Report on Describe the key steps in the process of Strategic management. (20 marks

(a)

Ans:  Strategic Management Process is an efficient approach towards business. This process is executed perfectly when everyone involved understands the strategy. Following are the steps involved in the strategic management process (Ansoff, et al., 2018).

·         OBJECTIVES DEFINING: The purpose of this step is to define the vision of the business clearly. This stage comprises of defining the objectives and aims then define the process required to achieve these goals and finally assigning the right task to the right person.

·         ANALYSIS: It is a vital stage. In this stage, relevant data and information are gathered and then analysed based on understanding the business needs and understanding the problems that these objectives face (Rothaermel, 2016).

·         STRATEGY FORMATION: First, the analysed information is reviewed. Identify the resources that could help in objective achievement. Define the priorities and start formulating the business strategy.

·         STRATEGY IMPLEMENTATION: Successful implementation of the formulated strategy is crucial for business success. If the strategy requires then a structure modification is necessary Responsibilities’ of the employees should be briefed and their role in the final goal.

·         MONITORING: Strategy monitoring include activities like performance measurement, analysis of internal and external environments, and how the strategy could successfully address these issues.

(b) Highlight briefly 3 indicators of strategic failure and decline . ( 10 marks )

Ans: Three indicators of strategic failure and decline are:

1.      The project or objective at hand is not coherent with the company’s strategic aims. Business leaders have access to finite resources, and lack of alignment of goals could lead to wasting of these resources and could lead to the strategy’s failure.

2.      An unclear vision of objective achievement. The signs of unclear vision include: executive takes an “if we do it, they will come” approach, having difficulty in explaining what the objective result is, ROI is not linked with the project.

3.      Absence of a clear schedule and budget for available resources and people is also a primary reason that leads to strategic failure (Cândido & Santos, 2015).

Q2: ) Describe the Value Chain Activities of a banking institution and highlight how understanding of this Primary activities can contributed to its success. ( 20 marks )

(a)

Ans: Value chain activities of banking institutions is as follows:

·         Bank Infrastructure

·         Risk Management

·         Technological development

·         Human Resources

All the above four departments then overlook the following activities:

·         Inbound logistics and raising deposits.

·         Commencement of services concerning the target market.

·         Marketing and sales: methodology of distribution, marketing and target marketing.

·         Services associated with products and after-sales, including consumer services.

In a customer and bank model value chain includes (Scannella, 2015):

Inputs: Money.

·         Private investments.

·         Corporate and individual accounts.

·         Achieved funds.

·         Trusts.

·         Insurances

·         Assets

·         Credits

Outputs: Securitisation

·         Risk alleviation

·         Cash services and transactions.

·         Money

·         Debt

·         Investment channels.

·         Loans

Inbound and outbound channels:

·         Bank branches

·         Distance services.

·         Other banks

·         BD channels.

Key services include:

·         All standard services and things.

·         Risk alleviation.

·         Cash and trade management.

·         Technical operations management.

·         Treasury services.

Understanding the value chain activities of the bank helps in understanding the full range of activities and services of banking institutions. The purpose of understanding value chain activities is to enhance the production efficiency so that the bank can deliver the maximum value for the minimal possible cost.

(b)

Ans: There are three main points for successful implementation of an international business strategy. The first is to define a basic business strategy for each unit of the organisation. The second is to adapt the strategy according to each of the international market. It is also essential to keep in view the internationalisation process because it differs from country to country. The third important point is to remove the weaknesses that have developed in the basic business strategy due to internationalisation aspect (Thompson, et al., 2015). A successful business strategy, in the end, provides more benefits than the efforts exerted. It also reduces the production time and increases creative and innovative input on the core matters.

SECTION B

Q5: Ans: Mergers and acquisitions are an essential business strategy that has acquired the attention of every business executive on some occasion. In order to gain a competitive advantage, organisations have to face many problems and are required to devise many strategies to become efficient and profitable. A merger can be considered a combination of two or more organisations in which the assets and liabilities of the selling organisation become the property of the purchasing one. After the merger, the sold organisation keeps its identity. An acquisition can be defined as an activity in which one firm buys a division or department of another firm. Many businesses have been able to become successful and gain a competitive advantage over much larger competitors based on merger and acquisitions strategy (Brooks, et al., 2018). For instance, PepsiCo could never have been able to compete on its own with the coca-cola, so they started on this mergers and acquisition strategy they started with Fritos-lays and eventually acquired many businesses related to energy drinks, snacks and nutritious foods as well. Currently, they are one of the largest snacks and drinks business in the world. Mergers of many types such as:

·         Horizontal mergers

·         Vertical mergers

·         Purchase mergers

·         Consolidation mergers

Acquisitions are of the following types:

·         Purchasing stocks.

·         Asset purchase transactions.

Mergers and acquisitions are used as a form of development strategy because of the following reasons:

·         In order to merger their powers with other strong competitors and enhance their influence and control over the market.

·         Another primary reason is the synergy, the new synergy achieved due to merger or acquisition creates increased value efficiencies of this new organisation and provides increased returns and reduced costs (Schmidt, 2015).

·         Economies of scales are developed due to the sharing of resources, products and services. This provides a total cost reduction edge, thus providing a competitive advantage. This edge is also enhanced by more buying power and longer production cycles.

·         Reduced risk of experimenting with newer techniques and models of managing financial risks.

·         Large companies can merge or acquire small technologically advanced companies and can grow and gain market shares.

·         A common reason that organisations use mergers and acquisitions for development is tax benefits. Financial advantages can be the primary reason for such a business strategy. Corporations can fully deploy utilisation of tax- shields, rising monetary leverage and use alternative tax benefits.

References

Ansoff, et al., 2018. Implanting strategic management.. s.l.: Springer.

Brooks, Chen & Zeng, 2018. Institutional cross-ownership and corporate strategy: The case of mergers and acquisitions.. ournal of Corporate Finance, Volume 48, pp. 187-216.

Cândido & Santos, 2015. Strategy implementation: What is the failure rate?.. Journal of Management & Organization, 21(2), pp. 237-262.

Rothaermel, 2016. Strategic management: concepts. 2 ed. s.l.: McGraw-Hill Education..

Scannella, 2015. What drives the disintegration of the loan origination value chain in the banking business.. Business Process Management Journal..

Schmidt, 2015. Costs and benefits of friendly boards during mergers and acquisitions.. Journal of Financial Economics, 117(2), pp. 424-447.

Thompson, Strickland & Gamble, 2015. Crafting and executing strategy: Concepts and readings.. s.l.:McGraw-Hill Education..