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MB0036

MB0036

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Master of Business Administration-MBA Semester 4 MB0036 – Strategic Management and Business Policy Assignment Set- 1 Q.

1 Explain how strategies are formulated and implemented. Ans:- Strategy Formulation and Implementation 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. Stages in Strategy Formulation and Implementation a) b) c) d) e) f) g) h) Identification of mission and objectives Environment scanning Generic strategy alternatives Strategy variations Strategic choice Allocation of resources and formulation of organisational structure Formulation of plans, policies, programmes and administration Evaluation and control

Strategy Formulation and Implementation Strategy formulation and implementation

NOKIA studies closely each of the subsets of its customer segments. It carefully assesses what appeals to each of them most. After identifying their purchasing power, it chooses the appropriate technology and then formulates the strategy. When MOTOROLA could not take off with seven varieties of cell phones, NOKIA struck gold with just two plain models. The secret of success was that the products were changed or adapted to local conditions. In other words, the products and services were more Indianised to ensure survival in the Indian markets. NOKIA could successfully formulate its strategy around its different customer segments, varying appeals and affordable technology. TAPARIA, CEO of Rajashree Cements followed a value enhancement strategy to capture the market dominated by 43 grade, where ACC and L&T were market leaders. He noticed that nobody thought of the market-positioning slot for superior grade 53, which, despite high price, leads to overall savings due to less consumption. He expected that a shift from 43 to 53 grade would require convincing, for which channel support and its participation in communication were essential. To popularise grade 53, Taparia launched the Shoppe concept by associating with ” weak and small channel “ members. The Shoppe concept empowered them with the services of a civil/structural engineer at Rajashree’s cost for any type of consultation with the customers visiting the shoppe. The neat and clean environment of the cement outlets attracted the customers who were otherwise used to the dirty and dusty environment of cement outlets. The customers were assured of the availability and reliability of the quality products. The customer could avail the services of a civil engineer and also sit in an air-conditioned chamber of the Shoppe and watch a video film on grade 53. The quality of documentation (invoices, challans) was improved to create confidence in the customer. The success of the Shoppe concept was evident from a rise in demand from 5000 tonnes per month to 45,000 TpM in Pune alone. Even established giants like ACC and LandT had to follow his footsteps by introducing grade 53 and also developing their own exclusive outlets like “ACC ki duniya” and “LandT station”. Q.2 Mr. Nandankumar wants to start a business of his own. He is seeking advice from a consultancy firm on how to go about it. If you were an employee of this consultancy firm, how would you guide him in preparing a business plan that would suit Nandankumar’s business? Ans:- 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. The first step in planning a new business venture is to establish goals that you seek to achieve with the business. You can establish these goals in a number of ways, but an inclusive and ordered process like an organizational strategic planning session or a comprehensive neighborhood planning process may be best. The board of directors of your organization should review and approve the goals, because these goals will influence the direction of the organization and require

the allocation of valuable staff and financial resources. Your goals will serve as a filter to screen a wide range of possible business opportunities. If you fail to establish clear goals early in the process, your organization may spend substantial time and resources pursuing potential business ventures that may be financially viable but do not serve the mission of your organization in other important ways. A liquor store on the corner may be a clear money-maker; however, it may not be the retail to assist your community desires. The following are examples of goals you may seek to achieve through the creation of a new business venture: Revenue Generation – Your organization may hope to create a business that will generate sufficient net income or profit to finance other programs, activities or services provided by your organization. Employment Creation – A new business venture may create job opportunities for community residents or the constituency served by your organization. Neighborhood Development Strategy – A new business venture might serve as an anchor to a deteriorating neighborhood commercial area, attract additional businesses to the area and fill a gap in existing retail services. You may need to find a use for a vacant commercial property that blights a strategic area of your neighborhood. Or your business might focus on the rehabilitation of dilapidated single family homes in the community. Whenever possible, goals should have quantifiable outcomes such as “to generate a minimum of $50,000 of net income or profit within three years”; “to employ at least 15 community residents within two years in new permanent jobs at a livable wage”; “to occupy and support a minimum of 10,000 square feet of neighborhood commercial space”; or “to rehabilitate 50 single-family houses over three years.” Clearly defined and quantifiable goals provide objective measurements to screen potential business opportunities. They also establish clear criteria to evaluate the success of the business venture. Establish Goals Once you have identified goals for a new business venture, the next step in the business planning process is to identify and select the right business. Many organizations may find themselves starting at this point in the process. Business opportunities may have been dropped at your doorstep. Perhaps an entrepreneurial member of the board of directors or a community resident has approached your organization with an idea for a new business, or a neighborhood business has closed or moved out of the area, taking jobs and leaving a vacant facility behind. Even if this is the case, we recommend that you take a step back and set goals. Failing to do so could result in a waste of valuable time and resources pursuing an idea that may seem feasible, but fails to accomplish important goals or to meet the mission of your organization. Depending on the goals you have set, you might take several approaches to identify potential business opportunities.

Your organization may wish to draw upon this internal expertise in selecting potential business opportunities. This assessment is based on the shopping and traffic patterns of the area and the demographic and socio-economic characteristics of the community. you should conduct a local market study. Identify Business Opportunities Buying an Existing Business: Rather than starting a new business. office supplies. Are all the required licenses and permits in place and can they be transferred to a new owner? . If nearby affiliate organizations also use this service or product. However. and other products. Your organization might consider purchasing and taking over the enterprise instead of starting a new business. these are just a few important areas to research in assessing the business you plan to purchase: Be sure to conduct a thorough review of the financial statements for the past three to five years to determine the current fiscal status and recent financial trends. If your organization does not have staff capacity to conduct a market study. with potentially disastrous results for the organization as a whole. catering services. Internal Purchasing Needs / Collaborative Procurement: Perhaps. transportation services. Its closure would mean the loss of jobs and services for your neighborhood. 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. staff or membership of your organization may possess knowledge and skills in a particular business sector or industry. you may wish to consider purchasing an existing business. and assess the capacity of the area to support existing and additional commercial or homeownership activity. property management services.Local Market Study: Whether your goal is to revitalize or fill space in a neighborhood commercial district or to rehabilitate vacant housing stock. Analysis of Local and Regional Industry Trends: Another method of investigating potential business opportunities is to research local and regional business and industry trends. you still need to go through the steps of creating a business plan. you might hire a consultant or solicit the assistance of business administration students from a local college or university. A good market study will measure the level of existing goods and services provided in the area. The regional or metropolitan area planning agency for your area is a good source of data on industry trends. A bad or insufficient market study could encourage your organization to pursue a business destined to fail. Conducting a solid and thorough market study up front will provide essential information for your final business plan. before moving ahead. Internal Capacity: The board. You may be able to identify which business or industrial sectors are growing or declining in your city. the validity of the accounts receivable and the status of the accounts payable. You will still need to conduct a complete market study to determine the demand for this product or service beyond your internal needs or the needs of your partners or affiliates. Perhaps a local retail or small light manufacturing business that has been an anchor to the local retail area or a much-needed source of jobs in the neighborhood is for sale. your organization frequently purchases a particular service or product. this may present a business opportunity. metropolitan area or region. travel services. If you decide to pursue this option. Examples of such products or services include printing or copying services.

The first step in writing your business plan is to identify your target audience. seek the expertise of an experienced professional in that particular industry. describe the market for your product or service. As a non-profit corporation. because of their expertise. be sure to consult an attorney experienced in corporation law. Will this be an internal plan the board will use to assess the feasibility and appropriateness of the business? Or will this plan be distributed to a larger external audience such as funding sources. commercial lenders or the community to gain financial backing and political support for the proposed venture? The content and emphasis of the plan will shift according to the audience. You will also need to assess the customer or client base and determine whether its members will remain loyal to the business after it changes hands. Another area to evaluate is the perception or image of the business. You might consider a combination of the options. engaging in income-generating activities not related to your mission may affect your tax-exempt status. In addition to qualified legal counsel. The following table lists the advantages and disadvantages of several options for getting the work done. attract investment. and establish operating goals and guidelines. At this early stage of your planning process. He or she will bring valuable knowledge and insights regarding the industry that will prove extremely useful during the business planning process. You will also need to decide who will conduct the necessary research and write the plan. Inspect the facilities and talk to suppliers.Also look at the quality of key employees who. A solid business plan will clearly explain the business concept. Advisory You have decided on a business opportunity that meets the goals of your organization. have a qualified attorney advise you on the proper corporate structure for your new venture. may need to remain with the business. After you have decided on a particular business activity. . You may also wish to protect your organization from any liability issues connected with the proposed business activity. Now you are ready to test the feasibility of the venture and to present your business concept to the world. customers and other businesses in the area to learn more about the reputation of the business.

It is necessary that an appropriate administrative structure be put in place to effectively deal with crisis management. Give a short note on mitigation strategies. The vast majority of the national critical infrastructure is owned and operated by private sector organizations. after a major crisis event. a. or intentionally caused disaster or emergency scenarios. non-governmental – its leadership has a duty to stakeholders to plan for its survival.Q. 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. during. interactive process that serves to assure the continuation of an organization’s core activities before.3. accidentally. the world’s largest organization of security professionals. it is good business for a company to secure its assets. ASIS. faith-based. Ans:. This new challenge goes beyond the mere emergency response plan or disaster management activities that we previously employed. and what the roles and responsibilities of participants are. This will ensure that all concerned understand who makes decisions. . Today’s threats require the creation of an on-going. Organizations now must engage in a comprehensive process best described generically as Business Continuity.Purpose of Business Continuity Plan Recent world events have challenged us to prepare to manage previously unthinkable situations that may threaten an organization’s future. and it is largely for these organizations that this guideline is intended. how the decisions are implemented. CEOs and shareholders must be prepared to budget for and secure the necessary resources to make this happen. It is no longer enough to draft a response plan that anticipates naturally. What is the purpose of business continuity plan? b. In the simplest of terms. and most importantly. not for profit. Regardless of the organization – for profit.

Prevention. and equipment should be documented in the plan and become part of ‘‘business as usual. Testing and Training.Mitigation Strategies Devise Mitigation Strategies Cost effective mitigation strategies should be employed to prevent or lessen the impact of potential crises. Evaluation and Maintenance. Critical Functions. Such monitoring can be likened to simple inventory management. a strong records management and technology disaster recovery program can mitigate the loss of key documents and data. but are not limited to: • • • • • • Emergency equipment Fire alarms and suppression systems Local resources and vendors Alternate worksites Maps and floor plans updated/changed due to construction and internal moves System backups and offsite storage. Ans. Business Impact Analysis. Q.In the not so distant past. Disaster. technology. there was little difference between financial and strategic investors. Readiness.recognizes these facts and believes the BC Guideline offers the reader a user-friendly method to enhance infrastructure protection. 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. These resources. facilities. Ans:. For example. Crisis Management Team. Resource Management. Mitigation Strategies. Investors of all colors sought to safeguard their investment by taking over as many . Recovery/Resumption.4. Mutual Aid Agreement. Examples of such systems and resources include. Risk Assessment. Key Words Business Continuity Plan. Damage Assessment..’’ Monitoring Systems and Resources Systems and resources should be monitored continually as part of mitigation strategies. securing equipment to walls or desks with strapping can mitigate damage from an earthquake. sprinkler systems can lessen the risk of a fire. Resources Needed for Mitigation The various resources that would contribute to the mitigation process should be identified. Distinguish between financial investor and strategic investor. including essential personnel and their roles and responsibilities. Response.

The quality of management. to issue new products and to acquire new clients money is abundant. but also a good management. This is "bottom line" short termism which also characterizes operators in the capital markets. The strategic investor. But his interpretation of the rolls and functions of "good management" are very different to that offered by the strategic investor. on the other hand. An investor was expected to excel in obtaining high yields on his capital – not in industrial management or in marketing. Additionally. not to be capable of personally tackling the various and varying tasks of the business that he managed. the success or failure of marketing strategies. But. it is the strategic investor that has the greater influence on the value of the company's shares. For "exit strategy" read quick profits. Indeed. separate businesses of money making and business management emerged. The strategic investor represents a discounted future in the same manner that shares do. Optimally. The financial investor is satisfied with a management team which maximizes value. One type supplied firms with capital. are purely financial investors. the rate of the introduction of new products. The financial investor represents the past. Given the ability to create a brand.all depend on the strategic investor. The financial investor participates in quarterly or annual general shareholders meetings. represents the real long term accumulator of value. the scales of industrial production (and of service provision) expanded. intellectual property.right and wrong decisions. Thus. Its money is the result of past . In many cases. The price of his shares is the most important indication of success. two classes of investors emerged. investment banks and other financial institutions. more and more. People invested in industries they were acquainted with first hand. That there is a strong relationship between the quality and decisions of the strategic investor and the share price is small wonder. The financial investor has little interest in the company's management. The financial investor is always on the lookout. the financial investor has no interest. for instance. to generate profits. Its orientation is short term: an "exit strategy" is sought as soon as feasible. . investments were small and shareholders few. Micromanagement is left to others . a separation was maintained. the strategic investor also provided the necessary funding. So are. A manager was expected to manage. Paradoxically. Actually. the level of customer satisfaction. the education of the workforce . nor the resources to get seriously involved in any one of them. The stock exchange is a popular exit strategy. the balance between financial investors and strategic investors is shifting in favour of the latter. technology. The other type supplied them with know-how. in many cases. As markets grew. Venture capital and risk capital funds. This is the extent of its involvement. People understand that money is abundant and what is in short supply is good management. his money buys for him not only a good product and a good market. management skills. A single investor (or a small group of investors) could no longer accommodate the needs even of a single firm. so is macro-management.but. As knowledge increased and specialization ensued – it was no longer feasible or possible to micro-manage a firm one invested in. marketing techniques. searching for willing buyers for his stake. Invested in so many ventures and companies. clientele and a vision. to a growing extent. gradually.management functions as they could. A firm resembled a household and the number of people involved – in ownership and in management – was correspondingly limited. a sense of direction.

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. To comply with all reporting. the audits. as financial management is implemented. other budgets. 6. especially. lack of compliance. financial consultants. the financing plans. the income. investment memoranda and all other financial and business documents as may be required from time to time by the Board of Directors of the Firm. To alert the Board of Directors and to warn it regarding any irregularity. the expenditures. the cost of sales and other budgetary items. 3. lacunas and problems whether actual or potential concerning the financial systems. 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. the management echelons. the adherence to the budget. the financial operations.These are the functions normally reserved to financial investors: Financial Management The financial investor is expected to take over the financial management of the firm and to directly appoint the senior management and. To timely. financial institutions and capital markets with the aim of securing the funds necessary for the operations of the firm. supervise and implement a timely. underwriters and brokers. To regulate. 1. To prepare and present for the approval of the Board of Directors an annual budget. the budgets and any other matter of a financial nature or which could or does have a financial implication. the accounting. 8. financial plans. which directly deal with the finances of the firm. . 5. lack of adherence. 2. the banking system and other financial venues. including accountants. its flow of funds. This is usually achieved both during a Due Diligence process and later. feasibility studies. 7. 4. 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. business plans. the attainment of its development plans and its investments. To collaborate and coordinate the activities of outside suppliers of financial services hired or contracted by the firm. To maintain a working relationship and to develop additional relationships with banks. To implement continuous financial audit and control systems to monitor the performance of the firm. auditors.

3. equipment. To coordinate an educational campaign to ensure the voluntary collaboration of the clients. therefore. conducive to the financial health. whether financial or of other nature.. put in charge of: 1. quantitative methods. The planning and erecting of the various sites. 2. premises. solving issues of compatibility (hardware and software. The provision of corporate guarantees and letters of comfort to suppliers. To constantly monitor and analyse the payment morale. 5. non-payment and nonperformance events.). The planning and implementation of line connections. 2. law enforcement agencies and private collection firms in assuring the timely flow and payment of all due payments. etc. etc. arrears and overdue payments and other collectibles. To analyse receivables and collectibles on a regular and timely basis. industrial processes. raw materials. 6. Negotiations and agreements with providers and suppliers. etc. 3. data gathering methods and venues in order to properly evaluate and predict the credit risk rating of a client. structures. Otherwise. protocols. Minimizing the costs of infrastructure by deploying proprietary components and planning. . 7. The strategic investor is. usually. computer network connections. – in order to determine the changes in the credit risk rating of said factors. Collection and Credit Assessment 1. or the average period of such arrears and overdue payments. factories. 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. He is. distributors and other debtors in the timely and orderly payment of their dues. To construct and implement credit risk assessment tools. 6. 4. To collaborate with legal institutions. questionnaires. To fully computerize all the above activities in a combined hardware-software and communications system which will integrate into the systems of other members of the group of companies.9. buildings. The selection of infrastructure.. 10. distributor. Project planning. To improve the collection methods in order to reduce the amounts of arrears and overdue payments. 4. to initiate and engage in all manner of activities. etc. 5. regularity. implementation and supervision. or supplier. put in charge of the following: Project Planning and Project Management The strategic investor is uniquely positioned to plan the technical side of the project and to implement it.

The planning and implementation of new technological systems up to their fully operational phase. The dissemination of the product as a preferred choice among vendors. collaboration with businesses. reliably. which. sounds. The strategic investor is usually possessed of a brandname recognized in many countries. market analyses and research. 5. advertising. It owns libraries of material. sponsorships. articles. its recognition and market awareness. paper clippings. vouchers). The planning and implementation of incentive systems (e. advertising and sales promotion drives best suited for it. The presentation to the Board an annual plan of sales and marketing including: market penetration targets. points. The strategic investor is also in charge of "vision thinking": new methods of operation. public relations and other media campaigns. . advertising campaigns. and proprietary trademarks and brand names. It has been providing goods and services to users for a long period of time. predicting the future trends and market needs. co-branding.. a franchising network. It has numerous off the shelf marketing plans and drawer sales promotion campaigns. collaboration with other suppliers – are all the responsibilities of the strategic investor. 2. image. distributors. or a sales network (retail chains) including: training. new marketing ploys. Special events. The strategic investor typically brings to the firm valuable experience in marketing and sales. It is the market leaders in certain territories. new market niches. inventory and accounting controls.Marketing and Sales 1. etc. The strategic investor usually organizes a distribution and dealership network. pricing. 4. local marketing and sales promotion and other network management functions. It has built large databases with multi-year profiles of the purchasing patterns and demographic data related to thousands of clients in many countries. individual users and businesses in the territory. profiles of potential social and economic categories of clients. Technology 1. Above all. can attract users. 6. images. The enhancement of the brandname. network control. It developed software and personnel capable of analysing any market into effective niches and of creating the right media (image and PR). The strategic investor also implements these plans or supervises their implementation. 7. PR and image materials. sales promotion methods.g. implement and supervise all the stages of the technological side of the business. it accumulated years of marketing and sales promotion ideas which crystallized into a new conception of the business. pecuniary and quality supervision. 3. This is an important asset. market penetration. if properly used. The strategic partner's engineers are available to plan.

The encouragement of the development of in-house. customer services. Education and Training The strategic investor is responsible to train all the personnel in the firm: operators. The planning and implementation of a fully operative computer system (hardware. The strategic investor puts at the disposal of the firm proprietary software developed by it and specifically tailored to the needs of companies operating in the firm's market. 2. To structure the firm in an optimal manner. for fear of losing all their money. Entrepreneurs are excellent at identifying the needs of the market and at introducing technological or service solutions to satisfy such needs. or persons. These things antagonize the entrepreneurs. They feel that they are losing their creation to . proprietary. 3. in collaboration with other suppliers or market technological leaders. technological solutions to the needs of the firm. To run the day to day business of the firm. intranet) to deal with all the aspects of the structure and the operation of the firm. sales personnel. They may be less visionary – but also more experienced. 4. its clients and suppliers. communication. They are more interested in business results than in dreams. representations and negotiations with other firms. software. 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. To oversee the personnel of the firm and to resolve all the personnel issues. The planning and the execution of an integration program with new technologies in the field. distributors. 3. And – being well acquainted with entrepreneurs – they insist on having unmitigated control of the business. But the very personality traits which qualify them to become entrepreneurs – also hinder the future development of their firms. The entrepreneurs – who sought to introduce the two types of investors. To secure the unobstructed flow of relevant information and the protection of confidential organization. To represent the firm in its contacts. 5. vendors. Outside investors are not emotionally involved. authorities. Only the introduction of outside investors can resolve the dilemma.2. 4. in the first place – are usually left with the following functions: Administration and Control 1. This is why entrepreneurs find it very hard to cohabitate with investors of any kind. The training is conducted at its sole expense and includes tours of its facilities abroad.

which relate to the provision of fair enforcement procedures . such as examination and grant of rights by a patent office. The procedures for enforcement of IP rights differ widely between countries. Without enforcement. you would normally have to take action yourself to take the infringing party to court. The main enforcement provisions in TRIPS include: • The general obligations under the TRIPS Agreement. but this is often limited. 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. and for infringement of rights such as patents. Ans:. TRIPS. mean spirited. This would save you the expense and the uncertainty of a protracted court case. potentially by many different people and on a large commercial scale. this includes having specific provisions for effective enforcement of IP rights in national laws. and general IP rights. 5 Give a note on enforcement of intellectual property rights. there are no real deterrents for infringers or remedies for those whose rights are infringed.Enforcement of Intellectual Property Rights Intellectual property rights are of limited value unless they are effectively enforced. Enforcement Measures Required by TRIPS The TRIPS Agreement differs from earlier international intellectual property treaties in several ways. for patents and plant breeders’ rights. plant breeders rights and trade secrets. Q. so this discussion will focus on the TRIPS provisions to give an overall picture of how enforcement operates. for instance. This is where nine out of ten entrepreneurs fail . One basic distinction in enforcement lies between more those IP infringements which tend to be infringed widely.in knowing when to let go. because they have much more to do with the general legal system than other aspects of IP rights. specifies that the government or legal authorities need to have a more active role in dealing with these infringements than. The TRIPS Agreement has established some general principles for IP enforcement which are reflected in the laws of many countries. whereas for patents it is normally up to the patent holder or licensee to take an infringer to court. The legal authorities do have some role in enforcing intellectual property 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. corporate predators.cold-hearted. say. In the first category are pirated copyright works and counterfeit trade mark goods. They rebel and prefer to remain small or even to close shop than to give up their cherished freedoms. and could provide you with a good financial return.

General Enforcement Obligations under Trips The TRIPS Agreement provides for a range of general obligations in relation to the enforcement of intellectual property rights. Example – enforcing a patented invention for making house paint. 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. imagine that you own a patent for house paint that dries very quickly. the US and Indonesia. including injunctions. so that enforcement is fair and balanced. TRIPS does not require a special judicial system for the enforcement of intellectual property rights distinct from the normal court system. Parties to a proceeding must have an avenue of appeal. TRIPS provides that enforcement procedures must be fair and equitable. and be made available to the parties without undue delay. The remedies available must also be severe enough to deter further infringements. Criminal procedures. It took you 8 years to develop the process and cost you thousands of dollars to patent your invention in Australia. and may not be unnecessarily complicated or costly.• • • Civil remedies. and that the remedies available are expeditious in order to prevent infringements. 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. Decisions in enforcement cases must be based on the merits of a case. The purpose of these obligations is to ensure that the enforcement measures are effective. or entail unreasonable time-limits or delays. Decisions should preferably be in writing and reasoned. Remedies must be timely and deter further infringements TRIPS requires that enforcement procedures permit effective action against any infringement of intellectual property rights. Special border enforcement measures to stop counterfeit trade mark and pirated copyright material coming into a country. damages and provisional measures. such as patents. 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 . 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. unless the case was criminal in nature and the accused was acquitted. and does not impede legitimate trade. which are compulsory for intentional trade mark and copyright piracy on a commercial scale and optional for other kinds of intellectual property. border enforcement measures are optional for other kinds of intellectual property. For example. such as patents. and that certain basic principles of due process are met. 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. Finally. Enforcement procedures must be fair.

initially in physics and chemistry. the first step is ‘taken’ by the ‘non-average’ underlying elements within the system. subjected in its turn to the disturbances from its own non-average individuals and situations. When this occurs. It is this dialogue between successive ‘systems’ and their own inner ‘richness’ that provides the capacity for continuous adaptation and change. complexity and qualities. while the second – the emergence of a transformed. and evolved over time. Creativity Everyone in business is creative. effective ‘average’ behaviour of the elements. functioning system – concerns new. They spend most of their creative energy telling manufacturers that they…aren’t creative! . gaining. Some of most creative people are in manufacturing. where flows of matter. 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. In Complex Systems. Successive instabilities occur each time that existing structure and organisation fail to withstand the impact of some new circumstance or behaviour. Obviously you need to take legal action against Cheap Paints to enforce your rights. Some of the least creative people perhaps are in advertising. changing structurally. Doing what has been decided (implementation).trading as Cheap Paints. energy and information can occur across their boundaries. The kinds of remedies you could take against Cheap Paints are set out in this unit. the system re-structures and becomes a different system. Q. this showed how systems came into being. there would be no market left for you to get any financial return on your invention.Complex Systems Behaviour In studying Complex Systems. 6 Give a note on complex systems behaviour and creativity. Ans:. otherwise. The study of Complex Systems therefore revealed a co-evolutionary process of a system and its environment in which successive change and adaptation each involved two separate steps: • • Discovering what to do (exploration and evaluation). it became clear that the key properties of ‘open’ systems. Instead of a ‘fixed’ mechanical system. and sometimes shedding. You also suspect that Cheap Paints are exporting tins of infringing paint overseas. They actually CREATE products that change the world. And these two steps are radically different in nature. were that they could undergo spontaneous transformations of structure and functionality.

pen. Story First.Salespeople Are Creative – They are natural born story-tellers. Your life. “It’s not my job to be creative. Look up at people. . your desk. not to complain. A Simple Creative Exercise… Simplify everything. Refuse to tell them a story about the meaning of the numbers. Don’t invest in a presentation class called “How to Use PowerPoint”…. procedures. You have a ton every day. But most of the time. …until you’ve taken a class called “How to Tell Stories and Connect with Your Audience”. policy. Your job is to fix problems. Brainstorming Don’t tell people that their ideas are bad.” How to Lose an Audience… • • Show your audience slides with columns of numbers. your processes. Get your ideas on paper (Let someone else edit it. Fixing Problems is Creative. and calendar into your meetings. It’s only your life’s work. Technology Last. vision. especially if you don’t have a better one.) Go retro: Carry a notebook. Accountants are creative. you can’t remember them by the day’s end. your office. Best Creative Exercise Ever Write down your ideas. your home. Everything. Don’t let spelling and grammar issues or relentless self-editing stop you. Never say.

read your audience. Create something every day. or else you will never get any real creative work done. Master of Business Administration-MBA Semester 4 MB0036 – Strategic Management and Business Policy Assignment Set.” Everyone in Sales Knows… · Tell stories. Avoid Meetings. It’s not rare. instead of endless (boring) discussions about the superiority of the Macintosh over the PC! Creativity: Use it or Lose it. Get Fresh Ideas. Leave the office building at least once a day. · Don’t just provide data. Another Lame Excuse… Designers should put more of their passion into designing great work. It’s just been mystified – Own your creativity. not once in a while. Creativity takes place every day. How about a Show? Try “giving a performance” instead of merely “giving a presentation. Do not attend more than two meetings a day. Instead.2 .• • Do not read your speech or presentation.

1 Explain the importance of licensing and assigning IP rights. Licenses are normally confined to a particular geographical area – typically. or to keep your IP rights and license them to others to use. a patent owner can grant an exclusive licence to make and sell their patented invention in Malaysia for the term of the patent. If a patent owner grants a non-exclusive licence to Company A to make and sell their patented invention in Malaysia. Ans:. The patent right normally includes the right to exclude others from making. For example. A licence is a grant of permission made by the patent owner to another to exercise any specified rights as agreed. and grant a separate exclusive licence to manufacture and sell their patented invention in India for the term of the patent. the jurisdiction in which particular IP rights have effect. For example. they would not be able to give a licence to anyone else in Malaysia while the licence with Company A remained in force. grant a licence a Canadian company to use the invention in North America. of course. in principle. However. and in maintaining and enforcing the underlying IP right. For instance. You can grant different exclusive licences for different territories at the same time. licences can be exclusive or non-exclusive. if a patent owner granted an exclusive licence to Company A to make and sell the invention in Malaysia. using.Q. it normally requires the owner of the invention to invest time and resources in monitoring the licensed use. 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.Licensing and Assigning IP rights One basic choice is whether you should actively exploit your IP rights yourself. a separate exclusive licence to another company to use it for relief of cold symptoms. and the patent holder retains ownership and control of the basic patent. If you are based in Malaysia. she could grant an exclusive licence to one company to use the technology for an arthritis drug. or sell or assign the rights to another person. if an inventor creates a new form of pharmaceutical delivery. and similar rights concerning patented processes. from that use. and a further exclusive licence to a third company to use it for veterinary pharmaceuticals. make different choices in different countries for exploiting IP rights for the same underlying invention. The license can therefore cover the use of the patented invention in many different ways. the patent owner would still be able to also grant Company B another non-exclusive for the same rights and the same time period in Malaysia. . Separate licences can be granted for different ways of using the same technology. You can. and sell or assign the rights in Europe to a Danish company – whether or not this is the best approach in practice is a different matter. such as financial royalties. In contrast. you could in theory decide to exploit your patent yourself in the East Asian region. A licence is merely the grant of permission to undertake some of the actions covered by intellectual property rights. selling or importing the patented product.

If you assign your rights. Q. Indeed. there is large consensus on its main features: . Companies are aware that they can contribute to sustainable development by managing their operations in such a way as to enhance economic growth and increase competitiveness whilst ensuring environmental protection and promoting social responsibility. It should be remembered that the person who makes an invention can be different to the person who owns the patent rights in that invention.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. territories and time periods. new social and market pressures are gradually leading to a change in the values and in the horizon of business activity. In this context. Patent licences and assignments of patent rights do not have to cover all patent rights together. they can be in infringement of the patent right if they continue to use it. yet responsible behaviour. Despite the wide spectrum of approaches to CSR. a patent owner could exclusively licence only their importation right to a company for the territory of Indonesia for 12 months. thereby generating profit for its owners and shareholders as well as welfare for society. Ans. an increasing number of firms have embraced a culture of CSR.An assignment of intellectual property rights is the sale of a patent right. you might negotiate an arrangement that gives you licence to use the patented invention in the event that you come up with an improvement on your original invention and this falls within the scope of the assigned patent. If an inventor assigns their patent rights to someone else they no longer own those rights. The main function of an enterprise is to create value through producing goods and services that society demands. the amount you charge for an assignment is usually considerably higher than the royalty fee you would charge for a patent licence. Portions of a patent right can also be assigned – so that in order to finance your invention. For instance. or a share of the patent. Therefore. If an inventor owns patents on the same invention in five different countries.. Equally. particularly through an ongoing process of job creation. including consumer interests. When assigning the rights.2 Assess the need for Corporate Social Responsibility with supporting instances. Licences are often limited to specific rights. the new owner of the assigned patent might want to get access to your subsequent improvements on the invention. There is today a growing perception among enterprises that sustainable business success and shareholder value cannot be achieved solely through maximising short-term profits. For example. you might seek to negotiate a licence from the new owner to ensure that you can continue to use your invention. you normally lose any possibility of further licensing or commercially exploiting your intellectual property rights. However. but instead through market-oriented. you might choose to sell a half-share to a commercial partner. they could assign (or sell) these patents to five different owners in each of those countries.

more effective development co-operation and technology transfers. policy-makers and other stakeholders. and tend to reward. be it in Europe or elsewhere. as an important element of new and emerging forms of governance. awareness of CSR issues and concerns will contribute to promote more sustainable investments.• • • CSR is behaviour by businesses over and above legal requirements. As knowledge and innovation become increasingly important for competitiveness. In view of the EU enlargement. The Growing Recognition of CSR CSR has found recognition among enterprises. enterprises have a higher interest in retaining highly skilled and competent personnel. it is however important to enhance common understanding both in Member States and candidate countries. investment and sustainable development are key issues in the CSR debate. It means a business approach. Indeed. socially and environmentally responsible firms. Socially responsible initiatives by entrepreneurs have a long tradition in Europe. CSR is intrinsically linked to the concept of sustainable development: businesses need to integrate the economic. Considerations of image and reputation play an increasingly important role in the business competitive environment. which can help them to respond to the following fundamental changes: • • Globalisation has created new opportunities for enterprises. financial stakeholders ask for the disclosure of information going beyond traditional financial reporting so as to allow them to better identify the success and risk factors inherent in a company and its responsiveness to public opinion. as consumers and NGO’s ask for more information about the conditions in which products and services are generated and the sustainability impact thereof. voluntarily adopted because businesses deem it to be in their long-term interest. which puts stakeholder’s expectations and the principle of continuous improvement and innovation at the heart of business strategies. particularly in developing countries. What constitutes CSR depends on the particular situation of individual enterprises and on the specific context in which they operate. social and environmental impact in their operations. What distinguishes today’s understanding of CSR from the initiatives of the past is the attempt to manage it strategically and to develop instruments for this. Partly as a consequence of this. with their behaviour. but it also has increased their organisational complexity and the increasing extension of business activities abroad has led to new responsibilities on a global scale. CSR is not an optional "add-on" to business core activities – but about the way in which businesses are managed. Both processes of trade and financial markets liberalisation should be matched by appropriate progress towards an effective system of global governance including its social and environmental . and the interrelation between trade. • • The Global Dimension of CSR Global governance.

international agreements are in place and their implementation by governments should be promoted. at present. requiring an international response. In its communication on Promoting Core Labour Standards and Improving Social Governance in the context of Globalisation[1]. Those agreed instruments are. . World Business Council for Sustainable Development. identifying common frameworks for the global dimension of CSR is challenging due to the diversity in domestic policy frameworks. such as Investors for Africa. Second. of two kinds: First. internationally endorsed set of rules governing the activities of multinationals.Small business is more than a fashion or a buzzword.dimensions. beyond CSR. only small businesses create new jobs. In promoting CSR in developing countries. and approaches should involve consultation with local stakeholders.3 What are the obstacles faced by small business units? Explain with examples. They should be transparent and based on clear and verifiable criteria or benchmarks. Q. the OECD Guidelines for Multinational Enterprises are the most comprehensive. It stressed in particular the universality of core labour standards and the need for codes of conduct to integrate the ILO fundamental Conventions. The big dinosaur firms (the "blue-chips") create negative employment – they fire people. protection of workers and environmental regulation. just as at European. Public policy can contribute to the development of an action framework with a view to promote transparency and thus credibility for CSR practices. the Commission stressed the need to ensure the respect for core labour standards in the context of globalisation. at global level. In the USA. The underlying approach should be that. This trend has a glitzy name: downsizing. A number of initiatives in which European companies participate. At the same time. Ans:. By abiding by internationally accepted standards. Globalisation has also increasingly exposed enterprises to trans-boundary economic criminality. CSR practices and instruments will be more effective if they are part of a concerted effort by all those concerned towards shared objectives. the implementation of CSR principles should also go over and above the legal requirements that businesses need to comply with. EU businesses should demonstrate and publicise their world-wide adherence to them. and the UN Global Compact have sought to identify basic principles and practices. multinational enterprises can contribute to ensure that international trade markets function in a more sustainable way and it is therefore important that the promotion of CSR at international level takes as its basis international standards and agreed instruments.

In the United Kingdom and Australia.it is common rule of thumb that the entrepreneur should have access to a sum of money at least equal to the projected revenue for the first year of business in addition to his anticipated expenses. A frequent cause of bankruptcy is undercapitalization.000 in revenues in the first year with $150. small business owners tend to be more concerned with excessive governmental red tape.4 Are decision support systems beneficial in strategic management and business policies? Justify your answer. Ans:. it would be impossible to break even. if the prospective owner thinks that he will generate $100.000 in start-up expenses. many small business owners underprice their products to a point where even at their maximum capacity. It forces the management to rationalize the depreciation. Small businesses often face a variety of problems related to their size. The same goes. Additional business management skills are needed to keep a business running smoothly. the business must be able to reach a level of sales where the gross margin exceeds fixed costs. the small business owner must also be mindful of gross margin (sales minus variable costs). This is often a result of poor planning rather than economic conditions. In the United States. Failure to provide this level of funding for the company could leave the owner liable for all of the company's debt should he end up in bankruptcy court. to a lesser extent. It warns the management against impending crises and problems in the company.In Israel many small businesses became world class exporters and big companies in world terms. rising energy costs and taxes. inventory and inflation policies. Q. in Britain and in Germany. In addition to ensuring that the business has enough capital. some of the largest concerns of small business owners are insurance costs (such as liability and health). To break even. It specially helps in following areas: . Another problem for many small businesses is termed the 'Entrepreneurial Myth' or E-Myth. Cost controls or price increases often resolve this problem.000 available. When they first start out.A decision system has great impact on the profits of the company. The mythic assumption is that an expert in a given technical field will also be expert at running that kind of business. For example. then he should have no less than $250. under the theory of undercapitalization.

It has been proven that without proper feedback. the actual expenditures are compared to the budget in a feedback loop.000 USD (all included: software. they can not serve as day-to-day guides to the General Manager. the firm generates its financial statements: the income statement. During the year. Profits go up. for how long (for which maturities) and in which interest rate. or IAS). these four documents are the formal edifice of the firm’s finances. As a result of all the above effects. provide a better sense of the dynamics of the operation and should be constructed on the basis of Western Accounting Principles (GAAP and FASBs. But the Manager should be able to open this computer daily and receive two kinds of data. Daily financial statements . As time passes. tax liabilities are minimized and cash flows are maintained positive throughout. non cash outlays are controlled. However. the cash flow statement. managers tend to take too much credit and burden the cash flow of their companies. It is completely compatible with western accounting methods and derives all the data that it needs from information extant in the company. These financial statements. the establishment of a decision system does not hinder the functioning of the company in any way and does not interfere with the authority and functioning of the financial department. fully updated and fully integrated: 1. They are one of the best investments that a firm can make. The budget allocates amounts of money to every activity and/or department of the firm. and training). Decision Support Systems cost as little as 20. the balance sheet.• • The management knows exactly how much credit it could take. The decision system is an integral part of financial management in the West. hardware. Levels of Reporting and Flows of Data To assist in overcoming the above. however inaccurate. or at the end of the fiscal year. there are four levels of reporting and flows of data which every company should institute: The first level is the annual budget of the company which is really a business plan. Put together. The second tier of financial audit and control is when the finance department (equipped with proper software – Solomon IV is the most widely used in the West) is able to produce pro forma financial statements monthly. So. the value of the company grows and its shares appreciate. A decision system allows for careful financial planning and tax planning.

at each and every stage. The most important statement is that of the cash flow. The Daily Financial Statements The Manager should have access to continuously updated statements of income. It enables the Manager to instantly analyse dozens of important aspects of the functioning of his company. cash flow. or where the ratios warn about problems in the future – management intervention may be required. The manager should be able to know. other firms in his branch and to the overall performance of the industry that he is operating in. In other words.2. The Daily Ratios Report This is the most important part of the decision support system. Where there is a strong deviation from historical patterns. spot the alerts. from home. Instead of sifting through mountains of documents. the Manager will only have to look at four computer screens in the morning. Examples of the Ratios to be Included in the Decision System a) b) c) d) e) 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 . the Manager will be able to type a future date into his computer and get the financial reports and statements relating to that date. This way. It also allows him to compare the performance of his company to the performance of his competitors. Using today’s technology – a wireless-connected laptop – Managers are able to access all these data from anywhere in the world. Daily ratios report. fully analysed and fully updated. and a balance sheet. the Manager will not be able to see only a present situation of his company. and so on. but its future situation. These pro forma financial statements should include all the future flows of money – whether invoiced or not. It allows him to compare the behaviour of these parameters to historical data and to simulate the future functioning of his company under different scenarios. The Manager can review these financial and production ratios. read the explanations offered by the software. 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. check what is happening and better prepare himself for the future. while traveling.

The Finance Director 2. the CFO can report directly to the Board of Directors through the person of the Chairman of the Board of Directors or by direct summons from the Board of Directors. Kevin is a CFO of a multinational company. eroded and embittered. What would be his role and responsibilities in the company? Ans. this would be considered treason – but. answers to him and regularly reports to him. Others retire. 5 Mr.f) ROS – the profit margin on the sales g) ATO – asset turnover.. Organizational Affiliation The Chief Financial Officer is subordinated to the Chief Executive Officer. The structure of business firms in the USA reflects its political structure. When the financial results are good – they are attributed to the talented Chief Executive Officer (CEO). Shareholders hold him responsible in annual meetings. the Management is the Executive (President and Administration). Very few make it to the top. The job of the Chief Financial Officer is composed of many elements. A grilling session then ensues: debriefing the officer and trying to spot contradictions between his testimony and others’. Despite the above said. In many developing countries. thankless job. Here is a universal job description which is common throughout the West.The CFO (Chief Financial Officer) is fervently hated by the workers. in the West every function holder in the company can – and regularly is – summoned by the (active) Board. When they are bad – the Chief Financial Officer gets blamed for not enforcing budgetary discipline. He is dreaded by the owners of the firm because his powers that often outweigh theirs. quick ratio. The Accounting Department which answers to him and regularly reports to him. how efficiently assets are used h) Tax burden and interest burden ratios i) Compounded leverage j) Sales to fixed assets ratios k) Inventory turnover ratios l) Days receivable and days payable m) Current ratio. The Financing Department 3. . He is thoroughly despised by other managers. the shareholders are the people. mostly for scrutinizing their expense accounts. It is a no-win. The usual checks and balances are applied: the authorities are supposedly separated and the Board criticizes the Management. The Board of Directors resembles Congress. The CFO is in charge of: 1. interest coverage ratio and other liquidity and coverage ratios n) Valuation price ratios o) And many others Q.

e. It has exactly the same functions. this is often confused with central planning. Developing countries are still after the cosy. In developing countries. 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 operation of the firm and subject to internal guidelines set from time to time by the Board of Directors of the firm. Boards of Directors are rubber stamps. colluding with it. that they have quotas to complete. they engage in the old time central planning and they do it through the budget. the expenditures.The same procedures are applied: the Board can summon a worker to testify – the same way that the Senate holds hearings and cross-questions workers in the administration. The books do not reflect reality because they are "tax driven" (i. This gives the CFO an inordinate power. the only one who has access to the whole picture. General Managers – unchecked – get involved in colossal blunders (not to mention worse). (2) To implement continuous financial audit and control systems to monitor the performance of the firm. This is somewhat difficult in developing countries. Nor does it mean a budget which goes to such details as how many tea bags will be consumed by whom and where. he can easily enrich himself. Functions (1) To regulate. however. supervise and implement a timely. Europe.. new management techniques to implement. where such incestuous practices were common hitherto – is reforming itself with zeal (especially Britain and Germany). Lately. its flow of funds. It is a statement of policy. Managers in developing countries still feel that they are being supervised and followed. possible collaborations. He is in a position to blackmail the management and the shareholders of the firm. So. devoid of any will to exercise their powers. most of the time. identification of the competition. new markets to penetrate. Financial control does not mean the waste of precious management resources on verifying petty expenses. But he cannot be honest: he has to constantly lie and he does so as a life long habit. the delineation became fuzzier with managers serving on the Board or. This is wrong. Ironically. the adherence to the budget. They are staffed with cronies and friends and family members of the senior management and they do and decide what the General Managers tell them to do and to decide. He becomes the information junction of the firm. the income. He (or she) develops a cognitive dissonance: I am honest with my superiors – I only lie to the state. the cost of sales and other budgetary items. Two sets of books are maintained: the real one which incorporates all the income – and another one which is presented to the tax authorities. It sets the strategic (and not the tactical) goals of the firm: new products to develop. worse. intended to cheat the tax authorities out of tax revenues). a beacon showing the way to a more profitable future. A budget in a firm is no different than the budget of the state. of . If he is dishonest. in reality. outdated European model. The concept of corporate governance is alien to most firms in developing countries and companies are regarded by most general managers as milking cows – fast paths to personal enrichment. that they have to act as though they are busy (even if they are. idle).

he is forced to collaborate. management-independent strategic thinking on a firm. corporate insecurity (will my company continue to exist in this horrible economic situation) and personal insecurity (will I continue to be the General Manager) combine to breed short-sightedness. a drive to get rich while the going is good (and thus rob the company) – and up to criminal tendencies. All this. transparency and long-term. potential problem areas of activity and performance. a budget must allocate the scarce resources of the firm in order to obtain a maximum impact (=efficiently). unfortunately. As I said: the Board in these countries is full with the cronies of the management. speculative streaks. A weak CFO is rendered a pawn in these get-rich-quick schemes – a stronger one becomes a partner.the relative competitive advantages. It is important to emphasize that not all the businesses in developing countries are like that. Additional functions of the CFO include: (3) To timely. political insecurity (will my party remain in power). the General Manager uses the Board as a way to secure the loyalty of his cronies. 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. friends and family members by paying them hefty fees for their participation (and presumed contribution) in the meetings of the Board. The poor CFO is loyal to the management – not to the firm. The firm is nothing but a vehicle for self enrichment and does not exist in the Western sense. Audit can be external but must be complemented internally. with stratagems which conflict with his conscience. Discipline and transparency require an enormous amount of investment by the financial structures of the firm: quarterly reports. (4) To comply with all reporting. Harder – because there is nothing like a stock exchange listing to impose discipline. audited annual financial statements. from time to time. It is the job of the CFO to provide the management with a real time tool which informs them what is happening in the firm and where are the problematic. In some places the situation is much better and closer to the West. The absence of a functioning capital market in many developing countries and the inability of developing countries firms to access foreign capital markets – make the life of the CFO harder and easier at the same time. The warning signs and barbed wire which separate the various organs of the Western firm (management from Board of Directors and both from the shareholders) – have yet to reach developing countries. as a separate functional entity which demands the undivided loyalty of its officers. disclosure of important business . No less important are the control and audit mechanisms which go with the budget. Above all. 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. In many companies. But geopolitical insecurity (what will be the future of developing countries in general and my country in particular). In both cases. is missing from budgets of firms in developing countries.

The primal sin in developing countries was so called “privatization”. the accounting. privatization. the audits. workers and ownership is detrimental to a firm. the financing plans. who were also owners and so on. financial consultants. (6) To alert the Board of Directors and to warn it regarding any irregularity. Privatized companies are dying slowly. Management takeovers and employee takeovers forced the new. feasibility studies. Communism (the common ownership of means of production) has returned in full vengeance. Thus. therefore. they were unable to infuse the firm with new capital. impoverished. (5) To prepare and present for the approval of the Board of Directors an annual budget. the budgets and any other matter of a financial nature or which could or does have a financial implication. financial plans. the banking system and other financial venues. To mix the functions of management. interaction with regulators (a tedious affair) – all fall within the remit of the CFO. The concept of ownership is meaningless because everyone owns everything and there are no identifiable owners (except in a few companies). business plans. The laws were flawed. lacunas and problems whether actual or potential concerning the financial systems. the financial operations. should he welcome it? Because discipline and transparency make the life of a CFO easier in the long run.developments. They are bitterly disappointed and enraged when they discover that an accountant has to comply with the rules of his trade or that a financial consultant protects his reputation by refusing to collaborate with shenanigans of the management. other budgets. Absurdly. including accountants. not all) are interested in collusion – not in consultancy. Boards were composed of friends and cronies of the management because the managers also owned the firm – but they could be easily fired by their own workers. new expertise. The CFO is absolutely aligned and identified with the management. investment memoranda and all other financial and business documents as may be required from time to time by the Board of Directors of the firm. These incestuous relationships introduced an incredible amount of insecurity into management ranks (see previous point). auditors. lack of compliance. Many firms in developing countries (again. Having hired a consultant or the accountant – they believe that they own him. precisely because of the ostensibly most capitalist act of all. . or new management. underwriters and brokers. Why. lack of adherence. Just think how much easier it is to maintain one set of books instead of two or to avoid conflicts with tax authorities on the one hand and your management on the other. One of the problems thus wrought was the total confusion regarding the organic structure of the firm. though in disguise. The Board is meaningless. (7) To collaborate and co-ordinate the activities of outside suppliers of financial services hired or contracted by the firm. yet this is exactly the path that was chosen in numerous developing countries. owners to rob the firm in order to pay for their shares.

conducive to the financial health. The financial institutions which pass for banks in developing countries lend money on the basis of personal acquaintance more than on the basis of analysis or rational decision making. It is this point that occupies the working time of Western CFOs. financial institutions and capital markets with the aim of securing the funds necessary for the operations of the firm. whether financial or other. the attainment of its development plans and its investments. He must collaborate with the skewed practices and decision making processes of the banks – or perish. 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. It is their brain that is valued – not their connections or cunning acts. (10) Otherwise.(8) To maintain a working relationship and to develop additional relationships with banks. (9) To fully computerize all the above activities in a combined hardware-software and communications system which integrates with the systems of other members of the group of companies. One of the main functions of the CFO is to establish a personal relationship with the firm’s bankers. 6 Give a note on strategies that improve sales. This also allows for favouritism and corruption in the banking sector. to fill the gap between actual sales and targeted sales: a) Intensive growth b) Integrative growth c) Diversification growth a) Intensive Growth: . Q. The lack of non-bank financing options and the general squeeze on liquidity make matters even worse for the finance manager. This "old boy network" substitutes for the orderly collection of data and credit rating of borrowers. A CFO who is unable to participate in these games is deemed by the management to be "weak". "ineffective" or "no-good". to initiate and engage in all manner of activities. Ans:Strategies to Improve Sales There are three alternatives to improve the sales performance of a business unit.

By lowering the prices of TVs with Trinitron picture tubes. dishwasher. MICROSOFT’s New Strategy It is called PC-plus.g. the company could successfully penetrate into the markets to add new customers to its customer base. it may be possible to gain more market share with the current products in their current markets through a market penetration strategy. the management should first evaluate the available opportunities to improve the performance of its existing current businesses. Most multinational companies have been entering Indian markets with this strategy. which could lead to price pressures.000 and above over the market through a niche market capture strategy. ‘In the near future. SONY introduced TV sets with Trinitron picture tubes into the market in 1996 priced at a premium of Rs. b) Developing software to allow these devices to communicate. Market Development Strategy is to explore the possibility to find or develop new markets for its current products (from the northern region to the eastern region etc. It may find three options: • • • To penetrate into existing markets To develop new markets To develop new products At times. Study the following example to understand what Product Development Strategy is. According to Bill Gates. . care should be taken to ensure that these new markets are not low density or saturated markets. However. refrigerator. For instance. It has three elements: Providing computer power to the most commonly used devices such as cell phone. Product Development Strategy involves consideration of new products of potential interest to its current markets (e. washing machines and so on. PC-based networks will help us control many of our domestic matters with devices that cost no more than $ 100 each ‘. However.). They gradually lowered the prices to market levels. it also simultaneously launched higher-end products (high-technology products) to maintain its global image as a technology leader.It refers to the process of identifying opportunities to achieve further growth within the company’s current businesses. personal computer. a) Microsoft envisions a home where everyday appliances and electronics are smart. To achieve intensive growth. Gramaphone Records to Musical Productions to CDs)– as part of a Diversification strategy. toaster oven. to develop markets globally.10. c) Investing heavily to help build wireless and high-speed internet access throughout the world to link it all together.

More often. the business processes have to be integrated for linear growth in the profits. it is called horizontal integration (however. In most cases. If the company legally takes over or acquires the business of any of its leading competitors. Alternatively. The corporate plan may be designed to undertake backward. if this company acquires some of its most profitably operating intermediaries such as wholesalers or retailers. laundry washers can be designed to send an instant message to the home computer when the load is done and refrigerators can be made to send an e-mail when there’s no more milk. A printing press might shift over to offset printing with computerised content generation to appeal to higher-end customers and also add new application areas ( Horizontal Diversification ) – or even sell stationery. it is forward integration. Microsoft plans to give these appliances ‘brains‘ and provide them the means to talk to each other through their Windows CE Operating System. forward or horizontal integration within the industry. b) A vendor supplying engine boxes to Maruti decides to supply the same with modifications to Hyundai. This makes sense when such opportunities outside the present businesses are identified with attractive returns and that industry has business strengths to be successful. Situation AnalysisSales Improvement Strategies: a) A supplier of computer stationery invests in a computer stationery manufacturing unit.It is also said at Microsoft that VCRs can be programmed via e-mail. c) A company dealing in computer floppies plans to set up a Software Technology Park. the company might choose new businesses that have nothing to do with the current technology. c) Diversification Growth: It refers to the process of identifying opportunities to develop or acquire businesses that are not related to the company’s current businesses. it might be counter-productive due to dilution of brand image). The classic examples for this would be engineering and textile firms setting up software development centres or Call Centres with new service clients. if this competitor is weak. . this is planned with new products that have technological or marketing synergies with existing businesses to cater to a different group of customers (Concentric Diversification). products or markets (Conglomerate Diversification). (Backward Integration) Alternatively. If a company operating in music systems takes over the manufacturing business of its plastic material supplier. b) Integrative Growth: It refers to the process of identifying opportunities to develop or acquire businesses that are related to the company’s current businesses. it would be able to gain more control over the market or generate more profit.

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