Test Papers / Previous Question Papers of IGNOU MS11 Old: Corporate Policies and Practices / Revised: Strategic Management June 2005

MANAGEMENT PROGRAMME
Term-End Examination

June, 2005

MS11 : Old: CORPORATE POLICIES AND PRACTICES
Revised: STRATEGIC MANAGEMENT

Time: 3 hours
Maximum Marks: 100
(Weightage 70%)

SECTION A

Set I (Old Course)

(Corporate Policies and Practices)

1. 'Corporate planning may be viewed as an organisational process that results in the development of the organisation's purposes, missions, objectives, goals, strategies, policies and detailed action plans to achieve the objectives.' Explain the statement. What benefits would ensure to an organisation using corporate planning ? (20)

2. What would be your role and functions if you were the CEO of a business organization operating in an environment of intense competition ? (20)

3. (a) Distinguish between the Opportunity and Threat matrices.

(b) Explain Shell's Directional Policy Matrix. (20)

4. (a) What do you understand by Break even analysis ? Explain the concept with the help of an example.

(b) Briefly explain 'Product Life Cycle Approach'. (20)

5. What are the usual motives for mergers and acquisitions? What factor would make mergers and acquisitions successfu ? Give relevant examples. (20)

SECTION A

Set 2 (Revised Course)

(Strategic Management)

1. 'Strategy includes the determination and evaluation of alternative paths to an already established mission or objective and eventually, choice of the alternatives to be adopted.' Explain the statement underlining the process of strategy formulation. (20)

2. Technological factors represent major opportunities and threats, which must be taken into account while formulating strategies. Discuss. How can a firm build a sustainable technology based competitive advantage ? (20)

3. "The low-cost leadership strategy at times enables the firrn to defend itself against each of five competitive forces." Explain. (20)

4. Briefly explain the factors which contribute towards the success of a strategic alliance. Illustrate with a recent example of strategic alliance. (20)

5. Explain any three methods/techniques used in strategic control systems, giving examples. (20)

SECTION B

6. Read the case, analyze it and answer the questions that follow : (40)

Rupbani Beverage Limited

Rupbani Beverage Limited entered the Indian wine industry in 1975 by acquiring the Mastana Wine Company of Shimla and two other smaller wine companies at Kalka for Rs. 50 lakh. Despite hostility expressed by other wine makers and predictions that Rupbani would very soon fail as other outsiders such as Parminder Wine Company had, the entry succeeded. Rupbani Limited performed the unheard-of feat of establishing a volume of 30 lakh cases wtihin two years and taking the market share away from premium brands such as the National Wine Company of Bombay, Pearl Drink Limited of Pune and Syndicate Cola Limited of Madras.

Rupbani advertised heavily and incurred Rs. 10 lakh in one year and standardised the taste of its wines with considerabie success. It also invesited Rs. 48 lakh in a large, new winery at Ahmedabad. A Rupbani Executive said, "By 1995, consumption of wine in lndia will be a litre per capita, compared with half a litre today."

The industry reacted to Rupbani's presence by doubling and tripling advertising expenditure. ABC and Company began a costly campaign to market premium and varied wines while reducing marketing emphasis on its cheap wines such as Nahan Drinks and the Gola Beverage. ABC maintained its 25 per cent market share but had to resort to some heavy price discounting to do so.

In 1982 Pearl Drinks formed a special wine unit to combine efforts for all its brands. Mr. Sailesh Kumar, former Vice-President of the National Wine Company, had directed a project to coordinate Pearl's world-wide wine business and develop a world wide strategy. The new unit was, in fact, a result of his work.

In 1983, wine consumption changed from growth at a rate of 5 per cent to no growth. The government also lifted the ban on imports of wine. This presented an even greater challenge because imported wines were cheaper as well as superior in quality.

In 1984. Mr. Ranganathan took over as Managing Director of Rupbani. He reviewed the recent performance of the company and its competitive position. He noted that the company was losing its hold over the market and it was not geittng the return as expected. He also found that the company's performance in the syrup business was excellent. He, therefore, thought of selling out the wine business to Pearl Drinks, He convened an executive meeting and apprised the executives of his proposal. He also informed them that Pearl Drinks had offered the company to recapture its investment in the wine business which was about Rs. one crore. Mr. Arun Mehta, General Manager, observed that Rupbani was in and out in the past six years and has joined different organisatons in trying the wine business. The Finance Manager, Mr. Subhash Ghai said, "The return on assets in the wine business is not the 30 to 35 per cent which Rupbani is used to getting in the syrup business. Gaining share and trying to compete with ABC and Company left Rupbani with, eventually, the number two position in the wine industry with profits of Rs. 60 lakh on Rs. 220 lakh in sales. The stockholders wanted immediate return and hence, the company could not afford to make long-term investments necessary to popularise the brands. Had they stayed for five rnore years, they would have been a key leader in a large and profitable industry."

Pearl Drinks immediately went from the sixth position in the industry to a strong second place with an 11 per cent market share. The Chairman of Pearl Drinks stated : "We believe you can make money in this business in two ways -- remain a small boutique winery or become large and achieve economies of scale."

Mr. Harish, Marketing Manager of Rupbani said, "it is no use selling out our business to Pearl Drink and get back what we have invested. We can compete with our competitors successfully and improve our market share if we manufacture wines of varying qualities to suit the varied preferences and pockets of diverse sections of society. We should also offer price discounts to attract the consumers. There should be wide publicity of our brands throughout the country".

Questions :

(a) Perform SWOT analysis of Rupbani.

(b) In the light of opportunities and threats of Rupbani Beverage and its strengths and weaknesses, what strategy should it formulate to improve its performance and strengthen its competitive position ?

(c) Should Rupbani spend on advertising in line with its competitors ? Discuss.

(d) What other strategies would you suggest for Rupbani for increasing their share of the market ?