Programme COHORT Master of Business Administration - MBAPM/16A/17A/PT Project Management Master of Business Administration - MBAFI/16B/PT Finance and Investment Master of Business Administration - MBAG/17A/PT General Examinations for Academic Year 2017 – 2018 Semester II / Academic Year 2018 Semester I MODULE: STRATEGIC MANAGEMENT(MBA) MODULE CODE: MGMT5310 DURATION: 3 HOURS Instructions to Candidates: 1. This paper consists of Sections A and B. 2. Section A is compulsory. 3. Answer any two questions from Section B. 4. Always start a new question on a fresh page. 5. Total marks 100. This question paper contains 5 questions and 4 pages. This Question Paper is printed on BOTH SIDES. Page 1 of 4 STRATEGIC MANAGEMENT(MBA)- MGMT5310-SBMF4444ran SECTION A: COMPULSORY QUESTION 1: (40 MARKS) Read the case below and answer questions that follow: Velvet Sky grounded after failing to pay service providers Velvet Sky’s board has assured chief operating officer Gary Webb that flights will resume on Friday EDWARD WEST, Published: 2012/02/24 WHILE expressing hope it would resume flights today, low-cost airline Velvet Sky stopped flights yesterday due to a "contractual dispute" with a service provider, barely a year after taking to the sky, chief operating officer Gary Webb said yesterday. The cessation of flights for the Durban-based airline followed delays in its flights between Cape Town, Durban, Johannesburg and Port Elizabeth on Wednesday. The airline started flying last March. Velvet Sky’s majority shareholder is Excalibur Aerospace, an aviation industry service provider owned by Excalibur Private Equity, which claims to be black-owned. Excalibur Aerospace acquired its 74% stake in Velvet Sky from founding company, the steel group Macdonald Holdings, for an undisclosed sum, within just three months of the airline’s launch. Mr Webb said a deal to "switch service providers is pretty much done", and Velvet Sky’s board had assured him that the flights would resume today. Wednesday’s delayed flights were blamed on not having paid South African Airways Technical and other service providers, according to the Velvet Sky website. Page 2 of 4 STRATEGIC MANAGEMENT(MBA)- MGMT5310-SBMF4444ran Velvet Sky also cancelled its flights to Polokwane last month. "We felt the route, which was the least profitable and sometimes loss-making, was not worth the damage to our brand," Velvet Sky chairman Stephen Nthite said at the time. This month Velvet Sky also purchased two DC9 aircraft for R4,6m, one of which had belonged to businessman Tokyo Sexwale’s family. The aim was to establish a luxury VIP charter division. Low-cost airlines have had a checkered history in SA, with some proving successful, such as Mango Airlines and kulula.com, while others, such as Flitestar, Nationwide and Phoenix Air, have failed. Last September, Excalibur said it was buying a controlling stake in rival low-cost airline 1time , but the deal lapsed last month due to the "failure to fulfil certain suspensive conditions timeously". Excalibur had wanted to grow its stake in 1time to expand into other African markets. The Mail & Guardian reported last year that a director, Thulani Ngubane, and advisers of mining company Aurora Empowerment Systems, Suleman and Faizel Bhana, Yaseen Theba and Tony Chammas, were involved in the "day-to-day running" of Velvet Sky, ostensibly as "business consultants". Aurora’s board members at that time included President Jacob Zuma ’s nephew Khulubuse Zuma and Nelson Mandela’s grandson Zondwa Mandela, the Mail & Guardian reported. Based on the extract on Velvet Sky, answer the following questions: REQUIRED: (a) Critically analyse the impact of financial problems and grounding of flights on the Velvet Sky brand. (10 marks) (b) Provide an assessment on how social media aggravated the crisis from a marketing perspective. (10 marks) (c) Explain how other low cost airlines (competitors) are likely to react to the situation in which Velvet Sky finds itself. (10 marks) (d) As a marketing consultant, recommend strategies to Velvet Sky that could be used to restore brand equity and rebuild customer confidence. (10 marks) Page 3 of 4 STRATEGIC MANAGEMENT(MBA)- MGMT5310-SBMF4444ran SECTION B: ANSWER ANY TWO QUESTIONS QUESTION 2: (30 MARKS) Describe the following Grand Strategies and explain how and when a company should contemplate using them: a) Integration strategies (10 marks) b) Intensive Strategies (10 marks) c) Diversification Strategies (10 marks) QUESTION 3: (30 MARKS) Explain Porter’s five forces model and discuss its limitations. QUESTION 4: (30 MARKS) Discuss issues that need to be addressed during strategy implementation to ensure organizational objectives are attained both in the short and long terms. QUESTION 5: (30 MARKS) Strategic Management is Management for the Long Term. Strategy Evaluation becomes futile as the future is uncertain and plans will change in any case. Discuss. ***END OF QUESTION PAPER*** Page 4 of 4 STRATEGIC MANAGEMENT(MBA)- MGMT5310-SBMF4444ran .