Student name) Chandan Singh +eg no) ,-111./0# Su%3ect code) *$..

,#

Course) *$A 1C code) .01.2 Su%3ect name) Strategic *anagement and $usiness (olicy

Q1. A well- formulated strategy is vital for growth and development of any organization. Explain corporate strategy in different types of organizations. Ans. Corporate Strategy in ifferent !ypes of "rganizations Small businesses, for example, generally operates 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 product!s" and generating some profit. #n large businesses or companies$whether in the private sector, public sector or multinationals$the situation is entirely different. %oth the internal and the external environment and the organizational ob&ectives and priorities are different. 'or all large private sector enterprises, there is a clear growth perspective, because the stakeholders want the companies to grow, increase market share and generate more revenue and profit. 'or all such companies, both strategic planning and strategic management play dominant roles. (ultinationals have a greater 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. 'or example, multinational companies like )eneral (otors, *onda and Toyota may have to decide about the most strategic locations or configurations of plants for manufacturing the cars. They are already operating multi location !country" strategies, and, in such companies, roles of strategic planning and management become more critical in optimizing manufacturing facilities, resource allocation and control. #n public sector companies, ob&ectives and priorities can be quite different from those in the private sector. )eneration of employment and maximizing output may be more important ob&ectives than maximizing profit. Stability rather than growth may be the priority many times. +ccountability system is also very different in public sector from that in private sector. #n non,profit organizations, the focus on social responsibilities is even greater than in the public sector. #n these organizations, ideology and underlying values are of central strategic significance. (any of these organizations have multiple service ob&ectives, and the beneficiaries of service are not necessarily the contributors to revenue or resource. Q#. $usinesses need to %e planned not only for today& %ut also for tomorrow& that is& for the future which implies %usiness continuity. 'rite the importance of %usiness continuity planning. Explain any two strategies for %usiness continuity planning. Ans. $usiness Continuity (lanning- %usiness continuity planning means proactively working out a means or method of preventing or mitigating the consequences of a

disaster$natural or manmade !sabotage or terrorism" - and managing it to limit to the level or degree that a business unit can afford. 4eed or 5mportance of $usiness Continuity (lanning- %usinesses today can be exposed to different types of threats - natural or man,made. (a&or threats are. /Natural disasters such as floods or earthquakes or accidents /(an,made threats like sabotage or terrorism /'inancial crisis or disaster can be partly man,made and partly due to environmental factors. %01 prepares companies to prevent or respond to such situations so that the damages or losses are minimized and the business or company survives. Thus, %01 plays a critical role in a business$its survival and sustainability. Strategies for $usiness Continuity (lanning- 'ive different strategies should be developed for five different situations2actions. These are. 3. 1revention 4. 5esponse 6. 5esumption 7. 5ecovery 8. 5estoration +ecovery- 5ecovery essentially means reinstallation of the operating and control system. Necessary critical operations are restored. +s this happens, information restoration from back,up tapes or offsite storage also begins. +s soon as information2data restoration is complete, critical business functions can resume. +estoration5estoration means restoration of the original site for normal functioning. The restoration process is initiated simultaneously with the recovery work. #n fact, recovery and restoration teams are often common. Q0. 6overned corporation is a model of successful corporate governance. efine and explain governed corporation. istinguish %etween managed corporation and governed corporation in terms of %oard7s role& ma3or characteristics and policies of a company. Ans. 6overned Corporation- #n the governed corporation, the focus is not on power $not monitoring or controlling the managers$but, on improving decision making. The ob&ective is to minimize chances of mistakes and, even if they occur, to mutually work out effective ways to rectify the mistake rather than fire the management. The result is a positive change in the way companies discuss, decide and review policy. To create the governed corporation, companies should start rethinking about the role of directors, and, also, of shareholders. %oth the directors and shareholders should be proactive, and, not reactive in the policymaking process. (anagers will continue to play their roles. This means that there are three critical constituents of the governed corporation. the board or directors, the managers and shareholders. 9irectors should guide managers to take best possible decisions ma&or shareholders should be able to communicate directly with the senior managers20:; and, also the directors about what they think of corporate policies and decisions. <ith shareholders and board2 directors participating in policy and decision making, and, the managers already involved, the corporation is governed rather than managed because all the three critical constituents !managers, directors and shareholders" have a voice in the governance of the company. !he *anaged Corporation vs. the 6overned Corporation-

!he *anaged Corporation- = %oard>s role is to hire, monitor and, when necessary, change failed management. = 1ower sufficient to control the 0:; and the performance, evaluation process. = Separate the 0:; and chairman !or lead outside director". !he 6overned Corporation- = %oard>s role is to foster effective decisions and monitor and reverse failed policies. = :xpertise sufficient to allow the board to add value to the decision,making process and performance. = ?ital areas of expertise must be represented on the board such as core industry and finance. Q2. (rice or mar8et competitiveness of a product or %usiness depends on its cost competitiveness. Cost competitiveness implies two things-cost efficiency and cost effectiveness. Explain the concept of cost efficiency of an organization. Analyze the ma3or determinants of cost efficiency. Ans. Cost Efficiency- cost efficiency may be defined as the level of resources or cost required to produce a particular output or create a given value. So, lesser the resources or cost, more efficient is the value creation process. ?arious factors contribute to cost efficiency in an organization. These may even include factors which are not directly related to cost or cost management like general work environment or culture in the organization, motivation levels of managers, approach of the top management, etc. *owever, here we shall consider the factors that are directly related to cost competence or cost efficiency. 'our ma&or factors may be identified. economies of scale, supply cost or cost of raw materials and inputs, product or process design, and experience or experience effect. Economies of scale) <e know from economics that economies of scale are the most conventional and, also a very important source of cost efficiency. #n manufacturing organizations, fixed cost !per unit of output", which initially remains very high, starts going down progressively as output increases. %ecause of this, average cost of output decreases as output increases, or the scale of operations increases. This also means increase in capacity utilization of plant and machinery. #n non,manufacturing organizations or non,manufacturing activities, economies of scale can be effected through mass advertising, mass marketing, extensive distribution, etc. Supply cost) 0osts of raw materials and various inputs constitute supply cost. #nputs generally include raw material inputs or intermediate inputs and energy inputs. #n an extended sense, these inputs can include factor inputs like labour also. #n highly raw material,intensive industries like steel, cement and non,ferrous metals, supply costs constitute a very high proportion of total cost of the product and, therefore, become a very important determinant of the level of cost efficiency. #n these industries, location influences supply cost because transportation becomes a significant component of total raw material cost. This is the reason why, in these industries, many plants are located near the raw material source or mines. This gives cost advantage to companies. #n such industries, ownership of raw material can also give definite cost advantage.

(roduct9process design) 1roduct design starts at the 5@9 stage even if it is an imitation. (any feel that product design is the first step in efficient cost management, because the nature of the product determines, to a large extent, the raw material and other input requirements and supply cost. 0ost efficiency in production processes can be achieved through better process engineering, increase in productivity !depends partly on the technology level" and better working capital management. (any companies have achieved cost efficiency through these methods. Experience) :xperience in any activity in an organization can be an important source of cost advantage or cost efficiency$be it manufacturing or any other functional area. (any studies have been conducted to establish the relationship between cumulative experience gained in an organization and its unit cost. The relationship is generally expressed as an inverse relationship between cumulative output and unit cost$unit cost decreases as cumulative output increases. Q,. Sta%ility strategy is most commonly used %y an organization. An organization will continue in similar %usiness as it currently pursues similar o%3ectives and resource %ase. iscuss six situations when it is good9%est to pursue sta%ility strategy. 6ive some 5ndian examples. Ans. 'hen $est to (ursue Sta%ility Strategy:a; (erception of management a%out performance) #f the management is satisfied with present performance and, is not willing to take market risks, they may like to adopt stability strategy and continue with it. The management may consider change of strategy only if results are not forthcoming. :%; Slowness to change) Some organizations are slow to change or resistant to change. This is particularly true of public sector companies. (any such companies are not organizationally equipped for fast or sudden change and lack the ability to cope with risk and uncertainty inherent in such change. :c; <re=uent past changes) #f a company had made frequent strategic changes in the past, it should follow stability strategy for some period for more efficient management. #n fact, it is always recommended that, after a period of internal change and restructuring or expansions, stability strategy should be pursued as a pause or rehabilitation. ;therwise, the organization may show signs of destabilization. :d; Strategic advantage) #f an organization>s strategic advantage lies in the present business and market, it should pursue stability strategy. #f, for example, an organization has high market share, it can continue in the same business and defend its position through incremental strategic changes. :e; (rofit o%3ective9maximization) :very company has some profit ob&ective which is commensurate with the level of investment, output level, market structure, willingness to take risk, etc. #f the stability strategy helps the company achieve its profit ob&ective, the company should stick to this. Sometimes, stability strategy may even help in profit maximization. :f; Sta%le environment) )iven the organizational resources and capabilities, the nature of environment determines, to a large extent, the kind of strategy to be followed by a company. Examples- #n practice, many companies in #ndia and various other countries follow stability strategies. The reasons or situations can be those mentioned above. Such

factors and circumstances relate to conditions in a particular country. #n #ndia, in addition to the situations mentioned above, reasons for pursuit of stability strategy by companies are of three types. 3. ;vercapacity or underutilization of capacity 4. 5egulatory restrictions or controls 6. Aack or withdrawal of budgetary support for expansion. The steel industry, cement industry and coal industry in #ndia have overcapacity. This is one of the most important reasons why companies like S+#A, 0oal #ndia and +00 are adopting the stability strategy. Such companies cannot go for expansion strategies. #nstead, they are concentrating on improving their operational efficiency. 0igarette and alcoholic beverages industries are sub&ect to regulatory restrictions and there is strict control over expansion of these industries. 0ompanies in the cigarette industry, like #T0, are going for growth and diversification in agri business, hospitality business and export. Q>. Corporate culture governs& to a large extent& %usiness ethics and values in an organization. escri%e the state of %usiness ethics in 5ndian companies. Analyze in terms of ?(*6 %usiness ethics survey. Ans. $usiness Ethics in 5ndian Companies#n terms of ethical practices, companies in #ndia, as in many other countries, can be classified as good and bad. <e have &ust given the examples of #nfosys, +mul, #0#0#, etc., which are highly ethical. There are also companies which do not conform to strong ethical norms. <e also have regulations like the (5T1 +ct and ':(+ !earlier ':5+" for curbing unethical business practices. B1() #ndia conducted a survey of 4CD top #ndian companies for ascertaining the level of business ethics in #ndia. Study analysis and findings are contained in Business Ethics Survey Report: India, 3EEE. (a&or findings of the study are summarized below. :a; *ission statement) +bout C8 per cent of the companies surveyed are reported to have a mission statement. %ut, most of these statements focus on customer service and customer satisfaction. ?ery few companies emphasize ethical and moral issues such as organizational values, integrity in business, harassment in the workplace, etc. :%; Company policy on ethics) (any companies have a documented policy on ethics. %ut, implementation or reinforcement of a formal ethical system is weak in most of these companies. Some companies have a grievance cell some companies conduct periodic workshop on business ethics, but nothing much beyond that. :c; Ethical ris8 in the wor8place) (any companies express concern about lack of ethics in the workplace. Some of the ma&or ethical concerns expressed by companies are. leakage or misuse of confidential information !FF per cent" insider trading !7C per cent" receiving gifts or favours from suppliers !7C per cent" promoting personal interest !7F per cent". :d; External factors in corporate ethics) (ost #ndian companies feel that ethical problems in business arise because of external or environmental factors. Two ma&or external factors are government policies2regulations and political interference. :e; !raining in %usiness ethics) (a&ority of the companies feel that training in business ethics should be given high priority. :ducation in ethics should be incorporated in the formal management development programmes of companies.

:f; Strengthening ethical practices) (ost #ndian companies are of the opinion that, for strengthening ethical business practices, two factors are important. first, professionalizing company management and, second, minimizing state or governmental control and interference.