Master of Business Administration MBA Semester 4 MB0052 Strategic Management and Business Policy- 4 Credits (Book ID: B1699)

Name: Samrudhi Ramchandra Patil Roll no: 521124677

Q1. Explain the Corporate Strategy in Different Types of Organizations Answer: 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, Multinational Corporation or a non-profit organization. But the nature and the focus of corporate strategy in these types of organizations will be different, primarily because of the nature of their operations and organizational objectives and priorities. Small business generally operate in a single market or a limited number of markets with a single product or a limited range of products. In many cases the founder or the owner himself forms the senior or top management and his wisdom gives direction to the company. In large business or companies whether it is private sector public sector or multinationals the situation is entirely different. For all private sector enterprises, there is a clear growth perspective, because the stakeholders want them to grow Multinationals have greater focus on growth and the development and also diversification in terms of both products and market. This is necessary to remain internationally competitive and sustain their global presence. 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 objective than maximizing profit. Stability rather than growth may be the priority many times. The Corporate planning system and management have to take into account all these factors and revolve more balancing strategies. In non-profit organizations, the focus on social responsibilities is even greater than in the public sector In these organizations, ideology and underling values are of central strategic significance. Many of these organizations have multiple service objectives, and the benefits of service are not necessarily the contributors to revenue or resources. All these make strategic planning and management in these organization quite different from all other organizations. The evaluation criteria also become different.

Q2. What is the role consultants play in the strategic planning and management process of a company? Is it an essential role? Answer: Yes it is an essential role. Management consultants can play very useful role in the strategic planning process of the company. Consultants render services in different functional areas of management including the strategic planning and management process. In companies with no separate planning division or unit, consultants can fill the gap. They can undertake planning and strategy exercises as and when the company management feels the need of such exercises of consultancies. Even in companies with a corporate planning division / unit, consultants may provide specialized inputs or insights into identified management or strategy areas. Top strategic consultants like McKinsey & company use of develop latest tools, techniques or models to work out solution to specific strategic management problems or issues-be it productive, cost efficiency, destructing, long term growth or diversification. Consultants bring with them diversified skill and experience from various companies which may not be available internally in a single company. This is the reason why even the large multinational companies hire consultants for achieving their goals or objectives. There are many international consultants who are in demand in different countries. There are also national consultants. Leading international consultants, in addition to McKinsey and Company, are Boston Consulting Group (BCG), Arthur D little, Accenture. Consultants sometimes have a difficult or delicate role to play. In many companies, a situation develops when the chief executive or the top management needs to bank upon the support of an external agency like a consultant to push through a strategic change in the organizational structure or a management system of the company. It may be for the growth and development or downsizing. In both cases, many companies face internal resistance to change. The resistance is more if it is downsizing even when it is required for turning around a company. This happens particularly in public sector companies where implementing change is always difficult. Consultants are engaged to support or substantiate the companys point of view so that change is more easily acceptable to the internal stake holders of the company. Consultants role may become delicate and sometimes tricky in some places and they should carefully weigh the ethical implication of their participation

Q3. What is strategic audit? Explain its relevance to corporate strategy and corporate governance? Answer: Strategic audit is a formal strategic review process which imposes its own discipline on both the board and the management very much like the financial audit process. But it is different from management audit, which is undertaken by the senior or top management on the progress and outcome of important corporate activities. To understand strategic audit in the correct perspective, one needs to analyze this in terms of its various elements Donaldson has specified five elements of strategic units 1. 2. 3. 4. 5. Establishing Criteria for performance Database design and maintenance Strategic Audit Committee Relationship with the CEO Alert to duty (By board members)

The performance criteria should be simple well understood and well accepted measures of financial performance. The number of measures of financial performance are available. One common measure, used by many companies is return on investment (ROI). The ROI can be analyzed like this: Profit for unit of sales, Profit margin, Sales per unit of capital employed, assets turnover and capital employed per unit of equity invested leverage. If this three ratios are multiplied together the resultant ration will give profit per unit of equity. This criterion would fulfill two objectives first sustainable rates of return of shareholder investment and second to decide the return is less or equal to or more than returns and alternative investments with comparable risk i.e. whether the company chosen strategy is justifiable or not. The strategic audit committee and the board should always be alert and vigilant to ensure that there are no slippages. Business cycles indicate that period of success may be followed by a period of slum. The strategic audit committee and the board should be alter enough to get signals so that they can act in time. This is necessary because compliance develops after success both the board and the management. If properly convinced deigned and conducted strategic audit, more than management audit can be powerful tool for monitoring the strategic process of a company and also strike a good balance between corporate strategy and corporate governance

Q4. What is Corporate Social Responsibility (CSR)? Which are the issues involved in analysis of CSR? Name three companies with high CSR rating. Answer: External stake holders of an organization are too many and vary and many of them represent different sections of social group. This implies that organization should be socially responsible that is in addition to the interests of the shareholders businesses or companies should also serve the society. This is corporate social responsibility (CSR). CSR can be defined as the alignment of business operations with social values. The conflict between internal and external stake holders can go much further than mentioned so far. Some feel that this is the most problematic issue in deciding company responsibility. External stakeholders argue that internal stakeholders demand be made secondary to the better need of the society, that is greater good of the external stake holders. Many of them feel that issues like pollution waste disposal, environmental safety and conservation of natural resources should be the overriding consideration for formulation of policy and strategic decision making. Internal stakeholders, on the other hand, think that the competing or social claims of external stakeholders should be balanced in such a way that it protects the company mission, objectives and profitability the debate continues. Strong exponents of CSR also talk of social policies for companies. They feel that social responsibilities of company should be clearly enunciated and declared as social policy. Social policies may directly affect a companys product and services, technologies, markets, customers and self-image. According to these thinkers and organization social policy should be integrated into all management activities including the mission statement and company objectives. Three companies with high CSR rating: 1. Infosys 2. Wipro 3. Hero Honda

Q5. Distinguish between core competence, distinctive competence, strategic competence and threshold competence. Use examples. Answer: Core competence: Core competency of a company is one of its special or unique competency. Core competency is not just a single strength or skill or capability of a company, it is interwoven resources, and technology and skill are synergy culminating into a special or core competency. Core competency gives a company a clear competitive advantage over its competitors. Sony has a core competency in miniaturizing , xeroxs core competence is in photo copying , Canons core competence lies in optics, imaging and laser control, Hondas core competence is in engines, 3Ms core competence is in sticky tape technology, JVCs in video tape technology and ITCs in tobacco and Cigarettes and Godrejs in locks and storewels. Distinctive competence: Distinctive competencies is based on assumption that there are different alternative ways to secure competitive advantage and not only special technical and production expertise as empathized by core competence. Distinctive competence includes core competence as one of the alternatives. But there are other alternatives that are also based on other capabilities so distinctive competence is more board based. Thompson and Strickland (1992) have defined distinctive competence as Distinctive competence is the unique capability that helps an organization in capitalizing upon a particular opportunity, the competitive edge in it may give a firm in the market place Strategic competence: strategic competence coexists with, or supports, core competence and distinctive competence. Strategic competence is the competence level required to formulate, implement and produce result with a particular strategy for e.g. to outwit competitors. Hindustan Unilever did this in the mid and the late 80s. They used strategic competence to out manoeuvre nirman and reestablish their leadership in the detergent market. Strategic competence may also involve combination or convergence of different capabilities as in the case of Hindustan Unilever. Threshold competence: Threshold competence is the competence level required just for survival in the market or business. The competence level of a company may be weaker than many of its competitors. Threshold competence may be adopted by no. 5 or no.6 player in the market or those struggling to survive. Companies with threshold competence can overtime graduate to a higher level of competence. But, continued threshold competence can also lead to the closure of business.

Q6. What is global industry? Explain with examples, international strategy, multi-domestic strategy, global strategy and transnational strategy. Answer: Competition in global industries possess a different kind of challenge because it cuts across national boundaries and, international or global forces came into play. These forces create among others to distinctive pressures: Cost pressure because of global competition and pressure for local responsive ness i.e. adaptation to local needs or values and consumer tastes and preference. For some products, cost pressure may be more: for some others the need for local adaptation is more. Guided by these two factors and product type or structure, companies, which wish to compete globally generally adopt one of the four strategies, international strategy, multidomestic strategy, global strategy and transnational strategy. International strategy: 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 standards product with little or no differentiation. International strategies are not common or popular. Some examples are Kelloggs, Indian Software and Indian handicrafts. Multi-domestic strategy: Multi-domestic strategy is n\almost opposite of international strategies. Multi-domestic strategy involves high degree of local responsiveness or local content. Products are highly customized to suit local requirements or conditions. Because of high customization cost pressure is less, cost effectiveness may be also difficult to achieve because of lack of scale economies. Examples Asian Paints, Indian Garments. Global strategy: Global strategy suits companies which make high standardized sophisticated products, and are in opposition to reap benefits of economies of scale and experience effect. Theses also include high technology products which have universal applicability and hardly require and local adaptation. Examples are Intel, Motorola, Microsoft, and Texas Instruments. Global retail chains like Walmart and Marks and Spencer also come under this category. Transnational strategy: Transnational strategy is the most difficult strategy to follow because this is based on the combination of two apparently contradictory factors i.e. cost effectiveness and local adaptation. Examples are Caterpillar (taking on Komatsu and Hitachi), McDonalds, Coca-Cola and Dominos Pizza. Many multinational FMCG companies like Unilever and Procter and Gamble follow transnational strategy thought their fully owned subsidiaries in different countries.