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MS-91 Advanced Strategic Management

Question1

Identify the features of Corporate Philosophy and examine it with reference to an organisation (Name and describe the
organisation you are referring to).

The decision and written promise to commit to compliance is the first step in creating an effective compliance program. This written
statement, usually referred to as a corporate philosophy statement, is just a written policy that promises to dedicate sufficient resources
to company compliance at all levels. It doesn’t have to be fancy or complicated. A simple, short statement of the company’s
commitment to compliance will do.

Corporate Philosophy @ Tata Docomo

With the aim of creating a new world of communications culture, we NTT DOCOMO will devote all the skills, know-how and energy
towards the establishment of more "personal communication" with our customer that contributes to their heartfelt satisfaction.

A New World of Communications Culture More personal communication

• Reliable access
• Real-time access

• E communication One-to-one “personal

This gives birth to a new world of communications culture

• Freedom to enjoy communications anytime, anywhere with anyone

• Birth of customs and etiquette corresponding to the Eparadigm “personal access

• Opening of endless lifestyle horizons

To achieve this...

In order to create a world of more innovative and enriched communications, we will improve service quality, aggressively
move forward with the development of various services. We will also research and develop a more advanced user-friendly
communications interface, and at the same time we will provide these services and technologies to an ever expanding area.

Customer Satisfaction
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• Communications that are always ready when needed.

• Capability to contact whomever, from wherever and whenever the customer desires.
• Happiness that comes from heart-to-heart communications.
• Bringing customers another step closer to realizing their dreams.
• Responding to every customer with consideration, courtesy and thoroughness.
• Providing products that give customers easy and convenient access to cutting- edge functionality.

To achieve this...
First and foremost, we will fulfill expectations of customers by fulfilling our response to their needs through improved
service quality, building original networks, enriching functionality and expanding the service area. In addition, by providing
an expanding and ever-improving selection of services at inexpensive rates, we will deliver satisfaction to a growing diversity
of customers.

Making the most of the talents of each individual in our company

• Respect for the individuality and sense of values that are unique to each person.
• Enable internal corporate communication to flow free from vertical and horizontal organizational barriers.
• Make the most of the ideas of each individual.
• Foster a corporate culture that is not restricted by conventional thinking and systems.
• Create a creative office environment that supports the fulfillment of the individual.
• Fostering an "open" corporate culture that welcomes the ideas and views of the individual.
• Evaluate personnel based on their merits.
• Build a company that overflows with a challenging spirit.
To achieve this...
By improving our system and programs for the enhancement of human resources and unifying our human resource
development, we will empower each individual to exert their skills to the utmost of their capabilities and discover new
potential. At the same time, we will strive to create a workplace that motivates individuals through measures such as
improvement of the working environment and labor conditions and enhancement of health and welfare benefits.

Toward a connected Future

What can NTT DOCOMO do to help move society towards sustainability? It can develop and offer services based on the mobile
phone and by making connections, it can continue finding ways to contribute to society.

Mobile phones have spread rapidly around the world in the past ten or more years. Having both positive and negative aspects, these
devices are continually creating change in our lives, even as they themselves evolve.

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The future of mobile phones is not for us to envision alone. We would like to create the vision together with our stakeholders.

DOCOMO reaches out to join with its stakeholders and create a new culture of communication that connects us with our goal of a
sustainable society.

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Question 2

High light the corporate governance practices in Indian context.

While corporate governance may not dictate the economic prospects of developing countries, it certainly plays an integral role in
shaping them. This Note contains a detailed analysis of the corporate-governance architecture of one such developing country, India,
from its independence in 1947 to the present. The results are surprising: India's corporate-governance framework is sophisticated for a
developing country. However, considerable room remains for improvement. This Note presents a series of suggestions designed to
improve corporate governance in India. Most notably, India must reform how its boards of directors function, improve its enforcement
mechanisms, redefine its corporate laws, and embrace corporate governance as a philosophy.

WHY CORPORATE GOVERNANCE

Investors primarily consider two variables before making investment decisions--the rate of return on invested capital and the risk
associated with the investment. In recent years, the "attractiveness of developing nations" as a destination for foreign capital has
increased, partly because of the high likelihood of obtaining robust returns and partly because of the decreasing "attractiveness of
developed nations." The lure of achieving a high rate of return, however, does not, by itself, guarantee foreign investment; the
attendant risk .weighs equally in an investor's decision-making calculus. Good corporate-governance practices reduce this risk by
ensuring
transparency, accountability, and enforceability in the marketplace. While strong corporate-governance systems help ensure a
country's long-term success, weak systems often lead to serious problems. For example, weak institutions caused, at least in part, the
debilitating 1997 East Asian economic crisis. The crisis was characterized by plummeting stock and real-estate prices, as well as a
severe erosion of investor confidence. The total indebtedness of the countries affected by the crisis exceeded one-hundred billion
dollars. While the presence of a good corporate-governance framework ensures neither stability nor success, it is widely believed that
corporate governance can "raise efficiency and growth," especially for countries that rely heavily on stock markets to raise capital. In
fact, some contend that the "Asian financial crisis gave developing countries ... a lesson on the importance of a sound corporate
governance system."

In an open market, investors choose from a variety of investment vehicles. The existence of a corporate-governance system is likely a
part of this decision-making process. In such a scenario, firms that are "more open and transparent,"

Also, sound corporate-governance practices enable management to allocate resources more efficiently, which increases the likelihood
that investors will obtain a higher rate of return on their investment. Finally, leading indices show that developing countries that have
good governance structures consistently outperform developing countries with poor corporate-governance structures. Thus, in an
efficient capital market, investors will invest in firms with better corporate-governance frameworks because of the lower risks and the
likelihood of higher returns. At a macro level, if firms in developing countries attract investment, they will stimulate growth in the
local economy. If they "cannot attract equity capital, they are doomed to remain on a small, inefficient scale," and they will be unable
to stimulate growth in their host country

HISTORY OF CORPORATE GOVERNANCE IN INDIA

A. PRE-LIBERALIZATION

When India attained independence from British rule in 1947, the country was poor, with an average per-capita annual income under
thirty dollars. However, it still possessed sophisticated laws regarding "listing, trading, and settlements." It even had four fully
operational stock exchanges. Subsequent laws, such as the 1956 Companies Act, further solidified the rights of investors.

In the decades following India's independence from Great Britain, the country turned away from its capitalist past and embraced
socialism. The 1951 Industries Act was a step in this direction, requiring "that all industrial units obtain licenses from the central
government." The 1956 Industrial Policy Resolution "stipulated that the public sector would dominate the economy." To put this plan
into effect, the Indian government created enormous state-owned enterprises, and India steadily moved toward a culture of
"corruption, nepotism and inefficiency." As the government took over floundering private enterprises and rejuvenated them, it

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essentially "convert[ed] private bankruptcy to high-cost public debt." One scholar referred to India's economic history as "the
institutionalization of inefficiency."

The absence of a corporate-governance framework exacerbated the situation. Government accountability was minimal, and the few
private companies that remained on India's business landscape enjoyed free reign with respect to most laws; the government rarely
initiated punitive action, even for nonconformity with basic governance laws. Boards of directors invariably were staffed by friends or
relatives of management, and abuses by dominant shareholders and management were commonplace. India's equity markets "were not
liquid or sophisticated enough" to punish these abuses.

Scholars believe that "takeover threats act as [a] disciplining mechanism to poorly performing companies" because as the stock price
of poorly governed firms decreases (because disgruntled investors discard stock), the firms become susceptible to hostile-takeover
attempts. Thus, “the fear of a takeover ... is supposed to keep the management honest." However, until recently, hostile takeovers
were almost entirely non-existent in India, and therefore, the poorly governed Indian firms had little to worry about in terms of
following corporate laws once they had raised capital through their initial public offering. Thus, corporate governance in India was in
a dismal condition by the early 1990s.

B. POST-LIBERALIZATION

In 1999, in a defining moment in India's corporate-governance history, the Indian Parliament created the Securities and Exchange
Board of India ("SEBI") to "protect the interests of investors in securities and to promote the development of, and to regulate[,] the
securities market." In the years leading up to 2000, as Indian enterprises turned to the stock market for capital, it became important to
ensure good corporate governance industry-wide. Additionally, a plethora of scams rocked the Indian business scene, and corporate
governance emerged as a solution to the problem of unscrupulous corporate behavior.

In 1998, the Confederation of Indian Industry ("CII"), "India's premier business association," unveiled India's first code of corporate
governance. However, since the Code's adoption was voluntary, few firms embraced it. Soon after, SEBI appointed the Birla
Committee to fashion a code of corporate governance. In 2000, SEBI accepted the recommendations of the Birla Committee and
introduced Clause 49 into the Listing Agreement of Stock Exchanges. Clause 49 outlines requirements vis-a-vis corporate governance
in exchange-traded companies. In 2003, SEBI instituted the Murthy Committee to scrutinize India's corporate-governance framework
further and to make additional recommendations to enhance its effectiveness. SEBI has since
incorporated the recommendations of the Murthy Committee, and the latest revisions
to Clause 49 became law on January 1, 2006.

IV. THE CURRENT STATE OF CORPORATE GOVERNANCE IN INDIA

Corporate governance reform in India has focused primarily on the "role and composition of the board of directors." Each of the three
sets of recommendations (the CII Code recommendations from 1997, the Kumar Mangalam Birla Committee recommendations from
2000, and the Murthy Committee recommendations from 2003) has advanced a more nuanced and sophisticated understanding of
corporate governance in this respect. For example, while the CII Code was silent on the financial-literacy levels expected of directors,
the Murthy Committee recommended
that companies train their "Board members ... in the business model of the company as well as the risk profile of the business
parameters of the company." Another notable recommendation of the Murthy Committee was that the Audit Committee be comprised
entirely of "financially literate non-executive members with at least one member having accounting or related financial …

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Question 3

“Corporate Philanthropy is considered as a practice by companies of all sizes and sectors making charitable contributions to
address a variety of social, economic and other issues as part of their overall corporate citizenship strategy” Discuss.

Corporate philanthropy or corporate giving is the act of corporations donating some of their profits, or their resources, to non profit
organizations.

Corporate giving is often handled by the corporation, directly, or it may be done through a company foundation.

Corporations most commonly donate cash, but they also donate the use of their facilities, property, services, or advertising support.
They may also set up employee volunteer groups that then donate their time.

Corporations give to all kinds of nonprofit groups, from education and the arts to human services and the environment.

Examples:

IBM gives millions of dollars each year to nonprofits through its corporate philanthropy program.

Corporate Philanthropy Will Grow in India

Indian businesses believe they are doing enough for inclusive growth and corporate charity will only get bigger from here on

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As the Indian economy gallops towards what many believe is new normal – 8 to 9 percent economic growth -- its business leaders are
gradually waking up to the importance of philanthropy. This formed the theme of a free-wheeling audience discussion at the cover
launch of the Forbes India Rich List issue on the evening of September 29, 2010 in Mumbai.

Titled “Wealth Creation in the Next Decade - Towards a More Inclusive India,” the audience comprised India’s top industrialists and
corporate heads. Anchored by CNBC’s Menaka Doshi, the discussion took up the issue of wealth creation and what it amounted to.

According to Subroto Bagchi, vice-chairman of Mindtree Ltd. while there are several models of wealth creation, for him wealth is
truly created when a person leaves a lasting legacy behind. “Physical infrastructure, intellectual and emotional legacy,” are its
hallmarks. At present, India seems to be equating growth with consumption and “we need to debate that,” he added.

A majority of business leaders believe their organisations are doing enough to promote inclusive growth with 51 percent saying yes
and 31 percent saying no. (The rest abstained.) Niranjan Hiranandani, MD, Hiranandani Group pointed out that as creating wealth for
shareholder is important, the inclusive growth mantra may not be heard in the boardroom as it should, but individual giving must take
care of these shortcomings. Significantly, 85 percent said that the quest for inclusive growth would not reduce their competitive edge.
Individual giving has been in the news recently with Bill Gates and Warren Buffet calling upon the rich the world over to donate 50
percent of their wealth to charity. In September, as part of “The Giving Pledge” they
travelled to China to impress upon the country’s millionaires the importance of giving. The two have termed their visit a success
despite only one billionaire agreeing to donate. Here at the Forbes India discussion some said that the lack of credible avenues to
donate to made giving a difficult choice. If Gates and Buffet reached out to the Indian rich, 48 percent said they would be willing to
donate, 39 percent said no and 12 percent abstained. The Indian rich give 0.2 percent of their wealth to charity

As the charitable impulses of family businesses slowly transformed into sustainable organized philanthropic initiatives, companies
started setting up Corporate Social Responsibility (CSR) wings.

As businesses grew and professionalised, several family businesses institutionalised their philanthropic activities in the form of family
foundations. These served as excellent forums for family collaboration and a means of transferring the mantle of philanthropic
stewardship to succeeding generations. Gradually, the global business environment and stakeholders' growing expectations
encouraged businesses to pay close attention not only to their philanthropic activities, but also to the measurable social impact of these
activities. Today, companies view their philanthropic programmes not only as corporate or family resources meant for social
development, but also as strategic social investments intended to achieve measurable outcomes and impacts. Corporate philanthropy
programmes are often a part of the organisation's
mission and are designed to address social and political issues that affect the business.

Philanthropy in Pre-Independence India During the early days of industrialisation in India, philanthropy was limited to individual
initiatives undertaken by organisations and rich families. During the independence movement, several industrial thought leaders
extended their financial support to leaders of the freedom struggle. G.D. Birla's financial contributions to the movement and Ardeshir
Godrej's generous donation to the Tilak Fund for the upliftment of Harijans were notable among these. The Tatas and the Murugappas
pioneered charitable contributions to hospitals and schools. Currently, on average, Tata Sons contributes between 8 to 14 percent of its

net profit every year for philanthropic activities through the various Tata Trusts.

Since philanthropy was considered as pure service to mankind and thus to God, women of many such prominent families were
encouraged to get involved.

Non-working family members, primarily women, took an active part in key decisions in philanthropic activities. While key members
of the family drove economic wealth creation, others took care of the trusteeship role expected from the family by taking up various
philanthropic initiatives to improve the lot of the underprivileged. In the paradigm of Indian philosophy, service to mankind is
believed to bring God's blessings, and hence the business family chose to directly supervise its philanthropic activities.

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Support came from the business organisation through executives and assistants who shared these sentiments. In essence, service was
the only motto of philanthropy in the early days, and everyone who wanted to get involved, regardless of his or her technical or
managerial capabilities, was encouraged.

The quality of work was measured in terms of input flow, particularly amount spent, rather than the net outcome. While effectiveness
was important, efficiency was assumed.

Philanthropy in the era of globalisation A quick glance at the current Indian philanthropic scenario would show a number of
interesting trends.

Broadly, one can see the emergence of three models of philanthropy.

Corporate Social Responsibility Corporate Social Responsibility (CSR) is the most prevalent form of philanthropy worldwide, though
the levels of activity and organisational involvement vary widely. Most large organisations have a social responsibility arm, with
budgeted resources and dedicated staff, which works towards improving the quality of life of the workforce and their families, as well
as for the local community at large. Most philanthropic initiatives are undertaken in the business neighborhood, mainly because of the
immediate impact on local stakeholders. Organisations with multiple locations tend to undertake community building
activities in as many business locations as possible. Such `pure' corporate initiatives do not have much participation from the business
promoter's families. This is particularly the case if the promoter family is not very closely involved in the business.

Individual / Family Foundations With the transformation of the economy in the 1990s, a new generation of corporate leaders, such as
those of Infosys and Wipro, have shown tremendous interest in investing their wealth for social development. They have
demonstrated how several strategic approaches used by professional organisations can be applied for formulating policies and
programmes for inclusive growth.

Read the following case study carefully and give your analytical responses to the questions given at the end.

Amway and its Independent Business Owners

Corporate Social Responsibility (CSR) means businesses and organizations working responsibly and contributing positively to the
communities they operate in. It involves working with employees, their families, the local community and society at large to improve
their quality of life. Companies that operate in a socially responsible way strengthen their reputations. In business, reputation is
everything. It determines the extent to which customers want to buy from you, partners are willing to work with you and your standing
in the community.

Amway is one of the world’s largest direct sales organizations with over 3 million Independent Business Owners (IBOs) in over 80
markets and territories worldwide. It is a family-owned business with a strong emphasis on family values. Its IBOs are often couples.
Many of these are raising families. They therefore have a strong bond with children. These families are more than happy to partner
with Amway, who, as part of its Corporate Social Responsibility strategy, works with UNICEF, the United Nations Children’s Fund.

As a family company, Amway is committed to playing a part in improving the lives of children in need across the globe. In this way,
the company is able to show its commitment to the support of global causes. Amway defines a global cause as ‘a social issue affecting
many people around the world engaged in a struggle or plight that warrants a charitable response.’ This case study shows how Amway
is a business that does more than provide customers with good quality products. It shows the practical realities of Amway’s global
commitment and how it plays a key role in the communities in which it operates.

Growth and responsibility

An understanding of how Amway operates as an organization gives a clearer picture of the contribution it can make to help children in
need across the globe. Amway’s vision is to help people live better lives. It does this every day by providing a low-cost low-risk

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business opportunity based on selling quality products. Amway is one of the world’s largest direct sales companies. It has over 3
million Independent Business Owners (IBOs) Worldwide.

UNICEF

Amway distributes a range of branded products. These products are sold to IBOs worldwide. The IBOs are Amway’s links with
consumers and the communities in which they operate. The IBOs are self-employed and are highly motivated. They work within the
guidelines of Amway’s Rules of Conduct and Code of Ethics, which are about being honest and responsible in trading. IBOs sell to
people that they know or meet. They can introduce others to the Amway business.

Typical products that IBOs sell include:

• personal care - fragrances, body care

• skin care and cosmetics
• durables such as cookware and water treatment systems
• Nutrition and wellness products such as food supplements, food and drinks.

IBOs play a key part in helping Amway to deliver its Global Cause Programme. In order to give many of the world’s children a
chance to live a better life, Amway launched the global One by One campaign for children in 2003. The One by One programme:

• helps Amway to bring its vision to life

• declares what the company stands for
• builds trust and respect in Amway brands

• establishes Corporate Social Responsibility at a high level.

Amway encourages staff and IBOs to support its One by One campaign for children. Since 2001, Amway Europe has been an official
partner of UNICEF and has been able to contribute over €2 million (about £1.4 million). The focus is on supporting the worldwide
‘Immunisation Plus’ programme. This involves, for example, providing measles vaccines to children across the globe. The ‘Plus’ is
about using the vehicle of immunisation to deliver other life-saving services for children. It is about making health systems stronger
and promoting activities that help communities and families to improve child-care practices. For example the ‘Plus’ could include
providing vitamin A supplements in countries where there is vitamin A deficiency. Since 2001,
Amway and its IBOs across Europe have been supporting UNICEF’s child survival programme.

Developing a strategy

A strategy is an organizational plan. Implementing a strategy involves putting that plan into action. In other words a strategy shows
how a business will achieve its goals. The strategy thus enables an organization to turn its values into action. Values are what a
company stands for. An important value for Amway is being a caring company. Amway believes in demonstrating this caring
approach and this is why it has partnered with UNICEF.

All Directors design strategies for the whole of an organization. Effective strategies involve discussion and communication with
others. The views of IBOs are influential in creating strategies for Amway. Amway’s strategies for corporate social responsibility
are cascaded through the organization as shown below: Amway’s Global Cause strategy involves creating responsible plans that make
a difference. However, the strategy is flexible. In shaping the strategy, research was carried out to find out which global causes IBOs
support. The results showed that many favoured a cause that helped children. There was a clear fit between Amway’s
aims to help children and UNICEF’s ‘Immunisation Plus’ programme for children. From the outset, Amway set out some clear
objectives for its strategy. These were to:

• build loyalty and pride among IBOs and employees

• enhance Amway’s reputation as a caring organization
• make a real difference to human lives.

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In 2005 Amway UK’s partnership was deepened through becoming an official Corporate partner of UNICEF UK. The Corporate
Partnership is a closer longer-term relationship which benefits both partners. Working together the two parties raise money for
UNICEF.

Q. How are principles of corporate social responsibility being followed by Amway?

Corporate Social Responsibility (CSR) means businesses and organisations working responsibly and contributing positively to the
communities they operate in. It involves working with employees, their families, the local community and society at large to improve
their quality of life. Companies that operate in a socially responsible way strengthen their reputations. In business, reputation is
everything. It determines the extent to which customers want to buy from you, partners are willing to work with you and your standing
in the community.

Amway is one of the world's largest direct sales organisations with over 3 million Independent Business Owners (IBOs) in over 80
markets and territories worldwide. It is a family-owned business with a strong emphasis on family values. Its IBOs are often couples.
Many of these are raising families. They therefore have a strong bond with children. These families are more than happy to partner
with Amway, who, as part of its Corporate Social Responsibility strategy, works with UNICEF, the United Nations Children's Fund.

As a family company, Amway is committed to playing a part in improving the lives of children in need across the globe. In this way,
the company is able to show its commitment to the support of global causes.

Amway defines a global cause as 'a social issue affecting many people around the world engaged in a struggle or plight that warrants a
charitable response'

Amway programmes

In order to give many of the world's children a chance to live a better life, Amway launched the global One by One campaign for
children in 2003. The One by One programme:

• helps Amway to bring its vision to life

• declares what the company stands for

• builds trust and respect in Amway brands

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• establishes Corporate Social Responsibility at a high level.

Amway encourages staff and IBOs to support its One by One campaign for children. Since 2001, Amway Europe has been an official
partner of UNICEF and has been able to contribute over €2 million (about £1.4 million). The focus is on supporting the worldwide
'Immunisation Plus' programme.

This involves, for example, providing measles vaccines to children across the globe. The 'Plus' is about using the vehicle of
immunisation to deliver other life-saving services for children. It is about making health systems stronger and promoting activities that
help communities and
families to improve child-care practices. For example the 'Plus' could include providing vitamin A supplements in countries where
there is vitamin A deficiency.

Since 2001, Amway and its IBOs across Europe have been supporting UNICEF's child survival programme. The need is great. One
out of ten children in Kenya does not live to see its fifth birthday, largely through preventable diseases. Malaria is the biggest killer
with 93 deaths per day. Only 58% of children under two are fully immunised

The work of the One by One programme is illustrated by a field trip undertaken by Amway IBOs to Kenya. The IBOs travelled to
Kilifi in 2006 to meet children and to find out what the problems are in various communities. They act as champions spreading the
message throughout their groups. In Kilifi, the focus is on trying to reach the most vulnerable children and pregnant mothers. The aim
is to increase immunisation from 40% to 70%. Other elements of the programme involve seeking to prevent the transmission of
HIV/AIDS to infants.

As the Amway organisation grows and prospers, it is able through CSR actions to help communities to grow and prosper too.

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Q.5 What do you understand by strategy? How does Amway develop and implement its strategy?

A strategy is an organizational plan. Implementing a strategy involves putting that plan into action. In other words a strategy shows
how a business will achieve its goals. The strategy thus enables an organization to turn its values into action. Values are what a
company stands for. An important value for Amway is being a caring company.

Amway believes in demonstrating this caring approach and this is why it has partnered with UNICEF.

All Directors design strategies for the whole of an organization. Effective strategies involve discussion and communication with
others. The views of IBOs are influential in creating strategies for Amway. Amway’s strategies for corporate social responsibility are
cascaded through the organization as shown below:

Amway’s Global Cause strategy involves creating responsible plans that make a difference. However, the strategy is flexible. In
shaping the strategy, research was carried out to find out which global causes IBOs support. The results showed that many favoured a
cause that helped children. There was a clear fit between Amway’s aims to help children and UNICEF’s ‘Immunisation Plus’
programme for children.

From the outset, Amway set out some clear objectives for its strategy. These were to:

• build loyalty and pride among IBOs and employees

• enhance Amway’s reputation as a caring organization

• make a real difference to human lives.

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In 2005 Amway UK’s partnership was deepened through becoming an official Corporate partner of UNICEF UK. The Corporate
Partnership is a closer longer-term relationship which benefits both partners. Working together the two parties raise money for
UNICEF.

From the outset, Amway set out some clear objectives for its strategy. These were to:

• build loyalty and pride among IBOs and employees

• enhance Amway's reputation as a caring organisation make a real difference to human lives.

In 2005 Amway UK's partnership was deepened through becoming an official Corporate Partner of UNICEF UK. The Corporate
Partnership is a closer longer-term relationship which benefits both partners. Working together the two parties raise money for
UNICEF

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