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McGraw Hill Education (India) Private Limited

NEW DELHI

McGraw Hill Education Offices

New Delhi New York St Louis San Francisco Auckland Bogotá Caracas
Kuala Lumpur Lisbon London Madrid Mexico City Milan Montreal
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ISBN (13 digit): 978-93-392-2183-6
ISBN (10 digit): 93-392-2183-4
Ebook Edition
ISBN (13 digit): 978-93-392-2196-6
ISBN (10 digit): 93-392-2196-6

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Exhibit 1.1 An Alternative Model of Strategic Management

In their 2001-paper titled “Are you sure you have a strategy?” in the Academy of Management Executive, D.C. Ham-
brick and J.W. Fredrickson talk at length about the misconceptions surrounding the use of the term and assert
that most organisations do not actually have a strategy. They go on to define strategy as “An integrated, overarch-
ing concept of how the business will achieve its objectives.”
Hambrick and Fredrickson propose that strategy outlines the means by which a firm intends to create unique
value for customers and important stakeholders. In doing so, strategy is the central, integrated, externally-
oriented concept of how a firm will achieve its objectives. In such a manner, strategy consists of an integrated
set of choices. These choices are the five related elements of the strategy based on decision that managers make
regarding them. The five elements are arranged in a manner to make it what is referred to as the strategy dia-
mond.

Internal and External Strategic

Analysis

Strategy: Implementation
Vision and Goals and Arenas Levers and
Mission Objectives Vehicles Strategic
Differentiators Leadership
Staging
Economic logic

A diagrammatic representation of Hambrick and Fredrickson model of strategic management

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The five elements that make up the strategy, according to Hambrick and Fredrickson, and those that form the
core of their model of strategic management, in the form of questions are:
1. Arenas: The arenas attempt to answer the question: where will we be active? Typically, the arenas would com-
prise of the products, services, distribution channels, geographic markets, and technology in which the firm
participates.
2. Vehicles: The vehicles attempt to answer the question: how will we get there? The vehicles thus are the means
for entering new arenas such as through acquisitions, alliances, or internal development.
3. Differentiators: The differentiators attempt to answer the question: how will we win in the marketplace? The
differentiators are the features and attributes of a firm’s products or services that help it compete in the
market. Some examples of differentiators could be price, quality or reliability of products.
4. Staging: The staging attempt to answer the question: what will be our speed and sequence of moves? Thus,
the staging refers to the timing and the pace of strategic moves. There are resources as well as limitations
that determine when a firm moves into a market and at what speed.
5. Economic logic: The economic logic attempts to answer the question: how will we obtain our returns? Every
firm has to earn a profit over and above its cost of capital. Explaining how profit will be created is the eco-
nomic logic of the firm.
A comprehensive strategic plan should be dealing with all these five elements of strategy and when the five
elements of strategy are aligned and reinforce each other, success is more likely.
The strategic management model proposed by Hambrick and Fredrickson has a lot of merit. It is being used
in some recent textbooks on strategic management among them being Strategic Management by Carpenter and
Sanders.
Sources: D.C. Hambrick and J.W. Fredrickson, “Are you sure you have a strategy?” Academy of Management Executive
15, no. 4 (2001): 48-59.; M. A. Carpenter and Wm. G. Sanders, Strategic Management: A Dynamic Perspective (Upper
Saddle River, N.J.: Pearson Prentice-Hall, 2007).

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Exhibit 1.2 An agenda for Strategic Management in Indian Companies

A consultant – academic duo has attempted to analyse the strategic issues in front of Indian companies over three
periods: the pre-liberalisation stage, i.e. till the 1980s, the liberalisation stage 1990s, and the post-liberalisation
stage, i.e. 2000 and beyond.
The key patterns in strategic management as practised by the Indian companies in the three periods are as
below:
Pre-liberalisation stage: Strategic management on government’s fringes
z Subsuming enterprise objectives into the national planning framework
z Capabilities in generating and grabbing opportunities
z High diversification, non-competitive scales and weak technology capabilities
z Secretive and ‘one man’ strategic management process
The decade of the 1990s: Transitional euphoria and reality-check
z Carried ‘operation de-linked strategy’ mindset to the early 1990s
z ‘Foreign complex’ governed strategy in older groups in the early 1990s
z Strategy of focus through rationalisation and operations improvement by majority of companies in the late
1990s
z Strategy of growth through acquisitions, internationalisation, and product-market expansion, by some compa-
nies in the late 1990s
z Experimentation with international consulting firms in strategic management process
Post-liberalisation stage: Issues and agenda in 2000 and beyond
z Acquire a ‘global maverick’ mindset and actively shed pre-liberalisation thinking
z Synergise entrepreneurial flair with professional skills in strategic management
z Complete portfolio rationalisation, but also expand boundaries through internationalisation and entry into
emerging sectors
z Mobilise increased resources and ensure adequate growth through existing businesses
z De-merge businesses as independent companies, for focus and improved market capitalisation
z Actively promote development of technology capabilities
z Decentralise organisations and develop institutionalised control mechanisms

Source: Adapted from R Karki and R. T. Krishnan, “Strategic management in Indian companies: Evolution and
an agenda for 2000–2010,” (Proceedings of the Second Annual Conference of the Strategic Management Forum
of India, Indian Institute of Management, Bangalore, May 1999).
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Exhibit 1.3 Strategy as Paradox

Bob De Wit and Ron Meyer have authored a highly readable book titled Strategy Synthesis. The approach adopted in
the book is very different from the common strategy texts. De Wit and Meyer consider strategy as a paradox. This
is so because “[a]t the heart of every set of strategic issues, a fundamental tension between apparent opposites can
be identified”. (p. 13). The challenge is to grapple with these tensions. Basically, these tensions arise owing to the
different assumptions that strategy theorists make in enunciating their theories. On every conceivable strategy topic,
there are two diametrically opposite perspectives creating a paradox. It requires considerable debate to transcend
the paradox and come out with synthesis that creatively combines the two differing perspectives.
The idea of De Wit and Meyer can be illustrated in the case of competition versus cooperation. Organisations
are often confronted with this paradox of whether to achieve success through competing or cooperating with their
rivals. A large body of strategy literature is firmly rooted in the assumption that competing is essential to winning. On
the other hand, there is convincing evidence that cooperation also can create winning situations. So what should the
organisation do? The paradox is: compete or cooperate. Some theorists have come up with the idea of ‘co-opetition
strategy’ that refers to simultaneous competing and cooperation trying to beat the paradox.
Another paradoxical situation arises when organisations have to decide to remain within the national boundaries
or go international. This is the paradox of globalisation versus localisation. In dealing with this paradox organisa-
tions are confronted with the differing perspectives of global convergence versus international diversity. Practically,
this means whether the organisation should offer the same product globally or adapt it to suit the different national
markets it serves. There is an approach that combines the differing perspectives and is called the ‘transnational strat-
egy’ where the organisation attempts to combine global scale of production with local responsiveness to national
markets thereby creating a winning situation.
Strategy, according to De Wit and Meyer, is a highly complex issue and the two sides of any issue need to be thor-
oughly debated to bring to the fore synthesis that is unique to each thinker. In such a manner, strategy emerges as
synthesis out of the process of intellectual churning of the two opposing perspectives.
Source: Bob De Wit and Ron Meyer, Strategy Synthesis: Resolving Strategy Paradoxes to Create Competitive Advantage 3rd ed.
(London: South-Western Cengage Learning, 2010) and Bob De Wit and Ron Meyer, Strategy: Process, Content, Context
4th ed. (London: South-Western Cengage Learning, 2010).

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Objectives Corporate-level Strategies Structural
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Exhibit 2.1 The Strategic Intent of Tata Steel

The Tata Group is known for its ethos of aligning business opportunities with nation building. One of the India’s
most reputed companies from the Tata Group which was set up in 1907, Tata Steel is Asia’s first and India’s larg-
est private sector steel company. Tata Steel is among the lowest cost producers of steel in the world. Its strategic
intent is expressed in terms of a hierarchy of vision, mission, strategic goals, and strategies. It also explicitly states
its corporate governance philosophy and measures to ensure business ethics.
Vision
‘We aspire to be the global steel industry benchmark for value creation and corporate citizenship.’
Mission
Tata Steel does not explicitly mention a mission statement but expresses that it would strive to make a difference
through the actions mentioned as under.
z By fostering teamwork, nurturing talent, enhancing leadership capability and acting with pace, pride, and
passion through people.
z By becoming the supplier of choice, delivering premium products and services, and creating value for cus-
tomers.
z By adopting an innovative approach to developing leading edge solutions in technology, processes, and
products.
z By providing a safe workplace, respecting the environment, caring for communities, and demonstrating high
ethical standards.
Strategic Goals
z Responding to changing customer demands and expectation
z Strengthening supply chain and logistics
z Innovating and developing new products
z Process improvements through shorter lead-times
z Excelling at customer services and proactive market development
z Improving operational effectiveness
z Focusing on sustainability, corporate social responsibility, and health and safety
Growth Strategy
z Building long-term value
z Expanding capacity
z Enhancing product quality
z Working closely with customers
z Differentiating through product innovation
Tata Steel stresses on adoption the ‘best practices’ in the area of corporate governance through emphasising
the need for full transparency and accountability in all its transactions, in order to protect the interests of its
stakeholders and to act as a trustee of its shareholders. It brings out an annual corporate governance report.
Tata Steel sets itself a high standard of ethical conduct. It adopts five core values of integrity, understanding,
excellence, unity, and responsibility. Business ethos is promoted through the four pillars of leadership, communi-
cation and awareness, evaluation of effectiveness, and compliance structure. It adopts the Tata Code of Conduct
in its operations. The company has a corporate ethics department responsible for the management of business
ethics. It also involves other social agencies in its agenda of common good.
Source: Adapted from information on website of Tata Steel at: http://www.tatasteel.com/; Annual Report 2013-14
available at http://www.tatasteel.com/investors/annual-report-2013-14/annual-report-2013-14.pdf; Corporate
governance report available at http://www.tatasteel.com/investors/pdf/corporate-governance-report.pdf; Tata
Code of Conduct, 2013 available at http://www.tatasteel.com/corporate/pdf/TCOC.pdf. All websites retrieved
22 November, 2014.
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Exhibit 2.2 What a Vision should be and should not be

A vision should be: A vision should be
9An organisational charter of core values 8A ‘high concept’ statement, motto or
and principles literature or an advertising slogan
9The ultimate source of priorities, plans, 8A strategy or plan and a view from
and goals the top
9A puller (not pusher) into the future 8A history of proud past
9A determination and publication of what 8A ‘soft’ business issue
makes a person unique
9A declaration of independence 8Passionless

Source: Adapted from Lucas, J. R. Anatomy of a vision statement Management Review, 87, no. 2 (1998): 22–26.

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Exhibit 2.3 The Process of Envisioning

Well-conceived vision

Core ideology Envisioned future

Core values Long-term audacious goals

Core purpose Vivid description of achievement

Source: Adapted from J. Parikh and F. Neubauer: “Corporate Visioning” in International Review of Strategic Management,
vol. 4, ed. D.E. Hussey (West Sussex, England: John Wiley & Sons, 1993): 109–111.

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Exhibit 2.4 Understanding the Business of Timekeeping

An illustrative diagram, like the one shown here, can be helpful in understanding business. In this diagram, we
have attempted to relate societal needs to the business of timekeeping.
Each successive step provides alternative ways through which the timekeeping needs of the society could be satis-
fied. Consider the following illustrative examples:
z Wristwatches could be of different types, e.g. ladies, men, children, and sports watches. Ladies wristwatches
could be either utility or ornamental watches.
z Other type of watches could be time pieces, wall clocks, and pocket watches.
z Other products could be an hourglass or a sundial.
z Specialty watches could be video timers, calculator watches, and car clocks.
z Consumer non-durables could be time-punching machines and stop watches.
z Services could be telephone or teletext time services.
z Other organisations which roughly meet the timekeeping needs could be for instance, a church bell chiming
at appointed hours or a call to the faithful from mosques.
All these options—or their combinations—lead to the satisfaction of the timekeeping needs of the society.
Four other variables are useful in understanding the business of timekeeping. These are:
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Business Other
organisations organisations

Products Services

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goods goods

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durables non-durables

Non-speciality Speciality
goods goods

Chronometers Other products

Other types of
Wristwatches
watches

1. Functions which watches can perform such as providing the time, day, date, and direction.
2. Customer needs satisfied by actions like finding time, recording time, using watches as fashionable accessories,
and presenting them as a gift items.
3. End usages like direct use by customers and indirect use, as sub-assemblies in the form of watch and clock move-
ments, by industry.
4. Technology used based on mechanical, quartz digital, or quartz analog manufacturing.
These four options and variables are, however, relevant to the current ‘state of the art’. Timekeeping business
could radically change if a breakthrough occurs any time in future. For instance, if it could somehow be possible
to embed sensors in the human brain that enable a person to just know and feel the time rather than finding time
by looking at a watch, timekeeping could become just another neurological function. The implications of such a
breakthrough for society and business are exciting. Naming just two, we could say that visually-challenged persons
could benefit a lot by such a technological advancement, and the business of timekeeping would never be the
same: all timekeeping equipment that we use today could face the risk of becoming redundant. The business of
timekeeping, is therefore, certainly not making more, better, sophisticated and a variety of watches but providing
the means—whatever they might be—to simply know the time.
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Exhibit 2.5 Abell’s Three Dimensions for Defining the Business of a Watch Company

Source: Adapted from D.F. Abell: Defining the Business: The Starting Point of Strategic Planning (Englewood Cliffs,
N.J. Prentice-Hall, 1980).

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Exhibit 2.6 Objectives of Indian Oil Corporation

The Indian Oil Corporation (IOC) is India’s largest company and the highest ranked Indian company among
Fortune Global-500 companies. It has a long and varied set of objectives divided into what seem to be strategic
objectives and financial objectives.
Strategic Objectives
z To serve the national interests in oil and related sectors in accordance and consistent with government poli-
cies.
z To ensure maintenance of continuous and smooth supplies of petroleum products by way of crude oil refin-
ing, transportation and marketing activities, and to provide appropriate assistance to consumers to conserve
and use petroleum products efficiently.
z To enhance the country’s self-sufficiency in oil refining and build expertise in laying of crude oil and petro-
leum product pipelines.
z To further enhance marketing infrastructure and reseller network for providing assured service to customers
throughout the country.
z To create a strong research and development base in refinery processes, product formulations, pipeline
transportation, and alternative fuels with a view to minimising/eliminating imports and to have next genera-
tion products.
z To optimise utilisation of refining capacity and maximise distillate yield and gross refining margin.
z To maximise utilisation of the existing facilities for improving efficiency and increasing productivity.
z To minimise fuel consumption and hydrocarbon loss in refineries and stock loss in marketing operations to
effect energy conservation.
z To earn a reasonable rate of return on investment.
z To avail of all viable opportunities, both national and global, arising out of the Government of India’s policy
of liberalisation and reforms.
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z To achieve higher growth through mergers, acquisitions, integration, and diversification by harnessing new
business opportunities in oil exploration and production, petrochemicals, natural gas, and downstream op-
portunities overseas.
z To inculcate strong ‘core values’ among the employees and continuously update skill sets for full exploitation
of the new business opportunities.
z To develop operational synergies with subsidiaries and joint ventures and continuously engage across the
hydrocarbon value chain for the benefit of society at large.
Financial Objectives
z To ensure adequate return on the capital employed and maintain a reasonable annual dividend on equity
capital.
z To ensure maximum economy in expenditure.
z To manage and operate all facilities in an efficient manner so as to generate adequate internal resources to
meet revenue cost and requirements for project investment, without budgetary support.
z To develop long-term corporate plans to provide for adequate growth of the corporation’s business.
z To reduce the cost of production of petroleum products by means of systematic cost control measures and
thereby sustain market leadership through cost competitiveness.
z To complete all planned projects within the scheduled time and approved cost.

Source: Adapted from the Website of Indian Oil Corporation at: http://www.iocl.com/AboutUs/Objectives.aspx.
Retrieved on 22 November, 2014.

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Exhibit 2.7 The Balanced Scorecard Model

Source: Adapted from R.S. Kaplan and D.P. Norton: The Strategy-focused Orientation: How Balanced Scorecard Companies
Thrive in the New Business Environment (Boston: Harvard Business School Publishing, 2000) and R.S. Kaplan and D.
P. Norton: The Balanced Scorecard: Translating Strategies into Action (Boston: Harvard Business School Press, 1996).

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Exhibit 2.8 A Typical Strategic Map

Source: Adapted from R.S. Kaplan and D.P. Norton: The Strategy-focused Orientation: How Balanced Scorecard Compa-
nies Thrive in the New Business Environment (Boston: Harvard Business School Publishing, 2000) and R.S. Kaplan
and D.P. Norton: The Balanced Scorecard: Translating Strategies into Action (Boston: Harvard Business School Press,
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tends from the level of objectives right up to the level of
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Exhibit 3.1 The Organisation-stakeholder Relationship

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Exhibit 3.3 Corporate Social Responsibility in the Indian Context

N.K. Balasubramaniam of the Indian Institute of Management (IIM), Bangalore, along with co-authors sum-
marises the findings of several surveys on corporate social responsibility in India while reporting on IIMB’s own
survey by its Centre for Corporate Governance and Citizenship (CCGC).
Some of their major observations based on the analysis of survey findings are as follows:
z Perspectives on the understanding and importance of CSR: There is a growing recognition of the strategic significance
of CSR in India. Rather than conduct CSR as philanthropy or merely legal compliance it has to be considered
as fundamental to the core business of the corporation and related to its core business opportunities.
z Major areas of CSR concern in India: Issues related to social upliftment and development are seen as major areas
of social concerns. These include environmental pollution, health, education, poverty alleviation, social welfare,
and community and rural development.
z Motivation for CSR: There are two sets of motivational factors that lead to CSR concerns; one is related to social
concerns such as ethics, values, social improvement, caring for society while the other is related to business
concerns such as corporate reputation, employee and customer relationship, stakeholder impact, responsive-
ness to local community, legal compliance, and strategic planning at the board level.
z Responsibility for CSR: Top management or the executive group within corporations is seen to be the mainly
responsible for CSR initiatives. Rather, CSR initiatives gain significance when backed by the top management.
There is admiration for the managers and CEOs who are perceived as socially-responsive. The corporate social
responsibility is perceived as meaningful when it is linked to corporate strategy and is a part of governance,
reputation management, and risk assessment.
z Obstacles and problems in CSR implementation: There are several types of obstacles and problems identified in the
surveys such as: competitive business practices, poor ethical decision-making, corruption and mismanaged
government practices, lack of executive commitment and unprofessional management, ineffective evaluation
of CSR implementation, and an ad hoc approach rather than strategic CSR interventions.
Overall, the findings indicate that while CSR is perceived as strategically significant but has yet to be extensively
integrated into the practices of the corporations in India.
Some later surveys on CSR have some more interesting findings:
z A survey conducted by Human Resources (HR) consulting firm Mercer titled ‘Corporate Social Responsibility
and Sustainability Programmes, Policies and Practices Survey,’ reveals that about 73 per cent employers in India
stated they have a CSR sustainability policy. Only about one-third of Indian organisations stated that they issue
an integrated annual report on their CSR activities. Justifying the business value of CSR/sustainability initiatives
is among the top challenges faced.
z The Kaiser Permanente Medical Group (KPMG) survey on corporate reporting practices among Indian organi-
sations shows that the Global Reporting Initiative and National Voluntary Guideline on Social, Environmental,
and Economic Responsibilities of Business are most used reporting frameworks. Nearly one-third of organisa-
tions surveyed have separate reports on corporate responsibility. Information technology (IT) companies tend
to have better quality reporting. A large number of organisations place the onus of corporate responsibility on
the CEO or the board of directors. Reporting on stakeholder engagement is becoming popular.
Sources: N. K. Subramaniam, D. Kimber, and F. Siemensma: “Emerging opportunities or traditions reinforced? An
analysis of the attitudes towards CSR, and trends of thinking about CSR, in India” The Journal of Corporate Citizen-
ship 17 (Spring 2005): 79–92. The surveys included in the analysis presented in this exhibit include: Tata Energy
Research Institute—New Academy of Business—ORG-MARG Research 2001; Centre for Social Marketing survey
2001; IndianNGOs.com survey 2002; United National Development Programme—British Council—Confederation
of Indian Industry-PricewaterhouseCoopers survey 2002; National Stock Exchange survey 2003 and Indian Institute
of Management, Bangalore survey 2001. India KPMG’s Corporate Responsibility Reporting Survey, 2013, available at
http://www.kpmg.com/IN/en/IssuesAndInsights/ArticlesPublications/Documents/India-Corporate-Respon-
sibility-Reporting-Survey-2013.pdf; “Education is the most favoured area for CSR spend in India: Mercer survey” in
Business Line, 14 November, 2014 available at http://www.thehindubusinessline.com/news/states/education-is-
the-most-favoured-area-forcsr-spend/article6600044.ece. Retrieved 26 November, 2014.
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Exhibit 3.4 Interweaving Social Responsibility with Commercial Purpose

There is much talk of sustainability in today’s world. Social responsibility is about many things. It is also about sus-
tainability. Take for instance, technology. An appropriate technology is one that can enable poor people to make a
living that can raise them out of poverty. Electricity is one means to help the people make a living. India’s villages
are typically dimly lit by paraffin lamps and dim lights battling darkening chimneys. Sustainable electricity has
the potential to help poor people become literate, for instance, and literacy is a means to lift them out of poverty.
Harish Hande has been working in the business of solar electrification for the past 12 years. Inspired by his profes-
sor at the University of Massachusetts, Jose Martin, who advised him that “socio-economic needs are more important
than technology” Hande ventured in 1995, into selling solar power to the poor of Karnataka. At the university he
had worked for his Masters and Ph.D. in solar electrification. He gathered first-hand experience in the Dominican
Republic, as a student of the Indian Institute of Technology, Kharagpur, where he observed the poor people readily
paying for access to solar power.
Hande established the Selco Solar Light Company with a vision to empower the poor by enabling them access
to electricity through solar energy. Selco has 85,000 clients in Karnataka and Gujarat at present bringing sustain-
able electricity to 35,000 homes and small businesses. There are 145 employees, many of whom share his vision.
Revenues for the year ending March 2007 were Rs. 13.25 crore with Rs. 75 lakh losses. Undeterred by losses, Hande
has worked tirelessly to knit his sense of social responsibility with his business strategies. Projected losses for 2008
are Rs. 25 lakh. There are related diversification plans to move into bio-gas and cooking gas aiming at becoming an
energy services company. Future plans include raising equity capital to finance an incubation centre at Bangalore
using Selco as a training base to create Selco-type organizations by training social entrepreneurs.
The business model rests of Selco rests on two basic needs of the potential customer: doorstep servicing and
doorstep financing. Doorstep servicing is achieved by setting up solar panels where needed; solar service centres are
manned by technicians from nearby villages reachable by the service centres. This is one of the pillars of the business
model. The second pillar rests on micro-financing as the poor are not able to pay lump sum for the services. Here
enters the role of regional rural banks, commercial banks, cooperatives, and NGOs which finance or help financing
the setting up of solar panels. The business is entirely market based and, remarkably, does not require government
subsidies.
Harish Hande is an individual of multifaceted personality. Forty years old, he is a sort of polyglot who speaks
several Indian languages. He prefers wearing ethnic clothes. His work came into limelight when he became the
winner of the Ashden Award for Sustainable Energy in 1995, and the Social Entrepreneur of the Year 2007. Hande
 ^ƚƌĂƚĞŐŝĐDĂŶĂŐĞŵĞŶƚ

is busy breaking some entrenched myths, among them are: poor cannot afford technology; poor cannot maintain
technology; and one cannot run a commercial venture without running a social venture. In the process, he is at-
tempting to empower the poor in more ways than one.
Sources: L.H. Lovins: “Development as if the World Mattered” World Affairs Journal May 2005; “A businessman’s
crusade against darkness” Business Standard, 4 December, 2007; S. Dowerah: “An entrepreneur’s crusade in lighting
up India’s villages” livemint.com The Wall Street Journal, 4 December, 2007. Available online at http://www.livemint.
com/2007/12/04111530/Web-Exclusive--An-entrepreneu.html?pg=2 Retrieved 2 February, 2008; S. Bhattacharya: “Solar
crusader: Harish Hande” Business Today, 23 Dec, 2007; and Selco’s website at: http://www.selco-intl.com/ Retrieved 2
February, 2008.

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Exhibit 4.1 Complexity and chaos in strategic management

Complexity theory of which chaos theory is a part, deals with the process of self-organisation. Chaos theory, pro-
posed by Edward Lorenz and Mitchel Feigenbaum, postulates that at the root of all complex systems—whether
they are organisations or the environment—there are a set of rules that provide a dynamic order to the surface
complexity. These systems cannot be considered as linear systems where a simple cause and effect model can
explain the behaviour of these systems. Rather, these systems are non-linear and dynamic in nature. Any change
that takes place in the non-linear systems is chaotic. Chaos theory uses the mathematical models, known as cha-
otic models, to interpret the process of non-linear and dynamic systems. The phenomenon of chaos is observed
 ^ƚƌĂƚĞŐŝĐDĂŶĂŐĞŵĞŶƚ

in a wide variety of processes—biological, sociological, economic, and meteorological. The applications of chaos
theory in management may range from predicting market behaviour, financial forecasting, to anticipating com-
petitive strategies.
Organisations and environments display many of the characteristics of the living eco-systems—as these are also
dynamic, ever changing systems—making it possible to apply the tenets of chaos theory to them.
In suggesting the use of chaos theory to strategic management, D. Levy gives the following reasons:
z Long-term planning is difficult
z Industries do not reach a stable equilibrium
z Dramatic changes can occur unexpectedly
z Short-term forecasts and predictions of patterns can be made
z Guidelines are needed to cope with complexity and uncertainty
The lesson that students of strategic management need to learn is that, in a dynamic environment, it is sui-
cidal for organisations to remain static. They have to forego maintaining an internal orientation and attempt to
change dynamically as the environment changes. Managers should not fall into the trap of over-rationalisation,
over-reliance on sophisticated modelling, and the futile attempt to create order where a state of equilibrium
simply cannot exist for long. Creative disorder in the environment, as it is in the universe, needs to be taken to
heart by managers.
Sources: D. Levy, ‘Chaos theory and strategy: Theory, application and managerial implications’ in Strategic Man-
agement Journal, 13 (1992): 111–25; D.N. Chorafas, Chaos Theory in the Financial Markets (Chicago: Irwin, 1994);
R.D. Stacey, Complexity and Creativity in Organizations (San Francisco: Berrett-Koehler, 1996) and R.T. Pascale,
M. Millemann, and L. Gioja, Surfing the Edge of Chaos: The Laws of Nature and the New Laws of Business (New York,
Three Rivers, 2000).

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Exhibit 4.2 The Business Environment of an Organisation

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Exhibit 4.3 The ‘LPG’ of the Economic Environment in India

By ‘LPG’, as colourfully stated by the once-redoubtable former chief election commissioner T N. Seshan, is meant
liberalisation, privatisation, and globalisation. You often hear these terms and might have an idea of what they
mean. Let us see the meaning of these terms in the context of the Indian economic environment.
Liberalisation refers to a set of measures and reforms aimed at the creation of an open economy. Broadly, the
economic policies talk of liberalisation measures for industry and trade and reforms related to the macro aspects
and structural adjustments.
Liberalisation measures encompass the following:
z Industrial policies related to liberalisation of licensing of companies, foreign exchange and its regulation, mo-
nopolies and restrictive trade practices, and the public sector reforms.
z Trade policies related to liberalisation through encouragement of foreign investments, opening of exports and
imports sectors, lowering of import tariffs, abolition of import licensing, and convertibility of rupee.
The reforms process includes:
z Fiscal (say, reduction of fiscal deficit and reform of taxation system), monetary (say, lowering interest rates and
controlling inflation), banking sector (say, freeing interest and lending rates and entry of private banks), and
capital market reforms (say, entry of private sector mutual funds and allowing foreign institutional investors in
capital markets).
z Structural adjustments related to phasing out of subsidies and price controls, and disinvestment in public sector
units, and framing of exit policy for industry.
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The ongoing reform process, often referred to as second-generation reforms, include transparent financial
systems, better governance, focused social sector spending, and trade and labour reforms.
Privatisation refers to the process of selling of state-owned enterprises (or public sector units as we call them)
to private individuals or corporations. In a limited sense, it also means the hiring of a private business to provide
products and services previously offered by a government agency. Liberalisation in the shape of public sector
reforms, for example, entails disinvestment of government equity in public sector units resulting in their pri-
vatisation. Another aspect that is quite popular in India is greater involvement in economic activities through
public-private partnerships.
Globalisation means the integration of a country’s economy with the global economy. This is done in several
ways like enhancing inward flow of foreign funds and technology, open up the system of trade and investments,
and, in general, the internationalisation of markets, production, and corporations. Operationally, it means that
a company that could earlier be successful by focussing only on making and selling goods and services within its
national boundaries now expands its horizon to the world.
You will note that the three terms are not mutually exclusive in terms of their coverage. These should not be
viewed in watertight compartments. Instead, these are to be seen as a part of an elaborate economic philosophy
of focussing on entrepreneurialism or individual initiative as the vehicle for economic growth, development, and
progress as opposed to state or government-led economic development.

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Exhibit 4.4 Relevance of WTO as an International Environment Factor for Indian Companies
The WTO claims to be ‘the only global international organization dealing with the rules of trade between na-
tions.’ The members negotiate and sign the agreements that may be ratified by their parliaments. The goal of
the WTO is to help producers of goods and services, exporters, and importers conduct their business.
The WTO was founded on 1 January, 1995 as a successor to the General Agreement on Trade and Tariff (GATT)
by the Uruguay round negotiations. While GATT focussed mainly on trade in goods, the WTO covers cross-border
 ^ƚƌĂƚĞŐŝĐDĂŶĂŐĞŵĞŶƚ

trade in services and ideas, and the movement of personnel. It has a membership of 150 countries as in January
2007.
The functions of the WTO are:
z Administering WTO trade agreements
z Forum for trade negotiations
z Handling trade disputes
z Monitoring national trade policies
z Technical assistance and training for developing countries
z Cooperation with other international organisations
The World Trade Organization functions on the basic premise that free trade among nations leads to economic
growth. Liberal trade policies that allow the unrestricted flow of goods and services help in honing competition,
motivating innovation, and nurturing success. Its wide-ranging activities relate to agriculture, banking, food
sanitation, government purchases, industrial standards and product safety, intellectual property, telecommunica-
tions, textiles and clothing, etc.
Criticism of WTO rests on several allegations made against it. WTO considers these allegations as misconcep-
tions arising out of misunderstanding. The World Trade Organization is now under fire for failing to take into
account labour standards or the environmental impact of trade. Besides, it is alleged that its efforts to break down
global trade barriers are faltering. The more serious criticism relates to it being a tool in the hands of powerful
multinational corporations, dictating policy to sovereign nations and prescribing actions that lead to destroying
jobs and increasing poverty. The World Trade Organization addresses many of these criticisms on its website at
http://www.wto.org/english/.
India is a founder member of the GATT and its successor, the WTO. India’s participation aims at the develop-
ment of an increasingly rule-based system in the governance of international trade so as to ensure more stability
and predictability that ultimately would lead to more trade and prosperity for itself and other member-nations.
India has benefited by the provisions of the WTO such as the most favoured nation principle and enabling of
access to a large number of importing countries. India is also a part of the group of developing nations that seek
to secure equity in access to the markets in developed countries and protecting its vital interests in agriculture.
Information related to India’s relationship with WTO is available with the Ministry of Commerce at http://com-
merce.nic.in/
There are important implications of the WTO regulations for strategic management for companies in all
industries that come within its purview. Among them are the pharmaceuticals (e.g. patenting), IT (e.g. outsourc-
ing), agriculture (e.g. food safety and processed food exports), textiles and garments (dismantling of quotas and
export competitiveness), and service sector (e.g. insurance, banking, and accounting).

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Exhibit 4.5 The Enigma that the Indian Market is

Ask any perceptive marketer about the biggest challenge in marketing in India and chances are that s/he would
name it: the heterogeneity of the Indian market. At any given time, it is difficult to segment a market. It is even more
difficult trying segmenting a market as diverse and unpredictable as India’s. The British Broadcasting Corporation’s
(BBC’s) George Arney, who has been reporting on India for many years, wonders: “how do you summarise a country
which is home to one in six members of the human race, contains a third of the world’s poorest people and yet has
an increasingly consumer-oriented middle-class twice the size of the population of Germany”?
Market analysts keep struggling with data streaming out from various surveys conducted by organization such
as the National Council of Applied Economic Research (NCAER), National Sample Survey (NSS), or the Indian
Readership Survey (IRS). Marketing students quickly get to adopt the jargon of consumer behaviour: ‘SEC C’ con-
sumer or ‘aspiring’ category consumer. The hype associated with India’s economic emergence fuels the marketing
strategists’ imagination. Yet, the elusive Indian consuming class simply refuses to come within the grips of artful
tactics and carefully designed strategies.
Estimates of the number of people in the consuming class vary widely. Invariably, they are quoted in a few hun-
dred millions. Subsequently, several of these estimates prove to be inflated and are based more on self-enlightened
prophecies rather than market realities. So many MNCs with their bloodied noses can relate well to this. To them,
the choice among being a volume-based, mass marketer or a premium, niche marketer has always been clear. They
are there for big action in a huge marketplace. The only problem is there is hardly any homogeneity to base action
upon. The Indian consumers do not act like the consumers in the countries where MNCs originate from. There
seems to be more emphasis on value for money, aversion to being pushed to buy, little liking for razzle-dazzle, and
the propensity to rely on reputation and trust in customer relationship.
Consumerism, or conspicuous consumption, is a double-edged sword. It fuels economic growth but also ignites
social disparities and individual guilt. While it is a phenomenon experienced by industrial societies anywhere, in
India it struggles valiantly with the strongly-entrenched social system and values. Take, for example, the issue of
debt-funded consumption. Is postponing consumption increasingly difficult for the Indian consumer than taking
a loan to satisfy it quickly? Many marketers gleefully report that the Indian consumer has finally gotten over his
aversion for loans or mortgages to buy items for immediate consumption. But is it really true? It is difficult to say.
If one sees it through the prism of generational differences and social mobility then it may be easier for a 23-year
old man, earning a tidy amount out of his call centre job to go for instant gratification but practically impossible for
his father, running his extended family with his meagre government pension, to do so. Who is the marketer really
aiming at: the father or the son? They might represent the two sides of the Indian consuming class to the marketer
yet they emanate from the same social milieu.
On the one hand, undoubtedly, there is a huge untapped market for consumer goods out there in India. On the
other, we are already witnessing signs of consumption-induced stress. The ‘buy-nothing-day’—a manifestation of
fatigue by over-consumption and a social movement against mindless consumerism, observed around the world in
November-end every year—was celebrated in Mumbai for the first time in 2006 and continues to make an impact.
Just like the country, the consuming class in India is a bundle of contradictions. Just like there might be an over-
fed kid who is sick of consumerism and looks forward to a minimalist lifestyle there might be aspiring youth from
the suburban areas looking forward to buy their first motorbike. There are so many variables making it difficult
to measure, evaluate, or compare data. Besides the usual marketing variables such as demography or lifestyle, the
marketers have factors such as the region, caste, and cultural diversity to contend with. Foreign, especially the Ameri-
can, models of marketing research can offer useful insights but cannot serve the purpose adequately of helping to
have a realistic understanding of the Indian consumer behaviour. Indigenous theoretical models, understanding
of markets grounded in social realities of India or simply, conservative trial-and-error may help to do so.
Despite the heterogeneity of the Indian market it is prudent to realise that the Indian society is in state of ferment.
Several differences apparent today may dim in intensity or disappear totally tomorrow. This is likely to happen es-
pecially across the socio-economic classes where for instance the elite classes behave in a similar way across regional
or caste divides. The market environment is dynamic, complex, and multifaceted. Its understanding and evaluation
poses a difficult challenge not only to the marketer but to the strategic planner as well.
 ŶǀŝƌŽŶŵĞŶƚĂůƉƉƌĂŝƐĂů൰

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Exhibit 4.6 Why the Industry and the Government Mistrust each other?
S.K. Bhattacharya, an eminent management consultant, made a perceptive analysis of the mistrust that exists
between the industry and government and made suggestions to bridge the gap in such a relationship. The dif-
fering perceptions that the industry and the government have, could be largely attributed to what managers and
bureaucrats feel about each other.

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Bhattacharya further suggested that the reality is far removed from what the managers and bureaucrats feel
about each other. He advocated that a consultative and collaborative approach should be adopted by the govern-
ment through open communication, while the industry should adopt a supportive attitude by recognising that
it is the government’s prerogative to regulate and guide industrial and economic development in the light of
national priorities. In retrospect (Bhattacharya’s perception is based on the situation in the late 1980s), it can be
seen that welcome changes are slowly taking shape—the bureaucrats are no longer as secretive and industrialists
adopt quite a supportive attitude to governmental initiatives. Yet, attitudes are difficult to alter and take a long
time to change. What Bhattacharya perceived in the 1980s could still be relevant especially in relation to lower-
level bureaucrats and industrialists working at places away from the industrial centres.
Sources: Adapted from, ‘The Industry-Government Hiatus’, in Business World, 28 March–10 April, 1988, 20–21 and
‘Bridging the Gap in Government-Industry Relationship’, in Business World, 25 April-8 May, 1988, 39–40. Both
the articles have been written by S.K. Bhattacharya.

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Exhibit 4.7 Social impact of media and its implications for business and industry
The eminent sociologist Emile Durkheim made two observations: as society grows more complex, specialised in-
stitutions serving specialised social needs develop and proliferate to maintain social stability; and new institution-
al forms displace old ones only when the old ones no longer manage to serve their original purposes effectively.
The evolving Indian society offers an interesting setting of how the mass media has emerged as a social institu-
tion, fulfilling many of the functions that are no longer or inadequately being served by traditional social institu-
tions such as the family or the school.
Mass media is powerful in the sense that people look to it for direction, values, and rules of behaviour. Media
supply people with membership in groups. People arrange their daily routines around media activities: the morn-
ing newspaper, the afternoons for checking E-mails, and evening for prime-time television serials. Media have
a prominent impact on the lifestyle of people dictating daily activities, jargon, or fashion. At tragic or exciting
 ŶǀŝƌŽŶŵĞŶƚĂůƉƉƌĂŝƐĂů൰

times, media serves as a comforter and facilitator. People turn to the media for information on railway accidents
or air crashes; they put on the televisions to view and hear about the latest election trends; and they are glued
to their television sets at the time of an exciting cricket match. Media performs an educational role too. The
Internet is an instantaneous source of information. People turn to it for myriad purposes: knowledge, entertain-
ment, news, or making new friends. Governments and politicians realise the power of the media in shaping public
opinion. Being media-savvy is an essential qualification for political parties’ spokespersons.
There is a big danger in investing the mass media with so much power. In the Western context, where media
was never intended as a social institution, the profit motive is the primary purpose. When private interests over-
ride public good, audience ratings may be more important than the programme content. Titillation of senses
through excessive sex and violence or as, in the case of television serials, fancy sets, expensive jewellery, and
jerky story plots become essential elements in the ‘masala’ to attract audiences, keep them hooked, and increase
advertising exposure for sponsors.
The global trends in media have not left India untouched. The spread of television network, private television
channels, broadband, and telecommunications are some of these popular trends. Other trends in the making—
digitisation, miniaturisation, higher bandwidth enabling transmission of images and colour, allowing greater use
of portability, and the integration of converging technologies—are leading to decreasing costs and greater user-
friendliness of multimedia communications and services. It is to be observed that the social impact of media is an
active process that involves those who create the information and those who use it. The diffusion of each new com-
munication medium is based on the progressive development of an effective use that may be significantly different
from its anticipated use. Thus, the use of Internet for pornography or mobile phones for blackmailing and bomb
blasts is unintended usage of technology. Secret filming of corruption or sex scandals by some private television
channels in India may be another such destructive trend that serves little social purpose. The corporate sector
primarily views the media as a means for advertising and promotion. Yet, media has much wider implications for
business and industry than being just a medium for marketing communication. There is research evidence to show
that countries with more open economies tend to have higher penetration rates for mass media. Indian business
and industry continually need to look beyond the traditional uses of media.
Sources: Based on A. Silverblatt, ‘Media as Social Institution,’ The American Behavioral Scientist, 48, no. 1 (September
2004): 35–42; F. Yang and J. Shanahan, ‘Economic openness and media penetration,’ Communication Research, 30,
no. 5 (October 2003): 557; and V. Manthripragada, ‘Social Impact of Media’s Exposes,’ at http://news.indiainfo.
com/publicopinion/medias-expose.html Retrieved 4 February, 2007.

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Exhibit 4.8 Digital Divide: An Emerging Aspect of the Technological Environment in India
According to the IT encyclopaedia Whatis.com the term ‘digital divide’ describes the fact that the world can be
divided into people who do and people who do not have access to and the capability to use modern information
technology, such as the telephone, television, or the Internet.
The boundaries of digital divide in the world could be many. Besides the traditional dichotomy of the ‘have versus
haves-not’, there could be developed versus developing country divide, the rich and poor countries divide, English
speaking and non-English speaking people divide, Anglo-Saxon culture and the rest, and so on.
Within a country or society, the digital divide could be manifested in terms of gender group, age groups, socio-
economic groups, and rural versus urban groups. In terms of the information technology it may not be limited to
the possession of computers or access to the Internet but also to the skills to use them.
Digital divide is a controversial current technological issue. If you access the Internet (assuming the readers of
this book are not the victims of digital divide!) you will find a wealth of information related to this issue. There are
the both good and bad stories of digital divide in India. Let us take the bad stories first.
The negative aspects of digital divide are mainly seen, for instance, in terms of the dismal statistics related to the
telephone density, number of personal computers, access to the Internet in India, or even the number of people
who know the English language. Take this example: most worldwide web sources are in English. Barely 50 million
Indians know English. So what happens to the rest? They may be wealthy, literate, educated, or whatever but since
they do not know English they cannot utilise the Internet well.
The good stories relate how individuals, organisations, and the Central and State governments are working to
bridge the digital divide. These relate to how some State governments are providing public services through Inter-
net such as Madhya Pradesh government’s successful experiment in Dhar district, how Pradeep Lokhande’s non-
governmental organization (NGO) in Pune helps brings used computers, donated by non-resident Indians (NRIs)
abroad, to the villages in rural Maharashtra or how Melurnet provides connectivity to the poor people in Madurai
district.
Of significance here is the fact that the digital divide is real, it exists, and it can be seen as a technological op-
portunity by the organisations rather than as a controversial issue to be debated upon endlessly. When EID Parry of
Chennai, through its portal (indiagriline.com) connects the sugarcane farmers it deals with as suppliers or Amul
of Anand uses it to manage information in association with its milk producers through village-based information
kiosks it is an example of utilising the digital divide as a technological opportunity that benefits both the company
and the community.
Sources: Adapted from K. Keniston and D. Kumar, Four Digital Divides (Delhi: Sage Publications, 2003); M. Ngues-
san, ‘Defining the Boundaries of the Digital Divide,’ Proceedings of the Second International Conference on Technology,
Knowledge and Society 12–15 December, 2005 Hyderabad, and the website of Good News India Magazine at: http://www.
goodnewsindia.com/Pages/content/economy/ddivide.html. Retrieved 27 November, 2014.

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Exhibit 4.9 Information sources for environmental scanning in India

A few selected and important sources which can be used in Indian context for collecting information for envi-
ronmental scanning are suggested below:
1. International publications
(a) Intergovernmental and international agencies like UN, UNCTAD, UNDP, UNESCO, UNIDO, ILO, WHO,
WTO, FAO, IBRD (World Bank), IMF, OECD, ESCAP, and others are a rich source of international statisti-
cal data. World Development Report, World Economic Survey, Statistical Yearbook of UN, International Trade Statistics
Yearbook of UN, etc. are some examples of major international publications.
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(b) International private data agencies such as country rating agencies like Bloomberg, Fitch, Moody’s, Stan-
dard & Poor, etc. provide credit rating and ranking of countries with regard to their attractiveness for
foreign investments.
2. World Wide Web, On-line databases* and systems
(a) Search Engines such as Bing, Lycos, Google, Yahoo! among others are good starting points to search for
information related to environmental scanning.
(b) With the emergence of Internet, the availability of data has increased manifold. Internet is a convenient
access to online data bases of several types of organisations. Government agencies, private data agencies,
federations of trade and industry, and individual companies and other types of institutions maintain web-
sites that provide access to information. Examples of major information sources on Internet are: national
portal of India at http://www.india.gov.in/business.php , directory of official websites of the Government
of India at http://goidirectory.nic.in/index.php, India Image - meant to be a gateway to the governmental
information on the web at http://indiaimage.nic.in/, and government policies are available at http://
policies.gov.in/ and at Department of Industrial Policy and Promotion, Ministry of Commerce at http://
dipp.nic.in/English/default.aspx
(c) Business people are increasingly turning to the computer to assist them in tracking and managing the
voluminous information about their companies and their competitors as well as general trends in in-
dustry and the economy. Data bases are a rich source of statistical and other types of data regarding the
economy, industry, and the corporate sector. Several on-line data bases are available worldwide covering a
vast range of subjects. Examples of business databases are India Business Database at https://www.india-
businessdatabase.com/en/index.aspx; India Business Insight at http://indiabusinessinsight.com/ibi/
login/; and Centre for Monitoring Indian Economy Private Limited at http://www.cmie.com/
3. Government publications
(a) Governmental information sources such as the Census of India reports, five-year plan reports, statistical
abstracts of Indian Union, etc. provide valuable macro-level data useful for the planning purpose. Statistical
abstracts and statistical handbooks are published by several central and state government agencies. The
main drawbacks are the delay in availability of the data and the fact that the data available has to be adapted
for its particular use.
(b) Periodic reports like economic surveys, annual surveys of industries, annual reports of ministries, etc. which
provide current data and reflect governmental thinking and priorities.
(c) Occasional reports brought out by various statutory agencies such as guidelines to industries, policies re-
lated to specific industry, export-import policies, etc. which are relevant for business and industry. Reserve
Bank of India’s (RBI’s) Department of Statistics also publishes valuable occasional papers related to differ-
ent aspects of the economy and industry.
(d) Reference books and encyclopaedias
4. Institutional publications
(a) Publications of market research agencies such as the NCAER, a statutory agency, provide extensive con-
temporary data on the demographic profile of customers that can be used for strategic and marketing
planning. There are several private agencies, several of them in the area of marketing research, that provide
similar information.
(b) Publications of trade and industry federations such as Confederation of Indian Industry (CII), Federation
of Indian Chambers of Commerce & Industry (FICCI), Association of Chambers of Commerce & Industry
(ASSOCHAM), and industry associations like NASSCOM or Automotive Tyre Manufacturers Association
(ATMA).
(c) Annual company reports, which contain data related to the balance sheet and profit and loss account apart
from information or plans and programmes, are an important source for studies of industry and for com-

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petitor analysis. Company in-house journals are also a source of rich information though their circulation
is limited among the members of the company.
5. Periodicals and newspapers
Magazines (Business India, Business Today, Business World, Forbes India, Fortune India etc.); and newspapers (The
Economic Times, The Financial Express, Business Standard, Business Line, Mint, etc.) are the most timely source
of information related to a wide variety of issues. Besides the print versions that remain popular, the online
editions are emerging as significant sources of information. Local and vernacular press increasingly devotes
more space to economic and industrial issues and is a potent source of information related to grassroots
issues generally ignored by mainstream media.
6. Industrial espionage agencies.
Private agencies provide information and reports on competitor plans and activities which may be essential
for strategic planning. These are used when information may not be available from other sources or when
the company wants to protect itself from its competitors’ attempt to infiltrate into its information system.

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Exhibit 4.10 Scenario writing for environmental scanning

Foresight and futurology require looking into the future by intelligent discerning of influences in the present
environment and projecting them into the future. We are interested in foresight and future for knowing what
to expect and not to be overtaken by nasty surprises. Knowing what to expect prepares us better to face future.
This simple principle is behind scenario writing—one of the techniques others being extrapolation and Delphi
 ŶǀŝƌŽŶŵĞŶƚĂůƉƉƌĂŝƐĂů൰

surveys for developing foresight and peeping into the future. As Schwartz says in The Art of the Long View : planning
for the Future in an uncertain world (New York: currency Doubleday, 1996) scenarios are not about predicting
the future; rather they are about perceiving the future in the present.
The uncertainties in today’s world arise from myriad influences such as fast-changing technologies, geopoliti-
cal developments, new business processes, or novel management techniques. Strategists anticipate such influ-
ences in order to cope with them effectively. One way to do that is through scenarios. Used for different purposes
such as technological forecasting, scenarios are stories that paint a vivid picture of a future state in a narrative
format.
Scenarios are used in environmental scanning for strategic planning. Essentially, small groups of experts and
stakeholders focus intensely on influences in a particular sector of environment, say technological or markets, likely
to take place during the coming years. They contemplate possible, even improbable, events that could occur to
change the pattern of influences and create scenarios that reflect the optimistic, pessimistic, and most likely future
shape of events to come. These scenarios provide a basis for strategy formulation.
The different stages of scenario writing proposed by Greg Tegart of the Asia-Pacific Economic Cooperation
(APEC) Center for Technology Foresight, Bangkok are:
1. Identifying the focal issue, objectives of the exercise, timeframe, and appropriate participants.
2. Environmental analysis for issues and trends in the current environment.
3. Identifying and characterize key predictable variables such as demography, resources, etc.
4. Identifying critical uncertainties representing possible discontinuities.
5. Clustering of variables into a manageable set.
6. Ranking of variables to establish key driving forces according to their relative importance and rank the critical
uncertainties.
7. Selecting of scenario logics that assist in determining the number and characteristics of scenarios to be devel-
oped.
8. Developing of scenarios using the key driving forces and developing strings of causally linked likely events into
a coherent narrative.
9. Assessing of scenario coherence by critical examination of its logic and coverage.
10. Assessing of implications of scenarios for strategic planning.
Scenario writing helped Singapore formulate its IT vision of an intelligent island. The city of Curitiba in Brazil
used it to improve civic services. New Zealand used it to project itself from an agricultural and industrial economy
to a knowledge era economy. The US Federal Railroad Administration uses it for its strategic planning. India Vision,
2020, used it extensively for technological scenario writing in the IT services sector. Royal Dutch Shell uses it to
develop foresight on a wide range of issues related to energy, economics, and politics in the various countries it oper-
ates. Several companies in Indian industries, including biotechnology (Panacea Biotec), consultancy (e.g. Satyam
Computer Services), energy (e.g. Cairn India) fertiliser (e.g. SPIC), IT services (e.g. Gartner), and pharmaceuticals
(e.g. EMD Pharma) report using scenario writing for various purposes including strategic planning.
Sources: Based on B.S. Flowers, ‘The Art and Strategy of Scenario Writing,’ Strategy & Leadership, 31, no. 2 (2003):
29–33; R.E. Neilson and D. Stouffer, ‘Narrating the Vision Scenarios in Action,’ The Futurist, 39, no. 3 (May/Jun
2005): 26–31; and G. Tegart, ‘Technology Foresight: Philosophy & Principles,’ available at http://www.apecfore-
sight.org/apec_wide/docs/ForesightMethod.doc Retrieved 5 February, 2007. P. Schwartz, The Art of the Long
View: Planning for the Future in an Uncertain World (New York: Currency Doubleday, 1996)

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Exhibit 4.11 Identifying High Priority Environmental Issues

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Source: Adapted from the W.R. Boulton, Business Policy: The Art of Strategic Management (New York: Macmillan
Publishing Co., 1984): 120.

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Exhibit 4.12 Environment Threat and Opportunity Profile (ETOP) for a Bicycle Company

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The subject matter of the chapter is environmental ap-
praisal, which is the process of identifying opportunities
and threats facing an organisation for the purpose of
strategy formulation.
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Exhibit 5.2 Understanding the Idea of ‘Core Competence’

C.K. Prahalad and Gary Hamel are mainly credited for the dynamic capabilities approach that considers strategic
management as a collective learning process aimed at developing and then exploiting distinctive competencies
by an organisation that are difficult to replicate by their rivals. Through a series of publications such as ‘The Core
Competence of the Corporation’ (1990) and ‘Strategy as Stretch and Leverage’ (1993) in the Harvard Business
Review, and a book Competing for the Future (1994) they have sought to propagate the idea of dynamic capabilities.
This idea rests on the thinking that strategy depends on learning, and learning depends on capabilities of an
organisation.
According to Prahalad and Hamel, the competitive (or strategic, as we call it here) advantage can be traced
to the core competencies of an organisation. They take the analogy of a tree in describing core competence.
‘The diversified corporation is a large tree. The trunk and major limbs are core products, the smaller branches
are business units; the leaves, flowers, and fruit are end products. The root system that provides nourishment,
sustenance, and stability is the core competence.’
Further they explain core competence as: ‘..... the collective learning in the organization, especially how to
coordinate diverse production skills and integrate multiple streams of technologies..... it is also about the orga-
nization of work and the delivery of value..... (It) is communication, involvement, and a deep commitment to
working across organizational boundaries. It involves many levels of people and all functions..... (and it) does
not diminish with use.’
To identify a core competence, Prahalad and Hamel prescribe three tests:
z it should be able to provide potential access to a wide variety of markets;
z it should make a significant contribution to the perceived customer benefits of the end product; and
z it should be difficult for the competitors to imitate.
From the several examples of corporations that Prahalad and Hamel use to exemplify their concept of core
competence, we quote here a few. Canon’s core competence lies in optics, imaging, and microprocessor controls,
Sony’s in miniaturisation, Philip’s in optical-media, 3M’s in stick tape, and Honda’s in engines and power trains.
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The core competencies of these corporations have enabled them to operate in diverse markets offering different
products. For instance, Canon has entered, and even dominated, diverse markets such as copiers, laser printers,
cameras, and image scanners.
Source: C.K. Prahalad and Gary Hamel, ‘The Core Competence of the Corporation,’ in Harvard Business Review,
68, no 3 (May – June 1990): 79–91.

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Exhibit 5.3 Understanding Organisational Learning

Crossan, Lane, and White (1997) define organisational learning as ‘the process of change in individual and
shared thought and action, which is affected by and embedded in the institutions of the organization’. Four basic
processes of organisational learning are: intuiting (subconscious process of learning that occurs at the individual
level); interpreting (sharing learning at the group level); integrating (collective understanding at the group level
and taking it to the level of organisation); and institutionalising (incorporating learning across the organisation
by embedding it in systems, structures, routines, and practices).
Nonaka and Takeuchi (1995) place value on knowledge creation within organisations through focussing on
insight, intuition, and hunch that are gained through experience. Chris Argyris (1977) earlier, and later Garratt
(1987), differentiated single-loop learning, which is a simple case about reviewing performance against targets
and taking corrective action, from double-loop learning that questions the existing framework in which decisions
take place. Organisations that engage in double-loop learning are able to discover new things and act in novel
ways that enable them to adapt to changes and sustain and improve their capability and competitiveness.
Peter Senge (1990) popularised the concept of learning organisation which could be explained as an organi-
sation skilled at creating, acquiring, and transferring knowledge, and at modifying its behaviour to reflect new
knowledge and insights. From the classic term of Peter Drucker: the knowledge worker down to the emerging
discipline of knowledge management—which is considered as gathering and managing intellectual capital that
can be leveraged for generating internal responsiveness of organisation—the focus is clearly on the capability of
an organisation for developing and sustaining strategic advantage.
Sources: C. Argyris, ‘Double Loop Learning in Organizations,’ in Harvard Business Review, (September-October
1977): 115–25; B. Garratt, The Learning Organization (London: Fontana / Collins, 1987; P.M. Senge, The Fifth Dis-
cipline: The Art and Practice of the Learning Organization, (New York: Doubleday / Currency, 1990); I. Nonaka and
H. Takeuchi, The Knowledge-creating Company: How Japanese Companies Create the Dynamics of Innovation, (New York:
Oxford University Press, 1995); M. Crossan, H. Lane, and R. White, ‘Organizational Learning: Toward Theory,’
Working Paper (London, Ontario: Richard Ivey School of Business, University of Western Ontario, 1997).

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Exhibit 5.6 Typical Strengths that Support Operations Capability

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z Congenial working environment
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z High level of organisational loyalty
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z Safe and salutary working conditions

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z Availability and operability of high-tech equipment
z Positive attitude to sharing and disseminating information
z Wide coverage and networking of computer systems
z Presence of fool-proof information security systems
z Presence of buyers and suppliers conversant with IT applications
z Top management understanding of, and support to, IT and its application within organisation

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z Entrepreneurial orientation and high propensity for risk-taking
z Good rapport with the government and bureaucracy
z Top management conscious of sustainability impact of decisions
z Favourable corporate image
z Commonly being perceived as a good organisation to work for
z Development-oriented organisational culture
z Political processes used for consensus-building in organisational interest
z Effective management of organisational change

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Exhibit 5.10 How Organisational Capabilities Contribute to Strengths and Weaknesses?

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Source: Adapted from J.B. Barney, Gaining and Sustaining Competitive Advantage, (Reading, MA: Addison–Wesley
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Exhibit 5.11 Porter’s Generic Value Chain

Source. M.E. Porter, Competitive Advantage: Creating and Sustaining Superior Performance (New York, NY: Free Press,
1985): 37.

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Exhibit 6.2 Ansoff’s Matrix for Diversification Strategies

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Exhibit 6.4 A Positive View on Diversification Strategies for Indian Companies

In the lively debate on focus (or concentration) versus diversification, Tarun Khanna and Krishna Palepu of the
Harvard Business School offer an insightful analysis of the reasons why companies in developing countries such
as India could benefit from diversification. They are opposed to the idea of core competence and focus that
are now quite popular with companies and consultants in developed economies. They feel that a conglomer-
ate organisation in a developing economy, with diversified interest, has better scope for being profitable and
competitive.
The central idea of the proposal is based on the hypothesis that the institutional context drives the strategy to
be adopted. The institutional context has several dimensions: capital, labour, and product markets; government
regulations; and contract enforcement. Typically, in developing economies, the institutional mechanisms are
weak. The capital markets are underdeveloped; skilled labour and managerial talent is scarce; there is little scope
of dissemination of reliable information about the product to consumers; the level of government regulation is
high; and contract enforcement is unpredictable in the absence of effective legal systems.
Conglomerates in developing economies can effectively fill the institutional voids in several ways. They can
leverage their reputation to raise external finance and use internally-generated funds for investment in new
businesses. Business houses can build up a reservoir of skilled labour and trained managerial personnel for new
ventures. The group identity could be used to build brand equity and awareness about businesses and products.
The past experience of conglomerates and their rapport with the government can help them in establishing and
running several businesses. The credibility of the conglomerates could also be used for effectively building busi-
ness relationship and assuring honest dealings and honouring contractual commitments. For all these reasons,
a diversified business group can be more attractive for foreign investors.
Khanna and Palepu refer to the several conglomerates in developing economies such as India, Indonesia,
Malaysia, and South Korea to support their conclusions. Among these, the example of the Tata group of India
is prominently quoted to demonstrate how a large business group could be successful and competitive while
remaining widely diversified.
Source: Based on T. Khanna and K. Palepu,‘Why Focussed Strategies may be Wrong for Emerging Markets,’ in
Harvard Business Review, 75 (July–August, 1997): 41–51.

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Exhibit 6.5 The Porter’s Diamond of National Competitive Advantage

Source: Adapted from M.E. Porter, ‘The Competitive Advantage of Nations,’Harvard Business Review, (March-
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Exhibit 6.6 Four Types of International Strategies

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strategy strategy

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Source: Adapted from C.A. Bartlett and S. Ghoshal, Managing Across Borders (Boston, M.A.: Harvard Business
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Exhibit 6.7 Strategy Options for Local Companies in Competing Against Global Companies
Industry pressures to globalise

Dodge rivals by shifting to

High a new business model or Contend on a global level
market niche

Defend by using Transfer company

Low home-field advantages expertise to cross-border
markets

Tailored for Transferable to

home market other countries
Resources and competitive capabilities

Source: Adapted form N. Dawar and T. Frost, ‘Competing with Giants: Survival Strategies for Local Companies in
Emerging Markets,’ Harvard Business Review, 77, no. 1 (March-April, 1999): 122.
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Exhibit 6.9 Research Studies on Indian Corporate Response to Macroenvironmental Changes in the
post-1991 Period
The topic of the corporate response from Indian companies to the macroenvironmental changes in the post-
1991 period of reform is quite popular and many studies have been conducted and papers written. This exhibit
presents the major findings of some of the representative studies.
One of the earlier studies was an intensive secondary data-based research study by Basant that attempted to
identify salient aspects of corporate strategies followed by the Indian corporate sector in the post-reform period.
The major findings were:
(a) The Indian corporate sector was vigorously restructuring to retain competitiveness. Restructuring was aimed
mostly at consolidation in a few chosen areas. This was being done to correct the imbalances created owing
to over-diversification in the past.
 ŽƌƉŽƌĂƚĞͲůĞǀĞů^ƚƌĂƚĞŐŝĞƐ൰

(b) Multinational companies used mergers and acquisition to gain market entry or to augment their presence
in Indian markets. They were able to use mergers and acquisition route because of their superior financial
strength.
(c) Foreign technology transfer, often tied with equity investments, was preferred by the Indian companies to
the detriment of local R&D and in-house technology generation.
(d) Manufacturing capability was sought to be improved through external alliances and internal expansion.
Quality upgradation is a priority area.
(e) Product differentiation strategy was more preferred over building marketing and distribution assets.
(f) Export-based growth strategies were adopted to some extent.
An empirical research study of 110 large and medium-sized Indian manufacturing organisations, conducted
by Ray, reported on the strategic adaptation by these organisations during the first five to six years of economic
liberalisation in India. His major findings were:
(a) The more successful organisations achieving superior performance exhibited these characteristics: (i) they
were younger, smaller, and moderately diversified with one dominant business; (ii) had higher entrepre-
neurial capability; (iii) were operating in less competitive environment and had better perception of the
environmental changes; and (iv) introduced new product lines in the existing business or diversified into
related businesses, expanded geographical reach in India and abroad, and increased resource sharing across
SBUs more than others.
(b) The less successful organisations achieving relatively lower performance exhibited these characteristics:
(i) they were older, larger, and more diversified; (ii) had low entrepreneurial capability but high growth
management capability; (iii) were operating in more competitive environment and did not have adequate
awareness of the environmental changes; and (iv) diversified operations, failed to restructure business and
product portfolio towards more related businesses, did not expand the present businesses, and failed to
expand geographically both within and outside India.
The third research study by Shah based its analysis on responses of CEOs of 125 Indian companies. It identified
five broad strategies as being most effective for the Indian markets. These strategies, in order of priority, are:
(a) Good quality and low price
(b) Product innovation
(c) Combination of cost leadership and differentiation
(d) Niche marketing
(e) Superior quality and premium price
A study by Khandwalla examined how liberalisation and globalisation of Indian economy influenced corporate
organisations. Based on data from 139 Indian companies, Khandwalla suggested a model that proposed that
greater use of policy frameworks representing entrepreneurial, organic, professional, and participatory styles
of management and the mechanisms of uncertainty reduction, differentiation and integration tend to enhance
corporate performance.
Finally, a study by Ray and Chakrabarti on strategic change of firms in response to liberalisation found that
environment was the dominant external factor influencing corporate strategy and performance of firms. Firms
having better environment-strategy fit achieved superior performance as well as those that increased their scale
of business and diversified into deregulated industries selectively but aggressively. Other notable studies are by
Monga (1997), Ray and Dikshit (2000), and a book by Shiva Ramu (1999). These studies recommend governmen-
tal policy initiatives to encourage efficiency in institutional and infrastructural arrangements, augmenting manu-
facturing and R & D capabilities, and increasing exports. To the organisations, these studies suggest reduction
of excessive dependence on domestic markets, reviewing diversification moves of the past, optimal utilisation of
existing resources, and deriving synergy in operations to achieve superior performance and develop sustainable
competitive advantage.
 ^ƚƌĂƚĞŐŝĐDĂŶĂŐĞŵĞŶƚ

Sources: M. L. Monga,‘Corporate Restructuring: The Search for a Fit by Indian Organisations,’South Asian Journal
of Management,4, no 1 (1997): 27–32; S. Shiva Ramu,Restructuring and Break ups(New Delhi: Response Books /
Sage Publications, 1999); R. Basant,‘Corporate Response to Economic Reforms,’ in Economic and Political Weekly,
(4 March, 2000): 813–22 ; S. Ray, ‘Strategic Adaptation During Economic Liberalisation: A study of Indian manu-
facturing firms,’Decision(January-June, 2000): 117–34; and A.M. Shah,‘Critical Success Factors and Effective Strat-
egies in the New Environment,’Vikalpa(April-June, 2000): 31–41; S. Ray and M.R. Dixit,‘Strategic Responses of
Firms to Economic Liberalisation: Experiences of Indian Firms,’Management and Change, 4, no. 2 (2000): 273–85;
P.N. Khandwalla,‘Effective Organisational Response by Corporates toIndia’s Liberalisation and Globalisation,’
Asia Pacific Journal of Management, 19 (2002): 423–48; S. Ray,‘Strategic Adaptation of Firms During Economic
Liberalization: Emerging Issues and a Research Agenda,’International Journal of Management, 23, no. 3, (2003):
271–81 and S. Ray and A.K. Chakrabarti,‘Strategic Change of Firms in Response to Economic Liberalisation
in an Emerging Market Economy,’International Journal of Strategic Change Management, 1 no. 1/2 (2006): 20–39.

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Exhibit 6.10 Corporate Restructuring by Indian Companies

This exhibit provides a sample of illustrations of restructuring exercises undertaken from among scores of com-
panies that are doing so. Note that the companies chosen are established business groups or large, diversified
public sector enterprises.
z Tata group’s restructuring aimed at creating a system of integrated planning, focus and rationalise compa-
nies, ensure synergy between overlapping units and consolidate holdings in group companies. Soon after
liberalisation started, the Tata group in 1992 came out with a strategic plan contemplating reducing the num-
ber of companies from 107 operating in 25 businesses to less than 30 operating in just 12 businesses. Later, in
1996, it commissioned consultant McKinsey and Company to devise a restructuring plan. Over the years, the
restructuring has resulted in divestment of several companies such as Lakme, Tata Iron and Steel Company
Ltd. (TISCO’s) cement division, and GoodlassNerolac while strengthening some businesses like cement and
tea has taken place simultaneously. A DS Prabhudas (DSP) Merrill Lynch report points out three elements
in the restructuring strategy of Tata group: changing group ethos across companies, internal restructuring
within companies, and product portfolio restructuring by identifying seven core areas and divesting out of
the rest. The ongoing emphasis of restructuring is on focusing on knowledge-based businesses.
z Hindustan Unilever (previously Hindustan Levers) devised Project Millennium, a comprehensive transfor-
mation plan to restructure and manage change from being a large, diversified conglomerate to become a
configuration of empowered virtual companies each build around a single category of products. Later, it
adopted the parent company Unilever’s power brand strategy under which it restructured its brand portfolio
cutting the number of its brands from 110 to 35 around 2005. To focus sharply on its core businesses, it sold
off non-core businesses such as chemicals and tea.
z Larsen & Toubro (L & T), a highly diversified company, had devised a Vision - 2005 plan to guide its restruc-
turing. The aim was to focus on its core businesses and delivering greater shareholder value. The company
had a minor restructuring earlier in 1993 in which it divested non-core businesses such as shipping and shoe
manufacturing. The later restructuring contemplated creating a joint venture for the cement, tractors, and
earth moving equipment businesses. The ongoing restructuring plans focus on core businesses in engineer-
ing, construction, electrical, and information technology. Divestments are taking place in cement, glass, and
milk processing equipment. In the meantime, much controversy was generated by two unsuccessful bids for
hostile takeovers by Reliance and the AV Birla group.
 ŽƌƉŽƌĂƚĞͲůĞǀĞů^ƚƌĂƚĞŐŝĞƐ൰

z State Bank of India sensed the environmental changes of emerging competition soon after liberalisation. In
1993, it appointed McKinsey and Company to devise a restructuring plan that has been under implementa-
tion for more than a decade. The objective of restructuring was to develop an international perspective and
become a world class bank. Focussing on the profitable areas led SBI to create banking groups to look after
the corporate banking, national (retail and other commercial) banking, international banking, and associ-
ate and subsidiary banking. Internally, the focus was on corporate culture of profitability and productivity,
technology upgradation, information technology applications for anytime, anywhere banking, and launch-
ing bancassurance and securities brokering services.
z Steel Authority of India had long been affected with problems arising mainly out of massive investments
made in modernisation programme undertaken during 1992–98 that proved to be untimely as the demand
did not match the expectations. While its major revival efforts were in terms of financial and asset restructur-
ing, its corporate restructuring aims at concentrating on its core business of mild carbon steel. This involves
adoption of intensification strategies for its four integrated and three speciality steel plants and divestment
of non-core subsidiaries like stainless steel and alloy steel or running them as joint ventures. The business
strategy focus is on cost leadership.
Sources: Based on ‘The Tata Group: Ripe for Restructuring,’Business Today,(7–21 January, 1994): 60–63; ‘Why
Must Larsen & Toubro Refocus Itself?’Business Today, (7 July, 1999); ‘Lever’s Millennium Project,’ in Business
Today,(7–21 August, 1999): 59–71; ‘SBI’s Wake-up Call’: 52–60 and ‘In Choppy Waters: SAIL,’Business India,
(9–22 August, 1999): 77–84; ‘The House of Tatas: Restructuring for Excellence,’Business Today, (22 March,
2000): 85–95; DSP Merrill Lynch: Restructuring in India-The Tata Group, (17 April, 2002); available at http://
www.tata.com/0_media/news/media/tata.pdf retrieved 19 June 19, 2007; ‘The Great SBI Makeover,’Business Today,
(4 August, 2002); ‘L&T Plans to Exit Joint Venture’ Business Line, (30 July, 2005); ‘New Improved HLL Rides the
Bandwagon,’Economic Times, (18 February, 2006); and Steel Authority of India’s website at http://www.sail.co.in/.
Retrieved 19 June, 2007.

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Exhibit 7.1 Competitive Advantage of Maruti Suzuki India Limited

Maruti Suzuki India Ltd. (MSIL), subsidiary of Suzuki Motor Corporation of Japan, is India’s largest car maker
for a market that is the sixth largest in the world.It has a wide range of products catering to the mobility need of
the passenger cars and utility vehicles customers ranging from the no-frills, entry-level competitively-priced cars
to premium ones under 14 brands with 150 variants. Despite maintaining its market leader status, MSIL faces
tough competition from local as well as foreign carmakers and its market share has seen a decline in a market
that hasnot been very promising in recent years.
Customer groups in the Indian automobile industry are segmented on the basis of price. Technology for car
manufacturing is fairly standardised and MSIL sources it from Suzuki, its Japanese parent company. In recent
years, Indian car manufacturers have had to undertake major technological upgradation to conform to the
international emission norms codified as the Euro I and Euro II norms and the absorption of multipoint fuel
injection(MPFI) technology. India is harmonising its emission norms for four wheelers with the European regula-
tion and has adopted Euro III. Technical segmentation of car market is done on the basis of length of the vehicle
and body shape.
The value chain in car manufacturing start with the inbound logistics of steel coils as input moving through
the processes of blanking, pressing, welding, assembly, and vehicle inspection. Material costs make up the bulk
of production costs. The value system of MSIL includes the ancillary units, vendors, and suppliers—mostly based
in proximity to its manufacturing facilities at Gurgaon and Manesar, Haryana—from whom its sources the com-
ponents and parts. It also includes the after-sale service providers who are dealers having service stations. Maruti
Suzuki India Ltd. has an extensive distribution channel consisting of channel partners who own and manage
their sales outlets across a large number of Indian cities. The service network coverage is quite extensive and
supported by authorised service outlets.
Maruti Suzuki India Ltd. has positioned itself as a provider of security, confidence, reassurance, value-for-
money, and good resale value. Analysts see MSIL as a carmaker that understands the Indian customer better than
its rivals. The customer benefits expected are of fuel efficiency, low maintenance costs, and easy availability of
genuine parts. The business strategies of MSIL are a combination of lower cost and differentiation for different
types of products.
The lower-cost strategy is followed by the usage of a reliable network of suppliers, efficient manufacturing,
just-in-time inventory systems, extensive after-sale service support, realisation of economies of scale, and strin-
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gent waste management and control. The competitive advantages for cost leadership flow from factors such as
economic size of operations, low initial investment, high level of indigenisation, fully depreciated manufacturing
plants, and high labour productivity.
The differentiation strategy is put into action by providing options to a customer of offering a car at anominal
price point difference. This means that a car with a marginal price difference would be available to a customer
looking for upgrading.
Source: Based on M. Venkateshand R. Povaiah,‘Total Control,’ in A & M (31 May, 2000): 32–38; S. Talatam, Maruti
Udyog Ltd.: ‘Competing with Cost Advantage,’Spark Online Refereed Journal (October 2002) available at http://www.
indiabschools.com/strategy_001.htm Retrieved 19 June, 2007; and Company website at http://www.marutisuzuki.com;
Industry statistics available from http://118.67.250.203//scripts/IndustryStatistics.aspx. Retrieved 30 September, 2014.

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Exhibit 7.2 Porter’s Generic Business Strategies

Source: Adapted from M.E. Porter, Competitive Advantage: Creating and Sustaining Superior Performance (New York:
Free Press, 1985): 12.

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Exhibit 7.3 Implementing Low-Cost Strategies at an NGO

The Pratham Mumbai Education Initiative, led by Dr. Madhav Chavan, set up in 1994, is an NGO serving the mis-
sion of ensuring that ‘to improve the quality of education in India, ensure that all children not only attend but also
thrive in school’ to attain the vision of universalising primary education.
Its business definition comprises :
z Customer groups who are poor children living in urban and semi-urban slums of India
z Customer need is of providing low-cost and effective pre-school education
z Technology is of ‘capital-light’ preschool programme in balwadi (child’s place)

The low-cost, replicable model strategy of Pratham works on the basis of following actions:
z Pratham does not own or invest in buildings or vehicles. It does not pay rent for any space, including its adminis-
trative offices. Instead, it relies on donated space in communities and municipal schools. This helps in reducing
its costs by half on each balwadi. Classes are held in spare rooms in community centres, mosques and temples,
municipal schools, and the buildings of other organisations. When nothing else is available, classes are held in
teachers’ homes. The condition for providing rent-free space involves local organisations. Holding classes at
public places enhances awareness and acceptance among parents.
z Computer-assisted learning is used. Donor companies provide computers and municipal schools provide space
and utilities.
z Pratham recruits teachers and supervisors from outside the organised workforce. These are mostly unmarried
young women with a fair amount of education who traditionally do not work outside the home. They work
part-time and remain in their local communities. Recruitment is not necessary as departing teachers find and
train their replacements. Serving Pratham offers social stature in local community and enhances job satisfaction.
Most teachers tend to stick to their jobs reducing mobility and turnover.
z Teacher training constitutes the only high-cost expense but is justified. Evaluation and monitoring are continual
ensuring good quality teaching.
z People are the main assets in developing a systematic and rigorous training and monitoring process. Teachers
are also entrepreneurs who replicate the model learnt widely in slums situated in towns and cities other than
Mumbai.
z Each balwadi teacher is an entrepreneur. She initiates and develops her class, charges a nominal fee depending
on the parents’ capacity to pay and accesses funds from local charities. The organisation is highly decentralised
with Mahila mandals (women groups) being the focus of action. Each mandal is a registered independent citi-
zens’ organisation. Decentralisation reduces bureaucratic costs.
z Corporate donors are involved actively through networking and partnerships by lending their staff and facilities
and not just funds. The fund raising activities of Pratham extend beyond the borders. Awards to the organisation
and to its founder serve to highlight its achievements.
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The outcomes of the low-cost strategy are satisfactory in terms of better learning, proficiency in science and
languages, and lower rate of school dropouts.
Sources: R. Banerji, M. Chavan, P. Vaish, and A. Varadhachary, ‘A Point of Light in Mumbai,’McKinsey Quarterly, 1
(2001); ‘A Movement to Educate Slum Children,’Business Line, 9 September, 2003; BBVA foundation,‘NGO Pratham
Takes the BBVA Foundation Frontiers of Knowledge Development Cooperation Award for Providing Quality Edu-
cation to Millions of Disadvantaged Children in India,’ Journal of India, 33 (2014); ‘Pratham to Hold Fundraiser
in London,’NGO Daily News (April, 2013) Ashoka International website at http://www.ashoka.org/node/2555; and
Pratham’s website at http://www.pratham.org/ . All websites accessed on 30 September, 2014.

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Exhibit 7.4 Stuck-in-the-middle positioning

Relative ability to differentiate

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differentiation advantage
Inferior

Advantage due to
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low-cost

Inferior Superior

Relative ability to reap cost advantage

Source: Based on ideas in M.E. Porter, Competitive Advantage: Creating and Sustaining Superior Performance (New York:
Free Press, 1985).

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Exhibit 7.5 Time as a Source of Competitive Advantage

George Stalk published an article in 1988 and later expanded his ideas on time as a source of competitive advan-
tage in Perspectives on Strategy (1998). This exhibit presents his ideas in a nutshell.
Following World War II, the Japanese firms used their low labour costs to adopt scale-based strategies and
later focussed strategies to achieve competitive advantage. Focus was achieved through combining the concepts
of just-in-time and flexible manufacturing. Through focus, the Japanese firms sought to reap the advantages of
both low-cost and wider variety. Next, they adopted time as a critical source of competitive advantage by shorten-
ing the product development cycle and reducing process time. Time came to be managed as any other resource
such as costs, quality, or inventory.
Stalk considers firms as systems the parts of which are connected by time. The planning loop denotes the time
taken for manufacturing activities. Traditional manufacturing systems require longer lead times. Jay W. Forrester,
writing on industrial dynamics in Harvard Business Review (July–August, 1958), established a model of time’s im-
pact on the firm’s performance. Since time flows throughout any system, focussing on it results in improvements
across the whole process.
Time-based manufacturing concerns shortening production run time, product-based organisation of produc-
tion process, and decentralised production scheduling. Time-based sales and distribution aims at eliminating de-
lays in selling and distribution, reducing costs, and improving customer service. Time-based innovation involves
small product improvements done more often, using cross-functional teams for product development, and
decentralised responsibility for innovative activities. Time-based strategy means attacking indirectly the competi-
tors through surprise and gaining market share at least cost. This is different from direct attack done through
traditional means of cost cutting and capacity addition that demand superior resources, are costlier, and take a
longer time.
The idea of time-based competition continues to guide important contributions in several areas of manage-
ment particularly in operations management, manufacturing, marketing, product development, concurrent
engineering, etc.
Sources: George Stalk, Jr., ‘Time—The Next Source of Competitive Advantage,’Harvard Business Review (July–Au-
gust, 1998) and ‘It is the Relative Speed that Counts,’ Interview of Stalk in Business Today (7 July, 1999): 74–77.

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Exhibit 7.6 The Pros and Cons of being the First Mover in the Deregulated Indian Insurance Industry
The insurance industry in India offers some meaningful insights into the advantages and disadvantages of being a
first mover. This industry for long had been closed to the private sector after it was nationalised in 1956. The process
for deregulating started in 1993 when the Malhotra Committee was set up by the Government of India to examine
the various aspects of the insurance industry. The adoption of the committee’s recommendations led to opening
up of the industry and setting up of the Insurance Regulatory and Development Authority (IRDA). Three licenses
were issued by IRDA to ICICI Prudential Life Insurance, HDFC Standard Life Insurance, and Max New York Life
Insurance in October 2000. There are fifteen companies operating in the life insurance segment and twelve in the
general insurance segment of the industry. Several domestic and international insurers are waiting to enter the
Indian insurance industry.
Life insurance business in India in terms of first year premium has shown a growth of more than 95 per cent over
the previous year and non-life, or general insurance, is not far behind either, growing at 22 per cent during 2006--07
in terms of new business premium—proving that insurance industry continues to remain a sunrise industry.
There are two major segments in the insurance industry that of life insurance and non-life or general insurance.
For the life insurance it is probable that being a first mover can be advantageous while for the general insurance
being a late-mover could prove to be better tactics.
The reasons why first mover tactics can work better in life insurance are as below:
1. Life insurance in India has been traditionally viewed as a tax saving device. First movers can take the lead in
educating customers about the true value of life insurance beyond tax savings.
2. First movers will have to build credibility to handle people’s savings as trust is extremely important to Indian
customers in matters of purchase of financial services and entrusting money to private sector firms.
3. Providing life insurance services requires building up of a vast infrastructure to provide speedy and efficient
service to customers.
First movers can utilise the lead times in customer education, creating credibility, and building up infrastructure.
Among the first movers, ICICI Prudential has fared the best.
The reasons why first mover tactics is not likely to work in general insurance are as follows:
1. General insurance purchasers do not place as much emphasis on credibility as they would do for service attri-
butes of value, price, and adherence to regulations.
2. Risk assessment systems and data for such an assessment are not fully developed in India.
3. Standardisation of operations and processes is poor in India and effective qualification and monitoring is almost
non-existent.
4. Switching from one general insurance provider to another is relatively easier than it is for life insurance.
Late movers can learn from the mistakes of the first movers to offer better service attributes, wait for the risk
assessment systems to develop and the operations and processes to be standardised, and design tactics to snatch
business from the first movers.
The Indian insurance industry has successfully completed the first phase of reforms by having a smooth transi-
tion from a state-controlled monopolistic structure to a free-market competitive industry. It is expected that some
market segmentation may take place with some companies becoming financial conglomerates and some others
transforming themselves into niche players.
Sources: Based on M. Zervoudis & A. Karamchandani, “The Monitor Group study on insurance - III” in Business Today,
May 22–June 6, 2000, pp. 122–125 and G. Krishnamurthy, “Bracing for competition” in The Hindu Survey of Indian
Industry 1999 pp. 51 – 53; V. Jagannathan: “Get ready for next phase of reforms” domain-b.com Jan 5, 2006; and S.S.
Dagar: “Over the hump” Business Today Jun 17, 2007.
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Exhibit 7.7 Four Stages of Industry Lifecycle

Market size

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Exhibit 8.1 Types of Strategic Alliances

High

Pre-competitive Competitive
Potential for conflict

alliance alliance
Low

Pre-competitive Non-competitive
alliance alliance

Low High

Extent of Organisational Interaction

Source: Adapted from M.Y. Yoshino and S. Rangan. Strategic Alliances: An Entrepreneurial Approach to Globalization
(Boston: Harvard Business School Press, 1995): 19.

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Exhibit 8.2 Public-Private Partnerships in India

Public-private partnership (PPP) is a long-term contractual joint venture agreement between the government
and one or more private sector companies to provide funding and expertise for infrastructure and public ser-
vices.
Public-private partnerships have been used in many other countries around the world such as Australia, Brazil,
Philippines, and United Kingdom with varying degree of success. In India, they have become increasingly popu-
lar owing to the inability of the government to satisfy the requirements of infrastructure financing and building
and lack of efficiency in service provision. Public-private partnership is meant to bring several benefits including
providing financing and expertise in provisioning of public services and building infrastructure.
In India, PPP are a popular mode of financing and operating projects in airports, ports, power, railways, roads,
telecommunications, and other public services both at the Central and State levels. India is the largest market
for PPP projects in the world. There are several types of business models used for PPP projects in India includ-
ing build-operate-transfer models based on user-fee and annuity, turnkey projects that include designing and
building and performance-based maintenance and management contracts.
There are several companies both big and small that have adopted PPPs as a method to pursue their strategies.
Among them are Larsen & Toubro (L&T) Transportation and Infrastructure, Grandhi Mallikarjun Rao (GMR)
Infrastructure, IVRCL Infrastructure, Sadhbav Engineering, DS Constructions, and MSK Projects (India) now
called Welspun Projects Ltd.
Public-private partnerships have had a mixed record of failures and successes in India. For instance, in build-
ing and operating airport infrastructure many PPP projects have been quite successful while in some case such
as Delhi Metro project it has failed. There are many reasons such ill-conceived projects, over-ambitious bidder,
long duration, cost escalation, lack of financing sources, paucity of information, lack of expertise, and perceived
cronyism in award of projects.
Sources: M.S. Priya and P. Jesintha,‘Public Private Partnership in India,’Journal of Management and Science, 1, no. 1
(2011); Public-private partnerships in India Ministry of Finance, Government of India website at http://www.pppin-
india.com/; FICCI and E&Y Report on Accelerating PPP in India, 2012 athttp://www.ey.com/Publication/vwLUAssets/
Accelerating_PPP_in_India/$FILE/Accelerating%20PPP%20in%20India%20-%20FINAL(Secured).pdf; ‘India Air-
ports: Public Private Partnership Model is Transformational but Key Lessons to be Learned,’ Centre for Aviation
available at http://centreforaviation.com/analysis/india-airports-public-private-partnership-model-is-transformational-but-
key-lessons-to-be-learned-176264. All website retrieved 7 October, 2014.

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Exhibit 8.3 Understanding Digitalisation

Computerisation means compressing huge amounts of analogue data into digital data making it possible for or-
ganisations to amplify, transmit, modulate, store, retrieve, and reconvert data. Computerisation also makes it
possible to deal with data in its various forms: text, audio, still images, animation, video, and other forms that we
call multimedia. In order to computerise data we need to first electronise it.
Electronisation is a term to denote progressive conversion of physical data into electronic data through digitisa-
tion. For example, a physical watch can show the time when we observe the hands pointing to figures on the
circumference of the dial. An electronic watch shows the time in digits or numbers on the dial. A watch, how-
ever, cannot transmit the electronic data related to time. For this to take place, it has to be digitised and then
networked.
Digitisation is a technical term denoting the conversion of analogue electrical signals into digital signals, a pro-
cess that takes place, for instance, in the case of recording music on a compact disk when physical sound waves
in the form of electrical sound signals get converted into digital electronic signals.
Computerisation, electronisation, and digitisation are supported by two other components of telecommunica-
tions and networking that create the phenomenon of convergence. Telecommunications enables organisations to
move beyond their own boundaries to other organisations and get connected to public networks. This is what
happened when organisational intranets developed and then got connected to public networks such as the In-
ternet resulting in networking.
Convergence is the merging of all types of information into a common digital form. Convergence of all electrical
impulses into digital is the underlying enabler of the digitalisation phenomenon. Organisations using comput-
erisation, electronisation, digitisation, telecommunications and networking are digitalised enterprises and the
process is called digitalisation.
Digitalisation has led to the widespread use of terms by prefixing ‘E’ or ‘e’ to traditional functions and activi-
ties. Thus, we have e-business (electronic business), e-commerce (electronic commerce), and various other terms
such as e-learning, e-trading, e-banking or e-tailing, the last one referring to electronic retailing. On a wider scale,
we have terms such as e-society, e-governance or e-healthcare.
Practically anything, the information of which can be digitised, can be transmitted over the electronic networks
and thus traded or shared. This has created an entirely new type of product category known as bitable or digitised
products/services that are products or services that can be rendered in the digitised form. Examples of bitable
 ^ƚƌĂƚĞŐŝĐDĂŶĂŐĞŵĞŶƚ

products/services are books, magazines, music, newspapers, software, videos, and financial, banking, and insur-
ance services. No wonder, we have industries related to these products and services being profoundly affected
by the phenomenon of digitalisation.
Besides the transformation of industries, yet another profound impact of digitalisation is the emergence of
what are known as electronic markets or e-markets. The e-markets potentially integrate advertising, product ordering,
delivery of products, and payment systems. A growing number of customers are attracted to buy (and sometimes
also sell) products in the e-markets. An increasing number of industries where digitised products and services
are available enter the e-markets to conduct their sales and marketing functions electronically.

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Exhibit 8.4 Comparison of Digitalisation-led and Traditional Approaches to Strategy

Type of approach Digitalisation-led strategy Traditional approach to strategy
Method Launch experiments and adapt or abandon Predict and plan
Analysis Based on working prototypes Paper-and-pencil analysis
Timeframe 12 – 18 months, revised monthly /continuously 3-to-5 years,
revised annually
Owner Everyone in organisation CEO, strategists
Competitive threat New forces of digitalisation, globalisation, and Michael Porter’s five forces
liberalisation
Role of information Disrupter Enabler
Technology
Output Killer apps Strategic plan
Source: Adapted from L. Downesand C. Mui, ‘The End of Strategy,’Strategy & Leadership, 26, no. 5 (November/
December, 1998): 6.
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This chapter dealt with the major methods to pursue
strategies. We covered strategic alliances and joint ven-
tures, M&As, strategic outsourcing, digitalisation and sus-
tainability as the methods for pursuing strategies.
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Exhibit 9.1 Gap Analysis for Focussing on Strategic Alternatives

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Exhibit 9.2 Dynamic Competitive Positioning

Source: Adapted from C.W.L. Hill and G.R. Jones, Strategic Management: An Integrated Approach (Boston: Houghton
Mifflin, 2007): 164.
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Exhibit 9.3 Possible Business Definition Alternatives for an Oral Care Company
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Exhibit 9.4 The Exciting World of Management Tools and Techniques

The onslaught of globalisation, increasing competitiveness, rising complexity of doing business, and access to
wide variety of sources of information are factors that prod managers to embark on a continual search for man-
agement tools and techniques that might have the potential for implementation and helping them in develop-
ing competitive advantage, increasing shareholders’ wealth, and enhancing profitability for their organisations.
Among these techniques many turn out to be mere fads in passing. Some of them remain as solid ideas worth
considering and applying widely and consistently.
There are surprisingly a large number of management tools and techniques available. In one of the earlier
studies by Hussey (1992), 57 techniques were listed. Clark’s 1997 study considered 80 strategic management
tools and techniques. In fact, the proliferation of tools and techniques has posed a problem of classification and
creating taxonomies and categories.
The usage of management tools and techniques has attracted the attention of researchers. There have been
studies on the usage of such tools and techniques by organisations globally as well as in specific countries. There
have also been context-specific studies such as the usage of management tools and techniques in small and me-
dium enterprises or agricultural cooperatives.
Bain and Company, a management consultancy organisation, have been performing a survey of management
tools and trends since 1993. In each survey, they focus on 25 most popular techniques that managers around the
world find to be relevant, topical, and measurable. The 2012 survey finds the most popular techniques to be of
strategic planning. The other popular techniques are: customer relationship management, employee engage-
ment surveys, benchmarking, balanced scorecard, core competencies, outsourcing, change management, supply
chain management and vision and mission statements. As you will notice many of these management techniques
are relevant for strategic management and strategic planning.
Unfortunately, we do not find such systematic empirical studies in the Indian context as yet. What we can know
about the usage of management tools and techniques in India is only through what is reported occasionally in the
business press and media and in journal articles and oblique references in studies related to other management
topics such as trends in HR or marketing.
Sources: Management Tools and Trends 2013 Bain & Company. This report along with its executive guide is available
at http://www.bain.com/publications/articles/management-tools-about-the-survey.aspx. Retrieved 13 October, 2014; D.E.
Hussey,‘Glossary of Management Techniques,’International Review of Strategic Management, 3(1992): 47–75; and D.
N. Clark, 1997 ‘Strategic Management Tool Usage: A Comparative Study,’Strategic Change, 6, no. 7 (1997): 417–27.

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Exhibit 9.6 A Typical SWOT Matrix

STRENGTHS
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- Excellent distribution network
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OPPORTUNITIES
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THREATS
- Unfavourable political environment
- Obstacles in licensing new business
- Uncertain competitors’ intentions
- Lack of sustainable financial backing

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Exhibit 9.7 Generating Strategic Alternatives Through TOWS Matrix

Internal factors
Strengths (S) Weakness (W)
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So strategies that will utilise WO strategies that will

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opportunities capitalising on opportunities

ST strategies that will utilise WT strategies that will

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Exhibit 9.8 Consolidated SWOT Profile for a Bicycle Company

ETOP Sector impact SAP Impact factor
Economic ≠
Market Æ Finance Ø
International Ø Marketing Æ
Political Æ Operations ≠
Regulatory Æ Personnel Æ
Social ≠ Information management ≠
Supplier Æ General management ≠
Technology ≠
Up arrows indicate favourable impact; down arrows indicate unfavourable impact, while horizontal arrows indicate
a neutral impact.
Sources: ETOP is based on Exhibit 4.12 while SAP is drawn from Exhibit 5.13.

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Exhibit 9.9 Experience and Learning Curves

Direct cost per unit/learning

Learning curve

Experience curve

Cumulative volume of production/experience

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Exhibit 9.10 Porter’s Five Forces Model of Competition in an Industry

Potential threats from

firms which make
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Exhibit 9.11 Porter’s Five Forces Operating in the Indian Paints Industry
Market research agencies and industry associations are unanimous in their opinion that Indian paints industry
is growing at a healthy rate and is destined to make good progress over the next several years. Low per capita
usage of paints in India offers good scope for demand expansion. The growth in the market is driven by growth
in infrastructure, rising urbanisation, rising demand in rural markets, emergence of the middle class, increase
in the ability and willingness to spend, and a growing young population no longer constrained by the austere
lifestyle of the older generation. The critical success factors for the industry are identified as: aggressive market-
ing, branding, distribution reach, innovative use of technology, product innovation, and value-added services.
The analysis of the industry profile of the Indian paints industry yields some interesting results for the Porter’s
five competitive forces. These five forces are described as follows:
1. Rivalry among existing firms: The Indian paints industry is divided into decorative and industrial paints in terms
of market segmentation and organised and unorganised sectors on the basis of the type of organisations.
Decorative paint makes up more than 75 per cent and industrial paint the balance of about 25 per cent. The
fragmented unorganised sector serves nearly 35 per cent of the market. The balance of 65 per cent is served
by the organised players major among them being Asian Paints, Berger Paints, Kansai Nerolac, and Akzo
Nobel. Most of the unorganised sector units are in decorative segment due to low technology differentiation.
The industrial paints segment is dominated by the organised sector due to its high technology orientation.
The organised sector is characterised by stiff competition backed by aggressive marketing, large advertising
campaigns, and strong distribution networks. Shalimar Paints is the industry first-mover. Asian Paints is the
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market leader in decorative segment. Kansai Nerolac is the leader in industrial segment. Competition in
unorganised sector is mostly on the basis of pricing. There is a level-playing field of competition between
organised and unorganised sector with decreasing differential of excise duties with the latter losing out
market share to organised sector.
2. Bargaining power of buyers: The major sub-segments in decorative paints are exterior wall emulsions; enamels
including primer, thinner, and distemper; and wood coatings. In the industrial paints buyers’ needs are
for automotive original equipment manufacturers (OEMs), protective coatings, auto refinish, and pow-
der coatings. Supply exceeds demand both in the decorative and industrial market segments. With tough
competition within the industry and competitors vying for the buyer’s spending, the bargaining power of
buyers has risen over the years with them becoming more choosy requiring companies to pamper them with
wider choice and innovative marketing tactics. Industrial paint buyers buy in bulk making them stronger in
negotiating price and delivery. It is difficult for paint companies to pass on cost increases in view of tough
competitive conditions.
3. Bargaining power of suppliers: The paints industry is critically dependent on raw materials (solvents, resins,
pigments and additives) that constitute around 50 per cent to 70 per cent of the total production cost. These
have a significant impact on the margins in an industry that is increasingly becoming a commodity business
in the decorative paints segment. A large number of nearly 300 raw materials, half of them petro-based
derivates, sourced from suppliers make the paints companies critically dependent thereby creating higher
bargaining power of suppliers.
4. Threat of new entrants: There is no perceptible threat of entry of new entrants as paints is a mature industry in
India. On the contrary, some smaller units in the unorganised sector may be pushed out owing to rising raw
material costs and inability to keep up with technology development. In the organised sector, the existing
four players are well-entrenched. Distribution network is a major entry barrier to new entrants with existing
players linked closely with the large number of distributors and retailers. Foreign companies do not find
competing in low-margin decorative paints that is the mass market in India though foreign players like the
Jotun Paints, National Paints, Nippon Paints, and Sherwin Williams have set up base in India. They prefer
entering Indian markets through strategic alliances with existing players. Indian paint companies have made
forays into foreign markets especially in the developing countries.
5. Threat from substitute products: Since times immemorial, rural areas in India have used liquefied dung—cheap,
readily-available, and environment-friendly paint—as a coating for the interior and exterior walls for their
humble dwellings. Modern solvent-based paints have replaced them. There is now a reverse trend of find-
ing non-toxic environmental-friendly, water-based paints. However, in the near future there did not seem a
perceptible threat of any type of substitutes emerging as replacements for either decorative or the industrial
paints.
Paints industry in India is closely linked to economic indicators and demand is dependent on several external
factors such as good monsoons, raw material prices, demand in user industries such as automobiles and real
estate making it a dynamic industry.
Sources: ‘Paint Market to Grow 20 per cent Annually in Next Two Years,’Business Standard (5 September, 2014)
available at http://www.business-standard.com/article/companies/indian-paint-market-set-to-grow-20-cagr-in-two-years-on-
rapid-urbanization-114090500527_1.html; Website of Indian Paints Association at http://www.ipaindia.org/; ‘Indian
Paint Industry Outlook 2014-2018,’ Normans Media Ltd, Coventry and ‘Research and Markets: India Paint Indus-
try Outlook 2014-2018,’Business Wire, New York, 17 September, 2014. All websites accessed on 16 October, 2014.

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Exhibit 9.12 Illustration of Strategic Group Mapping for Indian Paints Industry
Wider reach/more dealers

Asian Paints
Distribution reach

Berger
Paints
Narrower reach/lesser dealers

Kansai
Nerolac

Akzo
Nobel

Decorative segment Industrial segment

Bases for market segmentation

Note: Distribution reach in terms of number of dealers; size of circle proportional to relative market share in
paints industry

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Exhibit 9.13 NTPC Limited’s Growth Perspectives

The National Thermal Power Corporation Ltd is the largest thermal power generating, public sector company of
India incorporated in 1975 to accelerate power development in the country. Its vision is to be: ‘To be the world’s
largest and best power producer, powering India’s growth’. Its mission is stated as: ‘Develop and provide reliable
power, related products and services at competitive prices, integrating multiple energy sources with innovative
and eco-friendly technologies and contribute to society’.
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The National Thermal Power Corporation Ltd. aims at ensuring its presence in the entire value chain of
the power generation business including consultancy, power trading, ash utilisation, and coal mining. Its total
installed capacity of 43,128 MW resides in17 coal-based and 7 gas-based power generating stations, 7 renewable
energy projects, and 7 joint ventures that are coal-based.
The National Thermal Power Corporation Ltd.prepares its corporate plans which are co-terminus with the
national 5 year plans. It adopted a 15-year corporate plan 2002–17 as a mid-course correction of its earlier plan of
1997–2012. Its present Corporate Plan 2010–32 aims at diversified growth through a fuel mix of coal, gas, nuclear
energy, renewable energy and hydropower. By 2032 it plans to generate 28 per cent of power from carbon-free
fuel sources.
The National Thermal Power Corporation Ltd. made changes in its strategy and adopted the path of diversi-
fied growth businesses along the energy value chain into coal mining, power trading and manufacturing. The
methods adopted for pursuing strategies are several including strategic alliances, joint ventures, acquisitions,
and through Greenfield and Brownfield projects. Its strategic alliances and joint ventures are with national as
well as international companies.
Corporate citizenship activities of NTPC include rehabilitation and resettlement of displaced persons due
to its projects and planned and funded corporate social responsibility mainly in education and community
development around its project sites. For achieving sustainable development, NTPC has adopted measures for
improvements in the areas of environment management in its various business units.
An interim view of the success of the corporate plan of NTPC shows that it has had mixed success. Its plans
to increase generation capacity in thermal power and setting up renewable energy generation plants have been
successful but its move into non-core areas such as nuclear power and coal mining have not been realised. Its
efforts at strategic alliances and joint ventures also has had mixed success.
Source: NTPC Ltd. website at http://www.ntpc.co.in/index.php?option=com_content&view=frontpage&Itemid=1&lan
g=en; S.P. Singh, ‘NTPC’s Non-Core Plans Flounder,’Business Standard( 23 May, 2013) available at http://www.
business-standard.com/article/companies/ntpc-s-non-core-plans-flounder-113052301178_1.html. Both websites retrieved
19 October, 2014.

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Exhibit 9.14 Strategic Plan Preparation at Infosys Limited

The Infosys Limited (earlier Infosys Technologies) had a three-tiered strategic planning process based on time
horizons of 1 year, 3 years, and for a period of 5 to 8 years. Every year in July, the department initiated the process
of strategic planning by environmental scanning, competition analysis, and model building. A presentation was
made to the board of directors followed by another to the company’s top managers.
The 5 to 8 years strategic planning had the following components:
 z Annual strategic planning to identify themes relevant to the company
 z Strategy implementation done through Infyplus—a change management programme
 z Competitive analysis based on a 5-year model of competition that takes into account the competition likely to
be faced from local and international companies
 z Scenario planning that adopts a what-if style to look at areas such as currency rates movements or technologies

The 3-year business planning had the following components:

 z Business planning for creating a specific plan for each business unit
 z Goal alignment mechanism to ensure that all business units are moving in the direction of predetermined
goals
 z Portfolio management to analyse business units for the purpose of investments
 z 5-year modelling to analyse the impact of business decisions on company profitability

The annual planning process called the operations assurance process had the following elements:
 z Resource planning to assess the space and infrastructure requirements
 z Budgeting process for quarterly realignment for the following four quarters
 z Risk management model to deal with strategic, operational, reporting and compliance risks at business, divi-
sion, functional, and subsidiary levels
 z Operational review

Source: R. Sukumar,‘Fast Company,’Business Today (29 August, 2004).

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Exhibit 10.1 Strategy Implementation at Nahar Industrial Enterprise Ltd.

Nahar Industrial Enterprises Ltd.(NIEL) is a vertically-integrated textile manufacturer, covering value chain
operations ranging from spinning, weaving and processing to finished readymade garments. Set up in 1983 as a
part of the Oswal family group companies, NIEL is based at Ludhiana at Punjab. It consolidated its core business
of textiles and divested non-related businesses of steel, oils, and soaps and integrated forward into retailing. All
this required embarking on an expansion strategy through integration, added focus on internationalisation and
future diversification into the related field of textile e-commerce.
The company has a good track record in the textiles business, Oswal family group’s long-standing experience,
group synergies in cotton procurement and established market presence. It also benefits from the partially
integratednature of operations which mitigates demand risk and its diversified revenue base with focus on the
relatively stable domestic market, where it possesses an established distribution network lending stability tovol-
umes.
For putting its integration strategy into action, NIEL implemented an expansion plan. This plan had various
programmes such as augmenting production capacity and expanding exclusive franchise outlets for its Cotton
County branded garments. The finance for putting strategies into action was sourced through term loans, foreign
currency convertible bonds, and internal accruals.
A part of strategy implementation at NIEL required overhaul of various functional strategies. For instance, the
functional strategy of marketing involved geographical expansion into Southern India where the group boosted
its presence as well as geographical extension by moving from its mainly small-town presence to bigger cities.
Market development involved seeking opportunities in apparels for women and children from its then focus on
menswear while product development sought to expand the range from garments to undergarments. Another
functional area of information management got a boost with implementation of an enterprise resource planning
project.
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It’s not as if all of NIEL’s plans, programmes and projects had gone ahead smoothly. For instance, it had to
shelve an expansion project at Raisen, Madhya Pradesh, as it did not get land allotted by the State government.
Sources: ‘Nahar Plans Rs. 800 crore Expansion,’The Financial Express(20 May, 2006); ‘Nahar to Exit Non-Core Business,
Focus on Textiles,’The Economic Times(8 August, 2006); Nahar Weaves Rs. 814 crore Spread,’Business Standard (9 Oc-
tober, 2006); and ‘Nahar Retail to Pump in Rs. 430 crore,’The Economic Times (13 September, 2007); ICRA Credit Per-
spective Report at http://icra.in/Files/Reports/Rationale/NAHAR%20INDUSTRIAL%20ENTERPRISES_cpr_17092014.
pdf; and NIEL’s website at http://www.owmnahar.com/. Both websites retrieved 19 October, 2014.

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Exhibit 10.2 Two-way Linkage between Formulation and Implementation of Strategy

Strategy Strategy
formulation implementation
(analysis/thought) (action/doing)

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Exhibit 10.3 Mintzberg’s Conception of the Types of Strategies

Formulated Implemented
strategy strategy

Intended Deliberate strategy Realised

strategy strategy

Unrealized Emergent
strategy strategy

Source: Based on H. Mintzberg,‘Pattern in Strategy Formation,’Management Science, 24, no. 9 (May, 1978): 945.

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Source: Adapted from A. Kazmi, ‘A Proposed Framework for Strategy Implementation in the Indian Context,’Management
Decision, 46, no. 10 (2008): 1564–81.

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Exhibit 10.6 Strategy Implementation through Project Management

Strategic Management Process

Strategy implementation Strategy evaluation and control

Project Control
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metrics

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controlling

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Exhibit 10.7 Information Technology (IT) Project Implementation at Madura Fashion and Lifestyle
Madura Fashion and Lifestyle—MFL—(till 2010, known as Madura Garments), a unit of Aditya Birla Nuvo, is a
branded apparel company that owns international brands like Allen Solly, Louis Philippe, People, Peter England,
and Van Heusen. It also runs an exclusive chain of stores by the name of The Collective and Planet Fashion and
an online store Trendin.com. The company also supplies to international brands like Marks & Spencer’s, Tommy
Hilfiger, Polo, and Ralph Lauren. In order to take advantage of the opportunities in the growing Indian retail
industry the company launched new brands with high-end positioning from product to lifestyle and entered into
bigger retailing formats from wholesale.
Aditya Birla group’s Indian Rayon acquired Madura Garments from Coats Viyella of the UK in 1999 as a part of
its corporate restructuring exercise. Already established as a major textile producer, Aditya Birla group’s purpose
was to vertically integrate into the premium menswear market. Having established presence in the menswear
segment by the late 1990s, Madura Garments adopted expansion strategies of market development into women’s
wear and international strategies of moving into foreign markets such as the Middle East. These strategies placed
enormous pressures on the internal systems and operating practices of the company. For instance, new and in-
novative sourcing initiatives had to be launched to implement the business strategies.
Madura Garment’s managers identified two weak areas in the strategy implementation process: operations and
management information system. The latter problem arose owing to the legacy, non-integrated IT systems that
lacked the capability to provide updated information for new product development. The solution was to imple-
ment a comprehensive and integrated IT package that would facilitate company-wide integrated information
system covering all functional areas. Reduction of inventories and increase of order fulfilment rate were set as
the effectiveness measures. These were designed to lead to faster decision-making impacting quality of customer
service helping the company to maintain its competitive edge in a challenging albeit growing market.
A formal, structured approach was adopted to implement a project titled SAFFIRE (System that is affordable,
fast, flexible, integrated, robust and efficient). The project addressed not only the area of IT systems but also
the business processes. The IT system installed was Apparel Footwear Solution (AFS) that was chosen through
a rigorous selection process. The project resources included functional team members and technical personnel
from the company and the external consultants. The project scope covered the exports office, head office, design
studio, and the factories connected to the SAP server at the head office through V-SAT linkages, leased lines and
fibre optic cables. The schedule of the project was about a year from 1 August, 2001 through 7 July, 2002.
The project was implemented within the time schedule and achieved its objectives of providing a transparent
information system in real-time ensuring tighter and more integrated environment. It helped to reduce response
time to both internal and external customers boosting the company’s capability to react in a timely fashion to
the dynamic apparel market in India.
Sources: M. Bhatnagar, ‘Indian Rayon Pockets Madura Garments,’21 December, 1999 http://www.domain-b.com/
companies/companies_i/indian_rayon/19991223indian_rayon_madura.html; ‘Madura Garments: Weaving a Success
Story with Tech,’20 August, 2004 http://smbzone.indiatimes.com/articleshow/866565.cms; ‘McKinsey to shape UpBir-
las’ Retail Plans,’The Economic Times( 29 August, 2006); and T. Deshpande and G. Seshan,‘Madura Garments Plans
Brand Extension,’Business Standard(21 September, 2007) and MFL’s company website at http://adityabirlanuvo.
com/maduragarments/profile.aspx?id=Ry2ILhnoSIA=. All websites retrieved 21 October, 2014.

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Exhibit 11.2 The Evolution of Organisation Structure in Corporate India

Business Today makes an interesting analysis of the chronological evolution of the organisation structure within
Indian firms. The structures analysed show the firms responding to the environmental situation prevailing during
a particular time period. Here is an account of how structures have evolved from the pre-1940s to the post-1990s.
z One-man organisation (Pre-1940): The CEO is the hub around which there are workers.
z The classic triangle (1940–50): The functions of sales, finance, and production are designed below the direct
control of the CEO.
z The managing agency (1950–60): The foreign company provides the licence to the local partner who acts as
the managing agent. The functional areas are directly looked after by the managing agent who acts as the
CEO.
z The functional structure (1960–70): The traditional and popular structure of various functional areas directly
under the control of the CEO.
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z The cross-holding structure (1970–80): The promoter (most often a family group or a powerful industrialist) has
equity holding in several companies and exercises organisational control in the same proportion.
z The conglomerate (1980–90): The business / family group emerge as the focal point managing a clutch of busi-
nesses vested in different companies. Each company manages one or more businesses.
z The streamlined group (Post-1990): The group emerges as the focal point of structure with businesses vested in
subsidiaries, joint ventures, and equity alliances. The organisational control is exercised through a flagship
company.
The emerging forms of organisation in the twenty-first century-India could be radically different from those
in the past. New technologies and changing market conditions enable segmentation of customer groups and
differentiation of products and services. Declining transaction costs and the managing and leveraging of knowl-
edge is likely to alter organisational boundaries. Disaggregation of strategic decision within organisations may
be reflected in disaggregated structures. Network structures that rely on linkages to other organisations based on
knowledge sharing is another likely development. This might already be taking place internally where intensive
coordination and linkages between internal knowledge centres exist in organisations.
In a positive way, organisation structure may have to accommodate humane concerns such as providing growth
opportunities to employees including women and trends such as working away from workplaces.
Source: Based on A. Roy, ‘Forms for the Future,’Business Today (7–21August, 1995): 68–81; I. J. Parikh,‘The Em-
powered Workforce,’ and S. Khanna,‘Multidivisional Knowledge Networks.’ Both articles appeared in Business
Today Millennium edition (7 January, 2000).

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Exhibit 11.4 Inter-organisational Relationship of a Biotechnology Consortium

The Biotechnology Consortium India Ltd. (BCIL) is a company promoted by the Department of Biotechnology
of the Government of India in association with All-India Financial Institutions and a number of Indian companies
to promote commercialisation of biotechnology in India. The Biotechnology Consortium India Ltd. provides
services to its partners related to technology transfer, project consultancy, fund syndication, information dis-
semination, and manpower training and placement related to biotechnology.

Central and
State
governments

Financial Research
institutions institutions

Biotech
Consortium
India
Limited

Universities Industry

International
organisations

Source: Adapted from website of Biotech Consortium India Limited at http://bcil.nic.in/. Retrieved 25 October,
2014.
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Exhibit 11.5 Contemporary Organisation Design

Traditional organisational design characteristics Emerging organisational design characteristics

One large firm Small business units having cooperative relationships
Vertical communication patterns Horizontal communication patterns
Centralised top-down Decentralised participative
Vertical integration Outsourcing and virtual organisations
Work- / quality-based teams Autonomous work teams
Functional work teams Cross-functional work teams
Minimum training Extensive training
Individual-focussed specialised job design Value-chain team-focussed job design
Source: Comparative changing characteristics of the traditional organisational design and the emerging think-
ing in organisational design adapted from B. Macy and H. Izumi, ‘Organizational Change, Design, and Work
Innovation: A Meta-Analysis of 131 North American Field Studies - 1961-1991,’Research in Organizational Change
and Development, 7, (1993): 235–313 and Organisation Design Approaches of Mechanical and Natural System
Designs from D.K. Hurst, Crisis and Renewal: Meeting the Challenge of Organizational Change (Boston, Mass.: Harvard
Business School Press, 1995

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Exhibit 11.6 Interrelationship of Structure and Strategy

determines

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Exhibit 11.7 Why is Structural Implementation Needed?

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Exhibit 11.9 Structures for Business Strategies

CEO CEO

Centralised
staff R&D Mktg

Fin HRM Mktg Oper Fin HRM Oper

Organisation design for attaining cost leadership Organisation design for attaining differentiation
z Efficiency orientation z Learning orientation
z Strong central authority z Flexible, loosely-knit organisation
z Tight cost controls z Stress on horizontal coordination than
z Detailed control reports vertical control
z Standard operating procedures z Strong capability in R&D
z Highly efficient procurement and z Lots of leeway for employees to be creative
distribution systems and innovative
z Close supervision z Rewards for risk-taking
z Routine tasks z Broad guidelines to performance of activities
z Limited or no employee empowerment z Liberal amount of employee empowerment

Source: Comparison of Organisation Designs from R.L. Daft,Organization Theory and Design (Mason, Ohio: South-
Western, 2004): 63–64. Ideas for Structures for Cost Leadership and Differentiation from M.A. Hitt, R.D. Ireland
and R.E. Hoskisson, Strategic Management: Competitiveness and Globalization (Mason, Ohio: South-Western, 2007):
344–46.
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Exhibit 11.10 Structures for Corporate Strategies

Suggested Structure for Related Diversification

CEO

Legal PR

Strategic Corporate Corporate

Corporate
Business Marketing Operation
Finance
Unit B

Strategic Strategic Strategic Strategic

Business Business Business Business
Unit A Unit B Unit C Unit D

Suggested Structure for Unrelated Diversification

CEO

Corporate Corporate Corporate Corporate

Finance HRM Legal PR

Division Division Division Division

A B C D

Source: Structures adapted from M.A. Hitt, R.D. Ireland and R.E. Hoskisson, Strategic Management: Competitiveness
and Globalization (Mason, Ohio: South-Western, 2007): 347–53.
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Exhibit 11.11 Structures for Internationalisation Strategies

Global Transnational

Pressures for cost reduction

strategy strategy

Global product Global Matrix

structure structure

International Multidomestic
strategy strategy

International Global
division geographic
structure structure

Pressures for local responsiveness

Source: Adapted from R.E. Whiteand T.A. Poynter, ‘Organizing for Worldwide Advantage,’Business Quarterly (Sum-
mer, 1989): 84–89.

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Exhibit 11.12 Suggested Structures for Implementing International Strategies

CEO

Marketing Operations International

Finance HRM
Division

International Strategies: International Division Structure

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Corporate staff

COO

Region Region Region Region

A B C D

Multidomestic Strategies: Global Geographic Structure

CEO

Region A Region B Region C Region D

SBU 1

SBU 1

SBU 1

SBU 1

Transnational Strategies: Global Matrix Structure

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Exhibit 11.13 Generic Strategies and Key Dimensions of Computerised Information System
Generic strategies Stability Retrenchment Growth

Key dimensions Rigid policy stance Æ Flexible policy stance

Mainframe computers Æ Microcomputers
Transaction processing systems Æ Decision support systems
Source: Adapted from J.C. Camillus and A.L. Lederer, ‘Corporate Strategy and the Design of Computerised Informa-
tion Systems,’ Sloan Management Review (Spring, 1985): 35–42.

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Exhibit 11.14 The Control Cycle

Establish Measure
standards performance

Evaluate
Correct
performance
performance
against
if needed
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Exhibit 11.15 Organisational System Changes at the Aditya Birla Group

The Aditya Birla Group is headed by Kumaramangalam Birla, the great grandson of the legendary Ghanshyam
Das Birla. His father, Aditya Birla is known for his vision in making the group go global as early as 1969 when
Indian companies did not venture beyond the borders. The Aditya Birla group consists of both Indian and
international companies. The product and service portfolio is wide ranging from apparels, cement, chemicals,
fertilisers, financial services, metals, and telecom.
This exhibit illustrates the relationship of the strategies that the Aditya Birla Group adopted and the conse-
quent changes reflected in the three systems of information, control and reward during the transition phase un-
der K. M. Birla. The corporate strategy of the Aditya Birla Group was centred on expansion through acquisition
and setting up new businesses, and internationalisation and was considerably more aggressive than the earlier
strategies of cautious growth. Early strategic action included rationalisation of business portfolio resulting in di-
vestment of some businesses, reducing the share of fibre-based businesses, and focus on non-ferrous metals and
cement. The Aditya Birla Management Corporation Ltd. is the group’s apex decision-making body and provides
strategic direction to group companies. The business strategies varied across the 16 businesses with cost leader-
ship the dominating business strategy adopted by most group companies.
The heritage of Birlas goes back to Pilani in Rajasthan, the state that has provided so many entrepreneurs and
industrialists to the country. The groups’ management style had been conservative and traditional but since the
taking over of the group’s leadership by K.M. Birla, the style underwent significant changes. He is known for an
open style of management, prefers delegation of authority and power, encourages entry of professionals in the
decision making structure, likes to think big, and is not a stickler when it comes to tradition. For instance, he put
into effect a retirement policy soon after taking over that made many old-timers leave; their places were filled by
professionals.
The organisational systems and processes had undergone changes over a period of time. In fact, some media
reports point out the basic difference in the managerial style between father and son as the latter acting as an
organisation man while the former was an entrepreneur.
Information system: The corporate IT oversaw the group’s IT initiatives and provided policy guidelines regarding
information security, business continuity plan, information system audit, and standardisation of technologies
and platforms. The group had a SAP competence centre, a knowledge management portal called Aditya Disha—
e-commerce, and e-learning infrastructure.
Control system: The group had taken initiatives to create a group brand identity. The different businesses were
provided with goals to achieve indicating a top-down approach to control. There was a central cell to review
long term planning and budgeting, take decision making on capital expenditure proposals, formulate and evalu-
ate strategic initiatives, including M&A and corporate restructuring and evaluation of business performance.
Corporate management audit cell looked after evolution, implementation and review of internal controls, cost
reduction methods, group policies, assessment and mitigation of business risks and promoting effective corpo-
rate governance. The age-old indigenous financial accountability and control system, called the parta system, was
replaced with economic value-added system.
Reward system: The Corporate Human Resource Cell dealt with the various aspects of human resource manage-
ment in the group companies. Among other functions, there were the functions of formulating reward strategy,
performance management, and organisational development. Over the years, the group had striven to become
professional in terms of its reward system by becoming transparent and consistent, and instituting a meritocracy.
There were several methods of rewards including an employee stock option scheme.
Sources: P. Srinivasan,‘The Organisation Man,’Business Today (17 July, 2005); ‘Focused on Growth,’Business Today
(9 October, 2005); K. Datta, ‘Kumaramangalam: The Biggest Birla,’ Business Standard (19 September, 2005);
Aditya Birla group website at http://www.adityabirla.com/home. Retrieved 10 November, 2014.
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Exhibit 12.1 Matching Leadership Style with Strategy

Waldersee and Griffiths in a journal article explore the issue of strategy—leadership styles in the context of
implementing change. They adopt two broad types of change implementation: participative and unilateral. Par-
ticipative change is done through the support of people by the means of behavioural-social interventions such
as organisation development or sensitivity training. Unilateral changes are forced from top and implemented
by the technical-structural means such as system and process redesign or administrative changes in terms of
redefining authority and work rules.
Waldersee and Griffiths make several interesting observations, which are of interest to us here, in surveying
the literature on change implementation:
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z The strategy-style matching theory, as in Slater, 1989, is built on the premise that the effective implementa-
tion of a strategy requires a manager whose style has strengths consistent with the competencies required by
the strategy.
z The key assumption in strategy-style matching is that the characteristics of the leader cause them to imple-
ment change in a particular way, and this needs to be matched to the type of strategic change being imple-
mented.
z Strategy-style research has tried to link the personality characteristics of leaders to the business outcomes
achieved. For instance, innovative ability may be linked to success in implementing differentiation business
strategy.
z The present state of research in strategy-style match does not explicitly identify the implementation actions
that flow from leadership style adopted. Rather, it is assumed that the personality and background of the
managers cause implementation actions. Since personality and background cannot be changed, managers
do not, and cannot, alter their behaviour to suit the requirements of a particular strategy.
z The strategy-style research does provide an indication of the potential importance of matching the type of
change and implementation. For instance, it is found that the larger or more transformational the change,
the more unilateral the change implementation should be adopted. For smaller changes, participative imple-
mentation can work better.
z When transformational changes take place, it may be better to adopt unilateral methods of implementation
forcing the change from the top. Once these changes are in place, participative methods may be adopted to
bring about the behavioural changes necessary to make the transformation work.
In our study of strategic management, we are aware that strategic changes are often transformational in nature.
This means that they are big changes such as redesigning organisation structure, redesigning systems and processes,
and changing culture. Unilateral methods of implementing change may require top managers to act decisively and
initiate top-down actions that may cause the employee behaviour changes to follow. These changes can then be
managed better through the participative methods to build up support for the change. It must be noted; however,
that this is contrary to the generally-accepted idea that support of employees is necessary to bring about change.
There is also inherent contradiction in the observation that leaders cannot modify their behaviours. If they cannot
do so, then the question arises how participation methods can elicit behavioural changes among employees.
The present state of research in strategy-style match has a long tradition of research behind it. The literature
survey, for instance in Hakonsonn,et al., relates some of the developments in this field of study.
Source: R. Waldersee and A. Griffiths,‘Implementing Change: Matching Implementation Methods and Change
Type,’Leadership & Organization Development Journal, 25, no. 5 (2004): 424–34; and D.D. Hakonsonn, J. Laurid-
sen, B. Obel, and R. Burton,‘How Misfits Between Leadership Style and Strategy Affects Performance,’ Working
Paper available at http://www.lok.cbs.dk/images/publ/Dojbak%20Obel%20Burton%20og%20Lauridsen.pdf. Retrieved
11 December, 2007.

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Exhibit 12.2 Developing Strategic Leaders in India

Shortage of CEOs and senior managers is a perennial challenge faced not only in India but around the world.
The present position in India of acute shortage is owing to several reasons: the fast-growing economy is creating
higher demand for senior managers; attrition at the middle- and senior-levels dries up the reservoir that provide
senior managers; and many senior managers decide to take early retirements to become entrepreneurs. Execu-
tive search consultancy firms regularly forecast severe shortages of personnel to fill up senior positions. There is
also a view that most Indian companies are ill-prepared for handling succession issues.
 ĞŚĂǀŝŽƵƌĂů/ŵƉůĞŵĞŶƚĂƟŽŶ൰

Human resource professionals suggest three options to deal with the acute shortage of personnel for top
positions: hire laterally from rival companies by luring away executives by better compensation packages; use
succession planning to groom strategic leaders internally; and adopt a combination of the best of both these ap-
proaches of hiring competent people and grooming them for leadership or hiring leaders and grooming them
for competences. Indian companies are using a combination of these approaches depending on the types of
companies and industries.
The fast-growing companies in sunrise industries adopt the first approach of hiring laterally possibly because
they do not have the time or patience needed for grooming strategic leaders through succession planning. This
approach may work in the short-term but create problems of adjustment in the long-run as external personnel
taking charge at senior positions may not be able to understand the culture of the organisation.
Systematic career planning and development and succession planning may take place in stable organisations
such as the Tata group of companies that relies on TAS for senior managers. But even in the Tata companies,
foreign acquisitions have forced them to appoint CEOs sourced from foreign companies rather than through
their internal sources. Multinational companies such as Hindustan Unilever (HUL) and professionally-managed
groups such as the R.P. Goenka (RPG) group and Mahindra group rely on grooming strategic leaders internally.
Generally, the MNCs have a more meticulous approach to succession planning. In family-owned organisations,
the succession planning may not be a big issue as the senior positions automatically go to the sons and in some
cases to daughters too. But even here it is not as if the top positions are handed to them on a platter. The heirs
have often to undergo a trial by fire to prove that they are fit to handle the top jobs. Family-owned organisations
such as Ambani, Bajaj, and Murugappa are headed by family members who have gone through the grind before
being appointed to top positions. In some cases, however, family conflicts do occur when thereis more than one
heir contending for a top position.One welcome repercussion of the fast-growing Indian economy has been
the rapid rise of young managers to top positions in organisations. There are problem here too as these young
managers may face resentment from more senior colleagues who are ignored for promotions.
Despite so many different ways of hiring and grooming talented personnel for senior positions ultimately what
matters is to present challenges to people that fulfil their aspirations, expose them to quality thinking, offer scope
for intellectual development and provide empowerment. Stronger corporate governance mechanisms are also likely
to strengthen the board of directors’ position vis-à-vis the CEO making the board members more accountable for
succession decisions.
There is an alternate view that teams rather than individuals may be really important when it comes to strategic
leadership and rather than having specific persons designated for promotions under succession plans it may be
better to have executive teams from which future leaders may emerge.
Source: P. V. Sahad, India Inc.’s GenNext,’Business Today (15 August, 2004); A. Adhikari,‘Who’s Next?’Business
Today (17 December, 2006): 76–91; and; B. Kalesh, ‘Head Hunt,’Business World (October, 2007) at http://www.
businessworld.in/content/view/2656/2735/1/0/; ‘It is the Team, not the Leader,’Business World Roundtable discussion
available at http://www.businessworld.in/index2.php?option=com_content&do_pdf=1&id=2171 Both sites retrieved 13
December, 2007; and N. Singh and S. Mukherjee, ‘Family-run Companies Better at Succession Planning,’ Times of
India (26 July, 2013).

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Exhibit 12.3 A Typology of Corporate Cultures

Flexibility and discretion

Clean culture:
Adaptability

External focus and differentiation

Commitment to
culture:
Internal focus and integration

organisation;
Innovation,
involvement
risk-taking
and
and creativity
participation

Bureaucratic
culture: Market culture:
Consistency, profit-making,
conformity, professionalism,
collaboration ambition
among members

Stability and control

Source: Based on and adapted from R.E. Quinn and J. Rohrbaugh, ‘A Spatial Model of Effectiveness Criteria:
Towards a Competing Values Approach to Organizational Analysis,’  Management Science, 29, (1983): 363–77;
and K.S. Cameron and R. E. Quinn, Diagnosing and Changing Organizational Culture: Based on the Competing Values
Framework. (Reading, MA: Addison-Wesley, 1999).

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Exhibit 12.4 Impact of Culture on Two Different Groups of Organisations

S.K. Bhattacharya has analysed the major differences in multinational subsidiaries and professionally-managed
companies on the one hand, compared to family businesses and NRI’s companies on the other with regard to
corporate culture.
We present Bhattacharya’s observations in terms of a comparative table next. Dimensions of corporate culture

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Source: Based on S.K. Bhattacharya,‘ Organisational Culture: An Indian Perspective,’Business World (1 – 14 February,
1988): 48–49.
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Exhibit 12.5 Corporate Culture Changes at Warner Hindustan—Parke Davis

This illustration offers an insight into the post-merger cultural adaptation which takes place inside two entities where
the merger apparently did not work.
In September 1988, Warner-Hindustan was merged with Parke Davis—both offshoots of the same parent, The
Warner Lamber Company of the US. Parke Davis had a single location at Mumbai, and Warner Hindustan was multi-
locational. The factors that led to the merger included: the vagaries of the oppressive Drug Price Control Order,
the fact that both the companies belonged to the pharmaceuticals industry, and the potential of realising synergies.
The objectives to forge an alliance were: creating scope for growth, building complementarity in product portfolio,
and leveraging their brand power.
The two companies had very contrasting cultures. Parke Davis was a people-driven company that practiced
participative and democratic values. It was basically a positively-oriented conservative company. Employees had
interpersonal relationship based on trust and respect for each other. On the other hand, Warner-Hindustan had a
task-oriented culture. There was a high level of cost- and profit-consciousness, and a controlled, formal and docu-
mented work culture. Risk taking by managers was encouraged.
After the merger, the management focussed on the rationalisation of facilities and resources, structuring depart-
ments, and allocating designations. However, no attention was paid to the two different sets of operating rules being
followed in one post-merger company.
When the merger was consummated, there started a continual clash in the culture and working systems of the
two partners for a long time. It seemed as if two separate companies were working under the same roof. The average
employee felt alienated and insecure. It also led to the formation of cliques. After 4 years, in 1992, when conflicts
manifested in the form of work-stoppages and low productivity, the top management of the company got together
and created a new vision and mission statement for the company. The purpose was to create a common set of goals
for the employees of both the companies.
Though the efforts to resolve the problems had been taken, still differences were evident from the departure of
several managers. The process of cultural integration had apparently not succeeded.
Source: A. Farooq and A. Kazmi,‘Creating the Right Strategy-culture Fit,’Prestige Journal of Management and Research
(April-October, 1999): 25–37.

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Exhibit 12.6 Values and Ethics in the Context of Indian Psycho-philosophical Thought
Prof. S.K. Chakraborty of Indian Institute of Management (IIM), Kolkata has done extensive work on Indian
psycho-philosophical thought, contained in ancient texts of Hinduism, to derive insights for the purpose of
developing managerial effectiveness. His basic idea is to rely on education versus training, values versus skills,
principles versus policies, and wisdom versus knowledge to develop managerial effectiveness. His model of
managerial effectiveness is based on seven psycho-philosophical thoughts: the concept of self and reality; dis-
identification; theory of Gunas; theory of Samsakaras; the doctrine of Karma; theory and method of work; and a
‘giving’ model of motivation.
With regard to values and ethics rooted in the Indian thought, several ideas have been proposed as follows:
1. The concept of self in man has to embrace the spiritual dimension beyond the physical, social, and economic
dimensions.
2. The creative energies of human beings are derived from, and rooted in, the Supreme Creative Intelligence.
3. Managerial decisionmaking requires the interplay of both analytic and holistic faculties.
4. The final resolution of managerial conflicts lies in the de-egoisation of the self.
5. The key to cooperation and teamwork lies in realising that the same atma dwells in all.
6. The quality of managerial decision-making and skills can be improved through an understanding and inter-
nalisation of the doctrine of Karma.
7. Motivational strategies need to be based on the ‘giving’ model rather than a ‘needing’ model of man.
8. Ability for developing effective leadership style requires an understanding of three qualities of man: sattwa
(righteousness), rajas (selfishness), and tamas (laziness).
9. All managerial decisions are subjective in the ultimate analysis and the effectiveness of such decisions de-
pends critically on the purity of the mind of the decisionmaker.
Sources: Based on S.K. Chakraborty, Managerial Effectiveness and Quality of Worklife: Indian Insights (New Delhi:
Tata McGraw-Hill, 1987) and S.K. Chakraborty, Foundations of Managerial Work: Contributions from Indian Thought
(Bombay: Himalaya Publishing House, 1988).
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Exhibit 12.7 Unethical Activities in Indian Organisations

The Indian subsidiary of the MNC consultancy, KPMG India, conducted a survey of 293 Indian organisations in
the public and private sectors in 2012. The survey covered the impact of changed regulatory environment and
evolving regulatory framework on fraud, emerging frauds, bribery and corruption, identity theft, intellectual
property frauds, and cyber crimes.
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The highlights of the survey findings are as follows.

z More than half the respondents to the survey experienced fraud.
z Ninety-four per cent of respondents feel that frauds have become more sophisticated.
z Seven-four per cent feel that fraud is an inevitable cost of doing business.
z The emerging frauds of future are cyber crime, intellectual property theft, counterfeiting and piracy, and
identity theft.
z Bribery and corruption is the most frequent type of fraud experienced followed by cybercrime and diversion
of assets.
z Financial services lead the sectors experiencing fraud followed by information and entertainment, real estate
and infrastructure, and industrial markets.
z Among the groups of people who are more susceptible to fraud are vendors and agents followed by senior
management and non-managerial employees.
z The functions within organisations most susceptible to fraud are procurement, inventory, and sales and
distribution.
z Among the most effective means of detection of frauds are whistle-blower hotline, internal audit and data
analytics.
z Most organisations resort to internal investigation as response to fraud followed by modification of controls
and disciplinary actions.
Who commits unethical activities in organisations? Why does a fraudster commit fraud? and What can be done
to prevent fraud? are some of the questions that another KPMG survey investigated. The survey of fraudsters was
conducted in Europe, Middle East and Africa, and India.
A fraudster is often an average company employee who is trusted with company assets and information. Some
startling findings of the fraudsters’ survey show that the person committing fraud is often the organisation’s own
employee, is quite likely to be among the managerial cadres with 60 per cent chances of him being among the
top management including the directors on board. This shows that the people often entrusted with the destiny
of the organisation are often the ones who act unethically. Being managers these persons are highly educated,
have a good family background, and are selected through a stringent recruitment process. Yet, these people turn
out to be white-collar criminals.
Three factors of opportunity, motive, and rationalisation can help to explain why people commit fraud. Oppor-
tunity is provided by weaknesses in the internal control systems of the organisation. Ironically, trust also is often
misused to commit fraud. Motives arise from greed, financial pressures arising from excessive lifestyle, pressures
to meet financial targets, and the perceived gap between the responsibilities discharged and the remuneration
received by the employee. The rationalisation generally takes place in terms of self-justification that the organisa-
tion owes the employee additional remuneration.
Another survey report, the Kroll Global Fraud Report, points out that four of five companies worldwide are
affected by fraud. The Indian respondents to the survey opine that the prevalence of fraud has increased in
recent times. Apart from traditional methods of fraud such as misappropriation of funds newer forms such as
IT-related crimes, identification thefts, and false reporting by asset managers have emerged with applications of
new technologies.
Effective internal controls, applying best practices, due diligence, and continual preventive efforts are neces-
sary to minimise the incidence of fraud in organisations.
Source: India Fraud Survey Report, 2012 KPMG India available at http://www.businessworld.in/c/document_library/
get_file?uuid=3f13daf0-c87d-4050-af99-ef18ff5925c8&groupId=520986 Retrieved 10 May, 2014 and Profile of a Fraud-
ster Survey 2007 available at: http://www.in.kpmg.com/pdf/KPMG_Profile_of_a_%20Fraudster_Survey%202007_Forensic.
pdf ; ‘Four out of five companies in the world affected by fraud: Kroll Global Fraud Report,’ in domain-b.com 25
September, 2007 available at http://www.domain-b.com/management/general/20070925_fraud_report.html. Retrieved 10
January, 2008.

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in other courses in the curriculum of management edu-
cation programmes. Therefore, our effort all along has
been to place these important issues in the context of
strategic management.
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Exhibit 13.2 The Configuration of Functional Plans and Policies

Financial plans and Operations plans and

policies policies

Integration of
functional plans and
policies
Marketing plans and Personnel plans and
policies policies

Information
management plans
and policies

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Exhibit 13.3 Financial Plans and Policies at Hindalco

Hindalco is the metals behemoth of the AV Birla group established in 1958 and based at Renukoot in the Mirza-
pur District of Uttar Pradesh. With a 2014-turnover of nearly US $ 15 billion, it is a leader in the aluminium and
copper sector of the global metals industry with plants located in 34 locations spread over four continents and
11 countries.
The corporate strategies at Hindalco are of vertical integration and growth through acquisitions both nation-
ally and internationally. The business strategies are aimed at leadership positions in its major three businesses
of aluminium, copper, and mines. The company’s aluminium units cover the entire value chain from bauxite
mining through downstream rolling, extrusions, foils and alloy wheels. It has captive power plants, aluminium
being a power-intensive industry, and coal mines to supply fuel for the power plants. In the copper business,
the company’s Birla Copper Unit at Dahe, Gujarat is the world’s largest single location copper smelter backed
by captive power and oxygen plants. The mining business deals with non-renewable sources of ores so requires
continual tapping of opportunities worldwide.
The financial policies at Hindalcoare guided by its vision to be a market leader through global cost competi-
tiveness in the non-ferrous metals industry. The nature of the commodity business that Hindalco is in require it
to maximise cash generation to deal with the cyclical nature of business making it carry large reserves and free
cash flows.
The nature of the financial policies at Hindalcois designed to be essentially prudent for investments in ac-
quisitions, continual expansion, and modernisation of facilities. The theme of prudence in financial policies is
reflected in all the phases financial management at Hindalco whether the sources of funds, usage of funds or
management of funds. Growth plans are funded through internal accruals keeping the company under-leveraged
with low debt-equity ratio and a healthy interest cover, maintaining high credit rating to avail opportunities in
capital and debt markets to reduce cost of capital, effective working capital management, managing financial
risks proactively, and deploying a robust monitoring and management information system.
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The outcomes of the financial policies have served to make Hindalco one of the better financially managed
companies. There have been high returns of capital employed, healthy cash flows, strong liquidity, and high cash
surplus. Liquid funds are invested regularly in portfolio of varying maturities locking them through competitive
pricing into the capital and debt markets.
Hindalco’s acquisition of Novelis, the Canadian offshoot of Alcan, at US$ 6 billion however had created some
concern. Many analysts considered the deal as unfair with Birlas paying a high price to acquire Novelis and the
way how the acquisition was financed by incurring huge debt and cash investments. This was considered as con-
trary to Hindalco’s stance on investments in the past. The company did feel the pressure and had to restructure
its capital expenditure in India and had to close down some plants of Novelis abroad. Subsequently the company
has started to rely on debt financing for its expansion plans such as the Mahan Aluminium and Utkal Alumina.
Overall, financial policies seem to have a good horizontal fit with the other functional policies as well as vertical
fit with the higher level strategies of the company providing it the much-needed long-term stability in a highly
cyclical industry.
Sources: K. Gopalan, ‘Birla’s Global Gambit,’Business Today (11 March, 2007):80–87; M. Anand: ‘The Scary (un-
told) Story,’Business World (23 February, 2007); and Hindalco’s website at http://www.hindalco.com/milestones. Re-
trieved 4 November, 2014.

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Exhibit 13.4 Marketing Plans and Policies at Archies

Which day is the daughter’s day? No prizes for guessing. It’s the fourth Sunday every September as Archies Ltd.
just decided. A series of such days is one of the several promotional tactics used by Archies to sell its cards and
gift items.
New Delhi-based Archies Ltd. makes and sells greeting cards and gifts. Conceived as an idea in 1979 by Anil
Moolchandani, from selling poster and songbooks through mail order, today Archies has emerged as a popular
brand in India in what is itself branded as the social expression industry. Known for greeting cards introduced in
1980, the Archies product range expanded to include gifts and music. A foray into perfumes failed and in 2003 was
restructured into a franchise-based business. It has strategic alliances and franchising with many global brands such
as Walt Disney. It operates in some countries in South and West Asia.
The Product: There are a range of products that Archies has entered into over the years in line with its ‘business
of emotions’ widening its range of products to becoming a social expression company. In-store research helps
the company understand the consumer psyche and buying patterns of its target audience identified on the basis
of age group of teens to the late-30s. From just greeting cards sales of which were declining, the product range
has expanded into gift items. In the gifting segment, it is targeting on corporate and exclusive gift items in ad-
dition to products for individuals.
The Pricing: Premium pricing based on differentiation seems to be the pricing tactic of Archies. In contrast,
there are low-cost options sold by its competitors in the unorganised sector. Substitutes such as online cards that
are virtually free and greetings through SMS and MMS that have a very low price are not considered as serious
enough threats owing to lack of personalisation and being passing fads.
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The Place: Distribution is the mainstay of Archies’ marketing policy and its strength. Early in 2008, it launched its
hundredth Company-owned retail outlet—the ‘Archies Gallery’ first set up in 1987—at Kolkata. Besides its own
stores, it has franchise stores and also sells through the malls and other prime retail outlets. It has its e-commerce
portal and has tie-ups with e-tailers. Fashion accessories and premium gifts are sold under the retail chain name
‘Stupid cupid’. Clearly, the company-owned stores are favoured as they provide advantages of having a large format
store, permits display a wide range of products, and helps in generating consumer feedback. The company also has
a B2C website at http://www.archiesonline.com/
The Promotion: Archies Ltd. started with mail-order advertising and maintained a low-key, non-aggressive promo-
tion policy. Advertising during events and festivals serve as gentle reminders to a brand that is already established
and is easily recalled as connected to greetings and gifts. Extensive retail presence also serves as reminder as the
brand is visible in malls and other traditional shopping places.Associating with MTV Roadies on television helps
it to keep connected to the youth. Another tactic, already indicated at the start of this exhibit, is highlighting or
inventing special days to motivate people to celebrate and greet each other. Sometimes, it works as in the case
of friendship day and sometimes it does not as in the case of forgiveness day.
Sources: ‘Archies captures half of India’s greeting cards market using the franchise route,’ Content available
on the website of Franchising Association of India at http://www.fai.co.in/content/view/564/42/ Retrieved 3 Feb-
ruary, 2008; N. Kaushik: ‘Jubilee Resolutions,’The Hindu Business Line(8 April, 2004); ‘Archies to Launch New
Retail Chain, Stupid Cupid,’ domain-b.com 20 December, 2005 available at http://www.domain-b.com/companies/
companies_a/archies/20051220_retail.html; Interview of Pramod Arora, Executive Director, Archies Ltd. on Brand
Speak on exchange4media.com available at http://www.exchange4media.com/Brandspeak/brandspeak.asp?brand_id=99.
Retrieved 6 November, 2014.

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Exhibit 13.5 Relating Operations Plans and Policies to Strategy

Source: Partly based on ideas provided in R. Wild, Essentials of Production and Operations Management (London:
Holt, Rinehart and Winston, 1985): 26–30.

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Exhibit 13.6 Matching Operations Plans and Policies to Strategy at Rane Group
The Deming Application Prize is considered as the most prestigious global award for excellence in quality man-
agement. There are many Indian companies that have won the prize Sundaram Clayton being the first. But three
companies in the same business group winning the prize is a remarkable achievement. Chennai-based Rane Group
is the proud recipient of the Deming Prize seven times for its different companies.
Sometime in 1999, S. Sundar Ram, the then president of Rane Brake Linings realised the critical importance of
quality as a competitive tool in a changing world where global competition was going to prevail. Probably, spurred
by rival Sundaram Clayton’s success, Ram decided to focus on total quality management (TQM) as the means to
achieve strategic success.
Rane Group, consisting of 10 companies and founded in 1929, is a manufacturer of auto components like steer-
ing and suspension systems, seat belts, valves, valve guide and tappets. Rane Brake Linings, a member of the Rane
group of companies set up in 1964, is an ISO 9001 and 14001 company with factories at Chennai, Hyderabad, and
Pondicherry, manufacturing asbestos and asbestos-free brake linings, clutch facings, disc pads and railway brake
blocks. It plans to get into defence-related production through acquisitions.
Typical for a family-business group, Rane Brake was a top-driven company. The chief executive officer (CEO)
would formulate the strategic plan and the managers would implement it. Implementation of TQM required de-
centralisation of management as well as an open leadership style.
The implementation of TQM focused on certain elements such as customer focus, standardisation of processes,
fact-based decision making, policy deployment to align corporate goals with employee responsibilities, and total
employee involvement. The implementation plan also called for organisational support as well as behavioural in-
terventions such as quality circles and discussion groups.
An apex team was set up comprising all the company presidents and total quality (TQ) coordinators, besides
group-wide TQ coordinators. This team would go to a company location every month and spend the day auditing
the work done and charting out future progress. Quality circles and discussion groups proved invaluable in em-
ployee empowerment and employee ownership. Suggestions emanating from these groups helped make continual
improvements in various aspects of the production system.
Research and development is a thrust area at this consummate manufacturing company. There is a dedicated
facility for new product development for critical applications including aerospace. The design centre has CAD and
sophisticated test equipment. Products go through comprehensive testing and validation in the modern test facili-
ties. The company attempts to continually update in line with evolving customer demand.
The Rane group companies plan to improve their lean manufacturing systems using the Toyota Production
System, which focuses on eliminating all kinds of wastage and to push export sales. The group has technology col-
laborations with TRW Automotive of the US, and NSK and Nisshinbo of Japan.
The outcomes of changes in production plans and policies has been in terms of improved team work, ener-
geticand motivated employees, and improved organisation alignment.
Sources: V. Jagannath,‘The Deming Dash,’ domain-b.com 23 December, 2003. Available at http://www.domain-b.com/
companies/companies_r/rane_brake_linings/20031223_deming.html Retrieved 3 February, 2008; A. Bhattacharya,‘The
Deming Champions,’Business Today(18 December, 2005): 68; Rane Group website at http://www.rane.co.in/ Re-
trieved 6 November, 2014.

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Exhibit 13.7 Emerging Paradigms in Human Resource Management (HRM) in India

Characteristics of HRM in the pre-1991 controlled busi- Emerging paradigms governing HRM in the post-1991 liberalised
ness environment in India business environment in India

HRM function largely isolated from top manage- Integration with top management often in the form of
ment membership in top executive teams and board of directors
 &ƵŶĐƟŽŶĂůĂŶĚKƉĞƌĂƟŽŶĂů/ŵƉůĞŵĞŶƚĂƟŽŶ൰

Personnel management function Strategic HRM

Domination of family-based top management Induction of professionals in top management
Caste a major consideration in recruitment espe- Growing trend of recruitment based on knowledge, skills
cially in the top management cadres and abilities
Nepotism in selection of personnel Increasing use of objective methods such as assessment cen-
tres to judge capabilities of personnel impartially
Training primarily for managers Management and worker training
Compensation based on tenure Compensation based on performance
Owners and top managers relatively more powerful Power within organisations becoming more equitable
than employees among owners and managers, and employees
Sources of recruitment almost exclusively local; Growing trend of recruiting from outside India; increasing
lack of diversity in terms of nationality diversity of workforce

Source: Adapted from E. Pio,‘HRM and Indian Epistemologies: A Review and Avenues for Future Research,’Human
Resource Management Review, 17, no. 3 (September, 2007): 319–35.

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Exhibit 13.8 Personnel Plans and Policies at Rashtriya Ispat Nigam Ltd.
Rashtriya Ispat Nigam Ltd. (RINL) is the corporate entity of the Vishakhapatnam Steel Plant situated in Andhra
Pradesh. It is also called Vizag Steel. Like a typical public sector enterprise, it took 22 years from conception in
1970, when its setting up was announced in Parliament, coming into existence in 1982 and commissioning in
1992 when it actually started functioning. It had an inauspicious start with accumulated losses of Rs. 2,000 crore
even before producing a ton of steel. This happened owing to project cost overruns. To add to its woes, the
 ^ƚƌĂƚĞŐŝĐDĂŶĂŐĞŵĞŶƚ

commissioning came at a time when the steel industry was decontrolled post-liberalisation. The result was obvi-
ous when it was referred to the Board of Industrial Finance and Reconstruction (BIFR) being a sick company.
The organisation made a sustained recovery all through the 1990s and finally in 2005 was able to generate
profits. It also turned net positive wiping all its accumulated losses to achieve a net profit of Rs. 1251 crore. It
has been in the black after that achieving impressive revenue and having goof profitability. There are more than
18,000 employees. In 2010, it achieved the Navratna public enterprise status subject to making an initial public
offer and getting listed.
The mission of RINL was‘to attain 16 million ton liquid steel capacity through technological upgradation,
operational efficiency and expansion; to produce steel at international standards of cost and quality; and to meet
the aspirations of the stakeholders.’ The corporate/business strategy has been organic growth through doubling
the production capacity and maintaining leadership in the long segment of the steel industry constituting prod-
ucts such as wire rods, bars, structural, and seamless pipes.
The turnaround of RINL has been possible thanks to various initiatives among them the HR initiatives. RINL
claims that the HR initiatives are closely linked to its corporate strategy. We will look at some facts and figures
to understand the HR scenario at RINL. A remarkable feature of RINL was that it had the youngest workforce
in the Indian steel sector with nearly half of the workforce in the 25–35 years’ age-group. Again, almost all the
workforce was technically qualified having diploma from Industrial Training Institute or higher educational
qualifications.
Among the HR initiatives were efforts to boost the morale of the workforce resulting in RINL achieving the
highest labour productivity in the domestic steel sector. Another initiative was to enhance employee engagement
through a suggestion scheme connected to rewards resulting in substantial savings.
The HR policy statement of RINL incorporates the following elements:
1. Belief that the employees are the most important resource and their full potential should be utilised
2. Work environment that makes the employees committed and motivated for maximising productivity
3. Systems for maintaining transparency, fairness, and equality in dealing the employees
4. Empowerment of employees for enhancing commitment, responsibility, and accountability
5. Encouragement of teamwork, creativity, innovativeness, and high achievement orientation
6. Provision of growth and opportunities for developing skill and knowledge
7. Ensuring functioning of effective communication channels with employ
The company also had a formal HRD policy designed to nurture development-oriented organisational culture.
The salient features of the HRD policy were as follows:
z Identify development needs, provide requisite training, and evaluate its effectiveness
z Provide inputs to the employees and create match between competencies and organisational requirements
z Create a learning environment
z Facilitate continual development of employees
z Prepare employees for taking up higher-level responsibilities
z Fulfil social obligations by inducting students for practical training

The HR plan of company aimed at developing the unreserved commitment, creativity, competence and initiative
of the personnel in meeting its business challenges. Human resource personnel played a key role in the implementa-
tion of total quality management at RINL. Training activities were taken very seriously with proper measurement of
training effectiveness. Industrial relations were generally amicable and there was continuous interaction with the
recognised unions, officers’ association, and the Scheduled Caste/ Scheduled Tribe (SC/ST)Employees’ Welfare
Association in matters related to production, productivity, discipline, and work culture.
Sources: ‘RINL Revival: Human Resources the Key,’The Hindu Business Line (23 June, 2001); S. Palo and N. Padhi,‘How
HR Professionals Drive TQM: A Case Study in an Indian Organization,’The TQM Magazine, 17, no. 5 (2005): 467–85;
RINL’s official website at http://www.vizagsteel.com/ Retrieved 4 February, 2008; and RINL’s 25th. Annual Report 2005-
2006 available at: http://www.vizagsteel.com/images/English%202006-07.PDF. Retrieved 4 February, 2008.
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Exhibit 13.9 Information Management Pans and Policies at Larsen & Toubro (L&T)
Larsen & Toubro Limited (L&T) is a technology, engineering, construction and manufacturing company. Head-
quartered at Mumbai, L&T was established in 1938 by two Danish engineers as a private company and became a
public limited company in 1950. It is one of the largest and most respected companies in India’s private sector.
Larsen & Toubro is a large, complex and diversified organisation with 62 different operational areas in its
several businesses such as engineering and construction, electrical and electronics, machinery and industrial
products, IT and technology services, and financial services. The various divisions in L&T have myriad informa-
tion requirements necessitating a complex information management system. There is continual requirement
of introduction of state-of-the-art IT as well as maintenance of existing systems. Much of IT needs of various
divisions are served through in-sourcing to L&T Infotech that maintains several SAP systems across the group.
In this exhibit we will focus on information management in the project management function at L&T.
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Project management is at the core of the functions at L&T. Owing to its nature any project requires a lot
of collaboration between personnel working in different functional areas such as engineering, procurement,
execution, construction, and commissioning. There are a large number of vendors, subcontractors, and clients
who are a part of the web-like structure that connects various stakeholders of a project. It is a big challenge to
keep track of various communication devices such as discussions, meetings, documents and drawings that have
to recorded and transmitted in a secure fashion.
Another facet of project management at L&T is that there are several ongoing projects at any given point of
time. Many of these are similar in a number of ways. They are alike in nature, use analogous technology, are
executed more or less in the same way, and the problems faced and resolved are pretty similar too. Sometime in
1999, the top management at L&T thought of creating a system by which learning, experiences, best practices
and recommendations could be shared to the benefit current and future projects. The result was a knowledge
management system called Knowledge Online (KOL).
The KOL system identified the following critical categories of activities:
1. Activities related to proper communication through a daily newsletter called Know Net and e-mails aimed
at transmission and dissemination of information on a regular basis.
2. Activities related to building a knowledge repository as every project yields a large amount of documents.
Both explicit and tacit knowledge was sought to be captured through KOL and a document management
system called domino.doc aimed at acquisition, retention, processing, synthesis, and retrieval of information.
3. Activities related to promoting collaboration through a community of practice system and a project corre-
spondence system.
4. Activities related to rewarding and recognising knowledge behaviour in the form of two competitions annu-
ally to reward personnel who distinguish themselves for usage of learning and idea generation.
There have been encouraging results of implementing information management plans and policies at L&T
in the form of better collaboration, creating standard operating procedures, gains in efficiency, and monetary
and intangible savings.
Sources: R.P. Sinha,‘Working Towards Total Process Improvement at L&T,’Knowledge Management Review, 10, no. 1
(March/April, 2007): 18–23; ‘IT within, IT without,’CIO Today available at: http://cio.in/features/viewArticles/ARTI-
CLEID=5875/page=1Retrieved 4 February, 2008; L&T company website at http://www.larsentoubro.com/lntcorporate/
common/ui_templates/HtmlContainer.aspx?res=P_ENC_DENB_AAOV. Retrieved 6 November, 2014.

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Exhibit 13.10 Integration of Functional Plans and Policies

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Exhibit 13.11 Five Considerations in Integrating Functional Plans and Policies

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internal
consistency

Relevance to
development of
organisational
capability
Integration of
Making tradeoff functional
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Timing of
implementation
of functional plans
and policies

Sources: Based on theoretical matter in W. F. Glueck and L.R. Jauch, Business Policy and Strategic Management, 4th
ed. (New York: McGraw-Hill, 1984): 360–62.
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Exhibit 13.12 Integrating Functional Plans and Policies at LG Electronics

LG Electronics India Private Ltd. (LG) is a wholly-owned subsidiary of LG Electronics of South Korea. Set up
in 1997 in India, LG has two manufacturing units in Greater Noida, U.P. and Pune, Maharashtra. The business
portfolio of LG in India consists of televisions, home theatre systems, refrigerators, washing machine, computer
monitors, and smartphones, and commercial products.
Considered a market leader in consumer durables and a significant player in the IT and mobile telecom busi-
nesses in India, LG has differentiation business strategies in each of the four businesses. It focuses on premium
products in each category coming out with high-end products as well as attempting to create a nationwide
network of distribution outlets which it calls ‘the experience zones’ to match the ambience with the high-class
products.
Operating in the highly competitive consumer durables market, LG is conscious of the high value of the
marketing function. Its brand management comprises of four basic elements of values, innovation, people,
and passion. Positioning is aimed at ‘enhancing customer’s life (and lifestyle) with intelligent features, intuitive
functionality, and exceptional performance.’ Advertising slogan ‘Life’s Good’ attempts to express its brand val-
 &ƵŶĐƟŽŶĂůĂŶĚKƉĞƌĂƟŽŶĂů/ŵƉůĞŵĞŶƚĂƟŽŶ൰

ues, promise, benefits, and personality. LG’s website has interactive features such as the service centre locator,
complaint registration, information about warranty and annual maintenance contracts. Distribution is through
the exclusive showrooms, LG Brand Shoppe and through the distribution network including consumer durable
stores, speciality stores, and hypermarkets. It also has an online LG brand store. After-sales service is a major
component of marketing function. LG has its own centres and well as outsourced ones.
Realising the worth of HR, LG has adopted the idea of ‘Great Company, Great People’. The HR system has
been streamlined by integrating it with IT such as the online recruitment management system. The aim is to
shorten the time in the selection process. Psychometric tests are a part of the selection process to assess the cul-
tural adaptability of prospective employees. Induction and on-the-job training are essentials of the HRD policy.
LG has several policy measures in place to create congenial working and industrial relations environment. An
open communication policy helps to keep the workers in touch with management. Effective internal commu-
nication, such as in-house journals, newsletters, E-notice board, family days and pizza meetings, try to give the
employees a sense of belongingness and ownership.
LG Global is a research-intensive organisation with research laboratories around the world. Design centres,
one of them at Delhi, work on innovation and product improvement of its high-end products. There is a quality
charter emphasising customer focus, market-driven nature of operations policies and a service charter focusing
on providing customer delight.
LG Global has a structured IT set-up using ERP and supply chain solutions. LG first tried a customer informa-
tion system in early 2000 and then switched to Oracle e-business suite to drive its ERP and marketing activities.
Three data centres operate at New Delhi and Pune. Leasing IT equipment like servers is another IT policy. The
Oracle applications implementation is aimed at integration with the parent company and other LG businesses
worldwide. Within, the applications work in financial management, purchasing, manufacturing, sales, inventory
management, and HRM.
Sources: ‘Project CIS Casts a Golden Eye on LGEIL,’Express Computer (11 October, 2004); ‘LG Electronics selects
Oracle e-biz suite,’The Hindu Business Line (3 May, 2005);‘Trading Places,’The Economic Times(16 May, 2007);
LG Electronics India website at http://www.lg.com/in/and LG Global website at http://www.lg.com/global/about-lg.
Retrieved 7 November, 2014.

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Exhibit 13.13 Operational Implementation Plays a Key Role in Achieving Effectiveness

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Exhibit 13.14 The 4-Ps of Operational Effectiveness

Productivity Processes

Operational
effectivness

People Pace

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the corporate- and business-level strategies. Functional
strategies deals with a relatively restricted plan providing
objectives for a specific function, allocation of resources
among different operations within that functional area
and coordination between them for optimal contribution
to the achievement of the organisational objectives. Func-
tional strategies are derived from business and corporate
strategies and are implemented through functional and
operational implementation.
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Exhibit 14.1 How do Strategic Control and Operational Control Differ?

Attribute Strategic control Operational control
1. Basic question ‘Are we moving in the right direction’? ‘How are we performing’?
2. Aim Proactive, continuous questioning of Allocation and use of organisational
the basic direction of strategy resources
3. Main concern ‘Steering’ the organisation’s future Action control
direction
4. Focus External environment Internal organisation
5. Time horizon Long-term Short-term
6. Exercise of control Exclusively by top management, may be Mainly by executive or middle-level
through lower-level support management on the direction of the top
management
7. Main techniques Environmental scanning, information Budgets, schedules, and MBO
gathering, questioning and review
Source: Based on J.A. Pearce III and R.B. Robinson, Jr., Strategic Management: Strategy Formulation and Implementa-
tion, 3rd ed. (Homewood, Ill.: Richard D. Irwin, 1988): 404–19.
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Exhibit 14.2 The Evaluation Process for Operational Control

Strategy/ Setting Measurement

Actual
plan/ standards of of
performance
objectives performance performance
Check performance
Check standards
Reformulate

Analysing
variance

Feedback

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Exhibit 14.3 Some Illustrative Performance Indicators in Functional Areas Across Different Corporate-
Level Strategies

Corporate-level strategies
Functional area Stability Expansion Retrenchment
Focus of evaluation Efficiency-oriented Growth-oriented Cost reduction-oriented
Financial area Profitability and activity ra- Leverage ratios; credit rat- Liquidity and activity ratios
tios; dividend and earnings ings; break-even point
per share
Marketing area Sales revenues and quotas; Sales growth (current sales Marketing costs divided by
sales force productivity; ac- to base year’s sale); new ac- sales; marketing costs divid-
counts receivable divided counts opened per year; ed by orders; sales expenses
by sales; number of custom- new product’s sales divided divided by total number of
er complaints by total sales sales calls
Operations area Productivity (e.g. man Growth in assets; produc- Production costs divided by
hours per production unit); tion contribution divided sales; inventory as percent-
capacity utilisation; invest- by production assets age of sales or production;
ment in R & D as compared scrap, reject, or waste per-
to revenue; average lead centage
time for purchase
Personnel area Number of man days lost Training costs divided by Personnel costs divided by
divided by number of man average number of em- average number of employ-
days worked; productiv- ployees; recruitment costs ees; separation costs versus
ity rate of company versus divided by average number total costs; retraining costs
industry average; employ- of recruits; overtime costs divided by average number
ees’ suggestions received, versus total labour costs; of employees
percentage accepted, and bonus payments versus to-
implemented tal labour costs
Information man- Utilisation of systems re- Growth in hardware/ IT costs per employee; main-
agement area sources per unit time; data software assets; index of tenance costs divided by to-
error frequency end-user satisfaction; total tal IT investment
demand for application
programmes per unit time
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Exhibit 14.4 Parameters for Ranking the Top Companies in India

Ranking is big business globally. Most big names in the global publishing industry come out with annual rank-
ing of companies, universities, business schools, and so on. Several business magazines and websites and several
consultancy organisations rank top companies in India too. The bases used for ranking vary depending on the
nature of business magazine or website. When done on the basis of objective data such as published figures of
revenue, the rankings present a true picture of the standing of companies while survey-based rankings are per-
ceptual in nature and present a subjective view of the participants of the survey.
Fortune ranks global companies on the basis of total annual revenue. Indian Oil Corporation (IOC), Reliance
Industries Ltd. (RIL), and Bharat Petroleum Corporation Ltd. (BPCL) are the top three ranks in 2014 among the
eight companies from India. Forbes’ annual list of the world’s 2000 largest and most powerful public companies
had 54 Indian companies in its 2014 listing among them RIL, State Bank of India (SBI), and Oil and Natural
Gas Corporation (ONGC) being the top three. The magazine does ranking on the basis of four metrics of sales,
profit, assets, and market value.
Economic Times-500 ranking is based on total annual income or revenue. The 2014 ranking places IOC, RIL,
and BPCL at the first three ranks. Business Today ranks most valuable private companies in India to determine the
list of BT 500 on the basis of market capitalisation. Tata Consultancy Services (TCS), RIL, and Indian Tobacco
Company (ITC) were ranked the top three in 2013.
Business World ranks the fastest growing companies in India on the basis of the average of the last 4 year’s
year-on-year growth in net sales. The magazine creates categories such as super heavyweight companies of net
sales over Rs. 50,000 crore, heavyweight from Rs. 10,000 through 49,999 crore, middleweight from Rs. 5,000
through 9,999 crore, welterweight from Rs. 1,000 to 4,999 crore, and the featherweight from Rs. 100 crore to
999 crore. It then ranks the fastest growing companies in each of these categories.
Besides the objective ranking based on published data, the media also ranks companies on the basis of sub-
jective assessment such as being perceived as the best employer or as the most marketing savvy company. Such
rankings present an interesting picture of a sector or industry such as airlines or hotels where the companies in
those industries may compare themselves to their peers. On the part of companies, if they appear in the rankings,
it gives them a talking point and they can make claims of superior performance on the basis of their high rank-
ings. Critics allege that some media organisations are in the ‘business of ranking businesses’ and their rankings
do not carry much significance or could even be challenged on the basis of statistical analyses. There are also
 ^ƚƌĂƚĞŐŝĐǀĂůƵĂƟŽŶĂŶĚŽŶƚƌŽů൰

some serious allegations that rankings are based on the whether or not companies buy advertisement space on
the magazines or websites that publish those rankings.
For the purpose of strategic evaluation and control, rankings offer some insights into the parameters the
magazines use to rank companies that the company themselves could use to benchmark their performance
against peers in the country, sector, or industry.
Source: ‘Global 500 2014’ at http://fortune.com/global500/; ‘India Home to 54 of World’s Largest, Most Powerful
Public Companies: Forbes Magazine,’ The Times of India (8 May, 2014) at http://timesofindia.indiatimes.com/business/
india-business/India-home-to-54-of-worlds-largest-most-powerful-public-companies-Forbes-magazine/articleshow/34824059.
cms; ‘ET 500: Methodology of Arriving at the Ranking,’ The Economic Times (16 September, 2014) at http://
economictimes.indiatimes.com/markets/stocks/news/et-500-methodology-of-arriving-at-the-ranking/articleshow/42537441.
cms; ‘BT 500: India’s Most Valuable Companies,’ at http://businesstoday.intoday.in/bt500/summary-ranking.jsp; ‘Fast-
est Growing Companies,’ Business World (30 July, 2014) athttp://www.businessworld.in/news/business/corporate/rank-
ings/1456839/page-1.html#sthash.rq8ysnQv.dpuf; INSEAD provides a number of company ranking listings around the
world at http://www.insead.edu/library/rankings/companies.cfm; For criticism of rankings see, for instance, the allega-
tion that the website Yelp manipulates rankings at http://www.kcrw.com/news-culture/shows/press-play-with-madeleine-
brand/remembering-joan-rivers-and-breaking-up-with-football; All websites retrieved December 27, 2014.

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Exhibit 14.5 Sample variance chart for performance evaluation

Performance indicator Standard Actual Deviation

Financial area:
- Profit over sales (%) 12 10 -2
- Dividend (%) 10 10 0
Marketing area:
- Sales revenue (Rs. in millions) 25 23 -2
- Number of customers complaints (’00) 1.5 1.3 + 0.2
Operations area:
- Capacity utilisation (%) 85 90 +5
- Man hours per unit 4 3.5 + 0.5
Personnel area:
- Training costs over average number of employees (‘000) 20 15 +5
- Employees’ suggestions implemented over number received (%) 60 50 - 10
Information management area:
- Utilisation of system resources (%) 90 70 - 20
- Maintenance costs as per cent of IT investments (%) 15 20 -5

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Exhibit 14.6 Operational Control of Central Public Enterprises in India

The Government of India is the owner of 245 central public sector enterprises (CPSEs). Basically, the CPSEs are
accountable to the Parliament, and through audit and annual reports. Administrative or controlling ministries,
committees on Public Undertakings, Bureau of Public Enterprises (BPE), and the Comptroller and Auditor
General of India (CAG) are the main agencies concerned with the performance evaluation of CPSEs.
In 1987–88, the Government of India introduced the system of MOUs for performance evaluation of CPSEs.
‘MOU is a freely negotiated agreement between the public enterprise and the administrative ministry. Under the
agreement the enterprises undertake to achieve the targets set in the agreement at the beginning of the year. The
MOU covers both financial performance as well as non-financial performance. Under this system performance
of the company is organised into five categories namely: excellent, very good, good, fair, and poor.’
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The objectives of the MOU system are to:

z Improve the performance of public enterprises by increasing autonomy and accountability of the manage-
ment.
z Remove the fuzziness in the goals and objectives the enterprise is to pursue through clearly laid down perfor-
mance targets at the beginning of the year in an MOU entered into between Chief Executive and Secretary
of the Administrative Ministry.
z Enable the evaluation of managerial performance through objective criteria and provide a mechanism to
reward good performance through performance incentives to stimulate improved performance.
Based on timeline that starts in October/November each year, the formulation of MOU takes place through
an elaborate process of consultations and negotiations between all the participants on the side of the enterprises
and the Government. The draft MOUs indicate the performance targets on a five-point scale as proposed by the
CPSE for the ensuing financial year for all crucial parameters like production, sales, profits, etc. Additionally, the
CPSEs are also expected to include dynamic parameters of significance for strengthening the future potential of
the enterprise, such as project implementation, R&D, human resource development (HRD), etc. Appropriate
weights are assigned to each of these parameters.
The measurement of performance is based on standards devised through the balanced scorecard approach
and includes both financial and non-financial parameters having equal weights of 50 per cent each. The non-
financial parameters are further divided into dynamic parameters (30 per cent), enterprise-specific parameters
(10 per cent), and sector-specific parameters (10 per cent).
Overall, the results of using MOUs as an evaluation system have been mixed with a bias towards its increasing
acceptability. The CPSEs have benefited by having higher operational autonomy. Several experts including CPSE
managers are critical of the system and feel that devolution of authority from the government to CPSEs does not
match the accountability expected.
Sources: Website of the Department of Public Enterprises, Government of India at http://dpe.nic.in/; MOU Guide-
lines for 2014-2015 available at http://www.dpemou.nic.in/MOUFiles/MoU2014-15.pdf. Both websites retrieved 8
November, 2014.

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Exhibit 1 Market Size (Historic and Forecast) for Beauty and Personal Care
Products in US$ Million

     

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Exhibit 2 Per Capita Consumption of Beauty and Personal Care Products in US$ Per Year

     

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Exhibit 4 Imports of Essential Oils and Resinoids, Perfumery, Cosmetic or Toilet Preparations

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Source: Department of Commerce, Export-Import Data Bank at http://www.commerce.nic.in/eidb/Icomcnt.asp. Last

retrieved February 11, 2015.

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Exhibit 5 An Illustrative Chart of the Variety of Cosmetics and Toiletries Products in India

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Source: Based on information available at http://www.indianindustry.com/cosmetics/. Last retrieved Febru-

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Exhibit 6 Segmentation of Cosmetics and Toiletries Market According to

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Source: http://www.moneycontrol.com/stocks/data-bank/standalone/personal-care.html. Last retrieved February 14, 2015.

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Exhibit 1 Cost Cutting Measures27

The competitive world corporate houses and businesses were struggling to maintain profits and healthy bottom
lines. The costs of production, fuel, raw material, and human resources were rising each year. These develop-
ments have prompted people to look for cost reduction ideas and methods.
Those who had opted for focused cost reduction strategies survived; those who could not manage perished.
During economic downturn, it became more important to make cost reduction programme a major initiative
in the industry. Companies were finding it difficult to retain people and were laying people off which was un-
precedented in the recent history of industrial recession. Companies had to develop their own cost reduction
programme for saving without cutting jobs.28
Economic slowdown and low spending by consumer had forced big bakery manufacturers to implement cost
reduction strategies in their plants and operations. They were ongoing rather than knee-jerk programmes. One
had to continuously strive for innovation, modification, or automation for savings in factory operations.
Substantial cost savings could be achieved in the following areas:
Procurement or Purchasing
Procurement involved acquiring products, services, and works from vendors or internal source. Sourcing was
the process of identifying, evaluating, and negotiating with suppliers and service providers. This included the
entire vendor selection process as well as contract management. It opened doors to a rich supply of raw materials,
facilities, and labours at lower prices, thus reducing costs and increasing competitiveness in markets around the
world. The presence of foreign-produced finished manufactures compels domestic industries to be innovative
and efficient, both of which are keys to profitability and longevity.
Raw material comprises around 60-65 per cent of the product cost. Hence savings in raw material purchase
can add on to profits. The main raw materials are flour, fat, sugar, additives. Apart from these, engineering items
and packaging materials are also required. Some of the cost-saving ideas include bulk buying, forward buying,
sales tax exemption, excise duty free procurement, reverse auction, imports or sourcing from across the globe.
Logistics
The cost of transportation both inbound and outbound was very high. Efficient logistics management in the
following areas definitely helped reduce cost:
• Freight or transport management
• Inventory management
• Warehouse design and location
• Type of transportation
Energy
Energy also contributed to the cost of manufacturing; hence reduction of cost of energy should be a priority
for manufacturers. Following are some ideas for reducing energy cost:
• Getting an energy audit done and implementing the auditors’ suggestions
• Saving fuel through energy efficient burners
• Saving power energy through energy-efficient motors
• Installing screw compressors
• Using alternate fuels by sourcing cheaper fuel like CNG, LPG, RFO, LDO, etc.
• Recovering heat from ovens
• Using FRP fans for cooling tower
Packaging
Packaging material was also a major factor in the cost of manufacturing; hence selection of packaging material
had to be done with care. Few ideas were:
• Reducing or modifying shape and size of the product
• Reducing packaging waste through thickness or gauge reduction
Automation to Increase Productivity and Reduce Manpower
 ĂƐĞϮ͗൯,ĂƌǀĞƐƚ'ŽůĚ͗ĞůŚŝ͛ƐEŽ͘ϭƌĞĂĚ൰

Automating bakery processes can result in substantial savings in cost. Areas where we can go for automation
are:
• Raw material and finished product handling and storage
• Adding radio frequency dryer to increase the oven productivity
• Automating packaging processes from feeding to cartoning and palletizing.
Outsourcing
Few of the processes—like sugar grinding, promotion, packaging and distribution—could be outsourced.

Exhibit 2 Factors Affecting Wheat Flour Prices in India

Production and consumption of wheat: India was the second largest producer of wheat in the world, averaging an
annual production of 65,856 TMT. On average, India consumed 65,283 TMT of wheat, and was ranked as the
second largest consumer of wheat in the world. India did not produce enough wheat to be self-sufficient. So,
to make up the difference, it imported.29 Therefore, when production was not sufficient and the demand was
more, prices would automatically rise.
Yield of wheat: It was the yield of wheat which was a deciding factor for the good production of wheat. How ef-
ficient would be the farm to produce maximum output of wheat with minimum input decided the overall wheat
production and finally the price. Generally, the yield of wheat had been fairly good in several regions, e.g., Punjab
and Uttar Pradesh, thereby controlling the wheat prices.
Seasonal variation: The monthly price of wheat flour usually went up in the rainy season because the demand of
wheat bran would go down due to green pastures available. The millers in this situation would increase the price
of wheat flour to recover the total cost of wheat.
Stock of wheat (procurement and minimum support prices): The government’s policy was to have a buffer stock of food
grains for emergency situation, and it procured wheat accordingly through the Food Corporation of India (FCI)
godowns. This not only increased the maintenance cost of the government but also created artificial shortage
in the open market. Again, when the government tried to dispose off the stock, the price was fixed in such a
way that the open market price was less than the FCI price. On the other side, India was unable to export wheat
because of poor quality and price difference in the world market. Thus the stock was spoiled in the godown. The
government was also selling that stock at higher prices to the exporters. That also discouraged the processing
industry leaving the stock in the godown. The government was thus not in a cozy situation: the stock was piling
up, the hoarding cost was going up, the quality was deteriorating. So, it had no other option but to sell it at a
price, which was affordable to the millers. That lowered the price of wheat flour in the country and it could be
exported at a competitive price.
Price of by-product of wheat: Out of wheat, maida30, atta31, bran32 and suji33 were made in the ratio of 55:15:25:5. To
recover the price of wheat purchased, the miller also depended on those by-products. If the price of by-products
like bran and atta went down, the price of flour went up.
Export-import of wheat: India was a significant importer of wheat prior to the 1990s. During the 1990s, India had
become a marginal importer and even an exporter on occasions. However, since India had a large demand, these
marginal quantities could often be significant for the world market. Wheat trade had been under government
control in the past, and the export import quantities reflected Government decisions over each year as well as
across the years in managing the supply, demand, stocks and the food prices in the country. If the production
was less than the consumption, India had to import.34
On average, India imported 990 TMT of wheat, and, for various reasons, exported an average of 767 TMT of
wheat. The ending stocks in India averaged 9,900 TMT, giving India the third largest ending stocks in the world.35
Effects of WTO: Under the WTO, the quantitative restrictions from wheat import and export were removed in
India. The trader would have greater freedom to trade the wheat and wheat products and hence the wheat mar-
ket would become more dynamic. Moreover, under the WTO regime, the provision of export subsidy had to be
 ^ƚƌĂƚĞŐŝĐDĂŶĂŐĞŵĞŶƚ

reduced as these kind of subsidies were very much present in the developed countries especially in the US and
EU, while in India and other developing countries, the export subsidy was already nominal or nil, so, we would
have advantage in wheat export. So, it was predicted that exports were going to increase in India and accordingly,
wheat price and wheat flour price might also go up.
Effect of El-Nino: El Nino was the local warming of surface water, which would take place in the entire equatorial
zone of central and eastern Pacific Ocean off the Peruvian coast and affect the atmospheric circulation world-
wide. It usually would peak around Christmas hence the name of the phenomenon El Nino which was the Spanish
name for Christ child.36 El Nino would occur every 4-5 years sometimes less (2-3 years) and sometimes more (8-11
years). If the temperature increased by 2 degrees in the equatorial region, it might cause serious damage to the
crops in that region. So, it was better to keep an eye on this event. This could decrease the total production in
several countries including the US and thus lead to the rise in the wheat price.
World wheat production and consumption: The world wheat production was very important for the price of wheat
and wheat flour. When the production of wheat in wheat producing nations fell, the prices automatically went
up and vice versa.
The world wheat production in the recent years has hovered between 560-580 million tonnes a year. The
biggest cultivators of wheat were EU-25, China, India, USA, Russia, Australia, Canada, Pakistan, Turkey, and
Argentina. EU-25, China, India and USA, the four largest producers account for around 58% of the total global
production. World wheat consumption was consistently growing with growth in population, as it was one of the
major staple foods across the world. The major consuming countries of wheat were EU, China, India, Russia,
USA, and Pakistan. Around 16–19% of the world wheat production was traded annually between countries.
The annual world trade in wheat was to the extent of 102-106 million tonnes. USA, Australia, Canada, EU-25,
and Argentina were the five largest exporters of wheat in the world. Major importing countries that topped in
the figures were China, Egypt, Japan, Brazil, and the European Union. Other importing nations were Mexico,
Indonesia, Algeria, Philippines, and Iraq. However, the import amount varied year to year depending upon the
domestic production.37

Exhibit 3 Bread Production Process

Bread Manufacturing Process
Process Bread was made with three basic ingredients: grain, water, and bakers’ yeast. The harvested grain was
ground according to the type of bread being made. All grains were composed of three parts: bran (the hard
outer layer), germ (the reproductive component), and endosperm (the soft inner core). All three parts were
ground together to make whole wheat and rye breads. To make wheat flour, the bran and the germ had to be
removed. Since bran and germ contained most of the nutrients in grain, the wheat flour was often “enriched”
with vitamins and minerals and some wheat flour was fortified with fibre and calcium.
The grains were ground in the grain mills and then sold in bulk to Harvest Gold which kept the grains in
storage sacks until they were ready to be used. In the baking factory, water and yeast were mixed with the flour
to make a dough. Additional ingredients such as salt, fat, sugar, honey, raisins, and nuts were also added in the
factory.
Raw materials used in bread manufacturing were flour, fat, sugar, salt, yeast, sodium stearoyl lactylate, smp
solution, bread improvers, ascorbic acid, potassium bromate, calcium propionate, acetic acid and other additives.
Plant and machinery required for bread were spiral mixers, silos, sifters, conveyors, bowls, dividers, hander up,
interproover, moulder, final proovers, baking ovens, depanners, cooling racks, cooling tunnels, slicers and seal-
ers, and plastic trays. Utilities like chilling plants, air compressors, boilers, and cold storage rooms were required
for different applications.
Mixing and Kneading the Dough
The sifted flour was poured into an industrial mixer. Temperature-controlled water was piped into the mixer.
This mixture was called “gluten” and gave bread its elasticity. A pre-measured amount of yeast was added. Yeast
 ĂƐĞϮ͗൯,ĂƌǀĞƐƚ'ŽůĚ͗ĞůŚŝ͛ƐEŽ͘ϭƌĞĂĚ൰

was actually a tiny organism which fed off the sugars in the grain and emitted carbon dioxide. The growth of
the yeast produced gas bubbles, which leavened the bread. Depending on the type of bread to be made, other
ingredients were also poured into the mixer.
The mixer was essentially an enclosed drum that rotated at speeds between 35 to 75 revolutions per minute.
Inside the drum, mechanical arms kneaded the dough to the desired consistency in a matter of seconds. Al-
though modern bread production was highly computerized, the ability of the mixing staff to judge the elasticity
and appearance of the dough was critical. Experienced personnel were able to determine the consistency by the
sound of the dough as it rolled around the mixer. The mixing process took about 12 minutes.
 ^ƚƌĂƚĞŐŝĐDĂŶĂŐĞŵĞŶƚ

Fermentation
Three methods were used to ferment the dough. In some plants, the high-speed machinery was designed to
manipulate the dough at a very high speed and with great force, which forced the yeast cells to rapidly multiply.
Fermentation could also be induced by the addition of chemical additives such as 1-cysteine (a naturally occur-
ring amino acid) and vitamin C. A certain portion of the bread was allowed to ferment naturally. In this instance,
the dough was placed in covered metal bowls and stored in a temperature-controlled room until it rose.

Mixing Mixing Dough Rounding up

ingredients 1 dough 2 dividing 3 4

Prooving Moulding Final prooving Baking

5 6 7 8

Depanning Packing
9 10

Mixing Ingredients 5-10 minutes

From Mixing Dough to Final Proover 15 minutes

Final Prooving 75 minutes

Baking 30 minutes

Cooling 60-90 minutes

Packing 15 minutes

Division and Gas Reproduction

After the dough fermented, it was loaded into a divider with rotating blades that cut the dough into pre-deter-
mined weights. A conveyer belt then moved the pieces of dough to a moulding machine. The moulding machine
shaped the dough into balls and dropped them onto a layered conveyer belt that was enclosed in a warm, humid
cabinet called a “prover.” The dough moved slowly through the prover so that it could “rest” and thus allow the
gas reproduction to progress.
Moulding and Baking
When the dough emerged from the prover, it was conveyed to a second moulding machine which re-shaped
the dough into loaves and dropped them into pans. The pans travelled to another prover that was set at a high
temperature and with a high level of humidity. Here the dough regained the elasticity lost during fermentation
and the resting period.
 ĂƐĞϮ͗൯,ĂƌǀĞƐƚ'ŽůĚ͗ĞůŚŝ͛ƐEŽ͘ϭƌĞĂĚ൰

From the prover, the pans entered a tunnel oven. The temperature and speed were carefully calculated so
that when the loaves emerged from the tunnel, they were completely baked and partially cooled. While inside
the tunnel, the loaves were mechanically dumped from the pans onto shelves. The baking and cooling process
lasted approximately 30 minutes.
Slicing and Packaging
The bread continued to cool as it moved from the oven to the slicing machine. Here vertical serrated blades
moved up and down at great speeds, slicing the bread into consistently sized pieces.
Eight metal plates held the slices together while picking up each loaf and passing it to the wrapping machine.
Preprinted plastic bags were mechanically slipped over each loaf. The bags were closed with wire twists or sealed
with heat.38

Exhibit 4 Food Safety and Standard Authority of India (FSSAI)39

Food Safety and Standard Authority of India (FSSAI) had been established under the Food Safety and Standards
Act, 2006 which consolidated various acts and orders that have hitherto handled food-related issues in various
Ministries and Departments. FSSAI had been created for laying down science-based standards for articles of
food and to regulate their manufacture, storage, distribution, sale and import to ensure availability of safe and
wholesome food for human consumption.
Highlights of the Food Safety and Standard Act, 2006
Various central Acts were repealed after commencement of FSS Act, 2006:
• Prevention of Food Adulteration Act, 1954
• Fruit Products Order, 1955,
• Meat Food Products Order, 1973,
• Vegetable Oil Products (Control) Order, 1947
• Edible Oils Packaging (Regulation) Order 1988,
• Solvent Extracted Oil,
• De-oiled Meal and Edible Flour (Control) Order, 1967
• Milk and Milk Products Order, 1992
The Act also aimed to establish a single reference point for all matters relating to food safety and standards,
by moving from multi-level, multi-departmental control to a single line of command. To this effect, the Act
established an independent statutory authority—the Food Safety and Standard Authority of India with its head
office at Delhi. The Food Safety and Standards Authority of India (FSSAI) and the State Food Safety Authorities
enforced various provisions of the Act.
Duties and Functions of the Authority
FSSAI had been mandated by the FSS Act, 2006 for performing the following functions:
• Framing of Regulations to lay down the Standards and guidelines in relation to articles of food and specifying
appropriate system of enforcing various standards thus notified.
• Laying down mechanisms and guidelines for accreditation of certification bodies engaged in certification of
food safety management system for food businesses.
• Laying down procedure and guidelines for accreditation of laboratories and notification of the accredited
laboratories.
• Providing scientific advice and technical support to Central Government and State Governments in the
matters of framing the policy and rules in areas which have a direct or indirect bearing of food safety and
nutrition.
• Collecting and collating date regarding food consumption, incidence and prevalence of biological risk,
contaminants in food, residues of various, contaminants in foods products, identification of emerging risks
and introduction of rapid alert system.
• Creating an information network across the country so that the public, consumers, Panchayats, etc., receive
rapid, reliable and objective information about food safety and issues of concern.
• Providing training programmes for persons who are involved or intend to get involved in food businesses.
 ^ƚƌĂƚĞŐŝĐDĂŶĂŐĞŵĞŶƚ

• Contributing to the development of international technical standards for food, sanitary and phyto-sanitary
standards.
• Promoting general awareness about food safety and food standards.
Bakery manufacturers needed to follow up with the Food Authority for labelling, adultrants, additives, and
their permissible levels, etc.

ANNEXURE Sample Advertisements

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If one has worked in an ad agency, he would know that creating a big idea is painfully slow. An unusual product
should have an unusual campaign. Every Friday, one can enjoy while reading ‘Just like Harvest Gold’ which is
not just another bread.
Ultimately, the idea was to make Harvest Gold a generic name for the premium quality bread. To make the
edible brand indelible, the Delhi ad-shop of Equus Advertising Company cooked up a high-value, high-impact
campaign which used a different nonsense verse each week, in half-Punjabi (Punjab is a state in North-West of
India and Punjabi is the language spoken there and very commonly spoken in Delhi too as it is the easiest lan-
guage to learn), half-English, to hook the consumer.
The last line always drives home the core concept: “Harvest Gold: Not Just Another Bread” and while the rhy-
mes have little reason, they do have tonnes of topical interest. Here is one sample:
“Election time is coming. There is obviously lot of stress. Political scene te twanu pata hai Bilkul disgusting mess,”40

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Exhibit 1 Salient Financial Highlights of the Jammu & Kashmir Bank for the Period
FY2010 through FY2014

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Figures in Rs. crore

Source: Annual Reports of J&K Bank

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Exhibit 2 Key Financial Ratios of J&K Bank for the Period FY 2010 through FY 2014

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Information available at the website of Education Department of the Government of Rajasthan at http://www.
rajliteracy.rajasthan.gov.in/administrative-structure.html. Retrieved Jan 5, 2015.

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Source: Information available at the website of Education Department of the Government of Rajasthan at http://
www.rajshiksha.gov.in/ Retrieved Jan 5, 2015 and DISE data.

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Exhibit 4 Grassroots Education Projects in India and in the State of Rajasthan

Sarva Shiksha Abhiyaan (SSA-lit. education for all campaign) SSA is Government of India’s flagship programme
for achievement of Universalization of Elementary Education (UEE) in a time bound manner, as mandated by
86th amendment to the Constitution of India making free and compulsory Education to the Children of 6-14
years age group, a Fundamental Right. SSA is being implemented in partnership with State Governments to cover
the entire country and address the needs of 192 million children in 1.1 million habitations. The programme
seeks to open new schools in those habitations which do not have schooling facilities and strengthen existing
school infrastructure through provision of additional class rooms, toilets, drinking water, maintenance grant
and school improvement grants.
District Primary Education Programme (DPEP) DPEP is based on the principle of ‘additionality’ and is structured
to fill in the existing gaps by providing inputs over and above the provisions made under Central and State sec-
tor schemes for primary education. The Centrally-Sponsored Scheme of District Primary Education Programme
(DPEP) was launched in 1994 as a major initiative to revitalize the primary education system and to achieve the
objective of universalisation of primary education.
Lok Jumbish Project (LJP – lit. people’s movement project)The project, supported by Lok Jumbish Parishad,
aims at: facilitating access to primary education by all children of 5 to 14 years age; retention of all the children
enrolled in schools; improvement in quality of education; improving gender equity through education; making
special efforts to link children belonging to disadvantaged communities with elementary education; and solicit-
ing people’s participation for universalisation of primary education
A Non-formal Education Programme has also been in existence since 1975 but has largely been unsuccessful.
The State has also constituted the Rajiv Gandhi Elementary Education and Literacy Mission to undertake prog-
ress in education in a focused and time-bound manner.
The Shiksha Karmi Project had significant overlaps with the Lok Jumbish and DPEP and now forms part of the
overall State strategy for universalisation of elementary education in India.
Right to Education Act (RTE) was implemented in Rajasthan in 2011, this act talks about free and compulsory
education to all children in the age group 6-14 years. Other areas covered under the RTE act in Rajasthan are
SMCs (School Management Committees) and SC/ST inclusion in the same, School development plan which
covers the estimates on class wise enrolment in schools and a 25% reservation for children from lower income
backgrounds into the private schools
Sources: SSA information available at http://ssa.nic.in/; Information on DPEP at http://www.archive.india.gov.in/
sectors/education/index.php?id=14; Lok Jumbish information available at http://www.cuts-international.org/CHD/Lok-
Jumbish-Project.htm; RTE Act information pertaining to Rajasthan available at http://righttoeducation.in/resources/
states/rajasthan. All websites retrieved Jan 5, 2005.

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Exhibit 5 Foreign Donor Agencies for the Shiksha Karmi Project

The Swedish Agency for International Development Cooperation (SIDA) is a global organisation with its main
office is at Stockholm in Sweden. It is a government agency under the Swedish Ministry for Foreign Affairs. Its
stated goal is to contribute to making it possible for poor people to improve their living conditions. Like other
Swedish government agencies, SIDA works independently within the framework laid down by the Swedish parlia-
ment and government. The SIDA’s annual report 2006 mentions that its total staff numbers approximately 900, of
whom 190 work in the field at missions and offices. The Swedish government provides the funding to the agency
and the parliament oversees its activities. To start with, during the first phase (1987-94) the expenditure was to
90% paid by SIDA and 10% by the Rajasthan Govt. However during the second phase (1994-98) the expenditure
was shared equally between SIDA and the government of Rajasthan. As the negotiations for the next phase of
the project were on, SIDA withdrew support for the project following the explosion of the nuclear tests by the
Government of India in May 1998. Later DFID agreed to support the third phase of the project.
The Department for International Development (DFID) is a part of the Government of the United Kingdom
that manages UK’s aid to poor countries and works to get rid of extreme poverty. It has its headquarters at Lon-
don and East Kilbride and 64 offices worldwide. It is headed by a cabinet minister. DFID has its India office at
Delhi. DFID has provided about £1045 million to India in bilateral aid over 2002-2007 and plans to provide £825
million in between 2008 and 2011. DFID supported the SKP in the third phase (1999-2003) on 50:50 bases with
the Government of Rajasthan.
Source: A look at the SKP and the donor agencies part of it (The Shiksha Karmi Project is covered in pages 75-76)
available at http://www.sida.se/contentassets/20962396887d4256b4856065c7480d67/rajasthan-shiksha-karmi-project.-
an-overall-appraisal---desk-study-commissioned-by-sida-emassy-of-sweden-new-dehli_623.pdf. Retrieved Jan 5, 2015

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Exhibit 6 Value Chain Framework in the Context of Institutions such as Shiksha Karmi Project
Primary activities

 Student body from the area Æ enrolment Æ curriculum

Æ instruction Æ learning output Æ evaluation/re-
evaluation Æ upgrade Æ enrolment in formal primary
education system
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teaching Æ evaluation and testing
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Æ performance evaluation Æ remuneration Æ
transfer/promotions Æ retirement Æ post-retirement

Enrolment
Infrastructure Attendance
Funding, School administration, headmaster/principal, parental Learning
involvement, physical assets – building, electricity, drinking Intangibles
water, partnerships

Human resource management

Support activities

Teacher recruitment and selection, remuneration, training,

performance evaluation, transfers and promotion, motivation,
incentives, reward systems

Procurement
Physical assets, consumables, etc

Technological development
Teaching methodology, equipments, computer support, etc.

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Exhibit 4 Profile of the Directors

Dr. Kh. Palin, CMD: Dr. Kh. Palin, Chairman cum Managing Director, completed his M.B.B.S. from (Regional
Institute of Medical Sciences (RIMS), Imphal in 1978 and he worked as a Registrar in casualty and general
surgery departments in RIMS. He passed MS (General surgery) from PGI Chandigarh in 1984 after which he
joined the Department of Plastic Surgery as a registrar. He completed his MCh. (Plastic Surgery) from PGI
Chandigarh again in 1992 after which he was promoted to the post of Assistant professor of plastic surgery in
1993. He resigned from RIMS as Assistant Professor of Plastic Surgery on 16 February 1996. He also underwent
training in micro vascular surgery, laparoscopic surgery, and ultrasonography. He brought the art of laparoscopic
surgery for the first time in Manipur in April 1996. He was awarded “NETV People’s Choice Award 2005” for his
contribution in the field of healthcare business in the North East region. He was included in the top 50 Smile
Train plastic surgeons of the world in 2007.
Dr. S. Jugindra, Director and Superintendent: Dr. Jugindra, Director officiating as Medical Superintendent of
SHRI passed his MBBS from Calicut University, Kerala in 1986. He did his MS in General Surgery from Calicut
Medical, College, Kerala in 1995 and later trained in laparoscopic surgery, endoscopy, and endourology.
Dr. Bonney Devi, Director Finance: Dr. Bonney Devi was the founder member of Shija Hospitals and wife of the
Managing Director, Dr. Kh. Palin. After obtaining her MBBS degree in 1986 from RIMS she joined the venture
by actively participating in the clinical practice and management. She is trained in Laparoscopic Surgery and
Ultrasonography.
Ms. Gayatri Devi, Human Resource: Ms. Gayatri Devi did her MA in Sociology from North East Hills University;
Shillong in 1984. She is the wife of Dr. Jugindra, the Medical Director of SHRI. She worked as a Counsellor in
Meghalaya State Social Welfare Advisory Board from 1986 to 1990. She was looking after Human Resource De-
velopment of SHRI since 1995.



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Exhibit 6 A Veritable Feast of Medical Technology at Shija Hospitals

There are several other areas of technology that SHRI has tried to excel at. These include Doppler Guided Haem-
orrhoidal Artery Ligation—the latest German technology for non-surgical treatment of piles, Endoscopy—both
diagnostic & therapeutic including ERCP, C-Arm for foreign body removal, ERCP, pacemaker placement, PCNL,
URS & advanced bone fracture management VITROS 250—fully automated biochemical analyzer which can per-
form 250 tests in one hour, VITROS – ECI—fully automated biochemical analyzer based on dry chemistry which
can detect HIV status during window period and early detection of HCV & HBV within one week of infection,
Colour fundus photography & Fundus fluorescien angiography machine of Carl Zeiss, Germany to document
changes in optic nerve fibre, Savoflurane Anaesthesia—ideal for general/paediatric surgery, blood pressure &
heart patients, HD (High Definition) Camera with LED Lightsource (Stryker, USA), highly advanced medical
video technology used in Minimal Access Surgery (MAS), Digital Colposcope with Cervical Cryotherapy machine
for diagnosis & treatment of cervical malignancy, Datex Ohmeda (Aspire View, USA)—state of the art anaesthesia
workstation machine, Holmium LASSER with flexible uretero-renoscope (KARL STORZ, Germany)—the most
advanced non cutting treatment technology for kidney and urinary tract stones, Allura FC Cath Lab. (Philips),
which is capable of handling awide range cardiac procedures including diagnostics, interventions, pacemaker
implantations and electrophysiology, Power Assisted Liposuction (MICROAIRE, USA) for transforming body
shape by removing excess or unwanted fat cells from the abdomen, waist, hips, buttocks. Thighs etc., Fractional
Carbon Dioxide LASER, one of the top 6 anti-aging breakthroughs of the century for rejuvenation, resurfacing,
reduction and removal of scars, pregnancy stretch marks, wrinkles, old age spots & blemishes, sun damaged skin,
facial pigmentation, LASER peel etc., CIRRUS HD, Optical Coherence Tomography, OCT-500 (Carl Zeiss), state
of the art 3D imaging technology for the diagnosis and management of glaucoma, retinal diseases, cataract and
corneal diseases, Nd:YAG Laser for laser peripheral iridotomy (treatment and prevention of acute glaucoma),
NBI (Narrow Band Imaging)—superior endoscopic technology for the early diagnosis of gastric cancer, Green
LASER for treatment of diabetic retinopathy, QS Nd: Yag Laser for tattoo & scar removal, EEG, EMG, NCV, VEP
to rule out neurophysiologic disorders.

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Exhibit 8 Mean IPD Patients Admission for the Period 2000-2008

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Mean of the IPD patients

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Exhibit 2 Classification of States in India into four Groups based on the different Levels of
Coverage of Water and Sanitation Infrastructure
High water, low toilets High water and toilets

Jammu and Kashmir

Arunachal Pradesh
Assam
Manipur Delhi
Meghalaya Punjab
Mizoram West Bengal
Nagaland
Sikkim
Tripura
Goa 85% HH
Kerala with
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Himachal Pradesh supply
Rajasthan Uttaranchal
Chhattisgarh Uttar Pradesh
Madhya Pradesh Bihar
Orissa Gujarat
Jharkhand Maharashtra
Andhra Pradesh
Karnataka
Tamil Nadu

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Appendix TWS specific information)

(1) Drinking Water Costs in a Water Shop Concept (TWS Example)
Below calculation was based on an estimated operation time of 12 hours per day which was equivalent to produc-
tion of 12000 litres/day. The Trunz Water Unit was connected to the municipal water and power network. Storage
tank, piping and taps were provided locally and were not included in the calculation.

Investment costs EUR 10,000.00

Annual amortisation (10 years) EUR 1,000.00
Interest rate 5 % EUR 250.00
Annual maintenance costs EUR 200.00
Total costs per year EUR 1,450.00
Total water production per year 360 x 12,000 litres = 4,320,000 litres
Costs for 1 litre EUR 0.00033
1 litre of bottled water in market EUR 0.30
Costs for 1 m3 EUR 0.33
Æ 1 litre of bottled water was equivalent to 1000 litres of clean drinking water provided by Trunz Water Systems.
Æ A promising business model
• A unique chance for local people who act as entrepreneurs
• Establish a successful small business or even a chain of water shops
• Possibility for finance support from banks, leasing companies
• Profitability secured—even for very low water prices
• Possible locations for water shops: basement of apartment buildings, shopping malls, shopping centres, large
food stores, tourist spots etc.
• In remote villages as central water station
(2) Existing Projects of TWS in India
A few projects were already successfully implemented in India by partnering with government, private sector
and NGOs.
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Punjab: CSR Project A CSR Project put in as first demonstration pilot project in Hoshiarpur with ultrafiltration
unit running uninterrupted on solar power generated excellent results. Replication was planned in multiple
villages for Water and Power with Punjab Government.
Uttar Pradesh: Partnering with a Private Company Two machines were being deployed in Unnao district of UP.
Water Shop concept being deployed in partnership with Eureka Forbes and World Vision. Ultrafiltration, reverse
osmosis and fluoride capturing systems technologies were employed and the project was funded by Elea Founda-
tion. Project was planned to be run in a commercially sustainable manner to ensure sustainability and further
replication through various investors. Cost of water was Rs. 10 for a 20 litre container to be delivered at home by
the water service provider (local entrepreneur).
Gujarat: Teaming up with the Government Decentralized pilot community water model along with Gujarat govern-
ment (WASSMO) was implemented in selected regions/villages that lacked access to Narmada Canal. Replica-
tion was planned in multiple villages for water and power once the above pilot was successfully implemented.
Ultrafiltration and reverse osmosis technology as required from the water test results were employed. Model had
the government buying the water on a long-term contract basis.
(3) TWS Experiences and Solution Concepts
TWS adopted variety of technical layouts for different projects implemented worldwide. The experiences of
TWS while implementing different solutions across the world reinforced its vision and reassured the validity of
the current strategy.
EXAMPLE Electrification and drinking water to the natives of Venezuela
The program “Sembrando Luz” started as part of the Venezuelan Presidents voting promise to provide drinking water and
solar energy to the indigenous people in remote areas of Venezuela. After an evaluation by the Venezuelan authorities, Trunz
Water Systems of Switzerland was appointed as supplier for water treatment and desalination equipment. Project target was to
successfully implement clean technology which works under harsh conditions and provides a long-term sustainable solution.
The project consisted of the following steps:
Step 1: Investigation of regional conditions and needs

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Step 2: Visit and inspection of every village involved in the program

The project co-ordination team visited every appointed village and verified together with the local authorities the specific on-site
conditions such as number of inhabitants, water source, installation conditions, etc.
Step 3: Signing of contract by each inhabitant
Before the project could move forward, all inhabitants had to agree to the installation of the new equipment and infrastructure.
Step 4: Evaluation and purchase of equipment (centrally organized through project management).
Step 5: Training of a team of local operators
Trunz Water Systems was responsible for central training of technicians and operators. The first two days were
spent in classes for theoretical know-how transfer. Following the theoretical training, all participants were edu-
cated on practical issues such as installation, maintenance, troubleshooting, etc.
Step 6: Education of children and parents
Education of local school children in order to increase awareness for water issues in the rural areas were also
performed by TWS.
Step 7: Installation of the TrunzWater Systems and Solar Systems. Depending on the local situation, construction work was
required to build a solar array structure, drill a borehole, install tanks etc.
Step 8: Service and maintenance program for the installed units.
Electrification and Drinking Water to the Natives of Venezuela: Concept Overview

Specific Project Challenges in Venezuela

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