Strategic Management. 24 November Examination Paper. Time: 2 hours

Transcription

1 Strategic Management 24 November 2015 Examination Paper Answer any THREE (3) questions. Clearly cross out surplus answers. Failure to do this will result in only the first THREE (3) answers being marked. Time: 2 hours The maximum mark for this paper is 0. Any reference material brought into the examination room must be handed to the invigilator before the start of the examination.

2 Case study The questions are based around the following case study. You should base your answers upon the information in the case study. Case study Victorinox Victorinox was established in 1884 in Ibach, a town in Switzerland, and for many years was a producer of cutlery. It also produced a penknife for officers in the Swiss army, and it was this item that became the basis of the international expansion of the business after This international expansion started with American soldiers in Europe at the end of the Second World War buying them to take home as gifts. The Swiss Army knife is actually a multi-purpose gadget that includes one or two knife blades, but also typically includes screwdrivers, scissors, a bottle opener, a can opener, a file and potentially a large range of other items all of which fold up into a compact unit to put in a pocket or bag. The company now produces over 350 versions of these Swiss Army knives, ranging from small versions with just a short blade and a pair of scissors, through to larger versions with many additional functions including, for example, pliers, a wood saw, corkscrew and magnifying glass. Most of the Swiss Army knives are produced with red sides and a metallic cross, reminiscent of the Swiss national flag, although other colours and patterns are available. Although the Swiss Army knives have traditionally been associated with outdoor activities, there are models for a range of different markets, and include versions incorporating USB memory sticks, LED flashlights, pens, etc. Many of the Swiss Army knives are bought as gifts for others, rather than people buying them for themselves. All of the Swiss Army knives are made at the company s modern and efficient plant in Ibach, with the company producing up to 60,000 of the knives each day and employing around 1,000 staff. The company is run by a family foundation, where none of the family members can sell their shares. Although Victorinox is a well-known brand, the company faces competition. Until ten years ago, Swiss Army knives were also made by another Swiss company Wenger but Victorinox acquired that company in A significant number of other companies around the world produce similar knives usually cheaper versions of the more popular models. Several other companies produce multi-function gadgets with a different design, the most notable being Leatherman of the US. Victorinox also suffers from a lot of counterfeit production; producers in low-cost countries producing copies of Victorinox knives, with them then being sold as genuine. As a consequence, Victorinox only sell their products through authorised distributors, and through their own single-brand stores in locations around the world. The Victorinox Swiss Army knives are generally regarded as being the highest-quality of their type. Page 2 of 6

3 The company s progress has not always been smooth. Its greatest commercial challenge came after the terrorist attacks on the US on September After those attacks, airline security was tightened which included not allowing passengers to take knives on board. Up to that point, a major outlet for its Swiss Army knives were airport stores, and within a few months its sales had fallen by 30%. The majority of companies in that position would have cut staff numbers, but the company has not imposed redundancies in over 80 years and maintained this, despite the downturn. A commentator said of Carl Elsener, the member of the family that ran the business for over 50 years until 2007: The most important thing for him was to be able to look after his employees, and he has passed that outlook onto the next generation. Another indication of the attitudes within the organisation is that no-one earns more than 5 times the average wage in the company. Instead of imposing redundancies in 2001, shift times were cut, overtime cancelled, and employees lent to other companies in the area. In addition, the company set about developing other sources of income; now, Victorinox not only makes the Swiss Army knives, it also sells items in 5 other product groups, including: household and professional knives (e.g. for chefs), watches, a range of travel gear (luggage, bags, rucksacks etc.), a range of clothing, and fragrances for both men and women. The household and professional knives, watches, and fragrances are all made in Switzerland, but the travel gear and clothing is made in other countries. As a consequence of producing most of its products in Switzerland, Victorinox suffers from high costs. In addition, the company is heavily influenced by volatility in exchange rates, with a notable example being the increase in the value of the Swiss Franc by over 20% in just one day in January Page 3 of 6

4 Answer any THREE (3) questions Question 1 a) Discuss how the nature of the business environment facing an organisation is likely to influence the balance of the intended and emergent approaches to strategy formation. b) Evaluate how the size, and type (private sector, public sector, not-for-profit) is likely to influence the balance of intended and emergent approaches to strategy formation in organisations. c) Critically assess to what extent has there been a combination of intended and emergent approaches to strategy formation at Victorinox. 13 Question 2 a) Assess the likely benefits to an organisation, of undertaking an analysis of its business environment. b) Propose THREE (3) analytical frameworks for undertaking an analysis of an organisation s business environment, and what would be the specific purpose of each one? 8 15 c) Making use of appropriate analytical frameworks, identify and justify what you consider to be the FIVE (5) most important issues facing Victorinox arising from its business environment. Page 4 of 6

5 Question 3 a) Explain FOUR (4) benefits to an organisation of gaining an understanding of its strategic capability. b) Briefly outline the concepts and frameworks you would use to gain an understanding of the strategic capability of an organisation such as Victorinox, and explain why you would use them. c) Identify and justify what you consider to be the THREE (3) major elements of strategic capability that Victorinox possesses Question 4 a) Identify and explain the FOUR (4) alternative strategic directions for achieving growth included within the Ansoff matrix. b) Briefly identify and explain the major benefits, and risks, associated with each of the four alternative directions within the Ansoff matrix. c) Discuss the four alternative strategic directions and identify which Victorinox appears to have pursued, and explain whether or not you believe each was appropriate Page 5 of 6

6 Question 5 a) Identify and explain the main features of the stance towards ethics and corporate social responsibility being taken by Victorinox. 5 b) What are likely to be the major benefits, and costs, to Victorinox of its stance towards business ethics and corporate social responsibility, and why? 12 c) Identify what you consider to be Victorinox s FOUR (4) most important stakeholders, and justify why you consider them to be the most important. What do each of these stakeholders want? How much power over the future strategic direction are these stakeholders likely to have, and why? 16 End of paper Page 6 of 6