Mgt401 strategic management

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‫المملكة العربية السعودية‬ ‫وزارة التعليم‬ ‫الجامعة السعودية اإللكترونية‬ Kingdom of Saudi Arabia Ministry of Education Saudi Electronic University College of Administrative and Financial Sciences Assignment 1 Strategic Management (MGT 401) Due Date: 8/10/2022 @ 23:59 Course Name: Strategic Management Student’s Name: Course Code: MGT401 Student’s ID Number: Semester: First CRN: Academic Year:2022-23-1st For Instructor’s Use only Instructor’s Name: Students’ Grade: Marks Obtained/Out of 15 Level of Marks: High/Middle/Low General Instructions – PLEASE READ THEM CAREFULLY • • • • • • • • The Assignment must be submitted on Blackboard (WORD format only) via allocated folder. Assignments submitted through email will not be accepted. Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page. Students must mention question number clearly in their answer. Late submission will NOT be accepted. Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions. All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism). Submissions without this cover page will NOT be accepted. Learning Outcomes: CLO1. Recognize the basic concepts and terminology used in Strategic Management. CLO2.Describe the different issues related to environmental scanning, strategy formulation, and strategy implementation in diversified organizations CLO.5. Demonstrate how executive leadership is an important part of strategic management. Section I. Case study (10 marks) Read case study N.1 from your textbook entitled: The Recalcitrant Director at Byte Products, Inc., and answer the following questions: 1. Describe the ”Byte Products, Inc” industry (competitivity, rivals, growth, stakeholders…). 2 marks 2. Draw the SWOT matrix for ”Byte Products, Inc”. 2 marks 3. What is the major problem of ” Byte Products, Inc” and what are the main solutions provided to this company in order to improve its competitive advantage? 2 marks 4. Describe the plan suggested by the board of directors to improve the demand. 2 marks 5. What can you recommend to “Byte Products, Inc” in order to improve the demand for its products and ameliorate its competitive advantage? Justify. 2 marks Section II. Discussion questions (5 marks) 1. Is social responsibility a driver of a corporate competitive advantage? How? Justify your answer using examples from Saudi Market. 3 marks 2. Briefly describe a successful story of a strategic alliance between two companies from the real (national or international) market. 2 marks Note. To improve your answers, you are requested to use at least 5 recent scientific references. Answers Section I. 1. SECTION A Corporate Governance: Executive Leadership CASE 1 The Recalcitrant Director at Byte Products, Inc. Corporate Legality Versus Corporate Responsibility Dan R. Dalton, Richard A. Cosier, and Cathy A. Enz Byte Products, Inc., is primarily involved in the production of electronic components that are used in personal computers. Although such components might be found in a few computers in home use, Byte products are found most frequently in computers used for sophisticated business and engineering applications. Annual sales of these products have been steadily increasing over the past several years; Byte Products, Inc., currently has total sales of approximately $265 million. Over the past six years, increases in yearly revenues have consistently reached 12%. Byte Products, Inc., headquartered in the midwestern United States, is regarded as one of the largest-volume suppliers of specialized components and is easily the industry leader, with some 32% market share. Unfortunately for Byte, many new firms—domestic and foreign—have entered the industry. A dramatic surge in demand, high profitability, and the relative ease of a new firm’s entry into the industry explain in part the increased number of competing firms. Although Byte management—and presumably shareholders as well—is very pleased about the growth of its markets, it faces a major problem: Byte simply cannot meet the demand for these components. The company currently operates three manufacturing facilities in various locations throughout the United States. Each of these plants operates three production shifts (24 hours per day), seven days a week. This activity constitutes virtually all of the company’s production capacity. Without an additional manufacturing plant, Byte simply cannot increase its output of components. This case was prepared by Professors Dan R. Dalton and Richard A. Cosier of the Graduate School of Business at Indiana University and Cathy A. Enz of Cornell University. The names of the organization, individual, location, and/or financial information have been disguised to preserve the organization’s desire for anonymity. This case was edited for the SMBP– 9th, 10th, 11th, 12th, 13th and 14th Editions. Reprint permission is solely granted to the publisher, Prentice Hall, for the book, Strategic Management and Business Policy – 14th Edition by copyright holders Dan R. Dalton, Richard A. Cosier, and Cathy A. Enz. Any other publication of this case (translation, any form of electronic or other media), or sale (any form of partnership) to another publisher will be in violation of copyright laws, unless the copyright holders have granted an additional written reprint permission. 399 # 111708   Cust: PE/NJ/B&E   Au: Wheelen  Pg. No. 399 Z01_WHEE0811_14_GE_CA01.indd 399Management and Business Policy     Server: Jobs4 Title: Strategic C/M/Y/K Short / Normal DESIGN SERVICES OF S4carlisle Publishing Services 5/20/14 11:32 AM 400 C ase 1    The Recalcitrant Director at Byte Products, Inc. James M. Elliott, Chief Executive Officer and Chairman of the Board, recognizes the gravity of the problem. If Byte Products cannot continue to manufacture components in sufficient numbers to meet the demand, buyers will go elsewhere. Worse yet is the possibility that any continued lack of supply will encourage others to enter the market. As a long-term solution to this problem, the board of directors unanimously authorized the construction of a new, state-of-the-art manufacturing facility in the southwestern United States. When the planned capacity of this plant is added to that of the three current plants, Byte should be able to meet demand for many years to come. Unfortunately, an estimated three years will be required to complete the plant and bring it online. Jim Elliott believes very strongly that this three-year period is far too long and has insisted that there also be a shorter-range, stopgap solution while the plant is under construction. The instability of the market and the pressure to maintain leader status are two factors contributing to Elliott’s insistence on a more immediate solution. Without such a move, Byte management believes it will lose market share and, again, attract competitors into the market. Several Solutions A number of suggestions for such a temporary measure were offered by various staff specialists but rejected by Elliott. For example, licensing Byte’s product and process technology to other manufacturers in the short run to meet immediate demand was possible. This licensing authorization would be short term, or just until the new plant could come online. Top management, as well as the board, was uncomfortable with this solution for several reasons. They thought it unlikely that any manufacturer would shoulder the fixed costs of producing appropriate components for such a short term. Any manufacturer that would do so would charge a premium to recover its costs. This suggestion, obviously, would make Byte’s own products available to its customers at an unacceptable price. Nor did passing any price increase to its customers seem sensible, for this too would almost certainly reduce Byte’s market share as well as encourage further competition. Overseas facilities and licensing also were considered but rejected. Before it became a publicly traded company, Byte’s founders had decided that its manufacturing facilities would be domestic. Top management strongly felt that this strategy had served Byte well; moreover, Byte’s majority stockholders (initial owners of the then privately held Byte) were not likely to endorse such a move. Beyond that, however, top management was reluctant to foreign license their goods—or make available by any means the technologies for others to produce Byte products—as they could not then properly control patents. Top management feared that foreign licensing would essentially give away costly proprietary information regarding the company’s highly efficient means of product development. There also was the potential for initial low product quality—whether produced domestically or otherwise—especially for such a short-run operation. Any reduction in quality, however brief, would threaten Byte’s share of this sensitive market. The Solution! One recommendation that has come to the attention of the Chief Executive Officer could help solve Byte’s problem in the short run. Certain members of his staff have notified him that an abandoned plant currently is available in Plainville, a small town in the northeastern United States. Before its closing eight years earlier, this plant was used primarily for the manufacture of electronic components. As is, it could not possibly be used to produce Byte products, but it could be inexpensively refitted to do so in as few as three months. Moreover, this plant # 111708   Cust: PE/NJ/B&E   Au: Wheelen  Pg. No. 400 Z01_WHEE0811_14_GE_CA01.indd 400 Title: Strategic Management and Business Policy     Server: Jobs4 C/M/Y/K Short / Normal DESIGN SERVICES OF S4carlisle Publishing Services 5/20/14 11:32 AM Case 1    The Recalcitrant Director at Byte Products, Inc. 401 is available at a very attractive price. In fact, discreet inquiries by Elliott’s staff indicate that this plant could probably be leased immediately from its present owners because the building has been vacant for some eight years. All the news about this temporary plant proposal, however, is not nearly so positive. Elliott’s staff concedes that this plant will never be efficient and its profitability will be low. In addition, the Plainville location is a poor one in terms of high labor costs (the area is highly unionized), warehousing expenses, and inadequate transportation links to Byte’s major markets and suppliers. Plainville is simply not a candidate for a long-term solution. Still, in the short run, a temporary plant could help meet the demand and might forestall additional competition. The staff is persuasive and notes that this option has several advantages: (1) there is no need for any licensing, foreign or domestic, (2) quality control remains firmly in the company’s hands, and (3) an increase in the product price will be unnecessary. The temporary plant, then, would be used for three years or so until the new plant could be built. Then the temporary plant would be immediately closed. CEO Elliott is convinced. Taking the Plan to the Board The quarterly meeting of the board of directors is set to commence at 2:00 p.m. Jim Elliott has been reviewing his notes and agenda for the meeting most of the morning. The issue of the temporary plant is clearly the most important agenda item. Reviewing his detailed presentation of this matter, including the associated financial analyses, has occupied much of his time for several days. All the available information underscores his contention that the temporary plant in Plainville is the only responsible solution to the demand problems. No other option offers the same low level of risk and ensures Byte’s status as industry leader. At the meeting, after the board has dispensed with a number of routine matters, Jim Elliott turns his attention to the temporary plant. In short order, he advises the 11-member board (himself, 3 additional inside members, and 7 outside members) of his proposal to obtain and refit the existing plant to ameliorate demand problems in the short run, authorizes the construction of the new plant (the completion of which is estimated to take some three years), and plans to switch capacity from the temporary plant to the new one when it is operational. He also briefly reviews additional details concerning the costs involved, advantages of this proposal versus domestic or foreign licensing, and so on. All the board members except one are in favor of the proposal. In fact, they are most enthusiastic; the overwhelming majority agree that the temporary plant is an excellent—even inspired—stopgap measure. Ten of the eleven board members seem relieved because the board was most reluctant to endorse any of the other alternatives that had been mentioned. The single dissenter—T. Kevin Williams, an outside director—is, however, steadfast in his objections. He will not, under any circumstances, endorse the notion of the temporary plant and states rather strongly that “I will not be party to this nonsense, not now, not ever.” T. Kevin Williams, the senior executive of a major nonprofit organization, is normally a reserved and really quite agreeable person. This sudden, uncharacteristic burst of emotion clearly startles the remaining board members into silence. The following excerpt captures the ensuing, essentially one-on-one conversation between Williams and Elliott: Williams: How many workers do your people estimate will be employed in the temporary plant? Elliott: Roughly 1200, possibly a few more. # 111708   Cust: PE/NJ/B&E   Au: Wheelen  Pg. No. 401 Z01_WHEE0811_14_GE_CA01.indd 401Management and Business Policy     Server: Jobs4 Title: Strategic C/M/Y/K Short / Normal DESIGN SERVICES OF S4carlisle Publishing Services 5/20/14 11:32 AM 402 C ase 1    The Recalcitrant Director at Byte Products, Inc. Williams: I presume it would be fair, then, to say that, including spouses and children, something on the order of 4000 people will be attracted to the community. Elliott: I certainly would not be surprised. Williams: If I understand the situation correctly, this plant closed just over eight years ago, and that closing had a catastrophic effect on Plainville. Isn’t it true that a large portion of the community was employed by this plant? Elliott: Yes, it was far and away the majority employer. Williams: And most of these people have left the community, presumably to find employment elsewhere? Elliott: Definitely. There was a drastic decrease in the area’s population. Williams: Are you concerned, then, that our company must attract the 1200 employees to Plainville from other parts of New England? Elliott: Not in the least. We are absolutely confident that we will attract 1200—even more, for that matter, virtually any number we need. That, in fact, is one of the chief advantages of this proposal. I would think that the community would be very pleased to have us there. Williams: On the contrary, I would suspect that the community will rue the day we arrived. Beyond that, though, this plan is totally unworkable if we are candid. On the other hand, if we are less than candid, the proposal will work for us, but only at great cost to Plainville. In fact, quite frankly, the implications are appalling. Once again, I must enter my serious objections. Elliott: I don’t follow you. Williams: The temporary plant would employ some 1200 people. Again, this means the infusion of over 4000 to the community and surrounding areas. Byte Products, however, intends to close this plant in three years or less. If Byte informs the community or the employees that the jobs are temporary, the proposal simply won’t work. When the new people arrive in the community, there will be a need for more schools, instructors, utilities, housing, restaurants, and so forth. Obviously, if the banks and local government know that the plant is temporary, no funding will be made available for these projects and certainly no credit for the new employees to buy homes, appliances, automobiles, and so forth. If, on the other hand, Byte Products does not tell the community of its “temporary” plans, the project can go on. But, in several years when the plant closes (and we here have agreed today that it will close), we will have created a ghost town. The tax base of the community will have been destroyed; property values will decrease precipitously; practically the whole town will be unemployed. This proposal will place Byte Products in an untenable position and in extreme jeopardy. Elliott: Are you suggesting that this proposal jeopardizes us legally? If so, it should be noted that the legal department has reviewed this proposal in its entirety and has indicated no problem. Williams: No! I don’t think we are dealing with an issue of legality here. In fact, I don’t doubt for a minute that this proposal is altogether legal. I do, however, resolutely believe that this proposal constitutes gross irresponsibility. I think this decision has captured most of my major concerns. These, along with a host of collateral problems associated with this project, lead me to strongly suggest that you and the balance of the board reconsider and not endorse this proposal. Byte Products must find another way. # 111708   Cust: PE/NJ/B&E   Au: Wheelen  Pg. No. 402 Z01_WHEE0811_14_GE_CA01.indd 402 Title: Strategic Management and Business Policy     Server: Jobs4 C/M/Y/K Short / Normal DESIGN SERVICES OF S4carlisle Publishing Services 5/20/14 11:32 AM Case 1    The Recalcitrant Director at Byte Products, Inc. 403 The Dilemma After a short recess, the board meeting reconvened. Presumably because of some discussion during the recess, several other board members indicated that they were no longer inclined to support the proposal. After a short period of rather heated discussion, the following exchange took place: Elliott: It appears to me that any vote on this matter is likely to be very close. Given the gravity of our demand capacity problem, I must insist that the stockholders’ equity be protected. We cannot wait three years; that is clearly out of the question. I still feel that licensing—domestic or foreign—is not in our long-term interests for any number of reasons, some of which have been discussed here. On the other hand, I do not want to take this project forward on the strength of a mixed vote. A vote of 6–5 or 7–4, for example, does not indicate that the board is remotely close to being of one mind. Mr. Williams, is there a compromise to be reached? Williams: Respectfully, I have to say no. If we tell the truth—namely, the temporary nature of our operations—the proposal is simply not viable. If we are less than candid in this respect, we do grave damage to the community as well as to our image. It seems to me that we can only go one way or the other. I don’t see a middle ground. # 111708   Cust: PE/NJ/B&E   Au: Wheelen  Pg. No. 403 Z01_WHEE0811_14_GE_CA01.indd 403Management and Business Policy     Server: Jobs4 Title: Strategic C/M/Y/K Short / Normal DESIGN SERVICES OF S4carlisle Publishing Services 5/20/14 11:32 AM
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College of Administrative and Financial Sciences

Assignment 1
Strategic Management (MGT 401)
Due Date: 8/10/2022 @ 23:59
Course Name: Strategic Management

Student’s Name:

Course Code: MGT401

Student’s ID Number:

Semester: First

CRN:
Academic Year:2022-23-1st

For Instructor’s Use only
Instructor’s Name:
Students’ Grade:
Marks Obtained/Out of 15

Level of Marks: High/Middle/Low

SECTION I: CASE STUDY
1. Description of “Byte Production, Inc.”
Byte Products Inc is a firm that has its headquarters located in the Midwestern United States. The
firm is known to be the largest volume producer of electronic components that are used in
personal computers. The electronic components produced by these companies are used in the
computers that are used for business and engineering applications. The annual sales of the
products produced by this firm have been recording a steady increase as compared to the past
years. The firm has total sales approximated to $265 million. For the last six years, the firm has

been in the leading industry with its sales have been increasing at an average rate of 12%. Their
supply is estimated to be at 32% of the market share.
This firm was initially privately owned but it has now entered being a publicly traded company.
The majority of the stakeholders of Byte Products, Inc. are the initial owners of byte when it was
privately owned. The specific stakeholders; employees, customers, government, shareholders,
community, suppliers, and competitors have been included since it became a publicly traded
company. The Board of Directors managing this company is composed of 11 members. James
M. Elliot is the chairman of the board, with 3 inside members and 7 outside members. The firm
is stable, and profitable but faces a lot of competition in the market.
2. Swot Matrix for “Byte Products, Inc.”
Strengths

Weaknesses

Item

Action

Item

Leading
market in the
industry 32%
market share

A set
Unaware of Research
strategy to competitors increase to
maintain
actions
develop
the market
Byte
share
production

Total sale of Low prices Financing
approximately of products planning is
265 million
and
not done
discount to properly
increase
and
sales
efficiently

Action

Expertise to
conduct
financial
planning

Opportunities

Threats

Item

Action

Source of
employment
to the
community
and
surrounding

Recruitment
Entry of
commencement domestic
and foreign
firms

Large
distribution
network fo
customers
reach

New
Great customer Rising pay
technology
service with
level
with new
reduced prices
opportunities

Managing
pay of the
employees

High level of Dedicated Not good at Work on
New trends
customer
customer
product
good
in consumer
satisfaction
relationship demand
demand
behavior
forecasting forecasting
resulting the

Build new
revenue
streams and
diversification

Item

Action

New
Diversifica
environment of the prod
regulation category an
build new

to achieve
more
Reliable
supplies

Increase
the supply
base to
overcome
any supply
related
problems

lower
inventory

the product
category

Gaps in the Diversifying Decreasing
Boost
Currency
products
the product cost of
profitability
fluctuation
range sold range to be transportation and pass the
by the
sold by
and low
benefits to the
company
company
shipping
customers for a
prices
larger market
share

3. Major Problem of “Byte Products, Inc.”
The major problem faced by Byte Product, Inc., is improper capacity planning. This is because
of the high demand for its products in the market by the customers which is not matched by their
supply. This is the major challenge facing the firm even though its plant is running at full
capacity it is not able to meet the market demand of the required volume of the product. This
rapid increase in demand has allowed the entry of many competitive firms into the industry.
Even though the shareholders of the company and the management are pleased with the profit
made by the company and its consistent growth, there is still high market pressure in terms of the
demand for its products.
The solution to the problem faced by Byte Production Inc is the construction of another
manufacturing plant. This plant is to be fully built and became very operational. This
manufacturing plant was aimed at meeting the high market demand for the firm’s product. Even
though there will be a three-year rise in competition but as soon as the company is on its toes it
will serve the market demand regaining its superiority.
4. Plan Suggested by Board of Directors.

revenue
stream
Limit the
operating
counties

The chief executive officer of this firm who is James M. Elliot is concerned with the problem.
He also goes ahead to mention that if the company will not strive to increase its production, its
customers will shift their interest to other firms producing the same product. Thus, the number of
firms entering the market will reduce.
The Board of directors went ahead to have a suggested plan to curb the rising threat to the
company. Voting for immediate construction of a new state art of facility to meet the rising
market demand was done. The construction of the new facility was going to take three years to
be completed, this did not sound like an immediate solution to the problem faced by the firm.
According to the Chief executive officer, this was quite a long period. A suggestion for shortterm solutions was also required to play a part while the facility ...


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