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Master of Business Administration- MBA Semester 4 MB0052 Strategic Management and Business Policy - 4 Credits (Book ID: B1314)

Assignment (60 marks) Note: Assignment Set -1 must be written within 6-8 pages. Answer all questions. Q1. Define the term Strategic Management. Explain the importance of Strategic management. - 10 marks (350-400 words) Ans:- Strategic management is a systematic procedure of analyzing, planning and implementing strategies in an organization to gain continued success. Strategy is the blend of procedures intended to meet a particular situation and to solve certain problems. It is a combination of internal and external factors that are involved in meeting the organisations objective. Strategy is the capabilities of a business, its strengths and weakness, the outer environment of opportunities etc. It is a plan of action that develops a competitive advantage in business. Example: - Southwest Airlines is one of the profitable air carriers in North America. Its strategy was not imitating its rivals but implementing a different strategy comprising low fares, frequent departures and customer service. The Key features of strategic management are: Strategic Strategic Strategic Strategic analysis choice formulation control & evaluation

The roles of strategists involve thinking, planning and implementing relevant strategies to gain long term goal in the organization. Strategists are present at various management levels in an organization: Top level management Board of directors Planning staff

Importance of Strategic Management:Strategy is important because it is not possible to predict the future. In future the organisation might have to deal with uncertain consequences which are a part of the business environment. Strategy deals with long term progress rather than daily activities. It deals with probability of innovations of new products or new markets to be developed in future. Strategy is created to predict the credible behavior of customers and competitors. Strategy is created to predict the credible behavior of customers and competitors. Strategies dealing with employees predict the employee behavior. In contrast, and organisation without a clear strategic plan is affected by external pressures and is less efficient in handling changes in the market. In todays highly competitive market, and organisation without a rational strategy is likely to be overtaken by its competitors.

Due to increase in the competition, in there was demands for critical look at the bane corrupt of business. The environment played an important role in the business. The relationship of business with the environment leads to the concept of strategy. In early sixties, strategy helped the management to manage between the business and the environment. In early eighties, as many companies were globalised which lead to the competition of the rivals access the world. Japanese companies along with other Asian companies unleashed a force across the world and posed a threat for the US and European companies, which led to the current thinking. - 10 marks (350-400 words)

Q2. Describe Porters five forces Model.

Ans:- Porters Five Force model:Michael E. Porter has identified five competitive forces that influence every industry and market. The level of these forces determines the intensity of competition in an industry. The objective of corporate strategy should be to revise these competitive forces in a way that improves the position of the organization.

/ Porter explains that there are five forces that determine industry attractiveness and long-run industry profitability. These five "competitive forces" are - The threat of entry of new competitors (new entrants) - The threat of substitutes - The bargaining power of buyers - The bargaining power of suppliers - The degree of rivalry between existing competitors Forces driving industry competitions are:Threat of New Entrants New entrants to an industry can raise the level of competition, thereby reducing its attractiveness. Therefore, they are threats to an established organization. The threat of new entrants largely depends on the barriers to entry. High entry barriers exist in some industries (e.g. shipbuilding) whereas other industries are very easy to enter (e.g. estate agency, restaurants). Threat of Substitutes

The presence of substitute products can lower industry attractiveness and profitability because they limit price levels. The threat of substitute products depends on: Buyers' willingness to substitute The relative price and performance of substitutes The costs of switching to substitutes. An entry barrier is a hindrance that makes it difficult for a company to enter an industry. Bargaining Power of Suppliers Suppliers are the businesses that supply materials & other products into the industry. If suppliers have high bargaining power over a company, then in theory the company's industry is less attractive. The bargaining power of suppliers will be high when: There are many buyers and few dominant suppliers There are undifferentiated, highly valued products Suppliers threaten to integrate forward into the industry (e.g. brand manufacturers threatening to set up their own retail outlets) Buyers do not threaten to integrate backwards into supply The industry is not a key customer group to the suppliers

Bargaining Power of Buyers Buyers are the people / organizations that create demand in an industry The bargaining power of buyers is greater when There are few dominant buyers and many sellers in the industry Products are standardized Buyers threaten to integrate backward into the industry Suppliers do not threaten to integrate forward into the buyer's industry The industry is not a key supplying group for buyers Intensity of Rivalry In most industries, organizations are mutually dependent. A competitive move by one organization may result in a noticeable effect on its competitors and thus cause retaliation or counter efforts. The intensity of rivalry between competitors in an industry will depend on: The structure of competition The structure of industry costs Degree of differentiation Industries where products are commodities (e.g. steel, coal) have greater rivalry; industries where competitors can differentiate their products have less rivalry. Switching costs Rivalry is reduced where buyers have high switching costs. Strategic objectives When competitors are pursuing aggressive growth strategies, rivalry is more intense. Where competitors are "milking" profits in a mature industry, the degree of rivalry is less. Exit barriers When barriers to leaving an industry are high then competitors tend to exhibit greater rivalry.

Q3. Define the term Business policy. Explain its importance. - 10 marks (350-400 words) Ans:- Business policies are the instructions laid by an organization to manage its activities. It identifies the range within which the subordinates can take decisions in an organization .It authorizes the lower level management to resolve their issues and take decisions without consulting the top level management repeatedly. The limits within which the decisions are made are well defined. Business policy involves the acquirement of resources through which the organisational goals can be achieved. Business policy analyses roles and responsibilities of top level management and the decisions affecting the organisation in the long run. It also deals with the major issues that affect the success of the orgnisation. Features of business policy Following are the features of an effective business policy: Specific - Policy should be specific and identifiable. The implementation of policy is easier if it is precise. Clear - Policy should be clear and instantly recognizable. Usage of jargons and connotations should be avoided to prevent any misinterpretation in the policy. Uniform - Policy should be uniform and consistent. It should ensure uniformity of operations at different levels in an organisation. Appropriate - Policy should be appropriate and suitable to the organizational goal. It should be aimed at achieving the organisational objectives. Comprehensive - Policy has a wide scope in an organization. Hence, it should be comprehensive. Flexible - Policy should be flexible to ensure that it is followed in the routine scenario. Written form - To ensure uniformity of application at all times, the policy should be in writing. Stable Policy - Serves as a guidance to manage day to day activities. Thus, it should be stable. ImportanceofBusinessPolicies A company operates consistently, both internally and externally when the policies are established. Business policies should be set up before hiring the first employee in the organization. It deals with the constraints of real-life business. It is important to formulate policies to achieve the organizational objectives. The policies are articulated by the management. Policies serve as a guidance to administer activities that are repetitive in nature. It channels the thinking and action in decision making. It is a mechanism adopted by the top management to ensure that the activities are performed in the desired way. The complete process of management is organized by business policies. Business policies are important due to the following reasons: Coordination Reliable policies coordinate the purpose by focusing on organizational activities. Quick decisions Policies help subordinates to take prompt action and quick decisions. They demarcate the section within which decisions are to be taken. They help subordinates to take decisions with confidence without consulting their superiors every time. Effective control

Policies provide logical basis for assessing performance. They ensure that the activities are synchronized with the objectives of the organization. Decentralization Well defined policies help in decentralization as the executive roles and responsibility are clearly identified. Authority is delegated to the executives who refer the policies to work efficiently. Q4. What, in brief, are the types of Strategic Alliances and the purpose of each? Supplement your answer with real life examples. - 10 marks (350-400 words) Ans:-Types of Strategic Alliance:The mutual agreements between the organizations can take a number of forms and are increasing their common goals to get upper hand over their competitors. The different types of strategic alliances are listed below: Joint venture: Joint venture is the most powerful business concept that has the ability to pool two or more organizations in one project to achieve a common goal. In a joint venture, both the organizations invest on the resources like money, time and skills to achieve the objectives. Joint venture has been the hallmark for most successful organization in the world. An individual partner in joint venture may offer time and services whereas the other focuses on investments. This pools the resources among the organizations and helps each other in achieving the objectives. An agreement is formed between the two parties and the nature of agreement is truly beneficial with huge rewards such that the profits are shared by both the organisations. Example- the China Wireless Technologies, a mobile handset maker is getting into an agreement with the Reliance Communications Ltd to launch its new mobile. The joint venture between the two companies is to gain profits and provide affordable mobile phones to the market that consists of advanced features and aims to earn eight billion dollars in the next five years. The new mobile consists of dual SIM smart phone with 3G technology at a cheaper rate. Mergers and acquisitions Merger is the process of combining two or more organization to form a single organization and achieve greater efficiencies of scale and productivity. The main reason to involve into mergers is to join with other company and reap the rewards obtained by the combined strengths of two organizations. Collaborations and co-branding Collaboration is the process of cooperative agreement of two or more organizations which may or may not have previous relationship of working together to achieve a common goal. It is the beginning to pool resources like knowledge, experience and sharing skills of team members to effectively contribute to the development of a product rather working on narrow tasks as an individual team member in support to the development. Technological partnering It is the process of association the technologies of two different companies to achieve a common goal. The two organizations work as co-owners in business and share the profits and losses. The technologies of individual organizations are shared to achieve desired outcome.

Q5. Explain the concept, need for and importance of a Decision Support System. - 10 marks (350-400 words) A Decision Support System (DSS) is a class of information systems (including but not limited to computerized systems) that support business and organizational decision-making activities. A properly designed DSS is an interactive software-based system intended to help decision makers compile useful information from

a combination of raw data, documents, personal knowledge, or business models to identify and solve problems and make decisions. Benefits of DSS Improves personal efficiency Expedites problem solving (speed up the progress of problems solving in an organization) Facilitates interpersonal communication Promotes learning or training Increases organizational control Generates new evidence in support of a decision Creates a competitive advantage over competition Encourages exploration and discovery on the part of the decision maker Reveals new approaches to thinking about the problem space Helps automate the managerial processes

The need for decision-making speed has increased, overload of information is common, and there is more distortion of information. On the positive side, there is a greater emphasis on fact-based decision making. A complex decision-making environment creates a need for computerized decision support. Research and case studies provide evidence that a well-designed and appropriate computerized decision support system can encourage fact-based decisions, improve decision quality, and improve the efficiency and effectiveness of decision processes. Changing decision-making environments, managerial requests, and decision-maker limitations creates a need for more and better decision support. We should consider building a computerized decision support system when a) Good information is likely to improve the quality of decisions and b) Potential DSS users recognize a need for and want to use computerized support. DSS forces the management to rationalize the depreciation, inventory and inflation policies. It warns the management against impending crises and problems in the company. It specially helps in following areas: a. The management knows exactly how much credit it could take, for how long (for which maturities) and in which interest rate. It has been proven that without proper feedback, managers tend to take too much credit and burden the cash flow of their companies. A decision system allows for careful financial planning and tax planning. Profits go up, non cash outlays are controlled, tax liabilities are minimized and cash flows are maintained positive throughout. The decision system is an integral part of financial management in the West. It is completely compatible with western accounting methods and derives all the data that it needs from information extant in the company. So, 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, but in fact helps the manager to take quick decisions and make profit to the company.

Q6. Write short notes on: a) Corporate social responsibility b) Business plan Ans:- a) Corporate social responsibility

- 5 + 5 = 10 Marks (200 - 250words each)

Corporate social responsibility is not a new concept in India. However, what is new is the shift in focus from making profits to meeting societal challenges. Giving a universal definition of corporate social responsibility is bit difficult as there is no common definition as such. Most ideal definition of corporate social responsibility (CSR) has been given by world business council for Sustained Development which says, Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large. Thus, the meaning of CSR is twofold. On one hand, it exhibits the ethical behavior that an organisation exhibits towards its internal and external stakeholders (customers as well as employees). The following are the features of CSR:- CSR enhances the information security measures by establishing improved information security system and distributing them to overseas business sites. The information system has improved by enhancing better responses to complex security accidents - CSR creates a new value in transportation for the greater safety of pedestrians and automobiles. This is done by utilizing information and technology for automobiles. - CSR serves in preventing global warming by reducing the harmful gases emitted into the atmosphere during the process of business activities. - CSR contributes high quality product, environment conservation and occupational health safety to various regions and countries. b) Business plan A business plan is a formal statement of a set of business goals, the reasons they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals. Business plans may be internally or externally focused. Externally focused plans target goals that are important to external stakeholders, particularly financial stakeholders. They typically have detailed information about the organization or team attempting to reach the goals. With for-profit entities, external stakeholders include investors and customers. External stake-holders of non-profits include donors and the clients of the nonprofit's services. For government agencies, external stakeholders include tax-payers, higher-level government agencies, and international lending bodies such as the International Monetary Fund, the World Bank, various economic agencies of the United Nations, and development banks. A business plan is a complete internal document that summarises the operational and financial objectives of a business. It also contains the detailed plans which show how the objectives are being accomplished. An accurately made business plan helps to allocate resources properly, to handle unforeseen complications like financial crisis and to make good business decisions. Strategies for creating a business plan. These sections describe the strategies for creating a business plan. Every entrepreneur creates a business plan and its completion will determine the feasibility of the plan. The strategies for creating a business plan are as follows: Who is the customer? What business are you in? What do you sell (product/service)? What is your plan for growth? What is your primary competitive advantage? Make a list of your goals You must create a list of goals after proper research. In case of a start up business, more effort must be put on the short-term goals.