STRATEGIC MANAGEMENT AUGUST 2022 PAST PAPER

MONDAY: 1 August 2022. Morning paper. Time Allowed: 3 hours.

Answer ALL questions. Marks allocated to each question are shown at the end of the question. Do NOT write anything on this paper.

QUESTION ONE

LADY BIRD COSMETICS (LBC)

Founded in year 2006, Lady Bird Cosmetics (LBC) is considered one of the leading beauty brands in the East African
market. Its mission is “To Impact Life through Beauty”. To achieve the mission, LBC has focused on four main areas
namely beauty shops, distribution of global products, training and corporate social investment through various
subsidiaries Lady Bird Beautiful Faces (LBBF) is a multichannel retail business that operates more than 50 beauty shops in the main cities across East Africa. These beauty shops offer top of the range skincare, luxury perfumes and colour cosmetics.

Through these shops the company brings top global brands in the beauty industry to the local market. LBBF also
provides a retail avenue for upcoming local brands and manufacturers to access its rapidly growing consumer base. To be able to reach as many customers as possible, LBBF provides a wide range of products through in-shop experience and digital market places.

Lady Bird Trade Limited (LBTL) exclusively distributes global brands in skin colour, perfumes and hair products to big retailers, salons, pharmacies, other retailers and spas across the region. In terms of shilling sales, LBTL is the most important unit of LBC.

Lady Bird Academy (LBA) is a licensed beauty college that provides skills to aspiring beauty professionals, graduates,
professional beauty artists, therapists and discerning customers. The academy also bridges the gap from training to
industry by facilitating trainee placements and practicum with large retailers, beauty parlors and brands.

Lady Bird Foundation (LBF) is a registered not-for-profit Corporate Social Investment unit of LBC. The foundation is founded on values of equal access to opportunities in the fast-growing beauty industry. Through advocacy and
partnerships with governments and likeminded social impact organisations, the Foundation raises funds to provide
scholarships and free medicare to disadvantaged women and youth in the wider East African region. However, this effort has not succeeded without some resistance from local politicians who feel undermined and exposed for not meeting the economic needs of their communities. Recently the Foundation launched the LBC Ajiri Programme that aims at providing technical skills through the Lady Bird Academy for out of school youth through upskilling and micro entrepreneurship in the beauty industry. Successful youth from the programme are provided with seed capital to start their own beauty businesses. Both the youth and microenterprises are also provided with market and industry linkages.

To grow its business, LBC in the year 2018 established its first high end Beauty Spa in one of the affluent suburbs of
Nairobi. This was followed by seven more spread out in the major cities in the region. The company also established
exclusive beauty parlors in Nairobi, Kampala and Kigali. LBC is also in the process of building its own manufacturing
plant that will produce own label brands as well as producing global brands under license. LBC is awaiting an
environmental impact assessment report before commencing with the actual construction of the manufacturing plant.

These developments will make LBC a fully integrated beauty products company. Also being considered is an expansion to cover more East African countries but security concerns and political instability have made LBC to shelf those plans for the time being. Another area of concern is the requirement in those countries that foreign companies must meet certain minimum local shareholding to be registered. This is in contrast to LBC’s country of origin where the company is 100% locally owned. Market surveys have indicated a skewed income distribution in those target countries but holding other factors constant, a viable market exists. At the moment LBC is considering serving the new markets through digital market places although access by the population to the internet is considered to be a limiting factor.

LBC’s distribution strategy is based on two models: Business to Consumer (B2C) and Business to Business (B2B). By
using B2C, LBC brands are sold directly to consumers. The entire marketing strategy is directly dedicated to them. This is the strategy adopted in the LBC beauty shops, beauty spas and beauty parlors. By using B2B, the sale of the products is aimed at other businesses: hotels, spas, beauty centers, beauty salons and retailers within a framework of
customer/supplier relations. In deploying its distribution strategy, location has been a key consideration for LBC. Most of its retailing and customer contact points have been located at prominent malls in cities. However, LBC was forced to change this strategy due to the collapse of a number of large-scale supermarkets within the region. Most of these large-scale retailers were considered anchor tenants in the malls and their collapse led to reduction in foot traffic within the malls making the beauty shops, parlours and spas within the malls experience fewer walk-in clients. Although LBC has maintained presence in malls, the company has established customer contact points distributed within the high streets of most commercial centers. The company has done this as-a risk mitigation measure.

Required:

1. Evaluate the disadvantages that LBC would face from adopting a vertically integrated strategy. (10 marks)

2. Assess five benefits that could accrue to LBC from its corporate social investment arm; Lady Bird Foundation.
(10 marks)

3. Evaluate the likely PESTLE factors that LBC would face when executing their strategies in the region. (12 marks)

4. Using Michael Porter’s Diamond model, analyse four factors that might impact on LBC’s international strategy.
(8 marks)

(Total: 40 marks)

QUESTION TWO

1.  In the context of strategic management, distinguish between the following terms:

Deliberate strategy and emergent strategy. (4 marks)

Agility and resilience. (4 marks)

2. Assess seven drivers of change in strategic management. (7 marks)

(Total: 15 marks)

QUESTION THREE

1. Discuss four major corporate level strategies. (8 marks)

2. With regard to strategic management:

Explain the term “game theory”. (2 marks)

Describe one application of game theory. (2 marks)

3. Enumerate the purpose of strategy in an organisation. (3 marks)

(Total: 15 marks)

QUESTION FOUR

1. Implementation of a new strategic plan requires introduction of change in an organisation.

Evaluate four ways a strategic leader could make use of a strategic plan to manage resistance to change. (8 marks)

2. Explain seven measures that could be instituted in an organisation to deal with organisational politics. (7 marks)

(Total: 15 marks)

QUESTION FIVE

1. Discuss five justifications of the use of policies in strategy implementation. (5 marks)

2. Examine five drivers of globalisation. (5 marks)

3. Explain the significance of “deep dive” of strategic thinking for an organisation of your choice. (5 marks)

(Total: 15 marks)

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