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Mandalia Hetal Prabhudas

Master of Business Administration- MBA Semester 4 MB0052 Strategic Management and Business Policy - 4 Credits (Book ID: B1314) Assignment (60 marks) Note: Assignment Set -1 must be written within 6-8 pages. Answer all questions. Q1. Define the term Strategic Management. Explain the importance of Strategic management. Answer: Strategic Management Strategic management is a systematic approach of analysing, planning and implementing the strategy in an organisation to ensure a continued success. Strategic management is a long term procedure which helps the organisation in achieving a long term goal and its overall responsibility lies with the general management team. It focuses on building a solid foundation that will be subsequently achieved by the combined efforts of each and every employee of the organisation. Importance of strategic management A rapidly changing environment in organizations requires a greater awareness of changes and their impact on the organization. Hence strategic management plays an important role in an organization. Strategic management controls the crises that are aroused due to rapid change in an organization. Strategic management considers the opportunities and threats as the strengths and weaknesses of the organisation in the crucial environment for survival in a competitive market. Strategic management helps the top level management to examine the relevant factors before deciding their course of action that needs to be implemented in changing environment and thus aids them to better cope with uncertain situations. Changes rapidly happen in large organisations. Hence strategic management becomes necessary to develop appropriate responses to anticipate changes. The implementation of clear strategy enhances corporate harmony in the organization. The employees will be able to analyse the organisations ethics and rules and can tailor contribution accordingly. Systematically formulated business activities helps in providing consistent financial performance in the organization. A well designed global strategy helps the organisation to gain competitive advantages. It increases the economies of scale in the global market, exploits other countries resources, broadens learning opportunities, and provides reputation and brand identification.

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Mandalia Hetal Prabhudas

Q.2 Describe Porters five forces Model. Answer: Porters Five Force model Michael E. Porter developed the Five Force Model in his book, Competitive Strategy. Porter has identified five competitive forces that influence every industry and market. The level of these forces determines the intensity of competition in an industry. The objective of corporate strategy should be to revise these competitive forces in a way that improves the position of the organisation. Figure below describes forces driving industry competitions.

Figure: Forces Driving Industry Competitions Forces driving industry competitions are: Threat of new entrants New entrants to an industry generally bring new capacity; desire to gain market share and substantial resources. Therefore, they are threats to an established organisation. The threat of an entry depends on the presence of entry barriers and the reactions can be expected from existing competitors. An entry barrier is a hindrance that makes it difficult for a company to enter an industry. Suppliers - Suppliers affect the industry by raising prices or reducing the quality of purchased goods and services. Rivalry among existing firms - In most industries, organisations are mutually dependent. A competitive move by one organisation may result in a noticeable effect on its competitors and thus cause retaliation or counter efforts.

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Buyers - Buyers affect an industry through their ability to reduce prices, bargain for higher quality or more services. Threat of substitute products and services - Substitute products appear different but satisfy the same needs as the original product. Substitute products curb the potential returns of an industry by placing a ceiling on the prices firms can profitably charge. Other stakeholders - A sixth force should be included to Porters list to include a variety of stakeholder groups. Some of these groups include governments, local communities, trade association unions, and shareholders. The importance of stakeholders varies according to the industry.

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Roll No. 511026441

Mandalia Hetal Prabhudas

Q.3 Define the term Business policy. Explain its importance. Answer: Business Policies Business policies are the instructions laid by an organisation to manage its activities. It identifies the range within which the subordinates can take decisions in an organisation. It authorises the lower level management to resolve their issues and take decisions without consulting the top level management repeatedly. The limits within which the decisions are made are well defined. Business policy involves the acquirement of resources through which the organisational goals can be achieved. Business policy analyses roles and responsibilities of top level management and the decisions affecting the organisation in the long-run. It also deals with the major issues that affect the success of the organisation. Importance of Business Policies A company operates consistently, both internally and externally when the policies are established. Business policies should be set up before hiring the first employee in the organisation. It deals with the constraints of real-life business. It is important to formulate policies to achieve the organisational objectives. The policies are articulated by the management. Policies serve as a guidance to administer activities that are repetitive in nature. It channels the thinking and action in decision making. It is a mechanism adopted by the top management to ensure that the activities are performed in the desired way. The complete process of management is organised by business policies. Business policies are important due to the following reasons: Coordination Reliable policies coordinate the purpose by focusing on organisational activities. This helps in ensuring uniformity of action throughout the organisation. Policies encourage cooperation and promote initiative. Quick decisions Policies help subordinates to take prompt action and quick decisions. They demarcate the section within which decisions are to be taken. They help subordinates to take decisions with confidence without consulting their superiors every time. Every policy is a guide to activities that should be followed in a particular situation. It saves time by predicting frequent problems and providing ways to solve them. Effective control Policies provide logical basis for assessing performance. They ensure that the activities are synchronised with the objectives of the organisation. It prevents divergence from the planned course of action. The management tends to deviate from the objective if policies are not defined precisely. This affects the overall efficiency of the organisation. Policies are derived objectives and provide the outline for procedures. Decentralisation well defined policies help in decentralisation as the executive roles and responsibility are clearly identified. Authority is delegated to the executives who refer the policies to work efficiently. The required managerial procedures can be derived from the given policies. Policies provide guidelines

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to the executives to help them in determining the suitable actions which are within the limits of the stated policies. Policies contribute in building coordination in larger organisations. Q4. What, in brief, are the types of Strategic Alliances and the purpose of each? Supplement your answer with real life examples. Answer: Types of Strategic Alliances and Business Decisions: The matual agreements between the organizations can take a number of forms and are increasing their common goals to get upper hand over their competitors. The different types of strategic alliances are listed below: Joint venture: Joint venture is the most powerful business concept that has the ability to pool two or more organizations in one project to achieve a common goal. In a joint venture, both the organizations invest on the resources like money, time and skills to achieve the objectives. Joint venture has been hallmark for most successful organizations in the world. An individual partner in joint venture may offer time and services whereas the other focuses on investments. This pools the resources among the organizations and helps each other in achieving the objectives. An agreement is formed between the two parties and the nature of agreement is truly beneficial with huge rewards such that the profits are shared by both the organizations. The advantages of joint venture are: A long term relationship is built among the participating organizations It Increases integrity by teaming with other reputable and branded organizations It helps in investing little money or no money Reduces production time as the organization are into join venture More new products and services can be offered to the customers The disadvantages of joint venture: Sometimes the organizations deal with wrong people, thereby losing investment The organizations do not have the opportunity to take up decisions individually There are risks of disputes among the organizations that lead to poor performance If the organistion enters into joint venture agreement with unprofessional selfish organistion, then it increases the risk of hurting business reputation and devastating customers trust. Example The China Wireless Technologies, a mobile handset maker is getting into an agreement with the Reliance Communications Ltd (RCom) to launch its new mobile. The joint venture between the two companies is to gain profits and provide affordable mobile phones to the market that consists of advanced features and aims to earn eight billion dollars in the next five years. The new mobile consists of dual SIM smart phone with 3G technology at a cheaper rate. Mergers and acquisitions: Merger is the process of combining two or more organistions to form a single organistion and achieve greater efficiencies of scale and -5-

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productivity. The main reason to involve into mergers is to join with other company and reap the rewards obtained by the combined strengths of two organistions. A smart organisations merger helps to enter into new markets, acquire more customers, and excel among the competitors in the market. The participating organisaton can help the active partner in acquiring products, distribution channel, technical knowledge, infrastructure to drive into new levels of success. Collaborations and co-branding: Collaboration is the process of cooperative agreement of two or more organizations which may or may not have previous relationship of working together to achieve a common goal. It is the beginning to pool resources like knowledge, experience and sharing skills of team members to effectively contribute to the development of a product rather working on narrow tasks as an individual team member in support to the development. Effective collaboration can be obtained by the following actions: The orgainsations must get involved in the process from the beginning and avail the necessary resources for collaboration. Technological partnering IT is the process of associating the technologies of two different companies to achieve a common goal. The two organizations work as co-owners in business and share the profits and losses. The technologies of individual organizations are shared to achieve desired outcome. The required resources like knowledge, machinery, and expertise are collaborated between the organizations. Contractual agreements It is the process of agreement with specific terms between two or more organizations which guarantee in performing a specific task in return for a valuable benefit. The contractual agreement is the heart of business dealings. It is the most significant areas of legal concern and involves variations in certain situations and complexities. The organistions require analyzing fundamental factors before involving in contractual agreements. The elements to be analysed are: It is necessary to identify the type of offer being laid by the organistion to make an agreement. The acceptance of the information involved in offer which results in meeting the market needs. The organizations are required to recognize the strong commitment towards the contractual agreement. Systematic scheduling of the process involved in manufacturing product without any hindrances to both the organizations. Discover the terms and conditions for manufacturing product and the guarantee of the organistions in fulfilling it. The contract agreement includes several documents such as letters, orders, offers and counteroffers. Outsourcing It is the process of entering into a contract with an organisation or a person to perform a particular function. Most of the organisations outsource the work in numerous ways. The function being outsourced is considered as noncore to the organisation. The external firms that provide outsourcing services are called as third parties or it is commonly called as service providers. The concept of outsourcing existed form the era of work specialization. Usually organizations adopt this concept to carry out narrow functions such as -6-

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Mandalia Hetal Prabhudas

payrolls, billing, and data entry. Since most organisations lack in many resources, it outsources theses processes to other organisations which consists of specialized tolls, facilities and trained personnel. Q6. Write short notes on: a) Corporate social responsibility b) Business plan Answer: a) Corporate Social Responsibilities (CSR) Corporate Social Responsibility (CSR) is the continuing obligation of a business to behave ethically and contribute to the economic development of the organisation. It improves the quality of life of the organisation. The meaning of CSR has two folds. On one hand, it exhibits the ethical behaviour that an organisation exhibit towards its internal and external stakeholders. And on the other hand, it denotes the responsibility of an organisation towards the environment and society in which it operates. Thus CSR makes a significant contribution towards sustainability and competitiveness of the organisation. CSR is effective in number of areas such as human rights, safety at work, consumer protection, climate protection, caring for the environment, sustainable management of natural resources, and such other issues. CSR also provides health and safety measures, preserves employee rights and discourages discrimination at workplace. CSR activities include commitment to product quality, fair pricing policies, providing correct information to the consumers, resorting to legal assistance in case of unresolved business problems, so on. Example TATA implemented social welfare provisions for its employees since 1945. Features of CSR CSR improves the customer satisfaction through its products and services. It also assists in environmental protection and contributes towards social activities. The following are the features of CSR: Improves the quality of an organisation in terms of economic, legal and ethical factors CSR improves the economic features of an organisation by earning profits for the owners. It also improves the legal and ethical features by fulfilling the law and implementing ethical standards. Builds an improved management system CSR improves the management system by providing products which meets the essential customer needs. It develops relevant regulations through the utilisation of innovative technologies in the organisation Contributes to countries by improving the quality of management CSR contributes high quality product, environment conservation and occupational health safety to various regions and countries. Enhances information security systems and implementing effective security measures CSR enhances the information security measures by establishing improved information security -7-

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Mandalia Hetal Prabhudas

system and distributing them to overseas business sites. The information system has improved by enhancing better responses to complex security accidents. Creates a new value in transportation CSR creates a new value in transportation for the greater safety of pedestrians and automobiles. This is done by utilising information and technology for automobiles. The information and technology helps in establishing a safety driving assistance system. Creates awareness towards environmental issues CSR serves in preventing global warming by reducing the harmful gases emitted into the atmosphere during the process of business activities. Roles played in terms of ethical conduct CSR plays a significant role in maintaining ethical conduct in an organisation. The following are the roles played by CSR: Improves the relationships with the investment community and develops better access to capital and risks Enhances ability to recruit, develop and retain staff Improves the reputation and branding of the organisation Improves innovation, competitiveness and market positioning Improves the ability to attract and build effective and efficient supply chain relationships Improves relationships with regulators Reduces the costs through re-cycling process Enhances stronger financial performance and profitability through operational efficiency gains b) Business plan A business plan is a complete internal document that summarises the operational and financial objectives of a business. It also contains the detailed plans which show how the objectives are being accomplished. An accurately made business plan helps to allocate resources properly, to handle unforeseen complications like financial crisis and to make good business decisions. On the other hand, business venture is a start-up enterprise which is formed with expectations and plans of achieving financial gain. Once the need of the organisation is identified, it can be started by a small investor that has valuable resources and time. Other investors involve themselves by providing support for further development of the venture once the business is created. In the case of establishing a business venture, a formal business plan is written to outline the purpose and mission of the business for the future use.

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