Professional Documents
Culture Documents
ADMINISTRATION
ASSIGNMENT
SEMESTER - 4
1|Page
Q-1. What are the four steps of strategic management process?
Ans. The strategic management process covers the following four steps, which are: 1.
Identification of business objectives and purposes 2. Formulation of strategies 3. Implementation
of strategies and 4. Evaluation of strategies
Corporate purpose gives a clear picture of what the company is about and what is wants to
achieve in future. It is a statement of the principal line of business which it wants to pursue.
Corporate mission explains the scope of business in terms of products and markets. Objectives
on the other hand define the direction to achieve the mission.
For example, the mission of Fertilizer Company may be mentioned as to fight world hunger and
the objectives may be mentioned as to increase the agricultural productivity through
development, efficient production of improved fertilizers, generate profits to finance Research
and development (R & D) and to ensure satisfactory returns on investment.
2. Formulation of Strategies:
In strategy formulation, a firm must be aware of its strength, weaknesses, opportunities and
threats. SWOT analysis focus attention on these four variables viz, strengths, weaknesses,
opportunities and threats. The first two are internal whereas the last two are external to an
organisation.
(a) Strength
(b) Weaknesses
(c) Opportunities
(d) Threats
3. Implementation:
2|Page
4. Evaluation of Strategies:
The last phase of strategic management is evaluation and control. In business, conditions often
change resulting in the need of evaluation of existing strategies and planning the new ones to
take advantage of changing conditions.
According to Arthur Sharplin “The purpose of strategic evaluation is to monitor and evaluate
progress towards organisation’s objectives and to guide or correct the process or change the
strategic plan to better accord with current conditions and purposes.”
Ans. A business can be established, but to successfully sustain a business, the business needs
resources like finance, for which it has to depend on financial institutions. Acceptance of social
norms, for which it has to depend on society. Proper market conditions, for which it has to
depend on the market. The sale of products/services, for which it has to depend on the customers.
The labour, for which it has to depend on society.
Then there are natural resources and raw material, for which it has to depend on Nature. Also,
the legal support of the government, for which it has to depend on the government. There are
many factors and dimensions that affect Business Environment. These factors are many different
components of a single concept called Business Environment.
These factors which business depends upon aren’t standstill, they are very dynamic and ever-
changing. For example, trends, the trend of fidget spinners gave the biggest big push the silicone
mold industry has ever received.
The changing needs of customers and new innovations in the market are a part of the business
environment. The challenge for businesses in this technological era is not to enter the market but
to survive in the market. To survive in the market means to adapt to the changes as fast as
possible. To adapt to the changes means to be aware of the business environment.
The definition of Business Environment, “The sum total of all individuals, institutions and other
forces that are outside the control of a business enterprise but the business still depends upon
them as they affect the overall performance and sustainability of the business.”
The forces which constitute the business environment are its suppliers, competitors, consumer
groups, media, government, customers, economic conditions, market conditions, investors,
3|Page
technologies, trends, and multiple other institutions working externally of a business constitute
its business environment. These forces influence the business even though they are outside the
business boundaries.
For example, changes in taxes by the government can make the customers buy less. Here the
business would have to re-establish its prices to survive the change. Even though the business
had no involvement in initiating the change it still had to adapt to it in order to survive or use the
opportunity to make profits. Now let us discuss the importance of the business environment.
On the basis of the foregoing discussion, it can be said that the Business Environment is the most
important aspect of any business. To be aware of the ongoing changes, not only helps the
business to adapt to these changes but also to use them as opportunities.
Business Environment presents threats as well as opportunities for any business. A good business
manager not only identifies and evaluates the environment but also reacts to these external
forces. The importance of the business environment can be neatly understood if we consider the
following facts:
All changes are not negative. If understood and evaluated them, they can be the reason for the
success of a business. It is very necessary to identify a change and use it as a tool to solve the
solve the problems of the business or populous.
For example, Mr. Phanindra Sama was troubled by the ticket booking condition in India. He used
to travel a long distance to his travel agent to book his ticket but even after traveling this distance
he was not sure if his seat was confirmed. He saw the opportunity to establish an app in the face
of the problem and co-founded the online ticket booking app called ‘redBus’.
Careful scanning of the Business Environment helps in tapping the useful resources required for
the business. It helps the firm to track these resources and convert them into goods and services.
The business must be aware of the ongoing changes in the business environment, whether it be
changes in customer requirements, emerging trends, new government policies, technological
changes. If the business is aware of these regular changes then it can bring about a response to
deal with those changes. For example, when the Android OS market was blooming and the
4|Page
customers were preferring Android devices for its easy interface and apps, Nokia failed to cope
with the change by not implementing Android OS on Nokia devices. They failed to adapt and
lost tremendous market value.
4. Assistance in Planning
This is another aspect of the importance of the business environment. Planning purely means
what is to be done in the future. When the Business Environment presents a problem or an
opportunity, it is up to the business to decide what plan would it have to come up with in order to
address the future and solve the problem or utilise the opportunity. After analysing the changes
presented, the business can incorporate plans to counteract the changes for a secure future.
Enterprises that are thoroughly scanning their environment not only deal with the changes
presented but also flourish with them. Adapting to the external forces help the business to
improve the performance and survive in the market.
5|Page
a downturn in the local economy, it is the companies with the lowest cost of doing business that
will have the greatest chance at survival.
1. It can cause financial cuts in critical areas that harm the business.
It is a worthy goal to maintain a low-cost position. Many leaders following this style will find
ways where money can be saved from the current budget. There is also a danger here that some
cost leaders may look to reduce costs in critical areas of the company, like in their customer
service division. Although the price is nice for the consumer, the customers who incorporate the
value of customer service into their value calculations will stay away from this company.
6|Page
4. It encourages a lower quality product to be offered to the market.
Being able to cut costs is not an easy process. Once leaders find the obvious items that can be
cut, the real work of cost leadership begins. It may require a lower quality set of ingredients or
raw materials to create a higher profit margin. There may need to be a change to the advertising
or marketing budget, which could reduce the number of new customers obtained. Some
companies may even choose to pay their workers less if labor costs are one of their primary
expenses.
7|Page
strengths to take advantage of the environmental opportunities and to combat the
environmental threats.
Strategic decisions focus on achieving a sustainable competitive edge of the firm.
Strategic decisions are likely to affect operational and administrative decision.
Strategic decisions are complex in nature because they encompasses mission, long-term
direction, scope of the organization, and establishment of organization environment fit.
Due to the long-term future perspective of the strategic decisions, they might involve
significant uncertainty as future can hardly be forecasted exactly.
A strategy is usually comprehensive and highly integrated.
Strategic decisions aren’t the same as administrative and operational decisions.
Administrative decisions are routine decisions that assist or rather facilitate strategic
decisions or operational decisions. Operational decisions are technical decisions which help
execution of strategic decisions. To cut back cost is a strategic decision which can be
attained through operational decision of decreasing the number of employees and how we
carry out these reductions is going to be administrative decision.
Ans. The duties and responsibilities of the board of directors are as follows:
1. Trusteeship: The board of directors act as trustees to the property and welfare of the
company. Hence, the board must use the company’s property for the long-run gain of the
company, but not for their personal use.
2. Formulation of Mission, Objection and Policies: Board of directors must see the long run
view and have long run perspective of the company. The board formulates, reviews and
reformulates the company’s mission, objectives and policies which forms the basis for strategy
formulation and implementation.
3. Designing Organizational Structure: The board designs the structure of the organization
based on the objectives, policies, environmental factors, degree of competition, role of quality,
expectations of employees etc.
4. Selection of Top Executives: The board should assume the responsibility of screening and
selecting the top executives who can formulate and implement the strategies. Chief executives
are key personnel in the process of strategy implementation.
5. Financial Sanctions: The important financial decisions like sanctioning of finances to various
projects, reserves, distribution of profit to shareholders and repayment of loans and advances
8|Page
etc., are taken by the board. Further, the board reviews the financial performance of the company
from time to time and reformulates the financial policies.
6. Feed forward and Feedback: The board has to obtain information from the external
environmental factors and feed that information forward to various key points in the company in
order to prevent possible hurdles and mistakes in the process of achieving organizational goals.
Further, the board also obtains the information from internal sources of the organization, and
feeds it forward to prevent possible failures in decision-making by the top level executives.
The board also feeds the information back to the executives regarding their failures in decision-
making with a view to avoid the recurrence of such mistakes. Thus, feedback of information
helps the board to check and control the activities as board has the ultimate responsibility for the
success of the company.
7. Link between the Company and External Environment: The board acts a vital and
continuous link between the company and external environment like government, other
companies, social and economic institutions etc.
9|Page