SVKMs Narsee Monjee Institute of Management Studies (NMIMS) School of Distance Learning

SUBJECT: ADVANCE STRATEGIC MANAGEMENT

Q1 ) Explain various levels of Corporate Strategy? Ans 1) To explain the various levels of corporate strategy, first let us try and understand what is corporate strategy. It can be explained as the common thread among the organizations, activities and product markets that defines the essential nature of business that the organization was or planned to be in future.The term corporate strategy is gaining importance in the era of privatization,globalization and liberalization.A few aspects regarding the nature of strategy are as follows: a) Corporate strategy is related mostly to external environment. b) Corporate strategy is related to the long run. c) It provides overall framework for guiding enterprise thinking and action. d) It requires systems and norms for its efficient adoption in any organization.

Corporate strategy may exist at three levels in an organization.They may be at corporate lavel,business level and operational level.Briefly these three levels are explained below:

1) Coprorate level strategy It is believed that strategic decision making is the

responsibility of the top management.At the corporate level, the board of directors and chief executive officers are involved in strategy making.Corporate planners and consultants may also be involved.Mostly, corporate level strategies are futuristic,innovative and pervasive in nature.Decision like spreading the range of business interests,acquisitions,diversification,structural redesigning,mergers,takeovers,liquidations come under corporate level strategy.
2) Business level strategy Strategic business unit (SBU) managers are involved at this

level in taking strategic decisions.These strategies relate to a unit within an organization. At business level, the objectives are formulated for SBUs and resources are allocated among functional areas.These strategies operate under the defined scope of corporate level strategy.Business level strategy is more specific and action

SVKMs Narsee Monjee Institute of Management Studies (NMIMS) School of Distance Learning

oriented.It relates mainly with how aspect.The corporate level strategy is related to what aspect of corporate strategy.
3) Operating level strategy This level of strategy is at the operating end of the

organization.It is also known as the functional level strategy.These decisions relate to training, investment in plant, advertisement, sales promotion, total quality management, market segmentation etc.This decision is almost tactical.They deal with a relatively restricted plan providing objectives for specific function, allocation of resources among different operations within the functional area and coordination between them.

SVKMs Narsee Monjee Institute of Management Studies (NMIMS) School of Distance Learning

Q2 ) Explain the concepts of Social Responsibility and its importance with examples?

Ans) Corporate social responsibility has its roots in thinking of the twentieth century where the theologians and the religious thinkers suggested the application of religious principles to business activities.First was the principle of philanthropy in which the wealthy individual contributed to the resources for aiding the unfortunate.The next was the stewardship principle, a biblical doctrine, which requires business and wealthy individuals to see themselves as stewards or caretakers of society. The first publications in this field dates back to 1953 with Bowens social responsibility of the businessman.In this work, Bowen enumerates the following: 1) That businesses exist at the pleasure of society and that their behavior and methods of operation must fall within the guidelines set by the society.
2) Businesses act as moral agents within the society.

A growing number of scholars take the view that firms can no longer be seen purely as private institutions but as social institutions instead.The benefits flowing from the firms need to be shared collectively. However, Friedman differed from this and felt that the corporation is an economic institution and thus should specialize in the economic sphere alone and the socially responsible behavior will be rectified by the market through profits. Traditionally in the USA, CSR has been defined much more in terms of a philanthropic model.Corporate philanthropy is the practice of the companies of all sizes and sectors making charitable contributions to address a variety of social, economic, and other issues as part of an overall corporate citizenship strategy.The second generation of CSR is now developing where companies and whole industries see CSR as an integral part of the long term business strategy.Now a days lot of companies are taking it seriously for good of business.In the last decade , CSR and related concepts such as corporate citizenship and corporate sustainability have expanded.This has perhaps occurred in response to new challenges such as those emanating from increased globalization on the agenda of business managers as well as for related stakeholder communities. A third generation of CSR is needed in order to make a significant contribution to addressing poverty and environmental degradation.This will go beyond voluntary approaches by individual companies and will involve leadership companies and organizations influencing the market in which they operate and how it is regulated to re-mould whole markets towards sustainability.

SVKMs Narsee Monjee Institute of Management Studies (NMIMS) School of Distance Learning

In many ways CSR is important to an organization , these can be enumerated as follows:

a) Improved financial performance While it remains difficult to determine a direct casual

relationship between increased accountability and financial performance, a variety of study suggest that such a link exist. For example, according to 2002 Global Investor Opinion Survey released by McKinsey & Company, a majority of investors are prepared to pay a premium for companies exhibiting high governance standards.The study also found that more than 60 % of investors state that governance considerations might lead them to avoid individual companies with poor governance.
b) Hightened Public Credibility Companies that demonstrate a willingness to provide

information that is credible,verifiable and accessible can garner increased trust among stakeholders.At the same time, companies that make a public commitment to increaseaccountability and transparency need to ensure that they have robust systems for implementation, lest the company might risk negative public backlash for failing to live up to its commitment. c) Reduced Cost The enhanced communication that is often part of corporate accountability efforts can help build trust between companies and stakeholders, which can reduce costly conflict and improve decision making.
d) Increased attractiveness to Investors Investors welcome the increased disclosure that

comes with corporate accountability.A growing number of investors are including non financial metrics in their evaluation and analysis of their investment.New metrics cover labour and environmental practices,board diversity, independence and other corporate governance issues.A survey conducted by McKinsey and Company and World Bank found that three quarters of stakeholders consider board practices as important as financial performance when evaluating companies for investment.
e) Improved relationship with Investors Companies that make an effort to be transparent

and accountable for their actions and decisions are better able to build trust among their stakeholders.Many govt. agencies and stakeholders look favourably at companies that self-identify and publicly disclose accounatability challenges and demonstrate that they are working on solving them.
f) Maeketplace advantages Accountability can make entry and success in new markets

easier by helping establish direct relationships with key customers and business partners.These relationships can contribute to innovation in product development or delivery, help mitigate potential negative media coverage and enhance market

SVKMs Narsee Monjee Institute of Management Studies (NMIMS) School of Distance Learning

presence.Some companies have used dialogue with stakeholders to help make decisions on overseas investments and operations, or to overcome the challenges of operating in markets with different cultures,laws and languages.For example, Unilivers Indian subsidiary, Hindustan Lever , has worked with local stakeholders to dwvwlop a new delivery system for laundry detergent in Indian villages.
g) Improved Overall Management Many companies that have developed clear notability

CSRperformance and accountability systems inside their organization report experiencing an improvement in their management practices overall.Increasingly companies are finding that the impact of systems designed to increase accountability for CSR performance is not limited to CSR realm, but can also impact performance in other areas as the culture of the organization undergoes change.Ananalysis of Fortune 500 companies conducted at the Boston College,carroll School of Management found that companies judged as treating their stakeholders well are rated by peers as also having superior management. +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++