Topic: Corporate Strategy Formulation

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CSME – Nov 2015 – L2 – Q7 – Corporate Strategy Formulation

Analyzes reasons for slow growth in DAB phone sales, uses the S-shaped growth curve to evaluate market stages, and suggests sales improvement strategies.

Question

Ade John is a graduate of XYZ University. For his final project work in the Department of
Electronics and Electrical Engineering, he designed a cell-phone that is rugged, cheap,
handy and not sophisticated.
During his national service year, he kept toying with the idea of manufacturing the cellphone. To ascertain that there is a market for the phone, he carried out a series of market surveys among rural farmers, artisans, market women, etc. Each time, he was convinced that a market actually exists for his design. He also made contact with some manufacturers of cell-phone components. He entered
into an agreement with CKT Japan to import cell-phone accessories to enable him
assemble them in Nigeria. DAB phone is the first of its kind in the Nigerian market and
production and assembly commenced in a small room in his uncle‟s house at Ikare.
The first batch of phones manufactured by DAB Company was supplied to cell-phone
vendors in cities on „sale or return‟ basis. To encourage distributors to accept the
phones, a 15% margin was allowed. In addition, independent sales persons (hawkers)
were given between 10 -12% margin to sell the product. In spite of the low price of DAB
phones, demand was disappointing at the end of the first year. Nevertheless, Ade John is
still optimistic about the commercial viability of the phone if only he could develop an
effective strategy to market the DAB phones

Required:
a. Identify and explain TWO reasons for the slow growth of sales of DAB phones. (4 Marks)
b. With the aid of an S-shaped growth curve, evaluate market development of DAB phones. (6 Marks)
c. Recommend the strategies that Ade John can use to improve sales. (5 Marks)

Answer

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Tags: Market Entry, Product Development, S-shaped Growth Curve, Sales Strategy
Level: Level 2

Topic: Corporate Strategy Formulation
Series: NOV 2015

CSME – May 2022 – L2 – SA – Q1 – Corporate Strategy Formulation

Analyze Abiodun Farms' growth strategy using SOAR and PESTEL, and suggest strategic directions for growth.

Question

Abiodun Farms Limited is a company established to engage in poultry farming. Currently, it owns and runs a poultry farm located at Ota, Ogun State. With five years of experience in egg production, the company produces 700 crates of eggs per day, all of which are sold in Ota. The current demand for eggs in Ota is estimated at 2,000 crates per day. The company’s vision is to become the country’s biggest egg producer within the next ten years.

As a growth strategy, Abiodun Farms Limited plans to expand production to 10,000 crates of eggs per day through the installation of more cages and pens on its premises at Ota, acquisition of more chickens, and other required inputs. The focus is to serve the market for eggs in selected towns in Southwestern Nigeria, all of which have an estimated daily demand of 50,000 crates of eggs. The production capacity of all competitors of Abiodun Farms Limited in the market for eggs in the Southwest was estimated at 32,000 crates per day. The company hopes to take advantage of this demand gap through the establishment of distribution outlets across major cities in the region for effective marketing. Aggressive advertisement campaigns to stimulate demand for its products will also be embarked upon.

The establishment of a new poultry or expansion of the production capacity of an existing one has no legal requirements except for making adequate arrangements for waste management. Capital requirements are high. However, the Central Bank of Nigeria (CBN) recently approved the release of soft loans to all interested poultry farmers as part of the government’s agri-loan scheme aimed at promoting farming. Abiodun Farms Limited intends to fund 60% of its growth plan through the agri-loans scheme which the CBN has approved and is currently awaiting disbursement.

For the success of the proposed growth strategy, it hopes to leverage the following:

Knowledge and experience of poultry business acquired in the company’s 5 years of operation
Size of land owned by the company, where current production takes place, is adequate for the proposed expansion
Strong business relationships with the biggest and most reliable suppliers of poultry inputs, such as point-of-lay chickens, cages, feeds, medicines, egg crates, etc.
Growth rate of demand for eggs is currently in line with that of the population of the country, which is estimated at 3%
The company has access to current technology in egg production, which has not changed in decades. It hopes to install automatic solid chicken waste flushers, egg pickers, and sorters. There are also plans to employ two in-house veterinarians
The problem of kidnapping has become worrisome in the area where the company operates. Recently, it had to pay a huge ransom to kidnappers for the release of one of its kidnapped marketers. To mitigate this risk, the company plans to engage five local hunters to provide security for its employees in addition to those securing the farm premises currently
There is currently no public water supply to the farm location. Hence, the company provides its own water, using a huge borehole it drilled three years ago, which has the capacity to generate adequate water to meet current and future needs. In the same vein, the company relies mostly on its generating sets for its electricity needs, due to the unreliable and epileptic public electricity supply
With the increase in egg production comes an increase in solid waste generation and air pollution. Therefore, it is envisaged that the increased air pollution could attract some negative reactions from people in the Ota community. However, the company has an existing waste disposal system which it hopes to expand to properly dispose of all poultry waste
Required human resources are available within the Ota community

Required:

a. Use the SOAR model to analyze the strategic position of Abiodun Farms Limited. (12 Marks)

b. Using the PESTEL analysis, assess the business environment of Abiodun Farms Limited, explaining how each component will impact the company’s growth strategy. (12 Marks)

c. Suggest strategies for Abiodun Farms Limited to achieve its goal of becoming the biggest poultry products producer and seller in Nigeria under the following strategic directions:

i. Market development (2 Marks)
ii. Market penetration (2 Marks)
iii. Diversification (2 Marks)

Answer

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Tags: Diversification, Market Development, Market Penetration, PESTEL Analysis, SOAR Model
Level: Level 2

Topic: Corporate Strategy Formulation
Series: MAY 2022

MGE – May 2018 – L2 – Q1b – Market and Product Development Strategies

Distinguishing market and product development strategies using Agaba Limited as a case study.

Question

Ansoff argued that when a firm is planning its growth strategies, there should be a link between its current products and markets and its future products and markets. The management of Agaba Limited, an Aba-based company, has anchored its strategies for product-market development on Ansoff’s growth vector matrix.

Required:
Distinguish between market development strategy and product development strategy adopted by Agaba Limited. (6 Marks)

Answer

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Tags: Corporate Strategy, Growth Strategy, Market Development, Product Development
Level: Level 2

Topic: Corporate Strategy Formulation
Series: MAY 2018

CSME – May 2019 – L2 – Q5 – Corporate Strategy Formulation

Explain diversification strategy and advise Shacks Limited on factors favoring concentric diversification.

Question

Shacks Limited is a company involved in the production of radio cassettes and photographic films. In the past two decades, the company had the greatest share of the market for these products. However, technological advancements resulting in the development of DVDs and digital photographs have greatly eroded the competitiveness of the company. To reposition Shacks Limited and make it more competitive, the management is considering concentric diversification as the strategy to pursue.

(a) Explain the term ‘diversification strategy’. (5 Marks)

(b) From the given scenario, advise the management of Shacks Limited on the key factors that indicate preference for concentric diversification strategy. (10 Marks)

Answer

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Tags: Competitive Positioning, Concentric Diversification, Diversification Strategy, Market Share
Level: Level 2

Topic: Corporate Strategy Formulation
Series: MAY 2019

CSME – Mar/Jul 2020 – L2 – Q1 – CSME – Mar/July 2020 – L2 – Q1 – Air Spirit Strategic Analysis Using Bowman’s Strategic Clock and Porter’s Five Forces

Analyze Air Spirit Limited's competitive strategy using Bowman’s Strategic Clock and Porter’s Five Forces model.

Question

Air Spirit Limited, a leading aviation company in Nigeria, is involved in passenger and cargo airline business. The company was established in 1980 and since inception, it has maintained leadership in the passenger airline business in Nigeria. The company has been able to leverage on experience, leading to efficiency in its operations which competitors have not been able to replicate. Hence, it has assumed cost leadership position in the industry. The firm currently pursues a low-price strategy and offers the lowest fare for all categories of flights (economy, business, and first class) in the market and its cargo services. Service quality of Air Spirit is adjudged by the flying public as second to none in terms of quality, efficiency, and safety with customer benefits rated above those of its rivals.

As a growth strategy, the company plans to expand its product offerings to include chartered flights. Target market includes politicians, businessmen, and high-net-worth individuals. It is estimated that the chartered flights market is growing at 10% annually. Also, the chartered flights market is currently serviced by only one company; Royal Airlines Limited, which covers only the Lagos-Abuja route. Setup cost is high, thereby providing a barrier for new entrants. The company hopes to leverage on existing competencies in the passenger and cargo market to build the best chartered flights company in the country within the next three years, offering excellent services and benefits that would be difficult to replicate by competitors. It has built a strong relationship with aircraft suppliers and maintenance contractors. This will facilitate easy access to needed inputs. It hopes to commence operations across several routes, most of which are not currently serviced by its competitor. The company believes that the capabilities obtained from the passenger and cargo airline business will enable it to offer the lowest fare in the chartered flights industry.

Required:
a. From the scenario above, use Bowman’s Strategic Clock to analyse the effectiveness of the current strategy of Air Spirit Limited in the passenger airline business. (22 Marks)
b. Using Porter’s Five Forces model, advise the management of Air Spirit Limited on the level of competition in the chartered flights market. (18 Marks)

(Total 40 Marks)

Answer

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Tags: Aviation Industry, Bowman’s Strategy Clock, Corporate Strategy, Porter’s Five Forces
Level: Level 2

Topic: Competitive Strategies, Corporate Strategy Formulation
Series: MAR/JULY 2020

CSME – Nov 2015 – L2 – Q7 – Corporate Strategy Formulation

Analyzes reasons for slow growth in DAB phone sales, uses the S-shaped growth curve to evaluate market stages, and suggests sales improvement strategies.

Question

Answer

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Tags: Market Entry, Product Development, S-shaped Growth Curve, Sales Strategy
Level: Level 2

Topic: Corporate Strategy Formulation
Series: NOV 2015

CSME – May 2022 – L2 – SA – Q1 – Corporate Strategy Formulation

Analyze Abiodun Farms' growth strategy using SOAR and PESTEL, and suggest strategic directions for growth.

Question

For the success of the proposed growth strategy, it hopes to leverage the following:

Knowledge and experience of poultry business acquired in the company’s 5 years of operation
Size of land owned by the company, where current production takes place, is adequate for the proposed expansion
Strong business relationships with the biggest and most reliable suppliers of poultry inputs, such as point-of-lay chickens, cages, feeds, medicines, egg crates, etc.
Growth rate of demand for eggs is currently in line with that of the population of the country, which is estimated at 3%
The company has access to current technology in egg production, which has not changed in decades. It hopes to install automatic solid chicken waste flushers, egg pickers, and sorters. There are also plans to employ two in-house veterinarians
The problem of kidnapping has become worrisome in the area where the company operates. Recently, it had to pay a huge ransom to kidnappers for the release of one of its kidnapped marketers. To mitigate this risk, the company plans to engage five local hunters to provide security for its employees in addition to those securing the farm premises currently
There is currently no public water supply to the farm location. Hence, the company provides its own water, using a huge borehole it drilled three years ago, which has the capacity to generate adequate water to meet current and future needs. In the same vein, the company relies mostly on its generating sets for its electricity needs, due to the unreliable and epileptic public electricity supply
With the increase in egg production comes an increase in solid waste generation and air pollution. Therefore, it is envisaged that the increased air pollution could attract some negative reactions from people in the Ota community. However, the company has an existing waste disposal system which it hopes to expand to properly dispose of all poultry waste
Required human resources are available within the Ota community

Required:

a. Use the SOAR model to analyze the strategic position of Abiodun Farms Limited. (12 Marks)

b. Using the PESTEL analysis, assess the business environment of Abiodun Farms Limited, explaining how each component will impact the company’s growth strategy. (12 Marks)

c. Suggest strategies for Abiodun Farms Limited to achieve its goal of becoming the biggest poultry products producer and seller in Nigeria under the following strategic directions:

i. Market development (2 Marks)
ii. Market penetration (2 Marks)
iii. Diversification (2 Marks)

Answer

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Tags: Diversification, Market Development, Market Penetration, PESTEL Analysis, SOAR Model
Level: Level 2

Topic: Corporate Strategy Formulation
Series: MAY 2022

MGE – May 2018 – L2 – Q1b – Market and Product Development Strategies

Distinguishing market and product development strategies using Agaba Limited as a case study.

Question

Required:
Distinguish between market development strategy and product development strategy adopted by Agaba Limited. (6 Marks)

Answer

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Tags: Corporate Strategy, Growth Strategy, Market Development, Product Development
Level: Level 2

Topic: Corporate Strategy Formulation
Series: MAY 2018

CSME – May 2019 – L2 – Q5 – Corporate Strategy Formulation

Explain diversification strategy and advise Shacks Limited on factors favoring concentric diversification.

Question

(a) Explain the term ‘diversification strategy’. (5 Marks)

(b) From the given scenario, advise the management of Shacks Limited on the key factors that indicate preference for concentric diversification strategy. (10 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Competitive Positioning, Concentric Diversification, Diversification Strategy, Market Share
Level: Level 2

Topic: Corporate Strategy Formulation
Series: MAY 2019

CSME – Mar/Jul 2020 – L2 – Q1 – CSME – Mar/July 2020 – L2 – Q1 – Air Spirit Strategic Analysis Using Bowman’s Strategic Clock and Porter’s Five Forces

Analyze Air Spirit Limited's competitive strategy using Bowman’s Strategic Clock and Porter’s Five Forces model.

Question

(Total 40 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Aviation Industry, Bowman’s Strategy Clock, Corporate Strategy, Porter’s Five Forces
Level: Level 2

Topic: Competitive Strategies, Corporate Strategy Formulation
Series: MAR/JULY 2020

Topic: Corporate Strategy Formulation

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CSME – Nov 2015 – L2 – Q7 – Corporate Strategy Formulation

Analyzes reasons for slow growth in DAB phone sales, uses the S-shaped growth curve to evaluate market stages, and suggests sales improvement strategies.

CSME – May 2022 – L2 – SA – Q1 – Corporate Strategy Formulation

Analyze Abiodun Farms' growth strategy using SOAR and PESTEL, and suggest strategic directions for growth.

MGE – May 2018 – L2 – Q1b – Market and Product Development Strategies

Distinguishing market and product development strategies using Agaba Limited as a case study.

CSME – May 2019 – L2 – Q5 – Corporate Strategy Formulation

Explain diversification strategy and advise Shacks Limited on factors favoring concentric diversification.

CSME – Mar/Jul 2020 – L2 – Q1 – CSME – Mar/July 2020 – L2 – Q1 – Air Spirit Strategic Analysis Using Bowman’s Strategic Clock and Porter’s Five Forces

Analyze Air Spirit Limited's competitive strategy using Bowman’s Strategic Clock and Porter’s Five Forces model.

CSME – Nov 2015 – L2 – Q7 – Corporate Strategy Formulation

Analyzes reasons for slow growth in DAB phone sales, uses the S-shaped growth curve to evaluate market stages, and suggests sales improvement strategies.

CSME – May 2022 – L2 – SA – Q1 – Corporate Strategy Formulation

Analyze Abiodun Farms' growth strategy using SOAR and PESTEL, and suggest strategic directions for growth.

MGE – May 2018 – L2 – Q1b – Market and Product Development Strategies

Distinguishing market and product development strategies using Agaba Limited as a case study.

CSME – May 2019 – L2 – Q5 – Corporate Strategy Formulation

Explain diversification strategy and advise Shacks Limited on factors favoring concentric diversification.

CSME – Mar/Jul 2020 – L2 – Q1 – CSME – Mar/July 2020 – L2 – Q1 – Air Spirit Strategic Analysis Using Bowman’s Strategic Clock and Porter’s Five Forces

Analyze Air Spirit Limited's competitive strategy using Bowman’s Strategic Clock and Porter’s Five Forces model.

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CSME – Nov 2015 – L2 – Q7 – Corporate Strategy Formulation

Analyzes reasons for slow growth in DAB phone sales, uses the S-shaped growth curve to evaluate market stages, and suggests sales improvement strategies.

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CSME – May 2022 – L2 – SA – Q1 – Corporate Strategy Formulation

Analyze Abiodun Farms' growth strategy using SOAR and PESTEL, and suggest strategic directions for growth.

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MGE – May 2018 – L2 – Q1b – Market and Product Development Strategies

Distinguishing market and product development strategies using Agaba Limited as a case study.

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CSME – May 2019 – L2 – Q5 – Corporate Strategy Formulation

Explain diversification strategy and advise Shacks Limited on factors favoring concentric diversification.

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CSME – Mar/Jul 2020 – L2 – Q1 – CSME – Mar/July 2020 – L2 – Q1 – Air Spirit Strategic Analysis Using Bowman’s Strategic Clock and Porter’s Five Forces

Analyze Air Spirit Limited's competitive strategy using Bowman’s Strategic Clock and Porter’s Five Forces model.

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CSME – Nov 2015 – L2 – Q7 – Corporate Strategy Formulation

Analyzes reasons for slow growth in DAB phone sales, uses the S-shaped growth curve to evaluate market stages, and suggests sales improvement strategies.

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CSME – May 2022 – L2 – SA – Q1 – Corporate Strategy Formulation

Analyze Abiodun Farms' growth strategy using SOAR and PESTEL, and suggest strategic directions for growth.

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MGE – May 2018 – L2 – Q1b – Market and Product Development Strategies

Distinguishing market and product development strategies using Agaba Limited as a case study.

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CSME – May 2019 – L2 – Q5 – Corporate Strategy Formulation

Explain diversification strategy and advise Shacks Limited on factors favoring concentric diversification.

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CSME – Mar/Jul 2020 – L2 – Q1 – CSME – Mar/July 2020 – L2 – Q1 – Air Spirit Strategic Analysis Using Bowman’s Strategic Clock and Porter’s Five Forces

Analyze Air Spirit Limited's competitive strategy using Bowman’s Strategic Clock and Porter’s Five Forces model.

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