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  1. 1. Q.1 What do you understand by the term Strategy in the context of Business Management and Policy? And what are the stages in the formulation of a Strategy?Ans. A strategy is an operational tool to achieve the goals, and thus, the corporate mission. Strategies do not attempt to outline exactly how the enterprise is to accomplish its objectives. A company may view downsizing as a strategy in a competitive market to render cost-effective services. Thus, strategy provides a framework to guide thinking and action. Strategies are very much useful in organizations for guiding, planning and control. Strategy is a way of life both at the macro as well as micro levels for everyone, whether it is a nation or a company. To win over in a given complex situation, the organizations, even trans- nationals adopt strategies. They make changes, if necessary, even to their global strategies. An individual company may formulate its own strategy to bring out the desired results. The eventual success of the organization depends upon strategy formulation and implementation. The recently initiated moves such as globalization, privatization and liberalization are strategies to attain a globally competitive economy. Business management must focus on following issues a. Vision- For proper growth of the company. b. Mission – What the company wants to achieve. c. Goals – To achieve the above mission. d. Objectives – To achieve the set goals e. Strategies – To achieve the above objectives f. Policies – To control strategies g. Programmes – For implementation of objectives h. The above list outlines some of the key issues at every stage of action illustrating how: a. The mission springs out from vision statements b. Goals from the mission c. Objectives from goals d. Strategies from objectives e. And programmes from objectives RANJAN PAL , 511110942 Page 1
  2. 2. It is the crux of the strategic management process. Strategy refers to the course of action desired to achieve the objectives of the enterprise. Formulation, together with its implementation, constitutes an integral part of the management activity. Managers use strategies for different purposes such as to overcome competition, to increase sales, to increase production, to motivate the employees to provide their best, and so on. Implementation of a strategy is a crucial task as the formulation of it. There may be a lot of resistance during the implementation process. It is necessary for the manager to be very tactful to involve the members of his group in the formulation of strategy to facilitate the implementation process. Stages in Strategy Formulation and Implementation a. Identification of mission and objectives b. Environment scanning c. Generic strategy alternatives d. Strategy variations e. Strategic choice f. Allocation of resources and formulation of organizational structure g. Formulation of plans, policies, programmes and administration b. h) Evaluation and controlQ.2 What, in brief, are the types of Strategic Alliances and the purpose of each? Supplement your answer with one real life example of each.Ans. Strategic alliances constitute a viable alternative in addition to Strategic Alternatives. Companies can develop alliances with the members of the strategic group and perform more effectively. These alliances may take any of the following forms. Following are the different types of strategic Alliances: 1. Product and/or service alliance: Two or more companies may get together to synergies their operations, seeking alliance for their products and/or services. A manufacturing company may grant license to another company to produce its products. The necessary market and product support, including technical know-how, is provided as part of the alliance. Example: - Coca-cola initially provided such support to thumps Up. Two companies may jointly market their products which are complementary in nature. Example:- 1) Chocolate companies more often tie up with toy companies. 2) TV Channels tie-up RANJAN PAL , 511110942 Page 2
  3. 3. with Cricket boards to telecast entire series of cricket matches live. Two companies, who come together in such an alliance, may produce a new product altogether. Example: - Sony Music created a retail corner for itself in the ice-cream parlors of Baskin- Robbins. 2. Promotional alliance: Two or more companies may come together to promote their products and services. A company may agree to carry out a promotion campaign during a given period for the products and/or services of another company. Example :- The Cricket Board may permit Coke’s products to be displayed during the cricket matches for a period of one year. 3. Logistic alliance: Here the focus is on developing or extending logistics support. One company extends logistics support for another company’s products and services. Example:- The outlets of Pizza Hut, Kolkata entered into a logistic alliance with TDK Logistics Ltd., Hyderabad, to outsource the requirements of these outlets from more than 30 vendors all over India – for instance, meat and eggs from Hyderabad etc. 4. Pricing collaborations: Companies may join together for special pricing collaborations. Example :- It is customary to find that hardware and software companies in information technology sector offer each other price discounts. Companies should be very careful in selecting strategic partners. The strategy should be to select such a partner who has complementary strengths and who can offset the present weaknesses.Q.3 What is a Business Plan? What purpose does it serve?Ans. A business plan is a detailed description of how an organization intends to produce, market and sell a product or service. Whether the business is housing, commercial or some other enterprise, a good business plan describes to others and to your own board of directors, management and staff the details of how you intend to operate and expand your business. A solid business plan describes who you are, what you do, how you will do it, your capacity to do it, what financial resources are necessary to carry it out, and how you intend to secure those resources. A well-written plan will serve as a guide through the start-up phase of the business. It can also establish benchmarks to measure the performance of your business venture in comparison with expectations and industry standards. And most important, a good business plan will help to attract necessary financing by demonstrating the feasibility of your venture and the level of thought and professionalism you bring to the task. A well-written plan will serve as a guide through the start-up phase of the business. It can also establish benchmarks to measure the performance of your business venture in comparison with expectations and industry standards. And most important, a good business plan will help to attract RANJAN PAL , 511110942 Page 3
  4. 4. necessary financing by demonstrating the feasibility of your venture and the level of thought andprofessionalism you bring to the task. A good business plan will help attract necessary financing bydemonstrating the feasibility of your venture and the level of thought and professionalism you bringto the task. A good business plan serves the following purposes:1. Revenue Generation – Your organization may hope to create a business that will generate sufficient net income or profit to finance other programs, activities or services provided by your organization.2. Employment Creation – A new business venture may create job opportunities for community residents or the constituency served by your organization.3. Neighborhood Development Strategy – A new business venture might serve as an anchor to a deteriorating neighborhood commercial area, attract additional businesses to the area and fill a gap in existing retail services. You may need to find a use for a vacant commercial property that blights a strategic area of your neighborhood. Or your business might focus on the rehabilitation of dilapidated single family homes in the community.4. Establish Goals: Once you have identified goals for a new business venture, the next step in the business planning process is to identify and select the right business. Many organizations may find themselves starting at this point in the process. Business opportunities may have been dropped at your doorstep. Depending on the goals you have set, you might take several approaches to identify potential business opportunities.5. Local Market Study: Whether your goal is to revitalize or fill space in a neighborhood commercial district or to rehabilitate vacant housing stock, you should conduct a local market study. A good market study will measure the level of existing goods and services provided in the area, and assess the capacity of the area to support existing and additional commercial or home-ownership activity. A bad or insufficient market study could encourage your organization to pursue a business destined to fail, with potentially disastrous results for the organization as a whole. Through a market study you will be able to identify gaps in existing products and services and unsatisfied demand for additional or expanded products and services.6. Analysis of Local and Regional Industry Trends: Another method of investigating potential business opportunities is to research local and regional business and industry trends. You may be able to identify which business or industrial sectors are growing or declining in your city, metropolitan area or region. The regional or metropolitan area planning agency for your area is a good source of data on industry trends.7. Internal Capacity: The board, staff or membership of your organization may possess knowledge and skills in a particular business sector or industry. Your organization may wish toRANJAN PAL , 511110942 Page 4
  5. 5. draw upon this internal expertise in selecting potential business opportunities. 8. Internal Purchasing Needs/Collaborative Procurement: Perhaps, the organization frequently purchases a particular service or product. If nearby affiliate organizations also use this service or product, this may present a business opportunity. Examples of such products or services include printing or copying services, travel services, transportation services, property management services, office supplies, catering services, and other products.Q.4 What is the chief purpose of a Business Continuity Plan and what are its components for effective implementation. Explain in a sentence or two as to how it is different from a Business Plan.Ans. The Business Continuity Plan is a tool to allow organizations to consider the factors and steps necessary to prepare for a crisis (disaster or emergency) so that it can manage and survive the crisis and take all appropriate actions to help ensure the organization’s continued viability. The advisory portion of the plan is divided into two parts:  Planning process: It provides step-by-step Business Continuity Plan preparation and activation guidance, including readiness, prevention, response, and recovery/ resumption.  Implementation and maintenance: It gives the details of tasks required for the Business Continuity Plan to be maintained as a living document, changing and growing with the organization and remaining relevant and executable. The purpose of the business continuity plan is to prepare to face the unthinkable situations that may threaten an organization’s future. This new challenge goes beyond the mere emergency response plan or disaster management activities that we previously employed. Organizations now must engage in a comprehensive process best described generically as Business Continuity. It is no longer enough to draft a response plan that anticipates naturally, accidentally, or intentionally caused disaster or emergency scenarios. Today’s threats require the creation of an on-going, interactive process that serves to assure the continuation of an organization’s core activities before, during, and most importantly, after a major crisis event. In the simplest of terms, it is good business for a company to secure its assets. CEOs and shareholders must be prepared to budget for and secure the necessary resources to make this happen. It is necessary that an appropriate administrative structure be put in place to effectively deal with crisis management. Following steps are required to fulfilled for effective implementation of the business continuity plan: RANJAN PAL , 511110942 Page 5
  6. 6. 1. Educate and Train: The BCP is only as valuable as the knowledge that others have of it. Education and training are necessary components of the BCP process. They require a time commitment from the Crisis Management Team, the Response Teams, and the general employee population. 2. Educate and Train Teams: The Crisis Management and Response Teams should be educated about their responsibilities and duties. Check lists of critical actions and information to be gathered are valuable tools in the education and response processes. 3. Educate and Train All Personnel: All personnel should be trained to perform their individual responsibilities in case of a crisis. Such training could include procedures for evacuation, shelter-in-place, check-in processes to account for employees, arrangements at alternate worksites, and the handling of media inquiries by the company. 4. Review of BCP: The BCP should be regularly reviewed and evaluated. Reviews should occur according to a pre-determined schedule, and documentation of the review should be maintained as necessary. The following factors can trigger a review and should otherwise be examined once a review is scheduled:  Risk Assessment  Sector/Industry Trends  Regulatory Requirements  Event Experience  Test/Exercise Results5. Maintenance of BCP: Regular maintenance of the BCP cannot be overemphasized. Clear responsibility for BCP maintenance should be assigned. Maintenance can be either planned or unplanned and should reflect changes in the operation of the organization that will affect the BCP.Difference between a Business plan & Business continuity Plan a. A Business plan is a detailed description of how an organisation intends to produce, market and sale a product or service. A Business continuity plan is an ongoing process supported by senior management and funded to ensure that the necessary steps are taken to identify the impact of potential losses, maintain viable recovery strategies and plans, and ensure the continuity of operations through personnel training, plan ,testing and maintenance. b. A Business continuity plan is a tool which allows organisations to consider the factors and steps necessary to prepare for a crisis.(disaster or emergency). Whereas a business plan is not prepared for such type of disaster or emergency.RANJAN PAL , 511110942 Page 6
  7. 7. c. In a business continuity plan, a necessary Administrative structure is put in place to effectively deal with crisis management, whereas,in a business plan, no such administrative structure is available.Q.5 Take any three examples of the components of a Decision Support System and explain how they help decision makingAns. Following are the three components of a Decision Support System 1. Annual Budget: It is really a business plan. The budget allocates amounts of money to every activity and/or department of the firm. As time passes, the actual expenditures are compared to the budget in a feedback loop. During the year, or at the end of the fiscal year, the firm generates its financial statements: the income statement, the balance sheet, the cash flow statement. When putting together, these four documents are the formal edifice of the firm’s finances. However, they can not serve as day-to-day guides to the General Manager. 2. Daily Financial Statements: The Manager should have access to continuously updated statements of income, cash flow, and a balance sheet. The most important statement is that of the cash flow. The manager should be able to know, at each and every stage, what his real cash situation is – as opposed to the theoretical cash situation which includes accounts payable and account receivable in the form of expenses and income. 3. The Daily Ratios Report: This is the most important part of the decision support system. It enables the Manager to instantly analyse dozens of important aspects of the functioning of his company. It allows him to compare the behaviour of these parameters to historical data and to simulate the future functioning of his company under different scenarios. It also allows him to compare the performance of his company to the performance of his competitors, other firms in his branch and to the overall performance of the industry that he is operating in. The Manager can review these financial and production ratios. Where there is a strong deviation from historical patterns, or where the ratios warn about problems in the future – management intervention may be required. Examples of the Ratios to be Included in the Decision System  SUE measure – deviation of actual profits from expected profits  ROE – the return on the adjusted equity capital  Debt to equity ratios  ROA – the return on the assets  The financial average RANJAN PAL , 511110942 Page 7
  8. 8.  ROS – the profit margin on the sales  ATO – asset turnover, how efficiently assets are used  Tax burden and interest burden ratios  Compounded leverage  Sales to fixed assets ratios  Inventory turnover ratios  Days receivable and days payable  Current ratio, quick ratio, interest coverage ratio and other liquidity and coverage ratios  Valuation price ratios  And many others A decision system has great impact on the profits of the company. It forces the management to rationalize the depreciation, inventory and inflation policies. It warns the management against impending crises and problems in the company. It specially helps in following areas: a. The management knows exactly how much credit it could take, for how long (for which maturities) and in which interest rate. It has been proven that without proper feedback, managers tend to take too much credit and burden the cash flow of their companies. b. A decision system allows for careful financial planning and tax planning. Profits go up, non cash outlays are controlled, tax liabilities are minimized and cash flows are maintained positive throughout. The decision system is an integral part of financial management in the West. It is completely compatible with western accounting methods and derives all the data that it needs from information extant in the company. So, the establishment of a decision system does not hinder the functioning of the company in any way and does not interfere with the authority and functioning of the financial department, but infact helps the manager to take quick decisions and make profit to the company.Q.6 Name and explain any three ways in which a Company’s CSR can be expressed.Ans. CSR is “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis” as they are increasingly aware that responsible behaviour leads to sustainable business success. CSR is also about managing change at company level in a socially responsible manner. This happens when a company seeks to set the trade-offs between the requirements and the needs of RANJAN PAL , 511110942 Page 8
  9. 9. the various stakeholders into a balance, which is acceptable to all parties. If companies succeed inmanaging change in a socially responsible manner, this will have a positive impact at the macro-economic level.Following are the different ways in which companys CSR can be expressed.1. Employment and Social Affairs PolicyWithin a business CSR relates to quality employment, life-long learning, information, consultationand participation of workers, equal opportunities, integration of people with disabilities anticipationof industrial change and restructuring. Social dialogue is seen as a powerful instrument to addressemployment-related issues.Employment and social policy integrates the principles of CSR, in particular, through the EuropeanEmployment Strategy, an initiative on socially responsible restructuring, the European SocialInclusion Strategy, initiatives to promote equality and diversity in the workplace, the EU DisabilityStrategy and the Health and Safety Strategy.In its document "Anticipating and managing change: a dynamic approach to the social aspects ofcorporate restructuring", the Commission has stressed that properly taking into account andaddressing the social impact of restructuring contributes to its acceptance and to enhance itspositive potential. The Commission has called upon the social partners to give their opinion inrelation to the usefulness of establishing at Community level a number of principles for action,which would support business good practice in restructuring situations.Deeply rooted societal changes such as increasing participation of women in the labour marketshould be reflected in CSR, adapting structural changes and changing the work environment inorder to create more balanced conditions for both genders acknowledging the valuable contributionof women as strategies which will benefit the society as well as the enterprise itself.2. Enterprise policyOnly competitive and profitable enterprises are able to make a long-term contribution to sustainabledevelopment by generating wealth and jobs without compromising the social and environmentalneeds of society. In fact, only profitable firms are sustainable and have better chances toadopt/develop responsible practices.The role of enterprise policy is to help create a business environment, which supports the Lisbonobjective of becoming the world’s most dynamic knowledge-driven economy, supportsentrepreneurship and a sustainable economic growth. Its objective is to ensure a balancedapproach to sustainable development, which maximises synergies between its economic, socialRANJAN PAL , 511110942 Page 9
  10. 10. and environmental dimensions.3. Consumer PolicyCSR has partly evolved in response to consumer demands and expectations. Consumers, in theirpurchasing behaviour, increasingly require information and reassurance that their wider interests,such as environmental and social concerns, are being taken into account.Consumers and their representative organisations have an important role to play in the evolution ofCSR. If CSR is therefore to continue to serve its purpose, strong lines of communication betweenenterprises and consumers need to be created.RANJAN PAL , 511110942 Page 10