1. What is strategy, need and purpose? Factors affecting strategic positioning of product or service.

2. Who are stakeholders? Expectations of stakeholders.

3.Roles of ethics and culture. Benefits of values and ethics to a company.

4. Define Competitive advantage with examples. Alternative approaches to achieve competitive

advantage and importance.

5.Define business changes and factors effecting business change.

6. what is leadership. traits of business leadership.

7. Strategy and people staff development.

8. What is project management. Basic purpose/forces of project management .

9.What is cost and management accountant and it's role.

10.Define strategy implementation. Describe financial implications of making strategic choices or

implementing strategic actions.

11. Case study

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EXTRA:-

1. What is corporate strategy and its type and importance?

2.Strategic Gap analysis and the reasons why company perform this.

3. SWOT Analysis

4. Strategic directions and it's types.

5. Organizational structure and it's types.

 CH-1
INTERNAL FACTORS AFFECTING BUSINESS
ENVIRONMENT:-

What are internal environmental factors?

Internal environmental factors can be defined as the tangible and intangible
factors that are under the direct control of the organization in question.
Internal factors are further grouped as weaknesses and strengths. When
you’re starting a business there are many internal factors that will be
weaknesses but as you gain your legs, they can be transformed into
strengths.

In broad terms, something that has a positive effect on the company’s brand,
growth trajectory, revenue, etc. is considered a strength. If it has a negative
effect on the company or doesn’t contribute to its growth then it’s
considered a weakness.

An example of a positive internal environmental factor would be a marketing

team that has all the resources to launch, evaluate, and optimize advertising
campaigns to acquire new customers.

An example of a negative internal factor would be standard operating

procedures that are inefficient or haven’t been updated in years.

The 11 types of internal environmental factors are:

1. Shareholders and owners

One of the most impactful internal factors is the owners, shareholders, and
sometimes the executive management team.

This group determines who gets hired and fired, the company culture, the
financial position of the organization, and everything in between. It’s also
difficult (and in some cases impossible) to change the owners, shareholders,
or executive team.

If you’re a member of this group, it’s important to be introspective and

deliberate with your policies and actions. If the wrong example is set, it can
impact the organization for a long time to come.

Travis Kalanick, the founder of Uber, was ousted after the culture he created
caused a number of scandals.

Darshan Somashekar, a serial entrepreneur who runs classic games and brain
training start-up Solitaired, explains that your management team is a critical
factor for success. “Companies are built from the top down. Your executive
management team sets the culture and tone for everyone else in the
company. If they can’t function well and make decisions together, it will have
widespread negative effects across your company. It’s no coincidence that
great companies have teams that can work effectively together.”

2. Employees
Employees are the company. They’re the place ideas come from, the ones
who execute plans, and handle emergencies as they happen.

When you have an organization that requires a large number of specialized

employees, this internal environmental factor begins to be more noticeable.

Google and Macdonald’s are both large corporations but the former needs
thousands of highly skilled workers while the latter doesn’t.

If half of the workforce of each company quit tomorrow, McDonald’s would

be able to bounce back faster because they utilize a lot of unskilled labour.
The same can’t be said for Google.

To make the most of this intrinsic factor, it’s necessary to create a great place
to work, constantly up skill your team, and have well-developed hiring
processes based on HR metrics and analytics.

3. Internal Processes
If a routine task is done differently by everyone then there may be an
inconsistent end product.

When processes are documented – especially for repetitive tasks – it

becomes easier to on board new staff as well as newly hired freelancers and
maintain product consistency. This can be for something as simple as
cleaning the office in the evening or as complex as launching a marketing
campaign.

When internal processes aren’t documented, it takes more time to execute

plans and arrive at the end goal. If you’ve not done so already, start
documenting every procedure in your organization – no matter how obvious
it seems to be.

Moreover, adopt the culture of having meetings with your team. A team with
good collaboration can bring exceptional results by discussing and
communicating different challenges and finding the best possible
solutions. To keep teams connected, businesses are using team chat
or business messaging apps where teams can communicate seamlessly.

4. Directors (board of directors)

In many organizations, the board of directors serves an oversight function
and helps with a long-term strategy. They can also call the executive team to
order if things go sideways.

In other organizations, the board of directors takes a more hands-on

approach. They’ll help find candidates, make introductions, occupy limited
positions within the company, etc.

Famous board members can also bring a sense of prestige to your

organization that you may not otherwise have.

Whatever approach works for you is fine. Keep in mind that board members
are often successful in their own right so don’t hesitate to lean on them when
the time comes.

5. Equipment
Equipment is one of the largest tangible assets organizations have/require.
For some, it’s the way they do business like construction companies that rely
on heavy equipment. They may lease a large amount of their equipment and
manage their leases with the right lease management software because it’s
expensive to buy outright or finance.

For other organizations like KY Leads, our equipment requirements are

negligible. All we need are laptops and we’re off to the races.

The way you manage the equipment you need can have a big impact on your
cash flow and efficiency.

6. Organization’s brand
The brand is an intangible asset that’s difficult to measure. That doesn’t mean
it’s not important. Coke is one of the largest and most recognizable brands
in the world and a large percentage of its valuation can be attributed to its
brand.

The same can be said for a company like Nike. If you’re a smaller
organization, you may feel like your brand is unimportant. That’s not true. It’s
the steps you take when your brand is in its infancy that can have the largest
impact. When it matters most, your brand will kick in and save the day (or
lose the day).

That’s not to say you can’t correct course if there’s a mistake but it will set
the tone for what’s to come. To understand the impact of your brand,
monitor mentions on social media, articles, forums, etc. and look at how
branded search volume is trending. Ask people how they heard about you
and what they think of your brand.

If it’s not in line with your goals, correct course.

7. Company culture
Company culture is a term that’s hard to pin down but people intuitively
understand. It encompasses your values but goes beyond them. You can
think of it as the way people in your organization behave and handle certain
situations.

For example, if a company turns the other way when people do insider
trading, it will be seen as acceptable behaviour. A culture will grow that
accommodates and, eventually, encourages it.

Uber is a good example of what toxic culture can cause. The scandals that
pushed the Founder out were a direct result of the culture that was fostered
there.

In contrast, Zappos has a culture of service to its customers and it’s embodied
in everything they do. It’s part of the reason why it was sold to Amazon for
$1 billion.

A strong positive culture will help you grow your brand more quickly. A
culture that’s not actively fostered may have a major negative impact on your
business.

8. Company finance
Finances are an intrinsic factor that many people are aware of. It determines
the kind of investments you can make, who and how you can hire, the ability
to launch marketing campaigns, and so on.
There are many avenues of finance for an organization. Some businesses take
investor funding, others establish lines of credit, while others use their
revenue to grow.

In internal environmental factors, securing the right financing options is

pivotal in the business landscape.

The range of financing options profoundly influences a business’s capacity

for growth, resilience in economic turbulence, and ability to invest in new
technologies or personnel. Therefore, choosing the right financing strategy
isn’t just about obtaining funds—it’s about aligning with partners and
approaches that support your business’s goals and future growth. However
the financing is secured, it’s essential that there’s enough of it to launch
initiatives that’ll help you hit your business goals.

9. Policies, procedures, and plans

These are separate but can be lumped together because they’re so closely
related. The policies you adopt will serve as the framework for how people
behave in specific situations.

For example, you may have a policy around email marketing that all emails
should be friendly, insightful, and have a CTA.

The procedure for creating the email would be:

1. Log into our email marketing service

2. Click create a new campaign
3. Create a subject line for the email
4. etc.

Plans would be the specific steps you take to get to a goal.

Your policies, procedures, and plans work hand in hand to achieve specific
outcomes. Coupled with the owners and culture, these are some of the most
important internal environmental factors that’ll impact your business’
success.

10. Intellectual property

Intellectual property (IP) is an important factor to consider and take
advantage of. The largest companies in the world have countless pieces of IP
and will go to court to protect it.

Many people have tried to steal IP and have succeeded through nefarious
means. While this isn’t a conversation about how to enhance your digital
privacy and security, it’s important to take it into consideration.

I digress.

Google has a number of patents around search engine optimization.

Organizations have created and patented methodologies that they use in
their consulting practices. There are trademarks like Weight Watchers that
only specific organizations can profit from.

The list goes on.

Your IP is a clear competitive advantage but no one will protect it but you. If
you have IP that you haven’t taken the time to protect, do it now. You may
be pleasantly surprised at how important (and profitable) it may become.

11. Technology developed in house

Technology has been a competitive advantage since man developed large-
scale civilizations. Roman armies would invade nations and build roads to
secure their supply lines. Banking empires were built using cutting-edge
information dissemination techniques.

Technology developed in-house can take on a life of its own and become
another revenue stream for you. Visme developed Respona and now sells it
to customers. The digital agency 37Signals developed basecamp which
eventually replaced the agency altogether.

EXTERNAL FACTORS AFFECTING BUSINESS

ENVIRONMENT:-

What are External Environment Factors?

External environment factors are elements that are outside of the company’s
internal environment and they could impact its operations. The external
forces could either present challenges in your existing operations or help
your business. The business managers have to track various outer
environmental factors in order to identify and resolve issues and make
relevant changes accordingly.

Importance of External Environment for a

Business
The external environmental factors play a significant role in terms of directly
and indirectly impacting the company’s revenue stream and business
operations. The consistent changes brought by the external environment are
way beyond the control of the company. The executives and business
managers would track these changes and minimize their impact.

When you keep on evaluating the dynamic external factors, then it would
allow you to minimize the impact of unexpected changes and protect
yourself against predictable events.

10 Types of External Environment Factors

Some of the ten types of external environmental factors are as follows;

Political Factors
Every new political party comes to the government with its new policies and
gets rid of old policies, and their change in policies would impact relevant
businesses and companies. With the inconsistencies in the political
environment of the country, businesses and companies have to pay heed to
the legislation and the upcoming bills in order to prepare themselves for the
potential changes. Some of the policies that could influence the business are
as follows;
 Intellect Property Rights
 Import Restrictions
 Competition Regulations
 Employment Laws
 Tariffs
 Taxation
The political regulations have a great impact on the company’s operations,
and the business has to comply with the new legislation in order to keep
things going.

Economic Factors
The economic factors play a significant role in terms of impacting our daily
life to the growth of the company. When the country’s economy is in
recession, then the unemployment rate would be higher. Companies have to
work extra hard in order to retain their workforce and make changes in order
to maintain their revenue stream. If the company is in the business of
manufacturing retail products, then it has to decrease its prices to amplify
the sale to maintain its profitability.

Social Factors
When people live together in a society, then their social status and personal
choices would influence their purchase decision in terms of what and where
they should buy. While developing the product/service, companies keep in
mind various social factors because various social issues, events, and
movements impact their decision.
For instance, a feminist organization that endorses the women’s cause and
movement would earn the trust and loyalty to the women’s customer
market. When you’re targeting a specific segment of the market, then you
should keep in mind their preference and potential influences on them in
recent years. You can use such factors for your business growth and satisfy
the needs of customers.

Technological Factors
Technological developments are making significant changes in every
industry, and companies need to adopt technology to gain a competitive
edge in the market. For instance, a GPS manufacturing company for the
vehicle would have to face decreasing sales because of the integration of
mobile devices with GPS. But it can deal with this challenge by launching new
integrated products.
Healthcare companies should come up with the latest methods and
techniques in terms of gathering information from the patients. The patient
record and care system should be in alignment.
Legal Factors
Legal factors comprise the law of the country impacting the company that
how it should operate its business and behaviour of customers. Some of the
main areas that fall under its category are the viability of the certain product
in certain markets, profit margin, and product transportation.
When it comes to the sale of sharp objects, drugs, and others; the legal
factors help you to decide whether the company should offer it or not. Some
main laws that fall under its category are as follows;

 Import and Export Laws

 The legality of Pyramid Scheme
 Fraud Law
 Employment Law
 Health and Safety Laws
 Copyrights Laws
 Discrimination Laws
 Consumer Laws

Demographic Factors
Many companies conduct a demographic analysis to evaluate their target
market to make sure whether it’s meeting their needs or not. It allows them
to understand their target market and find ways to serve customers better.
The demographic could impact your business process and decision. It
comprises of following elements;
 Education level
 Income
 Occupation
 Marital Status
 Belief System
 Nationality
 Race
 Gender
 Age
Many telecom companies became operational in the 1990s, and their target
market is young professionals that are succeeding in their lives. Nowadays,
people from various backgrounds all use mobile devices daily. That’s why
telecom companies have been modifying the products/services in terms of
features and using various marketing approaches to target them.

Ethical Factors
Different people have different concepts of morality and ethics, and it has
become challenging for companies to maintain a balance between staff
expectation and their personal lives. It’s the responsibility of the company’s
sales staff to avoid such activities that would have a negative impact on the
company. The managers should address workplace ethical issues like
harassment and sharing the company’s confidential information and take
disciplinary actions against them.

Natural Factors
The customer market has cautious about the planet earth and the impact of
businesses practices on the natural environment. Some customers support
such companies that promote eco-friendly practices and products. The
conscious choice of eco-friendly products has created a lot of opportunities
and challenges for businesses. The goal is to amplify revenue, retain
customers, and protect the environment.

Global Factors
If the company is launching its product in the international market, then it
should keep in mind various global and local issues. The company should
keep on analysing the economic status, consumer trends, cultural norms, and
social issues; and offer training to deal with such issues. It allows them to
develop such products that would meet their needs and requirements.

Competitive Factors
Companies could amplify their market share and profitability if they keep on
tracking the market trends and competitors. It would allow them to
recognize the challenges and find ways to deal with them in order to deal
with loss.

What Is Strategic Management?

Strategic management is the management of an organization’s resources to
achieve its goals and objectives.
Strategic management involves setting objectives, analysing the competitive
environment, analysing the internal organization, evaluating strategies, and
ensuring that management rolls out the strategies across the organization.

KEY TAKEAWAYS

 Companies, universities, non-profits, and other organizations can use

strategic management as a way to make goals and meet objectives.
 Flexible companies may find it easier to make changes to their
structure and plans, while inflexible companies may chafe at a
changing environment.
 A strategic manager may oversee strategic management plans and
devise ways for organizations to meet their benchmark goals.

Understanding Strategic Management

Strategic management is divided into several schools of thought. A
prescriptive approach to strategic management outlines how strategies
should be developed, while a descriptive approach focuses on how
strategies should be put into practice. These schools differ on whether
strategies are developed through an analytic process, in which all threats
and opportunities are accounted for, or are more like general guiding
principles to be applied.

Business culture, the skills and competencies of employees,

and organizational structure are all important factors that influence how an
organization can achieve its stated objectives. Inflexible companies may find
it difficult to succeed in a changing business environment. Creating a barrier
between the development of strategies and their implementation can make
it difficult for managers to determine whether objectives have been
efficiently met.

While an organization’s upper management is ultimately responsible for

its strategy, the strategies are often sparked by actions and ideas from
lower-level managers and employees. An organization may have several
employees devoted to strategy, rather than relying solely on the chief
executive officer (CEO) for guidance.

Because of this reality, organizational leaders focus on learning from past

strategies and examining the environment at large. The collective
knowledge is then used to develop future strategies and to guide the
behaviour of employees to ensure that the entire organization is moving
forward. For these reasons, effective strategic management requires both an
inward and outward perspective.

Strategic management extends to internal and external communication

practices as well as to tracking, which ensures that the company meets goals
as defined in its strategic management plan.

Strategic management offers the following benefits:

 It allows for identification, prioritization, and exploitation of opportunities.
 It provides an objective view of management problems.
 It represents a framework for improved coordination and control of activities.
 It minimizes the effects of adverse conditions and changes.
 It allows major decisions to better support established objectives.
 It allows more effective allocation of time and resources to identified opportunities.
 It allows fewer resources and less time to be devoted to correcting erroneous or ad hoc
decisions.
 It creates a framework for internal communication among personnel.
 It helps integrate the behaviour of individuals into a total effort.
 It provides a basis for clarifying individual responsibilities.
 It encourages forward thinking.
 It provides a cooperative, integrated, and enthusiastic approach to tackling problems and
opportunities.
 It encourages a favourable attitude toward change.
 It gives a degree of discipline and formality to the management of a business.

Benefits of Strategic Management

Strategic management is more a way of life. It’s a school of thought that
the best managers subscribe to. But why? Let’s look at why it’s
important to manage resources in a strategic, well-planned out way.

1. Improved decision-making: Strategic management provides a

framework for better decision-making by allowing leadership to
assess the potential impact of their decisions on the overall
strategic objectives of the organization.
2. Enhanced collaboration: Strategy management encourages
collaboration between departments and functions ensuring that
everyone is working toward the same goals and objectives.
 3. Better organizational performance: Strategy management also
helps organizations to focus on the areas that need improvement,
identify the best ways to achieve their goals and objectives, and
measure progress.
4. Effective resource allocation: Strategic management encourages
organizations to utilise their resources more efficiently by ensuring
that resources are allocated to the most important areas.
5. Increased customer satisfaction: Strategy management helps
organizations to better understand their customers and develop
strategies to meet their needs.

CH-2
Factors Affecting An Organization- Marketing
& The Value Of Goods And Services

Marketing plays a crucial role in shaping the success of an organization. The effectiveness of
marketing can be influenced by various factors, both internal and external. Here are a few key
factors:

o Market Research:
 Understanding the target audience and their needs is essential. Conducting thorough
market research helps in identifying potential customers, their preferences, and the
demand for specific goods or services.
o Competition:
The competitive landscape can impact how a company markets its products. Analyzing
competitors helps in positioning products effectively and differentiating them in the
market.
o Economic Factors:
Economic conditions, such as inflation, interest rates, and overall market stability, can affect
consumer spending. Organizations need to adapt their marketing strategies based on the
economic environment.
o Technological Trends:
Advancements in technology influence the way products are marketed. Companies need
to stay updated on technological trends to leverage new channels and tools for reaching
their target audience.
o Cultural and Social Factors:
Cultural and social trends can impact consumer behavior. Understanding cultural nuances
and social dynamics helps in crafting marketing messages that resonate with the target
audience.
o Regulatory Environment:
Legal and regulatory factors, such as advertising laws and industry-specific regulations, can
impact marketing strategies. Organizations need to ensure compliance with relevant laws.

o Internal Factors:
o 5Ms of Marketing: These are elements within the organization that define its atmosphere.
They include:
 Market: Understanding the target audience and their needs.
 Money: Financial resources available for marketing efforts.
 Manpower: The skilled workforce responsible for executing marketing strategies.
 Machinery: Technological infrastructure supporting marketing activities.
 Materials: Raw materials or components required for production and marketing.
o Organizational Culture: The shared values, beliefs, and practices that shape decision-
making within the company. The organization's internal strengths and weaknesses play a
role. Effective coordination between different departments, a strong brand image, and the
quality of products/services contribute to successful marketing.

o Consumer Behavior:
Understanding how consumers make decisions and what influences their choices is crucial.
Behavioral insights help in tailoring marketing strategies to align with consumer
preferences.
o Global Influences:
For organizations operating globally, factors like international market trends, geopolitical
situations, and currency fluctuations can significantly impact marketing strategies.
o Environmental and Ethical Concerns:
Increasingly, consumers are concerned about the environmental and ethical aspects of
products. Organizations need to align their marketing with sustainability and ethical
practices to meet consumer expectations.
o External Factors:
o Microenvironment (Task Environment):
1. Customers: Their preferences, behaviors, and demands.
2. Suppliers: Availability and reliability of suppliers.
3. Competitors: Rival companies influencing market dynamics.
4. Intermediaries: Distributors, retailers, and wholesalers.
5. Publics: Stakeholders like media, government, and interest groups.
 Macro environment (Broad Environment):
1. Economic Factors: GDP growth, inflation rates, and consumer spending
patterns. Economic factors play a huge role in terms of a company’s
prospects in a market. For example, economic factors affect pricing and can
even influence the supply/demand curve for a product or service. For
example, high inflation causes consumers to have less spending power,
which translates into lower sales and revenue. In 2022, consumers
experienced both product shortages and higher prices, blamed largely on
COVID-19, Russia’s war on Ukraine, and the availability of certain
commodities, such as corn, sunflower oil, and wheat.

2. Social and Cultural Factors: Values, lifestyle choices, and brand

perception. Where people live, their personal values and their
socioeconomic status affect what, where and why people make purchases.
Businesses take social factors into consideration when developing and
marketing products, and many use current events, movements and social
issues to appeal to their customers. For example, a company that supports
a women's organization may earn the trust and loyalty of customers who
identify as female. Catering to the specific preferences and expectations of
underrepresented groups, who have more influence on the market today
than in past years, can also contribute to customer satisfaction and business
growth.

3. Technological Factors: Innovations impacting product development and

distribution. These factors encompass the innovations and developments
in technology that impact an organization’s operations, as well as the rate
of technological change. For example, look at one simple technological
change with which we’ve all become comfortable in the public arena over
the past decade or so: free WiFi. Starbucks was able to take advantage of
this change and reposition its coffeehouses and differentiate itself from
competitors by offering free WiFi.

4. Political and Legal Factors: Government regulations affecting marketing

strategies. Government policies, regulations, and political stability can
significantly impact business operations and marketing activities.

Adapting to changes in legislation is essential for businesses to remain

compliant and maintain a positive brand reputation.
Example: The tobacco industry faces strict advertising regulations in many
countries due to health concerns related to smoking.
 As a result, tobacco companies have shifted their marketing efforts toward
tobacco harm-reduction products like e-cigarettes and smokeless tobacco.

5. Environmental Factors: Sustainability concerns and eco-friendly practices.

Climate, pollution, and sustainability play a role. Weather events can disrupt
operations, while pollution and sustainability concerns affect long-term
planning. The situation has become quite alarming in recent years when
pollution levels have risen to unmanageable proportion causing serious
damage to ozone layer – heating up the soil, water and air.
Thanks to environmental activists, many companies are now seriously
trying to come out with-

(a) Eco-friendly products,

(b) Modified processes,
(c) Redesigned production equipment and
(d) Recycled by-products. Steel companies have been forced to spend
heavily in cleaner – burning fuels and pollution control equipment.

The natural environment comprising of ecological, geographical and

topographical factors (such as natural resources, weather, climate, location
etc.) are all relevant to business.

6. Demographic Factors: Population trends and age groups. Companies with

successful products and services evaluate the demographics of their target
market to ensure they meet the needs of those who benefit from their
offerings. They also perform tests to measure how well they serve their
customers. This helps them understand if their target market has changed
and how they can develop better ways to serve their loyal customers and
earn new ones. Demographics that affect business decisions and processes
include:
1. Age
2. Gender
3. Race
4. Nationality
5. Belief system
6. Marital status
7. Occupation
8. Income
9. Level of education
For example, when mobile phone companies emerged in the 1990s, their
marketing efforts focused on young, successful professionals. Now, people
of all ages use mobile devices daily. Telecommunications companies have
adapted to this change by modifying the features of their products and
taking different approaches to advertising methods.

By considering these factors, organizations can develop more effective marketing strategies that
align with the dynamic nature of the market and consumer behaviour.
1. Marketing : how does it affects the organization.

Marketing plays a crucial role in shaping the success and overall functioning of an
organization. Here are 10 ways in which marketing affects an organization:

Marketing plays a crucial role in shaping the success and overall functioning of an
organization. Here are 10 ways in which marketing affects an organization:

1. Revenue Generation: Effective marketing strategies help in attracting

customers, driving sales, and ultimately increasing revenue for the
organization.
2. Brand Building: Marketing contributes significantly to building and
maintaining a strong brand image. A well-defined brand enhances customer
trust and loyalty.
3. Market Presence: Marketing activities increase the organization's visibility in
the market, helping it stand out among competitors and reach a broader
audience.
4. Customer Acquisition: Marketing efforts are instrumental in acquiring new
customers. Through advertising, promotions, and other strategies,
organizations can expand their customer base.
5. Customer Retention: Marketing is not only about acquiring new customers
but also about retaining existing ones. Customer-focused marketing strategies
help in building long-term relationships.
6. Competitive Advantage: Organizations use marketing to differentiate
themselves from competitors. Unique selling propositions and effective
communication can give a competitive edge.
7. Innovation and Product Development: Customer feedback gathered
through marketing channels can inform product development and innovation,
ensuring that the organization meets customer needs and stays ahead in the
market.
8. Market Research: Marketing involves continuous market research to
understand consumer behavior, preferences, and trends. This information is
invaluable for making informed business decisions.
9. Communication and Messaging: Marketing is the primary channel through
which organizations communicate with their audience. It shapes the messages
and narratives associated with products or services.
10. Financial Performance: The success of marketing campaigns directly impacts
financial performance. Well-executed marketing initiatives can lead to
 increased sales and market share, positively influencing the organization's
bottom line.

In summary, marketing is not just a department within an organization; it is a critical

function that influences various aspects of the business, from revenue generation to
brand perception and overall market competitiveness. Marketing is a multifaceted
function that influences various aspects of an organization, from financial outcomes
to brand perception, employee morale, and even social impact.

2. How does the value of goods and services affects

the organization?
The value of goods and services is a critical factor that permeates various aspects of an
organization, from its financial performance to customer relationships and market
positioning. Organizations must carefully consider and manage the perceived value they
offer to thrive in competitive markets.

1. Revenue Generation: The perceived value of goods and services directly

influences pricing, affecting the organization's ability to generate revenue.
Higher perceived value often allows for premium pricing strategies.
2. Competitive Positioning: Organizations can gain a competitive advantage by
offering superior value in terms of quality, features, or customer service. This
positioning helps attract and retain customers.
3. Customer Satisfaction: When goods and services provide high value,
customers are more likely to be satisfied with their purchases. This satisfaction
can lead to repeat business, positive reviews, and word-of-mouth referrals.
4. Brand Image: The perceived value of products or services contributes to the
overall brand image. Consistently delivering value helps build a positive and
reputable brand in the eyes of consumers.
5. Profit Margins: The value proposition influences the pricing strategy, which
in turn affects profit margins. Premium products or services with high
perceived value may support higher profit margins.
6. Customer Loyalty: Organizations offering high value build strong customer
loyalty. When customers believe they are getting value for their money, they
are more likely to remain loyal to the brand and resist switching to
competitors.
7. Market Positioning: The value of goods and services determines where an
organization positions itself in the market. Whether it's positioned as a
 budget-friendly option, a premium choice, or somewhere in between, this
affects the target market and competition.
8. Market Share: Providing better value than competitors can contribute to
gaining or expanding market share. Customers are more likely to choose an
organization that offers superior value for similar products or services.
9. Customer Perception: The value associated with goods and services shapes
how customers perceive the organization. Positive perceptions lead to trust
and confidence in the brand, while negative perceptions can harm reputation.
10. Innovation and Differentiation: Organizations that continuously innovate to
enhance the value of their offerings can differentiate themselves in the
market. This differentiation is crucial for staying ahead of competitors.
11. Customer Expectations: The value of goods and services sets customer
expectations. Organizations need to meet or exceed these expectations to
maintain customer satisfaction and avoid disappointment.
12. Cross-selling and Upselling Opportunities: A strong value proposition
creates opportunities for cross-selling and upselling additional products or
services, increasing the average transaction value.
13. Cost Structure: The perceived value affects the organization's cost structure,
as investments in quality, customer service, and innovation can impact
production or service delivery costs.
14. Market Demand: The value proposition influences the demand for goods and
services. High-value offerings can stimulate demand even in competitive
markets.
15. Long-Term Viability: Sustaining a competitive advantage through the
consistent delivery of high value contributes to the long-term viability and
success of the organization.

CH-3
THE INTERNAL RESOURCES,CAPABILITIES AND COMPETENCE
OF AN ORGANISATION :
Internal resources, capabilities, and competencies are key elements that contribute to
an organization's ability to achieve its goals and maintain a competitive advantage.
Here's a breakdown of each:

1. Internal Resources:
  Human Resources:
 Skilled and knowledgeable workforce.
 Experience and expertise of employees.
 Workforce diversity and talent.
 Physical Resources:
 Facilities, buildings, and infrastructure.
 Equipment, machinery, and technology.
 Raw materials and inventory.
 Financial Resources:
 Capital, including cash and financial reserves.
 Access to credit and financing options.
 Budgets and financial management systems.
 Intellectual Capital:
 Patents, trademarks, and intellectual property.
 Research and development capabilities.
 Knowledge management systems.
 Organizational Culture:
 Shared values and beliefs.
 Employee morale and motivation.
 Team dynamics and collaboration.
 Informational Resources:
 Data and information systems.
 Information technology infrastructure.
 Access to market intelligence.

2. Capabilities:

 Strategic Management:
 Ability to formulate and execute effective strategies.
 Strategic planning and vision.
 Adaptive strategic decision-making.
 Operational Excellence:
 Efficient and effective operational processes.
 Supply chain management.
 Quality control and continuous improvement.
 Innovation and Creativity:
 Research and development capabilities.
 Product and service innovation.
 Adaptability and a culture of creativity.
 Marketing and Branding:
 Brand management and marketing capabilities.
 Customer relationship management.
  Market research and segmentation.
 Human Capital Development:
 Training and development programs.
 Succession planning.
 Leadership development.
 Technological Integration:
 Adoption and integration of cutting-edge technologies.
 IT infrastructure and systems.
 Digital transformation capabilities.
 Customer Focus:
 Customer service and relationship management.
 Understanding customer needs and preferences.
 Customer feedback and responsiveness.
 Risk Management:
 Risk identification and mitigation strategies.
 Crisis management and resilience.
 Proactive risk-taking and risk aversion.

3. Competencies:

 Core Competencies:
 Distinctive capabilities that provide a competitive advantage.
 Unique skills or technologies.
 Core processes that set the organization apart.
 Dynamic Capabilities:
 Ability to adapt and respond to changes in the business environment.
 Flexibility and agility in strategy and operations.
 Innovation and learning capabilities.
 Collaboration and Partnerships:
 Relationship-building and networking capabilities.
 Strategic alliances and partnerships.
 Joint ventures and collaborative projects.
 Brand Equity:
 Positive brand perception and reputation.
 Brand loyalty and customer trust.
 Brand consistency and differentiation.
 Market Positioning:
 Ability to occupy a favorable position in the market.
 Competitive pricing and value proposition.
 Niche market expertise.
 Supply Chain Management:
 Efficient supply chain coordination.
  Vendor relationships and negotiations.
 Inventory management and logistics.
 Financial Management:
 Sound financial planning and management.
 Cost control and efficiency.
 Financial forecasting and risk management.
 Learning Organization:
 Continuous learning and adaptation.
 Knowledge sharing and dissemination.
 Openness to feedback and improvement.

These internal resources, capabilities, and competencies collectively form the

foundation for an organization's competitiveness, resilience, and ability to achieve its
strategic objectives. Organizations must continually assess and enhance these
internal elements to adapt to changing market conditions and sustain long-term
success.

WHAT ARE THE EXPECTATIONS OF STAKEHOLDERS WITH THE

INFLUENCE OF ETHICS AND CULTURE?

The expectations of stakeholders in a business are influenced by a

combination of ethics and culture. Stakeholders include individuals or
groups who have an interest or stake in the organization and can
significantly impact or be impacted by its activities. The ethical principles
and cultural values embraced by an organization play a crucial role in
shaping these expectations. Here are some common expectations of
stakeholders influenced by ethics and culture:

1. Shareholders/Investors: Shareholders and investors expect the business to

generate profitable returns on their investments. They look for sustained financial
growth, dividends, and a clear strategy for maximizing shareholder value.
Transparent communication regarding financial performance and future prospects is
crucial to maintaining their confidence and support.
2. Customers: Customers expect the business to deliver high-quality products or
services that meet or exceed their expectations. Additionally, they seek fair pricing,
excellent customer service, and a seamless buying experience. Building and
 maintaining a positive relationship with customers is vital for long-term success and
brand loyalty.
3. Employees: Employees expect fair compensation, competitive benefits, and a safe,
positive work environment. Opportunities for professional growth, skill development,
and a supportive corporate culture contribute to employee satisfaction. Businesses
that prioritize their workforce often see increased productivity and employee
retention.
4. Suppliers: Suppliers expect timely and fair payment for goods or services provided.
They also value ethical business practices and transparent communication. Building
strong relationships with suppliers can lead to better terms, reliable partnerships, and
a smoother supply chain.
5. Government and Regulatory Bodies: Adherence to laws and regulations is a
fundamental expectation from government and regulatory bodies. Businesses are
expected to comply with industry standards, promote corporate responsibility, and
contribute to societal well-being. Maintaining a good standing with regulatory
authorities is crucial for long-term sustainability.
6. Local Communities: Businesses are expected to engage in corporate social
responsibility, contributing to the well-being of the local community. This can involve
initiatives such as job creation, supporting local charities, and minimizing
environmental impact. Positive community relations can enhance a company's
reputation and strengthen its social license to operate.
7. Competitors: Fair competition and ethical business practices are expected from
competitors. Unfair practices can damage industry dynamics and reputation. While
healthy competition is encouraged, collaboration on industry-wide issues and
adherence to shared ethical standards contribute to a thriving business environment.
8. Innovation: Stakeholders, including customers and investors, often expect
businesses to invest in innovation. This involves staying ahead of market trends,
adopting new technologies, and continuously improving products or services.
Innovation fosters competitiveness and positions a business for long-term success.
9. Environmental Responsibility: Stakeholders increasingly expect businesses to
demonstrate environmental responsibility. This includes sustainable practices, eco-
friendly operations, and efforts to minimize the carbon footprint. Companies that
prioritize environmental sustainability contribute to global efforts and appeal to
environmentally conscious consumers.
10. Ethical Business Practices: Ethical behaviour is a fundamental expectation from all
stakeholders. This involves honesty, integrity, and fairness in all business dealings.
Upholding ethical standards builds trust among stakeholders and establishes a
positive corporate reputation.
11. Transparency: Transparency in communication is crucial for building trust with
stakeholders. Openly sharing information about financial performance, business
strategies, and potential challenges fosters a culture of trust and accountability.
12. Risk Management: Stakeholders expect businesses to have robust risk management
strategies. This involves identifying potential risks, implementing measures to
 mitigate them, and having contingency plans in place. Effectively managing risks
ensures the long-term stability of the business.
13. Corporate Governance: Sound corporate governance practices are expected to
ensure fair decision-making and accountability. This includes having a competent
board of directors, transparent financial reporting, and mechanisms to prevent
conflicts of interest.
14. Social Responsibility: Beyond legal requirements, stakeholders expect businesses to
engage in social responsibility initiatives. This can involve philanthropy, community
outreach programs, and a commitment to social causes that align with the values of
the business and its stakeholders.
15. Adaptability: In a dynamic business environment, stakeholders expect businesses to
be adaptable to change. This includes being responsive to market shifts, embracing
technological advancements, and adjusting strategies to navigate challenges
effectively. Businesses that demonstrate adaptability are better positioned for long-
term success in evolving markets.

In summary, the expectations of stakeholders are deeply influenced by the

ethical principles and cultural values embraced by an organization.
Organizations that prioritize ethical behavior and cultural sensitivity are
more likely to build trust, foster positive relationships, and meet the
expectations of a diverse range of stakeholders.

Ch - 4
The influence of corporate strategy on an organisation :
Corporate strategy is a guiding framework that shapes and influences the
overall direction, goals, and decisions of an organization. It serves as a
roadmap for achieving long-term objectives and navigating the competitive
landscape. The influence of corporate strategy on an organization is
comprehensive and touches various aspects of its structure, operations, and
performance. Here are key ways in which corporate strategy influences an
organization:

1. Vision and Mission:

  Influence: Corporate strategy defines the organization's vision
and mission, providing a sense of purpose and direction.
 Impact: Shapes organizational culture, values, and the
overarching goals that guide decision-making.
2. Goal Setting and Prioritization:
 Influence: Corporate strategy sets clear goals and priorities
aligned with the organization's vision.
 Impact: Guides resource allocation, focusing efforts on
strategic initiatives that contribute to long-term success.
3. Competitive Positioning:
 Influence: Defines how the organization positions itself in the
market relative to competitors.
 Impact: Informs product/service differentiation, pricing
strategies, and marketing efforts to gain a competitive
advantage.
4. Business Portfolio Management:
 Influence: Guides decisions regarding the composition and
management of the organization's business portfolio.
 Impact: Shapes the balance between existing and new
businesses, divestitures, and expansions into new markets or
industries.
5. Resource Allocation:
 Influence: Determines how resources, including financial,
human, and technological, are allocated across business units
and initiatives.
 Impact: Ensures that resources are directed toward strategic
priorities and high-potential opportunities.
6. Strategic Alliances and Partnerships:
 Influence: Informs decisions about collaboration and
partnerships with other organizations.
 Impact: Facilitates access to complementary resources,
technologies, or markets, enhancing the organization's
capabilities.
7. Innovation and Research and Development (R&D):
 Influence: Shapes the organization's approach to innovation
and R&D.
  Impact: Drives investment in new technologies, products, or
services to stay competitive and meet evolving customer needs.
8. Market Expansion and Diversification:
 Influence: Guides decisions on entering new markets or
diversifying product/service offerings.
 Impact: Expands the organization's reach, reduces risk through
diversification, and taps into new revenue streams.
9. Operational Efficiency and Process Improvement:
 Influence: Encourages a focus on operational efficiency and
continuous improvement.
 Impact: Drives initiatives to streamline processes, reduce costs,
and enhance overall organizational effectiveness.
10. Risk Management:
 Influence: Guides the organization's approach to risk,
including risk tolerance and risk mitigation strategies.
 Impact: Balances risk-taking with risk mitigation efforts to
safeguard the organization's long-term viability.
11. Organizational Structure and Design:
 Influence: Shapes the organizational structure and design to
support the execution of the corporate strategy.
 Impact: Ensures alignment between the structure and the
strategic goals, facilitating effective communication and
coordination.
12. Leadership Development:
 Influence: Drives the development of leadership capabilities
aligned with the strategic vision.
 Impact: Ensures that leadership qualities and skills are
cultivated to lead the organization toward its strategic
objectives.
13. Financial Management and Performance Metrics:
 Influence: Guides financial management practices and the
selection of key performance metrics.
 Impact: Ensures financial discipline, accountability, and the
measurement of success against strategic goals.
14. Brand and Reputation Management:
 Influence: Shapes decisions related to brand positioning and
reputation management.
  Impact: Builds a positive brand image aligned with the
strategic direction, enhancing customer loyalty and stakeholder
trust.
15. Crisis Preparedness:
 Influence: Informs strategies for crisis management and
preparedness.
 Impact: Ensures that the organization is resilient in the face of
challenges and can adapt to unexpected disruptions.

In summary, corporate strategy is a guiding force that influences nearly

every aspect of an organization. It provides a framework for decision-
making, aligns the organization's efforts with long-term goals, and enables
it to adapt to a dynamic business environment. The effective
implementation of a well-defined corporate strategy is essential for an
organization's sustained success and competitiveness.

ALTERNATIVE APPROACHES FOR ACHIEVING COMPETITIVE

ADVANTAGE :
Achieving competitive advantage is a central goal for businesses looking to
outperform competitors and thrive in the marketplace. Various approaches can be
employed to gain a competitive edge. Here are some traditional and widely
recognized strategies for achieving competitive advantage:

1. Cost Leadership:
 Approach: Becoming the low-cost producer in the industry.
 Impact: Cost leadership allows for competitive pricing, higher profit
margins, and the ability to withstand price competition.
2. Differentiation:
 Approach: Offering unique and distinctive products or services.
 Impact: Differentiation can lead to brand loyalty, premium pricing, and
reduced sensitivity to price changes.
3. Focus Strategy:
 Approach: Concentrating on a specific market segment or niche.
 Impact: Specialization allows for a deeper understanding of customer
needs, increased efficiency, and higher customer loyalty within the
target segment.
4. Innovation:
 Approach: Introducing new products, services, or processes.
  Impact: Innovation can lead to a competitive advantage by offering
something novel, more efficient, or technologically advanced.
5. Quality Leadership:
 Approach: Delivering superior quality products or services.
 Impact: High-quality offerings can lead to customer satisfaction,
loyalty, and positive word-of-mouth, contributing to a competitive
advantage.
6. Speed and Agility:
 Approach: Being faster and more responsive in delivering products or
services.
 Impact: Speed and agility enhance customer satisfaction, reduce time-
to-market, and allow for quicker adaptations to market changes.
7. Customer Focus:
 Approach: Prioritizing customer needs and providing excellent
customer service.
 Impact: Building strong customer relationships, understanding
preferences, and delivering exceptional service contribute to a
competitive advantage.
8. Strategic Alliances and Partnerships:
 Approach: Forming strategic collaborations with other businesses.
 Impact: Alliances can provide access to new markets, technologies, or
resources, enhancing overall competitiveness.
9. Brand Building:
 Approach: Developing a strong and recognizable brand.
 Impact: A strong brand can create positive perceptions, build trust, and
differentiate products or services in the market.
10. Supply Chain Optimization:
 Approach: Streamlining and optimizing the supply chain for efficiency.
 Impact: Efficient supply chain management reduces costs, improves
product availability, and enhances overall competitiveness.
11. Employee Talent and Skills:
 Approach: Attracting and retaining top talent, investing in employee
development.
 Impact: Skilled and motivated employees contribute to innovation,
operational excellence, and customer satisfaction.
12. Global Expansion:
 Approach: Expanding operations into international markets.
 Impact: Global expansion can lead to increased market share, access to
diverse customer bases, and economies of scale.
13. Economies of Scale:
 Approach: Achieving cost advantages through large-scale production.
  Impact: Larger production volumes can lead to lower average costs,
providing a competitive advantage.
14. Market Segmentation:
 Approach: Identifying and targeting specific market segments.
 Impact: Tailoring products or services to the unique needs of different
customer groups can enhance competitiveness.
15. Operational Excellence:
 Approach: Focusing on efficient and effective internal operations.
 Impact: Operational excellence leads to cost savings, improved
productivity, and higher overall performance.

It's important to note that these approaches are not mutually exclusive, and
organizations often use a combination of strategies to create a unique competitive
position. The effectiveness of a chosen strategy depends on the industry, market
conditions, and the organization's internal capabilities and resources. Continuous
assessment and adaptation of strategies are crucial to maintaining a sustainable
competitive advantage over time.

ALTERNATIVES DIRECTIONS AND METHODS OF DEVELOPMENT :

Organizations pursue various directions and methods of development to achieve

growth, sustainability, and success in a dynamic business environment. The specific
approach chosen depends on the organization's goals, industry, market conditions,
and internal capabilities. Here are alternative directions and methods of development
that organizations often consider:

1. Organic Growth:

 Description: Expanding the organization's operations and market presence

through internal initiatives.
 Methods:
 Product Development: Introducing new products or improving
existing ones.
 Market Penetration: Capturing a larger share of the existing market.
 Geographic Expansion: Entering new geographic markets.

2. Inorganic Growth:

 Description: Growing through external means, such as mergers, acquisitions,

or strategic partnerships.
 Methods:
  Mergers and Acquisitions (M&A): Acquiring or merging with other
companies to gain market share or access new capabilities.
 Strategic Alliances: Collaborating with other organizations for mutual
benefit.
 Joint Ventures: Forming partnerships to undertake specific projects or
ventures.

3. Diversification:

 Description: Expanding into new products, services, or industries.

 Methods:
 Related Diversification: Expanding into industries related to the
existing business.
 Unrelated Diversification: Entering industries with no direct
connection to the current business.

4. Digital Transformation:

 Description: Embracing technology to transform business processes,

products, and customer experiences.
 Methods:
 Automation: Implementing automated processes to enhance
efficiency.
 Data Analytics: Leveraging data for informed decision-making.
 Digital Products/Services: Introducing new digital offerings.

5. Franchising:

 Description: Allowing individuals or entities to operate under the

organization's brand and business model.
 Methods:
 Franchise Agreements: Granting the right to operate using the
organization's brand and systems.

6. Strategic Partnerships and Collaborations:

 Description: Forming alliances with other organizations to achieve shared

goals.
 Methods:
 Research and Development Collaborations: Partnering for joint
innovation.
 Distribution Partnerships: Collaborating for expanded market reach.
7. E-commerce and Online Expansion:

 Description: Expanding sales and operations through online channels.

 Methods:
 E-commerce Platforms: Selling products or services online.
 Digital Marketing: Leveraging online channels for marketing and
sales.

8. Sustainability Initiatives:

 Description: Incorporating environmentally and socially responsible practices.

 Methods:
 Green Product Development: Creating environmentally friendly
products.
 Corporate Social Responsibility (CSR): Engaging in initiatives that
benefit society.

9. Customer Experience Enhancement:

 Description: Improving the overall customer experience to drive loyalty and

retention.
 Methods:
 Personalization: Tailoring products and services to individual customer
preferences.
 Omni-Channel Strategies: Creating seamless experiences across
multiple channels.

CH-6
 PROJECT MANAGEMENT
Project Management is the application of specific knowledge, skills, methodologies, and
techniques aimed at achieving specific and measurable project goals, including, ultimately,
successful project completion. It differs from general “management” because project
management relates directly to the goals and time-bound objectives achieved within the
scope of a project itself, on a limited timeline, rather than an ongoing one.
Project management uses processes, skills, tools and knowledge to complete a planned
project and achieve its goals. It differs from general management because of the limited
scope of a project, concrete deadlines and specific deliverables.

A project exists temporarily and must balance the involved team members’ time and
usually the organization’s limited financial resources—a daunting task but one that can be
accomplished in a few deliberate steps that utilize special methods and tools. The goal of
project management is to help a team achieve a goal or solve a problem with a set
deadline. The project manager owns responsibility for the team hitting its deadline and
meeting the goal.

 STEPS OF PROJECT MANAGEMENT

Project management begins when a manager or team initiates a project. The five steps of
project management include:

1. The initiation phase. The project manager will assign—or ask for team members to
volunteer—to complete specific tasks. This is the start of a project. After defining the
goal at a broad level, the team will conduct a feasibility study to determine if the project
is worth pursuing. During the initiation stage, a business case is prepared, explaining
why the project should be launched.

2. The planning phase. The team agrees on a schedule with the client or among
themselves for the project. The team may also create a communication schedule with
 key stakeholders, determine the project’s standards and set a budget during this phase.
During the planning stage, a project manager works to identify the details of a project,
including its scope, time, and cost, how the project will be managed, what material and
human resources are needed, and how the team will achieve the project’s objectives.
The PM also identifies potential risks during the planning stage, crafting contingency
plans that address each one in case it does indeed surface.

3. The execution phase. This phase is where the work gets done. Employees may work
independently or as a team on tasks that were determined during the previous phases.
During the execution stage, the project, under the PM’s direction, performs the work
required to complete the project’s deliverables. Should any risk crop up, it’s wise to
initiate a response plan to curb or eliminate its impact on the project.

4. The monitoring phase. The project manager monitors each person or team’s progress
along the way to ensure the project is on track to meet the overall deadline and achieve
its goals. This phase often happens simultaneous to the execution phase. This stage
involves tracking and reviewing the project’s performance. In case there are any
variances from the original plan, the project needs to be brought back on track by
implementing corrective actions.

5. The closing phase. Finally, the project manager ensures the team completed the
project to the agreed-upon standards and communicates that the team completed the
project. During this stage, the project is complete and is formally closed by the PM.
They then hand the final product over to the customer. After storing the project
documentation and data, the team can reflect on the lessons learned during the
project.

 THE NATURE OF PROJECTS

1. Defined Objectives: Projects start with clear, specific goals. For instance, if the
project is to develop a new software application, the objective might be to launch
the application within a certain time frame, with specific features and functionality.

2. Temporary: Unlike ongoing business activities, projects have a set timeframe. Once
the project's objectives are achieved, it concludes. This temporary nature helps
focus efforts and resources.
3. Unique: Each project is like a fingerprint—distinctive. Even if you've done similar
projects before, there are always unique elements. A project to design two different
websites for different clients, for example, will have unique design preferences and
requirements.

4. Cross-Functional: Projects often involve people from different departments or

disciplines. In building a new product, you might need input from designers,
engineers, marketers, and finance professionals, creating a cross-functional
collaboration.

5. Resources: Successful projects require dedicated resources. These include time

(scheduling deadlines), money (budget), and skilled individuals (team members or
external experts).

6. Risks: Because projects involve uncertainty, there's a need to identify potential

risks. This could be anything from unexpected delays to changes in project scope.
Identifying and managing these risks helps keep the project on track.

7. Progressive Elaboration: Project plans are not set in stone. As the project
progresses, more details become clear. It's like unfolding a map; you refine plans
based on the evolving understanding of the project's requirements.

8. Interconnected Tasks: Projects are like a chain of activities. The completion of one
task triggers or enables the start of another. In building a house, pouring the
foundation is a prerequisite for erecting the walls.
9. Customer Satisfaction: Ultimately, projects aim to meet customer or stakeholder
needs. If you're developing a new product, success is delivering something that
satisfies the customer's expectations.

10. Monitoring and Control: Throughout the project, you're keeping an eye on things.
Monitoring progress, comparing it to the plan, and making adjustments as needed
to ensure the project stays on course.

BUSINESS CASE

 WHAT IS A BUSINESS CASE?

 A business case is a project management document that explains how the benefits
of a project overweigh its costs and why it should be executed. Business cases are
prepared during the project initiation phase and their purpose is to include all the
project’s objectives, costs and benefits to convince stakeholders of its value.

A business case is an important project document to prove to your client, customer

or stakeholder that the project proposal you’re pitching is a sound investment.
Below, we illustrate the steps to writing one that will sway them.

The need for a business case is that it collects the financial appraisal, proposal,
strategy and marketing plan in one document and offers a full look at how the
project will benefit the organization. Once your business case is approved by the
project stakeholders, you can begin the project planning phase.

A business case is developed during the early stages of a project and outlines the
why, what, how, and who necessary to decide if it is worthwhile continuing a
project. One of the first things you need to know when starting a new project are
the benefits of the proposed business change and how to communicate those
benefits to the business.

While the project proposal focuses on why you want a project, it will only contain
an outline of the project:

 Business Vision
 Business Need
 Expected Benefits
 Strategic Fit
 Products Produced
 Broad Estimates Of Time And Cost
 And Impact On The Organization

 HOW TO WRITE A BUSINESS CASE

o A business case (project blueprint) is a document created during the initiation of
the project but is referred throughout the project lifecycle.
o A strong business case helps in building confidence and gaining support of key
stakeholders.
o A business case also helps you track a project’s progress over time.
o A weak business case that is not aligned with strategy can lead to project failure.
You can organize the document down into four different sections. Here is more about the
steps to follow when putting together this document:

1. Create an Executive Summary

The first section of your business plan is the executive summary, and the goal is to provide
a synopsis of the entire document. It presents vital information about the project and
communicates the project's origins, motivations and functions. The summary is about a
paragraph long because you elaborate on the subjects mentioned in the paragraph in
designated sections further into the document.

2. Add a Financial Section

This section's function is to prepare a current financial status for those who approve
funding. You may write this in two parts:

 Financial appraisal: This is an unbiased evaluation of the profitability and financial

strength of the project, including ensuring it is affordable. The appraisal identifies
all financial implications and allows for a comparison of project costs and forecast
benefits.
 Sensitivity analysis: This addresses project risk by considering alternative outcomes
through measurement of the impact on a project's outcomes. Additionally, it
measures the assumptions of changing values where there is uncertainty.

3. Define the Project

The project definition section is usually the largest part of the document, and it
benefits the project sponsors, stakeholders and team members. Several parts make
up this section, including:

 Background information
Background information gives a precise document and project introduction. It
includes an overview of the reasons for developing the project. For example, you
may have thought of the project because of an arising challenge, an opportunity
within the business or a change of circumstances.

 Business objective
 The business objective describes why you are creating the project. The business
objective addresses the project's goals and requirements for overcoming any
challenges. Additionally, it discusses how the project supports the business
strategy.

 Benefits and limitations

The benefits and limitations section details the financial and non-financial benefits
of the project, and its purpose is to explain why the company requires the project.
This includes the project motivation and how these benefits may help accomplish
the project's goal. Be sure to include any limitations that may pose a potential risk
to the company and project.

 Option identification and selection

The option identification and selection section identifies the potential solutions to
the challenges. Often, problems may have multiple solutions, which means they
may require an options appraisal. The purpose is to research potential solutions
and recommend the right option. As the project progresses, you or the executive
leadership may reject options and shorten the list. Additionally, the list may contain
benchmark options of about three to five.

 Scope, impact and interdependencies

The scope, impact and interdependencies section describes the work necessary to
deliver the business objective. It also identifies how the project affects the business
functions. Detail what it includes and excludes in the project, comprising the vital
interdependencies with other projects.

 Outline plan
The outline plan is the project's schedules, timelines and tasks. It lists the
deliverables and includes project descriptions and accountabilities. Segment the
project into phases, with key decisions preceding each stage, similar to a timeline.

 Market assessment
The purpose of a market assessment is to provide a thorough business context
assessment. The market assessment section allows you to clarify the underlying
interests of the company. Include an analysis of where the market stands regarding
economic, sociological, technological, legal and environmental influences which
may affect the project's success.
  Risk assessment
A risk assessment summarizes the project's significant risks and opportunities and
how you plan to address them. Include potential risks that may arise during or
because of the project. Create a comprehensive list log to track the project's risks
and how you plan to manage them.

 Project approach
The project approach describes how you plan to execute the project. It also explains
how to make the project progress successfully. Detail the process, such as what the
work looks like and what it takes to accomplish it as the project moves forward.

 Purchasing strategy
The purchasing strategy is the last portion of the project definition section. It
intends to describe how to finance the project. The purchasing procedure also
defines the purchasing process for the project.

4. Detail your project organization plans

Project organization is often the last section of your document, and it describes
how you plan to organize the project. Often, you may split the organization into
two parts, such as:

 Project governance: Project governance describes how you plan to structure the
project. The structure explains the different levels of decision-making strategies to
advance the project, including the project's roles, responsibilities, tolerances and
standards.
 Progress reporting: The business document establishes how you track the progress
of your project by using progress reporting. Reports include how you update the
project board about the project's performance.
  MANAGING AND LEADING PROJECTS-PLANNING,
MONITORING AND CONTROLLING PROJECTS

Project planning or project management planning is the foundation and most important
stage of the project management life-cycle. The project planning activity sets the project
foundations by base-lining the project scope, schedule, quality standards, objectives, and
goals. Planning typically involves creating a document with all project information that
comprises the respective tasks, assignees, and areas of responsibility.

There are five phases in the project management process: initiation, planning, execution,
monitoring and controlling and closing. Project monitoring and controlling occur in
tandem with the execution phase in the project life cycle.

Project monitoring and control is a project management phase that’s dedicated to

measuring project performance and making sure that it adheres to what’s been set in the
project plan. Project managers will closely track the progress and performance of the
project, review project status, identify potential problems and implement corrective
actions when required to keep the project on schedule and within budget.
o PLANNING:

1. Define Objectives:
 Clearly articulate what the project aims to achieve.
 Establish measurable goals to track progress.

2. Scope Definition:
 Clearly outline what is included and excluded from the project scope.
 Prevent scope creep by setting boundaries early on.

3. Task Breakdown:
 Decompose the project into smaller, manageable tasks.
 Assign responsibilities for each task to specific team members.

4. Resource Planning:
 Identify the personnel, equipment, and materials needed.
 Allocate resources efficiently, considering team members' skills and availability.

5. Timeline:
 Develop a detailed project timeline with milestones.
 Consider dependencies between tasks to create a realistic schedule.

6. Risk Assessment:
 Identify potential risks that could impact the project.
 Develop risk mitigation strategies and contingency plans.

o MONITORING:

1. Progress Tracking:
 Regularly track the status of each task against the project timeline.
 Use project management tools to monitor progress in real-time.

2. Key Performance Indicators (KPIs):

 Establish KPIs that align with project objectives.
 Use KPIs to measure and assess project performance regularly.
 3. Communication:
 Foster open and transparent communication within the team.
 Conduct regular team meetings to discuss progress, challenges, and updates.

4. Quality Control:
 Implement processes to ensure that project deliverables meet quality standards.
 Conduct regular quality checks throughout the project lifecycle.

5. Adaptability:
 Stay flexible and be ready to adjust the project plan as needed.
 Regularly reassess risks and adjust strategies accordingly.

o CONTROLLING:

1. Issue Resolution:
 Quickly identify and address any issues or roadblocks.
 Collaborate with the team to find effective solutions.

2. Change Management:
 Implement changes systematically, considering their impact on the project scope,
timeline, and resources.
 Communicate changes to the team and stakeholders.

3. Budget Control:
 Monitor project expenses and ensure they align with the allocated budget.
 Implement cost-control measures when necessary.

4. Timeline Management:
 Take corrective actions if the project deviates from the planned timeline.
 Communicate revised timelines to the team and stakeholders.

5. Stakeholder Management:
 Keep stakeholders informed about project progress and any changes.
 Address stakeholder concerns and maintain positive relationships.

Successful project management involves a continuous and iterative process of planning,

monitoring, and controlling to ensure the project's success. It requires adaptability,
effective communication, and proactive problem-solving.
CONCLUDING A PROJECT :
The conclusion of a project in project management involves a series of
activities and processes that bring the project to a close in an organized
and controlled manner. The conclusion phase is critical for evaluating
project success, documenting lessons learned, and ensuring the transition
of project deliverables to the appropriate stakeholders. Here are key steps
in concluding a project:

1. Project Closeout Plan:

 Develop a project closeout plan that outlines the activities,
responsibilities, and timelines for the conclusion phase. This
plan should be established during the project planning stage.
2. Final Deliverables:
 Ensure that all project deliverables have been completed and
meet the predefined quality standards. This may involve
finalizing reports, documents, software, or any other tangible
outputs.
3. Customer Acceptance:
 Obtain formal acceptance from the customer or project
sponsor. This is a critical step to ensure that the project has met
the agreed-upon requirements and objectives.
4. Contractual Closure:
 If the project is conducted under a contractual agreement,
ensure that all contractual obligations have been fulfilled. This
may involve completing contractual documentation and
obtaining necessary signatures.
5. Resource Release:
 Release project resources, including team members,
equipment, and facilities. Ensure that all resources are
appropriately reassigned or released, and project team
members are notified of their transition.
6. Financial Closure:
 Finalize all financial aspects of the project, including budget
reconciliation, expense reporting, and closure of financial
accounts. Document any financial variances and ensure that all
bills and payments are settled.
7. Quality Assurance:
  Perform a final review of the project to ensure that quality
standards have been met. This may involve conducting a final
quality audit or review to identify any remaining issues.
8. Knowledge Transfer:
 Document and transfer project knowledge to relevant
stakeholders. This includes creating documentation, conducting
training sessions, and ensuring that information is accessible
for future reference.
9. Lessons Learned:
 Conduct a lessons learned session with the project team and
key stakeholders. Document successes, challenges, and areas
for improvement. This information is valuable for enhancing
future project management practices.
10. Project Closure Report:
 Prepare a project closure report that summarizes the project's
outcomes, including achievements, challenges, and lessons
learned. This report serves as a formal record of the project's
conclusion.
11. Stakeholder Communication:
 Communicate the project closure to all relevant stakeholders.
This includes team members, sponsors, clients, and any other
parties with an interest in the project's outcome.
12. Archiving and Documentation:
 Archive all project documentation, including plans, reports, and
communication records. Ensure that this information is stored
in a way that allows for easy retrieval and reference in the
future.
13. Celebrate Success:
 Recognize and celebrate the achievements of the project team.
This fosters a positive team culture and acknowledges the hard
work and dedication put into the project.
14. Transition Planning:
 If applicable, plan and execute the transition of project
deliverables to the operations or maintenance phase. This may
involve training operational staff, updating documentation, and
ensuring a smooth handover.
15. Project Sign-off:
  Obtain formal sign-off from key stakeholders, including the
project sponsor and customer, confirming the successful
conclusion of the project and the satisfaction of project
requirements.

By systematically completing these steps, project managers can ensure a

well-organized and controlled conclusion to a project, facilitating a smooth
transition to the next phase or project. The conclusion phase is an essential
component of the overall project life cycle and contributes to the
continuous improvement of project management processes.

CH-7
FINANCIAL ANALYSIS
Financial analysis is the process of evaluating businesses, projects, budgets, and other
finance-related transactions to determine their performance and suitability. Typically,
financial analysis is used to analyze whether an entity is stable, solvent, liquid, or profitable
enough to warrant a monetary investment.

Financial analysis refers to an analysis of finance-related projects/activities or a company’s

financial statements, which includes a balance sheet, income statement, and notes to
accounts or financial ratios to evaluate the company’s results, performance, and its trend,
which will be useful for taking significant decisions like investment and planning projects
and financing activities. After assessing the company’s performance using financial data, a
person presents findings to the top management of a company with recommendations
about how it can improve in the future.

IMPORTANCE OF FINANCIAL ANALYSIS

1. Performance Evaluation:
Financial analysis is akin to a health check-up for a company. By examining financial
statements, it provides a comprehensive view of a company's performance. Metrics
like profit margins and return on investment help assess how efficiently the
company is operating and if it's making sound financial decisions.

2. Decision-Making Support:
Financial analysis serves as a compass for decision-makers. Investors use it to
decide where to invest their money, relying on metrics like earnings per share and
price-earnings ratios. Within a company, management utilizes financial analysis to
guide strategic decisions, ensuring that financial resources are allocated wisely.

3. Risk Assessment:
Like a weather forecast prepares for unexpected rain, financial analysis helps
companies anticipate and manage risks. By examining debt levels, liquidity, and
other financial ratios, it aids in identifying potential challenges and developing
strategies to navigate uncertainties.

4. Budgetary Control:
Effective financial analysis ensures that a company's spending aligns with its
budgetary plans. It's like making sure that a travel itinerary stays within the planned
budget, allowing for adjustments and preventing overspending.

5. Stakeholder Confidence:
Trust is vital in any relationship, including business. Financial analysis builds
confidence among stakeholders, such as investors and creditors, by showcasing
transparent and prudent financial management. It ensures that promises made to
stakeholders are backed by solid financial practices.

6. Strategic Planning:
Financial analysis is a crucial tool for long-term planning. It aids companies in
evaluating potential investments, shaping business strategies, and forecasting
future financial performance. It guides the alignment of financial goals with broader
strategic objectives.

7. Performance Benchmarks:
Comparable to a sports team analyzing its performance against others, financial
analysis provides benchmarks for companies. By comparing financial ratios and
 metrics with industry standards, companies can identify areas for improvement and
understand their competitive position in the market.

8. Compliance and Reporting:

Financial analysis ensures that a company adheres to accounting standards and
regulations. It's like following the rules in a game. By maintaining transparent and
accurate financial reporting, it establishes trust and credibility with stakeholders.

9. Resource Allocation:
Just as planning a recipe requires careful consideration of ingredients, financial
analysis helps companies decide where to allocate resources for optimal results. It
aids in determining the cost of capital and achieving a balanced capital structure.

10. Adaptability and Improvement:

In the dynamic business landscape, adaptability is key. Financial analysis supports
companies in adapting to changing conditions. It's like learning from past
experiences, allowing companies to continuously improve their financial strategies
and decision-making processes.

In essence, financial analysis is a versatile tool that goes beyond mere number-crunching.
It empowers companies to make informed decisions, navigate uncertainties, and build a
strong foundation for sustained success.

OBJECTIVES OF FINANCIAL ANALYSIS

Let us look at some of the main objectives of financial analysis:-

1. Reviewing the performance of a company over the past periods: To predict

the future prospects of the company, past performance is analyzed. Past
performance is analyzed by reviewing the trend of past sales, profitability, cash
flows, return on investment, debt-equity structure and operating expenses, etc.

2. Assessing the current position & operational efficiency: Examining the

current profitability & operational efficiency of the enterprise so that the
financial health of the company can be determined. For long-term decision
making, assets & liabilities of the company are reviewed. Analysis helps in
finding out the earning capacity & operating performance of the company.
3. Predicting growth & profitability prospects: The top management is
concerned with future prospects of the company. Financial analysis helps them
in reviewing the investment alternatives for judging the earning potential of the
 enterprise. With the help of financial statement analysis, assessment and
prediction of the bankruptcy and probability of business failure can be done.

4. Loan Decision by Financial Institutions and Banks: Financial analysis helps

the financial institutions, loan agencies & banks to decide whether a loan can
be given to the company or not. It helps them in determining the credit risk,
deciding the terms and conditions of a loan if sanctioned, interest rate, and
maturity date etc.

The link between strategy and finance :

The role of strategy in finance is crucial for the success and sustainability of
an organization. Financial strategy aligns the financial management
practices with the overall strategic goals and objectives of the business.
Here are several key aspects of how strategy intersects with finance:

1. Resource Allocation:
 Financial strategy involves determining how financial resources
will be allocated to various projects, departments, or
investments. It ensures that funds are directed toward activities
that align with the organization's strategic priorities.
2. Capital Structure Decisions:
 Strategic financial planning involves decisions about the
organization's capital structure, including the mix of debt and
equity. This decision affects the cost of capital and the overall
financial health of the company.
3. Risk Management:
 Financial strategy plays a crucial role in identifying, assessing,
and managing risks. It aligns risk management practices with
the organization's strategic objectives, ensuring that risk-taking
is in line with overall goals.
4. Budgeting and Forecasting:
 Strategic financial planning includes the development of
budgets and financial forecasts. These tools help in allocating
 resources effectively, monitoring performance, and ensuring
that financial goals are in line with broader strategic objectives.
5. Investment Decisions:
 Financial strategy guides investment decisions by evaluating
potential projects or acquisitions in terms of their alignment
with the organization's strategic goals and their expected
financial returns.
6. Working Capital Management:
 Efficient working capital management is critical for the day-to-
day operations of a business. Financial strategy ensures that the
organization maintains an optimal level of working capital to
support its strategic initiatives.
7. Dividend Policy:
 Decisions related to the distribution of profits, including
dividend payouts, are influenced by financial strategy. It
considers the organization's need for reinvestment in growth
versus returning value to shareholders.
8. Cost Management:
 Strategic financial management involves cost control and
optimization. It aligns cost management practices with the
organization's strategic priorities to ensure that resources are
used efficiently.
9. Financial Performance Measurement:
 Financial strategy defines key performance indicators (KPIs) and
metrics that measure the organization's financial health and
performance against strategic goals. This helps in monitoring
progress and making informed decisions.
10. Mergers and Acquisitions (M&A):
 Financial strategy guides decisions related to mergers and
acquisitions. It assesses the financial viability of potential
targets and ensures that M&A activities align with the
organization's overall strategy.
11. Tax Planning:
 Strategic financial planning includes tax considerations. It seeks
to optimize the organization's tax position in a way that aligns
with its strategic objectives while complying with relevant tax
regulations.
12. Financial Reporting and Transparency:
  Financial strategy emphasizes transparent financial reporting.
Clear and accurate financial information is essential for
stakeholders to understand the organization's financial health
and strategic direction.
13. Compliance and Governance:
 Financial strategy ensures that financial management practices
comply with regulatory requirements and governance
standards. It aligns financial decision-making with ethical and
legal considerations.
14. Financial Technology (Fintech) Integration:
 As technology evolves, financial strategy may involve the
integration of fintech solutions to streamline financial
processes, enhance data analysis, and improve decision-
making.
15. Crisis and Contingency Planning:
 Financial strategy includes planning for crises and
contingencies. It ensures that the organization has financial
resilience and can navigate unexpected challenges without
compromising its strategic objectives.

In summary, financial strategy is intertwined with the overall strategic

direction of an organization. It guides financial decision-making to support
the achievement of strategic goals, optimize resource allocation, and
ensure the long-term financial sustainability of the business.

FINANCE DECISIONS TO FORMULATE AND SUPPORT

BUSINESS STRATEGY :
Financial decisions play a crucial role in supporting and executing business
strategies. Here's how financial decisions align with and support broader
business strategies:

1. Capital Allocation:
 Business Strategy Connection: The allocation of financial
resources aligns with the organization's strategic priorities.
Capital is directed toward projects, initiatives, or investments
that support the achievement of strategic goals.
  Example: If a business strategy involves market expansion,
financial resources might be allocated to fund the opening of
new locations or the development of new products.
2. Investment Decisions:
 Business Strategy Connection: Financial decisions related to
investments in new projects or acquisitions are made with the
strategic objectives in mind. The goal is to invest in
opportunities that contribute to the long-term success of the
business.
 Example: If the business strategy is to diversify product
offerings, financial decisions may involve investing in research
and development for new product lines.
3. Cost Management:
 Business Strategy Connection: Cost management aligns with
the business strategy by ensuring that resources are used
efficiently and effectively. This supports strategic goals such as
achieving cost leadership or differentiation.
 Example: If the business strategy emphasizes cost leadership,
financial decisions may involve streamlining operations,
negotiating favorable supplier contracts, and implementing
cost-saving measures.
4. Working Capital Management:
 Business Strategy Connection: Efficient working capital
management ensures that the organization has the necessary
liquidity to support day-to-day operations. This is essential for
executing strategic plans without disruptions.
 Example: If the business strategy involves rapid growth,
financial decisions may focus on managing working capital to
support increased production and sales activities.
5. Funding Strategies:
 Business Strategy Connection: The choice between debt and
equity financing aligns with the business strategy and its
impact on the organization's capital structure. The goal is to
secure funding that supports strategic initiatives.
 Example: If the business strategy includes aggressive
expansion, financial decisions might involve securing additional
capital through a mix of debt and equity to fund growth.
6. Dividend Policy:
  Business Strategy Connection: The decision on dividend
payouts is influenced by the organization's need for
reinvestment in growth versus returning value to shareholders.
This aligns with the overall financial strategy supporting the
business strategy.
 Example: If the business strategy emphasizes reinvestment for
research and development, financial decisions may involve
retaining more earnings for internal investments.
7. Financial Performance Metrics:
 Business Strategy Connection: Financial metrics and key
performance indicators (KPIs) are chosen to measure
performance against strategic objectives. This ensures that
financial decisions are in line with the overarching business
strategy.
 Example: If the business strategy focuses on customer
satisfaction, financial decisions may include metrics related to
customer acquisition costs and lifetime customer value.
8. Risk Management:
 Business Strategy Connection: Financial decisions related to
risk management consider the organization's risk tolerance and
the impact of risks on strategic objectives. This supports the
implementation of risk-aware business strategies.
 Example: If the business strategy involves international
expansion, financial decisions may include hedging against
currency exchange rate fluctuations to mitigate financial risks.
9. Mergers and Acquisitions (M&A):
 Business Strategy Connection: Financial decisions related to
M&A activities are aligned with the business strategy.
Acquisitions are pursued to complement existing capabilities or
enter new markets in line with strategic goals.
 Example: If the business strategy aims for market
consolidation, financial decisions may involve evaluating and
acquiring competitors.
10. Technology Investments:
 Business Strategy Connection: Financial decisions regarding
technology investments support the organization's digital
transformation and innovation strategies. This ensures that the
business remains competitive and adapts to industry trends.
  Example: If the business strategy emphasizes digitalization,
financial decisions may involve investing in advanced
technologies to enhance operational efficiency and customer
experience.

In summary, financial decisions are an integral part of executing business

strategies. The alignment between financial management and strategic
objectives ensures that resources are deployed effectively, risks are
managed appropriately, and the organization can achieve its long-term
goals.

THE ROLE OF COST AND MANAGEMENT ACCOUNTING IN

STRATEGIC PLANNING AND IMPLEMENTATION :
Cost and management accounting play a critical role in strategic planning and
implementation within organizations. Here's how these accounting practices
contribute to the strategic management process:

1. Cost Identification and Analysis:

 Role: Cost accounting helps identify and analyze the various costs associated
with products, services, and activities.
 Impact on Strategic Planning: Understanding costs is crucial for pricing
strategies, product/service profitability analysis, and resource allocation in line
with strategic goals.

2. Budgeting and Forecasting:

 Role: Management accounting facilitates the creation of budgets and

financial forecasts.
 Impact on Strategic Planning: Budgets align with strategic objectives,
providing a financial roadmap. Forecasts assist in anticipating financial needs
and adjusting strategies accordingly.

3. Performance Measurement:

 Role: Management accounting establishes performance metrics and key

performance indicators (KPIs).
  Impact on Strategic Planning: Monitoring performance against strategic
objectives helps identify areas for improvement, supports decision-making,
and ensures accountability.

4. Product and Service Costing:

 Role: Cost accounting assigns costs to specific products or services.

 Impact on Strategic Planning: Accurate product/service costs inform pricing
decisions and guide strategic choices regarding which products or services to
emphasize or discontinue.

5. Profitability Analysis:

 Role: Management accounting analyzes the profitability of different business

segments, products, or customer groups.
 Impact on Strategic Planning: Identifying profitable and unprofitable areas
guides strategic decisions, such as resource allocation, market focus, or
product/service adjustments.

6. Cost Control and Reduction:

 Role: Cost accounting identifies areas where costs can be controlled or

reduced.
 Impact on Strategic Planning: Cost control measures align with cost
leadership strategies, contributing to competitive advantage and supporting
strategic goals.

7. Strategic Cost Management:

 Role: Both cost and management accounting contribute to strategic cost

management initiatives.
 Impact on Strategic Planning: Strategic cost management focuses on
creating value while minimizing costs, supporting the organization's
competitive positioning and strategic objectives.

8. Investment Appraisal:

 Role: Management accounting assesses the financial viability of investments

and projects.
 Impact on Strategic Planning: Informed investment decisions align with
strategic goals and contribute to the organization's long-term success.
9. Scenario Analysis:

 Role: Management accounting assists in conducting scenario analyses based

on various assumptions.
 Impact on Strategic Planning: Exploring different scenarios helps in risk
management and enhances the robustness of strategic plans.

10. Resource Allocation:

 Role: Both cost and management accounting guide the allocation of

resources.
 Impact on Strategic Planning: Efficient resource allocation ensures that
resources are directed towards strategic priorities, supporting the
achievement of organizational goals.

11. Activity-Based Costing (ABC):

 Role: Cost accounting employs ABC to trace costs to specific activities.

 Impact on Strategic Planning: ABC provides a more accurate understanding
of costs related to various activities, enabling better decision-making in
resource allocation and process improvements.

12. Benchmarking:

 Role: Management accounting facilitates benchmarking against industry

standards or competitors.
 Impact on Strategic Planning: Benchmarking informs strategic goals by
identifying areas where the organization can improve its performance relative
to industry best practices.

13. Performance Evaluation and Incentives:

 Role: Management accounting supports performance evaluation and

incentive structures.
 Impact on Strategic Planning: Aligning performance metrics with strategic
objectives ensures that employee efforts contribute to the realization of
strategic goals.

14. Cost of Quality Analysis:

 Role: Cost accounting evaluates the costs associated with maintaining

product or service quality.
  Impact on Strategic Planning: Understanding the cost of quality guides
decisions on quality improvement initiatives, contributing to strategic goals.

15. Continuous Improvement:

 Role: Both cost and management accounting support continuous

improvement initiatives.
 Impact on Strategic Planning: A focus on continuous improvement aligns
with strategic goals by ensuring that processes and activities are continually
optimized.

In summary, cost and management accounting provide essential tools and insights
for organizations to plan and implement their strategies effectively. These practices
enable informed decision-making, resource optimization, and performance
monitoring, all of which are critical for achieving strategic objectives.

Financial implications of making strategic choices:

Making strategic choices within an organization has significant financial

implications that directly impact its performance and success. Here are key
financial considerations associated with strategic decision-making:

1. Capital Expenditure (CapEx):

 Financial Implication: Strategic choices often involve
investments in new technologies, facilities, equipment, or
acquisitions.
 Impact: CapEx decisions influence cash flow, return on
investment (ROI), and the organization's financial health.
2. Operational Expenses (OpEx):
 Financial Implication: Strategic choices may lead to changes
in operating expenses, such as increased marketing, research
and development, or hiring.
 Impact: Managing operational costs is crucial for maintaining
profitability and sustaining financial stability.
3. Revenue Generation:
 Financial Implication: Strategic choices are often aimed at
expanding markets, introducing new products, or targeting
different customer segments.
 Impact: Successful execution of these strategies can lead to
increased revenue, while failure may result in financial losses.
4. Cost Structure:
 Financial Implication: Strategic choices can impact the overall
cost structure of the organization, including production costs,
distribution costs, and overhead.
 Impact: Efficient cost structures contribute to higher profit
margins and financial sustainability.
5. Financial Risk:
 Financial Implication: Strategic choices may introduce new
financial risks, such as market volatility, currency risk, or interest
rate risk.
 Impact: Effective risk management is crucial to mitigate
potential financial losses associated with strategic decisions.

6. Financing Decisions:
 Financial Implication: Strategic choices may require financing
through debt, equity, or a combination of both.
 Impact: The choice of financing options affects the
organization's capital structure, interest expenses, and financial
flexibility.
7. Working Capital Management:
 Financial Implication: Changes in business strategies may
impact working capital requirements, affecting cash flow and
liquidity.
 Impact: Efficient working capital management ensures the
organization can meet short-term financial obligations.
8. Financial Performance Metrics:
 Financial Implication: Strategic choices influence key financial
metrics such as return on investment (ROI), net profit margin,
and earnings per share.
 Impact: Monitoring these metrics helps assess the success and
financial impact of strategic decisions.
9. Dividend Policy:
 Financial Implication: Strategic choices may influence the
organization's dividend policy, impacting the distribution of
profits to shareholders.
 Impact: Decisions regarding dividends affect shareholder value
and investor perception.
10. Cash Flow Management:
 Financial Implication: Strategic choices can affect the timing
and amount of cash inflows and outflows.
 Impact: Effective cash flow management is essential for
supporting day-to-day operations and strategic initiatives.
11. Financial Modeling and Forecasting:
 Financial Implication: Strategic choices necessitate accurate
financial modeling and forecasting to assess potential
outcomes.
 Impact: Reliable financial forecasts help in resource planning,
risk assessment, and decision-making.

12. Financial Reporting and Compliance:

 Financial Implication: Strategic choices may have implications
for financial reporting and compliance with accounting
standards.
 Impact: Accurate and transparent financial reporting is
essential for maintaining the organization's credibility with
stakeholders.
13. Tax Implications:
 Financial Implication: Strategic decisions can have tax
implications, affecting the organization's overall tax position.
 Impact: Optimizing the tax structure supports financial
efficiency and compliance.
14. Long-Term Financial Health:
 Financial Implication: Strategic choices contribute to the
organization's long-term financial health and sustainability.
 Impact: Successful strategies enhance the organization's
financial position and ability to adapt to changing market
conditions.
 15. Market Valuation:
 Financial Implication: Strategic choices influence how the
market values the organization, impacting stock prices and
market capitalization.
 Impact: Positive strategic outcomes can lead to increased
shareholder value and improved market standing.

In summary, the financial implications of strategic choices are far-reaching,

affecting various aspects of an organization's financial landscape. Sound
financial management, risk mitigation, and effective implementation are
critical for navigating the financial complexities associated with strategic
decision-making.

CH-8
HUMAN RESOURCE STRATEGY
A human resource strategy is an organization's plan for managing employees in a way that
promotes its overall mission. Strategies may encompass activities ranging from hiring and
development to performance evaluations and compensation. HR professionals conduct
audits of their strategies and incorporate management input to implement more effective
changes. Strategy goals can vary depending on the organization's mission, but typical
objectives include increased productivity and positive company culture.

HR strategy is a roadmap for solving an organization’s biggest challenges with people-

centric solutions. This approach requires HR input during policy creation and elevates the
importance of recruitment, talent management, compensation, succession planning and
corporate culture.

IMPORTANCE OF A HUMAN RESOURCE (HR) STRATEGY

The importance of a human resource (HR) strategy in an organization is multifaceted and
plays a crucial role in driving overall success. Here are key reasons why having a well-
defined HR strategy is vital:

1. Alignment with Business Goals:

A robust HR strategy ensures that the human resource practices are in line with the overall
business objectives. It helps in defining how the workforce can contribute to the
achievement of organizational goals.

EXAMPLE: Imagine a soccer team. An HR strategy for the team ensures that each player
knows their role in scoring goals. It's like making sure the forwards, midfielders, and
defenders understand how their efforts contribute to winning matches and achieving the
team's goal of winning a championship.

2. Talent Acquisition and Retention:

An effective HR strategy focuses on attracting, hiring, and retaining top talent. It outlines
approaches for recruitment, onboarding, and employee engagement, contributing to a
skilled and motivated workforce.

EXAMPLE: Think of a game where you get to choose your teammates. An HR strategy for a
company involves finding the best players (employees) for the team. It's like scouting talented
individuals and making sure they want to stay and play for the company.

3. Skills Development and Training:

HR strategies emphasize continuous learning and development. By identifying skill gaps

and providing training opportunities, organizations can enhance the capabilities of their
employees, ensuring they stay relevant in a dynamic business environment.
EXAMPLE: Picture a video game where your character levels up. An HR strategy focuses on
levelling up the skills of employees. It's like providing training and development opportunities,
helping employees grow and become more skilled in their roles.

4. Employee Engagement and Satisfaction:

A well-crafted HR strategy includes initiatives to boost employee engagement and

satisfaction. This involves creating a positive work environment, fostering open
communication, and recognizing and rewarding employees for their contributions.

EXAMPLE: Imagine a game where everyone enjoys playing because it's fun. An HR strategy
creates a workplace that employees enjoy. It involves things like team-building activities, open
communication, and recognition for good performance—making work a positive experience.

5. Succession Planning:

HR strategies address the long-term sustainability of the organization by planning for

leadership succession. Identifying and developing potential leaders within the company
ensures a smooth transition when key roles become vacant.

EXAMPLE: Think of a team preparing for the next season. An HR strategy plans for the future
by identifying potential leaders within the company. It's like grooming someone from the
current team to become a captain if needed in the future.

6. Diversity and Inclusion:

Inclusion of diverse perspectives and backgrounds is crucial for innovation and overall
business success. HR strategies focus on promoting diversity and inclusion, creating a
workplace that values differences and fosters creativity.

EXAMPLE: Consider a board game with players from different countries. An HR strategy
promotes diversity and inclusion. It's like making sure everyone, regardless of their
background, feels like an important part of the team.

7. Adaptability to Change:

Businesses face constant change, and HR strategies play a vital role in preparing the
workforce for these changes. This includes developing a culture of adaptability and
resilience to navigate shifts in the industry and business environment.

EXAMPLE: Picture a game where new challenges are added. An HR strategy helps the team
adapt to changes in the company or industry. It's like preparing the team to handle new rules,
technologies, or market shifts.

8. Employee Well-being:

Employee well-being is integral to productivity and job satisfaction. HR strategies include

initiatives to support the physical, mental, and emotional health of employees,
contributing to a positive and healthy workplace.
EXAMPLE: Think of a game where characters need to stay healthy to perform well. An HR
strategy includes programs to support employee well-being. It's like offering wellness
initiatives, health benefits, and a positive work environment to keep everyone in good shape.

9. Compliance and Risk Management:

HR strategies ensure compliance with labor laws and regulations, minimizing legal risks.
By staying abreast of legal requirements and industry standards, organizations can avoid
potential legal issues related to human resource management.

EXAMPLE: Imagine playing a fair game with clear rules. An HR strategy ensures the company
follows employment laws and regulations. It's like playing by the rules to avoid penalties and
keep the game (business operations) fair and ethical.

10. Cost Management:

Strategic HR management helps optimize costs related to human capital. This includes
efficient workforce planning, managing turnover, and ensuring that resources are
allocated effectively to support business goals.

EXAMPLE: Consider managing in-game resources strategically. An HR strategy helps the

company use its resources wisely. It's like allocating budget and personnel efficiently, ensuring
the right people are in the right roles to maximize productivity.

In essence, a well-defined HR strategy is not just about managing personnel but is a

fundamental component of organizational success. It aligns the workforce with the
broader business strategy, contributes to a positive workplace culture, and ensures that
the organization can adapt and thrive in a dynamic and competitive environment.

An HR strategy is like the playbook for a successful team, guiding actions and decisions to
ensure the company plays the business game effectively. Each element contributes to the
overall success and well-being of the team.

HOW TO CREATE A HUMAN RESOURCE STRATEGY

Creating an HR strategy means taking a hard look at an organization’s
strengths, weakness, opportunities and threats – a process also known as a
SWOT analysis. Every business is different, but must follow these steps:

1. Understand the business and its objectives

 Talk to people throughout the organization to gain a full understanding of the
business’s past achievements, the products or services that it offers today, and
what it hopes to accomplish in the future.

2. Evaluate employee skillsets

Review employee performance, resumes, project history and continuing
education to assess the collective workforce skill level.

3. Conduct a gap analysis

Determine if employees have what they need to maximize their productivity or
if investments in additional resources are necessary.

4. Assess talent strategy

Regularly auditing compensation, benefits, work environments and employee
engagement can help employers compete for new talent and retain valued
workforce members.

5. Develop existing employees

If any employees appear ready for new challenges or have skills outside their
current role, create a development plan that will allow them grow to with the
business.

6. Limit turnover
Get to the root cause of why people leave an organization and create a
comprehensive plan to address the problem and prevent labor shortages.

7. Plan ahead for succession

Knowing which employees can easily fill other positions, should they become
vacant, helps lessen disruptions when someone abruptly leaves the
organization.

8. Rely on analytics
Compensation history, turnover rates, employee engagement and other HR
metrics can guide strategic decisions.

9. Create a mission and vision statement

Mission and vision statements summarize the HR strategy and serve as a litmus
test for all policies and decisions thereafter.
 Example 1
A company has no issues hiring, but employees tend to quit after only a few weeks
of working. Analysis demonstrates that development opportunities don't coincide
with the promises in the job promotion materials, so the company launches an
initiative to ensure these two elements are cohesive. After several weeks, the
company notices that increased transparency improves retention rates.

Example 2
A tech startup that prioritizes innovation notices that its competitors offer high
salaries and attractive benefits. The startup improves its current compensation to
attract talented individuals who can create novel products. In addition to using
industry trends to set salaries and introduce benefits, the startup also administers
employee surveys to determine what benefits they care about most.

LEADERSHIP

Leadership traits are essential qualities that make effective leaders in the workplace.
Whether you are managing a team, a department or an entire company, these traits
allow you to guide people and projects to success. The most important leadership
qualities involve soft skills rather than technical knowledge or industry-specific
experience, making leadership traits critical in nearly every occupation.
 Leadership traits are the people management skills, personal qualities and
technical expertise a person requires to lead effectively in the workplace.
 Effective leaders have leadership traits such as accountability, adaptability,
confidence, creativity and empathy, along with positivity and team-building
skills.
 To develop your leadership traits, prioritize learning and professional
development, adopt a leadership style, take on additional responsibilities,
find a mentor and work on improving your communication and
interpersonal relationship skills.

LEADERSHIP TRAITS
To become an effective leader, you should strive to become an expert in your field and
aim to cultivate essential leadership qualities. Begin with these 10 examples of leadership
traits.

1. Accountability
 The best leaders take full responsibility for their team’s performance, whether the
outcome is good or bad. As a leader, you should aim to praise your team when
they perform well and provide constructive criticism to help them improve. It’s also
important for you to take responsibility when you have made a bad decision or
done something unfavorable. We are all human and prone to mistakes, but
effective leaders recognize their areas of improvement and are open with their
team about them. Make a point of serving as a role model, and your team is likely
to demonstrate accountability, too.

2. Adaptability
Experienced leaders understand that plans, schedules and even goals can change
at any time. To become a strong leader, you should aim for a flexible approach that
allows you to pivot as necessary. As you develop adaptability, you may also find
that you develop related leadership characteristics, such as resourcefulness and
problem-solving abilities. To improve your sense of adaptability, practice accepting
and overcoming unexpected challenges rather than resisting them.

3. Confidence
As a key figure in a department or company, every leader should demonstrate
confidence to instill motivation. Even when obstacles impact progress, you should
strive to exhibit poise and conviction. Leaders who have this quality also tend to
build trust quickly with their team and colleagues. Build confidence by practicing
your presentations, anticipating the questions you might receive and preparing
effective, helpful answers.

4. Creativity
The best leaders rarely follow established pathways or copy the routes others have
taken. Instead, they embrace new ways of thinking and strategies that others have
yet to try. As a leader, you should aim to prioritize creativity so you can experiment
with innovative solutions and alternative approaches to reach goals. To improve
your creativity, try thinking of different resolutions for issues you encounter before
moving forward with a plan.

5. Empathy
Company leaders like executives, managers and supervisors work at a higher level
than other team members. In these positions, you should always try to empathize
with the reality that your team experiences so you can work together more easily.
To understand your team members better, try scheduling informal meetings to
help you acknowledge the challenges they face and the goals they want to achieve.
6. Focus
Focus can help you handle possible distractions while achieving major objectives.
When you give your attention to the most important aspects, you can complete
your biggest goals while managing your time and resources. Try scheduling
alternating periods of work without interruptions and less intensive work where
you can pause to address other issues. This strategy can help you to concentrate
your attention as necessary.

7. Positivity
Quality leaders use positivity to motivate their team to achieve goals, do their best
work and exceed expectations. To be an effective leader, you should exhibit
positivity during difficult situations such as overcoming obstacles or delivering
constructive criticism. For example, you can focus on the benefits of completing a
major project instead of highlighting the hard work your team will have to
complete in the process.

8. Risk-taking
Leaders regularly encounter risks, but they must know when to embrace a
challenge and when to take a safe approach. To become a master at navigating
risk, start by learning how to assess situations and compare pros and cons. Strive
to make decisive judgments so that your team can readily accept and act upon
your decisions. Try creating a flowchart with steps so you can evaluate situations
and make decisions confidently.

9. Stability
Although leaders are charged with driving significant change, they also need a
strong sense of stability. Taking a steady, reliable approach can allow you to keep
your project, team or company on track. Establishing regular routines and telling
your team what to expect allows you and your staff members to maintain energy
and focus, even as you strive for constant progress. For example, set a weekly
meeting to update your team on upcoming changes.

10. Team-building
Even the strongest leaders need dedicated teams to complete projects. To be an
effective leader, you must know how to encourage teamwork and collaboration,
inspire team members to contribute their best work and motivate colleagues to
accomplish seemingly impossible tasks. You can incorporate team-building
activities such as icebreakers and group outings to promote bonding and improve
communication.
 STRATEGY AND PEOPLE :

1. JOB DESIGN : Job design is the process of specifying the

duties and responsibilities that will be included in employees'
roles. Human Resource (HR) managers aim is to design work
duties specific to the individual so that it allows the employee to
maximise their performance and stay engaged and motivated.
It is a critical component of human resources (HR) strategy, as it
involves structuring jobs in a way that aligns with organizational
goals, enhances employee satisfaction, and maximizes productivity.
Here are several ways in which job design is integrated into human
resources strategy:
1. Alignment with Organizational Goals:
 Job design starts by aligning individual job roles with the broader
organizational objectives. HR works to ensure that each job contributes
directly to the achievement of strategic goals.
2. Skill and Competency Mapping:
 HR assesses the skills and competencies required for each job role. This
helps in designing jobs that match the skills of current employees and
identifies any skill gaps that may require training or recruitment.
3. Flexibility and Adaptability:
 Job design considers the need for flexibility and adaptability in the
workforce. HR strategists create job roles that allow employees to
respond effectively to changing business environments and emerging
opportunities.
4. Employee Empowerment:
 Job design can include elements of employee empowerment, granting
employees more autonomy and decision-making authority. This can
enhance job satisfaction and contribute to a sense of ownership and
responsibility.
5. Task Variety and Enrichment:
 HR focuses on designing jobs that offer task variety and enrichment.
This involves assigning employees tasks that are challenging and
meaningful, fostering engagement and professional development.
6. Work-Life Balance:
 HR strategy in job design recognizes the importance of work-life
balance. By creating roles with reasonable workloads and clear
 expectations, HR contributes to the well-being and job satisfaction of
employees.
7. Job Rotation and Career Development:
 HR may incorporate job rotation into job design, allowing employees to
gain experience in different roles. This contributes to career
development and helps the organization build a versatile workforce.
8. Performance Metrics and Feedback:
 HR establishes clear performance metrics tied to job roles and
responsibilities. Regular feedback mechanisms are implemented to
ensure employees understand expectations and have opportunities for
improvement.
9. Compensation and Recognition:
 Job design is linked to compensation and recognition strategies. HR
ensures that jobs are fairly compensated and that recognition
programs are aligned with the complexity and impact of each role.
10. Team Collaboration and Communication:
 HR emphasizes collaboration by designing jobs that require effective
teamwork. Clear communication channels and structures are
established to facilitate collaboration across different job roles and
departments.
11. Technology Integration:
 As technology evolves, HR ensures that job roles are designed to
integrate new technologies effectively. This may involve training
programs to equip employees with the necessary skills for tech-
enabled roles.
12. Employee Engagement and Satisfaction:
 HR considers job design as a tool for enhancing employee engagement
and satisfaction. Jobs that are well-designed contribute to a positive
work environment and employee morale.
13. Legal and Ethical Considerations:
 HR ensures that job design adheres to legal and ethical standards,
promoting fairness, diversity, and inclusion in all aspects of job roles
and responsibilities.
14. Succession Planning:
 Job design is integrated into succession planning. HR identifies key
roles and ensures that job designs support the development of a talent
pipeline for critical positions.
15. Adaptation to External Factors:
 HR stays agile in job design, adapting roles to external factors such as
changes in the industry, market dynamics, and regulatory
environments.
In summary, job design is a strategic element in human resources that
goes beyond the mere definition of tasks. It involves creating roles that
contribute to organizational objectives, enhance employee satisfaction,
and align with the dynamic nature of the business environment. HR
strategies in job design are essential for building a motivated, skilled,
and adaptable workforce.

2. STAFF DEVELOPMENT : Staff development can be defined as the

processes and activities designed to increase the professional
knowledge, skills, and attitudes of staff members so that they can
improve the learning of students

1. Training Programs:
 HR develops and implements training programs to address
specific skill gaps within the workforce. These programs can
cover technical skills, soft skills, and industry-specific
knowledge.
2. Professional Development Plans:
 HR collaborates with employees to create individualized
professional development plans. These plans outline career
goals, skill development areas, and the steps needed to achieve
them.
3. Leadership Development:
 HR identifies high-potential employees and implements
leadership development programs to prepare them for future
leadership roles. This involves training in strategic thinking,
decision-making, and people management.
4. Mentorship and Coaching:
 HR facilitates mentorship and coaching programs, pairing
experienced employees with those seeking guidance. This helps
transfer knowledge, fosters a learning culture, and supports the
development of specific skills.
5. On-the-Job Training:
 HR incorporates on-the-job training opportunities to allow
employees to learn and apply new skills in their daily work. This
 can be done through job rotations, cross-functional projects, or
shadowing programs.
6. Cross-Functional Training:
 HR encourages cross-functional training to expose employees
to different aspects of the business. This broadens their skill set
and understanding of the organization as a whole.
7. Continuous Learning Initiatives:
 HR promotes a culture of continuous learning by providing
access to online courses, workshops, seminars, and other
resources. This ensures that employees stay updated on
industry trends and best practices.
8. Succession Planning:
 Staff development is closely tied to succession planning. HR
identifies key positions and develops talent pipelines to ensure
a smooth transition when employees move into more senior
roles.
9. Performance Management Integration:
 HR integrates staff development into the performance
management process. Regular performance reviews are used to
identify areas for improvement and to set goals for ongoing
development.
10. Feedback Mechanisms:
 HR establishes feedback mechanisms, including 360-degree
feedback, to provide employees with insights into their
strengths and areas for improvement. This information informs
personalized development plans.
11. Tuition Assistance and Educational Programs:
 HR may offer tuition assistance programs to support
employees pursuing further education or certifications relevant
to their roles. This contributes to both individual and
organizational growth.
12. Skill Assessments:
 HR conducts regular skill assessments to identify evolving skill
requirements. This information guides the development of
targeted training programs and resources.
13. Recognition and Rewards:
 HR links staff development to recognition and rewards.
Employees who actively engage in development opportunities
 may be recognized and rewarded for their commitment to self-
improvement.
14. Adaptability Training:
 HR focuses on developing skills that enhance adaptability,
including resilience, problem-solving, and creativity. This
prepares employees to navigate changing work environments.
15. Technology Training:
 HR ensures that employees are equipped with the necessary
skills to navigate and leverage new technologies. This includes
training on software, digital tools, and other technological
advancements relevant to their roles.

In summary, staff development is an integral part of HR strategy, aiming to

cultivate a skilled and adaptable workforce. By investing in the continuous
learning and growth of employees, organizations can enhance
performance, increase employee satisfaction, and position themselves for
long-term success.