Name : NURHAYATI BINTI BUJANG

Matrix Num. : ...................................................

MGT6053

TAKE HOME EXAMINATION

STRATEGIC MANAGEMENT

Two hours

1. This question paper consists of 1 section.

This question paper consists of 1 printed page.

HAKCIPTA TERPELIHARA UNIVERSITI SULTAN AZLAN SHAH

THIS QUESTION PAPER CONSISTS OF 1 PRINTED PAGE WITH TOTAL OF 40 MARKS.

1. An external environment is composed of all the outside factors or influences that impact
the operation of business. The business must act or react to keep up its flow of operations.
Illustrate FIVE (5) factors of the external environment.
(10 marks)

2. The product life cycle has 4 very clearly defined stages, each with its own characteristics
that mean different things for business that are trying to manage the life cycle of their particular
products. Describe the stages of Nestle in the product life cycle. Explain your answer.
(10 marks)

3. A mission statement is meant for employees and leaders of the organization. Strategic
plan may involve changing the mission statement to reflect a new direction of the organization.
Evaluate FIVE (5) reasons why the companies need a clear mission?
(10
marks)

4. Porter’s five forces model is an analysis tool that uses five industry forces to determine
the intensity of competition in an industry and its profitability level. Relate the Porter’s Five
Forces Model in an industry environment.
(10
marks)

END OF PAPER

HAKCIPTA TERPELIHARA UNIVERSITI SULTAN AZLAN SHAH 1

1. An external environment is composed of all the outside factors or influences that impact the
operation of business. The business must act or react to keep up its flow of operations. Illustrate
FIVE (5) factors of the external environment.

a) Sociocultural
This involves attitudes, customs, values, norms, beliefs, behaviors and associated demographic
trends typical of a region. It is important for managers to monitor sociocultural trends for new
opportunities and potential threats. Trends such as delayed marriage and aging population
mean that demand will shift for certain types of products. In addition, a business must also be
sensitive to the culture and religious beliefs of the local community. This is because any action
that is contrary to the socio -culture of the community will only affect the image of the business
and cause dissatisfaction among the locals. For example, the culture of Western society that
emphasizes nutritious and low -calorie nutrition, then the percentage of calories recorded on the
packaging of food products is very important to them. For Muslims, the halal mark on the food
sold is important before making a purchase.

b) Economic
Economic factors such as inflation, interest rates and purchasing power of consumers can
impact the profitability and management practices of an organization. This element also involves
systems of wealth production, distribution and consumption. Economic activity in capitalist
economies are governed by market forces and the means of production are controlled by the
business organizations themselves. In a socialist economy, however, economic activity and
means of production are governed by the State. Organizations generally have little control over
the economic conditions. Economic changes will affect purchasing power and consumer
spending patterns. If the economy slumps, consumer income falls, purchasing power
decreases. This causes consumer spending to fall and business activity to decline. On the other
hand, if the country's economy is stable and developed, then business activities will also grow
and guarantee business opportunities. The income of the population will increase, guaranteeing
increased sales and business profits.

HAKCIPTA TERPELIHARA UNIVERSITI SULTAN AZLAN SHAH 2

c) Political/legal
This refers to legal and governmental systems within which an organization functions. Changes
in legislation, court decisions, politics and government regulations can significantly influence the
performance of an organization or operation of business. For instance, a change in the
corporate tax rate can affect the profitability of a business, or the imposition of business rules
and regulations to ensure that businesses run in line with codes of ethics, good health and
safety of consumers, can force organizations to change work methods. Example of the rules
and policies enforced by the government to influence economic activities are the setting of
prices of controlled goods, maximum and minimum price policies, the imposition of import taxes,
the provision of investment incentives and so on.

d) Competitive
Competition is another firm or business in the same industry or market. This is a threat to the
business as it has to compete with businesses that manufacture the same product or
replacement products in the same market. Market competition is divided into several types of
markets Perfect competition, Monopoly, Oligopoly, Monopolistic or monopolistic competition.
The failure or success of a business depends on the extent to which the business can compete
in a market to produce products and services that meet the needs of customers. With
competition, businesses can innovate on goods and services, increase efficiency and reduce
costs

e) Technological
This refers to the current state of knowledge about the production of products/services.
Relates to equipment, knowledge or methods for converting inputs to outputs which are the
invention of new methods as a result of research and development efforts or innovations carried
out. These new methods used in business activities such as production and marketing activities,
knowledge, task handling, use of equipment and so on will speed up business processes. For
example, the use of information and communication technology (ICT) in business such as e-
mail, e-commerce, video conferencing and so on will make it easier for businesses to contact
customers. Technological developments make it possible to improve product quality, increase
output and decrease costs. Rapid technology can also make products/services obsolete.
Therefore, managers must be alert, flexible and informed because technology can positively or
negatively impact the overall success of an organization.
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MGT6053 STRATEGIC MANAGEMENT SULIT

2.The product life cycle has 4 very clearly defined stages, each with its own characteristics that
mean different things for business that are trying to manage the life cycle of their particular
products. Describe the stages of Nestle in the product life cycle. Explain your answer.

Nestle is a Swiss multinational food and drink processing conglomerate corporation and was the
largest food and beverage company in the world and it has more than 2000 brands all over the
world. Nestle is available in 119 nations all over the globe. Nestle’ s products include baby food,
medical food, bottled water, breakfast cereals, coffee and tea, confectionery, dairy products, ice
cream, frozen food, pet foods, and snacks. The four stages of Nestle products in the product life
cycle are:

1) Introduction stage

New products by nestle began to be introduced to consumers and distributed in the market. The
growth rate is slow because consumers still do not know the product in depth or are just
beginning to know the product. Market share is small. Nestle product manufacturers earn low
profits or suffer losses on this stage because sales are low while promotional as well as
distribution expenses are high. Competition for Nestle products is non-existent, low or not yet
strong and the cost per unit of goods is high because it does not reach economies of scale.
Aggressive and massive promotions should be carried out by Nestle marketing officers to
introduce their new products to customer.

2) Growth stage

Sales of Nestle products began to increase rapidly as the products began to be accepted or
known to many and bought by many consumers. Manufacturers also enjoy substantial and
increasing profits due to the increasing rate of sales growth, while the cost per unit of goods
decreases. Market share also increased. Nestle companies starting face new challenges as
competitors start to enter the market due to good profit opportunities. Competitors introduce the
same product but with different brands and new feature additions. Therefore, Nestle companies
should make modifications and innovations to products to increase competitiveness in the
market and face stiff competition by conducting research and development (R&D). Nestle

HAKCIPTA TERPELIHARA UNIVERSITI SULTAN AZLAN SHAH 4

operators need to increase promotional spending to increase sales and maintain existing market
share.

3) Market Maturity stage

Products by Nestle are becoming more and more popular. The growth rate of product sales
increased slowly and then began to decline. More competitors are entering the market with
various substitute products. Nestle market share reaches its maximum level. Therefore, the
Nestle company will reduce the selling price of products and intensify advertising activities as
well as sales promotion but decrease compared to the growth stage because it wants to
maintain customer loyalty. As a result, profits are maximum and will decrease along this stage.
Most weak or inefficient business are starting to leave the market. Therefore, Nestle companies
need to strive to defend their products in the market by making modifications or improvements
to the products and marketing mix. The cost per unit of goods is at a minimum and competition
is stable.

4) Decline stage

Sales of Nestle products began to decline during this time period due to several factors. This is
because the increased competition in the market, changes in consumer tastes and
technological advances that create many new products or replacement products in the market.
Consumers have also been bored or tired of Nestle products. The cost per unit of goods has
risen again, profits have become negative or losses due to declining sales and Nestle
companies have also had to face stiff competition. The market share is very little or zero. As a
result, the Nestle company had to reduce the selling price of the product by giving a discount or
price discount. This will affect the profits of the manufacturer so causing some business to leave
the market. Business who still survive in the market may decide to reduce the number of
products offered, leave a weak market segment or reduce various marketing costs such as
advertising and promotion costs. The promotion is run to run out of stock.

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