MGT603 Final Term Subjective

Q29. Planning function is mostly carried out by managers in strategy formulation stage. What activities are performed under this function? (3 marks)

Strategic formulation means a strategy formulate to execute the business activities. Strategy formulation Includes developing:- 1-Vision and Mission Statement (target of the organization) 2-Stregnths and Weaknesses.(Internal factors.) 3-Opportunities and Threats.(External factors) Strategy formulation is concerned with setting long term goals and objectives, generating strategies to achieve those goals. Strategy formulation is also concerned with setting long term goals and objectives, generating alternative strategies to achieve that long term goals and choosing particular strategy to pursue. Page #3&4

Q30. What should be the characteristics of a firm that is successfully pursuing a Cost Leadership Strategy? Enlist any six of them. (3 marks)

Answer: Six characteristics of successfully pursuing cost leadership strategy firm: 1-Limited perks. 2-High efficiency. 3Low overhead. 4-Wide spans of control. 5-Intensive screening of budget. 6-Employees participation in cost control efforts.page#86

Q31. List down and explain five steps that comprise an effective framework for conducting an IFE Matrix. (5 marks)

Steps involved in the development of IFE Matrix:

1-List any internal factors identified in the internal audit. Only ten to twenty factors will be enough including strengths and weakness. Use percentage, ratios and comparative numbers. 2-Assign weights to each factor ranging from 0 to 1.The rates assigned indicate the relative importance of each factor to being successful. Sum of all weights must be equal to 1. 3-Assign 1-4 rating to each factor to see whether the factor represents major weakness (rate=1) or minor weakness (rate=2), minor strength (rate =3 ) or major strength (rate=4). 4Multiply each factor’s weights to its ratings to determine its weighted score. 5-Sum the weighted score of each variable page#47

Q29. What activities are performed in strategy evaluation stage under controlling function of management? (3 marks)

Controlling function of management includes all those activities undertaken to ensure that actual operations conform to planned operations. Controlling function of management is particularly important for effective strategy evaluation. Controlling function of management has the following activities in strategy evaluation.

1. Establishing performance standards
2. Measuring individual and organizational performance
3. Taking corrective actions
4. Comparing actual performance to planned performance standards page#59

Q30. In your opinion, what can be the circumstances when a Low Cost Producer in an industry brings effectiveness? (3 marks)

Low-cost producer in an industry can be especially effective when the market is Composed of many price-sensitive buyers, when there are few ways to achieve product differentiation, when buyers do not care much about differences from brand to brand, or when there are a large number of buyers with significant bargaining power The basic idea is to under price competitors and thereby gains market share and sales, driving some competitors out of the market entirely. Page#86

Q31. What are the major stakeholders that affect pricing decisions? (5 marks)

Following are the five major stakeholders which affect pricing decisions.

1. Governments
2. Suppliers
3. Distributors
4. Consumers
5. Competitors page#62

Q32. Mergers or acquisitions are the methods by which two companies combine to form a larger company. What can be the reasons for achieving mergers or acquisitions? (5 marks)

•  The 1st reason for acquisition and merger to combine is that they believe that synergy

exist and by joining both of us can achieve something more than we can get individually.

•  Acquisition and merger join to spread its risks and exploit new markets.
•  The idea is that the larger firm resulting from the merger can produce more cheaply than the previously separate firms.
•  firms may derive tax advantages from a merger or acquisition
•  Gain new technology
•  Gain economies of scale
•  Improve capacity utilization

Q32. Give at least two examples of multinational or local firms that are operating in Pakistan and have initiated backward integration. Justify your answer? (5 marks)

Explain concentric diversification strategy with the help of two examples of local or multinational firms operating in Pakistan?

1. List down and explain five steps that comprise an effective framework for conducting an EFE Matrix.

Five-Step process:

•  List key external factors (10-20)

� Opportunities & threats You have to prepare a list of all external factors which will affect the EFE matrix. These factors should be two points to be kept in mind these are opportunities and threats.

•  Assign weight to each (0 to 1.0)

Sum of all weights = 1.0 Now you have to arrange them according to their weight age that which factor is most important. It should be weight age in % ages. The sum of the total of all the factors should always be one.

 Assign 1-4 rating to each factor

• Firm’s current strategies response to the factor: how well firms response to these factors.

 Multiply each factor’s weight by its rating

• Produces a weighted score

How the firm will respond to these factors external factors. Such criteria are known as rating.