failure would have an important impact on division profits, on which his annual bonus was primarily determined. On the one hand, he recognized the wisdom of test marketing, but he disliked the costs and dangers involved. On the other hand, he hardly wished to take an unknown risk of embarking on a national program until a test showed that the product did in fact have a good market demand. Yet, he wondered whether all products should be test marketed.
Mr. Ashwin was asked to put this problem to his marketing department subordinates and ask them what should be done. To give the strategy some meaning, he used as a case at point the company's new hair conditioner which had been developed on the basis of promising, although preliminary, market research. He asked his sales manager whether he thought the product would succeed and what he thought his "best estimate" of sales would be. He also asked his advertising manager to give some cost estimates on launching the product.
Mr. Kiran, division sales manager, thought a while, then said he was convinced that the product was a winner and that his best estimate would be sales of Rs. 5 crores per year for at least five years. Mr. Desai, the advertising manager, said that the company could launch the product for a cost of Rs. 1 crore the first year and some Rs. 25 lakhs per year thereafter. He also pointed out that the test-marketing program would cost Rs. 15 lakhs, of which half would be saved if these test cities were merely a part of a national program, and that the testing program would delay the national program for six months. But he warned Mr. Ashwin that test marketing would save the gamble of so much money on the national promotion program. At this point, Mr. Sachdev, the new marketing research manager, suggested that the group might come to a better decision if they used a proper decision-making technique.
Question:
1. Which decision-making technique can be used in this situation? Why? (20)
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Examination Paper of Strategic Management
Section C: Applied Theory (30 marks)
1. What are the main characteristics of strategic decisions? (15)
2. What specific entrepreneurial aspects include the strategy formation process? (15)
S-2-010619
This section consists of Applied Theory Questions.
Answer all the questions.
Each question carries 15marks.
Detailed information should form the part of your answer (Word limit 200 to 250 words).
END OF SECTION C
END OF SECTION B
