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Q. 1 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? (10 marks) Ans. A strategy is an operational tool to achieve the goals, and thus, the corporate mission. Strategies do not attempt to outline exactly how the enterprise is to accomplish its objectives. A company may view downsizing as a strategy in a competitive market to render cost-effective services. Thus, strategy provides a framework to guide thinking and action. Strategies are very much useful in organizations for guiding; planning andcontrol.Strategy is a way of life both at the macro as well as micro levels for everyone, whether it is a nation or a company. To win over in a given complex situation, the organisations, even trans-nationals adopt strategies. They make changes, if necessary, even to their global strategies. An individual company may formulate its own strategy to bring out thed e s i r e d r e s u l t s . T h e e v e n t u a l s u c c e s s o f t h e o r g a n i s a t i o n d e p e n d s u p o n s t r a t e g y formula tion and implementation. The recently initiated moves such as globalization, privatization and liberalization are strategies to attain a globally competitive economy. Business management must focus on following issues a. Vision -For proper growth of the company. b.Mission – What the company wants to achieve. c.Goals – To achieve the above mission. d.Objectives – To achieve the set goals e.Strategies – To achieve the above objectives f.Policies – To control strategies g.Programmes – For implementation of objectives The above list outlines some of the key issues at every stage of action illustrating how: a.The mission springs out from vision statementsb . G o a l s f r o m t h e m i s s i o n c . O b j e c t i v e s f r o m g o a l s d.Strategies from objectivese.And programmers f r o m o b j e c t i v e s It is the crux of the strategic management process. Strategy refers to the course of action desired to achieve the objectives of the enterprise. Formulation, together with its implementation, constitutes an integral part of the management activity. Managers use strategies for different purposes such as to overcome competition, to increase sales, toi n c r e a s e p r o d u c t i o n , t o m o t i v a t e t h e e m p l o y e e s t o p r o v i d e t h e i r b e s t , a n d s o o n . Impleme ntation of a strategy is a crucial task as the formulation of it. There may be a lot of resistance during the implementation process. It is necessary for the manager to be very tactful to involve the members of his group in the formulation of strategy to facilitate the implementation process. Stages in Strategy Formulation and Implementation a. Identification of mission and objectivesb . E n v i r o n m e n t s c a n n i n g c . G e n e r i c s t r a t e g y a l t e r n a t i v e s d . S t r a t e g y v a r i a t i o n s e . S t r a t e g i c c h o i c e f.Allocation of r e s o u r c e s a n d f o r m u l a t i o n o f o r g a n i z a t i o n a l s t r u c t u r e g.Formulation of plans, policies, programmers and administrationb . h ) E v a l u a t i o n a n d c o n t r o l Q. 2 What, in brief, are the types of Strategic Alliances and the purpose of each? Supplement your answer with one real life example of each (10 marks) Strategic alliances constitute a viable alternative in addition to Strategic Alternatives. Companies can develop alliances with the members of the strategic group and perform More effectively. These alliances may take any of the following forms. Following are the different types of strategic Alliances: 1. Product and/or service alliance:
T w o o r m o r e c o m p a n i e s m a y g e t t o g e t h e r t o synergise their operations, seeking alliance for their products and/or services. Am a n u f a c t u r i n g C o m p a n y m a y g r a n t l i c e n s e t o a n o t h e r c o m p a n y t o p r o d u c e i t s products. The necessary market and product support, including technical know-how, i s p r o v i d e d a s p a r t o f t h e a l l i a n c e . E x a m p l e :Coca-cola initially provided such support to Thumps Up.T w o c o m p a n i e s m a y j o i n t l y m a r k e t t h e i r p r o d u c t s w h i c h a r e c o m p l e m e n t a r y i n nature. Example:1) Chocolate companies more often tie up with toy companies. 2) TV Channels tie-up with Cricket boards to telecast entire series of cricket matcheslive.Two companies, who come together in such an alliance, may produce a new product altogether. Example:Sony Music created a retail corner for itself in the ice-creamparlours of Baskin-Robbins. 2. Promotional alliance: Two or more companies may come together to promote their products and services. A company may agree to carry out a promotion campaignd u r i n g a g i v e n p e r i o d f o r t h e p r o d u c t s a n d / o r s e r v i c e s o f a n o t h e r c o m p a n y . Example:-The Cricket Board may permit Coke’s products to be displayed during the cricket matches for a period of one year. 3. Logistic alliance Here the focus is on developing or extending logistics Support.One Company e x t e n d s l o g i s t i c s s u p p o r t f o r a n o t h e r c o m p a n y ’ s p r o d u c t s a n d services. Example:- The outlets of Pizza Hut, Kolkata entered into a logistic alliance with TDK Logistics Ltd., Hyderabad, to outsource the requirements of these outlets f r o m m o r e t h a n 3 0 v e n d o r s a l l o v e r I n d i a – f o r i n s t a n c e , m e a t a n d e g g s f r o m Hyderabad etc. 4. Pricing collaborations: C o m p a n i e s m a y j o i n t o g e t h e r f o r s p e c i a l p r i c i n g collaborations. Example:I t i s c u s t o m a r y t o f i n d t h a t h a r d w a r e a n d s o f t w a r e companies in information techno logy sector offer each other price discounts.Companies should be very careful in selecti n g s t r a t e g i c p a r t n e r s . T h e s t r a t e g y should be to select such a partner who has complementary strengths and who can offset the present weaknesses. Q. 3 What is a Business Plan? What purpose does it serve? (10 marks) A business plan is a detailed description of how an organization intends to produce market and sell a product or service. W hether the business is housing, commercial or some other enterprise, a good business plan describes to others and to your own board of directors, management and staff the details of how you intend to operate and expand your business. A s o l i d b u s i n e s s p l a n d e s c r i b e s w h o y o u a r e , w h a t y o u d o , h o w y o u w i l l d o i t , y o u r capacity to do it, what financial resources are necessary to carry it out, and how you intend to secure those resources. A well-written plan will serve as a guide through thes t a r t - u p p h a s e o f t h e b u s i n e s s . I t c a n a l s o e s t a b l i s h b e n c h m a r k s t o m e a s u r e t h e performance of your 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 your venture and the level of thought and professionalism you bring to the task. A wellwritten plan will serve as a guide through the start-up phase of the business. It can also establish benchmarks to measure the performance of your 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 your venture and the level of thought and professionalism you bring to the task. A good business plan will help attract necessary financing by demonstrating the feasibility of your venture and the level of thought and professionalism you bring to the task. A good business plan serves the following purposes: 1. Revenue Generation –Your organization may hope to create a business that willg e n e r a t e s u f f i c i e n t n e t i n c o m e o r p r o f i t t o f i n a n c e o t h e r p r o g r a m s , a c t i v i t i e s o r services provided by your organization. 2. Employment Creation –A new business venture may create job opportunities for community residents or the constituency served by your organization. 3. Neighborhood Development Strategy –A new business venture might serve asa n a n c h o r t o a d e t e r i o r a t i n g n e i g h b o r h o o d c o m m e r c i a l a r e a , a t t r a c t a d d i t i o n a l businesses to the area and fill a gap in existing retail services. You may need to finda u s e f o r a v a c a n t c o m m e r c i a l p r o p e r t y t h a t b l i g h t s a s t r a t e g i c a r e a o f y o u r n e i g h b o r h o o d . O r y o u r b u s i n e s s m i g h t f o c u s o n t h e r e h a b i l i t a t i o n o f d i l a p i d a t e d single family homes in the community.
4. Establish Goals: Once you have identified goals for a new business venture, then e x t s t e p i n t h e b u s i n e s s p l a n n i n g p r o c e s s i s t o i d e n t i f y a n d s e l e c t t h e r i g h t business. Many organizations may find themselves starting at this point in thep r o c e s s . B u s i n e s s o p p o r t u n i t i e s m a y h a v e b e e n d r o p p e d a t y o u r d o o r s t e p . Depending on the goals you have set, you might take several approaches to identify potential business opportunities. 5. L o c a l M a r k e t S t u d y : W h e t h e r y o u r g o a l i s t o r e v i t a l i z e o r f i l l s p a c e i n a neighborhood commercial district or to rehabilitate vacant housing stock, you should conduct a local market study. A good market study will measure the level of existing goods and services provided in the area, and assess the capacity of the area to support existing and additional commercial or home-ownership activity. A bad or insufficient market study could encourage your organization to pursue a business destined to fail, with potentially disastrous results for the organization as a whole. Through a market study you will be able to identify gaps in existing products and services and unsatisfied demand for additional or expanded products and services. 6. Analysis of Local and Regional Industry Trends: Another method of investigating potential business opportunities is to research L o c a l a n d r e g i o n a l b u s i n e s s a n d industry trends. You may be able to identify which business or industrial sectors areg r o w i n g o r d e c l i n i n g i n y o u r c i t y , m e t r o p o l i t a n a r e a o r r e g i o n . T h e r e g i o n a l o r metropolitan area planning agency for your area is a good source of data on industry trends. 7. Internal Capacity: T h e b o a r d , s t a f f o r m e m b e r s h i p o f y o u r o r g a n i z a t i o n m a y p o s s e s s k n o w l e d g e a n d s k i l l s i n a p a r t i c u l a r b u s i n e s s s e c t o r o r i n d u s t r y . Y o u r organization may wish to draw upon this internal expertise in selecting potential business opportunities. 8. I n t e r n a l P u r c h a s i n g N e e d s / C o l l a b o r a t i v e P r o c u r e m e n t : P e r h a p s , theorganization frequently Purchases a particular service or product. I f n e a r b y affiliate organizations also use this Service or product, this may present a business opportunity. Examples of such products or services I n c l u d e p r i n t i n g o r c o p y i n g services, travel Services, transportation services, property management services, office supplies, catering services, and other products.
Q. 4 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 (10 marks) Ans.The Business Continuity Plan is a tool to allow organizations to consider the factors and steps necessary to prepare for a crisis (disaster or emergency) so that it can manage and survive the crisis and take all appropriate actions to help ensure the organization’s continued viability. The advisory portion of the plan is divided into two parts: Planning process : It provides step-by-step Business Continuity Plan preparation and activation guidance, including readiness, prevention, response, and recovery/ resumption. Implementation and maintenance : It gives the details of tasks required for the Business Continuity Plan to be maintained as a living document, changing and growing with the organization and remaining relevant and executable. T h e p u r p o s e o f t h e b u s i n e s s c o n t i n u i t y p l a n i s t o p r e p a r e t o f a c e t h e u n t h i n k a b l e situations that may threaten an organization’s future. This new challenge goes beyondt h e m e r e e m e r g e n c y r e s p o n s e p l a n o r d i s a s t e r m a n a g e m e n t a c t i v i t i e s t h a t w e previously employed. Organizations now must engage in a comprehensive process best described generically as Business Continuity. It is no longer enough to draft a responsep l a n t h a t a n t i c i p a t e s n a t u r a l l y , a c c i d e n t a l l y , o r i n t e n t i o n a l l y c a u s e d d i s a s t e r o r emergency scenarios. Today’s threats require the creation of an on-going, interactive process that serves to assure the continuation of an organization’s core activities before, during, and most importantly, after a major crisis event. In the simplest of terms, it is good business for a company
to secure its assets. CEOsand shareholders must be prepared to budget for and secure the necessary resources to make this happen. It is necessary that an appropriate administrative structure be Putin place to effectively deal with crisis management. Following steps are required to fulfill for effective implementation of the business continuity plan: 1. Educate and Train: The BCP is only as valuable as the knowledge that others have of it. Education and training are necessary components of the BCP process. They require a time commitment from the Crisis Management Team, the Response Teams, and the general employee population. 2. Educate and Train Teams : The Crisis Management and Response Teams should be educated about their responsibilities and duties. Check lists of critical action sand information to be gathered are valuable tools in the education and response processes. 3. Educate and Train All Personnel: All personnel should be trained to perform their individual responsibilities in case of a crisis. Such training could include procedures for evacuation, shelter-in-place, check-in processes to account for employees, arrangements at alternate worksites, and the handling of media inquiries by the company. 4. Review of BCP : The BCP should be regularly reviewed and evaluated. Reviews should occur according to a predetermined schedule, and documentation of their view should be maintained as necessary. The following factors can trigger are view and should otherwise be examined once a review is scheduled: Risk Assessment Sector/Industry Trends Regulatory Requirements Event Experience Test/Exercise Results 5. M a i n t e n a n c e o f B C P : R e g u l a r m a i n t e n a n c e o f t h e B C P c a n n o t b e overemphasized. Clear responsibility for BCP maintenance should be assigned. Maintenance can be either planned or unplanned and should reflect changes in the operation of the organization that will affect the BCP.Difference between a Business plan & Business continuity Plan a. A B u s i n e s s p l a n i s a d e t a i l e d d e s c r i p t i o n o f h o w a n o r g a n i z a t i o n i n t e n d s t o produce, market and sale a product or service. A Business continuity plan is an ongoing process supported by senior management and funded to ensure that the necessary steps are taken to identify the impact of potential losses, maintain viable recovery strategies and plans, and ensure the continuity of operations through personnel training, plan ,testing and maintenance. b. A Business continuity plan is a tool which allows organizations to consider the f a c t o r s a n d s t e p s n e c e s s a r y t o p r e p a r e f o r a c r i s i s . ( d i s a s t e r o r e m e r g e n c y ) . Whereas a business plan is not prepared for such type of disaster or emergency. c. In a business continuity plan, a necessary Administrative structure is put in place to effectively deal with crisis management, whereas, in a business plan, no such administrative structure is available.
Q. 5 Take any three examples of the components of a Decision Support System and explain how they help decision making (10 marks) Following are the three components of a Decision Support System 1. A n n u a l B u d g e t : I t i s R e a l l y a b u s i n e s s p l a n . T h e b u d g e t a l l o c a t e s a m o u n t s o f money to every activity and/or department of the firm. As time passes, the actual expenditures are compared to the budget in a feedback loop. During the year, or at the end of the fiscal year, the firm generates its financial statements: the income Statement, the balance sheet, the cash flow statement. W hen putting together, these four documents are the formal edifice of the firm’s finances. However, they cannot serve as day-to-day guides to the General Manager. 2.Daily Financial Statements: The Manager should have access to continuously updated statements of income, cash flow, and a balance sheet. The most important statement is that of the cash flow. The manager should be able to know, at each and
every stage, what his real cash situation is – as opposed to the theoretical cash situation which includes accounts payable and account receivable in the form of expenses and income. 3. The Daily Ratios Report: This is the most important part of the decision support system. It enables the Manager to instantly analyze dozens of important aspects of t h e f u n c t i o n i n g o f h i s c o m p a n y . I t a l l o w s h i m t o c o m p a r e t h e b e h a v i o r o f t h e s e parameters to historical data and to simulate the future functioning of his company u n d e r d i f f e r e n t s c e n a r i o s . I t a l s o a l l o w s h i m t o c o m p a r e t h e p e r f o r m a n c e o f h i s company to the performance of his competitors, other firms in his branch and to the overall performance of the industry that he is operating in. The Manager can review these financial and production ratios. W here there is a strong deviation from historical patterns, or where the ratios warn about problems in the future – management intervention may be required. Examples of the Ratios to be Included in the Decision System SUE measure – deviation of actual profits from expected profits ROE – the return on the adjusted equity capital Debt to equity ratios ROA – the return on the assets The financial average ROS – the profit margin on the sales ATO – asset turnover, how efficiently assets are used Tax burden and interest burden ratios Compounded leverage Sales to fixed assets ratios Inventory turnover ratios Days receivable and days payable Current ratio, quick ratio, interest coverage ratio and other liquidity and coverage ratios Valuation price ratios And many others A d e c i s i o n s y s t e m h a s g r e a t i m p a c t o n t h e p r o f i t s o f t h e c o m p a n y . I t f o r c e s t h e management to rationalize the depreciation, inventory and inflation policies. It warns the management against impending crises and problems in the company. It specially helps in following areas: a. The management knows exactly how much credit it could take, for how long (for which maturities) and in which interest rate. It has been proven that without proper feedback, managers tend to take too much credit and burden the cash flow of their companies. b. A decision system allows for careful financial planning and tax planning. Profits group, non cash outlays are controlled, tax liabilities are minimized and cash flows are maintained positive throughout. T h e d e c i s i o n s y s t e m i s a n i n t e g r a l p a r t o f f i n a n c i a l m a n a g e m e n t i n t h e W e s t . I t i s completely compatible with western accounting methods and derives all the data that it needs from information extant in the company. S o , t h e e s t a b l i s h m e n t o f a d e c i s i o n s y s t e m d o e s n o t h i n d e r t h e f u n c t i o n i n g o f t h e company in any way and does not interfere with the authority and functioning of the financial department, but infect helps the manager to take quick decisions and make profit to the company.
Q. 6 Name and explain any three ways in which a Company’s CSR can be expressed.(10 marks) CSR is “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis” as they are increasingly aware that responsible behavior leads to sustainable business success.CSR is also about managing change at company level in a socially responsible manner. This happens when a company seeks to set the trade-offs between
the requirements and the needs of the various stakeholders into a balance, which is acceptable to all parties. If companies succeed in managing change in a socially responsible manner, this will have a positive impact at the macro-economic level. Following are the different ways in which company's CSR can be expressed. 1. Employment and Social Affairs Policy W ithin a business CSR relates to quality employment, life-long learning, information, consultation and participation of workers, equal opportunities, integration of people with disabilities anticipation of industrial change and restructuring. Social dialogue is seen as a powerful instrument to address employment-related issues. Employment and social policy integrates the principles of CSR, in particular, through the European Employment Strategy, an initiative on socially responsible restructuring, the European Social Inclusion Strategy, initiatives to promote equality and diversity in the workplace, the EU Disability Strategy and the Health and Safety Strategy. In its document "Anticipating and managing change: a dynamic approach to the social aspects of corporate restructuring", the Commission has stressed that properly takingi n t o a c c o u n t a n d a d d r e s s i n g t h e s o c i a l i m p a c t o f r e s t r u c t u r i n g c o n t r i b u t e s t o i t s accep tance and to enhance its positive potential. The Commission has called upon the s o c i a l p a r t n e r s t o g i v e t h e i r o p i n i o n i n r e l a t i o n t o t h e u s e f u l n e s s o f e s t a b l i s h i n g a t Community level a number of principles for action, which would support business good practice in restructuring situations. Deeply rooted societal changes such as increasing participation of women in the labor market should be reflected in CSR, adapting structural changes and changing the worke n v i r o n m e n t i n o r d e r t o c r e a t e m o r e b a l a n c e d c o n d i t i o n s f o r b o t h g e n d e r s acknowledging the valuable contribution of women as strategies which will benefit the society as well as the enterprise itself. 2. Enterprise policy Only competitive and profitable enterprises are able to make a long-term contribution tos u s t a i n a b l e d e v e l o p m e n t b y g e n e r a t i n g w e a l t h a n d j o b s w i t h o u t c o m p r o m i s i n g t h e social and environmental needs of society. In fact, only profitable firms are sustainable and have better chances to adopt/develop responsible practices. The role of enterprise policy is to help create a business environment, which supports the Lisbon objective of becoming the world’s most dynamic knowledge-driven economy, supports entrepreneurship and a sustainable economic growth. Its objective is to ensure balanced approach to sustainable development, which maximizes synergies between its economic, social and environmental dimensions. 3. Consumer Policy C S R h a s p a r t l y e v o l v e d i n r e s p o n s e t o c o n s u m e r d e m a n d s a n d e x p e c t a t i o n s . Co n s u m e r s , i n t h e i r p u r c h a s i n g b e h a v i o u r , i n c r e a s i n g l y r e q u i r e i n f o r m a t i o n a n d reassurance that their wider interests, such as environmental and social concerns, are being taken into account. Consumers and their representative organizations have an important role to play in the evolution of CSR. If CSR is therefore to continue to serve its purpose, strong lines of communication between enterprises and consumers need to be created
ASSIGNMENTS- MBA Semester IV Subject code : MB0036 (3 credits) Set 2 Marks 60 Subject Name : Strategic Management & Business Policy Q 1 Having formulated a Business Strategy, what are the steps in its implementation? Explain each in a sentence or two (10 marks). Ans. A strategy is an operational tool to achieve the goals, and thus, the corporate mission.Strategies do not attempt to outline exactly how the enterprise is to accomplish itsobjectives. A company may view downsizing as a strategy in a competitive market torender cost-effective services. Thus, strategy provides a framework to guide thinkingand action. Strategies are very much useful in organizations for guiding, planning andcontrol.Strategy is a way of life both at the macro as well as micro levels for everyone, whether it is a nation or a company. To win over in a given complex situation, the organizations,even trans-nationals adopt strategies. They make changes, if necessary, even to their global strategies. An individual company may formulate its own strategy to bring out thed e s i r e d r e s u l t s . T h e e v e n t u a l s u c c e s s o f t h e o r g a n i z a t i o n d e p e n d s u p o n s t r a t e g y formula tion and implementation.S t r a t e g y r e f e r s t o t h e c o u r s e o f a c t i o n d e s i r e d t o a c h i e v e t h e o b j e c t i v e s o f t h e enterprise. Formulation, together with its implementation, constitutes an integral part of the management activity. Managers use strategies for different purposes such as too v e r c o m e c o m p e t i t i o n , t o i n c r e a s e s a l e s , t o i n c r e a s e p r o d u c t i o n , t o m o t i v a t e t h e employ ees to provide their best, and so on. Implementation of a strategy is a crucialtask as the formulation of it. There may be a lot of resistance during the implementationprocess. It is necessary for the manager to be very tactful to involve the members of hisgroup in the formulation of strategy to facilitate the implementation process Following are the steps for implementing the business strategy1 . I d e n t i f i c a t i o n o f m i s s i o n and objectives2 . E n v i r o n m e n t s c a n n i n g 3 . G e n e r i c s t r a t e g y a l t e r n a t i v e s 4 . S t r a t e g y v a r i a t i o n s 5 . S t r a t e g i c c h o i c e 6.Allocation of resources and formulation of organizational structure7.Formulation of plans, policies, programmes and administration8 . E v a l u a t i o n a n d c o n t r o l . After formulating a business strategy, the process of strategy implementation calls for an integrated set of choices and activities. These include 1. Allocating Resources: A good strategy with effective implementation has a higher probability of success. There source allocation decisions, such as, which departmentis sanctioned how much of money and resources, in the name of the budget, and soon – set the operative strategy of the firm. Budgets are formulated after a series of negotiations across different levels in the organization. Budgets may be of differenttypes: corporate budgets, capital budgets, departmental budgets, sales budgets,expense budgets, and others. 2. Organising: An effective co-ordination and efficient division of labour requires anappropriate organizational structure. The best structure is one, which fits into theorganizational environment. Also its internal characteristics should give rise to ane f f e c t i v e s t r a t e g y . A p p r o p r i a t e c h a n g e s i n t h e organization structure m a y b e i n i t i a t e d t o e n s u r e s t r a t e g i c i m p l e m e n t a t i o n o f t h e p r o p o s e d s t r a t e g y . E f f e c t i v e str ategic management practices suggest that organization structure should alsochange if the strategy changes or if the organization experiences any bottlenecks inthis regard 3. Formulation Of Policies, Plans, Programmes And Administration: Theresources allocated are said to be well-utilized only when they are well-monitored.For this purpose, it is essential: To develop policies and plans. T o a s s i g n a n d r e a s s i g n l e a d e r s t h e t a s k s a n d d e c i s i o n s t o s u p p o r t t h e chosen strategy. T o p r o v i d e a c o n d u c i v e e n v i r o n m e n t i n t h e o r g a n i z a t i o n t h r o u g h p r o p e r administration to achieve the given objectives directly and indirectly.The implementation of plans and policies is designed in accordance with the strategychosen. The firm creates plans and policies to guide managerial performance, andthese make the chosen strategies work. The corporate success lies ultimately in theability
to convert corporate strategy into plans and policies that are compatible andworkable. 4. Evaluation And Control Of Strategy: Evaluation is the last phase of the strategicmanagement process. It is at this stage that the success of the programmes can bea s s e s s e d . T h e r e s h o u l d b e a b u i l t - i n m e c h a n i s m t o e x a m i n e t h e d e v i a t i o n s a n d initiate corrections as and when required. This assures that the chosen strategieswill be implemented properly.T h e c o n t r o l p r o c e s s r e q u i r e s i d e n t i f y i n g a s e t o f p a r a m e t e r s f o r e v a l u a t i n g a n d me asuring the performance at the individual level and also at the department level.T h e p e r f o r m a n c e h a s t o b e e v a l u a t e d t o i d e n t i f y d e v i a t i o n s a n d t a k e c o r r e c t i v e action. The control and evaluation take place not only at the SBU level but also at thecorporate level. This process may involve the participation of all the executives at alllevels. Corrective actions are required wherever the evaluation reveals deviationsbetween the actual performance and the projected one, over a given period of time. Q.2How do we cope with crises and how do we use the Business Continuity Plan t o manage and recover from crisis?Ans. T h e B u s i n e s s C o n t i n u i t y G u i d e l i n e i s a t o o l t o a l l o w o r g a n i z a t i o n s t o c o n s i d e r t h e factors and steps necessary to prepare for a crisis (disaster or emergency) so that it canm a n a g e a n d s u r v i v e t h e c r i s i s a n d t a k e a l l a p p r o p r i a t e a c t i o n s t o h e l p e n s u r e t h e organization’s continued viability.T h e a d v i s o r y p o r t i o n o f t h e g u i d e l i n e w h i c h h e l p s u s t o c o p e w i t h t h e c r i s i s a n d t o manage and recover from the crisis is divided into two parts: 1. The Planning Process - p r o v i d e s s t e p - b y - s t e p B u s i n e s s C o n t i n u i t y P l a n preparation and activation guidance, including readiness, prevention, response, andrecovery/ resumption. The following steps are important:i . A s s i g n A c c o u n t a b i l i t y i i . P e r f o r m R i s k A s s e s s m e n t iii.Conduct Business Impact A n a l y s i s ( B I A ) i v . A g r e e o n S t r a t e g i c P l a n s v.Crisis Management and Response Team Developmen v i . M i t i g a t i o n S t r a t e g i e s v i i . A v o i d a n c e , Deterrence and Detectionviii.Potential Crisis Recognitioni x . C o m m u n i c a t i o n s x . R e s o u r c e Managementx i . F i n a n c i a l S u p p o r t xii.Financial Issues and Insurancexiii.Suppliers/Service Providersx i v . Mutua l Aid A gr eem ent sxv.Damage and Impact A s s e s s m e n t xvi.Resumption of Critical and Remaining Processesx v i i . R e t u r n t o Normal Operations 2. Successful Implementation And Maintenance - details those tasks required for the Business Continuity Plan to be maintained as a living document, changing andgrowing with the organization and remaining relevant and executable. The varioussteps involved are:i . E d u c a t e a n d T r a i n i i . T e s t t h e B C P iii.Develop BCP R e v i e w S c h e d u l e i v . D e v e l o p B C P M a i n t e n a n c e S c h e d u l e In order to use the Business Continuity Plan to manage and recover from the crisis, thefollowing checklists on the basis of the above advisory portion of the guideline needs tobe checked and necessary requirements as per the same, needs to be kept in readymode for immediate applications. Accountability: 1.Does your organization’s policy include a definition of crisis? 2.Has the person responsible for critical systems and business processes been identified?3 . H a s a B C P T e a m b e e n a p p o i n t e d , a n d d o e s i t i n c l u d e s e n i o r b u s i n e s s f u n c t i o n leaders?4 . H a s t h e B C P b e e n c o m m u n i c a t e d t h r o u g h o u t t h e o r g a n i z a t i o n ? 5.Has a person been assigned with the responsibility to update the BCP? Risk Assessment 1.Has your organization conducted a Risk Assessment?2 . H a v e t h e t y p e s o f r i s k s t h a t m a y i m p a c t y o u r o r g a n i z a t i o n b e e n i d e n t i f i e d a n d analyzed?3 . H a s t h e l i k e l i h o o d for each type of risk been rated? Business Impact Analysis 1.Have the critical business processes been identified?2.Have the business processes been ranked (low, medium, high)?3.If a crisis were to happen, has the impact, in terms o f h u m a n a n d f i n a n c i a l c o s t s , been assessed? 4.Have the maximum allowable outage and recovery time objectiv e s b e e n determined?5 . H a s t h e l e n g t h o f t i m e y o u r o r g a n i z a t i o n ’ s b u s i n e s s p r o c e s s e s c o u l d b e n o n - functional been determined?6 . H a v e t h e r e c o v e r y t i m e o b j e c t i v e s b e e n i d e n t i f i e d ? 7.Have the resources required for resumption and recovery been identified? Strategic Plans 1 . H a v e m e t h o d s t o m i t i g a t e t h e r i s k s i d e n t i f i e d i n t h e B u s i n e s s I m p a c t A n a l y s i s a n d Risk Assessment been identified?2 . H a v e p l a n s a n d p r o c e d u r e s t o r e s p o n d t o a n y i n c i d e n t b e e n
developed?3 . H a v e s t r a t e g i e s t h a t a d d r e s s s h o r t a n d l o n g t e r m b u s i n e s s i n t e r r u p t i o n s b e e n selected?4 . A r e t h e s t r a t e g i e s a t t a i n a b l e , tested, and cost effective? Compliance with Corporate Policy & Mitigation Strategies 1.Have compliance audits been conducted to enforce BCP policy and procedures?2.Have the systems and resources that will contribute to the mitigation process beenidentified, including personnel, facilities, technology, and equipment?3 . H a v e t h e s y s t e m s a n d r e s o u r c e s b e e n m o n i t o r e d t o e n s u r e t h e y w i l l b e a v a i l a b l e when needed? Avoidance, Deterrence, and Detection 1.Are employees motivated to b e r e s p o n s i b l e f o r a v o i d a n c e a n d d e t e r r e n c e a n d detection?2.Have facility security programs to support avoidance and deterrence and detectionbeen established?3.Have operational policy and procedures to protect the facilities been developed?4 . I s i t e n s u r e d t h a t s u f f i c i e n t p h y s i c a l s e c u r i t y s y s t e m s a n d p l a n n i n g a r e i n p l a c e t o protect the facility? Response:Potential Crisis Recognition and Team Notification 1 . W i l l t h e r e s p o n s e p r o g r a m r e c o g n i z e w h e n a c r i s i s o c c u r s a n d p r o v i d e s o m e l e v e l of response?2.Have the danger signals been identified that indicate a crisis is imminent? 3.Have personnel been trained to observe warning signs of an imminent crisis?4.Has a notification system been put in place, including redundant systems?5 . I s t h e n o t i f i c a t i o n c o n t a c t l i s t complete and up to date? Assess the Situation 1.Has an assessment process to address the severity and impact of the crisis b e e n developed?2 . H a s t h e r e s p o n s i b i l i t y f o r d e c l a r i n g a c r i s i s , w i t h f i r s t a n d s e c o n d a l t e r n a t e s , b e e n assigned? Declare a Crisis 1.Have the criteria been established for when a crisis should be declared?2.Has the responsibility for declaring a crisis been clearly defined and assigned?3.Has an alert network for BCP Team members and employees been established?4.Is it ensured that there is an alternate means of warning if the alert network fails?5 . H a v e t h e a c t i v i t i e s t h a t w i l l b e i m p l e m e n t e d i n event of a crisis been i d e n t i f i e d , including notification, evacuation, relocation, alternate site activation, teamd eployment, operational changes, etc? Execute the Plan 1.Has consideration been given to developing the BCP around a ‘‘worst c a s e scenario?’’2.Has the BCP been prioritized to save lives, protect assets, restore critical businessprocesses and systems, reduce the length of the interruption, protect reputation,control media coverage, and maintain customer relations?3.Have the severity of the crisis and the appropriate response been determined? Communications 1.Has a crisis communications strategy been developed?2.Are communications timely, h o n e s t , a n d o b j e c t i v e ? 3.Are communications with all employees occurring at approximately the same time?4.Are regular updates provided, including notification of when the next update will beissued?5 . H a s a p r i m a r y s p o k e s p e r s o n a n d b a c k - u p s p o k e s p e r s o n s b e e n d e s i g n a t e d w h o will manage and disseminate crisis communications to the media and others? Resource Management – Logistics 1.Has a designated Crisis Management Center been identified, and does i t h a v e n e c e s s a r y l i f e s u p p o r t f u n c t i o n s , i n c l u d i n g u n i n t e r r u p t i b l e p o w e r s u p p l y a n d comm unications equipment?2.Have alternate worksites for business resumption and recovery been identified? 3.Have critical and vital records been stored at an offsite storage facility?4.How long can each business function operate effectively without normal data inputstorage processes?5 . W h a t m u s t b e d o n e t o r e s t o r e d a t a t o t h e s a m e p r e v i o u s p o i n t i n t i m e w i t h i n t h e recovery time objective? 6 . C a n a n y a l t e r n a t e d a t a s t o r a g e p r o c e s s e s b e u s e d , a f t e r t h e i n i t i a l d a t a r e c o v e r y , to speed the forward recovery to the present time? R e s o u r c e M a n a g e m e n t – F i n a n c i a l I s s u e s a n d I n s u r a n c e , T r a n s p o r t a t i o n , Sup pliers/Service Providers, and Mutual Aid 1.Has the appropriate insurance coverage been identified and obtained?2 . A r e c a s h a n d c r e d i t available to the BCP Team?3.Have transportation alternatives been arranged in a d v a n c e ? 4.Have critical vendor and service provider agreements been established?5 . H a v e m u t u a l a i d a g r e e m e n t s b e e n e s t a b l i s h e d ? 6.If so, are they legally sound, properly documented, and understood by all parties? Recovery and resumption 1.Damage and Impact Assessment, Process Resumption, and Return to N o r m a l Operations2 . H a s a d a m a g e a s s e s s m e n t b e e n p e r f o r m e d a s s o o n a s p o s s i b l e ? 3 . H a s the Damage Assessment Team been mobilized to the site? 4.Has business process recovery been prioritized to recover the most c
r i t i c a l business processes first?5.Is the schedule of the processes to be restored in accordance with the prioritizationschedule?6 . I s t h e r e d o c u m e n t a t i o n o f w h e n t h e p r o c e s s e s w e r e r e s u m e d ? 7.Has the organization returned to normal operations? 8 . H a s t h e d e c i s i o n t o r e t u r n t o n o r m a l o p e r a t i o n s b e e n d o c u m e n t e d a n d communicated? The preparation and readiness of the resources as per the above checklists on thebasis of the Business Continuity Plan helps us to manage and recover from the crisis ina successful manner. Que. 3 What are the main components of Business Plan, explaining the role of each inthe Plan? Ans. 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 you are, whatyou do, how you will do it, your capacity to do it, what financial resources are necessaryto carry it out, and how you intend to secure those resources. A well-written plan wills e r v e a s a g u i d e t h r o u g h t h e s t a r t - u p p h a s e o f t h e b u s i n e s s . I t c a n a l s o e s t a b l i s benchmarks to measure the performance of your business venture in comparison withexpectations and industry standards. And most important, a good business plan willhelp to attract necessary financing by demonstrating the feasibility of your venture andthe level of thought and professionalism you bring to the task.A g o o d b u s i n e s s p l a n w i l l h e l p a t t r a c t n e c e s s a r y f i n a n c i n g b y d e m o n s t r a t i n g t h e feasibil ity of your venture and the level of thought and professionalism you bring to thetask.A business plan should contain the following components: 1. Executive Summary: The purpose of this component is to provide direction andhelp you establish your goals as clearly as possible. W ith this clearly spelled out,b o t h m a n a g e m e n t a n d e m p l o y e e s c a n f o c u s their efforts. Also it will help withinvestors and bankers in that they can clearly u n d e r s t a n d w h a t y o u r . I t s h o u l d include the following information. A history of the company (if you're already in business) or a history of the ideadevelopment. A description of the products or services you plan to develop and sell. 2. Company and Product Description: In this component one should provide type of b u s i n e s s , r e a s o n o f c r e a t i n g b u s i n e s s u n i t , r e f e r e n c i n g t h e g o a l a n d a t t a c h ref erences of business plan. Product or Service-Focus on the feature that distinguishes from rest of marketand what will attract consumers to your product or service. Price-Provide realistic price estimate and discuss the rationale behind that price.Describe where this price positions you in the market place: at the high end, lowend or in the middle of the existing range for a similar product or service. P l a c e - D e s c r i b e t h e l o c a t i o n a n d i t s a d v a n t a g e s w h e r e y o u w i l l p r o d u c e o r distribute your product or provide your service. Customers-Providing detail description of the customer base depending upontheir characteristics i.e. demographics, geography and socio economic status.P r o v i d e s t a t i s t i c a l d a t a t o d e s c r i b e t h e s i z e o f t a r g e t c u s t o m e r b a s e a n d i t s growth potential. Competition-Explain the reason for entering in the new venture and what differentiate your proposed venture from existing business. S a l e s P r o j e c t i o n s - P r e s e n t a n e s t i m a t e b a s e d o n s i z e o f y o u r m a r k e t , t h e characteristic of your customers and the share of market you will gain over your competition. 3. Market Description: A key composition of the operation of your business will beyour sales and marketing strategy, so one must describe how you will inform your target market about your product or service and how you will convince customer topurchase. Production Description:-Describe the steps from raw material to finished goods,packaged and ready for distribution and sale. Avoid using industry jargon todescribe the production process. Staffing:-Describe the type of staff, their qualification, skill, salaries, other benefitand how they will be recruited. 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, specializedfeatures if any are to be described. M a r k e t D e s c r i p t i o n : - S t r a t e g y f o r l o c a t i n g y o u r t a r g e t m a r k e t , i n f o r m i n g o r educating customers about your product or service and convincing them to buyit. Discuss the product‘s feature you plan to emphasize to gain the attention of your target market. 5. Operations: I n t h i s c o m p o n e n t c o m p a n y m u s t h i g h l i g h t t h e s e n i o r m a n a g e r responsible for ov e r s e e i n g t h e s t a r t - u p a n d o p e r a t i o n o f y o u r b u s i n e s s , t h e i r background and their responsibility in the business. Ownership- Potential investorsand lenders will be interested in ownership stake of the board of directors and also inwhat portion of the company‘s equity is available. An investor or banker must knowthis 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 financialstatements of the business to be attached such as …. S t a r t u p b u d g e t - D e s c r i b e t h e i n i t i a l e x p e n s e s w h i c h m a y i n c u r t o g e t y o u r business up and running. Cash flow projection-Provide month to month schedule of estimated cash inflowand outflows from the business for the first year. This include how much moneyand when. I n c o m e s t a t e m e n t - P r e p a r e a m u l t i y e a r s t a t e m e n t o f p r o j e c t e d r e v e n u e , expenses, capital expenditure and cost of goods sold. This should be supportedby documents of growth pattern of similar companies or studies that forecast anindustry 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 financingand repayment period, amount of expected return and explain any commitmentor investment that you may have already secured. Types of requirement of fundsare. Seed Capital Fixed asset financing Working Capital Initial Start-up timeline-Provide a timeline of task and events necessary to getyour business operational. Be sure to record stage as on today also. Set realisticdead line to capacity to complete these tasks. There may be several reasons todelay 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 gowrong in staring and running your business plan, thinking upon different challengeswill strengthen plan. Q.4Explain the concept, need for and importance of a Decision Support System. A n s . C o n c e p t : Decision support systems constitute a class of computer-based information systems including knowledge-based systems that support decision-making activities.I t i s a l s o e x p l a i n e d a s a class of information systems (including but not limited
tocomputerized systems) that support business and organizational decisionm a k i n g activities. A properly designed DSS is an interactive software-based system intended toh e l p d e c i s i o n m a k e r s c o m p i l e u s e f u l i n f o r m a t i o n f r o m a c o m b i n a t i o n o f r a w d a t a , docume nts, personal knowledge, or business models to identify and solve problems andmake decisions.Typical information that a decision support application might gather and present are: • a n i n v e n t o r y o f a l l o f y o u r c u r r e n t i n f o r m a t i o n a s s e t s ( i n c l u d i n g l e g a c y a n d relati onal data sources, cubes, data warehouses, and data marts), • comparative sales figures between one week and the next, • projected revenue figures based on new product sales assumptions. Need: Many companies in developing countries have a very detailed reporting systemgoing down to the level of a single product, a single supplier, a single day. However,these reports – which are normally provided to the General Manager – should not beused by them at all. They are too detailed and, thus, tend to obscure the true picture. AGeneral Manager must have a bird’s eye view of his company. He must be alerted tounusual happenings, disturbing financial data and other irregularities.As things stand now, the following phenomena could happen: • That the management will highly leverage the company by assuming excessivedebts burdening the cash flow of the company. • That a false Profit and Loss (PNL) picture will emerge – both on the single productlevel – and generally. This could lead to wrong decision-making, based on wrongdata. • That the company will pay excessive taxes on its earnings. • That the inventory will not be fully controlled and appraised centrally. • That the wrong cash flow picture will distort the decisions of the management andlead to wrong (even to dangerous) decisions. Importance: A d e c i s i o n s y s t e m h a s g r e a t i m p a c t o n t h e p r o f i t s o f t h e c o m p a n y . I t forces the management to rationalize the depreciation, inventory and inflation policies. Itw a r n s t h e m a n a g e m e n t a g a i n s t i m p e n d i n g c r i s e s a n d p r o b l e m s i n t h e c o m p a n y . I t specially helps in following areas: The management knows exactly how much credit it could take, for how long (for which maturities) and in which interest rate. It has been proven that without proper feedback, managers tend to take too much credit and burden the cash flow of their companies. A decision system allows for careful financial planning and tax planning. Profits goup, non cash outlays are controlled, tax liabilities are minimized and cash flows aremaintained positive throughout.T h e d e c i s i o n s y s t e m i s a n i n t e g r a l p a r t o f f i n a n c i a l m a n a g e m e n t i n t h e W e s t . I t i s completely compatible with western accounting methods and derives all the data that itneeds from information extant in the company.S o , t h e e s t a b l i s h m e n t o f a d e c i s i o n s y s t e m d o e s n o t h i n d e r t h e f u n c t i o n i n g o f t h e company in any way and does not interfere with the authority and functioning of the financial department. Q.5 Explain the importance of any five aspects of a Licensing Agreement that you will look for when negotiating the right to use an Intellectual Property Ans. A license is a grant of permission made by the patent owner to another to exercise any specified rights as agreed . Licensing is a good way for an owner to benefit from their work as they retain ownership of the patented invention while granting permission to others to use it and gaining benefits, such as financial royalties, from that use. However, it normally requires the owner of the invention to invest time and resources in monitoring the licensed use, and in maintaining and enforcing the underlying IP right. A license is merely the grant of permission to undertake some of the actions covered by intellectual property rights, and the patent holder retains ownership and control of the basic patent .Licensees are often limited to specific rights, territories and time periods. If an inventor owns patents on the same invention in five different countries, they could assign (or sell)these patents to five different owners in each of those countries. Portions of a patent right can also be assigned – so that in order to finance your invention, you might chooseto sell a half-share to a commercial partner.A lot of aspects are to be taken care of very carefully while negotiating or making alicensing agreement to give right to use an intellectual property. Some of the important aspects of a Licensing Agreement that we will look for when negotiating the right to use an Intellectual Property are explained below:
1.The Parties To The Licence: The ‘parties’ to the licence are the entities (individualpeople, companies or institutions) that are bound by the licence as a legal contract.They normally sign (or ‘execute’) the licence to confirm in a legally clear-cut way thatthey agree to comply with its terms. The parties can be individual persons, but theyare normally legal entities such as a research institution, a university or a company.It is important to ensure that the licence is signed in a way that is legally binding, andby a person authorized to sign for their institution.In some cases, the licence is not directly signed (think of the ‘I Agree’ block whichyou are often asked to click when installing a software package on a computer), andin the national law of many countries, contractual obligations can arise even withouta formal signed document. 2.Licensor And Licensee: The person granting the licence – the ‘licensor’ – typicallyh o l d s r i g h t s t o t e c h n o l o g y , b i o l o g i c a l m a t e r i a l , I P r i g h t s , k n o w - h o w , o r o t h e r information. The person receiving the licence – the ‘licensee’ – is the party which isseeking to use or exploit that material.The basic idea of the licence is that the person granting the licence (the ‘licensor’) isg i v i n g a n o t h e r p e r s o n ( t h e ‘ l i c e n s e e ’ ) t h e r i g h t t o d o s o m e t h i n g t h a t t h e y c o u l d otherwise prevent them from doing, in exchange for some kind of benefit (this maybe financial, but may be other forms of benefit). So the licensor might permit thel i c e n s e e t o u s e a t e c h n o l o g y t h a t i s c o v e r e d b y a p a t e n t – a n d i f t h e r e w a s n o license, the licensor could take legal action under the patent to prevent this use of the technology. 3.Sole, Exclusive Or Non-Exclusive Licences: T h e c h o i c e t a k e n a m o n g t h e s e options is very important. A n e x c l u s i v e l i c e n c e m e a n s t h a t t h e l i c e n s o r a g r e e s n o t t o g r a n t a n o t h e r licence to any other party, and agrees not to use the licensed rights (in other w o r d s , t h e l i c e n s o r c a n n o t b e c o m e a c o m p e t i n g u s e r o f t h e l i c e n s e d technolo gy). A sole licence means that the licensor grants a licence to only one licensee,the sole licensee, but the licensor retains the right to use the technology itself. Under a non-exclusive licence, the licensor grants the licensee a right to uset h e t e c h n o l o g y , b u t t h e l i c e n s o r c a n s t i l l g i v e t h e s a m e r i g h t s t o o t h e r licensees.T h e k i n d o f l i c e n s e g r a n t e d w i l l d e p e n d o n s e v e r a l f a c t o r s , a n d w i l l d o m u c h t o influence the pattern of use, and the scale of royalties or other payments, made bythe licensee. 4.Sub-Licences: A ‘sub-licence’ is a further licence, when the licensee of the originallicence itself grants a licence to a third party. The sub-licence may extend to some or all of the rights granted under the original licence. The original licence may need tomake clear whether sub-licences can be granted, and if so, to who, and on whatterms or conditions. There may be issues such as protecting the confidentiality of licensed material, liability for use of the technology, or the interests of the licensor ingranting direct licenses to the same third parties.A sub-licensing program may be of considerable benefit to the licensor, as it willincrease the scope of use of the licensed technology, and may be an effective wayof exporting the technology to new overseas markets. The original licensor mightretain an entitlement to a share of any royalties or other payments paid by the sub-licensee. The original licensor might retain the right to investigate and approve theeligibility of a sub-licensee, especially if the sub-licensee has no direct relationship with the original licensee. 5.Diligence And Milestones: The licensee may be relying on the license as t h e p r i n c i p a l m e c h a n i s m f o r r e c o v e r i n g i t s i n v e s t m e n t i n r e s e a r c h a n d f o r d e r i v i n g benefits from the patent or other IP. So it may be important to the licensor to ensuret h a t t h e l i c e n s e e d o e s e v e r y t h i n g t h e y c a n t o d e v e l o p a n d c o m m e r c i a l i z e t h e licensed IP. If a licensee gains an exclusive license, subject to a royalty payment on profits, and then decides to shelve the technology for several years because its i m m e d i a t e i n t e r e s t s l i e e l s e w h e r e , t h e n t h e w h o l e v a l u e o f t h e I P i s l o s t t o t h e licensor. So licenses will frequently include obligations on the licensee to develop and apply the licensed technology diligently and to meet specific deadlines. W here possible, certain defined points or milestones should be identified – possibly based on the business plan originally proposed by the licensee. The license could require t h e l i c e n s e e t o b r i n g t h e p r o d u c t t o t h e m a r k e t a s s o o n a s p r a c t i c a b l e , a n d t o continue to make the product available to the public on reasonable terms. These obligations may also be built into sub-licenses granted under the license. 6.Payments and Pricing: A license will normally involve a valuable ‘consideration’ –something of value which is given in exchange for the right to use this technology. It need not be financial consideration – it could be a right in exchange to use another technology (a ‘cross-license’), or valuable access to other facilities or resources. There are many potential models for payment. It is always difficult to establish value for intellectual property, even more so if it relates to unproven technology that will require a licensee to take a considerable commercial risk. The options boil down to lump sum payments, and royalties based on the extent of use of the technology. Its not unusual to see a mixture of both Q.6What is Corporate Social Responsibility? Why is it becoming inc
r e a s i n g l y relevant in today’s Business? A n s . C o r p o r a t e s o c i a l r e s p o n s i b i l i t y (CSR), also known as Corporate responsibility , Corporate citizenship , Responsible business , Sustainable responsible business (SRB) , or Corporate social performance , i s a f o r m o f c o r p o r a t e s e l f - r e g u l a t i o n 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 tolaw, ethical standards, and international norms. Business would embrace responsibilityf o r t h e i m p a c t o f t h e i r a c t i v i t i e s o n t h e e n v i r o n m e n t , c o n s u m e r s , e m p l o y e e s , communities, stakeholders and all other members of the public sphere. Furthermore, b u s i n e s s w o u l d p r o a c t i v e l y p r o m o t e t h e p u b l i c i n t e r e s t b y e n c o u r a g i n g c o m m u n i t y 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 decisionmaking, 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, shorttermp r o f i t s . C r i t i c s a r g u e t h a t C S R d i s t r a c t s f r o m t h e f u n d a m e n t a l e c o n o m i c r o l e o f b u s i n e s s e s ; o t h e r s a r g u e t h a t i t i s n o t h i n g m o r e t h a n s u p e r f i c i a l w i n d o w - d r e s s i n g ; others yet argue that it is an attempt to pre-empt the role of governments as a watchdogover powerful multinational corporations. Corporate Social Responsibility has beenr e d e f i n e d t h r o u g h o u t t h e y e a r s . H o w e v e r , i t e s s e n t i a l l y i s t i t l e d t o a i d t o a n or g a n i z a t i o n ' s m i s s i o n a s w e l l a s a g u i d e t o w h a t t h e c o m p a n y s t a n d s f o r a n d w i l l 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 consciencefocused marketplaces of the 21st century, the demand for more ethical business processes and actions (known as ethicist) 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 corporatep r a c t i c e a n d a c a r e e r s p e c i a l i z a t i o n , t h e f i e l d i s p r i m a r i l y n o r m a t i v e . I n a c a d e m i a , descriptive approaches are also taken. The range and quantity of business ethical i s s u e s r e f l e c t s t h e d e g r e e t o w h i c h b u s i n e s s i s p e r c e i v e d t o b e a t o d d s w i t h n o n - economic social values. Historically, interest in business ethics accelerated dramatically during the 1980s and 1990s, both within major corporations and within academia. For e x a m p l e , t o d a y m o s t m a j o r c o r p o r a t e w e b s i t e s l a y e m p h a s i s o n c o m m i t m e n t t o promoti ng 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 multinationalc o r p o r a t i o n s f o r m e d , a l t h o u g h i t w a s s e l d o m a b b r e v i a t e d . T h e t e r m s t a k e h o l d e r , 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’s 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 l i t e r a t u r e e x h o r t i n g b u s i n e s s t o a d o p t m e a s u r e s b e y o n d f i n a n c i a l o n e s . H o w e v e r , busines ses may not be looking at short-run financial returns when developing their CSRstrategy.The definition of CSR used within an organization can vary from the strict "stakeholder i m p a c t s " d e f i n i t i o n u s e d b y m a n y C S R a d v o c a t e s a n d w i l l o f t e n i n c l u d e c h a r i t a b l e efforts and volunteering. CSR may be based within the human resources, business development or public relations departments of an organization, or may be given se p a r a t e u n i t r e p o r t i n g t o t h e CEO or in some cases directly to the board. Somec o m p a n i e s m a y i m p l e m e n t C S R t y p e v a l u e s w i t h o u t a c l e a r l y d e f i n e d t e a m o r programme.
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