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  1. 1. MB0036 STRATEGIC MANAGEMENT AND BUSINESS POLICY Q.1). How does an organization’s vision get translated hierarchically and step by step into programs of action? Illustrate by a diagram and explain each step in a sentence or two, supported by an imaginary example. (10 marks) Answer: Translating Corporate Vision into Action: Case Study: BHEL Vision: “A world class, innovative, competitive and profitable engineering enterprise providing total business solutions.” BHEL translated this into action as: Mission- What the company wants to achieve: • To deal with products and services with specific focused engineering applications close to their Core Competence. • To become an international player • To be innovative • To be profitable • To provide total business solutions to ensure customer satisfaction. Goals – To achieve the above mission • To understand the status of technology in engineering and management. • To actively implement in-house and external R&D to develop innovative products and services. • To emerge as the most competitive player in terms of price and quality. Objectives – To achieve the above goals • To upgrade innovative R&D skills among technical human resource. • To outsource R&D services to close the gap. • To ensure that employees are committed. • To make key personnel more conscious of time, quality and cost. • To develop reliable and resourceful network of customers. Page 1 of 16
  2. 2. MB0036 STRATEGIC MANAGEMENT AND BUSINESS POLICY • To optimize utilization of resources, both financial as well as non-financial, material, as well as human. Strategies – To achieve the above objectives • To promote a joint venture with a strategy partner, preferably a leading multi-national. • To work for ISO 9000 certification, to streamline the operating systems in design, manufacturing, installation, testing and service. • To provide a continuous learning atmosphere for the technical and non-technical staff at all levels. • To network with leading international software vendors and transport companies of global standards. • To ensure quick recovery of receivables, offer incentives for early payment and initiate a system of debt factoring if necessary to take protection against bad debts. • To maintain an optimum staff strength and recruit only if and when necessary. • To select people based on aptitude and attitude. • To make the organization flat and lean to enhance the degree of competitiveness. Policies – To control strategies • To follow structured recruitment procedures • To make training a compulsory element of employees’ growth strategy. • To sell to a buyer only if he is not a significant contributor to debt levels • To encourage R&D and research paper presentations by employees • To make all maintenance staff lives within factory premises. Programmes – For implementation of objectives • To work for ISO 9000 certification • To conduct orientation programmes for all staff at all levels to communicate goals of such certification. • To develop and encourage cross-function teams combining employees, customers and suppliers. • To conduct job analysis, to identify job description and work out job specifications. • To use such data during recruitment. Page 2 of 16
  3. 3. MB0036 STRATEGIC MANAGEMENT AND BUSINESS POLICY • To schedule meetings with CEOs of major players in finance, supply and transportation and initiate measures for strategic alliance. • To conduct collection drive programmes for early recovery of outstanding. • To empower key personnel to negotiate early and favourable settlement of pending accounts, considering the best interests of the organization. • To organize cleanliness and safety weeks. The above list outlines some of key issues at every stage of action illustrating how: • The mission springs out from vision statements • Goals from the mission • Objectives from goals • Strategies from objectives • And programmes from objectives. Page 3 of 16
  4. 4. MB0036 STRATEGIC MANAGEMENT AND BUSINESS POLICY Q.2). Explain with any real or imaginary example, the four generic Strategy Alternatives for Marketing. (10 marks) Answer: Generic strategies are prescriptions about what the content of a firm’s strategy should be. Some offer a very limited choice of options, while others proffer a list of practices that are purported to lead to superior performance. With the advent of generic strategies the task of the executive suddenly became much simpler. Rather than by slogging through a structured analytical process, success could be achieved by following the checklist in the latest airport book. So the search for unique strategies has been replaced by a simplistic choice between a prescribed and limited set of generic alternatives. All of these generic strategy prescriptions are in some way incomplete. There are also problems with each theory that can lead to confusion. There are four strategy alternatives available to a firm or business: a) To expand: Expansion strategy can be adopted in the case of highly competitive and volatile industries, particularly, if they are in the introduction stage of product/ service life cycle. b) To stabilize: Stability strategy is a better choice when the firm is doing well, the environment is relatively less volatile, and the product or service has reached the stability or maturity stage of the life cycle. c) To wind up or retrench: Retrenchment strategy is the obvious choice when the firm is not doing well in terms of sales and revenue and finds greater returns elsewhere, or the product or service is in the finishing stage of the product life cycle. d) Combination strategy: Combination strategy is not a new strategy as it combines the other strategies. However, it is to be noted that it is better to evolve a complex combination strategy which could be Page 4 of 16
  5. 5. MB0036 STRATEGIC MANAGEMENT AND BUSINESS POLICY cumbersome with loss of precious business time. It is best suited to multiple SBU firms in times of economic transaction and also when changes occur in the product or service life cycle. If a firm realizes that some of its main product lines have outlived their lives, it may not be profitable to continue investment in the same product or SBU. The firm may choose to withdraw its resources from this area and follow an Expansion strategy in a new product area. Combination strategy is best suited when the firm finds that its product wise performance is uneven, or all or most of its products differ in their future potential. Page 5 of 16
  6. 6. MB0036 STRATEGIC MANAGEMENT AND BUSINESS POLICY Q.3). Explain in a sentence or two, each of the elements of a Business Plan and why it is necessary. (10 marks) Answer: A business plan is a formal statement of a set of business goals, the reasons why they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals. The business goals may be defined for for-profit or for non-profit organizations. For- profit business plans typically focus on financial goals, such as profit or creation of wealth. Non-profit and government agency business plans tend to focus on organizational mission which is the basis for their governmental status or their non-profit, tax-exempt status, respectively -- although non-profits may also focus on optimizing revenue. In non-profit organizations, creative tensions may develop in the effort to balance mission with quot;marginquot; (or revenue). Business plans may also target changes in perception and branding by the customer, client, tax-payer, or larger community. A business plan having changes in perception and branding as its primary goals is called a marketing plan. Business plans may be internally or externally focused. Externally focused plans target goals that are important to external stakeholders, particularly financial stakeholders. They typically have detailed information about the organization or team attempting to reach the goals. With for-profit entities, external stakeholders include investors and customers. External stake-holders of non-profits include donors and the clients of the non-profit's services. For government agencies, external stakeholders include tax-payers, higher-level government agencies, and international lending bodies such as the IMF, the World Bank, various economic agencies of the UN, and development banks. Internally focused business plans target intermediate goals required to reach the external goals. They may cover the development of a new product, a new service, a new IT system, a restructuring of finance, the refurbishing of a factory or a restructuring of the organization. An internal business plan is often developed in conjunction with a balanced Page 6 of 16
  7. 7. MB0036 STRATEGIC MANAGEMENT AND BUSINESS POLICY scorecard or a list of critical success factors. This allows success of the plan to be measured using non-financial measures. Business plans that identify and target internal goals, but provide only general guidance on how they will be met are called strategic plans. Operational plans describe the goals of an internal organization, working group or department. Project plans, sometimes known as project frameworks, describe the goals of a particular project. They may also address the project's place within the organization's larger strategic goals. Business Plan Content Business plans are decision-making tools. There is no fixed content for a business plan. Rather the content and format of the business plan is determined by the goals and audience. A business plan should contain whatever information is needed to decide whether or not to pursue a goal. For example, a business plan for a non-profit might discuss the fit between the business plan and the organization’s mission. Banks are quite concerned about defaults, so a business plan for a bank loan will build a convincing case for the organization’s ability to repay the loan. Venture capitalists are primarily concerned about initial investment, feasibility, and exit valuation. A business plan for a project requiring equity financing will need to explain why current resources, upcoming growth opportunities, and sustainable competitive advantage will lead to a high exit valuation. Preparing a business plan draws on a wide range of knowledge from many different business disciplines: finance, human resource management, intellectual property management, supply chain management, operations management, and marketing, among others. It can be helpful to view the business plan as a collection of sub-plans, one for each of the main business disciplines. quot;A good business plan can help to make a good business credible, understandable, and attractive to someone who is unfamiliar with the business. Writing a good business plan can’t guarantee success, but it can go a long way toward reducing the odds of failure.quot; Page 7 of 16
  8. 8. MB0036 STRATEGIC MANAGEMENT AND BUSINESS POLICY Typical structure for a business plan: • Cover page and table of contents • Executive summary • Business description • Business environment analysis • Industry background • Competitive analysis • Market analysis • Marketing plan • Operations plan • Management summary • Financial plan • Attachments and milestone How Business Plans are Used Venture Capital o Business plan contests - provides a way for venture capitals to find promising projects o Venture capital assessment of business plans - focus on qualitative factors such as team. Public Offerings o In a public offering, potential investors can evaluate perspectives of issuing company Within Corporations Fundraising o Fundraising is the primary purpose for many business plans, since they are related to the inherent probable success/failure of the company risk. Total Quality Management Page 8 of 16
  9. 9. MB0036 STRATEGIC MANAGEMENT AND BUSINESS POLICY o Total Quality Management (TQM) is a business management strategy aimed at embedding awareness of quality in all organizational processes. TQM has been widely used in manufacturing, education, call centers, government, and service industries, as well as NASA space and science programs. Management by Objective o Management by Objectives (MBO) is a process of agreeing upon objectives within an organization so that management and employees agree to the objectives and understand what they are in the organization. Strategic Planning o Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people. Various business analysis techniques can be used in strategic planning, including SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats ) and PEST analysis (Political, Economic, Social, and Technological analysis) or STEER analysis involving Socio-cultural, Technological, Economic, Ecological, and Regulatory factors and EPISTELS (Environment, Political, Informative, Social, Technological, Economic, Legal and Spiritual) Page 9 of 16
  10. 10. MB0036 STRATEGIC MANAGEMENT AND BUSINESS POLICY Q. 4. Case Study: S. C. Computers has been mismanaged by its promoter. The Company has over 50,000 employees with software expertise. It has clients over the last 15 years in 50 countries. The mismanagement has led to a severe cash crunch with no cash to meet even salary requirements. While the internal situation, it is one of financial and employee morale crisis, externally it enjoys the confidence of its clientele. The Government wants such a valuable institution, built over several years, to be saved so that it can continue to contribute to national wealth creation, but at the same time does not wish to extend direct financial assistance, lest it amounts to encouraging or subsidizing mismanagement. In one page, suggest the broad elements of a Business Continuity Plan covering all aspects (not just financial alone) specifically applicable to this situation. (10 marks) Answer: Technology Basics Business disruptions, the result of natural disasters, technology failures or criminal acts can threaten the very survival of a company. Such disruptions cannot always be predicted or prevented, but sound planning can dramatically reduce the damage they cause. But effective preparation for disaster recovery and business continuity is a job for the entire company. Business Survival in an Uncertain World - the Basics Remain Constant Major business interruptions particularly those featuring dramatic disasters grab attention and focus it on one vector of threat at a time. It is important, however, to keep the broad perspective, “the big picture,” in mind. Although business continuity planners naturally check their own company’s vulnerability to the natural or man-made disaster making news at the moment, the economic trends of the past 18 months demonstrate that the greatest threat to most businesses is simply “less business.” Factors to consider for business survival are complex, extending beyond data security and physical security. Being prepared for business interruption involves analysis of every aspect of the organization’s management so that the company is positioned to survive the erosive effects of the winds of change as well as the sudden blast of a hurricane. Using the Available Tools and Tactics Tools and tactics to manage the process of business continuity planning and disaster recovery need to be used in concert with financial planning and corporate governance information systems. Some important questions that emerge for technical officers and their continuity planning colleagues are: How can the company integrate continuity planning with Page 10 of 16
  11. 11. MB0036 STRATEGIC MANAGEMENT AND BUSINESS POLICY overall corporate risk management? Of the products, consultants and services available, which kind of help best fits each company’s needs? Should the company build and maintain the solution or contract for services? How can the company use continuity planning tools to prepare decision-makers to think creatively and flexibly when handling a crisis? Answering these questions requires understanding the services that support making business continuity decisions. High expectations for continuity and rapid recovery demonstrate the need for the integration of business continuity planning into enterprise-level initiatives. Business continuity preparation, adequately supported throughout the organization, embodies the strategic framework for a corporate culture that embraces a variety of tactics to mitigate risks that might cause: • Business process failure. • Asset loss. • Regulatory liability. • Customer service failure. • Damage to reputation or brand. Page 11 of 16
  12. 12. MB0036 STRATEGIC MANAGEMENT AND BUSINESS POLICY Q.5). Brand has become an important aspect of Business. What are the advantages of building a Brand and what steps are available under IPR to protect its ownership? (10 marks) Answer: Various Advantages of Building a Brand Any business needs to create a positive image in the minds of consumers. Contrary to what most people believe, branding isn’t just a logo. The businesses purpose, focus, and image all combine to create the brand. • It’s hard to remember a company with a generic name. Businessman may not be able to distinguish their purpose and business focus. Branding the business ensures consumers will know about the business. • Business gets customer loyalty. The fact is, people build close bonds with brand identities. Consumers want quality products they can trust. So, the business should have an identity that its customers can cling to. If the company delivers great products and services and has a great brand identity, people will remember the company. In addition, they will often refer it to friends and family. • Businessman wants the people who have not done business with him to still know who he is and what he do. If they see his ads on billboards, hear them on radio, see them on television, or any other media, they will know his brand identity. And when the time comes that they need his product or service, his company will be the first to come to mind. • One of the greatest advantages to business of having a strong brand is that it creates a sense of individuality and “separateness” in the marketplace so that its clients are able to easily differentiate that business from its competitors. • The goal of personal branding is to be known for who you are as a person and what you stand for. Your brand is a reflection of who you are, your opinions, values, and beliefs that are visibly expressed by what you say and do, and how you do it. • The branding process allows business to take control of its identity and influence the perception others will have about it and the services it offer. • A strong personal brand will enable business to effortlessly attract clients and opportunities. Business will position itself in the mind of their marketplace as the service provider of choice to dominate its market and command higher fees - work less and make more! Page 12 of 16
  13. 13. MB0036 STRATEGIC MANAGEMENT AND BUSINESS POLICY • Establish the businessman as an expert and become a celebrity in its area of specialty. Gain name recognition in his area of expertise where it counts the most - in his customer’s mind. Makes a lasting impression and be super-rewarded for his individuality. • Trust, respect, and admiration will follow when the business name and message are embedded repeatedly into the consciousness of its target market. The brand will propel it to the top in its marketplace. • Consumers pay for image. We are a very brand aware society. People commonly associate brand names with quality and may only buy certain brands for that reason. If people only want one brand of a particular product, they are willing to pay a higher price. Having a great brand will make the company have a superior image and cause consumers forget about the competition. Intellectual Property Rights (IPR), allow people and organisations to demonstrate ownership of their creativity and originality in the same way physical property can be owned. IPR are defined using: Copyright: Copyright allows the creators of, amongst others, literary, dramatic, musical and artistic works (which includes maps) to manage the use of their materials. The copyright owner is able to license its use and when necessary to take action to prevent unauthorized and inappropriate use of the material. For a work to enjoy copyright it must be original and be the result of skill and “sweat of the brow”. Copyright rights are automatic – they exist as soon as there is a record of the material that has been created. Patents: The term patent usually refers to a right granted to anyone who invents or discovers any new and useful process, machine, article of manufacture, or composition of matter, or any new and useful improvement thereof. The procedure for granting patents, the requirements placed on the patentee and the extent of the exclusive rights vary widely between countries according to national laws and international agreements. Typically, however, a patent application must include one or more claims defining the invention which must be new, inventive, and useful or industrially applicable. In many countries, certain subject areas are excluded from patents, such as business methods and mental acts. The exclusive right granted to a patentee in most countries is the right to prevent others from making, using, selling, or distributing the patented invention without permission. Page 13 of 16
  14. 14. MB0036 STRATEGIC MANAGEMENT AND BUSINESS POLICY Registered and unregistered trademarks for brand identity; A trademark or trade mark, identified by the symbols ™ (not yet registered) and ® (registered), is a distinctive sign or indicator used by an individual, business organization or other legal entity to identify that the products and/or services to consumers with which the trademark appears originate from a unique source, and to distinguish its products or services from those of other entities. A trademark is a type of intellectual property, and typically a name, word, phrase, logo, symbol, design, image, or a combination of these elements. There is also a range of non-conventional trademarks comprising marks which do not fall into these standard categories. Industrial design rights Industrial design rights are intellectual property rights that protect the visual design of objects that are not purely utilitarian. An industrial design consists of the creation of a shape, configuration or composition of pattern or color, or combination of pattern and color in three dimensional forms containing aesthetic value. An industrial design can be a two- or three- dimensional pattern used to produce a product, industrial commodity or handicraft. Page 14 of 16
  15. 15. MB0036 STRATEGIC MANAGEMENT AND BUSINESS POLICY Q.6). “Corporate Social Responsibility is outside the scope of Business houses”. Explain why you agree or disagree with this statement. (10 marks) Answer: “Corporate Social Responsibility is outside the scope of Business houses” – this statement is not in the form of geniality. Corporate Social Responsibility (CSR) is a form of corporate self-regulation integrated into a business model. Ideally, CSR policy would function as a built-in, self-regulating mechanism whereby business would monitor and ensure their adherence to law, ethical standards, and international norms. Business would embrace responsibility for the impact of their activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere. Furthermore, business would proactively promote the public interest by encouraging community growth and development, and voluntarily eliminating practices that harm the public sphere, regardless of legality. Essentially, CSR is the deliberate inclusion of public interest into corporate decision- making, and the honoring of a triple bottom line: People, Planet, and Profit. The scale and nature of the benefits of CSR for an organization can vary depending on the nature of the enterprise, and are difficult to quantify, though there is a large body of literature exhorting business to adopt measures beyond financial ones. Orlitzky, Schmidt, and Rynes found a correlation between social/environmental performance and financial performance. However, businesses may not be looking at short-run financial returns when developing their CSR strategy. The definition of CSR used within an organization can vary from the strict quot;stakeholder impactsquot; definition used by many CSR advocates and will often include charitable efforts and volunteering. CSR may be based within the human resources, business development or public relations departments of an organization, or may be given a separate unit reporting to the CEO or in some cases directly to the board. Some companies may implement CSR-type values without a clearly defined team or programme. The business case for CSR within a company will likely rest on one or more of these arguments: Human resources A CSR programme can be an aid to recruitment and retention, particularly within the competitive graduate student market. Potential recruits often ask about a firm's CSR policy during an interview, and having a comprehensive policy can give an advantage. CSR can also help to improve the perception of a company among its staff, particularly when staff can become involved through payroll giving, fundraising activities or community volunteering. Page 15 of 16
  16. 16. MB0036 STRATEGIC MANAGEMENT AND BUSINESS POLICY Risk management Managing risk is a central part of many corporate strategies. Reputations that take decades to build up can be ruined in hours through incidents such as corruption scandals or environmental accidents. These events can also draw unwanted attention from regulators, courts, governments and media. Building a genuine culture of 'doing the right thing' within a corporation can offset these risks. Brand differentiation In crowded marketplaces, companies strive for a unique selling proposition that can separate them from the competition in the minds of consumers. CSR can play a role in building customer loyalty based on distinctive ethical values. Several major brands, such as The Co-operative Group, The Body Shop and American Apparel are built on ethical values. Business service organizations can benefit too from building a reputation for integrity and best practice. License to operate Corporations are keen to avoid interference in their business through taxation or regulations. By taking substantive voluntary steps, they can persuade governments and the wider public that they are taking issues such as health and safety, diversity or the environment good corporate citizens with respect to labour standards and impacts on the environment. Page 16 of 16