GM14

Strategic Management and Ethics

Assignment I
Assignment Code : 2014GM14B1 Last Date of Sumission: 1!
th
"ctoer 2014
Ma#imum Mar$s: 100
Attem%t a&& the 'uestions( A&& 'uestions are com%u&sor) and carr) e'ua& mar$s(
Section A
1. (a) What do you understand by Strategic Management? Why should a student study Strategic Management?
(b) Why do we need it and what are the benefits to the organization?
2. (a) What do you understand by Organizational !!raisal?
(b) What should the strategist loo" for in sizing u! a com!any#s strengths$ wea"nesses$ o!!ortunities and
threats?
%. &laborate the four grand strategies 'iz. stability$ growth$ retrenchment and combination to achie'e the
cor!orate ob(ecti'es of the firm.
). firm should ha'e an edge o'er com!etition in getting customers and defending against com!etiti'e forces
to ha'e com!etiti'e ad'antage. *iscuss the statement with reference to +
a) ,eneric Strategies
b) Offensi'e Strategies
c) *efensi'e Strategies

Section B
Case Stud) * S+C,I ,"-ELS A.D DI/EC- MA/0E-I.G LIMI-ED
Mr. -ula!a hailed from a 'illage near .a(ahmundry whose hobby was tra'elling widely. *uring his e/tensi'e tra'el
in 1012s and 1032s$ he faced the !roblem of non4a'ailability of good hotels in different !arts of the country. 5e got
an idea of bridging this ga! in hotel industry at least in one town and he started a small hotel by name Suchi 5otel
with his own ca!ital of .s. 12$222 in 1061. 5e became successful by 106%. 5is !rofits cross %27 of his in'estment.
8he number of customers went u! by 2227 between 1061 and 106%. Sales in monetary terms rose by 1127 during
the !eriod. 5e was amazed by the !rogress of Suchi 5otel and started !lanning to e/!and the hotel to other towns
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!articularly to 9isa"ha!atnam and 9i(ayawada. 5e searched for a !artner who can !artici!ate in e:uity$ day to day
administration and !olicy ma"ing. 5e could find Mr. .am ;rishna in 1061 and both of them started hotels in
9isa"ha!atnam and 9i(ayawada after establishing a !ri'ate limited com!any under the name of Suchi 5otels
(-ri'ate) <imited in 1063. 8heir unit in 9i(ayawada was a successful !ro(ect. =n fact$ they e/!anded the 9i(ayawada
branch. 8he 9isa"ha!atnam branch !ro'ed to be a failure one and the com!any har'ested it in 10>1. 8he money
recei'ed from this source was in'ested in o!ening another branch in 9i(ayawada in 10>2. 8he com!any had !lans of
o!ening its hotels in other cities li"e 5yderabad$ ?ew *elhi and @ombay. 8he com!any was con'erted into a !ublic
limited com!any in 10>3 and issued share ca!ital for !ublic to the tune of .s. 12 la"hs. 8he com!any was successful
in this 'enture. 8he com!any started its branches in 5yderabad$ and ?ew *elhi in 10>> and could not start a branch
in @ombay as it could not get the right !lace in @ombay$ instead$ the com!any o!ened its branch in Madras.
ll the hotels of the com!any !ro'ed to be successful. 8he com!any#s management in 1001 seriously considered the
issue of su!!lying a lunch and dinner to the homes andA or offices. 8his idea attracted the management from the
'iew !oint of increasing number of wor"ing unmarried women and men. fter a thorough discussion of this !ro(ect$
the management decided to im!lement this idea from (anualy 1002. 8he com!any recei'ed an une/!ected res!onse
from the customers. 8herefore the com!any in'ested all its cash for !urchasing 'ehicles$ and other necessary
e:ui!ment for this !ro(ect. 8he com!any earned the !rofit as high as %27 in 1002 and declared di'idend the highest
!ercentage since its establishment i.e., 2>7.
-ragathi *irect Mar"eting <imited was mar"eting the consumer durables li"e 89s$ washing machines$ "itchen
a!!liances$ ready4made garments in South =ndia could not sur'i'e due to unsound financial !osition. 8he
management of Suchi 5otels <imited and -ragathi *irect Mar"eting <imited agreed for merging the latter com!any
with the former one. 8he name of the new com!any was decided as BSuchi 5otels and *irect Mar"eting <imitedB
and its was also agreed to offer one share of the new com!any for e'ery three shares of .s. 12 fully !aid to the
shareholders of the -ragathi *irect Mar"eting <imited. 8his new com!any of Suchi 5otels and *irect Mar"eting
<imited came into being in !ril 100%. 8he management of the new com!any issued e:uity shares for the !ublic to
the tune of .s. 2$22 crores in Culy 100% and the com!any had an o'erwhelming res!onse for this issue.
*uring this !eriod there was a boom in the ca!ital mar"et. 8he number of new com!anies in the country was
increasing. dded to this$ a number of e/isting com!anies either e/!anded andAor di'ersified their acti'ities. lmost
all the com!anies went for !ublic issue were successful. 8he growth of the traditional hotel industry reached a !ea"
stage. =n fact$ there was cut4throat com!etition in this industry due to more number of firms in the industry. 8he new
de'elo!ments in this industry are the emergence of motels far from the busy !laces of the cities and the emergence
of tiffin corners and lunch corners at all the !laces con'enient to the customers. &'en$ many e/isting hotels started
the homeAoffice deli'ery of brea"fast$ lunch and dinners.
8he Suchi 5otels and *irect Mar"eting <imited was affected se'erely by these en'ironmental changes. 8he number
of customers$ sales and !rofits of all of its hotels started declining from 1001 and reached to their lowest le'el in
1006. 8he com!any 'iewed this !roblem 'ery seriously as the sales le'el is 127 below the brea"4e'en le'el.
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*uring the 1002s$ there has been fa'ourable conditions for the direct mar"eting industry. 8he industry#s growth rate
is nearly 227. =n fact$ new items are added to the direct mar"eting by many com!anies. 8he Suchi 5otels and *irect
Mar"eting <imited also e/!anded its o!erations of its direct mar"eting !ortfolio. Durther$ this !ortfolio#s sales went
u! by 1227 between 1001 and 1006$ !rofit went u! by 127 during the !eriod. 8he ,eneral Manager of the
com!any has been designing many new !rogrammes which ha'e been !ro'ing successful. 8he com!any could not
a!!ro'e some of the worthwhile !ro(ects !ro!osed by the general manager of the *irect Mar"eting -ortfolio of the
com!any due to the cash crunch. 8he com!any also realised that it has been unable to e/!loit the o!!ortunities
offered by the direct mar"eting industry due to the setbac"s from the hotel !ortfolio of the com!any. 8he generaE
manager of the direct mar"eting wing threatened the management in Se!tember 1006$ that he would lea'e the
com!any by March 100>$ if the com!any fails to ma"e further in'estments.
1uestions
14 *iscuss the strategic alternati'es a'ailable in the com!any.
24 Should the com!any go for a !ublic issue? 8urn around !rogramme of the hotel and e/!ansion
!rogramme of direct mar"eting.
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GM14
Strategic Management 2 Ethics
Assignment II
Assignment Code : 2014GM14B2 Last Date of Sumission: 1!
th
.o3emer 2014
Ma#imum Mar$s: 100
Attem%t a&& the 'uestions( A&& 'uestions are com%u&sor) and carr) e'ua& mar$s(
Section A
1. @riefly discuss +
a) For!orate Fulture
b) Shared 9alues
c) -ower
d) Social .es!onsibilities
e) &thics
2. (a) What are the factors influencing organizational leadershi! and em!owerment?
(b) *iscuss the choice of leaders with reference to their :ualities and selection from inside or outside the
organization.
%. Strategic control focuses on monitoring and e'aluating the strategic management !rocess to ensure that it
function in the right direction. *iscuss the !ur!ose of strategic control and its !rocesses.
). (a) What do you understand Strategic *ecision Ma"ing?
(b) *iscuss its a!!roaches and !rocess.
Section B
CASE S-+D4* DI5E/SI6ICA-I". 7/"G/AMMES "6 ,I.D+S-A. MAC,I.E
-""LS 8,M-9
mong =ndian !ublic enter!rises$ 5industan Machine 8ools could be cited as a uni:ue e/am!le of an enter!rise
which started in 101%$ relati'ely small in each of its di'ersifications$ grew ra!idly in the course of time. =t grew 'ery
fast$ both !roduction4wise and !roduct4wise. 8a"ing birth in @angalore$ the enter!rise has succeeded through its
di'ersification strategy and4today it has !lants and offices s!read all o'er =ndia. Fommending its o!erations as a
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manufacturing enter!rise of machine tools it has di'ersified its acti'ities broadly co'ering a wide range of machine
tools$ !resses$ !rinting machines$ horological machines$ watches$ tractors$ lam!s and consultancy ser'ices and has
dis!layed a fairly good !rofit !erformance. 8he late fifties and early si/ties ha'e witnessed a rigorous di'ersification
of the machine tool !roduct line. Subse:uently$ it mo'ed on to other !rofitable and e/!ort oriented areas of
!roduction. 8he !rimary acti'ity was to !roduce a limited range of machine tools to enable building u! the industrial
infrastructure of the country.
5owe'er$ the rate of growth in machine tools demand outstri!!ed all e/!ectations by 1032431$ with 5M8 well on
the way to attaining its full rated ca!acity. s the rest of the machine tool industry in the country was ma"ing slow
and tardy efforts to raise the !roduction !otential matching with the ra!idly increasing needs of the country$ 5M8
too" u!on itself the tas" of recasting the role of the machine tools industry in su!!ort of the country#s 'isions of
industrialisation. With the success achie'ed in absorbing the technology and in attaining !roduction com!etence far
ahead of the original !lans$ and with a strategic mo'e$ the com!any launched a bold !lan for di'ersification and
e/!ansion which resulted in the du!lication of the @angalore unit and the setting u! of new units at -in(ore$
;alamassery and 5yderabad. Durther$ based on the !ro(ections of the -lanning Fommission$ a ten4year !lan$ which
may be termed as the first For!orate !lan for 5M8$ was de'elo!ed in 1032 to set u! fi'e more machine tools units
that would raise the aggregate annual ca!acity to around .s. 12 crore by 1062. 8his !lan was com!lete with a
statement of ob(ecti'es and the strategies for integrated technical and man!ower de'elo!ment$ internal generation of
financial resources$ e:uitable sharing of sur!luses with in'estors and em!loyees$ and so on. 8he actual growth of the
country#s consum!tion of machine tools$ and 5M8#s own growth$ were absolutely on4course with this !lan$ until
1033.
*uring the !eriod 1032433$ as if encouraged by the success of 5M8$ other machine tool ma"ers in the country also
!ro!ortionately increased their !roduction ca!acity and widened their !roduct base. =n 1036$ a recession struc" the
=ndian engineering industry and the consum!tion of machine tools decreased drastically$ down to .s. )2 crore in
1030462 instead of reaching .s. >) crore as en'isaged by the earlier !ro(ections.
8he traumatic years of recession$ difficult as they were to endure at the time$ did indeed ser'e to bring to the fore
two latent strengths of 5M8G the urge to sur'i'e and the confidence to inno'ate. With these strengths at full !lay$ the
com!any emerged from the recession.
With the world#s widest range of machine tools and associated ser'ices under a single cor!orate entityH
With action !lans firmly launched for di'ersification into tractors$ !rinting machines$ etc$$ which are
considered to ha'e economic cycles that are different from those of machine toolsH
With additional ca!acities for watch !roduction in the offing to !ro'ide a greater cushion against cyclical
fluctuations in ca!ital goods mar"etsH and
With e/!ort mar"ets of enormous !otential under acti'e de'elo!ment.
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Drom an enter!rise manufacturing a fairly narrow range of machine tools 'alued at about .s. %) million and
em!loying about )$222 em!loyees in 1032431$ the Fom!any has today (i.e., in 100%40)) grown into a giant$ with 13
units (2) di'isions) s!read o'er ten states$ !roducing goods worth nearly .s. 3.% billion$ em!loying 2)$010
em!loyees and mar"eting a wide range of ca!ital and consumer goods including a full s!ectrum of general !ur!ose
machine tools$ so!histicated machines li"e FMF turning centres$ FMF turret !unch !resses$ etc.$ !rinting
machinery$ dairy machinery$ tractors$ watches from wrist watches to to! line :uartz analog watches and lam!s
including fluorescent and sodium 'a!our lam!s.
5M8 has three subsidiaries viz., 5M8 =nternational <td.$ through which e/!orts of all 5M8 units are routed$ 5M8
@earing <td.$ a com!any !roducing a wide range of ball$ cylindrical and ta!ered bearings and -raga 8ools <td$ a
com!any which also manufacturers machine tools.
8he merger !lan"s of 5M8#s growth in the eighties were .I*$ cor!orate !lanning$ and human resources
de'elo!mentJ 5owe'er$ during the following decade$ 10>241002 the cor!orate strategy !ursued by 5M8 !referred
to confine its di'ersification !rogrammes and !lans mostly to its main line of acti'ity$ i.e., engineering !roducts and
machine tools. =t did not 'enture into any new field in 'iew of the decreasing returns on the in'estment and losses
suffered due to di'ersification into unrelated fields$ !articularly lam!s and its inability to go for technological
u!gradation with a 'iew to "ee!ing !ace with its com!etitors. Since 1002$ 5M8 !referred to consolidate its e/isting
line of acti'ity. n im!ortant landmar" which influenced the cor!orate strategy of 5M8 has been the study
conducted by Ca!an =nternational Fo4o!eration gency (C=F) which !ro'ided a totally new direction for its
di'ersification !lans.
&fforts ha'e been made by the researcher to study and analyse the strengths and wea"nesses of the com!any#s
cor!orate !olicy from the !oint of 'iew of its commitment to di'ersification !lans.
1uestions
14 What were the cor!orate mission$ ob(ecti'es and goals of 5M8 <td.?
24 .e'iew the !re!aration of 5M8 with regard to strengths$ wea"nesses$ o!!ortunities and threats.
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