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Mbad 791: Advanced Strategic Management Question Paper
Mbad 791: Advanced Strategic Management
Course:Masters In Business Administration
Institution: Chuka University question papers
Exam Year:2013
CHUKA
UNIVERSITY
UNIVERSITY EXAMINATIONS
EXAMINATIONS FOR THE AWARD OF
DEGREE OF MASTERS IN BUSINESS ADMINISTRATION
MBAD 791: ADVANCED STRATEGIC MANAGEMENT
STREAMS: TIME: 3 HOURS
DAY/DATE: THURSDAY 25/4/2013 5.30 PM – 8.30 PM
INSTRUCTIONS:
ANSWER ALL QUESTIONS
1. CASE STUDY
Volkswagen
While most automobile companies talk about bankruptcy, merger, collapse, and liquidation, Volkswagen AG is posting solid earnings. Based in Wolfsburg, Germany, and Europe’s biggest automaker by sales, Volkswagen (VW) managed the global economic recession well by focusing on emerging markets such as China and Brazil and continually reducing costs. VW is the leading auto firm in China, not Toyota or Nissan. VW’s market share in Western Europe rose to 20
percent in 2009 from 17.9 percent a year ago. While shrinking demand for new cars in major markets and high raw-material costs, and unfavorable exchange rates have reduced earnings of most European automakers, VW anticipated these conditions through excellent strategic planning and continues to take market share from rival firms worldwide.
The German truck maker and engineering company MAN AG is VW’s largest single shareholder at 30 per cent, and its business too has been good. MAN’s third quarter of 2008 saw profit jump 34 percent, lifted by strong sales of trucks, diesel engines, and turbo machinery. VW is currently spending $1 billion to build a new plant in Chattanooga, Tennessee, for the production of midsize sedan in 2011 with initial capacity of 150,000 cars annually. VW’s plans for 2018 include increasing its U.S. Market share from 2 percent to 6 percent by selling 800,000 vehicles annually in the United States. By 2018, VW also plans to export 125,000 vehicles from North America to Europe. VW’s plans include large expansions at its Puebla, Mexico, plant.
While most auto companies are cutting expenses, VW is increasing in 2009 U.S. Marketing budget by 15 percent in its Audi AG luxury division. The Audi ads even ran during the 2009 Super Bowl. For all of 2008, VW’s net profit rose 15percent to 4.75 billion Euros and revenues rose 4.5 percent to 114 billion. VW expects flat or even slight declines in 2009 but some of its competitors are incurring billion dollar losses. VW has cars named for climate patterns, insects, and small mammals. Along with new Beetle, VW’s annual production of 6 million cars, trucks, and vans includes such models such as passat (trade wind) Jetta (jet stream), Rabbit, and Fox. VW also owns several luxury carmakers, including AUDI, Lamborghini, Bentley and Bugatti.
Other VW makes include SEAT (family cars, Spain) and SKODA (family cars, the Czech Republic). VW operates plants in Africa, the Americas, Asia/Pacific and Europe. VW holds 68 percent of the voting rights in Swedish truck maker Scania and about 30 percent of MAN AG. VW also offers consumer financing. VW is acquiring Porsche Automobile Holding SE and merging their auto brands into VW. Based in Stuttgart, Germany, Porsche already owns 51 percent of VW but has weakened in 2009 after taking on $12 billion in new debt. VW is in talks with China’s BYD Co to build hybrid and electric vehicles powered by lithium batteries. Based in Shenzhen, BYD will supply VW with the battery technology. This will be the first automotive partner for BYD, which is one of the world’s largest suppliers of cell phone batteries. VW is building a new assembly plant in Indonesia for $47 million about 1 hour east of Jakarta, the capital. This plant will assemble the Touran and employ about 3,000 persons. Toyota already has a manufacturing plant in Indonesia and dominates that market. Currently many VW vehicles are imported into Indonesia, thus being subject to a 200 percent tariff. VW reported 2nd quarter 2009 earnings of $397 million; the Audi division was the biggest contributor to the gains.
(a) Analyze the strategies that Volkswagen is using to attain competitive edge over its
competitors. [10 Marks]
(b) “Even if you’re on the right track, you’ll get run over if you just sit there” Will Rogers: Analyzing the pros and cons, recommend outsourcing strategy to Volkswagen to remain in the right track. [10 Marks]
2. (a) Discuss the three levels of strategy , clearly showing who the players are and the
nature of strategies at each of the levels. [10Marks]
(b) Kenya has witnessed mergers of several companies in the recent past. Giving examples explain motives for mergers in today’s business world. [10 Marks]
3. (a) A company may be forced to diversify as a strategic decision due to certain
factors. Explain the factors that lead to diversification and clearly distinguish between concentric diversification and conglomerate diversification strategies.
[10 Marks]
(b) A company attempting to succeed in differentiation strategy must study buyers needs and behavior to learn what buyers consider important, of value and are prepared to pay for. In light of this statement, explain the benefits that a company is likely to accrue from differentiation strategy, the likely pitfalls of the strategy and the major approaches to differentiation. [10 Marks]
4. (a) Integration is an expansion strategy of a firm which can take different forms. By
use of examples, explain the meaning of vertical integration and distinguish between backward vertical integration and forward vertical integration.
[5 Marks]
(b) As a top manager of a multinational corporation you have realized that some of the branches are not doing well. Explain how you would apply BCG matrix to improve the company performance. [10 Marks]
(c) Explain the contributions of Henry Ford in the field of strategic management.
[5 Marks]
5. (a) Explain the challenges encountered by small business in applying strategic
management concepts. [5 Marks]
(b) Discuss in detail the major components of strategic management process.
[15 Marks]
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