ASSIGNMENT

DRIVE FALL 2013

PROGRAM BBA SEMESTER II
BBA 202 BUSINESS STRATEGY

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Q. No1 Explain the various factors influencing the business policy of a firm
1) Internal factors or Internal environment and
2) External factors or External environment
ANSWER:
1. Normally, it is presumed that these factors are controllable because the business is having the necessary
ability to control them. This can be better understood by comparing our own life where we can adopt a
disciplined way of living in our personal life because we need not depend on others for following
discipline. In the case of a business, the firm can recruit and use the services of employees with talent,
skill and knowledge by paying attractive remuneration. Some of the important internal factors are:a) Value System Values are a source of institutional drive. These values are guides for employers
besides becoming strong motivational factors for the employees. Recently, Canara Bank changed its logo
and it created a lot of resentment in the minds of the employees because they were wedded to the old
value system represented by "Growing to serve, Serving to Grow".

b) Mission & objectives They influence the business domain of the company, business philosophy,
priorities and direction of development of a particular business enterprise.
c) Management structure The type of organisational structure adopted by a business (flat or
pyramidal), the composition of the Board of Directors and the extent of professional approach adopted by
the management are important factors influencing business decisions.
d) Internal power equations The amount of support enjoyed by the Top management from different
stakeholders like employees, shareholders and board of directors also has an important role to play on the
effectiveness of the decisions and their implementation.
e) Human resources The skill, quality, morale, commitment and attributes of the workforce definitely
contributes to the success or failure of any organisation. For example, in the case of public sector banks in
India, it is very difficult to implement new ideas because of severe resistance from the employees.
f) Goodwill or Company Image The goodwill enjoyed by a company plays a very vital role whenever
it tries to tap the market for raising
funds, forming joint ventures or strategic alliances, launching new products, establishing a marketing
network etc.
2. External Factors
By and large, the external factors are beyond the control of the business organisation. So, these are also
called as uncontrollable factors. A list of the external factors is given below:a) Economic factors, b) socio-cultural factors, c) Political and legal factors d) demography related factors.
However, in the long run, the promoters of business organisations may wield their influence on the
external environment and succeed in evolving or modifying the external factors to suit the needs of the
business. However, normally it is the practice to treat the External factors as uncontrollable because the
number of businessmen having a charismatic personality (e.g., Mr. Tata, Mr. Narayana Murthy) is very
limited in any society and even in their case, it may take quite a few years to see the effect of their
influence on external factors bringing about changes benefitting the business.
In view of the above, the success of a business organisation depends on its ability to adapt or change itself
to the changing needs of the environment. The ability of the firm to adjust itself to the external
environment is also popularly called as 'adaptability' to the environment. The success of many enterprises
can be directly attributed to their adaptability to the external environment. Let us understand this with the
help of an example. Suppose, a South Indian is posted to Darjeeling, he may find it very difficult to
change himself to the external environment at Darjeeling within a short time. However, if he can adapt or

change himself to the external environment (here it is climate) quickly, he can reap the benefits in his
career. What is true in the case of an individual is also true in the case of an organisation.
External environment is further classified into two types Micro Environment & Macro Environment.
Micro environment
The micro environment consists of the immediate neighbours who have a direct influence on the
performance of the business. Here, the word immediate neighbours refer to the set of people/institutions
with which the business is having a continuous relationship throughout the life-time of the organisation.
Micro environment can be in the form of:
a)
b)
c)
d)

Suppliers
b) Customers:
c) Competitors
d) Marketing intermediaries

Macro environment
A business organisation and all its immediate neighbours viz., suppliers, consumers, competitors and the
marketing intermediaries are all operating in a larger environment often called as macro (meaning big or
large) environment. To be more precise, we can compare the business to a creeper (micro) surrounding a
big tree (macro environment) for its survival and growth. The macro factors are generally more
uncontrollable than the micro forces. Let us now look into the important macro forces.
a)
b)
c)
d)
e)
f)

Economic environment
Political environment
Socio-cultural environment
Demographic environment
Nature and Ecology
Technological environment

2 What are the various steps involved in strategy formulation?

ANSWER:
Formulating a strategy involves 4 important steps. Let us see what they are and briefly discuss each of the
steps:
a. Determination of Mission & Objectives: The mission is an attempt to define the broad social purpose
and scope of the business organization. However, the objectives aim to address the direction to achieve

the mission already adopted by the organization. Objectives are instrumental in translating the dream of
organizational mission into reality by way of results.
b. SWOT Analysis: SWOT analysis stands for analysis of strengths, weaknesses, opportunities and
threats, which are universally applicable to everyone in the world. Here, we are expected to find out
meaningful answers to the following questions:- What are the changes to be faced in the near future
including changes in the environment and their implications on the business organization. How to respond
to the changes listed out above? Studying the opportunities provided by the environment which can be
exploited with the strength inherent in the organization? How we can enhance our strength? Studying our
weaknesses and segregating them as those which can be overcome and those which can be minimized.
c. Developing a set of alternative strategies: Having completed the first two stages of strategy
formulation, the strategist should now proceed to generate a set of alternative strategies. Here it must be
borne in mind that all the alternative strategies including the one which was originally followed are of
equal importance. Further, it is equally important to evaluate the alternative strategies from time to time to
judge whether they can be effective as a new course of action.
d. Choosing the most appropriate strategy: While selecting the most appropriate strategy, one should
remember that the ultimate objective is to achieve the goals set, incurring minimum cost in a very simple
way. Final selection should be done only after evaluating the different models of strategies thoroughly.

3 What are the primary functions of a strategic leader in an organization?

ANSWER:

1) Formulation of correct strategy An effective leader envisages the future course of business and has
to formulate the correct strategy, keeping in mind the scope of the business and market conditions. This
will help in providing the route map for the business.
2) Execution of strategy A good leader has to formulate the correct strategy for the business and
should also outline the processes which help in the execution of such strategy.
3) Organization of resources In order to execute the strategy effectively, the leader has to provide the
necessary organizational framework. After designing the organizational structure, he should organize the
existing resources so as to achieve the common goals.

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4) Promotion of corporate spirit The strategic leader looks at the organization as a whole and ensures
that the morale of the employees is always high. A good leader provides the necessary support so as to
boost the confidence of the employees. This helps in increasing energy levels and employees are highly
motivated to achieve the objectives set by the top leadership.
5) Team work The strategic leader is responsible to develop teamwork amongst employees. He
motivates collectivism and maintains the balance between conflicting ideas. He has to ensure that the
appropriate climate is provided for the airing of employee ideas, as the sense of participation helps
employees to identify themselves with the organization and perform better.
6) Representation A good leader also serves as a connecting link between employers and top
management. He understands the pulse of the workforce and is able to motivate the employees by serving
as their representative.
7) Mentor and Counsellor A good leader acts as a mentor and counsellor for employees. When
employees suffer from emotional imbalance due to work related stress, the leader needs to step into a
mentoring role and counsel the employees and ensure their betterment. Such a role also helps to establish
trust and instil confidence about the leadership in the minds of employees.
8) Use of position and power A good leader uses the position of authority and power effectively, so
that the employees and the organization are benefited. An effective leader is non-partisan and does not use
his position for personal gain.
9) Time management For good performance, it is important that time is utilised effectively. A good
leader ensures that time is used well, as he plans well in advance. He also has the ability to foresee
problems, thereby avoiding crisis situations.

10) Effectiveness A good leader has the ability to increase organizational effectiveness. Instead of
waiting for problems to boomerang, headdresses the crucial problems of the business and averts potential
disasters. He provides motivation to employees by providing adequate rewards and recognition of efforts.
He also has the ability to delegate authority when required and is open to suggestions from all employees.
These factors help to increase the effectiveness of the organizational working, thereby achieving the
desired results.