Professional Documents
Culture Documents
DAVID
L.C .No.00120
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, to
increase production, to motivate the employees to provide their best, and so on.
Implementation 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.
b) Environment scanning
d) Strategy variations
e) Strategic choice
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f) Allocation of resources and formulation of organisational structure
They refer to the strategy alternatives in broader terms. After the nature of the business
of the firm is defined, the next task is to focus on the type of strategic alternative, in
general, the firm should pursue. The strategist seeks to identify the right alternative
through questions such as:
a) To expand
b) To wind up or retrench
c) To stabilize, and
a) Expansion strategy can be adopted in the case of highly competitive and volatile
industries, particularly, if they are in the introduction stage of product / service life cycle.
b) Stability strategy is a better choice when the firm is doing well, the environment is
relatively less volatile, and the product / service has reached the stability or maturity
stage of the life cycle.
c) Retrenchment strategy is the obvious choice when the firm is not doing well in terms
of sales and revenue and finds greater returns elsewhere, or the product / service is in the
finishing stage of the product life cycle.
Generic Strategy
Alternatives
Expand Retrench Stabilise Combination
Business Pace Business Pace Business Pace Definition
definition definition definition or Pace
Products Add new Find new Drop old De-crease maintain Make Drop old
products ones pro-ducts product package while
develop- changes, adding
ment quality new
improve- products
ments
Markets Find new Pene-trate Drop Reduce maintain Protect Drop old
territories markets distribution market share market customers
chan-nels shares, while
focus on finding
market new
niches customers
Func-tions Forward, Increase Be-come De-crease maintain Improve Increase
vertical capacity cap-tive process produc- capacity
integra- com-pany R&D tion and
tion efficiency improve
efficiency
Sometimes, a combination of a few or all of these strategies may be necessary. Any change must be
contemplated considering what is to be done (Business definition) and the speed (Pace) with which it is
to be done. Each of these alternatives has to be evaluated on its merits.
General Environment
Internal Factors
Generic Strategy
Alternatives
Strategy variations
Strategic Choice
Formulation of Plans,
Policies, Programmes &
Administration
A new business goes through phases in the business cycle (very similar to the stages of
human life). The first phase – is the formation of an idea. A person – or a group of
people join forces, centred around one exciting invention, process or service.
They are oriented to fill the needs of a market niche (a small group of select consumers
or customers), or to provide an innovative solution to a problem which bothers many, or
to create a market for a totally new product or service, or to provide a better solution to a
problem which is solved in a less efficient manner.
At this stage, what the entrepreneurs need most is expertise. They need a marketing
expert to tell them if their idea is marketable and viable. They need a financial expert to
tell them if they can get funds in each phase of the business cycle – and wherefrom and
also if the product or service can produce enough income to support the business, pay
back debts and yield a profit to the investors. They need technical experts to tell them if
the idea can or cannot be realized and what it requires by way of technology transfers,
engineering skills, know-how, etc. Once the idea has been shaped to its final form by the
team of entrepreneurs and experts – the proper legal entity should be formed. A
bewildering array of possibilities arises:
This decision is of cardinal importance. It has enormous tax implications and in the near
future of the firm it greatly influences the firm’s ability to raise funds in foreign capital
markets. Thus, a lawyer must be consulted who knows both the local applicable laws and
the foreign legislation in markets which could be relevant to the firm.
This costs a lot of money, one thing that entrepreneurs are in short supply of free legal
advice is likely to be highly appreciated by them.
When the firm is properly legally established, registered with all the relevant authorities
and has appointed an accounting firm – it can go on to tackle its main business:
developing new products and services. At this stage the firm should adopt Western
accounting standards and methodology. Accounting systems in many countries leave too
A whole host of problems faces the new firm immediately upon its formation.
They must be learnt and assimilated. Today’s modern management includes many
elements: manpower, finances, marketing, investing in the firm’s future through the
development of new products, services, or even whole new business lines. That is quite a
lot and very few people are properly trained to do the job successfully.
On top of that, markets do not always react the way entrepreneurs expect them to react.
Markets are evolving creatures: they change, develop, disappear and re-appear. They are
exceedingly hard to predict. The sales projections of the firm could prove to be
unfounded. Its contingency funds can evaporate.
Sometimes it is better to create a product mix: well-recognized brands which sell well –
side by side with innovative products.
This is a brief – and by no way comprehensive – taste of what awaits the new business
and its initiator, the entrepreneur. You see that a lot of money and effort are needed even
in the first phases of creating a business.
Having obtained the requisite licenses and permits and having registered with all the
appropriate authorities – you can move on to the next room in the same building. Here
you will receive a list of all the sources of capital available to you both locally and from
foreign sources. The terms and conditions of the financing will be specified for each and
every source. Example: EBRD – loans of up to 10 years – interest between 6.5% to 8% –
grace period of up to 3 years – finances mainly industry, financial services,
environmental projects, infrastructure and public services.
You can select the sources of funds most suitable for your needs – and proceed to the
next room.
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The next room will contain all the experts necessary to establish the business, get it
going – and, most important, raise funds from both local and international institutions.
For a symbolic sum they will prepare all the documents required by the financing
institutions as per their instructions.
But entrepreneurs in many developing countries are still fearful and uninformed. They
are intimidated by the complexity of the task facing them.
The solution is simple: you can approach a tutor or a mentor . This tutor will escort with
you from the first phase to the last.
He will be employed by the "One Stop Shop" and his role will be to ease life for the
novice businessman. He will transform the person to a businessman. And then they will
wish the entrepreneur: "Bon Voyage" – and may the best ones win.
There is an inherent conflict between owners and managers of companies. The former
want, for instance, to minimize costs – the latter to draw huge salaries as long as they are
in power.
In publicly traded companies, the former wish to maximize the value of the stocks (short
term), the latter might have a longer term view of things. In the USA, shareholders place
emphasis on the appreciation of the stocks (the result of quarterly and annual profit
figures). This leaves little room for technological innovation, investment in research and
development and in infrastructure. The theory is that workers who also own stocks avoid
these cancerous conflicts which, at times, bring companies to ruin and, in many cases,
dilapidate them financially and technologically. Whether reality lives up to theory, is an
altogether different question.
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. CEOs and
shareholders must be prepared to budget for and secure the necessary resources to make
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this happen. It is necessary that an appropriate administrative structure be put in place to
effectively deal with crisis management. This will ensure that all concerned understand
who makes decisions, how the decisions are implemented, and what the roles and
responsibilities of participants are. Personnel used for crisis management should be
assigned to perform these roles as part of their normal duties and not be expected to
perform them on a voluntary basis. Regardless of the organization – for profit, not for
profit, faith-based, non-governmental – its leadership has a duty to stakeholders to plan
for its survival. The vast majority of the national critical infrastructure is owned and
operated by private sector organizations, and it is largely for these organizations that this
guideline is intended. ASIS, the world’s largest organization of security professionals,
recognizes these facts and believes the BC Guideline offers the reader a user-friendly
method to enhance infrastructure protection.
Business Continuity Plan, Business Impact Analysis, Crisis Management Team, Critical
Functions, Damage Assessment, Disaster, Evaluation and Maintenance, Mitigation
Strategies, Mutual Aid Agreement, Prevention, Readiness, Recovery/Resumption,
Resource Management, Response, Risk Assessment, Testing and Training.
4.2.2 Terminology
Alternate Worksite – A work location, other than the primary location, to be used when
the primary location is not accessible.
Business Impact Analysis (BIA) – A management level financial analysis that identifies
the impacts of losing an organization’s resources. The analysis measures the effect of
resource loss and escalating losses over time in order to provide reliable data upon which
to base decisions on mitigation, recovery, and business continuity strategies.
Contact List – A list of team members and key players in a crisis. The list should
include home phone numbers, pager numbers, cell phone numbers, etc.
Damage Assessment – The process used to appraise or determine the number of injuries
and human loss, damage to public and private property, and the status of key facilities
and services resulting from a natural or human-caused disaster or emergency.
Exercise – An activity performed for the purpose of training and conditioning team
members and personnel in appropriate crisis responses with the goal of achieving
maximum performance.
Prevention – Plans and processes that will allow an organization to avoid, preclude, or
limit the impact of a crisis occurring. The tasks included in prevention should include
compliance with corporate policy, mitigation strategies, and behavior and programs to
support avoidance and deterrence and detection.
Readiness – The first step of a business continuity plan that addresses assigning
accountability for the plan, conducting a risk assessment and a business impact analysis,
agreeing on strategies to meet the needs identified in the risk assessment and business
impact analysis, and forming Crisis Management and any other appropriate response
teams.
Response – Executing the plan and resources identified to perform those duties and
services to preserve and protect life and property as well as provide services to the
surviving population. Response steps should include potential crisis recognition,
notification, situation assessment, and crisis declaration, plan execution,
communications, and resource management.
Shelter-in-Place – The process of securing and protecting people and assets in the
general area in which a crisis occurs.
Simulation Exercise – A test in which participants perform some or all of the actions
they would take in the event of plan activation. Simulation exercises are performed under
conditions as close as practicable to ‘‘real world’’ conditions.
Tabletop Exercise – A test method that presents a limited simulation of a crisis scenario
in a narrative format in which participants review and discuss, not perform, the policy,
methods, procedures, coordination, and resource assignments associated with plan
activation.
Training – An educational process by which teams and employees are made qualified
and proficient about their roles and responsibilities in implementing a Business
Continuity Plan.
Cost effective mitigation strategies should be employed to prevent or lessen the impact
of potential crises. For example, securing equipment to walls or desks with strapping can
mitigate damage from an earthquake; sprinkler systems can lessen the risk of a fire; a
strong records management and technology disaster recovery program can mitigate the
loss of key documents and data.
The various resources that would contribute to the mitigation process should be
identified. These resources, including essential personnel and their roles and
responsibilities, facilities, technology, and equipment should be documented in the plan
and become part of ‘‘business as usual.’’
The resources that will support the organization to mitigate the crisis should also be
monitored continually to ensure that they will be available and able to perform as
planned during the crisis. Examples of such systems and resources include, but are not
limited to:
· Emergency equipment
· Alternate worksites
· Maps and floor plans updated/changed due to construction and internal moves
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, 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 his 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 the capital markets. Invested in so many ventures
and companies, the financial investor 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.
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.
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 Board of Directors of the Firm.
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
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.
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.
2. To constantly monitor and analyse the payment morale, regularity, non-payment and
non-performance events, etc. – in order to determine the changes in the credit risk rating
of said factors.
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.
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:
· The planning and erecting of the various sites, structures, buildings, premises, factories,
etc.
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.
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 best-suited 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
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.
The strategic investor is responsible to train all the personnel in the firm: operators,
customer services, distributors, vendors, sales personnel. The training is conducted at its
sole expense and includes tours of its facilities abroad.
The entrepreneurs – who sought to introduce the two types of investors, in the first place
– are usually left with the following functions:
1. To structure the firm in an optimal manner, most conducive to the conduct of its
business and to present the new structure for the Board’s approval within 30 days from
the date of the GM’s appointment.
3. To oversee the personnel of the firm and to resolve all the personnel issues.
5. To represent the firm in its contacts, representations and negotiations with other firms,
authorities, or persons.
Intellectual property rights are of limited value unless they are effectively enforced.
Without enforcement, there are no real deterrents for infringers or
remedies for those whose rights are infringed. The legal authorities do have some role in
enforcing intellectual property rights, but this is often limited, and for infringement of
rights such as patents, plant breeders rights and trade secrets, you would normally have
to take action yourself to take the infringing party to court. The same practical
commercial considerations that apply to obtaining and managing IP rights also apply to
enforcement – in some cases, the possibility of taking court action could act to encourage
the infringing party to take out a licence to use your technology. This would save you the
expense and the uncertainty of a protracted court case, and could provide you with a
good financial return.
One basic distinction in enforcement lies between more those IP infringements which
tend to be infringed widely, potentially by many different people and on a large
commercial scale, and general IP rights. In the first category are pirated copyright works
and counterfeit trade mark goods.
TRIPS, for instance, specifies that the government or legal authorities need to have a
more active role in dealing with these infringements than, say, for patents and plant
breeders’ rights. So the state often has an active role in tracking down and prosecuting
those who infringe copyright and trademark rights on a commercial scale, whereas for
patents it is normally up to the patent holder or licensee to take an infringer to court.
The TRIPS Agreement differs from earlier international intellectual property treaties in
several ways; this includes having specific provisions for effective enforcement of IP
rights in national laws. The main enforcement provisions in TRIPS include:
· The general obligations under the TRIPS Agreement, which relate to the provision of
fair enforcement procedures.
· Criminal procedures, which are compulsory for intentional trade mark and copyright
piracy on a commercial scale and optional for other kinds of intellectual property, such
as patents.
· Special border enforcement measures to stop counterfeit trade mark and pirated
copyright material coming into a country, border enforcement measures are optional for
other kinds of intellectual property, such as patents.
The TRIPS Agreement provides for a range of general obligations in relation to the
enforcement of intellectual property rights. The purpose of these obligations is to ensure
that the enforcement measures are effective, and that certain basic principles of due
process are met, so that enforcement is fair and balanced, and does not impede legitimate
trade.
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Remedies must be timely and deter further infringements
TRIPS requires that enforcement procedures permit effective action against any
infringement of intellectual property rights, and that the remedies available are
expeditious in order to prevent infringements. A legal system that enables timely
initiation and execution of legal processes is particularly important for effective
enforcement of intellectual property rights because the information that intellectual
property protects is often easy to copy and spread quickly. The remedies available must
also be severe enough to deter further infringements. These procedures must be applied
in a way that avoids the creation of barriers to legitimate trade and to provide for
safeguards against their abuse.
TRIPS provides that enforcement procedures must be fair and equitable, and may not be
unnecessarily complicated or costly, or entail unreasonable time-limits or delays.
Decisions in enforcement cases must be based on the merits of a case. Decisions should
preferably be in writing and reasoned, and be made available to the parties without undue
delay. Decisions on the merits of a case must be based only on evidence in respect of
which the parties were offered the opportunity to be heard.
Parties to a proceeding must have an avenue of appeal, unless the case was criminal in
nature and the accused was acquitted. TRIPS does not require a special judicial system
for the enforcement of intellectual property rights distinct from the normal court system.
Finally, TRIPS creates no obligations with respect to the distribution of resources as
between enforcement of intellectual property rights and the enforcement of law in
general.
For example, imagine that you own a patent for house paint that dries very quickly. It
took you 8 years to develop the process and cost you thousands of dollars to patent your
invention in Australia, the US and Indonesia. Just as you started to distribute the paint
yourself in Australia you found out that your paint is being sold cheaply to the painting
trade in Sydney by a company trading as Cheap Paints. You also suspect that Cheap
Paints are exporting tins of infringing paint overseas. Obviously you need to take legal
action against Cheap Paints to enforce your rights, otherwise, there would be no market
left for you to get any financial return on your invention. The kinds of remedies you
could take against Cheap Paints are set out in this unit.
In Complex Systems, the first step is ‘taken’ by the ‘non-average’ underlying elements
within the system, while the second – the emergence of a transformed, functioning
system – concerns new, effective ‘average’ behaviour of the elements. The successful
co-evolution of a system with its environment therefore occurs through the dynamic
interplay of the average and non-average behaviours within it. Successive instabilities
occur each time that existing structure and organisation fail to withstand the impact of
some new circumstance or behaviour. When this occurs, the system re-structures and
becomes a different system, subjected in its turn to the disturbances from its own non-
average individuals and situations. It is this dialogue between successive ‘systems’ and
their own inner ‘richness’ that provides the capacity for continuous adaptation and
change.
3.5 Creativity
But most of the time, you can’t remember them by the day’s end.
Don’t let spelling and grammar issues or relentless self-editing stop you.
Look up at people.
Simplify everything. Your life, your home, your office, your desk, your processes,
vision, policy, procedures. Everything.
Brainstorming
Don’t tell people that their ideas are bad, especially if you don’t have a better one.
· Tell stories.
Avoid Meetings.
Do not attend more than two meetings a day, or else you will never get any real creative
work done.
Designers should put more of their passion into designing great work, instead of
endless (boring) discussions about the superiority of the Macintosh over the PC!
And you can’t blame a machine for your creative failures, either.
So do cooks.
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