Exam (elaborations)
Exam (elaborations) MNG3701 - Strategic Management
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Exam (elaborations) MNG3701 - Strategic Management EXAM PACK MAYJUNE 2022
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1.1 a) Use an example related to the Investec case study to explain the concept of‘transient competitive advantage’. (2 marks)
Transient competitive advantage relate to an organisation with the ability to build up
temporary advantages where they seize opportunities, exploit it then they move quickly when
they have exhausted the opportunity.
b) ‘According to the information provided in the case study, Investec has a transient
competitive advantage’. Do you agree or disagree with this statement? Justify your
answer. (3 marks)
Investec has transient competitive advantage. This is mainly due to the intricate nature of the
impact of covid-19. Also, the case study also acknowledges that, the group is subject to
inherent challenges arising from general macro-economic and geopolitical conditions in the
countries in which it operates. The financial industry is highly volatile. The velocities of
changes that take place mean there is no one participant who can have particular advantages
over other participants for a long time.
1.2 a) Evaluate the 1999 mission statement of Investec to determine whether it meets
the requirements of a good mission statement. (3 marks) Hint: When evaluating the
mission statement use a table with the following headings; components, yes/no,
excerpts from the statement.
COMPONENTS EXCERPTS FROM THE MISSION
YES/NO
STATEMENT
The product and / or It shows that it is a banking institution
YES
service
Organisational Values The organisation clearly states that it is committed
YES
to the core philosophies and values
The market It has indicated that it will be operating in the
YES
whole world
Orientation towards The mission statement does not state any economic
NO
survival and growth objectives towards growth and survival.
Organisational The organisational philosophy is not clearly stated
No
Philosophy
,b) Compare the 1999 and the 2021 mission statements and comment on how it has
changed over the years.
The first difference relates to the products. The 1999 mission statement broadly states that it
will be offering banking services whereas the 2021 mission statement add specifically, the
distinctive bank and wealth manager service to the services.
Another change can be noted on the values, the 1999 mission statement does not clearly state
the values but broadly acknowledges them. On the other hand , the 20221 mission statement
clearly states its values that is striving to create long-term value for all of our stakeholders.
Another change can be noted on the orientation towards survival and growth. The 1999
mission statement does not clearly show its orientation towards growth and survival where as
the 2021 mission statement clearly does through its commitment to the triple bottom line
which includes helping the societies. Thus contributing meaningfully the people,
communities and planet”.
QUESTION 2
a.) Threats from the external environment
CHOOSE ANY 5
1. Threat of existing competition for low-cost or zero-fee accounts
2. Threat of new entrants (Discovery Bank creeping into some of Investec's target
market)
3. General macro-economic and geopolitical conditions
4. COVID19 - significant uncertainty resulting from the COVID-19 pandemic
5. Economic environment remains challenging which is constraining consumer
spending.
6. Highly coordinated and advanced cyber-crime.
7. Socioeconomic challenges such as high rates of poverty, social inequality,
unemployment, and public service access.
b.) Recommendations on how Investec can counter threats identified in a) above
CHOOSE ANY 5
1. Threat of existing competition for low-cost or zero-fee accounts
, The intensity of competition among existing players can significantly limit the
profitability proposition for the firm. To beat this competition, Investec may engage in
strategies such as discounting products, new product introductions, service
improvements and advertising campaigns. Investec may also consider aggressive
strategies such as undercutting the price or providing cost adding value proposition.
2. Threat of new entrants (Discovery Bank creeping into some of Investec's target
market)
The threat of new entrants put a limit to profitability within the industry. If the
industry is easy to enter and have high profits then new entrants will rapidly bring
down the profitability of the entrenched players. For Investec to reduce this threat, they
have to work on establishing or increasing the barriers to entry into their markets,
which may include economies of scale, differentiation, capital requirements of entry,
political or legislative barriers and expected retaliation.
3. General macro-economic and geopolitical conditions
Investec can proactively manage the threats that escalating international and internal
political tensions pose to their operations, performance, and culture through short term,
medium term and long term actions. One short-term action they can take is establishing
a crisis-response unit to take the lead on identifying potential risks and developing
mitigation strategies. Another short-term action is to invest in strategy, PR, and
government-relations teams that can serve as the company’s points of contact with
senior government officials and key stakeholders in multiple jurisdictions. Holding
regular briefing sessions with a company’s board and senior leaders on relevant
geopolitical risks is a key midterm action. As part of long-term planning, Investec can
conduct exercises to assess its response to game-changing scenarios.
4. COVID19 - significant uncertainty resulting from the COVID-19 pandemic
To ensure business continuity, it is essential for Investec to act as fast as possible to
lessen any negative impact while preparing the organisation for future developments
that may arise due to the COVID-19 outbreak. They can do this by implementing the
following:
Establishing a crisis team
Ensuring the safety of employees
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