Mb0052 assignment

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Mb0052 assignment

  1. 1. MB0052 –Strategic Management and Business Policy Q1. Explain the corporate strategy in different types of organization? Ans. Corporate strategy can be defined as a proposed course of action or sequence of actions designed to have a far-reaching effect on an organization’s ability to achieve its leading objectives. It is often used in the context of a company’s plan of action that causes it to allocate its scarce resources specially finance over time to get from where it is to where it wants to go. Corporate strategy, in association with structure and systems is supposed to achieve super ordinate goals through skills, staff and style. Corporate strategies are concerned with the broad and long-term questions of what business the organization is in or wants to be in & what it wants to do with those businesses. A well formulated strategy is vital for growth and development of any organization whether it is a small business, a big private enterprise, a public sector company, a multinational corporation or a non-profit organization. Small businesses generally operate in a single market or a limited number of markets with a single product or a limited range of products. The nature and scope of operations are likely to be less of a strategic issue than in larger organizations. Not much of strategic planning may also be required or involved; and the company may be content with making and selling existing products and generating some profit. In large businesses whether in the private sector, public sector or multinationals—the situation is entirely different. Both the internal and external environment and the organizational objectives and priorities are different. For all large private sector enterprises, there is a clear growth perspective, because the stake holders want the companies to grow, increase market share and generate more revenue and profit. Multinationals have a great focus on growth and development and also diversification in terms of both products and markets. This is necessary to remain internationally competitive and sustain their global presence. For example multinational companies like General Motors, Honda and Toyota may have to decide about the most strategic locations or configurations of plants for manufacturing the cars. In public sector companies, objectives and priorities can be quite different from those in the private sector. Generation of employment and maximizing output may be more important objectives than maximizing profit. Stability rather than growth may be the priority many times. Accountability system is also very different in public sector from that in the private sector. There is also greater focus on corporate social responsibility. In non-profit organizations the focus on social responsibilities is even greater than in the public sector. In these organizations, ideology and underlying values are of central strategic significance. Many of these organizations have multiple service objectives and the beneficiaries of service are not necessarily the contributors to revenue or resource. All these make strategic planning and management in these organizations quite different from all other organizations. The evaluation criteria also become different. The growth objectives of not-for-profit businesses is to increase clients served or patrons attracted, to broaden the geographic area and to increase programs offered.
  2. 2. Q2. What is the role consultants play in the strategic planning and management process of a company? Is it an essential role? Ans: Managements consultants can play very crucial roles in the strategic planning process of a company. They render services in different functional areas including the strategic planning and the management process. They undertake planning and strategy exercises as and when the company management feels the need for such exercises. Top strategic consultants like McKinsey and Company use or develop latest tools or models to work out the solutions to the specific strategic management problems or issues whether it be productivity, cost efficiency, restructuring, long term growth or diversification. Consultants bring diversified skills and experience from various companies which may not be available internally in a single company. Consultants have a tough and delicate role to play. In many companies a situation develops when the top management needs to bank upon the support of a consultant to push through a strategic change in the organizational structure or the management of a company. It may be for the growth and development. Many companies face internal resistance to change the strategy. The resistance is more if it is downsizing even when it is required for turning around a company. Consultants are engaged to substantiate the company’s point of view so that change is more easily acceptable to the internal members of the company. Q.3.What is strategic audit? Explain its relevance to corporate strategy and corporate governance. Ans: Strategic Audit is the process of evaluating a firm’s strategy. Strategic audits are examinations and evaluations of strategic management processes including measuring corporate performance against the corporate strategy. Whenever a deficiency is noted or performance of an organization is sub-par, the organization may elect to perform a strategic audit. This may be done with in-house auditors, or an audit firm may be contracted to perform the audit. The auditors will audit performance of the organization against the current corporate strategy and seek to identify problems within the current strategy that may be tied or can be traced to poor performance. Upon completion of the audit, a report will be created regarding the auditing firm or group’s findings and submit the report with recommended remedies to the management of the organization. The organization will then seek to implement the proposed remedies with hopes of increasing organizational performance. Q.4. What is Corporate Social Responsibility (CSR)? Which are the issues involved in analysis of CSR? Name three
  3. 3. companies with high CSR rating. Ans. Corporate social responsibility is a form of corporate self-regulation integrated into a business model. CSR is a process with the aim to embrace responsibility for the company's actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere who may also be considered as stakeholders. The term "corporate social responsibility" came into common use in the late 1960s and early 1970s after many multinational corporations formed the term stakeholder, meaning those on whom an organization's activities have an impact. The term "corporate social responsibility" is often used interchangeably with corporate responsibility, corporate citizenship, social enterprise, sustainability, sustainable development, triple-bottom line, corporate ethics, and in some cases corporate governance. Though these terms are different, they all point in the same direction: throughout the industrialized world and in many developing countries there has been a sharp escalation in the social roles corporations are expected to play. Companies are facing new demands to engage in public-private partnerships and are under growing pressure to be accountable not only to shareholders, but also to stakeholders such as employees, consumers, suppliers, local communities, policymakers, and society-at-large. There is heated debate about whether it constitutes a legitimate activity for a corporation to be engaged in. The adoption of CSR threatens prosperity in poor countries as well as rich. It is likely to reduce competition and economic freedom and to ‘undermine the market economy’. CSR policies and activities should only be undertaken when it appears that they can enhance the value of the firm, i.e. when they are used as strategic CSR. Companies derive from CSR activities arise from two sources. The first source is expectations held by the immediate stakeholders of a company- its consumers, employees and investors - for responsible corporate conduct. The second driver behind the adoption of CSR activities by corporations is the threat that the state will impose new binding regulations on companies. The three companies with high CSR rating according to Forbes magazine are: a)Microsoft b)Google c)The Walt Disney World Q5. Distinguish between core competence, distinctive competence, strategic competence and threshold competence. Use examples. Ans. Competency refers to the ability of a firm to carry out an activity well. It is built and developed by firms consciously through experience and learning. A competency resides in people in the firm and not in physical assets. A Core competency is an activity central to a firm's profitability and competitiveness that is performed well by the firm. Core competencies create and sustain firm's ability to meet the critical success factors of particular customer groups. The core competency of Apple can be said to be making user friendly user interfaces and design. The core competency of Walmart can be said to be groceries at a low cost and the core competency of Dell can be said to
  4. 4. be custom made PC direct from manufacturer at a low cost. A distinctive competency is a competitively valuable activity that a firm performs better than its competitors. These provide the basis for competitive advantage. These are cornerstone of strategy. They provide sustainable competitive advantage because these are hard to copy. Distinctive competence of a firm refers to a set of activities or capabilities that a company is able to perform better than its competitors and which gives it an advantage over them. Distinctive competence can lie in different area such as technology, marketing activities, or management capability. A company needs to develop its strategy that utilizes its distinctive competence to gain competitive advantage. It must be remembered that what distinctive competence of a firm may change with time as other companies develop new capabilities and with change in market requirements. Therefore companies need to identify their distinctive competence by careful analysis, and if required, strive to develop new competences to meet changing market requirements and competitive situation. The concept of distinctive competence is quite similar to the concept of core competence. Some examples of distinctive competencies are: Sharp Corporation which expertises in flat panel display technology. Toyota, Honda and Nissan companies have high quality manufacturing capabilities at low cost. Intel has the ability to design and manufacture more powerful microprocessors for personal computers. Motorola manufactures defect free six sigma quality of mobile phones. Strategic competence refers to a speaker’s ability to adapt their use of verbal and nonverbal language to compensate for communication problems caused by the speaker’s lack of understanding of proper grammar use or insufficient knowledge of social behaviour and communication norms. Some examples of behaviors demonstrating strategic competence include using synonyms to substitute for words the speaker cannot recall or has not yet learned, resorting to physical gestures to convey meaning, asking for clarification from the listener, raising one's voice in order to be heard, and feigning comprehension in order to listen for context clues. The characteristics required by a jobholder to perform a job effectively are called threshold competencies. These distinguish the people who can do the job from those who cannot. For the position of a typist it is necessary to have primary knowledge about typing, which is a threshold competency. A threshold competency is a quality that a person needs in order to do a job; it might be as simple as being able to speak in the native language. It is different from the competency in a manner that it does not offer any aid in distinguishing superior performance from average and poor performance. So, every job at any level in the organization would have a threshold competency. Q.6. What is global industry? Explain with examples, international strategy, multi-domestic, global & transnational strategy. Ans. The term global industry specifically means an industry where a firm’s competitive position in one country is affected by its position in other countries. The industries exhibiting global pattern in today’s world include automobiles, television sets, commercial aircrafts and boats, sporting equipments, watches, clothing, semiconductors, copiers and also the transfer of funds.
  5. 5. Global industries are industries with organizations that make operational and production decisions based on global supply and demand and global market conditions established by integrated markets around the world. Global strategy is based on a strategy implementation on the assumption of one global village, thus one strategy is implemented for all countries regardless of their social cultural differences. Intel, Motorola, Microsoft, Global retail chains like Walmart and Marks & Spencer come under this category. Multidomestic strategy means companies implement a strategy that is more responding to local needs, values and demands. This usually happens on a regional basis, e.g. Western European countries or Northern part of Europe. Companies choose to follow this strategy because their products will be better received by local customers, rather than seen as something unusual that is produced by a foreign company. One of the nation's most popular hamburger chains is an example of a multidomestic strategy. The company researches each country’s local customs and foods before creating its menu items and opening up a store. For example, the restaurant's stores in India do not sell any sandwiches made with beef, since the Indian culture sees cows as sacred. American theme parks provide another example of multidomestic companies. Transnational strategy differs, however, in the way the product is marketed in each country. A transnational product keeps its same characteristics, regardless of the country in which it is sold. The product does not change according to local customs or preferences, so that the product sold in Asia or Mexico is exactly the same as the version sold in the United States or Europe. A very well-known coca cola soft drink is one example of a transnational product. The product is sold in over 200 countries worldwide, and this beverage company retains exactly the same beverage formulation in each country. International strategy can be adopted for those products and services which are not available in some countries and can be transferred from other countries. These are standard products with little or no differentiation. International strategies are not very popular. Kellogg’s , Indian software and Indian handicrafts come under this strategy.

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