August / Fall 2012 Master of Business Administration - MBA Semester IV MB0052 – Strategic Management and Business Policy Assignment

Set - 1 Q1. What do you understand by the term Strategy in the context of Business Management and Policy? And what are the stages in the formulation of a Strategy? Strategy is the method by which an organisation systematically achieves its future objectives. A business cannot progress for a long term without a reliable strategy. Strategy is a common direction set for the company and its various components to accomplish a desired position in the future. A meticulous planning process results in strategy. It is the comprehension of the goals which has logical step by step process. It defines the general mission and vision of an organisation. It is important to consider that the decisions taken by an organisation are likely to affect the employees, customers and competitors. Strategy guides the organisation to achieve a long term goal. The strategy is advantageous to the organisation through its configuration of resources within a challenging environment. It helps to meet the requirements of market and stakeholder expectations. Strategy is a plan that is aimed to give a competitive advantage to the organisation over rivals through differentiation. Creating a strategy begins with extensive research and analysis. It is a process through which senior management concentrates on top priority issues tackled by the company to be successful in a long term. It is the design of decisions in an organisation that sets its goals and plans to achieve it. The organisation plans the future goals to contribute at large to its shareholders, customers and to the society. Strategy is always improving and is amendable. It is a plan of future activities which is aimed at the progress of an organisation. It is a set of directions to enhance the position of the organisation in the overall market. Business strategy is the method by which an organisation achieves and maintains its success. If an organisation cannot identify its strategy clearly then it will struggle to survive in the competitive market. A steadfast strategy should be built to grow in the market. A fundamental concept is required to direct an organisation to create a sustainable and successful plan. The organisation must understand the customer requirements and relate to its customers for the success of business strategy. This understanding should be based on the attitude of the organisation to progress rather than focusing on a specific competitor or on current objectives. It is from this principle that the other objectives follow.

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Business strategy is used to achieve competitive advantage. The efficient development and implementation of strategy depends on the capability of the organisation. This includes the ability to prepare the strategic goals and implement the plans through strategic management. Levels of strategy Strategy exists at different business levels. The different levels of strategies are as follows: • Corporate Strategy – This is regarding the general function and scope of the business to meet the stakeholder’s expectations. As it is significantly influenced by the investors in the business, it is also called the critical level strategy. Business Strategy – This is regarding how a business competes effectively in a particular market. It includes strategic decisions about the selection of products and meeting customer requirements. Operational Strategy – This is regarding how each part of the business is organised and delivered to the corporate and business level. Operational strategy focuses on issues of resources and practices of an organisation.

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Q2. What, in brief, are the types of Strategic Alliances and the purpose of each? Supplement your answer with one real life example of each. Types of Strategic Alliances and Business Decisions: The mutual agreements between the organisations can take a number of forms and are increasing their common goals to get upper hand over their competitors. The different types of strategic alliances are listed below: Joint venture: Joint venture is the most powerful business concept that has the ability to pool two or more organisations in one project to achieve a common goal. In a joint venture, both the organisations invest on the resources like money, time and skills to achieve the objectives. Joint venture has been the hallmark for most successful organisations in the world. An individual partner in joint venture may offer time and services whereas the other focuses on investments. This pools the resources among the organisations and helps each other in achieving the objectives. An agreement is formed between the two parties and the nature of agreement is truly beneficial with huge rewards such that the profits are shared by both the organisations. The advantages of joint venture are: • • • • • • • A long term relationship is built among the participating organisations It Increases integrity by teaming with other reputable and branded organisations Helps in gaining new customers It helps in investing little money or no money It provides the capability to compete in the market with other organisations Reduces production time as the organisations are into join venture More new products and services can be offered to the customers

The disadvantages of joint venture: • • • • Sometimes the organisations deal with wrong people, thereby losing investments The organisations do not have the opportunity to take up decisions individually There are risks of disputes among the organisations that lead to poor performance If the organisation enters into joint venture agreement with unprofessional selfish organisation, then it increases the risk of hurting business reputation and devastating customer’s trust.

Example – The China Wireless Technologies, a mobile handset maker is getting into an agreement with the Reliance Communications Ltd (RCom) to launch its new mobile. The joint venture between the two companies is to gain profits and provide affordable mobile phones to the market that consists of advanced features and aims to earn eight billion dollars in the next Roll No. XXXXX

five years. The new mobile consists of dual SIM smart phone with 3G technology at a cheaper rate. Mergers and acquisitions Merger is the process of combining two or more organisations to form a single organisation and achieve greater efficiencies of scale and productivity. The main reason to involve into mergers is to join with other company and reap the rewards obtained by the combined strengths of two organisations. A smart organisation’s merger helps to enter into new markets, acquire more customers, and excel among the competitors in the market. The participating organisation can help the active partner in acquiring products, distribution channel, technical knowledge, infrastructure to drive into new levels of success. Collaborations and co-branding: Collaboration is the process of cooperative agreement of two or more organisations which may or may not have previous relationship of working together to achieve a common goal. It is the beginning to pool resources like knowledge, experience and sharing skills of team members to effectively contribute to the development of a product rather working on narrow tasks as an individual team member in support to the development. Such collaborations are the foundation for concepts like concurrent engineering or integrated product development. Collaboration is a win-win methodology. It means that both the organisations insist upon each other to gain equal profits with no negative attitude of acquiring each other’s possessions. Effective collaboration can be obtained by the following actions: The organisations must get involved in the process from the beginning and avail the necessary resources for collaboration. Technological partnering It is the process of associating the technologies of two different companies to achieve a common goal. The two organisations work as co-owners in business and share the profits and losses. The technologies of individual organisations are shared to achieve desired outcome. The required resources like knowledge, machinery, and expertise are collaborated between the organisations. Example – The software giant, Infosys Technologies Ltd. has entered into partnership with US based NVIDIA, GPU inventor and the world's visual technologies giant. The purpose of this partnering is to develop NVIDIA CUDA (Compute Unified Device Architecture). This technology is viewed as the next big revolution in the field of technology in lending high performance in computing. The software helps the developers of various applications to tap into the previously uncultivated power of the GPU. This will enable certain applications to achieve high performance. The capacity of CUDA is expected to multiply fifty times the performance of existing computing and reduce the run time to advance the user enterprise. Contractual agreements It is the process of agreement with specific terms between two or more organisations which guarantee in performing a specific task in return for a valuable benefit. The contractual agreement is the heart of business dealings. It is the most significant areas of legal concern and involves variations in certain situations and complexities. The Roll No. XXXXX

organisations require analysing fundamental factors before involving in contractual agreements. The elements to be analysed are: • • • • • It is necessary to identify the type of offer being laid by the organisation to make an agreement. The acceptance of the information involved in offer which results in meeting the market needs. The organisations are required to recognise the strong commitment towards the contractual agreement. Systematic scheduling of the process involved in manufacturing product without any hindrances to both the organisations. Discover the terms and conditions for manufacturing the product and the guarantee of the organisations in fulfilling it. The contract agreement includes several documents such as letters, orders, offers and counteroffers. There are various types of contractual agreements. They are:  Conditional – It is based on occurrence of an event. Joint and several – The organisations promise to perform together but still they possess individual responsibilities. Implied – The judicial court will determine the contract between the organisations based on circumstances. The parties will be able to buy all manufactured products, enter into a contract to supply other’s requirements, or renewal of the existing contract.

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Outsourcing It is the process of entering into a contract with an organisation or a person to perform a particular function. Most of the organisations outsource the work in numerous ways. The function being outsourced is considered as noncore to the organisation. The external firms that provide outsourcing services are called as third parties or it is commonly called as service providers. The concept of outsourcing existed from the era of work specialisation. Usually organisations adopt this concept to carry out narrow functions such as payrolls, billing, and data entry. Since most organisations lack in many resources, it outsources these processes to other organisations which consists of specialised tools, facilities and trained personnel.

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Q3. What is a Business Plan? What purpose does it serve? A business plan is a complete internal document that summarises the operational and financial objectives of a business. It also contains the detailed plans which show how the objectives are being accomplished. An accurately made business plan helps to allocate resources properly, to handle unforeseen complications like financial crisis and to make good business decisions. On the other hand, business venture is a start-up enterprise which is formed with expectations and plans of achieving financial gain. Once the need of the organisation is identified, it can be started by a small investor that has valuable resources and time. Other investors involve themselves by providing support for further development of the venture once the business is created. In the case of establishing a business venture, a formal business plan is written to outline the purpose and mission of the business for the future use. Common objectives include raising money, attracting talented employees, establishing creditworthiness and fulfilling dreams the CEO has for the company. A new company may have objectives that revolve around raising money for business capital. A company desiring to expand product lines may need to establish creditworthiness. The company CEO may have established a company with humanitarian goals in mind. When determining objectives, think about profitability goals and when they are to be achieved. Is there a niche the company should dominate, or should there be objectives concerning product lines or services offered? Once objectives are clearly stated, the business plan can be designed. Determine objectives by answering where will the business be in five years, what is the size of the company and what are the goals regarding market share, physical growth and human resources? Objectives monitor progress and keep the company focused on goals. Goals can be financial or revolve around the products or services provided. Objectives may serve to please investors or to give direction to management. A small company's objectives may be the same financially as a large company if they carry high-end products where size does not determine financial potential. According to Bev Clement, of "How to Run an Online Business," objectives should be measurable so progress can be determined, actionable so a clear action can be designed and realistic so that they can be achievable within the given time frame. Objectives allow those reading the business plan to see what the future company will look like.

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Q4. What is the chief purpose of a Business Continuity Plan and what are its components for effective implementation. Explain in a sentence or two as to how it is different from a Business Plan.

Remaining answers are available in the full assignments.

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