Assignment A

Answer 1. Difference between Strategic management and strategic planning- Strategic management
deals with the determination of the mission, vision, goals, objectives, values, roles and responsibilities of the
organization. It helps the organization to determine the strategic goals which a company wants to attain in
future. On the other hand, strategic planning is the management tool and it is the process in which the
organization focuses it's energy to attain those goals. In the strategic planning the organizations plan that
how the members will attain the organization's goals for example what the organization will do and how to do.
Therefore, strategic planning and strategic management are closely related. Strategic management is means
to manege all those activities which are performed for the achievement of strategic planning steps like
mission statement, goal and objectives, designing business portfolio and other marketing strategies.
Strategic planning is all about stating mission, goals and objectives and business portflio and marketing
strategies.

A policy is typically described as a principle or rule to guide decisions and achieve rational
outcome(s). The term is not normally used to denote what is actually done, this is normally
referred to as either procedure or protocol. Whereas a policy will contain the 'what' and the
'why', procedures or protocols contain the 'what', the 'how', the 'where', and the 'when'. Policies
are generally adopted by the Board of or senior governance body within an organisation where
as procedures or protocols would be developed and adopted by senior executive officers.

The term may apply to government, private sector organizations and groups, and individuals.
Policy or policy study may also refer to the process of making important organizational
decisions, including the identification of different alternatives such as programs or spending
priorities, and choosing among them on the basis of the impact they will have. Policies can be
understood as political, management, financial, and administrative mechanisms arranged to
reach explicit goals.

Characteristics of Strategic Decisions

Strategic decisions are likely to affect the long-term direction of an organisation.

2. Strategic decisions are normally about trying to achieve some advantage for the organisation.

3. Strategic decisions are likely to be concerned with the scope of an organisation’s activities:
Does (and should) the organisation concentrate on one area of activity, or does it have many?
The issue of scope of activity is fundamental to strategic decisions because it concerns the way
in which those responsible for managing the organisation conceive its boundaries. It is to do
with what they want the organisation to be like and to be about.

4. Strategy is to do with the matching of the activities of an organisation to the environment in

which it operates.

5. Strategy can also be seen as 'stretching' an organisation's resources and competences to

create opportunities or capitalise on them. It is not just about countering environmental threats
and taking advantage of environmental opportunities; it is also about matching organisational
resources to these threats and opportunities. There would be little point in trying to take
advantage of some new opportunity if the resources needed were not available or could not be
made available, or if the strategy was rooted in an inadequate resource-base.

6. Strategic decisions therefore often have major resource implications for an organisation. In
the 1980s a number of UK retail firms had attempted to develop overseas with little success and
one of the major reasons was that they had underestimated the extent to which their resource
commitments would rise and how the need to control them would take on quite different
proportions. Strategies, then, need to be considered not only in terms of the extent to which the
existing resource-base of the organisation is suited to the environmental opportunities but also
in terms of the extent to which resources can be obtained and controlled to develop a strategy
for the future.

7. Strategic decisions are therefore likely to affect operational decisions, to ‘set off waves of
lesser decisions’.

8. The strategy of an organisation will be affected not only by environmental forces and
resource availability, but also by the values and expectations of those who have power in and
around the organisation. In some respects, strategy can be thought of as a reflection of the
attitudes and beliefs of those who have the most influence on the organisation. Whether a
company is expansionist or more concerned with consolidation, and where the boundaries are
drawn for a company’s activities, may say much about the values and attitudes of those who
influence strategy -- the stakeholders of the organisation. The beliefs and values of these
stakeholders will have a more or less direct influence on the organisation.

Systematic analysis of the factors associated with customers and competitors (the external
environment) and the organization itself (the internal environment) to provide the basis for
rethinking the current management practices. Its objective is to achieve better alignment of
corporate policies and strategic priorities.

Answer 2. Vision Statements and Mission Statements can be power-packed drivers in a

company culture when they are done right, and when they are used to release the potent
energy within the people who make up that company. (Don’t for a moment think that companies
are made up of anything else.) The best missions and visions become mantras for action;
they’re catalysts. The worst ones are those pretty, carefully crafted ones up on the walls in
frames that are long and detailed: too much to memorize and remember, too much to bother
with at all. No one pays attention to them, and no one lives them. Rotate them with famous
quotations or snippets from eloquent speeches and no one will even notice, because none of
the real people in the company say those things.

That old guideline that a mission describes “what business you’re in and who your customer is”
barely gets anyone up in the morning. Ho hum. Keep the trees in the ground, for it’s not worth
wasting the paper you draft it on.

You don’t need your mission or your vision to state the obvious; you want them to state the
exceptional and extraordinary, to boast of your edge-teetering leaps of faith, and the wild
dreamings of every possibility you want explored every single day. You need them to create
chatter, thrilled whispers, passionate debate and evangelism. You want people inside and
outside your organization to talk about them constantly because they’re fascinating, enticing,
and enthralling. You couldn’t possibly contain their passion on the company bulletin board if you
tried.

Let them be controversial. Let them beg discussion and explanation. They should answer these
better questions: How will we make a difference every single day, improving the quality of life
itself? How can we work on only what really matters to us, and to everyone? Why is it that this
world can’t possibly be a great place without the magic we work? Why is it that we are so
special, so damned good, and so fanatically courageous? Put unbusiness-like words in them,
like Beauty. Uprising. Character. Notoriety. Caring. Wear your values on your sleeve and speak
them.

A Mission Statement defines the organization's purpose and primary objectives. Its prime
function is internal – to define the key measure or measures of the organization’s success – and
its prime audience is the leadership team and stockholders.

Vision Statements also define the organizations purpose, but this time they do so in terms of
the organization’s values rather than bottom line measures (values are guiding beliefs about
how things should be done.) The vision statement communicates both the purpose and values
of the organization. For employees, it gives direction about how they are expected to behave
and inspires them to give their best. Shared with customers, it shapes customers’ understanding
of why they should work with the organization.

Mission Statement Creation

To create your mission statement, first identify your organization’s “winning idea”.

This is the idea or approach that will make your organization stand out from its competitors, and
is the reason that customers will come to you and not your competitors (see tip below).

Next identify the key measures of your success. Make sure you choose the most important
measures (and not too many of them!)

Combine your winning idea and success measures into a tangible and measurable goal.

Refine the words until you have a concise and precise statement of your mission, which
expresses your ideas, measures and desired result.

All effective mission statements have in common critical components that clarify each
organization's purpose.

Mission statements often contain the following

• Purpose and aim of the organization

• The organization's primary stakeholders: clients, stockholders, congregation, etc.
• Responsibilities of the organization toward these stakeholders
• Products and services offered
According to Hill, the mission statement consists of: 1. a statement containing the reason for
using your product 2. a statement of some desired future state (vision) 3. a statement of the key
values the organization is committed to 4. a statement of major goals

The mission statement can be used to resolve differences between business stakeholders.
Stakeholders include: employees including managers and executives, stockholders, board of
directors, customers, suppliers, distributors, creditors, governments (local, state, federal, etc.),
unions, competitors, NGO's, and the general public. Stakeholders affect, and are affected by,
the organization's strategies.

According to Vern McGinis, a mission should:

Define what the company is? MISSION

Define what the company aspires to be? VISIONS STATEMENT.
Limited to exclude some ventures
Broad enough to allow for creative growth
Distinguish the company from all others
Serve as framework to evaluate current activities
Stated clearly so that it is understood by all

Mission of the company communicates the firm's core ideology and visionary goals. It should
contain the company's core values, core purpose, and visionary goals. When the visionary
goals are selected, the core values and purpose of the firms should be discovered. Values and
purpose are in the company already; the mission just describes them. In that case, the
stakeholders are more likely to believe in the company's mission.

Vision Statement Creation

Once you’ve created your mission statement, move on to create your vision statement:

1. First identify your organization’s mission. Then uncover the real, human value in that
mission.

2. Next, identify what you, your customers and other stakeholders will value most about
how your organization will achieve this mission. Distil these into the values that your
organization has or should have.

3. Combine your mission and values, and polish the words until you have a vision
statement inspiring enough to energize and motivate people inside and outside your
organization.

vision statements must serve three important functions:

1) Those who you lead need that vision or their efforts will fail to achieve anything of long-lasting
value;
2) Your vision must be written in clear, plain language so that your people will be able to run
with its meaning;

3) A vision refers to some appointed time in the future and though it appears to be delayed in
coming, it will eventually become your reality.

An Element of Purposeful Action!

You need verbs. Use your statements to convey action. Your actions must be focused on
producing some effect, result or outcome.

You could discuss it - but that will not satisfy the desires of our human hearts. Your vision must
fulfill others and not leave them with a sense of emptiness.

You should say something that matters to others, something that will impact their lives,
something that gives them a purpose.

Give their efforts, activities or striving a worthy reward.

An Element of Compelling Reasons!

Your leadership is the reason. Why do they want to follow you? What "because" will your vision
provide them with? How come we need to do this thing, this project, this venture?

Your statement must give a set of compelling reasons for taking action. These reasons must be
compelling, inspiring, critical, exciting, essential to your group.

I love those CEOs who slither up to the microphone and tell their fellow employees that they
should be motivated to slave away so that the company can 'increase shareholder value'! After
the speech, ask those employees about the percentage of their ownership in that company and
you find out that the employees only own about 0.1% - not even enough power to vote in a
single director.

Increasing shareholder value is not very exciting to anyone, including shareholders - they are
motivated by the amounts of money they actually earn - cash-in-hand, not promises of paper
profits.

An Element of Trustworthy Purposes!

Psychologists say unemployed people are usually depressed, sullen and lethargic. It's a
scientific fact that people living with little or no purpose are unhappy and are more likely to think
about ending their lives.

You and I are at our most effective when we are fulfilling our purpose. Job titles are important
because those designations tell people that there is a purpose for their work, their organization
and profession.

Your title is not the only indicator of your purpose but it does give you a sense of purpose,
doesn't it? We find it easier to trust in and rely on the promises of a worthwhile, noble purpose.
Your vision statements should give the group a purpose that is worthy of their trust, loyalty and
commitment.

An Element of Valuable Identity!

Do your statements portray pictures of hope, future realities or laudable objectives? What will
your group identify themselves with after they achieve your vision?

Vivid visions educate, develop and encourage people. Visions hold up the mirror of future
possibilities and enable people to see their potential clearly defined.

You can use your visionary projections to transform the group into a newer, better, more
confident team of leaders, innovators and mentors. Thus, visions can help you add value to and
boost the resourcefulness of your people's best efforts.

An Element of Principled Activities!

Without principles, your vision will fade away into nothingness - is it possible that the Bible's
Author means the same thing?

Your vision must have a strong foundation to have any chance at a future of success.
Integrating the personal, cultural and corporate values of your people into your vision provides a
bedrock for buy-in from all the actors.

Principles, shared beliefs, morals or ethics can also form the underpinnings of a worthy vision.
When you involve any positive findings from our studies of philosophy, psychology or theology
you probably have the makings of a nurturing vision.

An Element of Eternal Hope!

The time is now but eternity is forever. Eternity is one big eternal present - within it, there is no
past, no future and no in-between, there is only a now.

Your vision needs to be present at all times - to be sure the vision may not yet be attained, but it
when its goals are achieved that visionary image will be present.

If the vision contains a crystallized hope, it will appear to mirror the best parts of eternity - your
vision will be without any past regrets, without the fear of future doom and it will contain one
ever-present hope for better things.

An Element of Unlimited Dimensionality!

Does your vision statement inspire our bodies, minds, spirits and potentials? Have you spoken
to and connected with our physical, intellectual, spiritual or developmental beings?

The vision that finds its way into a group's innermost core has the best chance of realization.
Your statement must help your audience to see their opportunities to: - Add tangible value to
their world - Pursue newer, more challenging ideas - Be empowered to accomplish greater
things - Grow beyond the limitations of their current state
Use the power of dimension to lengthen, deepen, heighten and broaden the character,
capability, competence and potential of your team - they'll be the better for it.

Goals and Objective

In many situations people use words goals and objectives as interchangeable. Yet, in the
context of goal setting, the difference between goals and objectives has an important practical
meaning. After you set your important goals you move to setting objectives. Objectives are also
goals, but they are down the hierarchy. They are sub goals set with the only purpose to serve
your goals.

To achieve your goals, which conditions should you provide, which resources should you
collect, which skills should you develop, what knowledge should you acquire? Is there anything
significant you should achieve before you can reach your goals? Formulate the answers to
these questions as your objectives, in writing.

Note that objectives are also more than just activities. They still contain some challenge in them.
Activities are things that you just do.

So, while a particular goal is important to you on its own, objectives and activities are important
too, but not on their own. If an objective or activity does not work to help achieving your goals,
change or replace that objective so that it does.

To achieve success, you need both persistence and flexibility. When you face difficulties and
unexpected problems, use all your persistence and determination to stick to your goals. But
always stay flexible with your objectives and activities. If the way you do things now does not
work, try another way. Keep trying until you find the one that works.

Don't change the ends, change the means. And never forget the difference between ends and
means, between goals and objectives.

Objective is a projected computation of affairs that a person or a system plans or intends to

achieve—a personal or organizational desired end-point in some sort of assumed development.
Many people endeavor to reach goals within a finite time by setting deadlines.

An operational or operating objective is a short-term goal whose attainment moves an

organization towards achieving strategic or long-term goals. In business, operational objectives
define a clear, often measurable, outcome of a business operation or process typically expected
to be achieved within a single calendar or fiscal year. The business term is typically used in the
context of strategic management and operational planning. Operational objectives may be
incremental steps or measures leading to the achievement of an operational goal.
An operational objective is also called a tactical objective in some contexts, especially when
referring to military operations or public safety tactical planning.
Operational objectives are short-term or limited goals that are structured to move an
organization closer to the realization of its ultimate or long-term goals. Also known as tactical
objectives, each operational objective addresses some aspect of the business operation and
implements some type of change that improves the position of the company in a direct or
indirect manner. It is not unusual for several operational objectives to be pursued concurrently,
with various objectives focusing on the function of different areas of the organization.
My organization vision-Together, it is our mission to:

Deliver high quality security services and solutions by leveraging our proven operational
experience,
best practices, and in-depth industry expertise.
Help global clients in commercial and public sectors achieve regulatory compliance, ensure
business
continuity, and limit liability through the proper investments in technology.

Provide a challenging and rewarding environment where security professionals

implement effective security
programs for our customers.

Answer 3-Social responsibility is an ethical ideology or theory that an entity, be it an

organization or individual, has an obligation to act to benefit society at large. This responsibility
can be passive, by avoiding engaging in socially harmful acts, or active, by performing activities
that directly advance social goals.
Businesses can use ethical decision making to secure their businesses by making decisions
that allow for government agencies to minimize their involvement with the corporation. (Kaliski,
2001) For instance if a company is proactive and follows the United States Environmental
Protection Agency (EPA) guidelines for emissions on dangerous pollutants and even goes an
extra step to get involved in the community and address those concerns that the public might
have; they would be less likely to have the EPA investigate them for environmental concerns. “A
significant element of current thinking about privacy, however, stresses "self-regulation" rather
than market or government mechanisms for protecting personal information” (Swire , 1997)
Most rules and regulations are formed due to public outcry, if there is not outcry there often will
be limited regulation.
Critics argue that Corporate social responsibility (CSR) distracts from the fundamental economic
role of businesses; others argue that it is nothing more than superficial window-dressing; others
argue that it is an attempt to pre-empt the role of governments as a watchdog over powerful
multinational corporations.

conscience, corporate citizenship, responsible business, sustainable responsible

business (SRB), or corporate social performance,is a form of corporate self-regulation
integrated into a business model. Ideally, CSR policy would function as a built-in, self-regulating
mechanism whereby business would monitor and ensure its support to law, ethical standards,
and international norms. Consequently, business would embrace responsibility for the impact of
its activities on the environment, consumers, employees, communities, stakeholders and all
other members of the public sphere. Furthermore, CSR-focused businesses would proactively
promote the public interest by encouraging community growth and development, and voluntarily
eliminating practices that harm the public sphere, regardless of legality. Essentially, CSR is the
deliberate inclusion of public interest into corporate decision-making, and the honoring of a triple
bottom line: people, planet, profit.
The practice of CSR is much debated and criticized. Proponents argue that there is a strong
business case for CSR, in that corporations benefit in multiple ways by operating with a
perspective broader and longer than their own immediate, short-term profits. Critics argue that
CSR distracts from the fundamental economic role of businesses; others argue that it is nothing
more than superficial window-dressing; yet others argue that it is an attempt to pre-empt the role
of governments as a watchdog over powerful multinational corporations. Corporate Social
Responsibility has been redefined throughout the years. However, it essentially is titled to aid to
an organization's mission as well as a guide to what the company stands for and will uphold to
its consumers.
Development business ethics is one of the forms of applied ethics that examines ethical
principles and moral or ethical problems that can arise in a business environment.
In the increasingly conscience-focused marketplaces of the 21st century, the demand for more
ethical business processes and actions (known as ethicism) is increasing. Simultaneously,
pressure is applied on industry to improve business ethics through new public initiatives and
laws (e.g. higher UK road tax for higher-emission vehicles).
Business ethics can be both a normative and a descriptive discipline. As a corporate practice
and a career specialization, the field is primarily normative. In academia, descriptive approaches
are also taken. The range and quantity of business ethical issues reflects the degree to which
business is perceived to be at odds with non-economic social values. Historically, interest in
business ethics accelerated dramatically during the 1980s and 1990s, both within major
corporations and within academia. For example, today most major corporate websites lay
emphasis on commitment to promoting non-economic social values under a variety of headings
(e.g. ethics codes, social responsibility charters). In some cases, corporations have re-branded
their core values in the light of business ethical considerations (e.g. BP's "beyond petroleum"
environmental tilt).
The term "CSR" came in to common use in the early 1970s, after many multinational
corporations formed, although it was seldom abbreviated. The term stakeholder, meaning those
on whom an organization's activities have an impact, was used to describe corporate owners
beyond shareholders as a result of an influential book by R Freeman in 1984.
ISO 26000 is the recognized international standard for CSR (currently a Draft International
Standard). Public sector organizations (the United Nations for example) adhere to the triple
bottom line (TBL). It is widely accepted that CSR adheres to similar principles but with no formal
act of legislation. The UN has developed the Principles for Responsible Investment as
guidelines for investing entities.

Social Obligation
The obligation of a business to meet its economic and legal responsibilities and nothing more.
•Social Responsiveness
When a firm engages in social actions in response to some popular social need.
•Social Responsibility
A business's intention, beyond its legal and economic obligations, to do the right things and act
in ways that are good for society.

Conflict

Critics of CSR as well as proponents debate a number of concerns related to it. These include
CSR's relationship to the fundamental purpose and nature of business and questionable
motives for engaging in CSR, including concerns about insincerity and hypocrisy.

Nature of business
Milton Friedman and others have argued that a corporation's purpose is to maximize returns to
its shareholders, and that since only people can have social responsibilities, corporations are
only responsible to their shareholders and not to society as a whole. Although they accept that
corporations should obey the laws of the countries within which they work, they assert that
corporations have no other obligation to society. Some people perceive CSR as incongruent
with the very nature and purpose of business, and indeed a hindrance to free trade. Those who
assert that CSR is contrasting with capitalism and are in favor of neoliberalism argue that
improvements in health, longevity and/or infant mortality have been created by economic growth
attributed to free enterprise.
Critics of this argument perceive neoliberalism as opposed to the well-being of society and a
hindrance to human freedom. They claim that the type of capitalism practiced in many
developing countries is a form of economic and cultural imperialism, noting that these countries
usually have fewer labour protections, and thus their citizens are at a higher risk of exploitation
by multinational corporations.
A wide variety of individuals and organizations operate in between these poles. For example,
the REALeadership Alliance asserts that the business of leadership (be it corporate or
otherwise) is to change the world for the better.Many religious and cultural traditions hold that
the economy exists to serve human beings, so all economic entities have an obligation to
society (see for example Economic Justice for All). Moreover, as discussed above, many CSR
proponents point out that CSR can significantly improve long-term corporate profitability
because it reduces risks and inefficiencies while offering a host of potential benefits such as
enhanced brand reputation and employee engagement.

Motives
Some critics believe that CSR programs are undertaken by companies such as British American
Tobacco (BAT), the petroleum giant BP (well-known for its high-profile advertising campaigns on
environmental aspects of its operations), and McDonald's (see below) to distract the public from
ethical questions posed by their core operations. They argue that some corporations start CSR
programs for the commercial benefit they enjoy through raising their reputation with the public or
with government. They suggest that corporations which exist solely to maximize profits are
unable to advance the interests of society as a whole.
Another concern is that sometimes companies claim to promote CSR and be committed to
sustainable development but simultaneously engaging in harmful business practices. For
example, since the 1970s, the McDonald's Corporation's association with Ronald McDonald
House has been viewed as CSR and relationship marketing. More recently, as CSR has
become mainstream, the company has beefed up its CSR programs related to its labor,
environmental and other practices All the same, in McDonald's Restaurants v Morris & Steel,
Lord Justices Pill, May and Keane ruled that it was fair comment to say that McDonald's
employees worldwide 'do badly in terms of pay and conditions'and true that 'if one eats enough
McDonald's food, one's diet may well become high in fat etc., with the very real risk of heart
disease.'
Royal Dutch Shell has a much-publicized CSR policy and was a pioneer in triple bottom line
reporting, but this did not prevent the 2004 scandal concerning its misreporting of oil reserves,
which seriously damaged its reputation and led to charges of hypocrisy. Since then, the Shell
Foundation has become involved in many projects across the world, including a partnership with
Marks and Spencer (UK) in three flower and fruit growing communities across Africa.
Critics concerned with corporate hypocrisy and insincerity generally suggest that better
governmental and international regulation and enforcement, rather than voluntary measures,
are necessary to ensure that companies behave in a socially responsible manner. Others, such
as Patricia Werhane, argue that CSR should be considered more as a corporate moral
responsibility, and limit the reach of CSR by focusing more on direct impacts of the organization
as viewed through a systems perspective to identify stakeholders.

Ethical consumerism
The rise in popularity of ethical consumerism over the last two decades can be linked to the rise
of CSR. As global population increases, so does the pressure on limited natural resources
required to meet rising consumer demand (Grace and Cohen 2005, 147). Industrialization, in
many developing countries, is booming as a result of both technology and globalization.
Consumers are becoming more aware of the environmental and social implications of their day-
to-day consumer decisions and are therefore beginning to make purchasing decisions related to
their environmental and ethical concerns. However, this practice is far from consistent or
universal.

Globalization and market forces

As corporations pursue growth through globalization, they have encountered new challenges
that impose limits to their growth and potential profits. Government regulations, tariffs,
environmental restrictions and varying standards of what constitutes "labor exploitation" are
problems that can cost organizations millions of dollars. Some view ethical issues as simply a
costly hindrance, while some companies use CSR methodologies as a strategic tactic to gain
public support for their presence in global markets, helping them sustain a competitive
advantage by using their social contributions to provide a subconscious level of advertising.
(Fry, Keim, Meiners 1986, 105) Global competition places a particular pressure on multinational
corporations to examine not only their own labor practices, but those of their entire supply chain,
from a CSR perspective.

Social awareness and education

The role among corporate stakeholders is to work collectively to pressure corporations that are
changing. Shareholders and investors themselves, through socially responsible investing are
exerting pressure on corporations to behave responsibly. Non-governmental organizations are
also taking an increasing role, leveraging the power of the media and the Internet to increase
their scrutiny and collective activism around corporate behavior. Through education and
dialogue, the development of community in holding businesses responsible for their actions is
growing (Roux 2007).

Ethics training
The rise of ethics training inside corporations, some of it required by government regulation, is
another driver credited with changing the behavior and culture of corporations. The aim of such
training is to help employees make ethical decisions when the answers are unclear. Tullberg
believes that humans are built with the capacity to cheat and manipulate, a view taken from
(Trivers 1971, 1985), hence the need for learning normative values and rules in human behavior
(Tullberg 1996). The most direct benefit is reducing the likelihood of "dirty hands" (Grace and
Cohen 2005), fines and damaged reputations for breaching laws or moral norms. Organizations
also see secondary benefit in increasing employee loyalty and pride in the organization.
Caterpillar and Best Buy are examples of organizations that have taken such steps (Thilmany
2007).
Increasingly, companies are becoming interested in processes that can add visibility to their
CSR policies and activities. One method that is gaining increasing popularity is the use of well-
grounded training programs, where CSR is a major issue, and business simulations can play a
part in this.
One relevant documentary is The Corporation, the history of organizations and their growth in
power is discussed. Corporate social responsibility, what a company does to in trying to benefit
society, versus corporate moral responsibility (CMR), what a company should morally do, are
both important topics to consider when looking at ethics in CSR. For example, Ray Anderson, in
The Corporation, takes a CMR perspective in order to do what is moral and he begins to shift
his company's focus towards the biosphere by utilizing carpets in sections so that they will
sustain for longer periods. This is Anderson thinking in terms of Garret Hardin's "The Tragedy of
the Commons," where if people do not pay attention to the private ways in which we use public
resources, people will eventually lose those public resources.

Laws and regulation

Another driver of CSR is the role of independent mediators, particularly the government, in
ensuring that corporations are prevented from harming the broader social good, including
people and the environment. CSR critics such as Robert Reich argue that governments should
set the agenda for social responsibility by the way of laws and regulation that will allow a
business to conduct themselves responsibly.
The issues surrounding government regulation pose several problems. Regulation in itself is
unable to cover every aspect in detail of a corporation's operations. This leads to burdensome
legal processes bogged down in interpretations of the law and debatable grey areas (Sacconi
2004). For example, General Electric failed to clean up the Hudson River after contaminating it
with organic pollutants. The company continues to argue via the legal process on assignment of
liability, while the cleanup remains stagnant. (Sullivan & Schiafo 2005).
The second issue is the financial burden that regulation can place on a nation's economy. This
view shared by Bulkeley, who cites the Australian federal government's actions to avoid
compliance with the Kyoto Protocol in 1997, on the concerns of economic loss and national
interest. The Australian government took the position that signing the Kyoto Pact would have
caused more significant economic losses for Australia than for any other OECD nation (Bulkeley
2001, pg 436). On the change of government following the election in November 2007, Prime
Minister Kevin Rudd signed the ratification immediately after assuming office on 3 December
2007, just before the meeting of the UN Framework Convention on Climate Change. Critics of
CSR also point out that organisations pay taxes to government to ensure that society and the
environment are not adversely affected by business activities.
Denmark has a law on CSR. On 16 December 2008, the Danish parliament adopted a bill
making it mandatory for the 1100 largest Danish companies, investors and state-owned
companies to include information on corporate social responsibility (CSR) in their annual
financial reports. The reporting requirements became effective on 1 January 2009.The required
information includes:
• information on the companies’ policies for CSR or socially responsible investments (SRI)
• information on how such policies are implemented in practice, and
• information on what results have been obtained so far and managements expectations
for the future with regard to CSR/SRI.

Crises and their consequences

Often it takes a crisis to precipitate attention to CSR. One of the most active stands against
environmental management is the CERES Principles that resulted after the Exxon Valdez
incident in Alaska in 1989 (Grace and Cohen 2006). Other examples include the lead poisoning
paint used by toy giant Mattel, which required a recall of millions of toys globally and caused the
company to initiate new risk management and quality control processes. In another example,
Magellan Metals in the West Australian town of Esperance was responsible for lead
contamination killing thousands of birds in the area. The company had to cease business
immediately and work with independent regulatory bodies to execute a cleanup. Odwalla also
experienced a crisis with sales dropping 90%, and the company's stock price dropping 34% due
to several cases of E. Coli spread through Odwalla apple juice. The company ordered a recall of
all apple or carrot juice products and introduced a new process called "flash pasteurization" as
well as maintaining lines of communication constantly open with customers.

Stakeholder priorities
Increasingly, corporations are motivated to become more socially responsible because their
most important stakeholders expect them to understand and address the social and community
issues that are relevant to them. Understanding what causes are important to employees is
usually the first priority because of the many interrelated business benefits that can be derived
from increased employee engagement (i.e. more loyalty, improved recruitment, increased
retention, higher productivity, and so on). Key external stakeholders include customers,
consumers, investors (particularly institutional investors), communities in the areas where the
corporation operates its facilities, regulators, academics, and the media.

Social Audit

Taking responsibility for its impact on society means first and foremost that a company must
account for its actions. Social accounting, a concept describing the communication of social and
environmental effects of a company's economic actions to particular interest groups within
society and to society at large, is thus an important element of CSR.
Social accounting emphasizes the notion of corporate accountability. D. Crowther defines social
accounting in this sense as "an approach to reporting a firm’s activities which stresses the need
for the identification of socially relevant behavior, the determination of those to whom the
company is accountable for its social performance and the development of appropriate
measures and reporting techniques." An example of social accounting, to a limited extent, is
found in an annual Director's Report, under the requirements of UK company law.
A number of reporting guidelines or standards have been developed to serve as frameworks for
social accounting, auditing and reporting including:
• AccountAbility's AA1000 standard, based on John Elkington's triple bottom line (3BL)
reporting
• Accounting for Sustainability's Connected Reporting Framework
• The Fair Labor Association conducts audits based on its Workplace Code of Conduct
and posts audit results on the FLA website.
• The Fair Wear Foundation takes a unique approach to verifying labour conditions in
companies' supply chains, using interdisciplinary auditing teams.
• Global Reporting Initiative's Sustainability Reporting Guidelines
• GoodCorporation's Standard developed in association with the Institute of Business
Ethics
• Earthcheck www.earthcheck.org Certification / Standard
• Social Accountability International's SA8000 standard
• The ISO 14000 environmental management standard
 • The United Nations Global Compact promotes companies reporting in the format of a
Communication on Progress (COP). A COP report describes the company's
implementation of the Compact's ten universal principles.
• The United Nations Intergovernmental Working Group of Experts on International
Standards of Accounting and Reporting (ISAR) provides voluntary technical guidance on
eco-efficiency indicators, corporate responsibility reporting, and corporate governance
disclosure.
• Verite's Monitoring Guidelines
The FTSE Group publishes the FTSE4Good Index, an evaluation of CSR performance of
companies.
In some nations, legal requirements for social accounting, auditing and reporting exist (e.g. in
the French bilan social), though international or national agreement on meaningful
measurements of social and environmental performance is difficult. Many companies now
produce externally audited annual reports that cover Sustainable Development and CSR issues
("Triple Bottom Line Reports"), but the reports vary widely in format, style, and evaluation
methodology (even within the same industry). Critics dismiss these reports as lip service, citing
examples such as Enron's yearly "Corporate Responsibility Annual Report" and tobacco
corporations' social reports.
In South Africa, as of June 2010, all companies listed on the Johannesburg Stock Exchange
(JSE) were required to produce an integrated report in place of an annual financial report and
sustainability report. An integrated report includes environmental, social and economic
performance alongside financial performance information and is expected to provide users with
a more holistic overview of a company. However, this requirement was implemented in the
absence of any formal or legal standards for an integrated report. An Integrated Reporting
Committee (IRC) was established to issue guidelines for good practice in this field.

Indian companies are now expected to discharge their stakeholder responsibilities and societal
obligations, along with their shareholder-wealth maximisation goal.

Nearly all leading corporates in India are involved in corporate social responsibility (CSR)
programmes in areas like education, health, livelihood creation, skill development, and
empowerment of weaker sections of the society. Notable efforts have come from the Tata
Group, Infosys, Bharti Enterprises, ITC Welcome group, Indian Oil Corporation among others.

The 2010 list of Forbes Asia’s ‘48 Heroes of Philanthropy’ contains four Indians. The 2009 list
also featured four Indians. India has been named among the top ten Asian countries paying
increasing importance towards corporate social responsibility (CSR) disclosure norms. India
was ranked fourth in the list, according to social enterprise CSR Asia's Asian Sustainability
Ranking (ASR), released in October 2009.

According to a study undertaken by an industry body in June 2009, which studied the CSR
activities of 300 corporate houses, corporate India has spread its CSR activities across 20
states and Union territories, with Maharashtra gaining the most from them. About 36 per cent of
the CSR activities are concentrated in the state, followed by about 12 per cent in Gujarat, 10 per
cent in Delhi and 9 per cent in Tamil Nadu.
The companies have on an aggregate, identified 26 different themes for their CSR initiatives. Of
these 26 schemes, community welfare tops the list, followed by education, the environment,
health, as well as rural development.
Further, according to a study by financial paper, The Economic Times, donations by listed
companies grew 8 per cent during the fiscal ended March 2009. The study of disclosures made
by companies showed that 760 companies donated US$ 170 million in FY09, up from US$ 156
million in the year-ago period. As many as 108 companies donated over US$ 216,199, up 20
per cent over the previous year.

Although corporate India is involved in CSR activities, the central government is working on a
framework for quantifying the CSR initiatives of companies to promote them further. According
to Minister for Corporate Affairs, Mr Salman Khurshid, one of the ways to attract companies
towards CSR work is to develop a system of CSR credits, similar to the system of carbon credits
which are given to companies for green initiatives.
Moreover, in 2009, the government made it mandatory for all public sector oil companies to
spend 2 per cent of their net profits on corporate social responsibility.
Besides the private sector, the government is also ensuring that the public sector companies
participate actively in CSR initiatives. The Department of Public Enterprises (DPE) has prepared
guidelines for central public sector enterprises to take up important corporate social
responsibility projects to be funded by 2-5 per cent of the company's net profits.
As per the guidelines, companies with net profit of less than US$ 22.5 million will earmark 3-5
per cent of profit for CSR, companies with net profit of between US$ 22.5 million - US$ 112.5
million, will utilise 2-3 per cent for CSR activities and companies with net profit of over US$
112.5 million will spend 0.5-2 per cent of net profits for CSR.

ndia Inc has joined hands to fine-tune all its activities falling under CSR. For this, it has set up a
global platform to showcase all the work done by Indian firms. Confederation of Indian Industry
(CII) and the TVS Group collaborated to form the CII-TVS Centre of Excellence for Responsive
Corporate Citizenship in 2007. It provides consultancy services and technical assistance on
social development and CSR.

According to a National Geographic survey which studied 17,000 consumers in 17 countries,

Indians are the most eco-friendly consumers in the world. India topped the Consumer
Greendex, where consumers were asked about energy use and conservation, transportation
choices, food sources, the relative use of green products versus traditional products, attitudes
towards the environment and sustainability and knowledge of environmental issues.

• Reliance Industries and two Tata Group firms—Tata Motors and Tata Steel—are the
country's most admired companies for their corporate social responsibility initiatives,
according to a Nielsen survey released in May 2009.
• As part of its Corporate Service Corps (CSC) programme, IBM has joined hands with the
Tribal Development Department of Gujarat for a development project aimed at upliftment
of tribals in the Sasan area of Gir forest.
• The financial services sector is going green in a steady manner. With an eye on
preserving energy, companies have started easing the carbon footprint in their offices.
The year 2009 witnessed initiatives including application of renewable energy
technologies, moving to paperless operations and recognition of environmental
standards. Efforts by companies such as HSBC India, Max New York Life and Standard
Chartered Bank have ensured that the green movement has kept its momentum by
asking their customers to shift to e-statements and e-receipts.
 • State-owned Navratna company, Coal India Ltd (CIL) will invest US$ 67.5 million in
2010-11 on social and environmental causes.
• Public sector aluminium company NALCO has contributed US$ 3.23 million for
development work in Orissa's Koraput district as part of its Corporate Social
Responsibility (CSR).
India's Human Resource (HR)
Over the last decade, India's vast manpower has played an instrumental role in its economic
success story. Several corporate bigwigs are now thinking of ways of building the skill sets of
their employees.
Moreover, as the global economy recovers from recession and Indian companies expand in the
US and European markets, India Inc is grooming global managers who can effortlessly connect
with diverse geographies and fuel opportunities for growth. Indian companies are shifting their
young managers abroad to handle diversity at an early stage and help create a reserve of
globally competent people. The Tatas, Aditya Birla Group, Essar Group, Infosys and mid-cap
firms like Glenmark Pharmaceuticals and S Kumars Nationwide (SKNL) are among companies
that nurture global talent.
Not only is India Inc grooming global managers, but companies from across the globe are
scouting the country for quality talent to fill positions across geographies. India is fast gaining
the distinction of becoming one of the world's largest talent incubators.
Recruitment companies, such a s Europe, Africa, Asia-Pacific, Middle East and the rest of the
South Asian Association for Regional Cooperation (SAARC) region are expected to import talent
from India across profiles and domains, in significant numbers. According to industry estimates,
close to 100 top level executive (CXO) positions and 30,000 middle- to junior-level hirings,
across profiles and domains are expected during 2010, and these numbers are expected to go
up in the coming years.
A survey by global HR services firm, Hewitt Associates, released in March 2010, said that a
majority of Indian companies, particularly those in infrastructure and energy sectors, were
planning to hire in a big way this year. About 93.4 per cent of the firms surveyed were expected
to hire this year. Firms in sectors like telecom, oil and gas and infrastructure were likely to recruit
the most, across lateral and entry levels.
As per a new survey by Manpower Inc, released in June 2010, India's job market is likely to
return to pre-slowdown days in the third quarter of this fiscal. India’s hiring outlook is most
optimistic among 36 nations, with a net employment outlook of 42 per cent. The hiring is
expected to be strongest in the mining and construction industries, with 46 per cent of the
respondents planning to recruit in the next quarter.
Manufacturing too is set to recruit in a big way with about 44 per cent of employers indicating
their plans to do so.
Exchange rate used: 1 USD = 44.53 INR (as on April 2010)

Answer 4-Business organization is a gathering of people in order to achieve profits as the

common goal. Business organization can be seen in various types and sizes. A business
organization can be from a home base small private company with few employees to
multimillion dollar organizations with thousands of employees.

According to Steven Jobs the CEO of apple computers, a company (business organization) is
one of humanities amazing inventions.

The Organizational environment

Organizational environment refers to the forces that can make an impact. Forces made up
opportunities and threats. Organizations dose not exist in isolation. It works with the overall
environment.
Scholars have divided these environmental factors into two main parts as,
v Internal Environment
v External Environment

Internal Environment
Organizations internal environment refers to the elements within the organization. Internally, an
organization can be viewed as a resource conversion machine that takes inputs (labor, money,
materials and equipment) from the external environment (i.e., the outside world), converts them
into useful products, goods, and services, and makes them available to customers as outputs.
v Current employees
v Management
v Trade unions
v Share holders

Current employees- this refers to the number of employees that and firm has. Employees or the
working people are the main resources of an organization. In other hand these employees can
make a big difference for an organization. If an organization has unskilled labors they may find a
difficulty of getting things done. Organization benefited with skilled labor. It requires motivation
and skills development to take the maximum performance of the labor.

Management- A manager is someone skilled in knowing how to analyze and improve the ability
of an organization to survive and grow in a complex and changing world. This means that
managers have a set of tools that enable them to grasp the complexity of the organization's
environment. A management system describes the organization and the set of significant
interacting institutions and forces in the organization's complex and rapidly changing
environment that affect its ability to serve its customers. The firm must continuously monitor and
adapt to the environment if it is to survive and prosper. Disturbances in the environment may
spell profound threats or new opportunities for the firm. The successful firm will identify,
appraise, and respond to the various opportunities and threats in its environment.

Trade unions- A trade union or labor union is "a continuous association of wage-earners for the
purpose of maintaining or improving the conditions of their employment."
Unions can make an impact to the organization. They can demand for there rights. Some
Organizations face huge problems because of white color trade unions.

Share holders-they are the owners of an organization. A shareholder or stockholder is an

individual or company (including a corporation) that legally owns one or more shares of stock in
a joint stock company. A company's shareholders collectively own that companyThey invests
there recourses to an organization in order to obtain a profit.

External Environment
It consists of all the outside institutions and forces that have an actual or potential interest or
impact on the organization's ability to achieve its objectives:
v Competitive
v Technological
v Political
v Legal

Competitive-these are the other organizations which operate in the same field. They share the
same customer group of the organizations. They can make an effect on the organization. There
price, quality, distribution and other factors affect the overall organizational goals.

Technological- is a broad concept. After the industrial revolution technology became an

important factor for organizations. Technology brought the effectiveness to the industries. In
modern technology is used also for management to bring the better organizational environment.

Political-can make the worst or the best effect to an organization. The political situations or the
system of a country can make the organizations future. Better policies make a good business
environment for any organization.

Legal-every organization and there resources, including the employees have to act under the
legal factor. No one can go beyond the law of a country. Witch ever an organization dose they
have to scope with the legal factors.

In my view, companies will have to really work hard to keep pace with the changing
environment. Today work environment is very dynamic, things are changing very fast and
attrition is major issue haunting company. High attrition is a result of changing internal and
external environment. Organizations cannot control external environment, but they can definitely
influence internal environment. By implementing correct HR policies, they can control
employees.

Answer 5- SWOT analysis is a strategic planning method used to evaluate the Strengths,
Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It
involves specifying the objective of the business venture or project and identifying the internal
and external factors that are favorable and unfavorable to achieve that objective. The technique
is credited to Albert Humphrey, who led a convention at Stanford University in the 1960s and
1970s using data from Fortune 500 companies.

A SWOT analysis must first start with defining a desired end state or objective. A SWOT
analysis may be incorporated into the strategic planning model. Strategic Planning, has been
the subject of much research.

• Strengths: characteristics of the business or team that give it an

advantage over others in the industry.
• Weaknesses: are characteristics that place the firm at a disadvantage
relative to others.
• Opportunities: external chances to make greater sales or profits in the
environment.
• Threats: external elements in the environment that could cause trouble for
the business.
Identification of SWOTs are essential because subsequent steps in the process of planning for
achievement of the selected objective may be derived from the SWOTs.

First, the decision makers have to determine whether the objective is attainable, given the
SWOTs. If the objective is NOT attainable a different objective must be selected and the
process repeated.

The SWOT analysis is often used in academia to highlight and identify strengths, weaknesses,
opportunities and threats. It is particularly helpful in identifying areas for development

Matching and converting

Another way of utilizing SWOT is matching and converting.

Matching is used to find competitive advantages by matching the strengths to opportunities.

Converting is to apply conversion strategies to convert weaknesses or threats into strengths or

opportunities.

An example of conversion strategy is to find new markets.

If the threats or weaknesses cannot be converted a company should try to minimize or avoid
them.

Evidence on the use of SWOT

SWOT analysis may limit the strategies considered in the evaluation. J. Scott Armstrong notes
that "people who use SWOT might conclude that they have done an adequate job of planning
and ignore such sensible things as defining the firm's objectives or calculating ROI for alternate
strategies." Findings from Menon et al. (1999) and Hill and Westbrook (1997) have shown that
SWOT may harm performance. As an alternative to SWOT, Armstrong describes a 5-step
approach alternative that leads to better corporate performance.

These criticisms are addressed to an old version of SWOT analysis that precedes the SWOT
analysis described above under the heading "Strategic and Creative Use of SWOT Analysis."
This old version did not require that SWOTs be derived from an agreed upon objective.
Examples of SWOT analyses that do not state an objective can be "Human Resources" and
"Marketing."

Internal and external factors

The aim of any SWOT analysis is to identify the key internal and external factors that are
important to achieving the objective. These come from within the company's unique value chain.
SWOT analysis groups key pieces of information into two main categories:

• Internal factors – The strengths and weaknesses internal to the

organization.
 • External factors – The opportunities and threats presented by the external
environment to the organization. - Use a PEST or PESTLE analysis to help
identify factors

The internal factors may be viewed as strengths or weaknesses depending upon their impact on
the organization's objectives. What may represent strengths with respect to one objective may
be weaknesses for another objective. The factors may include all of the 4P's; as well as
personnel, finance, manufacturing capabilities, and so on. The external factors may include
macroeconomic matters, technological change, legislation, and socio-cultural changes, as well
as changes in the marketplace or competitive position. The results are often presented in the
form of a matrix.

SWOT analysis is just one method of categorization and has its own weaknesses. For example,
it may tend to persuade companies to compile lists rather than think about what is actually
important in achieving objectives. It also presents the resulting lists uncritically and without clear
prioritization so that, for example, weak opportunities may appear to balance strong threats.

It is prudent not to eliminate too quickly any candidate SWOT entry. The importance of
individual SWOTs will be revealed by the value of the strategies it generates. A SWOT item that
produces valuable strategies is important. A SWOT item that generates no strategies is not
important.

Use of SWOT analysis

The usefulness of SWOT analysis is not limited to profit-seeking organizations. SWOT analysis
may be used in any decision-making situation when a desired end-state (objective) has been
defined. Examples include: non-profit organizations, governmental units, and individuals. SWOT
analysis may also be used in pre-crisis planning and preventive crisis management. SWOT
analysis may also be used in creating a recommendation during a viability study/survey.

SWOT - landscape analysis

The SWOT-landscape grabs different managerial situations by visualizing and foreseeing the
dynamic performance of comparable objects according to findings by Brendan Kitts, Leif
Edvinsson and Tord Beding (2000).

Changes in relative performance are continually identified. Projects (or other units of
measurements) that could be potential risk or opportunity objects are highlighted.

SWOT-landscape also indicates which underlying strength/weakness factors that have had or
likely will have highest influence in the context of value in use (for ex. capital value fluctuations).

Corporate planning

As part of the development of strategies and plans to enable the organization to achieve its
objectives, then that organization will use a systematic/rigorous process known as corporate
planning. SWOT alongside PEST/PESTLE can be used as a basis for the analysis of business
and environmental factors.
 • Set objectives – defining what the organization is going to do
• Environmental scanning
o Internal appraisals of the organization's SWOT, this needs to
include an assessment of the present situation as well as a portfolio of
products/services and an analysis of the product/service life cycle
• Analysis of existing strategies, this should determine relevance from
the results of an internal/external appraisal. This may include gap analysis which
will look at environmental factors
• Strategic Issues defined – key factors in the development of a corporate
plan which needs to be addressed by the organization
• Develop new/revised strategies – revised analysis of strategic issues
may mean the objectives need to change
• Establish critical success factors – the achievement of objectives and
strategy implementation
• Preparation of operational, resource, projects plans for strategy
implementation
• Monitoring results – mapping against plans, taking corrective action
which may mean amending objectives/strategies.

Marketing

In many competitor analyses, marketers build detailed profiles of each competitor in the market,
focusing especially on their relative competitive strengths and weaknesses using SWOT
analysis. Marketing managers will examine each competitor's cost structure, sources of profits,
resources and competencies, competitive positioning and product differentiation, degree of
vertical integration, historical responses to industry developments, and other factors.

Marketing management often finds it necessary to invest in research to collect the data required
to perform accurate marketing analysis. Accordingly, management often conducts market
research (alternately marketing research) to obtain this information. Marketers employ a variety
of techniques to conduct market research, but some of the more common include:

• Qualitative marketing research, such as focus groups

• Quantitative marketing research, such as statistical surveys
• Experimental techniques such as test markets
• Observational techniques such as ethnographic (on-site) observation
• Marketing managers may also design and oversee various environmental
scanning and competitive intelligence processes to help identify trends and
inform the company's marketing analysis.

Using SWOT to analyse the market position of a small management consultancy with
specialism in HRM

Strengths Weaknesses Opportunities Threats

Reputation in Shortage of Well established Large consultancies
marketplace consultants at position with a well operating at a minor
operating level rather defined market niche level
than partner level
Expertise at partner level Unable to deal with Identified market for Other small
in HRM consultancy multi-disciplinary consultancy in areas consultancies looking
 assignments because other than HRM to invade the
of size or lack of ability marketplace

Identification of various alternatives strategies is an important

Aspects of strategic management as it provide the alternatives which can be considered and
selected for implementation in order to arrive at certain result. At this stage, the managers are
able to complete their environmental analysis and appraisal of their strengths and they are in a
position to identify what alternatives strategies are available for them in the light of
their organizational mission.

In this there are four main strategies:

1) Stability Strategy

2)Growth/Expansion Strategy

3)Retrenchment Strategy

4) Combination Strategy

Strategy formation

Strategic formation is a combination of three main processes which are as follows:

• Performing a situation analysis, self-evaluation and competitor analysis: both internal

and external; both micro-environmental and macro-environmental.
• Concurrent with this assessment, objectives are set. These objectives should be parallel
to a time-line; some are in the short-term and others on the long-term. This involves crafting
vision statements (long term view of a possible future), mission statements (the role that the
organization gives itself in society), overall corporate objectives (both financial and strategic),
strategic business unit objectives (both financial and strategic), and tactical objectives.
• These objectives should, in the light of the situation analysis, suggest a strategic plan.
The plan provides the details of how to achieve these objectives.

Strategy evaluation

• Measuring the effectiveness of the organizational strategy, it's extremely important to

conduct a SWOT analysis to figure out the strengths, weaknesses, opportunities and threats
(both internal and external) of the entity in business. This may require to take certain
precautionary measures or even to change the entire strategy.

In corporate strategy, Johnson, Scholes and Whittington present a model in which strategic
options are evaluated against three key success criteria:

• Suitability (would it work?)

• Feasibility (can it be made to work?)
• Acceptability (will they work it?)

Suitability

Suitability deals with the overall rationale of the strategy. The key point to consider is whether
the strategy would address the key strategic issues underlined by the organisation's strategic
position.

• Does it make economic sense?

• Would the organization obtain economies of scale, economies of scope, or experience
economy?
• Would it be suitable in terms of environment and capabilities?

Tools that can be used to evaluate suitability include:

• Ranking strategic options

• Decision trees

Feasibility

Feasibility is concerned with whether the resources required to implement the strategy are
available, can be developed or obtained. Resources include funding, people, time and
information.

Tools that can be used to evaluate feasibility include:

• cash flow analysis and forecasting

• break-even analysis
• resource deployment analysis

Acceptability

Acceptability is concerned with the expectations of the identified stakeholders (mainly

shareholders, employees and customers) with the expected performance outcomes, which can
be return, risk and stakeholder reactions.

• Return deals with the benefits expected by the stakeholders (financial and non-
financial). For example, shareholders would expect the increase of their wealth, employees
would expect improvement in their careers and customers would expect better value for money.
• Risk deals with the probability and consequences of failure of a strategy (financial and
non-financial).
• Stakeholder reactions deals with anticipating the likely reaction of stakeholders.
Shareholders could oppose the issuing of new shares, employees and unions could oppose
outsourcing for fear of losing their jobs, customers could have concerns over a merger with
regards to quality and support.

Tools that can be used to evaluate acceptability include:

• what-if analysis
• stakeholder mapping

General approaches

In general terms, there are two main approaches, which are opposite but complement each
other in some ways, to strategic management:

• The Industrial Organizational Approach

o based on economic theory — deals with issues like competitive rivalry, resource
allocation, economies of scale
o assumptions — rationality, self discipline behaviour, profit maximization
• The Sociological Approach
o deals primarily with human interactions
o assumptions — bounded rationality, satisfying behaviour, profit sub-optimality.
An example of a company that currently operates this way is Google. The stakeholder focused
approach is an example of this modern approach to strategy.

Strategic management techniques can be viewed as bottom-up, top-down, or collaborative

processes. In the bottom-up approach, employees submit proposals to their managers who, in
turn, funnel the best ideas further up the organization. This is often accomplished by a capital
budgeting process. Proposals are assessed using financial criteria such as return on investment
or cost-benefit analysis. Cost underestimation and benefit overestimation are major sources of
error. The proposals that are approved form the substance of a new strategy, all of which is
done without a grand strategic design or a strategic architect. The top-down approach is the
most common by far. In it, the CEO, possibly with the assistance of a strategic planning team,
decides on the overall direction the company should take. Some organizations are starting to
experiment with collaborative strategic planning techniques that recognize the emergent nature
of strategic decisions.

Strategic decisions should focus on Outcome, Time remaining, and current Value/priority. The
outcome comprises both the desired ending goal and the plan designed to reach that goal.
Managing strategically requires paying attention to the time remaining to reach a particular level
or goal and adjusting the pace and options accordingly. Value/priority relates to the shifting,
relative concept of value-add. Strategic decisions should be based on the understanding that
the value-add of whatever you are managing is a constantly changing reference point. An
objective that begins with a high level of value-add may change due to influence of internal and
external factors. Strategic management by definition, is managing with a heads-up approach to
outcome, time and relative value, and actively making course corrections as needed.

The strategy hierarchy

In most (large) corporations there are several levels of management. Strategic management is
the highest of these levels in the sense that it is the broadest - applying to all parts of the firm -
while also incorporating the longest time horizon. It gives direction to corporate values,
corporate culture, corporate goals, and corporate missions. Under this broad corporate strategy
there are typically business-level competitive strategies and functional unit strategies.

Corporate strategy refers to the overarching strategy of the diversified firm. Such a corporate
strategy answers the questions of "which businesses should we be in?" and "how does being in
these businesses create synergy and/or add to the competitive advantage of the corporation as
a whole?" Business strategy refers to the aggregated strategies of single business firm or a
strategic business unit (SBU) in a diversified corporation. According to Michael Porter, a firm
must formulate a business strategy that incorporates cost leadership, differentiation or focus in
order to achieve a sustainable competitive advantage and long-term success in its chosen
areas or industries. Alternatively, according to W. Chan Kim and Renée Mauborgne, an
organization can achieve high growth and profits by creating a Blue Ocean Strategy that breaks
the previous value-cost trade off by simultaneously pursuing both differentiation and low cost.

Functional strategies include marketing strategies, new product development strategies,

human resource strategies, financial strategies, legal strategies, supply-chain strategies, and
information technology management strategies. The emphasis is on short and medium term
plans and is limited to the domain of each department’s functional responsibility. Each functional
department attempts to do its part in meeting overall corporate objectives, and hence to some
extent their strategies are derived from broader corporate strategies.

Many companies feel that a functional organizational structure is not an efficient way to organize
activities so they have reengineered according to processes or SBUs. A strategic business
unit is a semi-autonomous unit that is usually responsible for its own budgeting, new product
decisions, hiring decisions, and price setting. An SBU is treated as an internal profit centre by
corporate headquarters. A technology strategy, for example, although it is focused on
technology as a means of achieving an organization's overall objective(s), may include
dimensions that are beyond the scope of a single business unit, engineering organization or IT
department.

An additional level of strategy called operational strategy was encouraged by Peter Drucker in
his theory of management by objectives (MBO). It is very narrow in focus and deals with day-to-
day operational activities such as scheduling criteria. It must operate within a budget but is not
at liberty to adjust or create that budget. Operational level strategies are informed by business
level strategies which, in turn, are informed by corporate level strategies.

Since the turn of the millennium, some firms have reverted to a simpler strategic structure driven
by advances in information technology. It is felt that knowledge management systems should be
used to share information and create common goals. Strategic divisions are thought to hamper
this process. This notion of strategy has been captured under the rubric of dynamic strategy,
popularized by Carpenter and Sanders's textbook. This work builds on that of Brown and
Eisenhart as well as Christensen and portrays firm strategy, both business and corporate, as
necessarily embracing ongoing strategic change, and the seamless integration of strategy
formulation and implementation. Such change and implementation are usually built into the
strategy through the staging and pacing facets.

Assignment B

Answer 1-A core competency is a specific factor that a business sees as being central to the way it, or its
employees, works. It fulfills two key criteria:
1. It is not easy for competitors to imitate
2. It can be leveraged widely to many products and markets.

A core competency can take various forms, including technical/subject matter know-how, a
reliable process and/or close relationships with customers and suppliers. It may also include
product development or culture, such as employee dedication.

Core competencies are particular strengths relative to other organizations in the industry which
provide the fundamental basis for the provision of added value. Core competencies are the
collective learning in organizations, and involve how to coordinate diverse production skills and
integrate multiple streams of technologies. It is communication, an involvement and a deep
commitment to working across organizational boundaries. Few companies are likely to build
world leadership in more than five or six fundamental competencies.

For an example of core competencies, when studying Walt Disney World - Parks and Resorts,
there are three main core competencies:

• Animatronics and Show Design

• Storytelling, Story Creation and Themed Atmospheric Attractions
• Efficient operation of theme parks

The value chain is a systematic approach to examining the development of competitive

advantage. It was created by M. E. Porter in his book, Competitive Advantage (1980). The chain
consists of a series of activities that create and build value. They culminate in the total value
delivered by an organization. The 'margin' depicted in the diagram is the same as added value.
The organization is split into 'primary activities' and 'support activities'.

My core competencies are,

• Analysis
• Leadership skills
• Good communication skills

Organizational culture is an idea in the field of organizational studies and management which
describes the psychology, attitudes, experiences, beliefs and values (personal and cultural
values) of an organization. It has been defined as "the specific collection of values and norms
that are shared by people and groups in an organization and that control the way they interact
with each other and with stakeholders outside the organization."

This definition continues to explain organizational values, also known as "beliefs and ideas
about what kinds of goals members of an organization should pursue and ideas about the
appropriate kinds or standards of behavior organisational members should use to achieve these
goals. From organisational values develop organizational norms, guidelines, or expectations
that prescribe appropriate kinds of behavior by employees in particular situations and control the
behavior of organisational members towards one another.
Robert Quinn and Kim Cameron researched what makes organizations effective and
successful. Based on the Competing Values Framework, they developed the Organizational
Culture Assessment Instrument that distinguishes four culture types. See their book: Diagnosing
and Changing Organizational Culture.

Competing values produce polarities like: flexibility versus stability and internal versus external
focus. These two polarities were found to be most important in defining organizational success.

The polarities construct a quadrant with four types of culture: Clan Culture - internal focus and
flexible A friendly workplace where leaders act like father figures. Adhocracy Culture - external
focus and flexible A dynamic workplace with leaders that stimulate innovation. Market Culture -
external focus and controlled A competitive workplace with leaders like hard drivers Hierarchy
Culture - internal focus and controlled A structured and formalized workplace where leaders act
like coordinators.

Cameron & Quinn found six key aspects that will make up a culture. These can be assessed in
the Organizational Culture Assessment Instrument (OCAI) thus producing a mix of these four
archetypes of culture. Each organization or team will have its unique mix of culture types. By
assessing the current organizational culture as well as the preferred situation, the gap and
direction to change can be made visible. This can be the first step to changing organizational
culture.

Answer 2-Tracing the evolution of management theory over several decades, one can observe a striking
change in the direction of a greater concern for holistic understanding. There has been a shift in emphasis from
explaining particular aspects of management to understanding the total process or mechanism. Parallel to this
development, a remarkable surge of interest in small business has occurred. Figure 1 illustrates some
interesting connections between these two developments.

The pattern of relationships shown in figure 1 would seem to suggest that as interest in small
business grows, interest in strategic questions declines. A more cautious interpretation is that
these two tendencies exert pressure in opposite directions. The planning euphoria of the
technocrats with their scientific management and their naive belief in the feasibility and
"Shapeability" of the future gave impetus to the need for a forward-looking orientation. In
scientific management the most important goal is maximization of the economic and technical
performance of the enterprise in order to achieve economies of scale. This, in turn, created a
strong disposition to behave strategically. These tendencies, however, have been offset to
some extent by the spread of the human (or humanizing) perspective, which emphasizes that
goals can be better achieved in communiites of small size, with the result that large companies
have chosen to perform their operations in smaller, more close-knit units. The holistic approach
with its focus on understanding realities and seeing the whole as opposed to only the parts has
contributed a similar offsetting effect.
The Nature of Strategic Management
Strategic management obviously means managementin pursuit of and on the basis of a
strategy. The strategy is the course by means of which a change is effected, specifically a
change in behavior. This course tends to be both comprehensive and long-term, and involves
more than planning, which is, after all, a separate and quite different matter from the
implementation of a plan. This is mentioned because, in practice, strategic management is often
taken to be an alternative to planning.
Looked at comprehensively, however, strategic management includes planning, as can be seen
in figure 2, in which the elements of the St. Gallen Management Model have been combined
with the elements of the Kirsch/ Trux model.
Strategic management is a complex process in which no element can be looked at separately
because many elements are integrated and combined.
It is also possible to represent the strategic management process twodimensionally, as
Hinterhuber does:
1. Analysis of the firm's starting position and prospects on the basis of a comparison of the
opportunities and threats of environmental developments, the company's strengths and
weaknesses, and the values and social concerns of management;
2. Formulation of strategies by which the desired product/ market combinations are to be
realized and the long-term profit objectives achieved;
3. Design of functional policies that will serve the executives in the different spheres of operation
and/or departments of the firm as guidelines for drawing up plans of action in harmony with the
strategies;
4. Moulding of the organization required to carry out the strategies and functional policies,
including motivating the persons involved and supervising the system.
The steps in the strategic management process, as perceived by Hinterhuber and by
Kirsch/Trux, are compared graphically in figure 3.
All in all, strategic management involves an attempt to cope more effectively with the great and
rising demands emanating from both outside and inside the firm by:
* Giving the development of the firm a long-range direction;
* Formulating and applying an overall concept of the firm;
* Generating, implementing, and controlling basic strategies and substrategies;
* Utilizing such special "Strategic" tools as strengths/weaknesses analysis and opportunity/risk
analysis, among others.
A forward-looking orientation is intended to place the firm in a position to measure up more
effectively to the demands made upon it. This calls for imagination and flexibility, and it is
precisely these qualities that ought to be, if not actually furnished, at least deliberately fostered
by strategic management.
Strategic Management In the Small Firm

Many small-business entrepreneurs are successful even without explicitly practicing the kind of
management usually described as strategic. Ought we to then attempt to convert to strategic
management even those individuals who, up until now, have held their own with the aid of
improvisation and intuition? Would it not be wrong to make a successful entrepreneur unsure of
him or herself and thereby undo his or her success?

Strategy evaluation

• Measuring the effectiveness of the organizational strategy, it's extremely important to

conduct a SWOT analysis to figure out the strengths, weaknesses, opportunities and threats
(both internal and external) of the entity in business. This may require to take certain
precautionary measures or even to change the entire strategy.

In corporate strategy, Johnson, Scholes and Whittington present a model in which strategic
options are evaluated against three key success criteria.

• Suitability (would it work?)

• Feasibility (can it be made to work?)
• Acceptability (will they work it?)

Suitability

Suitability deals with the overall rationale of the strategy. The key point to consider is whether
the strategy would address the key strategic issues underlined by the organisation's strategic
position.

• Does it make economic sense?

• Would the organization obtain economies of scale, economies of scope, or experience
economy?
• Would it be suitable in terms of environment and capabilities?

Tools that can be used to evaluate suitability include:

• Ranking strategic options

• Decision trees

Feasibility

Feasibility is concerned with whether the resources required to implement the strategy are
available, can be developed or obtained. Resources include funding, people, time and
information.

Tools that can be used to evaluate feasibility include:

• cash flow analysis and forecasting

• break-even analysis
• resource deployment analysis

Acceptability

Acceptability is concerned with the expectations of the identified stakeholders (mainly

shareholders, employees and customers) with the expected performance outcomes, which can
be return, risk and stakeholder reactions.

• Return deals with the benefits expected by the stakeholders (financial and non-
financial). For example, shareholders would expect the increase of their wealth, employees
would expect improvement in their careers and customers would expect better value for money.
• Risk deals with the probability and consequences of failure of a strategy (financial and
non-financial).
• Stakeholder reactions deals with anticipating the likely reaction of stakeholders.
Shareholders could oppose the issuing of new shares, employees and unions could oppose
outsourcing for fear of losing their jobs, customers could have concerns over a merger with
regards to quality and support.

Tools that can be used to evaluate acceptability include:

• what-if analysis
• stakeholder mapping

General approaches

In general terms, there are two main approaches, which are opposite but complement each
other in some ways, to strategic management:

• The Industrial Organizational Approach

o based on economic theory — deals with issues like competitive rivalry, resource
allocation, economies of scale
o assumptions — rationality, self discipline behaviour, profit maximization
• The Sociological Approach
o deals primarily with human interactions
o assumptions — bounded rationality, satisfying behaviour, profit sub-optimality.
An example of a company that currently operates this way is Google. The stakeholder focused
approach is an example of this modern approach to strategy.

Strategic management techniques can be viewed as bottom-up, top-down, or collaborative

processes. In the bottom-up approach, employees submit proposals to their managers who, in
turn, funnel the best ideas further up the organization. This is often accomplished by a capital
budgeting process. Proposals are assessed using financial criteria such as return on investment
or cost-benefit analysis. Cost underestimation and benefit overestimation are major sources of
error. The proposals that are approved form the substance of a new strategy, all of which is
done without a grand strategic design or a strategic architect. The top-down approach is the
most common by far. In it, the CEO, possibly with the assistance of a strategic planning team,
decides on the overall direction the company should take. Some organizations are starting to
experiment with collaborative strategic planning techniques that recognize the emergent nature
of strategic decisions.

Strategic decisions should focus on Outcome, Time remaining, and current Value/priority. The
outcome comprises both the desired ending goal and the plan designed to reach that goal.
Managing strategically requires paying attention to the time remaining to reach a particular level
or goal and adjusting the pace and options accordingly. Value/priority relates to the shifting,
relative concept of value-add. Strategic decisions should be based on the understanding that
the value-add of whatever you are managing is a constantly changing reference point. An
objective that begins with a high level of value-add may change due to influence of internal and
external factors. Strategic management by definition, is managing with a heads-up approach to
outcome, time and relative value, and actively making course corrections as needed.

The psychology of strategic management

Several psychologists have conducted studies to determine the psychological patterns involved
in strategic management. Typically senior managers have been asked how they go about
making strategic decisions. A 1938 treatise by Chester Barnard, that was based on his own
experience as a business executive, sees the process as informal, intuitive, non-routinized, and
involving primarily oral, 2-way communications. Bernard says “The process is the sensing of the
organization as a whole and the total situation relevant to it. It transcends the capacity of merely
intellectual methods, and the techniques of discriminating the factors of the situation. The terms
pertinent to it are “feeling”, “judgement”, “sense”, “proportion”, “balance”, “appropriateness”. It is
a matter of art rather than science.”
In 1973, Henry Mintzberg found that senior managers typically deal with unpredictable situations
so they strategize in ad hoc, flexible, dynamic, and implicit ways. . He says, “The job breeds
adaptive information-manipulators who prefer the live concrete situation. The manager works in
an environment of stimulous-response, and he develops in his work a clear preference for live
action.”

In 1982, John Kotter studied the daily activities of 15 executives and concluded that they spent
most of their time developing and working a network of relationships from which they gained
general insights and specific details to be used in making strategic decisions. They tended to
use “mental road maps” rather than systematic planning techniques.

Daniel Isenberg's 1984 study of senior managers found that their decisions were highly intuitive.
Executives often sensed what they were going to do before they could explain why. He claimed
in 1986 that one of the reasons for this is the complexity of strategic decisions and the resultant
information uncertainty.

Shoshana Zuboff (1988) claims that information technology is widening the divide between
senior managers (who typically make strategic decisions) and operational level managers (who
typically make routine decisions). She claims that prior to the widespread use of computer
systems, managers, even at the most senior level, engaged in both strategic decisions and
routine administration, but as computers facilitated (She called it “deskilled”) routine processes,
these activities were moved further down the hierarchy, leaving senior management free for
strategic decions making.

In 1977, Abraham Zaleznik identified a difference between leaders and managers. He describes
leadership leaders as visionaries who inspire. They care about substance. Whereas managers
are claimed to care about process, plans, and form. He also claimed in 1989 that the rise of the
manager was the main factor that caused the decline of American business in the 1970s and
80s.The main difference between leader and manager is that, leader has followers and
manager has subordinates. In capitalistic society leaders make decisions and manager usually
follows or execute. Lack of leadership is most damaging at the level of strategic management
where it can paralyze an entire organization.

According to Corner, Kinichi, and Keats, strategic decision making in organizations occurs at
two levels: individual and aggregate. They have developed a model of parallel strategic decision
making. The model identifies two parallel processes both of which involve getting attention,
encoding information, storage and retrieval of information, strategic choice, strategic outcome,
and feedback. The individual and organizational processes are not independent however. They
interact at each stage of the process.

Centralization and Decentralization

Centralisation, or centralization is the process by which the activities of an organisation,

particularly those regarding planning decision-making, become concentrated within a particular
location and/or group.

In political science, this refers to the concentration of a government's power - both

geographically and politically, into a centralized government.
In neuroscience, centralization refers to the evolutionary trend of the nervous system to be
partitioned into a central nervous system and peripheral nervous system.

In business studies centralisation and decentralization is about where decisions are taken in the
chain of command.

Centralization is said to be a process where the concentration of decision making is in a few

hands. All the important decision and actions at the lower level, all subjects and actions at the
lower level are subject to the approval of top management. According to Allen, “Centralization”
is the systematic and consistent reservation of authority at central points in the organization.
The implication of centralization can be :-

1. Reservation of decision making power at top level.

2. Reservation of operating authority with the middle level managers.
3. Reservation of operation at lower level at the directions of the top level.

Under centralization, the important and key decisions are taken by the top management and the
other levels are into implementations as per the directions of top level. For example, in a
business concern, the father & son being the owners decide about the important matters and all
the rest of functions
like product, finance, marketing, personnel, are carried out by the department heads and they have to act as per
instruction and orders of the two people. Therefore in this case, decision making power remain in the hands of
father & son.
On the other hand, Decentralization is a systematic delegation of authority at all levels of management and in
all of the organization. In a decentralization concern, authority in retained by the top management for taking
major decisions and framing policies concerning the whole concern. Rest of the authority may be delegated to
the middle level and lower level of management.

The degree of centralization and decentralization will depend upon the amount of authority
delegated to the lowest level. According to Allen, “Decentralization refers to the systematic effort
to delegate to the lowest level of authority except that which can be controlled and exercised at
central points.

Decentralization is not the same as delegation. In fact, decentralization is all extension of

delegation. Decentralization pattern is wider is scope and the authorities are diffused to the
lowest most level of management. Delegation of authority is a complete process and takes
place from one person to another. While decentralization is complete only when fullest possible
delegation has taken place. For example, the general manager of a company is responsible for
receiving the leave application for the whole of the concern. The general manager delegates
this work to the personnel manager who is now responsible for receiving the leave applicants. In
this situation delegation of authority has taken place. On the other hand, on the request of the
personnel manager ,if the general manager delegates this power to all the departmental heads
at all level, in this situation decentralization has taken place. There is a saying that “Everything
that increasing the role of subordinates is decentralization and that decreases the role is
centralization”. Decentralization is wider in scope and the subordinate’s responsibility increase
in this case. On the other hand, in delegation the managers remain answerable even for the
acts of subordinates to their superiors.
Implications of Decentralization

1. There is less burden on the Chief Executive as in the case of centralization.

2. In decentralization, the subordinates get a chance to decide and act independently
which develops skills and capabilities. This way the organization is able to process reserve of
talents in it.
3. In decentralization, diversification and horizontal can be easily implanted.
4. In decentralization, concern diversification of activities can place effectively since there is
more scope for creating new departments. Therefore, diversification growth is of a degree.
5. In decentralization structure, operations can be coordinated at divisional level which is
not possible in the centralization set up.
6. In the case of decentralization structure, there is greater motivation and morale of the
employees since they get more independence to act and decide.
7. In a decentralization structure, co-ordination to some extent is difficult to maintain as
there are lot many department divisions and authority is delegated to maximum possible
extent ,i.e., to the bottom most level delegation reaches. Centralization and decentralization are
the categories by which the pattern of authority relationships became clear. The degree of
centralization and de-centralization can be affected by many factors like nature of operation,
volume of profits, number of departments, size of a concern, etc. The larger the size of a
concern, a decentralization set up is suitable in it.

Answer 3-Reverse logistics is fast becoming a competitive necessity. More liberal returns
policies, the increasing use of consignment inventory, shorter product lifecycles, and more
demanding customers translate to more returned product.1 Firms are being forced to find more
efficient ways to reclaim, redistribute, and/or dispose of returns. Firms that do not recognize the
importance of an effective reverse logistics program risk damaging customer relations and may
seriously harm the organization's reputation and brand image

The trend toward more direct-to-consumer marketing and retailing also impacts reverse
logistics, as does the exponential surge in Internet retailing. Non-traditional retailing is typically
subject to higher rates of returned merchandise than in-store shopping. For example, it is
estimated that returns for direct sales catalog companies can run as high as 20% of sales.3 The
necessity of dealing with such volumes of returned product has led catalog retailers to focus
efforts at more efficient returns handling. Rogers and Tibben-Lembke4 suggest that some
catalog retailers are at the forefront of best practice reverse logistics. Because of their history of
dealing with returns and their purported expertise in reverse logistics, catalog retailers were
selected as the focus for the current research project.

Reverse logistics programs are resource intensive in terms of implementation and maintenance.
Significant time and resources must be committed. However, there is little empirical work
examining the relationship between allocating resources to reverse logistics and reverse
logistics program performance. Reluctance to devote managerial and financial resources is a
barrier to the development of effective reverse logistics programs.5 Is there a payoff in terms of
financial and/or service performance for firms that devote more resources to reverse logistics?
The current research was undertaken to assess the effectiveness of reverse logistics programs
and to gauge their impact on business operations. The research focused more on value
reclamation aspects of reverse logistics (reclaiming unsold or damaged product, for example)
rather than recycling or environmental issues.
Reverse Logistics Programs

Reverse logistics refers to:

The process of planning, implementing and controlling the efficient, costeffective flow of raw
materials, in-process inventory, finished goods and related information from point of
consumption to the point of origin for the purpose of recapturing value or for proper disposal.6

Reverse logistics has received more attention in recent years because of its strategic
implications. A well managed reverse logistics program can result in savings in inventory
carrying, transportation, and waste disposal costs7 as well as improving customer service.8
Environmental and "corporate citizenship" goals also have influenced program development.9
For example, stringent governmental legislation on disposal of products,10 public awareness of
the social cost of excess waste,11 and growing support for recycling12 have all contributed to
expand firms' involvement in reverse logistics.

Returns are, and always have been, a fundamental part of retailing. It is estimated that reverse
logistics accounts for 5-6% of total logistics costs in the retail and manufacturing sectors.13
Routine reverse logistics activities in the retail sector include handling recalls (product defects),
exchanges (customer dissatisfaction or indecision), returns (damage), re-distributions (seasonal
and excess inventory), and trade-ins, as well as the disposal of shipping containers and the
collection of product and materials for recycling. Considerable payoff in terms of performance-
based outcomes is believed to be associated with effective reverse logistics programs.

Better customer service, improved customer satisfaction, increased control of inventory,

reduced costs, higher profitability, and enhancement of corporate image have all been identified
as potential benefits that may accrue to firms with effective reverse logistics programs.14
Reverse logistics programs also offer firms the opportunity to collect valuable information.15
Data may facilitate the identification of patterns of defects or problem areas, and thus, can be
used to reduce the volume of returns. In addition, reverse logistics programs can improve
overall customer service and customer relations by helping to ensure that returns are processed
quickly.

BMG, a catalog retailer that offers its customers a music membership service, provides an
illustration of how a successful reverse logistics program can contribute to company
performance. BMG exploits its reverse logistics capabilities to positively impact customer
service and inventory control. Returns are standard business for BMG. On average, the firm
receives approximately 80,000 returned packages on Mondays and about 40,000 on other
weekdays. Reasons for returns include wrong product sent, wrong addresses, and customers
simply changing their minds about the purchase. Because the nature of mail-order music
business is such that returns are expected, BMG facilitates returns by planning for them at the
time of original sale. Unique bar code labels are affixed to the customer's invoice as well as the
product itself at the time of sale. The identifying label that is scanned when the product is
shipped from the distribution center can also be scanned if the product comes back.

BMG's system is set up to speed handling of returned merchandise. An automated conveyor--

based system sorts approximately 57,000 items in an eight-hour period. The process prioritizes
popular or faster-moving selections so that they can rapidly be returned to inventory. Typically,
customers' accounts are credited and usable product is back in inventory within eight hours of
the time that the return is received.
Despite the positive economic and customer service benefits that may result from committing
resources to a proactive reverse logistics program, too many firms apply minimal effort to the
area.18 Firms' traditional preoccupation with outbound logistics and desires to "hide" inventory
mistakes are suggested as potential reasons for reluctance to commit resources to reverse
logistics.19 Another explanation may be that a lack of awareness of the magnitude of potential
benefits serves to limit allocation of resources to reverse logistics. Thus, empirical research on
the effect of reverse logistics on performance is needed to provide greater understanding.20
The resource-based theory of the firm21 provides a theoretical framework to examine the
impact of resource commitment on reverse logistics program performance.

Resource-Based Theory

Many firms are focusing on the innovative utilization of logistical resources in the supply chain to
create and add value for customers.22 However, despite recent advances in the field of
strategic logistics research, further theoretical development remains a key priority.23 For
example, and the lack of a theoretically grounded view of reverse logistics represents a "critical
gap."24 The resource-- based theory of the firm has significant potential for logistics research,25
and for assessing the impact of investment in reverse logistics on program performance.

Bases of Power

Coercive Power
Reward Power
Legitimate Power
Expert Power
Referent Power

The Dependency Factor

Importance,Scarcity,Non-Substitutability

Contingency Approaches to Power

Interdependence and Influencability

Overall Contingency Model for Power

Power in Groups: Coalitions

Organizational Politics

Definition and Nature of Politics

Factors Relating to Political Behavior

The Ethics of Power and Politics

Power and politics are among the most important concepts in the study of organization
behavior. Both power and politics are dynamic concepts and are a function of the interaction
between different elements in organizations. Power has been defined as "the ability to influence
and control anything that is of value to others." It is the ability to influence the behavior of other
people in the organization and to get them to do what they otherwise would not have done.

Although the terms power, authority and influence are often used synonymously, there is a
difference between them. Power is the ability to effect a change in an individual or a group in
some way. Power may or may not be legitimate. That is, power need not correspond with a
person's organizational position. Authority, on the other hand, is legitimate. It is the power which
is sanctioned by the organization and is often the 'source' of power. Influence is a much broader
concept than both power and authority.

French and Raven, social psychologists, identified five sources of power - coercive, reward,
legitimate, expert and referent. Coercive power is based on fear and is the ability to influence
another person through threats or fear of punishment. Reward power is a positive power which
refers to the ability to get things done through others on the basis of one's power to grant
rewards. Legitimate power depends on organizational position and authority. It refers to the
power conferred by a person's organizational position. Expert power is derived from a person's
expertise or specialized knowledge of a certain subject that is perceived as important to the
organization. And referent power is based on people's identification with a certain individual and
their attempt to emulate his behavior. The person who acts as a model for reference has power
over the person who emulates his behavior.

Dependency is the most important concept of power. The degree of dependence of the target
determines the power exercised by the agent. Dependency is a function of importance, scarcity
and non substitutability of the resources controlled by a person.

Contingency approaches to power are also gaining importance. The contingency approach
suggests that power depends on being in the 'right place' at the right time and the influencability
of the target. The overall contingency model combines the theories of French and Raven with
those of Herbert Kelman and identifies the three main processes of power, namely, compliance,
identification and internalization.

When people lose power, they try to regain it individually, or by forming a coalition with other
less powerful people. Organizational coalitions are different from political coalitions in some
basic ways.

Organizational politics is often called 'power in action.' Politics may be legitimate (within
sanctioned organizational limits) or illegitimate (exceeding sanctioned organizational limits) in
nature. The degree of politicking engaged in depends on individual as well as organizational
factors. Individual politicking is a function of the person's power motive, personality factors and
background, and current work environment. Organizational politicking is a function of culture,
goal and role clarity and the attitude of top management.
Considerable importance has also been given to the ethical aspects of power and politics. It is
not always easy to develop ethical standards because of the ambiguous and subjective nature
of certain actions.

Making organizations more innovative, responsive and responsible requires focusing on a

number of leadership, power and influence issues. These issues are critical in coping with the
strategic environment with all its VUCA characteristics, and strategic leader performance
requirements in that environment. The issues influence developing teams at the strategic level,
as well as managing organizational processes linked to values and ethics, organizational
culture, visioning and the management of change. Such issues include:
• Implementing strategic or adaptive change in the face of formidable resistance.
• Fostering entrepreneurial and creative behavior despite strong opposition.
• Gaining resources and support from bosses whose personal agendas might include
organizationally harmful political games.
• Avoiding destructive adversarial relationships with others whose help and cooperation
are paramount to your success, but who are outside your chain of command and your direct
control, and who may suspect your motives.
• Building and developing effective teams in an internal environment where the natural
tendency is to conflict with each other and engage in "turf battles".
• Avoiding becoming a victim or casualty of destructive power struggles.
• Avoiding the numerous traps that generate power misuses and ultimately power loss.
• Fostering organizational excellence, innovation and creativity, and not getting mired in
bureaucratic politics or dysfunctional power conflicts.

This chapter will not by itself change your view or way of acquiring power and effectively
exercising influence. It does provide an opportunity to think differently about power, politics and
influence, and it can refocus your attention on organizational issues and problems. For strategic
leaders in most organizations the key to successfully implementing organizational change and
improving long term performance rests with the leader's skill in knowing how to make power
dynamics work for the organization, instead of against it.

POWER IN ORGANIZATIONS

THE CONCEPTS OF POWER AND ORGANIZATIONAL POLITICS John Gardner, writing

about leadership and power in organizations, notes, "Of course leaders are preoccupied with
power! The significant questions are: What means do they use to gain it? How much do they
exercise it?" To what ends do they exercise it? He further states, "Power is the basic energy
needed to initiate and sustain action or, to put it another way, the capacity to translate intention
into reality and sustain it." In a similar vein, Richard Nixon wrote, "The great leader needs . . .
the capacity to achieve. . . . Power is the opportunity to build, to create, to nudge history in a
different direction." Dahl writing about the pervasiveness of the concept of power states, "The
concept of power is as ancient and ubiquitous as any that social theory can boast." He defined
power "as a relation among social actors in which one actor A, can get another social actor B, to
do something that B would not otherwise have done." Hence, power is recognized as "the ability
of those who possess power to bring about the outcomes they desire

The concept of organizational politics can be linked to Harold Lasswell's (1936) definition of
politics as who gets what, when and how. If power involves the employment of stored influence
by which events, ac- tions and behaviors are affected, then politics involves the exercise of
power to get something done, as well as to enhance and protect the vested interests of
individuals or groups. Thus, the use of organizational politics suggests that political activity is
used to overcome resistance and implies a conscious effort to organize activity to challenge
opposition in a priority decision situation. The preceding discussion indicates that the concepts
of power and organizational politics are related. Thus, in this chapter, we define organizational
politics as the use of power, with power viewed as a source of potential energy to
manage relationships.

THE POLITICAL FRAME As discussed earlier, Bolman and Deal describe four "frames" for
viewing the world: structural, human resources, political, and symbolic. The political frame is an
excellent tool for examining the concept of organizational politics and makes a number of
assumptions about organizations and what motivates both their actions and the actions of their
decision makers.

• Organizations are coalitions of individuals and interest groups, which form

because the members need each others' support. Through a negotiation process, members
combine forces to produce common objectives and agreed upon ways to utilize resources thus
aggregating their power. Power bases are developed that can accomplish more than individual
forces alone.
• There are enduring differences among individuals and groups in values,
preferences, beliefs, information, and perception of reality. Such differences change slowly,
if at all.
• Most of the important decisions in organizations involve allocation of scarce
resources: they are decisions about who gets what. Scarcity exacerbates political behavior.
In government at present, the competition is for personnel spaces and funding. Mission is the
means to gain both, because resources tend to follow mission. For this reason, the Services
compete for strategic mission (e.g., the omnipresent roles and missions debate), and thus make
the job of the Chairman of the Joint Chiefs more challenging. In the government as a whole,
agencies compete for significance in the national/international picture, because significance
means public approval and that means resources. (The two dominant political parties also
attempt to present the American public with different views of what is significant.)
• Because of scarce resources and enduring differences, conflict is central to
organizational dynamics and power is the most important resource. Conflict is more likely
in under-bounded systems (less regulation and control). In an over-bounded system with power
concentrated at the top (e.g., pre-Glasnost Russia), politics remains, but underground. Jefferies
makes the point that organizations play the political game within the broader governmental
context, but those individuals also play politics within organizations. So both influences are at
work. And power is key in both cases, because it confers the ability both to allocate
resources- in itself a way to increase power-and to consolidate power by bringing others
with similar goals and objectives into the inner decision making core.
• Organizational goals and decisions emerge from bargaining, negotiating, and
jockeying for position among members of different coalitions. Bolman and Deal offer the
space shuttle program as an example of a strategic effort backed by a complex coalition
consisting of NASA, contractors, Congress, the White House, the military, the media, and even
portions of the public. The difficulty in the Challenger disaster was that different members of the
coalition were in disagreement about how to balance technical and political concerns. These
became increasingly salient as the enormously expensive shuttle program encountered one
delay after another for safety-related technical reasons. At the time of the Challenger shuttle
disaster, both Thiokol and NASA were under increasing pressure to produce on schedule at
programmed cost. The decision to launch on that fateful day was made when political forces
overcame technical considerations. But, of course, this only illustrates the decision maker's
difficulty in weighing one kind of consideration against another-subjective assessment of
constituency demands versus rational data that may nonetheless lack substantiated cause-and-
effect relationships with downside outcomes-under conditions of great time pressure.

The five propositions of the political frame do not attribute organizational politics to negative,
dysfunctional or aggrandizing behavior. They assert that organization diversity,
interdependence, resource scarcity, and power dynamics will inevitably generate political forces,
regardless of the players. Organizational politics cannot be eliminated or fantasized away.
Leaders, however, with a healthy power motive can learn to understand and manage political
processes.
POWER AS A MOTIVE . Power is attractive because it confers the ability to influence
decisions, about who gets what resources, what goals are pursued, what philosophy the
organization adopts, what actions are taken, who succeeds and who fails. Power also gives a
sense of control over outcomes, and may in fact convey such enhanced control. Particularly as
decision issues become more complex and outcomes become more uncertain, power becomes
more attractive as a tool for reducing uncertainty.

Power and the ability to use it are essential to effective leadership. Strategic leaders who are
uncomfortable with either the presence of great power in others or its use by themselves are
probably going to fail their organizations at some point. The critical issue is why the leader
seeks power and how it is used. Some see power as a tool to enhance their ability to facilitate
the work of their organizations and groups. Others value power for its own sake, and exercise
power for the personal satisfaction it brings. There can be good and bad in both cases.
However, the leader who uses power in the service of his/her organization is using power in the
most constructive sense. The leader who seeks power for its own sake and for personal
satisfaction is at a level of personal maturity that will compromise his/her ethical position, risk
his/her organization's effectiveness, and perhaps even jeopardize the long-term viability of the
organization(Jacobs 1996).

Power competition exists at two levels. Individuals compete for power within agencies and
organizations; agencies and organizations compete for power within the broader governmental
context. The mechanics of power competition are much the same. In both cases, power accrues
when an individual or an organization achieves control of a scarce commodity that others need.
And in both cases, the operations are essentially political. Even when compelling physical force
is the means, the mechanism is political. The scarce commodity is the means of inflicting harm
on others. So dictators, by hook or by crook, gain a monopoly on the means for inflicting harm
on others. During the course of the Cold War, the massive build-up of armaments was aimed at
maintaining a "balance of forces" so as to prevent intimidation by either side. Even after
Glasnost, the level of armaments on both sides was carefully negotiated so as to preclude
imbalance that might tempt one side or the other toward risky moves.

Power competition within an organization or agency is generally for resources- personnel

spaces or funding, or both, in governmental agencies. And the basis for the competition can be
constructive as well as destructive. If the top-level leadership is wise and capable, the basis for
competition can be defined as meritorious performance of either individual or group. In that
case, performance becomes the basis for determining who accumulates power. The process is
still political, but it is also constructive because the organization as a whole benefits.

So, the political process can be either destructive or constructive, depending on the resource to
be accumulated, the means by which the competitors seek to accumulate it, and the value that
accrues to all competitors by virtue of the competition. (Of course, competition based on
performance, if conducted at such an extreme that human values or key norms governing
competition are violated, may substantially hurt the organization in the long term).

However, internal politics can also be detrimental in ways not readily apparent. Sub-units within
agencies may develop objectives and goals at odds with those of the agency. For example, a
given "desk" owes its stature in its own agency to the constituency needs it serves. An
extremely important constituency is the nation it represents within its own agency and with
which it deals. The "desk" therefore may find it valuable to promote the needs of that
constituency over the needs of the agency by "selling" important positions or programs that
benefit the constituency-thereby unwittingly becoming co-opted and increasingly vulnerable to
manipulation by that constituency.

Organizations also play a political game. Organizations seek influence. Influence increases
autonomy (freedom to control own assets); organizational morale (the ability to maintain
cohesion and effectiveness); essence (sanctity of essential tasks and functions); roles and
missions (exclusion of options that would challenge these); and budgets (increased roles and
missions will always favor larger budgets) (Jefferies).

To increase their own influence, agencies in government and other organizations will provide
information, recommend options, and execute directives in ways that enhance their own self
interest. Jefferies illustrates with the decision to send a U-2 reconnaissance aircraft to overfly
the Cuban missile sites. The decision to send the U-2 was actually made 10 days before the
flight occurred, but the implementation was delayed by the CIA-USAF struggle for the mission.
The CIA defined the mission as intelligence gathering and advanced the argument that it had a
better U-2 than did the USAF. The USAF was concerned that the pilot be in uniform to avoid
repetition of the Gary Powers crisis if the aircraft was shot down. (The total mission delay came
from five days to make the decision and five days to train an Air Force pilot to fly CIA U-2s.)

Because key leaders who form the centralized circle at the top of the policy making apparatus
have different viewpoints, particularly with something as uncertain as strategic policy, they are
obligated to fight for what they consider right. Thus, decision making is not a unitary process,
but also "a process of individuals in politics reacting to their own perceptions of national,
organizational, and personal goals" (Jefferies 1992). Because the scope and scale are too great
for one person to master, the president must persuade in order to develop the consensus
required for broad support of decision outcomes. (Those who wind up executing must be
product champions for these decisions, or they are not likely to implement them.) The
president is also open to persuasion, because the various branches or agencies may also build
power bases outside government or outside the executive branch.

While our focus has been on establishing a legitimate context for understanding organizational
politics, a countervailing view to the political frame is the rational frame of organizational
decision making

THE RATIONAL FRAME. By definition, rational processes are different from political
processes. Rational decisions rest heavily on analytic process. An analytic process can be
defined as one in which there are agreed-upon methods for generating alternative solutions to
problems, and for assigning values to the benefits and costs expected from each of the
alternatives. And sophisticated computational methods are readily available for calculating
benefits/costs ratios once these values are assigned. The essence of rational process is the
belief that, "All good persons, given the same information, will come to the same conclusion."
Those seeking to employ the rational process to the exclusion of political process thus seek
open communication, perhaps through more than just formal (vertical) organizational channels.

The rapid expansion of electronic mail systems that permits anyone in an organization to
address anyone else probably rests on a rationality premise-that transcending organizational
channels by allowing all members to address directly even the highest official will give that
official more complete information and thus enable higher quality decisions. This is very difficult
for some people to understand especially those with narcissistic power needs and maturity
issues. There is also a trust assumption: that members can be trusted not to abuse the
privilege and that high officials will not misuse the information. A political process would view
valuable information as a commodity to be traded for influence (Jacobs).

There is another important difference between rational and political views of appropriate
operations both within and between organizations. The political frame does not depend on trust
between persons. In the preceding example, both trust assumptions would be discounted as
unrealistic. Trust in the probable future actions of coalition members is based on perception of
gain to be expected from not violating agreements on which a coalition is based, for example.
The intrinsic morality of being trustworthy is not particularly useful as a concept.

Trust probably is not particularly a part of the rational frame, either, except that a strong
rationalist believes in and trusts the logic of the process by which information is converted into
decision outcomes. So a strong rationalist will trust others to be similarly logical. This leads to
important postulates about rational communication within a system. For a rationalist, systems
are information-consuming engines. Particularly at the strategic level, the unimpeded flow of
information is crucial to the health of the system as a whole. However, politics and power
dynamics strongly influence communication processes. To the extent organizations and the
people in them are motivated by political gain and power dynamics, rational processes are
inevitably shortchanged

POWER DYNAMICS AND THE RATIONAL FRAME.

The National Security Strategy apparatus exists to support the formulation of policy and
implementing strategy and thus presidential decision making. George writes insightfully about
both the demands of these processes, and obstacles to their effective operation-particularly
those attributable to bureaucratic politics. He comments that political scientists of an earlier
generation "were intrigued by the possibility that an overburdened executive might be able to
divide his overall responsibilities into a set of more manageable subtasks to be assigned to
specialized units of the organization. It was hoped and expected that division of labor and
specialization within the organization, coupled with central direction and coordination, would
enable the modern executive to achieve the ideal of 'rationality' in policy making." He goes on to
say that this hope has not been realized because: Some problems of large scale are not
amenable to fragmentation.

As an example, the task of central coordination and direction of foreign policy making has gotten
steadily worse as the range, complexity, and scope of foreign policy problems has increased.
The distinction between foreign and domestic policy has also eroded. George illustrates by
noting that the deployment of US troops in Europe has implications for defense posture (DOD),
balance of payments (Treasury), and U.S. relations with foreign nations (State). Such problems
must be approached from a broader, holistic viewpoint, and there must be interaction among
representatives of agencies with diverse viewpoints. This is prevented, however, by power
competition within organizations, and between organizations and agencies within the
government. As Jefferies puts it, individuals play politics within organizations, and organizations
play the political game within the broader context.

Rationalist guidelines for good policy making would include something like the following
(George): get all the information needed for incisive and valid diagnosis of the proble/situation;
identify all dimensions of value complexity so there can be balanced consideration of value
priorities; identify a broad range of alternatives, considering uncertainties; take into account the
policy implementation factor; and arrange for feedback information. In a politicized structure, the
dynamics of organizational politics impacts all of these by giving a "win-lose" flavor to
information-giving and position advancement. Thus, mixing organizational politics with a rational
decision making process will likely lead to the following consequences:

• Each actor acquires information on its own policy issues and not those of others, thereby
denying full, balanced information flow to the decision maker.
• Its own parochial interests and goals shape each actor's participation in identification
and evaluation of policy options.
• Oversimplification and rhetorical exaggeration distort policy debate (overstate benefits of
own position and risks of opponents' positions).
• Actors use their own bargaining advantage to manipulate the flow of advice to influence
the executive's choice of policy.
• Actors may arrange compromises (logrolling deals) among themselves to avoid
presidential decisions that might be damaging to their perceived interests, thereby keeping
policy issues from rising to the presidential level.
• Actors may seek to avoid an area, in order to avoid responsibility for it.
• Actors rely on policy routines and SOP that were previously developed, but which may
not be appropriate for novel problems.
• Actors may be prevented from dealing incisively with foreign-policy issues by the time,
energy, and attention expended on internal politics.

As George points out, while the rational frame to organizational decision making may be highly
desirable to most decision makers, it is not immune to political influences. The fact is there are
politics involved in innovation and change and suc- cessful strategic leaders must be effective
politicians. The higher one goes in organizations, the more use of organizational politics
becomes an important social process; politics are often required to get important decisions
implemented in complex systems

NATURE OF STRATEGIC LEADER POWER

A number of authors writing in Strivastva's Executive Power (1992) argue that power at the
strategic organization level is manifested and executed through three fundamental elements:
consensus, cooperation, and culture.

"An organization is high in consensus potential when it has the capacity to synthesize the
commitment of multiple constituencies and stakeholders in response to specific challenges and
aspirations." In this area, strategic leader power is derived from the management of ideas, the
management of agreement, and the management of group and team decision making
processes.

"Cooperative potential refers to an organization's capacity to catalyze cooperative interaction

among individuals and groups." Power is employed by a strategic leader in the management of
organization structures, task designs, resource allocation, and reward systems that support and
encourage this behavior.

"Cultural/spiritual potential refers to a sense of timeless destiny about the organization, its role in
its own area of endeavor as well as its larger role in its service to society." Strategic leaders use
power in this area to manage and institutionalize organizational symbols, beliefs, myths, ideals
and values. Their strategic aim is to create a strong culture that connects the destiny of the
organization to the personal goals and aspirations of its members.
Jacobs' seminal work of general officer job requirements can be linked to the above conceptual
requirements for successfully acquiring and managing strategic leader power potential. His
study of the work environment of general officers provides a context for looking at strategic
performance requirements. He found three job demands consistently reported by the survey
respondents. They were long-term vision, consensus building, and command team building.

Although the road to power is open to those who wish to travel it, not all will distinguish
themselves as master practitioners. What skills and attributes distinguish those strategic leaders
who use power effectively from those who do not?

INDIVIDUAL SKILLS AND ATTRIBUTES AS SOURCES OF POWER

Pfeffer's (1992) research and observations emphasize the following characteristics as being
especially important for acquiring and maintaining strategic power bases:

• High energy and physical endurance is the ability and motivation to work long and often
times grueling hours. Absent this attribute other skills and characteristics may not be of much
value.
• Directing energy is the ability and skill to focus on a clear objective and to subordinate
other interests to that objective. Attention to small details embedded in the objective is critical for
getting things done.
• Successfully reading the behavior of others is the ability and skill to understand who are
the key players, their positions and what strategy to follow in communicating with and
influencing them. Equally essential in using this skill is correctly assessing their willingness or
resistance to following the Strategic Leader's direction.
• Adaptability and flexibility is the ability and skill to modify one's behavior. This skill
requires the capacity to re-direct energy, abandon a course of action that is not working, and
manage emotional or ego concerns in the situation.
• Motivation to engage and confront conflict is the ability and skill to deal with conflict in
order to get done what you want accomplished. The willingness to take on the tough issues and
challenges and execute a successful strategic decision is a source of power in any organization.
• Subordinating one's ego is the ability and skill to submerge one's ego for the collective
good of the team or organization. Possessing this attribute is related to the characteristics of
adaptability and flexibility. Depending on the situation and players, by exercising discipline and
restraint an opportunity may be present to generate greater power and resources in a future
scenario.

The skills and attributes identified in the ICAF Strategic Leader Development Inventory are
relevant not only to the work of strategic leaders but may contribute to the their overall capacity
to acquire and use power effectively. These skills and attributes are grouped as conceptual
skills and attributes and positive attributes.

CONCEPTUAL SKILLS AND ATTRIBUTES.

• Professional Competence is one of the many ways leaders "add value" by grasping
the essential nature of work to be done and providing the organizing guidance so it can be done
quickly, efficiently, and well.
• Conceptual Flexibility is the capacity to see problems from multiple perspectives. It
includes rapid grasp of complex and difficult situations as they unfold, and the ability to
understand complex and perhaps unstructured problems quickly. It also includes tolerance for
uncertainty and ambiguity.
• Future Vision reflects strategic vision, appreciation of long-range planning, and a good
sense of the broad span of time over which strategic cause and effect play out.
• Conceptual Competence relates to conceptual flexibility in that both are essential for
strategic vision. It has to do with the scope of a person's vision and the power of a person's logic
in thinking through complex situations.
• Political Sensitivity is being skilled in assessing political issues and interests beyond
narrow organizational interests. It means possessing the ability to compete in an arena
immersed in the political frame to ensure that your organization is adequately resourced to
support your stated organization interests and those of the nation.

POSITIVE ATTRIBUTES.

• Interpersonal Competence is essential for effectiveness in influencing others outside

your chain of command, or negotiating across agency lines. It suggests high confidence in the
worth of other people, which is reflected in openness and trust in others.
• Empowering Subordinates goes beyond simple delegation of tasks and is crucial for
creating and leading high performing organizations. It involves the personal capacity to develop
meaningful roles for subordinates and then to encourage initiative in the execution of these
roles.
• Team Performance Facilitation includes selecting good people in assembling a team,
getting team members the resources to do a job, providing coordination to get tasks done and
moving quickly to confront problem individuals.
• Objectivity is the ability to "keep one's cool" and maintain composure under conditions
that might otherwise be personally threatening.
• Initiative/Commitment is the ability to stay involved and committed to one's work, get
things done, be part of a team effort and take charge in situations as required.

Understanding the character of strategic leader power and the requisite personal attributes and
skills sets the stage for employing power effectively. We need to know more than the conceptual
elements that constitute power in organizations at the strategic level. But, we need to know
the strategies of how to use power effectively and to get things done.

LEADING WITH POWER

The acquisition and use of strategic leader power involves managing a sequential process that
is described below:

1. The first task is to decide what it is the leader is trying to achieve that necessitates the
use of power.

2. With the goal in mind, the leader must assess the patterns of dependence and
interdependence among the key players and determine to what extent he or she will be
successful in influencing their behavior. It is critical that the leader develop power and
influence when the key players have expressed a differing point of view. It is important to
remember there is more interdependence at the strategic level of the organization where task
accomplishment is more complex.
3. Getting things done means the leader should "draw" a political map of the terrain that
shows the relative power of the various players to fully understand the patterns of
dependence and interdependence. This involves mapping the critical organization units and
sub-units and assessing their power bases. This step is very important because a leader needs
to

determine how much power these units have to leverage influence either in support or
opposition to their effort. For example, if a leader is proposing to introduce a consensus team
decision making process in a joint interdependent environment, this implementation decision
could change power relationships among the players. In this case, the leader needs to know the
opposing players and the depth of their power bases. This move will likely require the
mobilization of allies and the neutralization of resisters.

4. Developing multiple power bases is a process connected to those personal attributes

and skills previously discussed and to structural sources of power. Structural sources of
power comes from the leader's creation and control over resources, location in communication
and information networks, interpersonal connections with influential others, reputation for being
powerful, allies or supporters, and the importance of leading the "right" organization.

6. Recognizing the need for multiple power bases and developing them is not enough. The
strategic leader must have an arsenal of influence strategies and tactics that convert
power and influence into concrete and visible results. Research on strategies and tactics
for employing power effectively suggests the following range of influence tactics:

• Framing/Reframing tactics establishes the context for analyzing both the decision and
the action taken. By framing the context early in the process, the strategic leader is positioned to
influence what looks reasonable or inappropriate in terms of language and the overall process
for generating the decision itself. Framing and reframing decision making is an important tactic
for influencing organizational behavior. This process sensitizes the leader to the context of
organizational decision making by increasing his or her self-awareness of history-the history of
past relationships and past choices. Framing and reframing tactics thus give the leader the
ability to set a context within which present and possible future decisions are evaluated,
and an important perceptual lens that provides leverage for producing innovative ideas
for getting things done.
• Interpersonal influence tactics recognizes that power and influence tactics are
fundamental to living and operating in a world where organizations are characterized as
interdependent social systems that require getting things done with the help of other people. A
leader employing interpersonal influence tactics typically demonstrate behaviors that include:
understanding the needs and concerns of the other person, managing constructive
relationships with superiors, peers and subordinates, using active listening skills, asking
probing questions to understand a countervailing power position, anticipating how
individuals may respond to ideas or information, thinking about the most effective means
to influence the individual and crafting appropriate tactics to the needs and concerns of
the other person, and maintaining a broad network of individual contacts.
• Timing tactics involve determining not only what to do but when to move out. These
types of action include: initiating action first to catch your adversary unprepared, thereby
establishing possible advantage in framing a context for action, using delay tactics to
erode the confidence of proponents or opponents as it relates to setting priorities,
allocating resources and establishing deadlines, controlling the agenda and order of
agenda items to affect how decisions are made. The sequencing of agenda items is very
critical where decisions are interdependent.
• Empowerment tactics create conditions where subordinates can feel powerful,
especially those who have a high need for power. Leaders empower their followers and
subordinates through a process that provides direction, intellectual stimulation, emotional
energy, developmental opportunities and appropriate rewards. Typical behaviors of a leader
using these tactics include: high involvement and participation in the decision making
process, modifying and adapting one's ideas to include suggestions from others,
involving others in the strategy formulation and implementation process, looking for
creative and innovative solutions that will benefit the total organization, and instilling
confidence in those who will implement the solutions.
• Structural tactics can be employed to divide and dominate the opposition. They
can be used to consolidate power by putting a leader or his or her subordinates and
allies in a position to exercise more control over resources, information, and formal
authority. Re-aligning organizational structure can also be used to co-op others to
support a leader's ideas, initiatives and decisions. Effective employment of structural tactics
is accomplished when leaders aggressively use their formal power to consolidate, expand and
control the organizational landscape.
• Logical persuasion tactics requires using logical reasons, facts, and data to influence
others. Employment of a leader's expert power base can be used to support logical persuasion.
Effective use of these tactics include the following behaviors: persuading others by
emphasizing the strengths and advantages of their ideas, developing more than one
reason to support one's position, using systems thinking to demonstrate the advantages
of their approach, and preparing arguments to support their case.
• Bargaining tactics involve leader behaviors that attempt to gain influence by
offering to exchange favors or resources, by making concessions, or by negotiating a
decision that mutually advances the interests of all participants. These influence tactics
are typically effective in a political environment involving opposing or resisting forces; when a
leader is in a position to do something for another individual or group; or when the collective
interests of all can be served.
• Organizational mapping tactics focus the leader's sight on possible power-dependent
and interdependent relationships. The critical task is to identify and secure the support of
important people who can influence others in the organization. Leaders using these tactics will
employ behaviors that include: determining which actors are likely to influence a decision,
getting things done by identifying existing coalitions and working through them,
garnering support by bringing together individuals from different areas of the
organization, isolating key individuals to build support for a decision, linking the
reputations of important players to the decision context and working outside formal
organization channels to get the support of key decision makers.
• Impact leadership tactics include thinking carefully about the most profound,
interesting or dramatic means to structure a decision situation to gain the support of others.
Behaviors include: presenting ideas that create an emotional bond with others, using
innovative and creative ways to present information or ideas, finding and presenting
examples that are embedded in the political and cultural frames such as language,
ceremonies and propitious events, and lastly, consistently demonstrating high energy
and physical stamina in getting the job done.
• Visioning tactics demonstrate how a leader's ideas and values support the
organization's strategic goals, beliefs and values. Leader behaviors in executing these tactics
include: articulating ideas that connect the organization's membership to an inspiring
vision of what the organization can become, appealing to organization core values or
principles, linking the work of the organization to the leader's vision and broader goals,
creating and using cultural symbols to develop both individual pride and team identity.
• Information and analysis tactics suggest that leaders in control of the facts and
analysis can exercise substantial influence. Leaders will use unobtrusive behaviors to
disguise their true intention, which is to effectively employ influence tactics that seemingly
appear rational and analytical. Facts and data are manipulated and presented to appear
rational and help to make the use of power and influence less obvious. Another ploy used
by leaders is to mobilize power by bringing in credible outside experts who can be relied
on to support a given strategy and provide the answers they are expected to give. Lastly,
under conditions of VUCA which characterizes strategic decision making, leaders will
selectively advocate decision criteria that support their own interests and organizations. In
these cases, leaders typically do what works best and make decisions based on criteria that are
most familiar to them.
• Coercive tactics are the least effective in influencing strategic decisions. These tactics
involve employing threats, punishment, or pressure to get others to do what a leader wants
done. Typical leader behaviors include: using position power to demand obedient
compliance or blind loyalty, making perfectly clear the costs and consequences of not
"playing the game", publicly abusing and reprimanding people for not performing, and
punishing individuals who do not implement the leader's requests, orders or
instructions.

This chapter has addressed what strategies and tactics are required for leading with power at
the highest organizational level. In a micro context, it is about managing power, which translates
as being personally effective in knowing how to get things done and having the political will to
do so. At a macro level, it means coping effectively with the strategic environment and dealing
with innovation and organizational change.

HOW POWER IS LOST

In a general sense power is lost because organizations change and leaders don't.
Organizational dynamics create complex conditions and different decision situations that require
innovative and creative approaches, new skill sets and new dependent and interdependent
relationships. Leaders who have learned to do things a specific way become committed to
predictable choices and decision actions. They remain bonded and loyal to highly developed
social networks and friendships, failing to recognize the need for change, let alone allocating the
political will to accomplish it. Ultimately, power may be lost because of negative personal
attributes that diminish a leader's capacity to lead with power effectively. The SLDI identifies a
number of negative attributes that when linked to certain organizational dynamics will generate
potential loss of power:

• Technically Incompetent describes leaders who lack the conceptual skills needed to
develop vision and be proactive in managing organizational change.
• Self-Serving/Unethical leaders abuse power and use it for their own self
aggrandizement, take special privileges, and exploit peers and subordinates by taking credit for
contributions done by others. Self-serving leaders contaminate the ethical climate by modeling
power-oriented behavior that influence others to replicate their behavior. Over the long run,
these leaders engender divisiveness and are not trusted.
• Micromangement of subordinates destroys individual and team motivation. Leaders
who over-supervise their subordinates have strong control needs, are generally risk averse and
lack conceptual understanding of power sharing and subordinate development.
• Arrogant leaders are impressed with their own self-importance, and talk down to both
peers and subordinates thereby alienating them. If empowering others is about releasing
purposeful and creative energy, arrogance produces a negative leadership climate that
supresses the power needs of others. Arrogant leaders makes it almost impossible for
subordinates to acquire power as a means to improve their own performance as well as to seek
new ways to learn and grow.
• Explosive and Abusive leaders are likely to be "hot reactors" who use profanity
excessively, have inadequate control of temper, and abuse subordinates. They may also lack
the self-control required to probe for in-depth understanding of complex problems and so may
consistently solve them at a superficial level. Explosive and abusive leaders may self-destruct
repeatedly in coalition building and negotiating situations.
• Inaccessible leaders are out of touch with their subordinates particularly when they
need access for assistance. Peers typically "write the individual off." Leaders are generally
inaccessible because they don't place great value on building interpersonal relationships, they
may have weak interpersonal skills or they may be self-centered.

CONCLUSIONS

What are the key learning points in this chapter and what are the practical implications for
strategic leaders and decision makers. Pfeffer has described learning about power most
succinctly: "it is one thing to understand power--how to diagnose it, what are its sources, what
are the strategies and tactics for its use, and how it is lost. It is quite another thing to use that
knowledge in the world at large...In corporations, public agencies, universities, and government,
the problem is how to get things done, how to move forward, how to solve the many problems
facing organizations of all sizes and types. Developing and exercising power require having
both will and skill. It is the will that often seems to be missing."

Case Study

Answer- WS Industries’s senior management is exceptionally well in Strategic management. It

is a field that deals with the major intended and emergent initiatives taken by general managers
on behalf of owners, involving utilization of resources, to enhance the performance of firms in
their external environments. It entails specifying the organization's mission, vision and
objectives, developing policies and plans, often in terms of projects and programs, which are
designed to achieve these objectives, and then allocating resources to implement the policies
and plans, projects and programs. A balanced scorecard is often used to evaluate the overall
performance of the business and its progress towards objectives. Recent studies and leading
management theorists have advocated that strategy needs to start with stakeholders
expectations and use a modified balanced scorecard which includes all stakeholders.

They understand the employee’s behavioral pattern and are well aware of ‘how to bring that
change?’ that’s why management is able to eliminate those factors and bring synergy among
employees and between employees and management. Though it is not easy as most people
don't like change because they don't like being changed. When change comes into view, fear
and resistance to change follow – often despite its obvious benefits.
People fight against change because they:
 • fear to lose something they value, or
• don't understand the change and its implications, or
• don't think that the change makes sense, or
• find it difficult to cope with either the level or pace of the change.

Resistance emerges when there s a threat to something the individual values. The threat may
be real or it may be just a perception. It may arise from a genuine understanding of the change
or from misunderstanding, or even almost total ignorance about it.

And with this synergy, they are able to exploit their core competencies. Their core competencies
are to supply core components and its competitive advantage in terms of prices. Companies
cannot exploit their core competencies unless there is synergy among workers and
management is able to eliminate the obstacles while implementing a strategy.

A core competency is a specific factor that a business sees as being central to the way it, or its employees,
works. It fulfills two key criteria:

1. It is not easy for competitors to imitate

2. It can be leveraged widely to many products and markets.

A core competency can take various forms, including technical/subject matter know-how, a
reliable process and/or close relationships with customers and suppliers. It may also include
product development or culture, such as employee dedication.

Efficiency of a organization depends upon its organizational culture. Organizational culture is

an idea in the field of organizational studies and management which describes the psychology,
attitudes, experiences, beliefs and values (personal and cultural values) of an organization. It
has been defined as "the specific collection of values and norms that are shared by people and
groups in an organization and that control the way they interact with each other and with
stakeholders outside the organization."

This definition continues to explain organizational values, also known as "beliefs and ideas
about what kinds of goals members of an organization should pursue and ideas about the
appropriate kinds or standards of behavior organisational members should use to achieve these
goals. From organisational values develop organizational norms, guidelines, or expectations
that prescribe appropriate kinds of behavior by employees in particular situations and control the
behavior of organisational members towards one another.

These all values when come together can significantly improve a company’s performance and it
can exploit the opportunity and its core competence.

Assignment C

Answer 1. Yes

Answer 2. No
Answer 3. Yes

Answer 4. No

Answer 5. Yes, International, Political and legal, Technology, Social and Economic

Answer 6. Yes

Answer 7. No

Answer 8. Yes

Answer 9. No

Answer 10. Yes, strategic Business Unit

Answer 11. No

Answer 12. No

Answer 13. Yes, In microeconomics and management, the term vertical integration describes
a style of management control. Vertically integrated companies in a supply chain are united
through a common owner. Usually each member of the supply chain produces a different
product or (market-specific) service, and the products combine to satisfy a common need. It is
contrasted with horizontal integration.

Vertical integration is one method of avoiding the hold-up problem. A monopoly produced
through vertical integration is called a vertical monopoly, although it might be more appropriate
to speak of this as some form of cartel.

Nineteenth century steel tycoon Andrew Carnegie introduced the idea of the existence and use
of vertical integration. This led other businesspeople to use the system to promote better
financial growth and efficiency in their companies and businesses.

Answer 14. Yes

Answer 15.
Answer 16. No

Answer 17. Yes

Answer 18. Yes

Answer 19. Yes

Answer 20. Yes

Answer 21. No

Answer 22. Yes

Answer 23. No

Answer 24. A. Getting Your Strategy Ready for Implementation.

B. Avoiding the Implementation pitfalls

C. Covering all your bases

D. Making sure you have the suppor

People
• Resource
 • Structure
• Systems
• Culture

E. Determine your plan of attack

Answer 25. Implementation is the process that turns strategies and plans into actions in order
to accomplish strategic objectives and goals. Implementing your strategic plan is as important,
or even more important, than your strategy.

The critical actions move a strategic plan from a document that sits on the shelf to actions that
drive business growth. Sadly, the majority of companies who have strategic plans fail to
implement them. According to a Fortune cover story in 1999, nine out of ten organizations fail to
implement their strategic plan for many reasons:

• 60% of organizations don’t link strategy to budgeting

• 75% of organizations don’t link employee incentives to strategy
• 86% of business owners and managers spend less than one hour per month discussing
strategy
• 95% of a typical workforce doesn’t understand their organization’s strategy.

A strategic plan provides a business with the roadmap it needs to pursue a specific strategic
direction and set of performance goals, deliver customer value, and be successful. However,
this is just a plan; it doesn’t guarantee that the desired performance is reached any more than
having a roadmap guarantees the traveler arrives at the desired destination.

Getting Your Strategy Ready for Implementation

For those businesses that have a plan in place, wasting time and energy on the planning
process and then not implementing the plan is very discouraging. Although the topic of
implementation may not be the most exciting thing to talk about, it’s a fundamental business
practice that’s critical for any strategy to take hold.

The strategic plan addresses the what and why of activities, but implementation addresses the
who, where, when, and how. The fact is that both are critical to success. In fact, companies
can gain competitive advantage through implementation if done effectively. In the following
sections, you discover how to get support for your complete implementation plan and how to
avoid some common mistakes.

Avoiding the Implementation pitfalls

Because you want your plan to succeed, heed the advice here and stay away from the pitfalls of
implementing your strategic plan. Here are the most common reasons strategic plans fail:
• Lack of ownership: The most common reason a plan fails is lack of ownership. If
people don’t have a stake and responsibility in the plan, it’ll be business as usual for all but a
frustrated few.
• Lack of communication: The plan doesn’t get communicated to employees, and they
don’t understand how they contribute.
• Getting mired in the day-to-day: Owners and managers, consumed by daily operating
problems, lose sight of long-term goals. _ Out of the ordinary: The plan is treated as something
separate and removed from the management process.
• An overwhelming plan: The goals and actions generated in the strategic planning
session are too numerous because the team failed to make tough choices to eliminate non-
critical actions. Employees don’t know where to begin.
• A meaningless plan: The vision, mission, and value statements are viewed as fluff and
not supported by actions or don’t have employee buy-in.
• Annual strategy: Strategy is only discussed at yearly weekend retreats. _ Not
considering implementation: Implementation isn’t discussed in the strategic planning process.
The planning document is seen as an end in itself.
• No progress report: There’s no method to track progress, and the plan only measures
what’s easy, not what’s important. No one feels any forward momentum.
• No accountability: Accountability and high visibility help drive change. This means that
each measure, objective, data source, and initiative must have an owner.
• Lack of empowerment: Although accountability may provide strong motivation for
improving performance, employees must also have the authority, responsibility, and tools
necessary to impact relevant measures. Otherwise, they may resist involvement and
ownership. It’s easier to avoid pitfalls when they’re clearly identified. Now that you know what
they are, you’re more likely to jump right over them!

Covering all your bases

As a business owner, executive, or department manager, your job entails making sure you’re
set up for a successful implementation. Before you start this process, evaluate your strategic
plan and how you may implement it by answering a few questions to keep yourself in check.

Take a moment to honestly answer the following questions:

• How committed are you to implementing the plan to move your company forward?
• How do you plan to communicate the plan throughout the company?
• Are there sufficient people who have a buy-in to drive the plan forward?
• How are you going to motivate your people?
• Have you identified internal processes that are key to driving the plan forward?
• Are you going to commit money, resources, and time to support the plan?
• What are the roadblocks to implementing and supporting the plan?
• How will you take available resources and achieve maximum results with them?

You don’t need to have the perfect answers to all these questions right now, but just make sure
that you’ve given all the questions equal consideration. You don’t want to look back six months
from now, and wish you had identified some big issues that are now threatening your success. If
you’ve identified some red flags, assess if they’re huge obstacles or small ones. If they’re big,
get them out of the way before you implement, even if it means pushing your timeline out for
awhile.
Making sure you have the support

Often overlooked are the five key components necessary to support implementation: people,
resources, structure, systems, and culture. All components must be in place in order to move
from creating the plan to activating the plan.

People

The first stage of implementing your plan is to make sure to have the right people on board. The
right people include those folks with required competencies and skills that are needed to
support the plan. In the months following the planning process, expand employee skills through
training, recruitment, or new hires to include new competencies required by the strategic plan.

Resources

You need to have sufficient funds and enough time to support implementation. Often, true costs
are underestimated or not identified. True costs can include a realistic time commitment from
staff to achieve a goal, a clear identification of expenses associated with a tactic, or unexpected
cost overruns by a vendor. Additionally, employees must have enough time to implement what
may be additional activities that they aren’t currently performing.

Structure

Set your structure of management and appropriate lines of authority, and have clear, open lines
of communication with your employees. A plan owner and regular strategy meetings are the two
easiest ways to put a structure in place. Meetings to review the progress should be scheduled
monthly or quarterly, depending on the level of activity and time frame of the plan.

Systems

Both management and technology systems help track the progress of the plan and make it
faster to adapt to changes. As part of the system, build milestones into the plan that must be
achieved within a specific time frame. A scorecard is one tool used by many organizations that
incorporates progress tracking and milestones. See the section “Keeping Score of Your
Progress” later in this chapter for info on how to create a scorecard for your company.

Culture

Create an environment that connects employees to the organization’s mission and that makes
them feel comfortable. To reinforce the importance of focusing on strategy and vision, reward
success. Develop some creative positive and negative consequences for achieving or not
achieving the strategy. The rewards may be big or small, as long as they lift the strategy above
the day-to-day so people make it a priority.

Determine your plan of attack

Implementing your plan includes several different pieces. Implementing a plan can sometimes
feel like it needs another plan of its own. But you don’t need to go to that extent because I’ve
done it for you! Use the steps below as your base implementation plan. Modify it to make it your
own timeline and fit your organization’s culture and structure. What follows is a set of
comprehensive implementation steps:

• Finalize your strategic plan after obtaining input from all invested parties.
• Align your budget to annual goals based on your financial assessment.
• Produce the various versions of your plan for each group.
• Establish your scorecard system for tracking and monitoring your plan.
• Establish your performance management and reward system.
• Roll out your plan to the whole organization
• Build all department annual plans around the corporate plan
• Set up monthly strategy meetings with established reporting to monitor your
progress.
• Set up annual strategic review dates, including new assessments and a large
group meeting for an annual plan review.

Answer 26. No

Answer 27. Yes

Answer 28. Yes

Answer 29. No

Answer 30. Strategic control can be defined as process of monitoring as to whether to various strategies
adopted by the organization are helping its internal environment to be matched with the external environment.
Strategic control processes allow managers to evaluate a company's program from a critical long-term
perspective. This involves a detailed and objective analysis of a company's organization and its ability to
maximize its strengths and market opportunities.

There are four types of strategic control as follows:

1. Premise control: is designed to check systematically and continuous whether or not the
premises set during the planning and implementation process are still valid
2. Implementation control: is designed to assess whether the overall strategy result
associated with incremental steps and actions that implement overall strategy.
3. Strategic surveillance: It is designed to monitor a broad range of events inside and
outside the company to threaten the course of firm's strategy.
4. Special alert control: is the need to thoroughly and often rapidly reconsider the firm's
basic strategy based on a sudden unexpected event.

Answer 31. Command authority that may be exercised by commanders at any echelon at or
below the level of combatant command. Operational control is inherent in combatant command
(command authority) and may be delegated within the command. When forces are transferred
between combatant commands, the command relationship the gaining commander will exercise
(and the losing commander will relinquish) over these forces must be specified by the Secretary
of Defense. Operational control is the authority to perform those functions of command over
subordinate forces involving organizing and employing commands and forces, assigning tasks,
designating objectives, and giving authoritative direction necessary to accomplish the mission.
Operational control includes authoritative direction over all aspects of military operations and
joint training necessary to accomplish missions assigned to the command. Operational control
should be exercised through the commanders of subordinate organizations. Normally this
authority is exercised through subordinate joint force commanders and Service and/or functional
component commanders. Operational control normally provides full authority to organize
commands and forces and to employ those forces as the commander in operational control
considers necessary to accomplish assigned missions; it does not, in and of itself, include
authoritative direction for logistics or matters of administration, discipline, internal organization,
or unit training. Also called OPCON. See also combatant command; combatant command
(command authority); tactical control.

Answer 32- The best formulated and implemented strategies become obsolete as a firm’s external
and internal environments change. It is essential, therefore, that strategists systematically review,
evaluate, and control the execution of strategies. The final stage in strategic management is
strategy evaluation and control. All strategies are subject to future modification because internal
and external factors are constantly changing. In the strategy evaluation and control process
managers determine whether the chosen strategy is achieving the organization's objectives.
The fundamental strategy evaluation and control activities are: reviewing internal and external
factors that are the bases for current strategies, measuring performance, and taking corrective
actions.

Strategic Management Models

Strategic management is a broader term that includes not only the stages already identified but
also the earlier steps of determining the mission and objectives of an organization within the
context of its external environment. The basic steps of the strategic management can be
examined through the use of strategic management model.

The strategic management model identifies concepts of strategy and the elements necessary
for development of a strategy enabling the organization to satisfy its mission. Historically, a
number of frameworks and models have been advanced which propose different normative
approaches to strategy determination. However, a review of the major strategic management
models indicates that they all include the following elements:

1. Performing an environmental analysis.

2. Establishing organizational direction.
3. Formulating organizational strategy.
4. Implementing organizational strategy.
5. Evaluating and controlling strategy.

Strategic management is a continuous and dynamic process. Therefore, it should be

understood that each element interacts with the other elements and that this interaction often
happens simultaneously.

Answer 33. The final stage in strategic management is strategy evaluation and control. All
strategies are subject to future modification because internal and external factors are constantly
changing. In the strategy evaluation and control process managers determine whether the
chosen strategy is achieving the organization's objectives. The fundamental strategy evaluation
and control activities are: reviewing internal and external factors that are the bases for current
strategies, measuring performance, and taking corrective actions.

THE NATURE OF STRATEGY EVALUATION

A. Importance of Strategy Evaluation

1. The strategic-management process results in decisions that can have significant, long-lastin
consequences. Erroneous strategic decisions can inflict severe penalties and can be exceedingl
difficult, if not impossible, to reverse.

2. Most strategists agree, therefore, that strategy evaluation is vital to an organization’s well-being; timel
evaluations can alert management to problems or potential problems before a situation become
critical.

3. Strategy evaluation includes three basic activities:

a. Examining the underlying bases of a firm’s strategy.

b. Comparing expected results with actual results.

c. Taking corrective actions to ensure that performance conforms to plans.

4. The strategy-evaluation stage of the strategic-management process.

5. Strategy evaluation can be a complex and sensitive undertaking. Too much

emphasis on evaluating strategies may be expensive and counterproductive. Yet, too little or no
evaluation can create even worse problems. Strategy evaluation is essential to ensure that stated
objectives are being achieved.
6. It is impossible to demonstrate conclusively that a particular strategy is optimal, but it
can be evaluated for critical flaws. Here are four criteria to use in evaluating a strategy:

a. consistency
b. consonance
c. feasibility
d. advantage

7. These trends make strategy evaluation difficult:

a. dramatic increase in environmental complexity

b. difficult in predicting future
c. increasing number of variables
d. rapid rate of obsolescence
e. increase in the number of world events affecting organization
f. decreasing time spans for planning

Answer 34- Financial ratios are used as quantitative criteria like IRR, earning per share etc.
Consistency, distinctiveness, advantage and feasibility are four qualitative criteria for strategy
review.

Answer 35- Yes

Answer 36-Yes

Answer 37. No

Answer 38. No

Answer 39. No

Answer 40. No

Answer 41. Yes

Answer 42. Yes

Answer 43. Yes

Answer 44. No

Answer 45. Yes