University Of Pune Question Paper
M.B.S. (Semester – I) Examination, 2014
CNO 102 : BUSINESS POLICY AND STRATEGIC MANAGEMENT
(2008 Pattern)
Time : 3 Hours Max. Marks : 70
Instructions : 1) Attempt any four questions from Q. 1 to Q. 6. They carry 13
marks each.
2) Question 7 is compulsory and it carries 18 marks.
1. What are the characteristics of strategic Management ? Explain in detail strategic Management
Process ?
2. Explain the concepts and capability factors of organisational appraisal relating to business
firm.
3. Explain in detail porter’s five forces Model of Industry Analysis.
4. Why is strategy evaluation and control important to an organization ? Explain with suitable
examples.
5. “The Quality of leadership is an important element in the role of executives while implementing
strategy”. Discuss giving examples.
6. Write short note on (any two) :
a) Mission
b) SWOT analysis
c) Mckinseys 7s Framework
d) Strategic decision making
7. Case Study (Solve the case) :
Systematic approach, critical analysis of the case. Identification of the issues involved and
solution with logical reasoning will carry more weightage.
Nestle – Strategic Planning Process
Nestle’s food range is founded on two major areas-milk products and instant coffee-Nescafe.
The company’s strategy has been to expand from this base into other food areas with a
carefully planned series of acquisitions and in-house technology developments.
Because of the diversity of its product portfolio, Nestle has chosen in the past to devolve
strategy to its main operating areas and control them informally from the centre. This case
study describes the strategic planning procedures, but also shows how they are becoming
more centralised as the company attempts to improve its performance and operational
efficiency.
Seat
No.
P.T.O.
[4674] – 12 -2-
With Sales of over US$72 billion, Nestle (Switzerland) is the world’s largest food and consumer
goods company. Its main product areas include coffee (Nescafe), milk and baby foods,
confectionery, pet foods and frozen foods. It operates globally through a series of geographical
zones and a set of product Strategic Business Units (SBUs). For example, there is an SBU
for the confectionery and ice cream product area operating on a worldwide basis. Because
of the wide variation in the SBUs in its portfolio, Nestle has chosen to give strategic control
of its operations to the individual SBUs. Each SBU has a full range of functional expertise in
its business area: marketing, production, research and so on. However, operational decisions
rest with the zones and below them the national companies. In the past, the role of the centre
has been to co-ordinate and to allocate resources and this continues to the present with
some modifications.
The centre begins the strategic planning process by issuing instructions to the SBUs for the
next planning cycle. The SBUs then work on their three-year long-term plans. Every SBU
prepares three year plan each year but some are merely updates from previous years. In
order to promote strategic discussion with the centre, the three year plan are then circulated.
They will include such areas as brand positioning, market share and competitive activity,
pricing, capital proposals and new product development. However, as from 2000, the centre
has initiated an additional layer of co-ordination and control on an experimental basis that will
take some five years to be fully implemented.
Because the company operates in relatively mature markets, it is able to operate a system
of checks and balances with more lengthy debate between the centre and the SBUs than
might be appropriate where markets are changing fast and quick decisions are required.
Hence, following the three year plan preparation early in the year, discussions are held on
content in the period from April to June between the SBUs, zones and the centre. The Nestle
executive committee has to give its approval. Later in the year, there is an investment and
revenue budget review. The strategies and activities can be changed at this point if the
market situation or competitive positions have altered significantly.
However, the controls and balances do not simply take the official committees described
above but are more subtle.
In a similar way, although the SBUs and zones are separated in decision-making terms from
the centre, most are located in the same geographical location – at Nestle’s HQ in Vevey,
Switzerland. This principle of direct informal contact is encouraged, even if it means that
some managers have extensive travel commitments. The aims are to produce an integrated
team and to maintain the informal communications that provide the real checks and balances
to the Nestle style of strategic planning.
Nestle believes that such informal approaches to planning and monitoring by the centre are
useful in guiding and developing corporate strategy. They are probably just as effective as
the formal reporting against strategic objectives. Financial rewards for achieving strategic
targets are not an important aspect of the strategic process. Peer pressures, promotion and
personal competitiveness are greater incentives in ensuring that strategies are delivered. A
longer-term view is taken of management performance and competence by the centre rather
than specific achievement against targets. This is reflected in the tendency for managers to
serve the company for many years in long and stable relationships.
However in 2000, the company realised that its devolved approach to planning mean that it
was not able to take full advantage of the benefits of globalisation – economies of scale,
shared R and D expenditure and so on. Hence, the company introduced a new information
technology programme called GLOBE. The aim was “to improve the performance and
operational efficiency of the businesses worldwide. In the process, the company will revisit
all aspects of our business practices to shape new ways to run Nestle.” Thus the company
was introducing common computer coding around the world for items such as raw materials
and packaging materials, finished goods and customers.
The aim of GLOBE was to consolidate information, leveraging the company’s size, and to
communicate better across the world. There would also be an exchange of best practices
and data: common information systems would be developed to achieve this. The whole
project was expected to cost US$1.9 billion and, by 2006, deliver cumulative savings of the
same magnitude. It would be introduced progressively throughout the company, starting
with Switzerland, part of South America and Malaysia/Singapore. Clearly, the new project
represented a shift from the informal controls of the current system, even though the new
system would not replace that approach. The GLOBE system was implemented around the
world by 2005.
Nestle then decided to move further in terms of its regional as well as its global activity. The
company took the view that its real strength in some product groups was not global but in
certain regions of the world, which it called zones. Such businesses could be managed
globally to some extent, but would be even better if managed on a regional basis. ‘Regional’
here meant a region of the world like Western Europe or Africa. The company introduced a
new manager called a Zone Executive Officer (ZEO). The responsibility of the ZEO was to
manage its regional businesses along side its global management of some parts of Nestle.
For example, its ice cream business had ambitions to be global but was particularly strong in
certain parts of the world. The ZEO would have accountability for zone business strategies
and for global strategies in so far as they impacted on that particular zone. The manager
would also have responsibilities for the achievement of broader company policies in the
particular zone. Importantly, the ZEO would also have clear responsibility for innovation and
launching of new global/regional products and brands.
Case Questions :
1) What do you understand from Nestle’s planning process ?
2) Has GLOBE succeeded ?
3) In your opinion, what type of strategic management process should Nestle follow ? Why ?
———————
M.B.S. (Semester – I) Examination, 2014
CNO 102 : BUSINESS POLICY AND STRATEGIC MANAGEMENT
(2008 Pattern)
Time : 3 Hours Max. Marks : 70
Instructions : 1) Attempt any four questions from Q. 1 to Q. 6. They carry 13
marks each.
2) Question 7 is compulsory and it carries 18 marks.
1. What are the characteristics of strategic Management ? Explain in detail strategic Management
Process ?
2. Explain the concepts and capability factors of organisational appraisal relating to business
firm.
3. Explain in detail porter’s five forces Model of Industry Analysis.
4. Why is strategy evaluation and control important to an organization ? Explain with suitable
examples.
5. “The Quality of leadership is an important element in the role of executives while implementing
strategy”. Discuss giving examples.
6. Write short note on (any two) :
a) Mission
b) SWOT analysis
c) Mckinseys 7s Framework
d) Strategic decision making
7. Case Study (Solve the case) :
Systematic approach, critical analysis of the case. Identification of the issues involved and
solution with logical reasoning will carry more weightage.
Nestle – Strategic Planning Process
Nestle’s food range is founded on two major areas-milk products and instant coffee-Nescafe.
The company’s strategy has been to expand from this base into other food areas with a
carefully planned series of acquisitions and in-house technology developments.
Because of the diversity of its product portfolio, Nestle has chosen in the past to devolve
strategy to its main operating areas and control them informally from the centre. This case
study describes the strategic planning procedures, but also shows how they are becoming
more centralised as the company attempts to improve its performance and operational
efficiency.
Seat
No.
P.T.O.
[4674] – 12 -2-
With Sales of over US$72 billion, Nestle (Switzerland) is the world’s largest food and consumer
goods company. Its main product areas include coffee (Nescafe), milk and baby foods,
confectionery, pet foods and frozen foods. It operates globally through a series of geographical
zones and a set of product Strategic Business Units (SBUs). For example, there is an SBU
for the confectionery and ice cream product area operating on a worldwide basis. Because
of the wide variation in the SBUs in its portfolio, Nestle has chosen to give strategic control
of its operations to the individual SBUs. Each SBU has a full range of functional expertise in
its business area: marketing, production, research and so on. However, operational decisions
rest with the zones and below them the national companies. In the past, the role of the centre
has been to co-ordinate and to allocate resources and this continues to the present with
some modifications.
The centre begins the strategic planning process by issuing instructions to the SBUs for the
next planning cycle. The SBUs then work on their three-year long-term plans. Every SBU
prepares three year plan each year but some are merely updates from previous years. In
order to promote strategic discussion with the centre, the three year plan are then circulated.
They will include such areas as brand positioning, market share and competitive activity,
pricing, capital proposals and new product development. However, as from 2000, the centre
has initiated an additional layer of co-ordination and control on an experimental basis that will
take some five years to be fully implemented.
Because the company operates in relatively mature markets, it is able to operate a system
of checks and balances with more lengthy debate between the centre and the SBUs than
might be appropriate where markets are changing fast and quick decisions are required.
Hence, following the three year plan preparation early in the year, discussions are held on
content in the period from April to June between the SBUs, zones and the centre. The Nestle
executive committee has to give its approval. Later in the year, there is an investment and
revenue budget review. The strategies and activities can be changed at this point if the
market situation or competitive positions have altered significantly.
However, the controls and balances do not simply take the official committees described
above but are more subtle.
In a similar way, although the SBUs and zones are separated in decision-making terms from
the centre, most are located in the same geographical location – at Nestle’s HQ in Vevey,
Switzerland. This principle of direct informal contact is encouraged, even if it means that
some managers have extensive travel commitments. The aims are to produce an integrated
team and to maintain the informal communications that provide the real checks and balances
to the Nestle style of strategic planning.
Nestle believes that such informal approaches to planning and monitoring by the centre are
useful in guiding and developing corporate strategy. They are probably just as effective as
the formal reporting against strategic objectives. Financial rewards for achieving strategic
targets are not an important aspect of the strategic process. Peer pressures, promotion and
personal competitiveness are greater incentives in ensuring that strategies are delivered. A
longer-term view is taken of management performance and competence by the centre rather
than specific achievement against targets. This is reflected in the tendency for managers to
serve the company for many years in long and stable relationships.
However in 2000, the company realised that its devolved approach to planning mean that it
was not able to take full advantage of the benefits of globalisation – economies of scale,
shared R and D expenditure and so on. Hence, the company introduced a new information
technology programme called GLOBE. The aim was “to improve the performance and
operational efficiency of the businesses worldwide. In the process, the company will revisit
all aspects of our business practices to shape new ways to run Nestle.” Thus the company
was introducing common computer coding around the world for items such as raw materials
and packaging materials, finished goods and customers.
The aim of GLOBE was to consolidate information, leveraging the company’s size, and to
communicate better across the world. There would also be an exchange of best practices
and data: common information systems would be developed to achieve this. The whole
project was expected to cost US$1.9 billion and, by 2006, deliver cumulative savings of the
same magnitude. It would be introduced progressively throughout the company, starting
with Switzerland, part of South America and Malaysia/Singapore. Clearly, the new project
represented a shift from the informal controls of the current system, even though the new
system would not replace that approach. The GLOBE system was implemented around the
world by 2005.
Nestle then decided to move further in terms of its regional as well as its global activity. The
company took the view that its real strength in some product groups was not global but in
certain regions of the world, which it called zones. Such businesses could be managed
globally to some extent, but would be even better if managed on a regional basis. ‘Regional’
here meant a region of the world like Western Europe or Africa. The company introduced a
new manager called a Zone Executive Officer (ZEO). The responsibility of the ZEO was to
manage its regional businesses along side its global management of some parts of Nestle.
For example, its ice cream business had ambitions to be global but was particularly strong in
certain parts of the world. The ZEO would have accountability for zone business strategies
and for global strategies in so far as they impacted on that particular zone. The manager
would also have responsibilities for the achievement of broader company policies in the
particular zone. Importantly, the ZEO would also have clear responsibility for innovation and
launching of new global/regional products and brands.
Case Questions :
1) What do you understand from Nestle’s planning process ?
2) Has GLOBE succeeded ?
3) In your opinion, what type of strategic management process should Nestle follow ? Why ?
———————
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