MB0036 – Strategic Management & Business Policy –Set-1

Note: Each question carries 10 Marks. Answer all the questions.

Q.1. Explain the different circumstances under which a suitable growth strategy should be selected by
any company to improve its performance (i.e., intensive, integrative or diversification growth). We may
select an example of wer choice to substantiate wer views (10 marks).
Ans.:
There are three alternative strategies available to improve the sales performance of a business unit, to
fill the gap between actual sales and targeted sales:

a) Intensive growth

b) Integrative growth

c) Diversification growth

a) Intensive Growth:

It refers to the process of identifying opportunities to achieve further growth within the company’s
current businesses. To achieve intensive growth, the management should first evaluate the available
opportunities to improve the performance of its existing current businesses.

It may find three options:

· To penetrate into existing markets

· To develop new markets

· To develop new products

At times, it may be possible to gain more market share with the current products in their current markets
through a market penetration strategy. For instance, SONY introduced TV sets with Trinitron picture
tubes into the market in 1996 priced at a premium of Rs.10,000 and above over the market through a
niche market capture strategy. They gradually lowered the prices to market levels. However, it also
simultaneously launched higher-end products (high-technology products) to maintain its global image as
a technology leader. By lowering the prices of TVs with Trinitron picture tubes, the company could
successfully penetrate into the markets to add new customers to its customer base.

Market Development Strategy is to explore the possibility to find or develop new markets for its current
products (from the northern region to the eastern region etc.). Most multinational companies have been
entering Indian markets with this strategy, to develop markets globally. However, care should be taken
to ensure that these new markets are not low density or saturated markets, which could lead to price
pressures.

Product Development Strategy involves consideration of new products of potential interest to its current
markets (e.g. Gramaphone Records to Musical Productions to CDs)– as part of a Diversification
strategy.

AMBRISH Page 1
 MB0036 – Strategic Management & Business Policy –Set-1

Microsoft Product Development Strategy is.

It is called PC-plus. It has three elements:

a) Providing computer power to the most commonly used devices such as

cell phone, personal computer, toaster oven, dishwasher, refrigerator,
washing machines and so on.

b) Developing software to allow these devices to communicate.

c) Investing heavily to help build wireless and high-speed internet access

throughout the world to link it all together.

Microsoft envisions a home where everyday appliances and electronics are

smart. According to Bill Gates, ‘In the near future, PC-based networks will
help us control many of our domestic matters with devices that cost no more
than $ 100 each ‘.

It is also said at Microsoft that VCRs can be programmed via e-mail,

laundry washers can be designed to send an instant message to the home
computer when the load is done and refrigerators can be made to send an e-
mail when there’s no more milk. Microsoft plans to give these appliances
‘brains‘ and provide them the means to talk to each other through their
Windows CE Operating System.

b) Integrative Growth:

It refers to the process of identifying opportunities to develop or acquire businesses that are related to
the company’s current businesses. More often, the business processes have to be integrated for linear
growth in the profits. The corporate plan may be designed to undertake backward, forward or horizontal
integration within the industry.

If a company operating in music systems takes over the manufacturing business of its plastic material
supplier, it would be able to gain more control over the market or generate more profit. (Backward
Integration)

Alternatively, if this company acquires some of its most profitably operating intermediaries such as
wholesalers or retailers, it is forward integration. If the company legally takes over or acquires the
business of any of its leading competitors, it is called horizontal integration (however, if this competitor
is weak, it might be counter-productive due to dilution of brand image).

c) Diversification Growth:

It refers to the process of identifying opportunities to develop or acquire businesses that are not related
to the company’s current businesses. This makes sense when such opportunities outside the present
businesses are identified with attractive returns and that industry has business strengths to be successful.
In most cases, this is planned with new products that have technological or marketing synergies with
existing businesses to cater to a different group of customers (Concentric Diversification).

AMBRISH Page 2
 MB0036 – Strategic Management & Business Policy –Set-1

A printing press might shift over to offset printing with computerised content generation to appeal to
higher-end customers and also add new application areas ( Horizontal Diversification ) – or even sell
stationery.

Alternatively, the company might choose new businesses that have nothing to do with the current
technology, products or markets (Conglomerate Diversification).

The classic examples for this would be engineering and textile firms setting up software development
centres or Call Centres with new service clients.

Situation Analysis

Sales Improvement Strategies:

a) A supplier of computer stationery invests in a computer stationery

manufacturing unit.

b) A vendor supplying engine boxes to Maruti decides to supply the same

with modifications to Hyundai.

c) A company dealing in computer floppies plans to set up a Software

Technology Park.

Downsizing Older Businesses – as part of Operating Plans

It is necessary to reduce the scale of operations of an unprofitable business to ensure that the resources
are optimally utilised. A weak business requires higher degree of managerial attention. The management
should focus on the company’s growth opportunities, not fritter away energy and resources trying to
revive tired and old businesses.

Q.2. What are the components of a good Business Plan and briefly explain the importance of each.

AMBRISH Page 3
 MB0036 – Strategic Management & Business Policy –Set-1

A business plan is a detailed description of how an organization intends to produce, market and sell a
product or service. A solid business plan describes who we are, what we do, how we will do it, wer
capacity to do it, what financial resources are necessary to carry it out, and how we intend to secure
those resources. A well-written plan will serve as a guide through the start-up phase of the business. It
can also establish benchmarks to measure the performance of wer business venture in comparison with
expectations and industry standards. And most important, a good business plan will help to attract
necessary financing by demonstrating the feasibility of wer venture and the level of thought and
professionalism we bring to the task.
A good business plan will help attract necessary financing by demonstrating the feasibility of wer
venture and the level of thought and professionalism we bring to the task.
A business plan should contain the following components:
1. Executive Summary: The purpose of this component is to provide direction and help we establish
wer goals as clearly as possible. With this clearly spelled out, both management and employees can
focus their efforts. Also it will help with investors and bankers in that they can clearly understand
what wer. It should include the following information.
 A history of the company (if we're already in business) or a history of the idea development.
 A description of the products or services we plan to develop and sell.
2. Company and Product Description: In this component one should provide type of business, reason
of creating business unit, referencing the goal and attach references of business plan.
 Product or Service-Focus on the feature that distinguishes from rest of market and what will
attract consumers to wer product or service.
 Price-Provide realistic price estimate and discuss the rationale behind that price. Describe where
this price positions we in the market place: at the high end, low end or in the middle of the
existing range for a similar product or service.
 Place-Describe the location and its advantages where we will produce or distribute wer product
or provide wer service.
 Customers-Providing detail description of the customer base depending upon their characteristics
i.e. demographics, geography and socio economic status. Provide statistical data to describe the
size of target customer base and its growth potential.
 Competition-Explain the reason for entering in the new venture and what differentiate wer
proposed venture from existing business.
 Sales Projections-Present an estimate based on size of wer market, the characteristic of wer
customers and the share of market we will gain over wer competition.
3. Market Description: A key composition of the operation of wer business will be wer sales and
marketing strategy, so one must describe how we will inform wer target market about wer product or
service and how we will convince customer to purchase.
 Production Description:-Describe the steps from raw material to finished goods, packaged and
ready for distribution and sale. Avoid using industry jargon to describe the production process.
 Staffing:-Describe the type of staff, their qualification, skill, salaries, other benefit and how they
will be recruited.

AMBRISH Page 4
 MB0036 – Strategic Management & Business Policy –Set-1

4. Equipment and Material: In this component one must describe the special type of machines and
materials required to purchase, their cost and source.
 Facility:-Facilities and other infrastructure required for the company, specialized features if any
are to be described.
 Market Description:-Strategy for locating wer target market, informing or educating customers
about wer product or service and convincing them to buy it. Discuss the product‘s feature we
plan to emphasize to gain the attention of wer target market.
5. Operations: In this component company must highlight the senior manager responsible for
overseeing the start-up and operation of wer business, their background and their responsibility in the
business. Ownership- Potential investors and lenders will be interested in ownership stake of the
board of directors and also in what portion of the company‘s equity is available. An investor or
banker must know this because each form has certain legal and tax implications. The typical forms
are:

• Sole proprietor.
• Partnership.
• Limited Liability Company
• Corporation.
• Sub-Chapter S Corporation
6. Management and ownership: Providing a brief description of the different financial statements of
the business to be attached such as ….
 Startup budget-Describe the initial expenses which may incur to get wer business up and
running.
 Cash flow projection-Provide month to month schedule of estimated cash inflow and outflows
from the business for the first year. This include how much money and when.
 Income statement-Prepare a multiyear statement of projected revenue, expenses, capital
expenditure and cost of goods sold. This should be supported by documents of growth pattern of
similar companies or studies that forecast an industry wise forecast.
 Balance sheet-Provide a copy of balance sheet of sponsoring organization.

7. Financial information and timeline:

 Capital Requirement- Describe the Requirement of type of capital for financing and repayment
period, amount of expected return and explain any commitment or investment that we may have
already secured. Types of requirement of funds are.
 Seed Capital
 Fixed asset financing
 Working Capital
 Initial Start-up timeline-Provide a timeline of task and events necessary to get wer business
operational. Be sure to record stage as on today also. Set realistic dead line to capacity to

AMBRISH Page 5
 MB0036 – Strategic Management & Business Policy –Set-1

complete these tasks. There may be several reasons to delay the project which are in not ones
hand but explain in details.
 describe any asset that will be allocated to the start-up of the business.

8. Risks and their mitigation: Although it is impossible to know exactly what will go wrong in
staring and running wer business plan, thinking upon different challenges and will strengthen
plan.

Q.3. We wish to start a new venture to manufacture auto components. Explain different stages in the
process of starting this new business.

For starting a new venture to manufacture auto components, following are the different stages
in process of starting new business are described below:

1. It is required to file legal incorporation documents in the concerned authorities.

2. For starting new venture, it is most important to identify a suitable place for
running of the business. It is also required to obtain necessary non-
encumbrance certificate from the concerned authorities. After obtaining the non-
encumbrance certificate, it is required to obtain necessary certificates like
pollution clearance, fire safety, must be obtained from the concerned authorities.
3. After that designing and developing of the product is required. These designs
must be passed from the concerned authority.

4. Necessary licenses or permits required to be obtained.

5. Securing necessary financing like arrangement of capital and fund for day to day
requirement of running of business, the financial planning section requires
consideration on the following points.

- Costs and prices

- Cash flow monitoring

- Record keeping

- Setting up financial reserves and contingency plans

- Availability of long term or emergency finance

AMBRISH Page 6
 MB0036 – Strategic Management & Business Policy –Set-1

6. The necessary equipments related to business are required to be purchased or

leased.

7. Talented employees to be recruited in the key position to reach at competitive

position in the business concerned.

8. After hiring competent production and support staff, training regarding core
product of business to be organized so that they can be aware of the new
technology in the market.

9. For purchasing of raw material and other ancillary items, it is required to make a
list reputed vendors and select best out of them to place the order in most
competitive rates.

10. After financial and operational planning, marketing strategy must be developed
and initiated. Marketing is about identifying consumer needs and seeking to
satisfy those needs profitably. It is also need to identify the demand ofr auto
components from Auto Service Companies. Once we identify the demand of our
product, it is necessary to start advertising activities through suitable media
agencies.

11. To start a successful business, a grand opening ceremony makes a impact on

the minds of the internal & external stakeholders. The Chief Guest of the
opening ceremony must be from the field of same business which we are going
to start.

Q.4. Explain the process of due Diligence and why it is necessary.(10 marks).
Ans.:

The Process of Due Diligence

A business which wants to attract foreign investments must present a business plan. But a business plan
is the equivalent of a visit card. The introduction is very important – but, once the foreign investor has
expressed interest, a second, more serious, more onerous and more tedious process commences: Due
Diligence.

"Due Diligence" is a legal term (borrowed from the securities industry). It means, essentially, to make
sure that all the facts regarding the firm are available and have been independently verified. In some
respects, it is very similar to an audit. All the documents of the firm are assembled and reviewed, the
management is interviewed and a team of financial experts, lawyers and accountants descends on the
firm to analyze it.

AMBRISH Page 7
 MB0036 – Strategic Management & Business Policy –Set-1

First Rule:

The firm must appoint ONE due diligence coordinator. This person interfaces with all outside due
diligence teams. He collects all the materials requested and oversees all the activities which make up the
due diligence process.

The firm must have ONE VOICE. Only one person represents the company, answers questions, makes
presentations and serves as a coordinator when the DD teams wish to interview people connected to the
firm.

Second Rule:Brief wer workers. Give them the big picture. Why is the company raising funds, who are
the investors, how will the future of the firm (and their personal future) look if the investor comes in.
Both employees and management must realize that this is a top priority. They must be instructed not to
lie. They must know the DD coordinator and the company’s spokesman in the DD process.

The DD is a process which is more structured than the preparation of a Business Plan. It is confined both
in time and in subjects: Legal, Financial, Technical, Marketing, Controls.

The Marketing Plan

Must include the following elements:

· A brief history of the business (to show its track performance and growth)

· Points regarding the political, legal (licences) and competitive environment

· A vision of the business in the future

· Products and services and their uses

· Comparison of the firm’s products and services to those of the competitors

· Warranties, guarantees and after-sales service

· Development of new products or services

· A general overview of the market and market segmentation

· Is the market rising or falling (the trend: past and future)

· What customer needs do the products / services satisfy

· Which markets segments do we concentrate on and why

· What factors are important in the customer’s decision to buy (or not to buy)

· A list of the direct competitors and a short description of each

AMBRISH Page 8
 MB0036 – Strategic Management & Business Policy –Set-1

· The strengths and weaknesses of the competitors relative to the firm

· Missing information regarding the markets, the clients and the competitors

· Planned market research

· A sales forecast by product group

· The pricing strategy (how is pricing decided)

· Promotion of the sales of the products (including a description of the sales force, sales-related
incentives, sales targets, training of the sales personnel, special offers, dealerships, telemarketing and
sales support). Attach a flow chart of the purchasing process from the moment that the client is
approached by the sales force until he buys the product.

· Marketing and advertising campaigns (including cost estimates) – broken by market and by media

· Distribution of the products

· A flow chart describing the receipt of orders, invoicing, shipping.

· Customer after-sales service (hotline, support, maintenance, complaints, upgrades, etc.)

· Customer loyalty (example: churn rate and how is it monitored and controlled).

Legal Details

· Full name of the firm

· Ownership of the firm

· Court registration documents

· Copies of all protocols of the Board of Directors and the General Assembly of Shareholders

· Signatory rights backed by the appropriate decisions

· The charter (statute) of the firm and other incorporation documents

· Copies of licences granted to the firm

· A legal opinion regarding the above licences

· A list of lawsuit that were filed against the firm and that the firm filed against third parties (litigation)
plus a list of disputes which are likely to reach the courts

· Legal opinions regarding the possible outcomes of all the lawsuits and disputes including their
potential influence on the firm

AMBRISH Page 9
 MB0036 – Strategic Management & Business Policy –Set-1

Financial Due Diligence

· Last 3 years income statements of the firm or of constituents of the firm, if the firm is the result of a
merger. The statements have to include:

· Balance Sheets

· Income Statements

· Cash Flow statements

· Audit reports (preferably done according to the International Accounting Standards, or, if the firm is
looking to raise money in the USA, in accordance with FASB)

· Cash Flow Projections and the assumptions underlying them

Controls

· Accounting systems used

· Methods to price products and services

· Payment terms, collections of debts and ageing of receivables

· Introduction of international accounting standards

· Monitoring of sales

· Monitoring of orders and shipments

· Keeping of records, filing, archives

· Cost accounting system

· Budgeting and budget monitoring and controls

· Internal audits (frequency and procedures)

· External audits (frequency and procedures)

· The banks that the firm is working with: history, references, balances

Technical Plan

· Description of manufacturing processes (hardware, software, communications, other)

· Need for know-how, technological transfer and licensing required

AMBRISH Page 10
 MB0036 – Strategic Management & Business Policy –Set-1

· Suppliers of equipment, software, services (including offers)

· Manpower (skilled and unskilled)

· Infrastructure (power, water, etc.)

· Transport and communications (example: satellites, lines, receivers, transmitters)

· Raw materials: sources, cost and quality

· Relations with suppliers and support industries

· Import restrictions or licensing (where applicable)

· Sites, technical specification

· Environmental issues and how they are addressed

· Leases, special arrangements

· Integration of new operations into existing ones (protocols, etc.)

A successful due diligence is the key to an eventual investment. This is a process much more serious
and important than the preparation of the Business Plan.

Q5.Is Corporate Social Responsibility necessary and how does it benefit a company and its
shareholders? (10 marks).
Ans.: Corporate social responsibility (CSR), also known as corporate responsibility,
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 adherence to law, ethical
standards, and international norms. Business would embrace responsibility for the
impact of their activities on the environment, consumers, employees, communities,
stakeholders and all other members of the public sphere. Furthermore, business would
proactively promote the public interest by encouraging community growth and

AMBRISH Page 11
 MB0036 – Strategic Management & Business Policy –Set-1

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 and Profit.
The practice of CSR is subject to much debate and criticism. 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; others
yet 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.

Relevancy In Today’s Business:

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 impacted by an organization's activities, was used to describe corporate
owners beyond shareholders as a result of an influential book by R Freeman in 1984.
Whilst there is no recognized standard for CSR, 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
The scale and nature of the benefits of CSR for an organization can vary depending on
the nature of the enterprise, and are difficult to quantify, though there is a large body of
literature exhorting business to adopt measures beyond financial ones. However,

AMBRISH Page 12
 MB0036 – Strategic Management & Business Policy –Set-1

businesses may not be looking at short-run financial returns when developing their CSR
strategy.
The definition of CSR used within an organization can vary from the strict "stakeholder
impacts" definition used by many CSR advocates and will often include charitable
efforts and volunteering. CSR may be based within the human resources, business
development or public relations departments of an organisation, or may be given a
separate unit reporting to the CEO or in some cases directly to the board. Some
companies may implement CSR-type values without a clearly defined team or
programme.

Q.6. Distinguish between a Financial Investor and a Strategic Investor explaining the role they play in a
Company. (10 marks).
Ans.:
Financial Investor vs. Strategic Investor

In the not so distant past, there was little difference between financial and strategic investors. Investors
of all colors sought to safeguard their investment by taking over as many management functions as they
could. Additionally, investments were small and shareholders few. A firm resembled a household and
the number of people involved – in ownership and in management – was correspondingly limited.
People invested in industries they were acquainted with first hand.
As markets grew, the scales of industrial production (and of service provision) expanded. A single
investor (or a small group of investors) could no longer accommodate the needs even of a single firm.
As knowledge increased and specialization ensued – it was no longer feasible or possible
to micro-manage a firm one invested in. Actually, separate businesses of money making and business
management emerged. An investor was expected to excel in obtaining high yields on his capital – not in
industrial management or in marketing. A manager was expected to manage, not to
be capable of personally tackling the various and varying tasks of the
business that he managed.

Thus, two classes of investors emerged. One type supplied firms with capital. The other type supplied
them with know-how, technology, management skills, marketing techniques, intellectual property,

AMBRISH Page 13
 MB0036 – Strategic Management & Business Policy –Set-1

clientele and a vision, a sense of direction. In many cases, the strategic investor also provided the
necessary funding.
But, more and more, a separation was maintained. Venture capital and risk capital funds, for instance,
are purely financial investors. So are, to a growing extent, investment banks and other financial
institutions. The financial investor represents the past. Its money is the result of past -
right and wrong - decisions. Its orientation is short term: an "exit strategy" is sought as soon as feasible.
For “exit strategy” read quick profits. The financial investor is always on the lookout, searching for
willing buyers for this stake. The stock exchange is a popular exit strategy. The financial investor has
little interest in the company's management. Optimally, his money buys for him not only a good product
and a good market, but also a good management. But his interpretation of the rolls and functions of
"good management" are very different to that offered by the strategic investor. The financial investor is
satisfied with a management team which maximizes value. The price of his shares is the most important
indication of success. This is "bottom line" short termism which also characterizes operators in
thecapital markets. Invested in so many ventures and companies, the financialinvestor has no interest,
nor the resources to get seriously involved in any
one of them. Micro-management is left to others - but, in many cases, so is macro-management. The
financial investor participates in quarterly or annual general shareholders meetings. This is the extent of
its involvement. The strategic investor, on the other hand, represents the real long term
accumulator of value. Paradoxically, it is the strategic investor that has the greater influence on the value
of the company's shares. The quality of management, the rate of the introduction of new products, the
success or failure of marketing strategies, the level of customer satisfaction, the
education of the workforce - all depend on the strategic investor. That there is a strong relationship
between the quality and decisions of the strategic investor and the share price is small wonder. The
strategic investor represents a discounted future in the same manner that shares do. Indeed,
gradually, the balance between financial investors and strategic investors is shifting in favour of the
latter. People understand that money is abundant and what is in short supply is good management. Given
the ability to create a brand, to generate profits, to issue new products and to acquire new
clients - money is abundant.
These are the functions normally reserved to financial investors:
Financial Management
The financial investor is expected to take over the financial management of the firm and to directly
appoint the senior management and, especially, the management echelons, which directly deal with the
finances of the firm.

1. To regulate, supervise and implement a timely, full and accurate set of accounting books of the firm
reflecting all its activities in a manner commensurate with the relevant legislation and regulation in the
territories of operations of the firm and with internal guidelines set from time to time by the Board of
Directors of the firm. This is usually achieved both during a Due Diligence process and later, as
financial management is implemented.

2. To implement continuous financial audit and control systems to monitor the performance of the firm,
its flow of funds, the adherence to the budget, the expenditures, the income, the cost of sales and other
budgetary items.

3. To timely, regularly and duly prepare and present to the Board of Directors financial statements and
reports as required by all pertinent laws and regulations in the territories of the operations of the firm
and as deemed necessary and demanded from time to time by the Boardof Directors of the Firm.

AMBRISH Page 14
 MB0036 – Strategic Management & Business Policy –Set-1

4. To comply with all reporting, accounting and audit requirements imposed by the capital markets or
regulatory bodies of capital markets in which the securities of the firm are traded or are about to be
traded or otherwise listed.

5. To prepare and present for the approval of the Board of Directors an annual budget, other budgets,
financial plans, business plans,feasibility studies, investment memoranda and all other financial and
business documents as may be required from time to time by the Board of Directors of the Firm.

6. To alert the Board of Directors and to warn it regarding any irregularity, lack of compliance, lack of
adherence, lacunas and problems whether actual or potential concerning the financial systems, the
financial operations, the financing plans, the accounting, the audits, the budgets and any other matter of
a financial nature or which could or does have a financial implication.

7. To collaborate and coordinate the activities of outside suppliers of financial services hired or on
tracted by the firm, including accountants, auditors, financial consultants, underwriters and brokers,
the banking system and other financial venues.

8. To maintain a working relationship and to develop additional relationships with banks, financial
institutions and capital markets with the aim of securing the funds necessary for the operations of the
firm, the attainment of its development plans and its investments.

9. To fully computerize all the above activities in a combined hardware software and communications
system which will integrate into the systems of other members of the group of companies?

10. Otherwise, to initiate and engage in all manner of activities, whether financial or of other nature,
conducive to the financial health, the growth prospects and the fulfillment of investment plans of the
firm to the best of his ability and with the appropriate dedication of the time and efforts required.

Collection and Credit Assessment

1. To construct and implement credit risk assessment tools,
questionnaires, quantitative methods, data gathering methods and
venues in order to properly evaluate and predict the credit risk rating of a
client, distributor, or supplier.
2. To constantly monitor and analyse the payment morale, regularity, nonpayment
and non-performance events, etc. – in order to determine the
changes in the credit risk rating of said factors.
3. To analyse receivables and collectibles on a regular and timely basis.
4. To improve the collection methods in order to reduce the amounts of
arrears and overdue payments, or the average period of such arrears
and overdue payments.
5. To collaborate with legal institutions, law enforcement agencies and
private collection firms in assuring the timely flow and payment of all due
payments, arrears and overdue payments and other collectibles.
6. To coordinate an educational campaign to ensure the voluntary
collaboration of the clients, distributors and other debtors in the timely
and orderly payment of their dues.
The strategic investor is, usually, put in charge of the following:
Project Planning and Project Management
AMBRISH Page 15
 MB0036 – Strategic Management & Business Policy –Set-1

The strategic investor is uniquely positioned to plan the technical side of the
project and to implement it. He is, therefore, put in charge of:
Strategic Management and Business Policy Unit 6
Sikkim Manipal University Page No. 180
The selection of infrastructure, equipment, raw materials, industrial
processes, etc.
Negotiations and agreements with providers and suppliers
Minimizing the costs of infrastructure by deploying proprietary
components and planning
The provision of corporate guarantees and letters of comfort to suppliers
The planning and erecting of the various sites, structures, buildings,
premises, factories, etc.
The planning and implementation of line connections, computer network
connections, protocols, solving issues of compatibility (hardware and
software, etc.)
Project planning, implementation and supervision
Marketing and Sales
1. The presentation to the Board an annual plan of sales and marketing
including: market penetration targets, profiles of potential social and
economic categories of clients, sales promotion methods, advertising
campaigns, image, public relations and other media campaigns. The
strategic investor also implements these plans or supervises their
implementation.
2. The strategic investor is usually possessed of a brandname recognized
in many countries. It is the market leaders in certain territories. It has
been providing goods and services to users for a long period of time,
reliably. This is an important asset, which, if properly used, can attract
users. The enhancement of the brand name, its recognition and market
awareness, market penetration, co-branding, collaboration with other
suppliers – are all the responsibilities of the strategic investor.
3. The dissemination of the product as a preferred choice among vendors,
distributors, individual users and businesses in the territory.
Strategic Management and Business Policy Unit 6
Sikkim Manipal University Page No. 181
4. Special events, sponsorships, collaboration with businesses.
5. The planning and implementation of incentive systems (e.g., points, vouchers).
6. The strategic investor usually organizes a distribution and dealership
network, a franchising network, or a sales network (retail chains)
including: training, pricing, pecuniary and quality supervision, network
control, inventory and accounting controls, advertising, local marketing
and sales promotion and other network management functions.
7. The strategic investor is also in charge of "vision thinking": new methods
of operation, new marketing ploys, new market niches, predicting the
future trends and market needs, market analyses and research, etc.
The strategic investor typically brings to the firm valuable experience in
marketing and sales. It has numerous off the shelf marketing plans and
drawer sales promotion campaigns. It developed software and personnel
capable of analysing any market into effective niches and of creating the
right media (image and PR), advertising and sales promotion drives bestsuited
AMBRISH Page 16
 MB0036 – Strategic Management & Business Policy –Set-1

for it. It has built large databases with multi-year profiles of the
purchasing patterns and demographic data related to thousands of clients in
many countries. It owns libraries of material, images, sounds, paper
clippings, articles, PR and image materials, and proprietary trademarks and
brand names. Above all, it accumulated years of marketing and sales
promotion ideas which crystallized into a new conception of the business.
Technology
1. The planning and implementation of new technological systems up to their fully operational phase.
The strategic partner's engineers are available to plan, implement and supervise all the stages of the
technological side of the business.
2. The planning and implementation of a fully operative computer system(hardware, software,
communication, intranet) to deal with all the
aspects of the structure and the operation of the firm. The strategic investor puts at the disposal of the
firm proprietary software developed
by it and specifically tailored to the needs of companies operating in the firm's market.
3. The encouragement of the development of in-house, proprietary,
technological solutions to the needs of the firm, its clients and suppliers.
4. The planning and the execution of an integration program with new
technologies in the field, in collaboration with other suppliers or market
technological leaders.
Education and Training
The strategic investor is responsible to train all the personnel in the firm:operators, customer services,
distributors, vendors, sales personnel. Thetraining is conducted at its sole expense and includes tours of
its facilitiesabroad.The entrepreneurs – who sought to introduce the two types of investors, in
the first place – are usually left with the following functions:
Administration and Control
1. To structure the firm in an optimal manner, most conducive to theconduct of its business and to
present the new structure for the Board'sapproval within 30 days from the date of the GM's appointment.
2. To run the day to day business of the firm.
3. To oversee the personnel of the firm and to resolve all the personnelissues.
4. To secure the unobstructed flow of relevant information and the protection of confidential
organization.
5. To represent the firm in its contacts, representations and negotiations with other firms, authorities, or
persons.
This is why entrepreneurs find it very hard to cohabitate with investors ofany kind. Entrepreneurs are
excellent at identifying the needs of the market
and at introducing technological or service solutions to satisfy such needs.But the very personality traits
which qualify them to become entrepreneurs –
also hinder the future development of their firms. Only the introduction of outside investors can resolve
the dilemma. Outside investors are not
emotionally involved. They may be less visionary – but also more experienced.
They are more interested in business results than in dreams. And – being well acquainted with
entrepreneurs – they insist on having unmitigated control of the business, for fear of losing all their
money. These things antagonize the entrepreneurs. They feel that they are losing their creation to
cold-hearted, mean spirited, corporate predators. They rebel and prefer to remain small or even to close
shop than to give up their cherished freedoms. This is where nine out of ten entrepreneurs fail - in
knowing when to let go.

AMBRISH Page 17