Question No. 1.

Mission and vision Statement of Unilever’s Pakistan

Unilever's mission is to add vitality to life. We meet everyday needs for nutrition, hygiene, and
personal care with brands that help people feel good, look good and get more out of life.

Meeting consumer needs

In the last five years, we have built our business by focusing on our brands, streamlining how we
work, and improving our insight into the evolving needs and tastes of consumers. Now we are
taking the next step in simplification - by aligning ourselves around a clear common mission.

We recognize that the world in which we operate is changing. Consumers are increasingly
bringing their views as citizens into their buying decisions, demanding more from the companies
behind the brands. They want companies and brands they trust.

Unilever embraces these new expectations. Our heritage of good governance, product quality and
long experience of working with communities gives us a strong base. We aim to build on this by
taking the next step in transparency and accountability. We will stand visibly as Unilever, behind
our products and everything we do, everywhere.

Mission and vision Statement Suzuki Pakistan

VISION

To be Excellent All Around.

MISSION

To provide automobile of international quality at competitive price.

To improve skills of employees by imparting training and inculcating in them a sense of

participation.

To achieve maximum indigenization and promote the automobile vending industry.

To contribute to Pakistani society through development of industry in general and automobile

industry in particular.

Mission and vision Statement Nestle Pakistan

The Nestlé global vision is to be the leading health, wellness, and nutrition company in the
world. Nestlé Pakistan subscribes fully to this vision. In particular, we envision to:

Lead a dynamic motivated and professional workforce – proud of its heritage and bullish about
the future.

Meet the nutritional needs of consumers of all age groups – from infancy to old age, from
nutrition to pleasure, through an innovative portfolio of branded food and beverage products of
the highest quality.

Deliver shareholder value through profitable long-term growth, while continuing to play a
significant and responsible role in the social, economic and environmental sectors of the country.

We have profitable and diversified high quality food and beverage product portfolio, delivering
60:40+ advantage to consumers, available across all sales channels.

Our brands are the preferred choice in their categories. Consumer insight drives all aspects of our
marketing and communication efforts.

Our communications to the consumer are relevant, cutting-edge, and adhere to the highest
standards of responsible communication.

Our company is seen as the No. 1 career destination for talented, motivated and ambitious
professionals.

Our result-oriented organizational structure ensures effective communication and empowered

self-management.

Our milk collection and agri services will continue to play the primary role in development of the
dairy sector in rural Pakistan.

Our proactive innovation and renovation culture is the key to our success in the marketplace.

Fully integrated systems (Nestlé Pakistan, suppliers, customers) ensure efficient business
processes.

Non-strategic activities and products are outsourced or discontinued.

Mission Statement of Haleeb Foods

Build Branded food business to improve quality of life by offering tasty, affordable and highly
nutritional products to our consumers while maximizing stake holders' value

Vision Statement of Haleeb Foods

Most Innovative and fastest growing food company offering products enjoyed in "every home
every day"

Most Innovative and fastest growing food company offering products enjoyed in "every home
every day"

Values

• Enterprise
• Empowerment
• Accountability
• Trust
• Teamwork

Similarities between mission and vision statement

 All the organization take the extra care about the costumer need and wants which is so
necessary in the this current environment of competition
 All the organizations try to explain some thing which is beneficial for customer.
 In all the above mention organization tall about their products to the customer that their
products are good for his health.
 Total quality management is the same things in all the organization and emphasized on
quality of goods that provided to customer.
 All the organizations try to convince the consumer about their products.

Differences between mission and vision statement

 All the organizations not focus on price except of Suzuki Pakistan. Which is very
attractive thing to attract the customers
 All the organizations not tell about the worker welfare except the Suzuki Pakistan.
 Nestle Pakistan more focuses on customer health.

Calculation

Every organization in this world try to understand consumer need and want and make the goods
according to consumer needs. But some organizations do work some extra ordinary to attract the
consumer and these organizations get better profit from other.
Macro environment

Definition 1
Major external and uncontrollable factors that influence an organization's decision making, and
affect its performance and strategies. These factors include the economic, demographics, legal,
political, and social conditions, technological changes, and natural forces.

Definition 2
Factors that influence a company's or product's development but that are outside of the
company's control. For example, the macro environment could include competitors, changes in
interest rates, changes in cultural tastes, or government regulations.

Micro environment
Elements close to a company that impact the company's ability to serve its customers. There are
six components of the microenvironment: the company's internal environment, composed of the
management personnel and including the finance, purchasing, manufacturing, research and
development, and marketing departments; the company's suppliers, who provide the goods and
services necessary for the production of the company's products; the marketing intermediaries,
composed of all the individuals or companies who help in the promotion, selling, and distribution
of the company's products; the customers, consisting of the five types of markets in which the
company may sell its products (consumer, industrial, reseller, government, and international
markets); the company's competitors; and the company's various publics, which can be any
individual or group that can affect the company's ability to achieve its objectives, such as citizen
action groups, the media, or the government. See also macroenvironment

The Macro Environment Analysis, what every strategic manager should know

The Macro Environment Analysis is traditionally the first step of a strategic analysis; it is
sometimes referred to as an external analysis, a pest analysis or a pestle analysis.
The purpose of the Macro Environment Analysis is to identify possible opportunities and threats
to your industry as a whole that are outside the control of your industry. (Note: You will often be
forecasting trends – like “interest rates will remain static” which may or may not be the case)
When completing a macro environment analyses you will be seeking to answer the questions
“what will affect the growth of our industry as a whole” and “What is the likely impact of all of
the things that affect the growth of your industry”

For example: An aging population is a demographic trend in many western counties, which will
result in an increase in the total number of caravans sold – if you are in the caravan industry you
should expect to see growth in the total size of your industry.
These opportunities and threats may affect many industries, such as possible interest rate rises,
but you should only be interested if interest rate rises will affect your industry.

For example: If you are in the greeting card industry and fluctuations in interest rates will not
affect the size of your industry then you do not need to consider interest rates in your macro
environment analysis. (However if you are heavily geared or have large borrowings you will
need to consider interest rates in your internal analysis)

Strategic Leadership and the Macro Environment Analysis

Once you have grasped the macro environmental analysis, as a good leader you will be
continually scanning for macro factors in your daily life, activities such as watching or reading
the news, reading management magazines and when in conversation with other industry leaders
will all lead to a greater understanding of the macro environment.
In addition there are a number of things you can do to improve the depth of your understanding
of the macro environment
Networking with senior leaders in your industry
Networking with political parities
Source strategic analysis information prepared for your industry typically by a third party
provider (Normally through subscription)

Read the financial papers

Read management magazines
Surf the Web for trends

How to do a Macro Environment Analysis

A macro environmental analysis can be completed alone or in a brainstorming session, however

you may like to do some research before starting.
To simplify the Macro Environment Analysis the following 6 broad heading will provide some
structure, a good start is to list all of the trends you can think of or can find and indicate whether
they will have a positive impact or negative impact on the size of your industry.
Download your free strategic planning template for the Macro Environment Analysis
Economic Trends: The macro economic environment analysis will identify trends such as
changes in personal disposable income, interest rates, inflation and unemployment rates
Political Trends: The macro political environment analysis will identify changes in the position
politicians take on issues. A current example is a shift towards greener policies in the developed
world.

Technological Trends: The macro technological environment analysis will identify changes in
the application of technology. A current example is a shift towards online transactions and in
some areas a shift away from online transactions.
Legal Trends: The macro legal environment analysis is closely linked to the political
environment (politicians tend to make the laws), but also includes trends in court decisions –
such as liability compensation.
Social/Cultural Trends: The macro social/cultural environment analysis will identify trends in
societies beliefs, behaviours, values and norms. Such as the number of part time workers,
attitudes towards global warming, make up of the family structure.
Demographic Trends: The macro demographic analysis will identify trends in population
growth at relevant ages for your industry (There maybe zero population growth in general but
high growth in the number of people over 65), the population location
(I tend to combine political and legal trends)

The final step of the macro environmental analysis is to summaries the opportunities and threats
to determine if you should expect growth, stability or decline in the size of your industry.
You may find that you have some trends that have the potential to have a significant impact on
your industry – such as an interest rate rise may cause a drop in demand for the building industry
– for these trends it is worth completing scenario planning or contingency planning and keeping
a watchful eye on the progress of the trend.

Knowledge for the good leader: Pest analysis and Pestle analysis (sometimes misspelt as Pestal
Analysis)

These two have only been included so that if anyone asks you if you know how to do a pest
analysis you will know that is has nothing to do with mice, cockroaches or ants. The P.E.S.T.
analysis is the same as the macro environment analysis but used the acronym P.E.S.T. to help
you remember the headings

Political
Economic
Social/cultural
Technological

And the P.E.S.T.L.E Analysis is same as the macro environment analysis but used the acronym
P.E.S.T.L.E. to help you remember the headings (sometimes people misspell pestle analysis and
write pestal analysis – now you can correct them)

Political
Economic
Social/cultural
Technological
Legal

Environmental (Environmental issues, global warming, pollution etcetera)

In a world of constant change, strategy is redundant. What

A business does not operate on its own. It is always in contact with the environment. The fact
that it produces goods or services for buyers and compete with rivals already shows that without
any relations with its environment, a business could simply not be. It needs to be in touch with
the outside world in order to be successful. Considering the world is “constantly changing”, does
this mean that companies need to focus only on reacting in an effective and flexible way to these
changes? therefore undermining the importance of strategies?
First of all it is useful to understand the concept of environment and explain how and why it is
vital for a company to be aware of it and to take appropriate steps. The idea of a strategy being
important to a company should also be emphasized along with the prerequisites to establish the
strategy.

First of all it is a fact the companies are constantly interacting with their environment. They try
to satisfy customer demand by adapting to them, they respect the laws when operating and they
may suffer when the economy is not going well.

There is thus a relation between a business and its environment.

There are two major external forces which may have an influence over a company´

My selected Industry is “sugar industry”

Now days our country suffering shortage of sugar there are some external and uncontrollable
factors that influence at the whole situation which is created by some people. Fowling are some
factor that influence the current situation.

 Some political factor are responsible for whole situation

 Some external speculations are also responsible for this situation.
 Negligence of federal and provisional government impact on this whole situation.
 The excessive use of sugar also add some impact on this scenario.

________________________________

Question No.3 (a)

1
A Framework for Analyzing Industries:
Michael Porter’s Five Forces Analysis
Michael Porter is a professor at Harvard University. His 1979 framework uses concepts
developed in IO (Industrial Organization) economics to derive five forces that determine the
attractiveness of a market. Porter referred to these forces as the microenvironment, to contrast it
with the more general term macro environment. They consist of those forces close to a company
that affect its ability to serve its customers and make a profit. A change in any of the forces
normally requires a company to re-assess the marketplace. Four forces -- the bargaining power of
customers, the bargaining power of suppliers, the threat of new entrants, and the threat of
substitute products -- combine with other variables to influence a fifth force, the level of
competition in an industry.

1. The Five Forces

Bargaining Power of Customers
The power of buyers describes the effect that your customers have on the profitability of your
business. The transaction between the seller and the buyer creates value for both parties. But if
buyers (who may be distributors, consumers, or other manufacturers) have more economic
power, your ability to capture a high proportion of the value created will decrease, and you will
earn lower profit. The bargaining power of customers is likely to be high when
· They buy large volumes and there is a concentration of buyers. For example, you may have
little negotiating power if you and several competing companies are trying to sell similar
products to one large buyer.
· The supplying industry operates with high fixed costs.

· The product is undifferentiated and can be replaced by substitutes. If your brand is homogenous
or similar to all of the others, buyers will base their decision mainly on price.

· Switching to an alternative product is relatively simple and is not related to high costs. For
example, IBM customers might switch to Gateway or Dell, but it may be inconvenient for them
to consider Macintosh.
· Customers have low margins and are price sensitive. Customers may not price shop for a quart
of oil, but they will price shop if purchasing a new vehicle.

· Customers could produce the product themselves. Anheuser-Busch, Coors, and Heinz are
examples of companies that have integrated back into metal can manufacturing to fill the balance
of their container needs.

· The product is not strategically important to the customer.

· Customers have access to and are able to evaluate market information. You have less room for
negotiation if buyers know market demand, prices, and your costs.

Bargaining Power of Suppliers

Any business requires inputs—labor, parts, raw materials, and services. The cost of your inputs
can have a significant effect on your company’s profitability.Whether the strength of suppliers
represents a weak or a strong force hinges on the amount of bargaining power they can exert and,
ultimately, on how they can influence the terms and conditions of transactions in their favor.
Suppliers would prefer to sell to you at the highest price possible or provide you with no more
services than necessary. If the force is weak, then you may be able to negotiate a favorable
business deal for yourself. Conversely, if the force is strong, then you are in a weak position and
may have to pay a higher price or accept a lower level of quality or service. The bargaining
power of suppliers increases when

· The market is dominated by a few large suppliers rather than a fragmented source of supply.
For instance, if you are making computers and need microprocessors, you will have little or no
bargaining power with Intel, the world’s dominant supplier.

· There are no substitutes for the particular input. If you use a certain enzyme in a food
manufacturing process, changing to another supplier may require you to change your entire
manufacturing process. This may be very costly to you, thus you will have less bargaining power
with your supplier.

· The supplier’s customers are fragmented, so their bargaining power is low. If the supplier does
not depend on your business, you will have less power to negotiate. Of course the opposite is
true as well. Wal-Mart has significant negotiating power over its suppliers because it is such a
large percentage of suppliers’ business.

· The switching costs from one supplier to another are high. For example, if you recently
invested in a unique inventory and information management system to work effectively with
your supplier, it would be expensive for you to switch suppliers.

· There is the possibility of the supplier integrating forwards in order to obtain higher prices and
margins. This threat is especially high when the buying industry has a higher profitability than
the supplying industry, or forward integration provides economies of scale for the supplier.

· Suppliers can sell directly to your customers, bypassing the need for your business. For
example, a manufacturer could open its own retail outlet and compete against you.

· You do not have a full understanding of your supplier’s market. You are less able to negotiate if
you have little information about market demand, prices, and supplier’s costs.

Threat of New Entrants

The competition in an industry becomes higher, the easier it is for other companies to enter the
industry. In such a situation, new entrants could change major determinants of the market
environment (e.g. market shares, prices, customer loyalty) at any time. There is always a latent
pressure for reaction and adjustment for existing players in this industry. The threat of new
entries will depend on the extent to which there are barriers to entry.

Threat of new entrants is greatest when

· Processes are not protected by regulations or patents. In contrast, when licenses and permits are
required to do business, such as with the liquor industry, existing firms enjoy some protection
from new entrants.

· Customers have little brand loyalty.Without strong brand loyalty, a potential competitor has to
spend little to overcome the advertising and service programs of existing firms and is more likely
to enter the industry.

· Start-up costs are low for new businesses entering the industry. The less commitment needed in
advertising, research and development, and capital assets, the greater the chance of new entrants
to the industry.

· The products provided are not unique. When the products are commodities and the assets used
to produce them are common, firms are more willing to enter an industry because they know
they can easily liquidate their inventory and assets if the venture fails.
· Switching costs are low. In situations where customers do not face significant one-time costs
from switching suppliers, it is more attractive for new firms to enter the industry and lure the
customers away from their previous suppliers.

· The production process is easily learned. Just as competitors may be scared away when the
learning curve is steep, competitors will be attracted to an industry where the production process
is easily learned.

· Access to inputs is easy. Entry by new firms is easier when established firms do not have
favorable access to raw materials, locations, or government subsidies.

· Access to customers is easy. For instance, it may be easy to rent space to sell produce at a
farmer’s market, but nearly impossible to get shelf space in a grocery store. You are more likely
to find new entrants in the food business using the farmer’s market distribution system over
grocery stores.

· Economies of scale are minimal. If there is little improvement in efficiency as scale (or size)
increases, a firm entering a market won’t be at a disadvantage if it doesn’t produce the large
volume that an existing firm produces.

Threat of Substitutes
A threat from substitutes exists if there are alternative products with lower prices of better
performance parameters for the same purpose. They could potentially attract a significant
proportion of market volume and hence reduce the potential sales volume for existing players.
This category also relates to complementary products. Substitutes are a greater threat when

· Your product doesn’t offer any real benefit compared to other products. What will hold your
customers if they can get an identical product from your competitor?

· It is easy for customers to switch. A grocer can easily switch from paper to plastic bags for its
customers, but a bottler may have to reconfigure its equipment and retrain its workers if it
switches from aluminum cans to plastic bottles.
· Customers have little loyalty. When price is the customer’s primary motivator, the threat of
substitutes is greater.

Rivalry among Competitors

High competitive pressure results in pressure on prices, margins and on profitability for every
single company in the industry. The most intense rivalries occur when

· One firm or a small number of firms have incentive to try and become the market leader. In
some cases, an industry with two or three dominant firms may experience intense rivalry when
these firms are battling to achieve market leader status. In other situations, when competitors
with diverse strategies and relationships have different goals and the “rules of the game” are not
well established, rivalry will be more intense. The market is growing slowly or shrinking. When
the potential to sell products is stagnant or declining, existing firms are unable to grow their
market without taking market away from competitors. In this situation rivalry is more likely.
· There are high fixed costs of production. When a large percentage of the cost to produce
products is independent of the number of units produced, businesses are pressured to produce
larger volumes. This may tempt companies to drastically cut rices when there is excess capacity
in the industry in order to sell greater volumes of product.

· Products are perishable and need to be sold quickly. Sellers are more likely to price
aggressively if they risk losing inventory due to spoilage or if storage costsare high.

· Products are not unique or homogenous. Undifferentiated products (commodities) compete

mainly on price, because consumers receive the same value from the products of different firms.
Because firms do not experience any insulation from price competition, there is more likely to be
active rivalry.

· Customers can easily switch between products. Intense rivalry is likely when customers in a
given industry can easily switch to other suppliers. In these situations, the businesses in the
industry will be vying for market share.

· There are high costs for exiting the business. If liquidation would result in a loss, businesses
that invested heavily in their facilities will try hard to pay for them and may resort to extreme
methods of competition.
2. Reducing the Power of Five Forces
Companies could take action to reduce the power of the five forces to strength their positions in
the market.
Reducing the Bargaining Power of Suppliers
· Partnering
· Supply chain management
· Supply chain training
· Increase dependency
· Build knowledge of supplier cost and methods
· Take over a supplier
Reducing the Bargaining Power of Customers
· Partnering
· Supply chain management
· Increase loyalty
· Increase incentives and value added
· Move purchase decision away from price
· Cut off powerful intermediaries (go directly to customer)
Reducing the Treat of New Entrants
· Increase minimum efficient scales of operations
· Create a marketing / brand image (loyalty as a barrier)
· Patents, protection of intellectual property
· Alliances with linked products / services
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6
· Tie up with suppliers
· Tie up with distributors
· Retaliation tactics
Reducing the Threat of Substitutes
· Legal actions
· Increase switching costs
· Alliances
· Customer surveys to learn about their preferences
· Enter substitute market and influence from within
· Accentuate differences (real or perceived)
Reducing the Competitive Rivalry between Existing Players
· Avoid price competition
· Differentiate your product
· Buy out competition
· Reduce industry over-capacity
· Focus on different segments
· Communicate with competitors
3. Critique
When trying to apply the five-force analysis to your industry study, there are some problems to
be considered.

· In the economic sense, the model assumes a classic perfect market. The more an industry is
regulated, the less meaningful insights the model can deliver.

· The model is best applicable for analysis of simple market structures. A comprehensive
description and analysis of all five forces gets very difficult in complex industries with multiple
interrelations, product groups, byproducts and segments. A too narrow focus on particular
segments of such industries, however, bears the risk of missing important elements.

· The model assumes relatively static market structures. This is hardly the case in today’s
dynamic markets. Technological breakthroughs and dynamic market entrants from start-ups or
other industries may completely change business models, entry barriers and relationships along
the supply chain within short times.
The Five Forces model may have some use for later analysis of the new situation; but it will
hardly provide much meaningful advice for preventive actions.

· The model is based on the idea of competition. It assumes that companies try to achieve
competitive advantages over other players in the markets as well as over suppliers or customers.
With this focus, it does not really take into consideration strategies like strategic alliances,
electronic linking of information systems of all
Companies along a value chain, virtual enterprise-networks or others.
Question No. 3. (b)

Introduction

Value chain

The value chain, also known as value chain analysis, is a concept from business management
that was first described and popularized by Michael Porter in his 1985 best-seller, Competitive
Advantage: Creating and Sustaining Superior Performance.

A value chain is a chain of activities. Products pass through all activities of the chain in order
and at each activity the product gains some value. The chain of activities gives the products more
added value than the sum of added values of all activities. It is important not to mix the concept
of the value chain with the costs occurring throughout the activities. A diamond cutter can be
used as an example of the difference. The cutting activity may have a low cost, but the activity
adds much of the value to the end product, since a rough diamond is significantly less valuable
than a cut diamond.

The value chain categorizes the generic value-adding activities of an organization. The "primary
activities" include: inbound logistics, operations (production), outbound logistics, marketing and
sales (demand), and services (maintenance). The "support activities" include: administrative
infrastructure management, human resource management, technology (R&D), and procurement.
The costs and value drivers are identified for each value activity. The value chain framework
quickly made its way to the forefront of management thought as a powerful analysis tool for
strategic planning. The simpler concept of value streams, a cross-functional process which was
developed over the next decade,[1] had some success in the early 1990s

The value-chain concept has been extended beyond individual organizations. It can apply to
whole supply chains and distribution networks. The delivery of a mix of products and services to
the end customer will mobilize different economic factors, each managing its own value chain.
The industry wide synchronized interactions of those local value chains create an extended value
chain, sometimes global in extent. Porter terms this larger interconnected system of value chains
the "value system." A value system includes the value chains of a firm's supplier (and their
suppliers all the way back), the firm itself, the firm distribution channels, and the firm's buyers
(and presumably extended to the buyers of their products, and so on).

Capturing the value generated along the chain is the new approach taken by many management
strategists. For example, a manufacturer might require its parts suppliers to be located nearby its
assembly plant to minimize the cost of transportation. By exploiting the upstream and
downstream information flowing along the value chain, the firms may try to bypass the
intermediaries creating new business models, or in other ways create improvements in its value
system.
The Supply-Chain Council, a global trade consortium in operation with over 700 member
companies, governmental, academic, and consulting groups participating in the last 10 years,
manages the Supply-Chain Operations Reference (SCOR), the de facto universal reference
model for Supply Chain including Planning, Procurement, Manufacturing, Order Management,
Logistics, Returns, and Retail; Product and Service Design including Design Planning, Research,
Prototyping, Integration, Launch and Revision, and Sales including CRM, Service Support,
Sales, and Contract Management which are congruent to the Porter framework. The SCOR
framework has been adopted by hundreds of companies as well as national entities as a standard
for business excellence, and the US DOD has adopted the newly-launched Design-Chain
Operations Reference (DCOR) framework for product design as a standard to use for managing
their development processes. In addition to process elements, these reference frameworks also
maintain a vast database of standard process metrics aligned to the Porter model, as well as a
large and constantly researched database of prescriptive universal best practices for process
execution.

Nestlé’s Value Chain Analysis

Nestlé is travelling its own road with a proposed new corporate social responsibility model

Nestlé’s recently unveiled Latin America corporate social responsibility report is the food giant’s
bear-hug attempt to understand its operational impacts across a vast sourcing, production and
distribution chain.

It is also a stab at defining a new corporate responsibility model, one that sits more comfortably
with the firm’s defiantly unapologetic corporate culture.

The company’s operational reach or “footprint” is huge, involving sourcing from close to
275,000 farmers (for its three principal raw materials – 218,000 coffee farmers, 35,000 milk
farmers and 22,000 other farmers), who supply some 4 billion Swiss francs (£1.8 billion) worth
of goods and services, for 72 factories domiciled in South America.

These have more than 38,000 workers, producing products for more than 400 million consumers
in the region. Nestlé’s milk-producing district in Brazil alone is larger than Switzerland.

Nestlé retained the Foundation Strategy Group consulting firm, affiliated with Harvard Business
School’s Michael Porter, to study its existing practices and “the social impact the company has
had over several decades” in Latin America, where it set up its first factory in 1921, in Brazil.

Upcoming Ethical Corporation conferences & events:

“Our research clearly demonstrates that Nestlé has had a profound and positive impact on the
people and the environment in Latin America,” concluded FSG in “The Nestlé Concept of
Corporate Social Responsibility” (which follows a similar report devoted to Africa, published
last year.)
Depth of detail

The result – or least the publicly available report – is an impressive new effort by the company to
get in better step with rising corporate responsibility expectations. But to some it still sounds
more an effort in public relations than in stakeholder relations. And despite its new reach, the
report lacks the depth of detail to allow any analytically rigorous assessment of just how well the
company is managing its impacts.

Numerous examples of how Nestlé ties local needs to business objectives are described but all
too often with a happy postcard pastiche quality. Even the case studies, as laudatory as they may
be, seem hatched in a sporadic catch-as-catch-can fashion, lacking any larger, apparent design.
This is at least tacitly acknowledged by FSG, which recommends Nestlé move “beyond
individual initiatives to encompass its entire global value chain of activities.”

As a “first step” the company should “set goals and to measures progress against them on a
global basis in the area of agricultural development, manufacturing impacts, and consumer
benefit and education in order to tighten the link between Nestlé’s strategy and its social
responsibility,” FSG recommends.

Company executives say its variegated initiatives are the natural outcome of the particular needs
of local circumstances and what is doable on the ground. At the same time Nestlé intends to
become “more systematic and structured” in the way its activities create wider social benefits.

“Until more success stories are replicated across all of Nestlé’s markets, it will not be clear
whether they are merely excellent initiatives or if they truly represent a mode of operation that is
embedded in corporate strategy,” says FSG’s managing director, Mark Kramer.

The Nestlé way

It’s a challenge Nestlé has taken on, while insisting it will do so on its own terms. In an
introductory discussion Nestlé chief executive Peter Brabeck-Letmathe lays out his conviction
that corporate social responsibility is “inherent to Nestlé business strategy”.

But at the same time he defines that responsibility in his own way, in terms of business’s “unique
capacity to create wealth and benefit society through long-term value creation”.

It’s a starting point that rejects the premise that companies incur some existential societal debt.
Quite the opposite: companies’ raison d’etre is to create both wealth for shareholders and value
for all stakeholders along the entire value chain.

“While corporate social responsibility and sustainability represent a set of useful principles and
practices, we believe that the true test of a business is whether it creates value for society [and
hence for shareholders too] over the long term,” says Brabeck.

This is an approach that can be misinterpreted, or distorted, as company officials insist occurred
in the flap kicked up by a speech Brabeck gave at a Boston College CEO forum last year. But it
is one Brabeck maintains unflinchingly.

“The most important social responsibility that the CEO of a company has … is to be sure that
this company will continue to exist in 100 years from now – and in order to do that, you must
have a very long-term approach to business,” he said at the report’s New York launch in March.

‘Shared value’

This nicely dovetails with the proposed new corporate responsibility model – dubbed Creating
Shared Value – that the FSG consultants devised while studying Nestlé’s operations. “Creating
Shared Value is a very different approach to CSR, because it is not focused on meeting a set of
standard external criteria, or on philanthropy; the idea of winners and losers does not fit this
model of CSR,” said FSG’s Kramer, a colleague of Porter’s at Harvard.

Porter insists that creating shared value represents a new “third wave” in corporate social
responsibility’s evolution, one Nestlé is helping to define by its “front edge” position. At
Nestlé’s April annual general meeting, Brabeck told his audience: “The two academics have
been able to confirm in Nestlé a theory they developed and which could significantly influence
the on-going discussion of corporate social responsibility.”

So far, though, corporate responsibility experts are not exactly won over. London School of
Business professor Craig Smith said the approach was “not especially innovative” but
nonetheless an “appropriate way to look at Nestlé”.

To Boston University School of Management professor James Post, the Nestlé initiative is
“interesting, and suggestive, but not convincing”. Post, who has watched Nestlé for 25 years,
including serving nine years on its infant formula audit commission, said the idea of shared
creation of value has been around for two decades.

“The more important issue in the 21st century may be one of value-sharing, i.e., how will the
benefits of wealth creation to be shared with the stakeholders?” he said.

“Nestlé can buy the advice of the world’s leading experts, but it is never certain that they will
actually achieve the good to which they would have us believe they are committed,” Post added,
suggesting the company might do well to hire independent external social auditors. “Doing this
without the threat of a boycott or other action would be of maximum benefit for Nestlé,” he said,
noting that Shell has done so, to “its considerable benefit”.

More to come

In the short term at least we can expect to hear more from Nestlé about shared value, as it better
understands how it contributes to society along its entire value chain: from agricultural sourcing
– helping farmers to provide better quality raw materials and setting higher labour and
environmental standards – to marketing and educating customers about nutritious foods and
lifestyles.
In the past, such impacts were perhaps mostly incidental, some fortuitous, and rarely well
publicised. How many know, for example, that Nescafe, one of the firm’s signature products,
was developed in response to a Brazilian government request for help when the country
experienced, in the 1930s, a huge glut of coffee, bankrupting farmers who had no way to
preserve surpluses?

“We need to develop a methodology that guides us in maximizing the shared value we create at
every point in our value chain for every product we produce and in every region where we
operate,” says Brabeck. He concedes the firm could do a “better job informing people” how this
approach is “embedded in our brands”.

Any company that has done as much as Nestlé to atone for its past sins related to marketing
infant formula and yet is still dogged by an active boycott – however unwarranted this appears to
be today – would seem to have its work cut out.

Communication challenges

So how well does Nestlé display its on-the-ground achievements? The discerning reader is likely
to be intrigued but ultimately disappointed by the sketchiness of descriptions that rarely paint a
comprehensible picture.

Take coffee, the food giant’s most important product. Besides the expected science-based efforts
to improve plant yields and bean quality in all its coffee-growing areas, we hear of several new
undertakings to promote sustainable high-quality coffee growing, but there is no information as
to the scale – much less impacts – of these efforts.

Even where Nestlé deserves some credit the report oddly misses the mark. For example, it fails
to mention that the company is building a new multi-product factory specifically designed to
market to the low-paid (annual family income of under $1,000) in Brazil’s north-east.

Nestlé calls these “popularly positioned products” and it is the company’s first full-fledged effort
at what others call marketing to the “base of the pyramid”. “We need to think about how to
evolve our business models so we can reach further into disadvantaged segments of society with
our products and help improve their quality of life,” says Brabeck.

It is no mean undertaking, requiring separate sourcing chain, manufacturing lines, distribution

and sales networks staffed by locals, all geared to meet the primary objective of affordability.

At the same time there is a “great opportunity” to develop brand loyalty at the “lowest level
possible” and then to accompany the consumer as purchasing power increases where “our
classical, more elaborate ranges where convenience, pleasure and diversity are key
considerations”, Brabeck told the annual meeting. “Finally, we reach the area of health, nutrition
and wellness and ultimately, perhaps, well-being.”

For an ambitious foray into corporate responsibility territory, the report appears to be not a bad
initial effort from Nestlé. However, many commentators note that the company will need to
expend considerable improvement in terms of metrics, targets and performance in future efforts
to bring the company up to speed with many other companies its size.

Question No.4.

Mergers and Acquisitions

Introduction

(M&A) and corporate restructuring are a big part of the corporate finance world. Every day,
Wall Street investment bankers arrange M&A transactions, which bring separate companies
together to form larger ones. When they're not creating big companies from smaller ones,
corporate finance deals do the reverse and break up companies through spinoffs, carve-outs or
tracking stocks.
Not surprisingly, these actions often make the news. Deals can be worth hundreds of millions, or
even billions, of dollars. They can dictate the fortunes of the companies involved for years to
come. For a CEO, leading an M&A can represent the highlight of a whole career. And it is no
wonder we hear about so many of these transactions; they happen all the time. Next time you flip
open the newspaper’s business section, odds are good that at least one headline will announce
some kind of M&A transaction.

Sure, M&A deals grab headlines, but what does this all mean to investors? To answer this
question, this tutorial discusses the forces that drive companies to buy or merge with others, or to
split-off or sell parts of their own businesses. Once you know the different ways in which these
deals are executed, you'll have a better idea of whether you should cheer or weep when a
company you own buys another company - or is bought by one. You will also be aware of the tax
consequences for companies and for investors.

Mergers and Acquisitions

Definition

The Main Idea

One plus one makes three: this equation is the special alchemy of a merger or an acquisition. The
key principle behind buying a company is to create shareholder value over and above that of the
sum of the two companies. Two companies together are more valuable than two separate
companies - at least, that's the reasoning behind M&A.

This rationale is particularly alluring to companies when times are tough. Strong companies will
act to buy other companies to create a more competitive, cost-efficient company. The companies
will come together hoping to gain a greater market share or to achieve greater efficiency.
Because of these potential benefits, target companies will often agree to be purchased when they
know they cannot survive alone.

Distinction between Mergers and Acquisitions

Although they are often uttered in the same breath and used as though they were synonymous,
the terms merger and acquisition mean slightly different things.

When one company takes over another and clearly established itself as the new owner, the
purchase is called an acquisition. From a legal point of view, the target company ceases to exist,
the buyer "swallows" the business and the buyer's stock continues to be traded.

In the pure sense of the term, a merger happens when two firms, often of about the same size,
agree to go forward as a single new company rather than remain separately owned and operated.
This kind of action is more precisely referred to as a "merger of equals." Both companies' stocks
are surrendered and new company stock is issued in its place. For example, both Daimler-Benz
and Chrysler ceased to exist when the two firms merged, and a new company, DaimlerChrysler,
was created.

In practice, however, actual mergers of equals don't happen very often. Usually, one company
will buy another and, as part of the deal's terms, simply allow the acquired firm to proclaim that
the action is a merger of equals, even if it's technically an acquisition. Being bought out often
carries negative connotations, therefore, by describing the deal as a merger, deal makers and top
managers try to make the takeover more palatable.

A purchase deal will also be called a merger when both CEOs agree that joining together is in the
best interest of both of their companies. But when the deal is unfriendly - that is, when the target
company does not want to be purchased - it is always regarded as an acquisition.

Whether a purchase is considered a merger or an acquisition really depends on whether the

purchase is friendly or hostile and how it is announced. In other words, the real difference lies in
how the purchase is communicated to and received by the target company's board of directors,
employees and shareholders.
Joint Developments and Strategic Alliances

Fujitsu and Cisco Form Strategic Alliance; Joint Development of

Next Generation High-End Routers Will Deliver Improved
Quality and Accelerated Feature Development.

"Partnering is a strategic imperative for companies such as Cisco and Fujitsu to address service
providers' and enterprise customer requirements," said Mike Volpi, senior vice president of
Cisco's Routing Technology Group. "Forming a strategic alliance with Fujitsu enables us to
combine resources so we can deliver on those requirements with value-added, industry-leading
networking solutions."

"Telecommunications service provider A Telecommunications Service Provider or TSP is a type

of Communications Service Provider that has traditionally provided telephone and similar
services. This category includes ILECs, CLECs, and mobile wireless companies. networks must
support the highest quality service levels and be built upon the best technologies available," said
Chiaki Ito, corporate executive vice president, Fujitsu Limited. "Together, Fujitsu and Cisco
have unparalleled technology depth, and through the joint development and other collaborative
efforts we are embarking upon, we will be able to address service providers' needs with even
higher quality systems and innovative solutions."

IP-based networking products such as routers and switches are central elements of future
network infrastructures, and the performance and quality of these products will have a major
impact on network systems overall. This is especially true for telecommunication

Telecommunication
Communication between parties at a distance from one another. Modern telecommunication
systems—capable of transmitting telephone, fax, data, radio, or television signals—can transmit
large volumes of information over long distances. service provider networks, where they will
play a vital and essential role in determining the service and quality levels that providers can
offer.

Through this agreement, the companies will take advantage of Cisco's worldwide leadership in
IP technologies and Fujitsu's industry-leading expertise in high-reliability and high-availability
technologies to quickly and continually

1. Recurring regularly or frequently: the continual need to pay the mortgage.

2. bring to market world-class networking products. The alliance will initially focus on the
Japanese market in these key areas:

A[micro] 1)

The companies will collaborate on development of Cisco's IOS-XR operating system for multi-
terabit routers. This is the first time Cisco has joined with another communications equipment
manufacturer in router operating system development. By combining their engineering
knowledge, Fujitsu and Cisco will be able to accelerate the development of features critical to
Japanese service providers and large enterprises.

A[micro] 2)

Fujitsu will offer Fujitsu and Cisco co-branded routing products running IOS-XR to
telecommunications service providers in Japan. Capitalizing on the technological expertise it has
accumulated in its telecommunications equipment business, Fujitsu will respond to the strict
quality demands of Japan's telecommunications service providers by offering networking
systems with even higher levels of reliability. Fujitsu plans to release the first co-branded
product in the spring of 2005.

A[micro] 3)

Fujitsu will offer telecommunications service providers and enterprise users comprehensive
network solutions that combine specific networking products with servers and other computing
equipment, based on a roadmap of both companies' router and switch product offerings.

A[micro] 4)

The companies will work closely together on test and integration processes to ensure carrier class
quality requirements are met as well as offering service and support to ensure highest level of
customer success.

About Fujitsu

Fujitsu is a leading provider of customer-focused IT and communications solutions for the global
marketplace. Pace-setting technologies, highly reliable computing computing - computer and
communications platforms, and a worldwide corps of systems and services experts uniquely
position Fujitsu to deliver comprehensive solutions that open up infinite possibilities for its
customers' success. Headquartered in Tokyo, Fujitsu Limited (TSE:6702) reported consolidated
revenues of 4.7 trillion One thousand times one billion, which is 1, followed by 12 zeros, or 10 to
the 12th power.

About Cisco
 Cisco Systems, Inc. (NASDAQ:CSCO), the worldwide leader in networking for the Internet,
this year celebrates 20 years of commitment to technology innovation, industry leadership, and
corporate social responsibility. Information about Cisco can be found at http://www.cisco.com.

Cisco, Cisco IOS Cisco IOS (originally Internetwork Operating System) is the software used
on the vast majority of Cisco Systems routers and all current Cisco network switches. IOS is a
package of routing, switching, internetworking and telecommunications functions tightly
integrated with a , Cisco Systems, and the Cisco Systems logo are registered trademarks of Cisco
Systems, Inc. and/or its affiliates in the United States United States, officially United States of
America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North
America. The United States is the world's third largest country in population and the fourth
largest country in area.

___________________________________

Question No 4.(a)

Capabilities and Competences

Capability-based strategies are based on the notion that internal resources and core competencies
derived from distinctive capabilities provide the strategy platform that underlies a firm's long-
term profitability. Evaluation of these capabilities begins with a company capability profile,
which examines a company's strengths and weaknesses in four key areas:

• managerial
• marketing
• financial
• technical

Then a SWOT analysis is carried out to determine whether the company has the strengths
necessary to deal with the specific forces in the external environment. This analysis enables
managers to identify:

1. external threats and opportunities, and

2. distinct competencies that can ward off the threats and compensate for weaknesses.

The picture identified by the SWOT analysis helps to suggest which type of strategy, or strategic
thrust the firm should use to gain competitive advantage.

Stalk, Evans and Schulman (1992) have identified four principles that serve as guidelines to
achieving capability-based competition:

1. Corporate strategy does not depend on products or markets but on business processes.
2. Key strategic processes are needed to consistently provide superior value to the customer.
3. Investment is made in capability, not functions or SBUs.
4. The CEO must champion the capability-based strategy.
Capability-based strategies, sometimes referred to as the resource-based view of the firm, are
determined by (a) those internal resources and capabilities that provide the platform for the firm's
strategy and (b) those resources and capabilities that are the primary source of profit for the firm.
A key management function is to identify what resource gaps need to be filled in order to
maintain a competitive edge where these capabilities are required.

Several levels can be established in defining the firm's overall strategy platform (see figure).

At the bottom of the pyramid are the basic resources a firm has compiled over time. They can be
categorised as technical factors, competitive factors, managerial factors, and financial factors.

Core competencies can be defined as the unique combination of the resources and experiences of
a particular firm. It takes time to build these core competencies and they are difficult to imitate.
Critical to sustaining these core competencies are their:

1. Durability - their life span is longer than individual product or technology life-cycles, as
are the life spans of resources used to generate them, including people.
2. Intransparency - it is difficult for competitors to imitate these competencies quickly.
3. Immobility - these capabilities and resources are difficult to transfer.

Question No. 5(b)

Introduction

Identifying the main issues helps to define the focus of the self-assessment process. The
following sections will help you develop deeper, more detailed strategic questions. We have
provided a brief section on each component of the performance model; these have been adapted
and refined from our earlier work, Institutional Assessment. Use the following sections in any
order to focus on areas you wish to explore.

A FRAMEWORK FOR ASSESSING ORGANIZATIONAL PERFORMANCE

The International Development Research Centre (IDRC) and Universalia Management Group
have constructed a framework to help organizations assess themselves. Our approach can help
you clarify important issues and guide the collection of data to help you make decisions to
improve your organization’s performance and capacity.

In brief, the framework encompasses four areas:

ORGANIZATIONAL PERFORMANCE

Your organization’s performance is made visible through the activities it conducts to achieve its
mission. Outputs and their effects are the most observable aspects of an organization’s
performance.

Ideas about the concept of performance vary considerably. Each interest group or stakeholder
may have an entirely different idea of what counts. For instance, administrators might define
your organization’s performance in terms of the amount of money brought into the organization
through grants, whereas a donor might define performance in terms of your organization’s
beneficial impact on a target group.

In our experience, very few organizations have performance data readily available. However, it
is usually not difficult to generate this information from existing data or to develop mechanisms
for gathering performance data.

Data gathering tends to be mechanical and technical. It is far more difficult to obtain consensus
on the merits of particular performance data and indicators. It is even more difficult to arrive at
value judgments regarding acceptable levels of quantity and quality for each performance
indicator. The real questions are these: How does your organization define good performance?
Does good performance help your organization attain its mission? The second of these questions
is particularly important for organizations that have very diverse stakeholders.

When you are diagnosing your organization and its performance, the number and choice of
indicators are critical. “Wise” organizations try to identify 10–15 key performance indicators that
they can regularly monitor to assess their own performance. It is also wise to have a set of other
variables to monitor as a barometer to help understand performance. These other variables may
include employee morale, timeliness of financial information, economic indicators, absenteeism,
and number of new funders.

YOU MAY ALREADY HAVE INDICATORS

Although we have often worked with organizations that never went through the process of
thinking about their indicators, we have found that every organization has a unique set of
organizationally appropriate indicators. Your organization needs to create its own indicator-
monitoring list. Not all the indicators you develop will have the same importance, and you may
also find that the appropriate indicators change as your organizational-performance issues do or
as the organization evolves.

Effectiveness

The effectiveness of your organization is the degree to which it moves toward the attainment of
its mission and realizes its goals. Effectiveness, however, is not a simple concept. The basic
difficulty in analyzing effectiveness lies in the fact that many organizations make multiple
statements about their missions and goals. Sometimes these statements are in the organization’s
charter; other times, in their strategic documents. Regardless of where you find these statements,
you need a clearly defined guide to the raison d’être of the organization.

A BALANCING ACT

One research institution was caught in a dilemma that many funded institutions can relate to.
External donors offered to fund it to carry out environmental-impact projects. Although
fascinating and lucrative, these projects would lie outside the mission of the institute, which was
primarily to promote economic and social-science research. In addition, the research institute
would have to hire an expert in environmental issues to carry out the projects. If the institute
accepted this funding, the results of the research would not be fully used by the national
government, but the institute would gain revenues from external donors.

The dilemma for this organization was to understand the trade-off between ensuring its own
financial sustainability and working toward its mission.

EFFECTIVENESS ISSUES

How effective is your organization in working toward its mission?

* The charter, mission statement, and other documents provide the raison d’être for the
organization.

* The mission is known and agreed to by staff.

* The mission is operationalized through program goals, objectives, and activities.

* Quantitative and qualitative indicators are used to capture the essence of the mission.

* A system is in place to assess effectiveness.

* The organization monitors organizational effectiveness.

* The organization uses feedback to improve itself.

 SOME INDICATORS OF EFFECTIVENESS

* Number of clients served

* Quality of services or products

* Changes with respect to equality

* Environmental changes

* Quality-of-life changes

* Service access and usage

* Knowledge generation and use

* Collaborative arrangements

* Demand for policy or technical advice from stakeholders

* Replication of the organization’s programs by stakeholders

* Growth indicators in terms of coverage of programs, services, clients, and funding

Efficiency

An organization must be able not only to provide exceptional services but also to provide them
within an appropriate cost structure. Performance is increasingly judged by the efficiency of the
organization (for example, the cost per service, the number of outputs per employee, the number
of outputs per person per year, the average value of grants per person). Whatever the overall size
of the unit, performing organizations are viewed as those that provide good value for the money
in both quantitative and qualitative terms.

EFFICIENCY ISSUES

How efficient is your organization in the use of its human, financial, and physical resources?

* Staff members are used by the organization to the best of their abilities.

* Maximal use is made of physical facilities (buildings, equipment, etc.).

* Optimal use is made of financial resources.

* The administrative system provides good value for cost.

 * High-quality administrative systems are in place (financial, human resources, program,
strategy, etc.) to support the efficiency of the organization.

* Benchmark comparisons are made of the progress achieved in the organization.

SOME INDICATORS OF EFFICIENCY

* Cost per program

* Cost per client served

* Cost–benefit of programs

* Output per staff

* Employee absenteeism and turnover rates

* Program-completion rates

* Overhead – total program cost

* Frequency of system breakdowns

* Timeliness of service delivery

Relevance

Organizations in any society take time to evolve and develop, but they must develop in ways that
consolidate their strengths. Organizations face internal and external crises, and no organization is
protected from becoming out of date, irrelevant, or subject to closure. To survive, your
organization must adapt to changing contexts and capacities and keep its mission, goals,
programs, and activities agreeable to its key stakeholders and constituents.

RELEVANCE ISSUES

Has your organization remained relevant?

* Regular program revisions reflect changing environment and capacities.

* The mission is undergoing review.

* Stakeholder-needs assessments are conducted regularly.

* The organization regularly reviews the environment to adapt its strategy.

 * The organization monitors its reputation.

* The organization creates or adapts to new technologies.

* Innovation is encouraged.

* The organization regularly undertakes role analyses.

SOME INDICATORS OF RELEVANCE

* Stakeholder satisfaction (clients, donors, etc.)

* Number of new programs and services

* Changes in partner attitudes

* Changes in role

* Changes in funders (quality and quantity)

* Changes in reputation among peer organizations

* Changes in reputation among key stakeholders

* Stakeholders’ acceptance of programs and services

* Support earmarked for professional development

* Number of old and new financial contributors (risk of discontinuance, leverage of

funding)

* Changes in organizational innovation and adaptiveness (changes appropriate to needs,

methods)

* Changes in services and programs related to changing client systems

ARE WE ADEQUATELY BALANCING STAKEHOLDERS DEMANDS?

A social-service agency had to balance its ways of being relevant to its beneficiaries and
funders:

* Beneficiaries – Because of increasing demands from the community to provide more

home care for the elderly, the agency was tempted to put more of its resources into this type of
service.
 * Funders – One of its funders wanted the agency to increase its promotion and advocacy
for voluntary work in and beyond the immediate community.

The Board of Directors and management were thus faced with two not necessarily convergent
sets of demands from two important stakeholders.

Financial viability

To survive, your organization’s inflow of financial resources must be greater than the outflow.
Our experience has shown that the conditions needed to make an organization financially viable
include multiple sources of funding, positive cash flow, and financial surplus.

FINANCIAL-VIABILITY ISSUES

Is your organization financially sustainable?

* Existing funding sources offer sustained support.

* The organization consistently obtains new funding sources.

* The organization consistently has more revenue than expenses.

* Assets are greater than liabilities.

* The organization keeps a reasonable surplus of money to use during difficult times.

* The organization monitors finances on a regular basis.

* Capital assets and depreciation are monitored.

* The organization does not depend on a single source of funding.