PART 2. Answer the following short answer questions.

1. In what situations is top-down planning likely to be superior

to bottom-up emergent strategy development? Please provide
an example.
Ans:
Top-down planning is more appropriate in stable and hierarchical
organizations, where the strategic decisions need to be communicated
clearly and effectively to ensure alignment and consistency.
Ex: Clear Direction and Control:
In a crisis situation where a quick and decisive response is needed,
top-down planning can provide clear direction and control. For instance, if a
company faces a sudden financial crisis, the leadership may need to make
rapid decisions to cut costs and reallocate resources.

2. Identify and explain the four criteria in the resource-based view

(VRIO framework) that managers can use to evaluate whether
particular resources and capabilities are core competencies and can,
therefore, provide a basis for sustainable competitive advantage?
ANS:
Ans1:
The VRIO framework is a tool used to analyze the competitive advantage
of a firm's resources and capabilities. It helps determine whether a
resource or capability can provide a sustainable competitive advantage.
The criteria of the VRIO framework are as follows:

Value: The resource or capability must add value to the firm's products or
services or enable the firm to exploit opportunities or mitigate threats in the
market. It should contribute to increasing revenues, reducing costs,
improving customer satisfaction, or achieving other strategic objectives.

Rarity: The resource or capability must be rare or unique within the

industry or market. It should not be easily obtainable or imitable by
competitors. Rarity is a crucial factor in creating a competitive advantage
because it limits the ability of rivals to replicate the benefits.

Imitability: The resource or capability should be difficult for competitors to

imitate or replicate. It means that competitors should not be able to obtain
or develop the same resource or capability easily. Imitability can be
influenced by factors such as intellectual property protection, complex
organizational processes, unique knowledge or expertise, or exclusive
relationships.

Organization: The firm must have the organizational structure, systems,

and processes in place to effectively exploit the resource or capability. It
requires the alignment of internal resources, coordination, and integration
across different functions or departments. The firm's culture and values
should also support the development and utilization of the resource or
capability.

If a resource or capability meets all four criteria (value, rarity, imitability, and
organization), it is considered to be a source of sustained competitive
advantage. Such resources or capabilities enable the firm to outperform
competitors and achieve superior performance in the long term.

ans2:
Criteria of VRIO framework
To be the basis of a competitive advantage, a resource must be:
Valuable
Rare
Costly to Imitate
Organized to capture the value of the resource
A firm can gain and sustain a competitive advantage only when it has
resources that satisfy all of the VRIO criteria.
Valuable: It helps to exploit an opportunity or offset a threat
Rare: Only 1 or few firms possess it
Costly to Imitate: Competitors can’t develop the resource for a reasonable
price. Imitation and substitution are risks
Organized to capture the value: Effective internal organizational structure
and coordinating systems. Organized around this resource for competition
Advantage
● It can help prioritize the allocation of business resources to
highlight your unique value.
● It can highlight internal resources and advantages that would
otherwise be hard to recognize.
● Helps highlight the most important factors to creating and
maintaining a competitive advantage over similar organizations.
 ● Enables you to identify and prioritize your competitive edge.
● Provides a great opportunity to conduct an internal virtual
workshop.

Limited
● Due to the cyclical nature of the competitive ecosystem, your
unique value and edge cannot be predicted in the long term.
● Only really accessible by established organizations. Many smaller
companies may struggle to define many of the key terms in the
VRIO framework.
● Strictly looks inward at your resources and capabilities and does
not analyze exterior opportunities.

3. Identify and describe the 4 components of Corporate Social

Responsibility?
ANS:
- What’s the CSR?
CSR, which stands for Corporate Social Responsibility, helps firms
recognize and address the economic, legal, ethical, and philanthropic
expectations that society has of the business enterprise at a given point in
time.
- It has 4 components:
+ Economic responsibilities: The business enterprise is first and
foremost an economic institution. Investors expect an adequate return for
their risk capital. Creditors expect the firm to repay its debts. Consumers
expect safe products and services at appropriate prices and quality.
Suppliers expect to be paid in full and on time. Governments expect the
firm to pay taxes and to manage natural resources such as air and water
under a decent stewardship. For example, when Vinamilk pays taxes, this
money will be used by the State for support funds. This is a mandatory
activity that businesses must perform.
+ Legal responsibilities: Laws and regulations are a society's codified
ethics, embodying notions of right and wrong. They also establish the rules
of the game. For example, strategic leaders must ensure that their firms
obey all the laws and regulations, including but not limited to labor,
consumer protection, and environmental laws.
+ Ethical responsibilities: A firm's ethical responsibilities go beyond its
legal responsibilities. They embody the full scope of expectations, norms,
and values of its stakeholders. Strategic leaders are called upon to do what
society deems just and fair. In the spring of 2018, after being heavily
criticized, the Starbucks director had to issue a formal apology because a
Starbucks employee prevented an African American from using the
restroom because he hadn't ordered a drink. This is not an action the
company is legally obligated to take, but one it feels ethically obligated to
take to avoid a repeat of such incidents.
+ Philanthropic responsibilities: are often subsumed under the idea of
corporate citizenship, reflecting the notion of voluntarily giving back to
society. For example, over the years, Microsoft's corporate philanthropy
program has donated more than $3 billion in cash and software to people
who can't afford computer technology.
=> Carefully balance social responsibilities. Doing so ensures not
only effective strategy implementation but also long-term viability

4. Comparisons between Top-down and Bottom-up strategy

planning, suitable situations for each (chap 2)

Top-down Bottom-up

● Senior management makes ● Involves employees at various

strategic decisions and levels in the strategy
communicates them to development process.
lower-level employees. ● Encourages collaboration,
● Suitable for centralized creativity, and employee
decision-making and well-defined empowerment.
organizational structures. ● Suitable for decentralized
● Used for long-term planning and decision-making and fostering
resource allocation. innovation.
● Require a broad perspective and ● Used for tactical and operational
coordination across different planning, problem-solving, and
departments or business units. grassroots-level opportunities.

Suitable situations for each approach:

- Top-down planning is more appropriate in stable and hierarchical
organizations, where the strategic decisions need to be communicated
clearly and effectively to ensure alignment and consistency.
- Bottom-up planning is more suitable in dynamic and innovative
organizations that value employee participation, engagement, and a
collaborative culture, where creativity and agility are important.

5. 5 competitive forces in Porter’s model

Porter's Five Forces model is a framework developed by Michael Porter
that helps analyze the competitive forces within an industry. These forces
determine the level of competition and attractiveness of an industry. The
five competitive forces in Porter's model are:

Threat of New Entrants: This force measures the ease with which new
competitors can enter the market and pose a threat to existing firms.
Factors that influence this force include barriers to entry such as high
capital requirements, economies of scale, brand loyalty, government
regulations, and access to distribution channels. The higher the barriers,
the lower the threat of new entrants.

Bargaining Power of Suppliers: This force assesses the power of

suppliers to influence pricing, terms, and conditions in an industry.
Suppliers gain power when they are the few, they have unique products or
services, or they have strong brand recognition. If suppliers can dictate
terms and raise prices, it reduces the profitability of the industry.

Bargaining Power of Buyers: This force examines the power of

buyers/customers to negotiate for lower prices, better quality, or more
favorable terms. Factors that affect this force include buyer concentration,
the availability of substitutes, switching costs, and the importance of the
product or service to the buyer. If buyers have strong negotiating power, it
can reduce the profitability of the industry.

Threat of Substitutes: This force considers the availability and

attractiveness of substitute products or services that can fulfill the same
needs as the industry's offerings. Substitutes can limit the potential market
share and profitability of an industry. Factors that affect this force include
the price-performance trade-off, switching costs, and customer loyalty to
existing products or services.
Intensity of Competitive Rivalry: This force looks at the level of
competition among existing firms in the industry. Factors that influence this
force include the number of competitors, industry growth rate, product
differentiation, capacity utilization, and exit barriers. High levels of
competition can lead to price wars, decreased profitability, and market
share erosion.

6. Describe 5 stages of industry life cycle (introduction, growth, shake

out, maturity, decline) with the number and the size of competition,
resources of each stages

1. Introduction stage
● Number of Competitors: Few competitors.
● Size of Competitors: Small to medium-sized companies.
● Resources:
● High investment in research and development.
● Marketing efforts focus on building awareness.
● Limited sales and profits as the market is still developing.
● Key Characteristics:
● Products are introduced to the market.
● High uncertainty and risk.
● Potential for high growth but also high costs.
2. Growth stage
● Number of Competitors: Increasing competition.
● Size of Competitors: New entrants join, existing companies
grow.
● Resources:
● Investments in marketing and distribution increase.
● Product development continues but may slow down.
● Companies strive to build brand recognition.
● Key Characteristics:
● Rapid market expansion.
● Growing sales and profitability.
● Heightened competition and product differentiation.
3. Shakeout stage
● Number of Competitors: Consolidation; decline in the number
of competitors.
 ● Size of Competitors: Some companies exit; larger ones
dominate.
● Resources:
● Intense competition leads to cost-cutting.
● Weaker firms exit or are acquired.
● Remaining companies focus on streamlining operations.
● Key Characteristics:
● Slowing industry growth.
● Increased competitive pressures lead to industry
consolidation.
● Companies face challenges, and weaker players exit the
market.
4. Maturity stage
● Number of Competitors: Stable number of competitors.
● Size of Competitors: A mix of large, established companies
and smaller players.
● Resources:
● Focus on cost reduction, efficiency, and customer
retention.
● Marketing efforts may shift towards brand loyalty and
innovation.
● Limited emphasis on major product development.
● Key Characteristics:
● Slower growth in sales.
● Market saturation.
● Increased emphasis on cost control and efficiency.
5. Decline Stage
● Number of Competitors: Declining number of competitors.
● Size of Competitors: Larger companies may dominate
remaining market share.
● Resources:
● Companies may divest from declining products or
markets.
● Cost-cutting becomes a primary focus.
● Strategic decisions focus on maintaining profitability in a
shrinking market.
● Key Characteristics:
● Declining sales and profitability.
 ● Technological obsolescence or changing consumer
preferences.
● Increased industry consolidation as weaker players exit.

Overall Observations:
- Competition: The number of competitors tends to decrease as the
industry progresses from introduction to decline. Intense competition during
the shakeout stage leads to consolidation.

- **Size of Competitors:** Companies may start small in the introduction

stage, grow in size during the growth and shakeout stages, and become
more consolidated with larger, dominant players in the maturity and decline
stages.

- **Resources:** Resource allocation shifts across stages. In the

introduction stage, resources are focused on innovation; in the growth
stage, investments increase in marketing; shakeout and maturity stages
emphasize efficiency and cost control; and the decline stage may see
reduced resources as the industry contracts.

The Resource-based View - aids in identifying core competencies

Resources are key to superior firm performance.
1. Tangible resources have physical attributes and are visible.
2. Intangible resources do not have physical attributes and are invisible.
Ex. Alphabet’s tangible resources, valued at $59 billion, headquarters (The
Googleplex), numerous server farms (clusters of computer servers).
The Google brand (intangible) valued at over $300 billion.
The Resource-based View - Critical Assumptions
Resource Heterogeneity.
• A firm is a unique bundle of resources, capabilities and competencies.
• These bundles differ across firms.
Resource Immobility.
• Resources are “sticky,” and don’t move easily from firm to firm.
• Resources are difficult to replicate.
• Resources can last for a long time.