NMIMS Global Access

School for Continuing Education (NGA-SCE)

Course: Strategic Management
Internal Assignment Applicable for September 2022 Examination

Answer 1: The firm's overall direction decision as well as how it manages its business or
product portfolio and concerns.
Different businesses employ two distinct directional strategy kinds. One is a broad strategy that
a corporation chooses to implement in order to expand sales, boost earnings, and achieve
certain goals and objectives. Companies like GoDaddy, for instance, prioritize customer care,
technical assistance, and the user-friendliness of their websites and domain name registrar
services rather than competing directly with rivals on price or feature differentiation.

The second kind of directional strategy focuses on the company's values, which can enhance its
brand. Examples include being a "green" company, paying all employees a living wage, or
running a company that donates a portion of its revenues to charity. The infant and health goods
offered by Jessica Alba's Honest Company compete on the promise of eco-friendly, natural, and
secure products rather than on price or fashion.

Apply the growth, stability, and retrenchment directed tactics to the organizational environment
where they perform best.

A coorporate’s directional strategy is composed of three general orientation:

Growth Strategies:
Stability Strategies:
Retrenchment Strategies:

After deciding on a broad orientation, managers of a company can choose from a number of
more focused corporate strategies, like concentration within a single product line or industry.
Both businesses that operate in a single industry with a single product line and those that do so
throughout a wide range of sectors and product lines can benefit from these tactics.

Managers must evaluate where the organization is now, where they want it to go, and what
resources are available before deciding on a directed plan. The right course of action will
depend on how abstract elements like the vision statement, mission statement, and intended
strategic results interact with the company's existing financial status. For instance, a business
may not be in the greatest position to execute a growth strategy if it has low resources, bad
credit, and no expertise.
 NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course: Strategic Management
Internal Assignment Applicable for September 2022 Examination

Growth Strategy

Companies that employ a growth strategy look for opportunities in new markets, product
development, and revenue streams. In a vertical growth strategy, new items are sold to current
clients. Offering sugar-free or healthier variants of their conventional products is an illustration of
a vertical growth strategy for a soft drink maker. A horizontal expansion strategy includes
looking for new customer markets. By seeking marketing prospects abroad, the soft drink
business might also follow a horizontal approach.

Stability Strategy

Stability-oriented strategies emphasize maintaining the status quo and limiting operational
changes. This is a strategy that businesses may use if they want to avoid the risk involved in
seeking new prospects and have a steady, consistent profit margin. As they accumulate
resources for the upcoming expansion project, managers may also choose a stability approach
on a temporary basis. For instance, a soft drink business may choose to employ a stability
strategy if its current beverages generate constant earnings while delaying the introduction of
new flavors.

Retrenchment Strategy

Keeping operational changes to a minimum and upholding the status quo are the major goals of
a stability-focused approach. This approach may be used by businesses that want to avoid the
risk involved in seeking new prospects and have a steady, consistent profit margin. While they
build up resources for the upcoming expansion project, managers may also choose to employ a
stability approach temporarily. If a soft drink firm, for instance, sees constant profitability on its
current drinks and decides to delay adding new varieties, it may choose to pursue a stability
strategy.
 NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course: Strategic Management
Internal Assignment Applicable for September 2022 Examination

Growth Stability Retrenchment

Concentration Pause/Proceed with Caution Turnaround

1.Vertical Growth No Change Captive Company
2.Horizontal Growth Profit Sell Out/ Divestment
Bankruptcy/ Liquidation
Diversification
1. Concentric
2. Conglomerate

Without a clear direction, businesses risk losing sight of their aims or getting off track with
initiatives and plans. A directional strategy helps businesses maintain the highest level of
strategic focus while continuing to expand their client base and revenue-generating portfolio of
goods and services. In order to achieve this, they make sure that each department collaborates
with one another rather than focusing solely on its own objectives.

According to The American Health Information Management Association, nonprofit

organizations should prioritize directional initiatives that are centered on their vision, mission,
and values.

Answer 2) It is useful to know what kind of business model a company is employing while
examining it. A company's strategy for generating revenue in the current economic climate is
known as its business model. It encompasses the essential structural and functional aspects of
a company, such as how it generates money and turns a profit. Typically, a business model is
made up of five components.

1. Who it serves
2. Who it provides.
3. How it makes money
4. How it differentiates and sustains competitive advantage
5. How it provides its product/service.

“A business model is supposed to answer who your customer is, what value you can create/add for the
customer and how you can do that at reasonable costs.”

The business model serves as a road map for success and the organization's plan (or failure). The
founders can use this tool to decide how their company will operate and generate revenue.
Additionally, the business strategy explains why buyers should select the service over competing
products on the market. Because of its free operating model and ability to connect and talk with
individuals anywhere in the world, consumers favored Facebook (revenue model). Because it offered
 NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course: Strategic Management
Internal Assignment Applicable for September 2022 Examination

value in the form of constant on-demand programming rather than the traditional TV streaming business
model, Netflix's business strategy was chosen over others.

● The idea behind the firm, or the market opportunity it takes advantage of.
● The clientele that the company mostly serves.
● The issues that the company hopes to fix.
● The service the company provides and how it adds value for customers.
● How the company attracts customers.
● The company's operational strategy.
● How the company generates revenue and the expenses incurred to do so

How do Company uses Business models:

Businesses of various sizes and maturity levels employ business plans and models. While some take
their time and construct complex models, others speak swiftly when stating the fundamentals. Internal
alignment is forced when one has the discipline to complete this planning technique.

For established enterprises, a business model is often a living framework that is reviewed and adapted
every year based on changes with customers, employees, and the market. For companies launching new
products and services or entering new markets, a business model can help get them off to the right start
and ensure that early product and marketing decisions are tied back to the business strategy.

Providing a good or service that may be offered so that revenues exceed costs and all expenses
is the simplest business strategy. Other models might be considerably trickier. Among the
several potential business models are:

Customer solution model:

By offering its expertise to clients in order to enhance their operations, IBM uses this
business model to generate revenue instead of selling IBM products.It's a consultancy
model.
 NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course: Strategic Management
Internal Assignment Applicable for September 2022 Examination

Profit pyramid model:

In order to fill any gaps where a rival might find a place, General Motors provides a broad
line of automobiles. The secret is to get people to purchase at the entry-level, low-margin
Chevrolet Spark (manufacturer's suggested retail price US $13,485) before moving them up
to the higher-margin, higher-priced Cadillac and Buick models, which are where the
corporation makes its money.

Multicomponent system/installed base model:

This well-known business strategy was created by Gillette in order to sell razors at
break-even prices and profit from higher margin razor blade sales. The same applies to
HP's printers and ink cartridges. Thus, the product is a system rather than a single item,
with one item and one component making up the majority of the revenues.

Switchboard model:

In this arrangement, a company serves as a middleman to link numerous sellers and

numerous buyers. Financial advisors juggle a broad selection of items for sale to several
clients with various demands. Both Amazon.com and eBay have implemented this concept
with success.
 NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course: Strategic Management
Internal Assignment Applicable for September 2022 Examination

Time Model:

Speed and product R&D are essential for success in the time model. A pioneer like Gppgle can
make tremendous returns by being the first to market with a new product. once the remainder of
the sector catches up. Google has switched to a newer, more inventive strategy to entice users
to return.

Efficiency Model:

According to this model, a business waits until a product is standardized before entering the
market with a low-cost, low-margin strategy that caters to the general public. Spirit Airlines, KIA
Motors, and Vanguard all use this model.

De facto industry standard model:

The goal of this model is for a business to saturate the market and establish itself as the
industry standard by providing specialized items for free or at a very low cost. Once users are
locked in, the business uses this standard to offer greater margin items. This strategy has been
incredibly successful for LinkedIN, whereas TurboTax offers its most fundamental programme
for free.
 NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course: Strategic Management
Internal Assignment Applicable for September 2022 Examination

Answer 3a) Corporate social responsibility (CSR) is a self-policing corporate strategy that
enables an organization to be socially accountable to its customers, employees, and
stakeholders. Companies can be aware of their impact on the economic, social, and
environmental aspects of society by engaging in corporate social responsibility, often known as
corporate citizenship.

Carroll’s Pyramid of Corporate Social Responsibility

Maximizing a company's profit was traditionally thought of as a business responsibility. This is

due to the perception that companies always put the interests of their shareholders first.
Businesses are, nevertheless, moving toward having an impact on society and the environment.

According to numerous studies, corporations now have direct obligations to a number of

different stakeholders, including protecting human rights and making sure there are remedies
available in the event that violations do occur.

Carroll has proposed a CSR concept, Carroll’s Pyramid of Corporate Social Responsibility,
which states the organizations four business responsibilities –
(i) economic
(ii) Legal
(iii) Ethical
and (iv) Discretionary(philanthropic).

These four components are complementary to each other (not mutually exclusive).
 NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course: Strategic Management
Internal Assignment Applicable for September 2022 Examination

Corporate Social Responsibility (CSR) as defined by Carroll

Since the 1950s, the term "corporate social responsibility" (CSR) has gained popularity. The
significance of the phrase and how it was used weren't made evident until much later.

Definition

The research that resulted in Archie Carroll's pyramid served as the foundation for the present
definition of CSR. Archie B. Carroll first presented this four-part concept in 1979: A company's
behavior that is economically successful, compliant with the law, morally upright, and supportive
of society is referred to as CSR.

The most crucial requirements for corporate social responsibility and when talking about the
company's ethics and the extent to which it helps the society it is a part of with resources like
money, time, and talent are profitability and legal compliance.

He added to this definition in 1991 by utilizing a pyramid. The goal of the pyramid was to
illustrate the building-block character of the four-part framework. This geometric shape was
chosen because it’s both simple and timeless.

Economic responsibility in Carroll’s CSR pyramid

The goal of a company's economic responsibility is to produce goods and services that society
needs while also turning a profit.

Businesses have stakeholders who demand and expect a fair return on their investments,
workers who want to perform their duties safely and fairly, and customers who want high-quality
goods at reasonable rates. The pyramid's base is where all the other tiers are supported.

In CSR, economic responsibility is:

● The obligation to be successful

● The only means a company has of long-term survival and societal backing
 NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course: Strategic Management
Internal Assignment Applicable for September 2022 Examination

Legal responsibility in Carroll’s CSR pyramid

Companies' legal obligations revolve around abiding by the established minimum standards.
Organizations must adhere to certain regulations in order to operate and function. The
fundamental guidelines are made up of laws and norms that reflect society's opinions on
established ethics.

They determine how businesses can carry out their business activities fairly, as specified by
national, regional, and local legislation. CSR's legal obligations are:

● Operating consistently while abiding by the law and government regulations

● Observing various local and national regulations
● Acting as obedient, dependable, and corporate citizens
● Observing legal requirements
● Providing products and services that adhere to the bare minimum of the law

Ethical responsibility in Carroll’s CSR pyramid

Beyond the normative requirements of society—laws and regulations—businesses have an

ethical obligation. Additionally, organizations are expected by society to run and manage their
operations ethically.

By embracing actions, standards, and practices that aren't often documented but are
nonetheless expected, organizations demonstrate their commitment to ethics.

It might be challenging to distinguish between ethical and legal standards. Of course, laws are
founded on moral principles, but ethics extends beyond that.

Among the CSR's ethical responsibilities are:

● Exhibiting behavior that is in line with societal norms

● Recognizing and upholding society's newly established or growing moral and ethical
norms
● Preventing the violation of moral principles in order to accomplish goals
● Exhibiting excellent business citizenship by acting properly or ethically
● Acknowledging
 NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course: Strategic Management
Internal Assignment Applicable for September 2022 Examination

For Illustration : Utilizing goods with fair-trade certification is an illustration of ethical company
operations. For instance, only fair-trade certified ingredients including sugar, coffee, bananas,
and vanilla are used in Ben & Jerry's products.

Philanthropic responsibility in Carroll’s CSR pyramid

Businesses' voluntary or discretionary efforts and practices are part of their charitable
responsibilities.

Although it isn't a legal obligation, businesses are now expected by society to engage in
charitable endeavors. Companies' desire to participate in social activities that are typically not
asked of them in an ethical sense drive the type and volume of these voluntary activities.

Businesses that develop charitable or discretionary initiatives provide the impression to the
public that they care about the community.

Businesses engage in various forms of philanthropy to achieve this, including gifts, donations,
volunteer work, community development, and all other optional contributions to the community
or stakeholder groups that comprise that community.

For Example : The Bill and Melinda Gates Foundation prioritizes, among other things, improving
agriculture, eradicating malaria, and advancing education. Bill Gates gave 1.5 billion dollars to
the Bill and Melinda Foundation in 2014, making him the most generous donor in the world.

Answer 3b)

Friedman’s traditional view

The Friedman Doctrine contends that shareholders, not company leaders, should make
decisions on corporate social responsibility. He contends that a company is not required to fulfill
any social obligations unless its shareholders chose to do so.

Resources are needed for any social obligations to the society, so they should be organized
before they are carried out. The ultimate decision-makers for significant choices like the use of
financial resources are the shareholders, who must first approve any use of a company's
resources.
 NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course: Strategic Management
Internal Assignment Applicable for September 2022 Examination

The financial resources of the company will be impacted by social responsibility initiatives like
the creation of social facilities for the community. Friedman said that such obligations shouldn't
be placed under the company's control and that the shareholders should have the last say on
whether or not they are carried out.

Conclusion : The social obligations of a corporation are not supported by Milton Friedman
unless they are focused solely on the firm. According to him, a company's main objective is to
use as many of its resources as possible in initiatives that increase its profitability. He goes on to
say that when a company practices social responsibility, it will spend more money in an effort to
meet the extra demands of its employees. This will cause the prices of the company's products
to increase in an effort to do so. Milton is a staunch advocate of moral and lawful behavior in a
setting that fosters competition. Archie Caroll, however, contends that a company must also
take into account the requirements of its corporate members and go beyond simply focusing on
maximizing profits.