Master of Business Administration-MBA Semester 4 MB0052 – Strategic Management and Business Policy Assignment Set- 1

Q.1 What similarities and differences do you find in BCG business portfolio matrix, Ansoff growth matrix and GE growth pyramid. (10 marks) Ans. The BCG matrix is a portfolio management tool used in product life cycle. BCG matrix is often used to highlight the products which get more funding and attention within the company. During a product’s life cycle, it is categorized into one of four types for the purpose of funding decisions. Figure 3.5 below depicts the BCG matrix.

Figure 3.5 BCG Growth Share Matrix Question Marks (high growth, low market share) are new products with potential success, but they need a lot of cash for development. If such a product gains enough market shares to become a market leader, which is categorized under Stars, the organization takes money from more mature products and spends it on Question Marks. Stars (high growth, high market share) are products at the peak of their product life cycle and they are in a growing market. When their market rate grows, they become Cash Cows. Cash Cows (low growth, high market share) are typically products that bring in far more money than is needed to maintain their market share. In this declining stage of their life cycle, these products are milked for cash that can be invested in new Question Marks. Dogs (low growth, low market share) are products that have low market share and do not have the potential to bring in much cash. According to BCG matrix, Dogs have to be sold off or be managed carefully for the small amount of cash they guarantee. The key to success is assumed to be the market share. Firms with the highest market share tend to have a cost leadership position based on economies of scale among other things. If a company is able to apply the experience curve to its advantage, it should able to produce and sell new products at low price, enough to garner early market share leadership.

Limitations of BCG matrix: — The use of highs and lows to form four categories is too simple — The correlation between market share and profitability is questionable. Low share business can also be profitable. — Product lines or business are considered only in relation to one competitor: the market leader. Small competitors with fast growing shares are ignored. — Growth rate is the only aspect of industry attractiveness — Market share is the only aspect of overall competitive position 3.4.2 Igor Ansoff growth matrix The Ansoff Growth matrix is a tool that helps organizations to decide about their product and market growth strategy. Growth matrix suggests that an organization’s attempts to grow depend on whether it markets new or existing products in new or existing markets. Ansoff’s matrix suggests strategic choices to achieve the objectives. Figure 3.6 depicts Ansoff growth matrix.

Figure 3.6 Ansoff Growth Matrix Market penetration – Market penetration is a strategy where the business focuses on selling existing products into existing markets. This increases the revenue of the organization. Market development – Market development is a growth strategy where the business seeks to sell its existing products into new markets. This means that the product is the same, but it is marketed to a new audience. Product development – Product development is a growth strategy where a business aims to introduce new products into existing markets. This strategy may need the development of new competencies and requires the business to revise products to appeal to existing markets. Diversification – Diversification is the growth strategy where a business markets new products in new markets. This is an intrinsically riskier strategy because the business is moving into markets in which it has little or no experience. For a business to adopt a diversification strategy, it should have a clear idea about what it expects to gain from the strategy and an honest assessment of the risks. 3.4.3 McKinsey/GE growth pyramid

The McKinsey/GE matrix is a tool that performs a business portfolio analysis on the Strategic Business units in an organization. It is more sophisticated than BCG matrix in the following three aspects: — Industry (market) attractiveness – Industry attractiveness replaces market growth. It includes market growth, industry profitability, size and pricing practices, among other possible opportunities and threats. — Competitive strength – Competitive strength replaces market share. It includes market share as well as technological positions, profitability, size, among other possible strengths and weaknesses. — McKinsey/GE growth pyramid matrix works with 3*3 grids while BCG matrix is 2*2 matrixes. External factors that determine market attractiveness are the following: — Market size — Market growth — Market profitability — Pricing trends — Competitive intensity/rivalry — Overall risk of returns in the industry — Opportunity to differentiate products and services — Segmentation — Distribution structure (e.g., retail, direct, wholesale) Internal factors that affect competitive strength are the following: — Strength of assets and competencies — Relative brand strength — Market share — Customer loyalty — Relative cost position (cost structure compared to competitors) — Distribution strength — Record of technological or other innovation — Access to financial and other investment resources

. Ans. remodeling customer-facing environments or opening additional locations. a guaranteed return on the investment will come in the form of tax not assessed on the reinvested funds. debt elimination can equate to a financial return that outpaces even the best investments. If a business has outstanding debt financed at a given interest rate. Use Income to Eliminate Debt o While the pay-down of outstanding debt may not seem like business investment on the surface.2 Discuss the investment strategies applicable for businesses and methods to rectify faulty investment strategies. Entire college programs have been designed specifically to teach business investment strategies. guaranteed return that is significantly higher than usual returns on other investments. As an added bonus. An investment strategy is a key component of every conceivable business type. Because business debt often reaches into double digit interest rates. paying off this debt can provide an instant. By reinvesting profits back into the business for expansion or improvement. paying off that debt guarantees an instant return of that percentage.Figure 3.7 McKinsey/GE Growth Pyramid Q. Reinvest Funds to Nurture the Business o Perhaps one of the most common ways businesses invest their funds involves purchasing additional equipment. and it's critical to ensuring the success of the business. the business stands to gain additional profits as a result of the expansion. but a few key tips can help lay groundwork for effective investing.

— Have a clear disposition towards price – The more you pay for an asset in relation to its earnings. Following are the ways to invest successfully: — Leave a margin of safety – Always leave a margin of safety in your investments to protect your portfolio.Invest in Other Businesses o Some businesses find success in investing their profits in other noncompeting businesses. products/services etc. as loans or by purchasing securities issued to business start-ups. ° Be conservative in your valuation assumptions ° Only buy assets dealing at substantial discounts to your conservative estimate. The following are the two ways to incorporate the above principle in your investment selection process. So have a clear outlook towards the price. Never purchase the stock until you understand the industrial economy and able to forecast the future of the company with certainty. Internal methods to rectify faulty investment strategies In this section we will explain the methods to rectify faulty investment strategies. — Measure your success – Evaluate your performance by the underlying measures in business. as spreading investments into other types of operations can help diversify a business's holdings and reduce the risk of a complete business loss. — Allocate capital by opportunity cost – Allocate investments/assets to the choice which has been opted as the best among several mutually exclusive choices. Or — Use of income to eliminate debt — Reinvestment of funds to nurture the business — Investment in other businesses Investment is defined as the commitment of money or capital (e. keeping funds in a bank account etc) to generate future returns. Some of the methods are as follows: — Internal transformation — Corporate restructuring and reorganization — Financial restructuring — Divestment strategy — Expansion strategy — Diversification strategy — Vertical and horizontal integration strategy — Building core competencies and critical success factors . Investing in other businesses can be an especially wise move for companies in shaky industries. These investments may be made as traditional cash investments. the lesser is your return value.g. A proper understanding of the investment strategies and a thorough analysis of the options helps an investor to create a portfolio that maximises returns and minimises exposure to risks. — Invest in business which you understand – Invest in a business in which you have a thorough understanding of the customers. purchasing assets. — Make assumptions – Make assumptions about your future performance by recognising your own limitations.

The vital components of moral responsibility are deeply rooted in the structure of every society and are a part of social life. safety at work. . dignity etc. Organizations also have to essentially take care of the interests of its stakeholders and employees. moral and environmental way: Social business obligations The sense of principles and morality regarding social and community issues may be referred to as the social obligations. but ethical standards play an important role in business decision making in an organization. consumer protection. fair pricing policies. caring for the environment. people and community. A portion of the business profits may be retained back so as to cycle the funds within the business. — Although an organization might succeed. CSR also provides health and safety measures. and such other issues. There are various obligations of a business. Obligations in terms of business are the duties of an organization towards the upliftment of the people and the country. co-workers and family members. climate protection. preserves employee rights and discourages discrimination at workplace. responsibility. Frequent assessment report assists in detecting the problems associated with faulty investment strategies in an organization. But in the current world. Moral business obligations Moral obligation is a responsibility of balancing various needs of an individual by accurate understanding of the right or wrong actions using the acquired knowledge by an organization. providing correct information to the consumers. but it must respect ethical values. CSR activities include commitment to product quality. Example – TATA implemented social welfare provisions for its employees since 1945 Business obligations are the ties which bind an organization to pay or to do something agreeable by the laws and customs of the country in which the obligation is made. businesses follow limited obligation towards social issues. so on. Following are some of the business obligations in terms of social. sustainable management of natural resources. resorting to legal assistance in case of unresolved business problems. ethical. Example – The reasons for the death of employees who inhale fumes from chemical spill in a factory is the negligence of social obligation that failed to provide safety and security for its employees. Business is about the relationships with people and community. employees and investors fairly and honestly. neighbours. Moral responsibility is based on the relationships among friends.CSR is effective in number of areas such as human rights. — The quality and loyalty of company’s workforce must not change — The higher officials must possess the following qualities like honesty. consistency. Factors which enhance social business obligations are as follows: — Implementing punishable act towards corruption or any illegal act in an organization — The employer-employee relationships must be stable. Social responsibility is demonstrated by the determination of the organization to treat customers. There are several social issues that affect the current business workplace.

The top management needs to be updated about the performance to take corrective actions for controlling the undesired performance. One of the obstacles to effective strategic control is the difficulty in developing appropriate measures . provides feedback to the management to take corrective measures. Improper analysis. The essential components of a successful business transformation are as follows: — Achievement ° A new level of sustainably high performance emerges ° Extraordinary and unexpected results appear throughout — Improved synergy ° Collaboration naturally occurs across all levels ° Creativity and innovation flourishes — Aliveness ° Employees flourish as they openly express their passion. All strategies are subject to constant modifications as the internal and external factors influencing a strategy change constantly. downsizing of employees etc. It includes corporate restructuring. This is achieved by holding high quality level of productivity. If performance results are beyond the tolerance range. — Corporate restructuring and re-organization — Layoffs and employee termination The core aim of strategic management succeeds only if it generates a positive outcome. Strategic evaluation and control consists of data and reports about the performance of the organization. Strategic evaluation and control ensures that the organization is implementing the relevant strategy to reach its objectives. survival and maintain profitability. It compares the current performance with the desired results and if necessary. It is essential for the strategist to constantly evaluate the performance of the strategies on a timely basis.Internal transformation Internal transformation takes place in an organization to sustain constant growth. new implementation procedures are introduced. ° Growth and development occurs both personally and professionally — Shared future ° The entire organization unites to accomplish the future and live consistently with core values We will now discuss the two internal transformation processes in the following section. planning or implementation of the strategies will result in negative performance of the organization. commitment and creativity towards work. The following are the reasons for internal transformation of a company: — Pressure on owner to decrease costs — Overstaffing — Large and complicated company structure — Low flexibility of staff — Financial instability The main objective of a company which adopts internal transformation is to increase efficiency by reaching the standards in the global market. Strategic evaluation consists of performance and activity reports.

Strategic control is established to focus on the resources used in the performance (input). • • • • • Control is taking measures that synchronize outcomes as closely as possible with plans Traditionally. Successful strategists combine patience with a willingness to take corrective actions promptly. the manager will have knowledge about the cause of the problem and the corrective actions. Strategic control stimulates the strategic managers to investigate the use of strategic planning and implementation. Strategic control involves tracking the strategy as it is being planned.for important activities. has been almost completely based on financial performance Hence. After the evaluation. when necessary. implemented and take necessary actions when it indicates any negative performance. Strategy evaluation is vital to an organization’s well-being as timely evaluations can alert the management about potential problems before the situation becomes critical. activities that generate the performance (behaviour) and the result of actual performance (output). top internal accounting officer became the “In Charge” official for organization control policies and procedures What do we call the chief accounting officer of an organization? Answer: The Controller o Financial Information was primary source o Rewarded Efficiency o Encouraged Dysfunctional Behavior . The strategic-evaluation process with constantly updated corrective actions results in significant and long-lasting consequences.

It is a planned way to handle certain issues in the organization. procedure. It 6. using simple It is generally sentences. Policies are is a part of tactical guidelines for tools. 7. Policy explains It describes method in which the specific the reason for emergency work is done. economical way goal. existence of an procedures which It is a long term rule It provides step organization. to the activities how rules are It is systematic way taken to achieve enforced and of handling routine the goals. describes its actions. process and programmes. Now we will analyze how each concept is different from the other. procedure. 8. taken. managerial actions. include warnings and that drives an by step approach 3.Q. objective. 1. process and programmes In the previous topic we discussed the definition and meaning of policy. a. designed to company rules. Procedures are of doing things 5. Ans. Differences between policy. It defines an means to achieve the developing an outcome or a goals. detailed and rigid. It is framed by the top level .3. Distinguish policy. Process defines the accomplish a 2. Policy shows cautions. Policy is Procedure identifies Process is a set of Programme is a general in the specific actions activities conducted concrete scheme nature and and explains when an by people to achieve of activities identifies the action needs to be organizational goals. Procedure defines the helps in 4. Programming consequences. procedure and programmes with examples. They are written in an outline in a systematic described by format. manner. organization.

improved quality and reliability. Give a short note on synergy. b. Rather than having two representatives make two sales calls to a potential customer. According to the company. the mere combination of people or business elements does not necessarily lead to better outcomes. However. The sender aims giving certain information to the public. The 2004 acquisition of AT&T Wireless by Cingular was an effort to create customer benefits and growth prospects that neither company could have achieved on its own—offering better coverage.management. . One way to achieve positive synergy is by acquiring related products. Downsizing and the divestiture of businesses is in part the result of negative synergy. Policies are a part of the strategies of the organization. Organizations strive to achieve positive synergy or strategic fit by combining multiple products. Synergy in business is the benefit derived from combining two or more elements (or businesses) so that the performance of the combination is higher than that of the sum of the individual elements (or businesses). Negative synergy is also possible at the corporate level. so that sales representatives can sell numerous products during one sales call. one sales representative can offer the broader mix of products. b. There are also other ways to communicate or advertise in newspapers or journals. business lines. Managers expect that combining employees into teams or broadening the firm's product or market mix will result in a higher level of performance. core business activity. The intended result of many business decisions is positive synergy. business Mends etc. and the resulting lack of harmony or coordination can lead to negative synergy. Mergers and acquisitions are corporate-level strategies designed to achieve positive synergy. A circular is a communication meant to convey information of a business firm to customers. In the course of business. Synergy is the energy or force created by the working together of various parts or processes. 9. For instance. the removal of the pulp mill will enhance operational flexibility and eliminate distraction on periphery units. occasions will arise to send out circular letters. Ans. Kimberly-Clark Corporation set out to sharpen its emphasis on consumer and health care products by divesting its tiny interests in business paper and pulp production. and a wide array of innovative services for consumers. thus allowing the corporation to concentrate on a single. or markets.

Notices are methods used to keep the workforce as a whole up to date with what is going on. while a circular is a letter or advert. Circulars and notices are written forms of communication within the organization. whereas general letters arc personal and private in nature.4. A circular letter is one that carries a communication to a number of addresses. less expenses. a sign or placard conveying some information or intelligence. any number of letters can be posted in a day. formerly known as Cadbury-Schweppes plc. The basic difference between a circular and a general letter is that. addressed and distributed to a circle of people. whereas the former is addressed to many persons. Employees tend to look at notice boards in their breaks. customer. The objectives of circular letters are: To obtain publicity for a merchandise. the latter is forwarded directly to the intended recipients. A written record of the message is kept. if interested. to impress the readers with the facts about the firm and the products. They can be created in such a way as to attract attention. by kvsudepizzacom Q. They keep workers informed and attempt to make them feel a part of a large company. Select any established Indian company and analyse the different types of strategies taken up by the company over the last few years. Cadbury plc. union matters or social events and are likely to be displayed on a notice board. and the recipient. to a predertermined group or circle. The difference between a circular and a notice is circulars are announcements those are distributed to small or selective groups of people within an organization. whereas notices are meant for a larger group of people. to a certain extent the personal meet of the sales agents can be substituted. There are impersonal methods of communication i. a notice is a mention in writing. the latter is addressed to only one person. 2008). Ans.Generally printed or cyclostyled circular letters have a few advantages such as. to make the readers more interest in their contents. holiday arrangements. Basically. Circular letters are to be read by a large number of people. they both convey info. Notices may relate to vacant posts. before it demerged from its Americas Beverages manufacturing business in 2008 (Peston. The advantages of this method are: It can contain diagrams as well as written information. and so the agent need not wait to have an appointment. the same communication is sent to all the workers. The only diff is that while the former is strategically placed in known locations. may call upon the firm or the sales agent. Sometimes important notices are included with wage or salary slips. is the world’s leading .e. of which many copies have been made. In simple term. to attain the confidence of the readers and to stimulate sales.

affordable pure milk chocolate for many Indian customers (Cadbury Dairy Milk. Part of Cadbury Dairy Milk’s success lies in its shared history with India’s identity (it was first sold in 1948. 2000).) by targeting current consumers and encouraging them to make impulse purchases and by maintaining a superior marketing mix (Karvy Research. of which 30% is directly due to the success of its Dairy Milk product. towards market segments divided by age.. income. 2008). n. technological knowledge and healthconsciousness. Since Cadbury’s activities vary from country to country. 5 (about 0. 2008). Cadbury plc “operates in over 60 countries. 2003). (a) Cadbury Dairy Milk (i) Pricing Cadbury India enjoys controlling 70% of the confectionery market in India. has been designated its flagship brand (Cadbury India Ltd. 2008). milk food drinks. (ii) Consumer segments served and advertising/promotional strategies used Cadbury India Ltd continuously markets Dairy Milk as a relatively inexpensive treat.. but not affordable for those who buy from the less-then-3-rupee (Rs.). as such. Cadbury also aims to put “A Cadbury in every pocket” (Karvy Research.13 CAD).d. . Cadbury stresses the importance that it places on quality. 2006) and is relatively affordable by the Indian masses. has made the Cadbury dairy Milk bar synonymous with high quality. Apart from its mission statement. 2008) but also in the fact that it is priced relatively cheaply (Chatterjee. “Cadbury means quality” as an integral part of its business’s activities (Superbrands. albeit with different business strategies and approaches.000 direct and indirect suppliers and employs around 50. 2008).d. Its history of operating in the country and its average level pricing of chocolate bars. 2008). as the Indian subsidiary of this confectionery giant. this report will simply examine the activities of Cadbury India Ltd in the Indian market. one of the fastest growing confectioneries markets in the world (Financial Express. also utilizes the same mission and vision statements of its parent firm when operating in the Indian market. Lastly. Rs.confectionery manufacturer and distributor. 6. which averages sales of around 1 million bars per day (Cadbury Dairy Milk.000 people” (Cadbury India Ltd. is priced at Rs. 3) segment of the market (Chatterjee. 2006). works with over 35.50 billion (around 1. candy and gums categories (Cadbury India Ltd.. This report will examine two different products offered to the Indian market by Cadbury India: Cadbury Dairy Milk (chocolate category) and Cadbury Bournvita (milk drinks category). Chatterjee. candy and chewing gum (Cadbury India Ltd.. 2008). 2008. Even its smallest Dairy Milk bar. affordable by many middle-class Indians as an occasional treat. Cadbury India Ltd. 2008). 2008. but in the Indian market. n. one year after the country was made independent from the British Empire) (Cadbury Dairy Milk. Marketing Communications. Cadbury plc manufactures and sells three different kinds of confectionery: chocolate. Products offered by Cadbury India Ltd. it also references the slogan. its product line is split up into the chocolate confectionery.6 billion CAD) chocolate market (Gupta. Cadbury Dairy Milk bars are Cadbury India’s cash cow in the country’s 4000 tonne. the 13 gram version.

as Cadbury Dairy Milk is their “Gold Standard” for chocolate. Cadbury will need to address the needs of this market segment in order to boost its sales of Dairy Milk. Lastly. 1999). 2008) clearly targets the child segment of its market. who wish to enjoy the taste of dark chocolate but also its health benefits (Financial Express. 2008). Cadbury India continuously develops new versions of its Dairy Milk brand in order to keep its adult and children consumers satisfied and interested. This restrained marketing has allowed the chocolate to slowly become a measure of quality for many Indians. Cadbury’s market segmentation is quite effective because it allows them to target all three major market segments: children. Indian consumers seem to be satisfied with Cadbury Dairy Milk as its marketing promotes it as an occasional indulgence. further marketing in the form of the “Real taste of life” campaign (Cadbury Dairy Milk. which allowed students across the country to check their examination grades online and celebrate with Cadbury’s Dairy Milk if they did well (Cadbury Dairy Milk. Cadbury Dairy Milk Wowie. which are formal and informal communication that have their own set of characteristic features. 2008). as well as the Cadbury Dairy Milk Desserts. Furthermore. targets the health-conscious market segment of the chocolate market. The Cadbury Bournville Dark Chocolate bar. there can be two broad categories of communication. In fact. Cadbury managed to capture the attention of the nation and cement its market share superiority in India (Cadbury Dairy Milk. similar to the Dairy Milk bar. where the “pure taste of Cadbury Dairy Milk defines the chocolate taste for the Indian consumer” (Cadbury India Ltd. despite popular opinion that it is a relatively expensive luxury product (Cadbury India Ltd. the company stated promoting the chocolate for “the kid in everyone”. lower income consumers who buy from the less-than-3-rupee range of chocolate cannot afford to buy Cadbury Dairy Milk regularly. By using opinion leaders from Bollywood and using extensive advertising in newspapers. television.In the 1990’s. 2008. Marketing Communications. the most notable being its “Pappu Pass Ho Gaya” (Pappu Passed!) joint venture operation with Reliance India Mobile. 2008) attempted to absorb these customers into its market share. 2008). with Disney characters embossed on each chocolate square (Cadbury Dairy Milk. Cadbury Dairy Milk was voted one of the India’s most trusted brands in a poll conducted in 2005 (Cadbury Dairy Milk. 2008). Variations include the Fruit & Nut and Crackle & Roast Almond variations (Cadbury Dairy Milk. 2008) which are meant for snacking. adults and technologically-savvy consumers. magazines and massive billboards across the country. 2007). (iii) Product Positioning Based on the style of communication. 2008). Formal Communication . Although Dairy Milk is affordable to the upper and middle-income consumers who view it as a mid-priced item (Kochhar. “to cater to the urge for ‘something sweet’ after meals” (Cadbury Dairy Milk. In order to appeal to potential lower-income customers in the villages of India. a branch of India’s largest network service provider. 2008).. in an attempt to appeal to adults as well as children (Cadbury Dairy Milk. Cadbury’s is trying to tap into the potential market of younger generation Internet users by offering contests and hosting competitions online. but it does not serve those segments of the market that have been divided by income levels. Analysts Meet. 2008). Nowadays.

Cadbury India must maintain its current marketing strategy but slowly start to promote Dairy Milk as a household good so that consumers spend their rising disposable incomes on it and boost its sales (Rai.) and Nestle India around 27% (Nestle to expand. Cadbury simply cannot match this kind of national endorsement. Formal communication can also occur between two strangers when they meet for the first time. the booming economy and the increasing affluence of the burgeoning middle class (Basu. As seen in Appendix B. Cadbury India may have misinterpreted the popularity of Dairy Milk as a sign that the Indian public has accepted it as a household product. meetings and written memos and corporate letters are used for communication. its chocolates are viewed as being local and not luxurious. As mentioned earlier. 2006). Informal Communication: Informal communication includes instances of free unrestrained communication between people who share a casual rapport with each other. 2006). Informal conversations need not necessarily have boundaries of time. where the regular consumption of so-called luxury chocolates such as Cadbury Dairy Milk is viewed as fashionable (Kochhar. . 2008) of the chocolate market.). justifying a lower price tag (Chansarkar et al. Amul’s origins as a community welfare program in Gujarat. Informal communication does not have any rigid rules and guidelines. Although this has allowed it to control more of the market than its closest competitors. by kvsudepizzacom. 2008). Official conferences. 1999). whereas Amul controls around 2% (Dobhal. 2008) spanned the decades during which newly-independent India forged its identity.. Nestle’s subsidiary in India. Despite Amul’s longer history in India.. 2004) has promoted the use of status symbols. 1999) and not as household goods. it can try to be “Indian” too. This contradicts Cadbury’s assertion that its leadership is maintained by a “superior marketing mix” (Karvy Research. India’s own dairy company and Nestle India. 2007). In fact. Cadbury India Ltd’s main sources of competition come from Amul. place or even subjects for that matter since we all know that friendly chats with our loved ones can simply go on and on.Formal communication includes all the instances where communication has to occur in a set formal format. Cadbury’s main strength comes from it ability to market Dairy Milk products “through altering the theme and functionality of the product as the time demands” (Cadbury India Ltd Analysts Meet. official and always precise and has a stringent and rigid tone to it. The style of communication in this form is very formal and official. Informal communication requires two people to have a similar wavelength and hence occurs between friends and family. the reasons for its success may also lie in the fact that many Indians still view its chocolates as luxury products (Cadbury India Ltd Analysts Meet.d.d. one of India’s most industrialized states. n. so by at least promoting the fact that it has been operating in India for almost as long as Amul. to becoming a national enterprise (Amul. Hence formal communication is straightforward. Cadbury India controls around 70% (Cadbury India Ltd. thus becoming an integral part of India’s identity and giving its marketing strategy a new source of authority. n. Typically this can include all sorts of business communication or corporate communication.

This. in combination with the longest running advertising campaign that Amul is famous for gives it a brand awareness boost. and it uses this extensively to promote Cadbury Dairy Milk all over the country. one way to do this would be to follow Amul’s lead and develop and market products that meet specific ethnic needs. combined with successful marketing strategies and promotional offers. India alone accounts for 22% of the world’s malt-food milk drink retail sales (BeverageDaily. Cadbury India’s longer track history gives it a competitive edge. 2002). As a result of being one of the first products offered on the Indian market by Cadbury. 2004). due to its long history with India. 2008). 2004). (ii) Consumer segments served and advertising/promotional strategies used . (a) Cadbury Bournvita (i) Pricing Cadbury Bournvita was first sold on the Indian markets in 1948.35 CAD) a piece despite other sizes being available. The “Gold Standard” (Cadbury Dairy Milk. as this will eventually allow it to negate some of the extensive damage that this negative publicity has to the firm’s reputation. and is perceived to be quite expensive (Hawa. concepts that Cadbury India has yet to explore. as people’s confidence in its safety was shattered. endearing it to the consumers and boosting its sales. Cadbury will be able to position its chocolates as chocolate specifically designed for India. Their release of diabetic friendly chocolate and chocolates catering to different ethnic flavours (Janve and Dogra. 2002). Lastly. Cadbury Bournvita enjoys a 17% market share of the malt-based food drink market (Cadbury Bournvita. Bournvita is largely sold in 500 gram bottles for around Rs. Moreover. soon after Cadbury India Ltd (then known as Cadbury-Fry) was incorporated (Cadbury Bournvita. such as chocolates for Diwali and Rakshabandan (two different Indian festivals) (Kochhar. 2007) as well as chocolates for festive seasons allow them to rapidly sway consumers over to their products. The new extralayer packaging of chocolate that is now being used in the manufacture of Dairy Milk is a good first step to take in reclaiming some of the public’s trust (Vivek. but unlike Cadbury Dairy Milk. Cadbury Bournvita does not control a large share of India’s malt-based food drinks market. In comparison to Nestle India however. namely. Amul’s reputation for credibility. safety and consumer satisfaction was only reinforced when Cadbury India’s Chinese-made products were found to be contaminated with worms and melamine (Sinn and Karimi. 2008) was no longer gold. Customer satisfaction must be given the utmost importance. However. even if the company has to run at a loss for a few months. 2007) . nor was it a standard anymore. 2008). 1999). Cadbury has more of a brand recognition power than Nestle has. This accounts for their soaring annual market growth rates of 18% annually (Indian Express. Cadbury India must counter this threat that Nestle and Amul pose. Nestle still has to break into the Indian market. Amul’s innovative ideas will be the bane of Cadbury. 2008). the production of chocolates specifically for the festive seasons of India. 95 (2. In order to position its products as safe and affordable treats once again. By doing so. Bournvita’s still remains popular (Hawa. and the fact that it is used a staple source of nourishment by Indian mothers for their children. Cadbury India should make attempts to be even more sensitive to consumer demands.

This campaign was followed by the massively successful “Brought up right. the primary medium of communication for many Indians at the time (Ranjan. product design. Over the years. 2008. 2002. It focused on the “Good Upbringing. Goodness that grows with you” campaign to promote Bournvita as an essential health drink for children (Cadbury Bournvita. having first been aired in 1972. by supporting sports competitions and sponsoring athletes across the country. The new product is being aimed at the segment of children who want nutrition but also taste (Cadbury Bournvita. promotion and distribution have allowed Cadbury Bournvita to maintain its 17% market share over the years in India’s 220. This marketing campaign was broadcast on television and published in newspapers in an effort to recruit contestants (Kapoor. 2008). Cadbury has marketed Bournvita in order to appeal to the change in perceptions and tastes of its consumers. despite Cadbury Bournvita’s history of serving consumers in the Indian market. This campaign was conducted mainly on the radio. However. making it one of the most popular high school contests (Cadbury Bournvita. pregnant women and athletes (Hawa. By also sponsoring the Indian Olympic team to the Moscow Olympics of 1980 (Cadbury Bournvita. 2007). Furthermore. 2008) and allowed Cadbury Bournvita to keep “pace with the evolving mindsets of the new age consumers” (Cadbury Bournvita. a concept that appealed to many children. 2008). Bournvita challenged the public by promising complete physical and mental development for its consumers (Cadbury Bournvita. such as . In order to cement their consumer base and ensure brand loyalty. and amidst allegations of declining quality and taste of the Bournvita brand (Hawa. has involved more than 4000 schools and more than 1 million students. many customers still feel that Bournvita does not have the appeal that other brands. Cadbury Bournvita has managed to promote itself as a sports drink for athletes (Kapoor. 2008). 2008) to reach out to more children and promote the link between intelligence and Bournvita. one of its caramel chocolates helps maintain consumer interest. one of the most famous Indian examples of Cadbury Bournvita’s ingenious marketing is its sponsorship of the Bournvita Quiz Contest. 2008). Continuous brand re-invention. Bournvita bright” television. combining the flavour of the original chocolate Bournvita with the flavor of Cadbury 5-Star (Cadbury Bournvita. as well as one of Cadbury’s most successful marketing ventures till date. 2008). Cadbury Bournvita. newspaper and magazine campaign (Cadbury Bournvita. The Bournvita Quiz Contest is the longest running quiz show in India.Cadbury markets its Bournvita product in diverse market segments. BeverageDaily. 2007). The most recent marketing campaign undertaken by Cadbury Bournvita is the one specially designed to harness consumers’ uncertainty about the challenges of the new millennium. 2008). 2007). 2008).000 tonne malt-food market (Cadbury Bournvita. a “rich brand heritage” and complete overhauls in packaging. Bournvita has been marketed mainly towards children. vitality and nutrition necessary for facing the challenges of the new millennium (Cadbury Bournvita. Cadbury Bournvita has managed to appeal to an athletic market segment as well. 2002). Recently. in the 1990s. where the subsequent television marketing campaign secured Cadbury Bournvita’s place in the Indian market. The Contest spans 7 countries. 2004). The “Real Achievers who have grown up on Bournvita” campaign focused on preparing consumers with the health. The release of new versions of the original Bournvita such as Bournvita 5-Star. 2008). but also finds followers amongst elderly people.

Thus. Given than Horlicks has been operating in the Indian market for longer than Cadbury (Horlicks. this may possibly work against Complan as many families may feel that their child receives enough nourishment and does not require more. with products designed for different members of the family. As mentioned earlier. Although Cadbury Bournvita currently has a larger market share of the two. 2008). Since the words ‘nutritional supplement’ connote a need for extra nourishment. 2008).). in order to maintain its superiority. this larger market share may be explained by more consumer familiarity with Horlicks than with Bournvita. Delivering Cadbury products to customers India’s 300 billion USD retail market is growing at a rate of 30% per annum (Rai. more consumers have started switching over to consuming white drinks than brown drinks. Even the Bournvita Quiz Contest. 2002). 1999). Horlicks’ extensive marketing campaigns may also have played a part.d. thereby giving Horlicks a larger market share than Bournvita (Karvy Research. 2006). the malt-drinks market is split up into the white and brown drinks categories.).). The white drinks category is mainly led by Horlicks whereas the brown drinks category is led by Bournvita (Karvy Research. even elderly and convalescent consumers can consume the product without feeling conscious of consuming a child-only product. n.d.) rather than as a healthy drink for children. Thus. than Bournvita’s mainly child-oriented approach. the solution lies in Cadbury India marketing Bournvita as an adult drink as well. Cadbury Bournvita’s major source of competition comes from GlaxoSmithKline’s Horlicks and Heinz Food’s Complan. it must continue to market itself as a child-friendly drink.d.).d. 2006). and the brown drinks being popular in the northern and western parts of the country (Karvy Research. 2006) and then Complan with its 13% market share (Samajdar. In a country where half a billion people are under the age of 25. 2006). Complan’s market share of 13% (Samajdar. Cadbury Bournvita’s current marketing strategy is simply not enough. Although both products are targeted at children. Horlicks is the market leader with a 44% market share (Chatterjee. disposable incomes are on the rise and the economy is growing at a rate of 8% annually (Rai. selling treats such as . Complan has marketed itself as a “perfect nutritional supplement” (Complan. Cadbury India Ltd Analysts Meet. mainly attracts more child consumers to its product (Radakrishnan. n. Only then will it be able to compete effectively with Horlicks. (iii) Product Positioning The malt-based food drinks market in India is divided into brown drinks and white drinks categories (Cadbury India Ltd Analysts Meet. however. followed by Cadbury Bournvita with its 17% market share (Chatterjee..d. 2008).Horlicks do (refer to Appendix C) and thus the market is slowly switiching over to white malt-based food drinks such as Horlicks (Karvy Research. Meanwhile. n. n. which is Bournvita’s approach. which makes it more appealing to a wider section of the market. with white drinks being popular in the southern and eastern parts of the country. and thus cannot compete with Horlicks’ wider appeal. is less than Bournvita’s. Lately. 1999. 2006). When competing with Horlicks. 2006). Horlicks has always marketed itself as a “Great Family Nourisher” with products such as Mother’s Horlicks designed for different members of the family (Horlicks. As seen in Appendix C.d. effectively Bournvita’s longest running marketing campaign. n. n. such as Mother’s Horlicks (Horlicks. Karvy Research. and not as a nutritional supplement.

almost 3100 locations are directly supplied by Cadbury India Ltd distributors at least thrice a month (Cadbury India Ltd Analysts Meet. Furthermore. 1999) and compete with Horlicks. if Cadbury Dairy Milk can be marketed extensively enough to break the ‘luxury’ perception that consumers have of it currently (Cadbury India Ltd Analysts Meet. This objective can be accomplished by simply building on the good reputation and trust that it has earned. Amul’s yearly growth rate of 18% may slowly start to eat away at Cadbury’s success (Indian Express. it can benefit from inelastic demand as a household product. length of time serving India and its ability to develop and market products specifically tailored for Indian consumers. its Cadbury Dairy Milk success will only be short-term in nature and Bournvita will not be able to reverse the trend towards the consumption of white malted drinks (Cadbury India Ltd Analysts Meet. and by listening to the needs of its consumers. The Indian retail sector is composed of 97% “family-run. Conclusion Cadbury India Ltd’s position in India is relatively strong. but also sells its products through a chain of over 300. One key aspect of this lies in maintaining the safety of its products so that the name of Cadbury is always synonymous with high quality safe products. it will be able to isolate the benefits and drawbacks of its competitors’ marketing mix and use those to its own advantage. proper distribution channels must be identified. n. Cadbury India’s brand recognition aspect will immediately work against it by highlighting the link between its name and contaminated food products. thus generating a constant stream of revenue and cementing the Dairy Milk brand as a cash cow product. 2006) and the remaining 3% consisting of malls and shopping complexes. 1999). Therefore. 1999).Cadbury Dairy Milk bars and Cadbury Bournvita powder will generate massive returns. However.d. in order to be able to sell these products to customers. while also analyzing its competitors’ marketing strategies. Until then. As seen in Appendix D. Bournvita meanwhile needs to be extensively marketed in order to reduce the damaging effect that Horlicks’ family-friendly marketing mix is having on its market share. This will cripple sales and reverse the fruits of 70 years of . These distribution networks give Cadbury India its competitive edge in India’s massive consumer market.000 retailers spread across India (Cadbury India Ltd Analysts Meet. Repeats of the recent melamine and worms issues cannot be allowed to happen as once consumer confidence in its brand name is shattered. Furthermore. it must learn to address the specific needs of its consumers and continue to maintain their goodwill. of a total of 3600 locations that sell Cadbury products. In order to maintain its lead in such a large market. As a result of its witty marketing strategies. produces its products in factories spread geographically across India. 1999). 1999). SWOT Analysis of Cadbury India Ltd. The efforts of these retailers are augmented by the support of 1900 distributor locations and 27 depots (Cadbury India Ltd Analysts Meet. Cadbury must also appreciate the advantages of a positive reputation and always stress consumer satisfaction. Cadbury India Ltd.) can only be done if the company markets its Cadbury Dairy Milk as a household good and its Bournvita as a family-friendly drink. By doing so. Cadbury India Ltd’s objective of putting a “Cadbury in every pocket” (Karvy Research. 1999). street corner stores” (Rai. the key threat that can affect Cadbury India Ltd’s success in India is Amul’s innovative marketing strategy.

when sales usually dip due to the fact that the heat effects product quality and thereby consumption. This would be really effective in maintaining consumption in summer. It appears that company is likely to play the value game to expand the market encouraged by the recent success of its low priced ‘value for many packs’. The only concerns that the company has in this regard is the current high level of duties. . Efficient sourcing of key raw material i. At the same time the management is also aware of external changes taking place in the competitive environment and is taking steps to remain competitive in the future environment of free imports. The management is not unduly concerned about the huge deluge of imported chocolate brands in the market place. coca through forward purchase of imports. The company has added 8 million new consumer in the current year and how has consumer base of 60 million although the growth in absolute numbers is lower than targeted. It is of the view that size of this imported premium market is small to threaten its own volumes or sales in fact. The company is today the second best manufacturing location of Cadbury’s Schweppes in the world. • Use of it to improve logistic and distribution competitiveness • Utilizing mass media to create and maintain brands. New channel of marketing such as gifting and child connectivity and low end value for money product for expanding the consumer base have been identified. The company would be able to not only provide greater variety. where it could optimally use the global Cadbury Schweppes portfolio.6% and Cadbury’s share in the impulse segment is 4. • Improving distribution quality by addressing issues of product stability by installation of visi coolers at several outlets.e.hard work in the country. and low penetration of chocolate (22% of urban population) point towards a big opportunity of increasing the share of chocolate in the branded impulse among the costly alternative in the branded impulse market.8% factor like changing attitude. a large youth population. higher disposable income. which limit the opportunity to launch value for money products. the share of chocolate in 6. • The above are some steps being taken internally to improve future operation and profitability. the company looks at the tree important as an opportunity. Future Strategy In the branded impulse market. higher local consumption by entering long term contract with farmer and undertaking efforts in expanding local coca area development. In terms of manufacturing management focus is on optimizing manufacturing efficiencies and creating a world class manufacturing location for CDM and Éclairs. the company has been able to increase the width of its consumer base through launch of low priced products. The initiatives in the terms of development a long term domestic coca a sourcing base would field maximum gains when commodity prices start moving up. Various measures are undertaken in all areas of operation to create value for the future. leaving the path open for more efficient local companies like Amul to learn from Cadbury India’s mistakes and take over its market share. lower barrier to trade and the advent of all global players in to the country. but it would also be more cost effective to test market new product as well as improve speed of response to change in consumer preference through imports. • Expand the consumer base.

stakeholders and society. sustainability commitments and culture Cadbury plans to “deliver superior shareholder returns” (Cadbury plc.Q. It is a concise description of the existence and fundamental purpose of an organization. 2008). It integrates an understanding about the nature and aspirations of the organization and develops this conception to lead the organization towards a better objective. delivered through our priorities. A vision is the ability to view what the organization wants to be in future. Vision statement of L&T L&T employees shall be innovative and the empowered team will constantly create values and attain global benchmarks. 2008) by measuring its financial progress in the areas of growth. It conveys the purpose of the organization to its employees and the public. and we have an enduring commitment to become the undisputed best. It is a concise and motivating statement that guides the employees to select the procedures to attain the goals. Mission statement A mission statement is the extensive definition of the mission of an organization.Wal-Mart’s vision is to become worldwide leader in retailing. It conveys an effective business plan. It shall meet the expectations of employees. Vision statement A vision statement defines the purpose and principles of an organization in terms of the values of the organization. Vision statement is the framework of strategic planning. It is prepared for the organization and its employees. Example . L&T shall promote a culture of trust and continuous learning. Vision and Mission statements A well-articulated strategic intent guides the development of goals and helps in inspiring the employees to achieve targets. (10 marks) Ans. It is vital for the development and growth of the organization. It also facilitates in utilising the intent to allocate resources and in encouraging team participation. At the heart of our plan is our performance scorecard. It describes the present potentials and activities of the organization. We are currently the biggest. 5 Why do you think it is necessary for organizations to have vision and mission statements and also core competencies? Support your answer with relevant examples. It must synchronise with the organization’s principles. The ambition should be rational and achievable. (i) Cadbury’s Vision Statement Our objective is to deliver superior shareholder returns by realizing our vision to the be the world’s biggest and best confectionery company. efficiency. . It comprises of the vision and mission statements. capabilities and sustainability from 2008 to 2011 (Cadbury plc. It should be implanted in the organization being collectively shared by everyone in the organization. A vision statement describes the future ambition of an organization.

Example – Infosys has a core competency in information technology. Core competencies are those skills that are critical for a business to achieve competitive advantage.Mission statement is the responsibility by which an organization aims to serve its stakeholders. the core competencies also adjust to the change. we strive to be the forerunner in inventing. developing and manufacturing most advanced information technologies. We collaborate and work as teams to convert products into brands. storage systems and microelectronics. It is a unique skill or technology that establishes a distinct customer value. Q. the stakeholders and the reason for existence of an organization. functions and roles. Core competency is the key strength of business because it comprises the essential skills.” The distinction between mission statement and vision statement is that the mission statement focuses on the present position of the organization and the vision statement focuses on the future of the organization. It should be unique and different to leave an impact on everyone. Example -Wal-Mart’s mission is to provide ordinary customers the chance to buy the same thing as rich people. They are adaptable and advance over time. They change in response to the transformation in the environment of the company. The organization makes the maximum utilization of the competencies and correlates them to new opportunities in the market. including computer systems. the core competencies also adapt to the transformation. It gives a framework on the operations of the organization within which the strategies are devised. It should be clear and precise so that the actions can be taken based on it. As the organization progresses and adapts to the new environment. The strategy is devised in a manner that an organization can receive reasonable profit and attain strategic competitiveness. Mention some of the successful SBU of MNC’s. Mission statement of IBM “At IBM. What is SBU? Explain its features. These are the central areas of expertise of the company where maximum value is added to its services or products. . As an organization progresses and adapts to new circumstances. The statement distinguishes an organization from its other competitors by explaining its scope of activities. software. It should be practical and achievable. Our core purpose “Working together to create brands people love” captures the spirit of what we are trying to achieve as a business. These skills enable a business to deliver essential customer benefit like the selection of a product or service by a customer. They are not rigid but flexible to advancing time. its products and services used to achieve the goals and objectives. It describes the present capabilities. Resources and capabilities are the building blocks on which an organization builds and executes a value-added strategy. It should be credible so that the stakeholders accept it. 6. (ii) Cadbury’s Mission Statement Cadbury’s mission statement outlines its overall business objective and its commitment to its customers. Core Competencies are not fixed. technologies.

But if there are other sources. or the feedback that you may anticipate. independent from other SBUs. style/ quality. Strategic Business Unit (SBUs) is necessary when corporation starts to provide different products and hence. These strategic groups are called Strategic Business Units (SBUs). the critical spectators attending your presentation. corporate set different groups of product/product line regarding the strategy to follow (in terms of competition. Each Business Unit must meet the following criteria: 1. Study your subject. The unique small business unit benefits that a firm aggressively promotes in a consistent manner. use them to enhance your own insight. Doing so can also help you develop more confidence in your speech. prices. For . When companies become really large. you will discover that you are already halfway prepared to address your listeners. critical questions. substitutability. Have clearly definable set of competitors. they are best thought of as being composed of a number of businesses (or SBUs). Your level of comfort can depend on the size of your audience. 3.SBUs are also known as strategy centers. and simple questions (the ones which are so simple that you forgot to prepare an answer for). Strategic Business Unit or SBU is understood as a business unit within the overall corporate identity which is distinguishable from other business because it serves a defined external market where management can conduct strategic planning in relation to products and markets. Independent Business Unit or even Strategic Planning Centers. In the comfort of your own study lab (wherever that may be). Instructions: 1. Is able to carry out integrative planning relatively independently of other SBUs. The following steps can complete your preparation.Strategic Business Unit (SBU) is necessary when corporation starts to provide different products and hence. 2. With thorough and effective research about your subject. Whatever you may find as a cause for concerns about speaking before a group. 2.Incomplete Ans. Equip yourself with facts and insight accordingly. never let it be your knowledge about what you will speak. Have a unique business mission. anticipate all types of responding questions from people in your audience: challenging questions. need to follow different strategies. Should have a Manager authorized and responsible for its operation. and impact of product withdrawal). Delivering a formal presentation can be either fairly stress-free or nerve-wrecking. To ease its operation. You may have already been provided great information from which you could pull. such as the Internet or experts. crazy questions. need to follow different strategies.

So.paper or cards . Do not overestimate your listeners' attention spans. if you jot your notes down on index cards. I have read several message boards and even complaint sites to help me prepare for the unexpected. 10. that is). Don't expect an audience to read lengthy sentences or any paragraph . then look just past the last row of people to land your sight on either some empty seats or the wall. The audience does not need to see the back of your head. Give your tone some range (logical range. Organize the notes from which you will speak. While these expressions of intelligence seem effective. 6.enlightenment on people's views. you . which is what can happen if you read word-for-word from your notes. Dropping loose papers or cards during your speech should not distract an attentive listener. Practice your presentation in private and be willing to be your own biggest critic. bear in mind how you will insert information to be displayed. 3. Grab a tape recorder or any recording device to listen to your own speech. Please impose neither overly technical terminologies nor acronyms on your audience. the speaker. Remember that. bind the notes . Make your task a tad bit easier on yourself alleviating the possibility of that problem. There are corners of walls and other inanimate objects where you can place your focus until you find yourself comfortable enough to make brief eye contact with a few friendly or neutral faces. As I expressed above. Keep their interest.that you plan to use during your presentation. 5. Whether typed or handwritten. you must be able to comprehend them in order to convey them to an audience. By all means. do not prepare yourself to read every word written on that Power Point. and followed the tips above. And wherever your subject and the points from which you speak will allow. 4. write legibly. 9.no matter how much time they are given. Please do not imagine your audience in their underwear. 8. at this point. Also. Unless you have a reliable microphone. 7. there should be no reason to lose confidence. they actually reflect a lazy effort to communicate detailed and comprehensible information to listeners. approach the podium with a solid knowledge base about every point your will discuss. If you've studied your subject. engage your audience with illustrations which they can relate to. grasped a clear understanding of it. If you decide to speak with the aid of a Power Point presentation. If eye contact with any of those listeners intimidates you. 11. You need to focus. They don't need to hear your voice drift into a state of monotony. be sure to project. Remember that the last row of listeners need to hear your voice. but it can certainly distract you.

have the tools to conquer any sharp sensation that you may feel in the pit of your gut going before any group.2 . Master of Business Administration-MBA Semester 4 MB0052 – Strategic Management and Business Policy Assignment Set.

The strategic intelligence is the process of detailed description of what the company is and assessing its sphere of operations. Policy framing is one of the phases of strategic planning in the organization. The policies act as guidelines to . The elements of policy analysis process include evaluating the consequences of various alternatives and their effects on the objectives of the organization. Hence meetings are held to discuss the implementation of the policy that suits the best. the company must define the purpose in terms of guidelines needed for measuring the performance and obtaining the desired targets. etc.1 Explain with respect to policies – steps in framing business policy and stages of policy cycle. The major function of designing the policy relies upon the managers. A list of policy alternatives is generated by considering the probabilities of the problems faced by the organization. timings of production. — Preparation of strategic intelligence – This step involves analysing the internal environment of the organization. This step is the central phase of framing a policy. many factors are considered by the top level management to increase the production rate and the size of orders. It is based on the underlying objectives of the organization. Will these help in decision making? Ans.Q. This is done by the top level management. An alternative policy is based on the consequences to be faced by the organization. — Strategic choice – It is the process of selecting the policies that is best suited for the organization. The managers recognise the problems faced by the organization and discover the alternative policies. resources and the production. The top level management introduced an alternative to the inventory control policy that consisted of determination and evaluation of various conflicting factors. Framing and monitoring the policy is one of the critical tasks in the organization. The purpose is to select the guidelines for measuring the performance based on the organization’s strengths and weaknesses. The policy is adopted to represent a balance between the internal factors like employees. The basic concept of the business activities is defined in this phase. The prediction of the future happenings including the opportunities and risks must be known because it lays heavy impact on the company’s position in the market. In such a situation. — Policy alternatives – Alternating policies must be identified and analysed once the objectives of the organization are defined. — Policy analysis – This step involves analysing the alternative policies and examining its contribution towards the objectives of the organization. Example – Inventory systems in Das n Das Company The Das n Das Company invested on control systems to avoid taking decisions on the routine matter regarding the orders. Adding to such a conceptual view. Policy formulation is the process of designing the policy. The process of framing policies consists of the following steps: — Definition of purpose – The first step towards framing policies includes the process of identifying the objectives and the philosophy of the organization. its available resources and the personnel. Example – The perception of the garment company is to develop the finest cloth at less cost.

A list of factors is considered which includes processes.fulfill the organization’s purpose. This phase makes the policy visible to the employees in the organization. — Organizational design and modification – The existing organization must be reengineered or modified according to the new policy. The drafted policies adhere to the organizations objectives. implementing the policies systematically reduces the negative perception of the employees. They mainly deal with the organization’s needs. Policy implementation tasks are: — Policy legitimating – The proposed policy must obtain authenticity from the team implementing the policy. The next section defines policy cycle and describes the stages of policy cycle. Implementation of policy The implementation process is necessary to effectively communicate the drafted policies. Hence. These policies are necessary to govern the organization. It forms a standard and does not lend procedures. Writing policy It is the process of drafting the policy for the organization. revenue etc. The policy is drafted based on the various factors discussed in the meetings. The policies are created in such a way that it does not lead to controversies. — Constituency structure – The policy must be marketed in such a way that it promotes the relationship between the beneficiaries. — Policy review – Policy review is the process to evaluate whether the framed policy is matching the organizational performance. designing. Policy cycle is the process of analysing. This section explained the various steps involved in framing business policies. The policy cycle is necessary to implement this process. planning. It helps in creating procedures to govern the organization in specific situations. . The low level policies deal with a set of specific circumstances. — Resource allocation – The resources that are supporting the implementation of policy must be acquired or reallocated depending on the implementation of the strategy. Establishing the specific policies represents the strategic commitment towards achieving the objective of organization. The top level management organises committee meetings to discuss these factors and make a detailed planning for framing a policy. The policy statements must be clear. An environment of compliance is achieved between the organization norms and the employees only if the employees are aware of policies in the organization. The high level policies govern the entire company in all circumstances. and implementing the policies in the organization. employees view the policies as restrictions. resources. Hence it must be reviewed and reshaped as the objectives of the organization changes. Stages of policy cycle The policy cycle consists of the following stages: Setting the policy agenda Policy agenda is the process of describing the sequence of business activities in the organization and planning the measures to frame a policy. A separate team under framing business policies is responsible for writing policies. Every organization typically has high and low level policies. concise and easily implemented in the organization. Generally. A periodical review of policies is necessary to maintain the policies up to date.

2 Assess the challenges involved in Strategic Management in the near future. business policies have to be framed after a careful scrutiny and then decided whether such policies are needed or not. flexibility and assistance to other business decisions. Ans. Reviewing the policy Reviewing the policies is the process of checking whether the policies are matching the business activities in the organization. Strategic management includes strategic planning. Q. But in the modern business context strategic management faces many challenges such as: • Orientation for globalization- . Policies should act as guiding light to lead the organization and business strategies in the right path. Once policies are in place and implemented. Further. Both have to be complementary to each other. A policy should not hinder strategic decisions and in the same way. All the policies must be reviewed on daily basis. Therefore. All most all the modern organizations engage in strategic management to ensure that they achieve the desired level of performance.— Resource mobilization – The resources in the organization must be redirected to provide the capacity to conduct action as per the implemented policy. a strategy should not restrict policy decisions. Hence enforcing policies develops responses to the problems faced in the organization without hampering the organization’s success. If any errors are found that are not compatible to the organization’s views then it is reverted to the policy drafting team to re-draft. enever any business policy is framed. If the policies are not updated then the organization experiences issues with various factors in the organization. Reviewing policies ensures that they reflect the business realities of the moment. If the employees are found exploiting the policies then the organization has powers to impose penalties to the employees. it has to be observed by the decision makers as feasible and beneficial for the organization’s growth and success. Policy making decisions together with strategic decisions must provide clarity. Updating policy If any changes are made in the process of the business activities then the existing policies also must be changed. Interdependence between policy and strategy Business policies and business strategies requires compatibility. A change in policy or amendments done to existing policies should also be considered in decision making before implementing them. This phase includes re-examining the existing policies. Enforcing policy Enforcing policy is the process of applying the drafted policies in situations that are in compliance between the organization and the employees. it should not cause any major disruptions in the internal environment. Just because a policy is in place. it should further help in functional and operational decisions without causing any ambiguities or delays in procedures. The review team holds the responsibilities of updating policies. it doesn’t mean that it will help business decisions. The top level management has the clear responsibility for enforcing the policies. implementation and review/control of the strategy of an organization.

. CSR focuses in maintaining the effective business features in an organization. commercial and public expectations. Due to the globlised operations of the business world there are new orientations such as international human resource management (IHRM) and international finance are emerging. Strategic management should identify these external pressure groups and hear about their concerns. Strategic management process of the business should be able to accommodate e-commerce motives into the business process. legal. • Cut throat competitionWith the globalization. Q. e-commerce and other changes in the business environment.Every aspect of the business is getting globalised and business organizations step in to global operations with MNC and other foreign business operations methods. Pure Ltd. • Active pressure groupsIn the modern world there are active pressure groups operating such as environmental activism and consumer protectionism. They are also interested in meeting its business obligations. It deals in designer fabrics. The strategic management should be able to identify diversified business opportunities and manage them well. Ethics and corporate social responsibility are essential factors which influences business undertakings and its functional operations. Could you suggest to the management on how to go about it? Ans. Its top management comprises mainly of young talented persons. was a newly started company. Strategic management process should generate competitive intelligence and predict the next moves of the competitors and build the competitive strategy to win the battle with competitors. They would to know to make the company follow ethical codes and practice CSR as the company moves ahead. Company’s strategic management process has to be updated to cope up with these new orientations.3 Four years back. To diversify the business risk companies now engage in diversified operations where they focus on more than one business area/industry rather than specializing in one area. Corporate Social Responsibility (CSR) means operating a business that meets or exceeds the ethical. Business ethics are referred as moral rules and regulations governing the business world to guide in making effective corporate decisions. todays business world has become hyper competitive where the organization can no longer survive without executing proper competitive strategy. • DiversificationWith the rapid changing business environment and increased uncertainty the business risk has increased drastically. Strategic management should look into possible CSR activities and implement those to be in line with expectations of the society. • Emerging e-commerce and internet cultureWith the wide expansion of world wide wed (www) and the technology businesses have moved on to e-commerce where they conduct business electronic means such as online purchasing/selling and online advertising. • Motive for Corporate Social Responsibility (CSR) and ethicsThe modern business organizations have engage in CSR and ethics to keep up their corporate reputation and be competitive in the environment.

people and community. but it must respect ethical values. consumer protection. There are several social issues that affect the current business workplace. — Although an organization might succeed. businesses follow limited obligation towards social issues. Thus CSR makes a significant contribution towards sustainability and competitiveness of the organization. preserves employee rights and discourages discrimination at workplace. Business is about the relationships with people and community. ethical. responsibility. Social responsibility is demonstrated by the determination of the organization to treat customers. it exhibits the ethical behaviour that an organization exhibit towards its internal and external stakeholders.Corporate Social Responsibility (CSR) is the continuing obligation of a business to behave ethically and contribute to the economic development of the organization. it denotes the responsibility of an organization towards the environment and society in which it operates. — The quality and loyalty of company’s workforce must not change — The higher officials must possess the following qualities like honesty. Example – TATA implemented social welfare provisions for its employees since 1945 Business obligations are the ties which bind an organization to pay or to do something agreeable by the laws and customs of the country in which the obligation is made. On one hand. Following are some of the business obligations in terms of social. Obligations in terms of business are the duties of an organization towards the upliftment of the people and the country. consistency. but ethical standards play an important role in business decision making in an organization. safety at work. dignity etc. Factors which enhance social business obligations are as follows: — Implementing punishable act towards corruption or any illegal act in an organization — The employer-employee relationships must be stable. moral and environmental way: Social business obligations The sense of principles and morality regarding social and community issues may be referred to as the social obligations. It improves the quality of life of the organization. providing correct information to the consumers. sustainable management of natural resources. The meaning of CSR has two folds. But in the current world. employees and investors fairly and honestly. climate protection. Example – The reasons for the death of employees who inhale fumes from chemical spill in a factory is the negligence of social obligation that failed to provide safety and security for its employees. A portion of the business profits may be retained back so as to cycle the funds within the business. so on. fair pricing policies. caring for the environment. Organizations also have to essentially take care of the interests of its stakeholders and employees. There are various obligations of a business. CSR activities include commitment to product quality. resorting to legal assistance in case of unresolved business problems. CSR also provides health and safety measures. Moral business obligations . CSR is effective in number of areas such as human rights. And on the other hand. and such other issues.

In such cases BCP ensures that critical operations continue to be available. test-validated documentation. toxic waste spills. What is BCP? Discuss its importance and influence on strategic management. assumptions and social constructions of the employment relationship. etc. Moral responsibility is based on the relationships among friends. fire accident etc) but also routine interruption (e. manufacture of unsafe and defective products.g. failure of legislative bodies. Ethical obligations in an organization include the following ethical duties with different values. document containing the recovery timeline methodology. Wars. and action instructions developed specifically for use in restoring organization operations in the event of a declared disaster. Example – The emergence of HIV infection and AIDS has refocused the interest of moral obligations in preventing the transmission of such communicable disease by the medical institutes of the nation. . neighbours. Many ethical conflicts have arisen around the business world in the past. monopoly suppliers can exploit the consumers. major power interruption etc). Business continuity plan (BCP) is a process followed by an organization to survive in an event that causes disruption to normal business processes. corporate fraud.4. How contingency planning is related to BCP? Ans. BCP not only includes major disasters (e. loss of a building due to natural calamities. An organization has certain responsibility towards reducing unethical issues. The vital components of moral responsibility are deeply rooted in the structure of every society and are a part of social life. a business organization must help their employees to develop a new understanding of ethical values. access to vital records. To be effective. co-workers and family members. There are four groups of people who are generally responsible for the success of a business. educational system upliftment programme. Example – Worldwide inequality of income can result in unethical practices such as the child labour. The company could fulfill its CSR due to its ethical obligations. hard disk crash due to virus. Building ethical obligations in an organization is highly significant for a business. most Business Continuity Plans also require testing. gang violence. procedures. financial waste by governmental agenciesc are the outcomes of poor moral obligations of an organization. skilled personnel.Moral obligation is a responsibility of balancing various needs of an individual by accurate understanding of the right or wrong actions using the acquired knowledge by an organization.g. It includes employees. community and shareholders. Ethical business obligations In the time of rapid technological and social change. and alternate recovery resources including facilities”. Q. Collective moral responsibility of a business deals with appropriate arrangements of the widespread harm and misconduct by different groups. etc. A company owes an ethical obligation to the individuals and groups who are responsible for the success of the company. customers. Example – Infosys has developed its corporate social responsibility by establishing social rehabilitation and rural upliftment programme.

hurricanes or earthquakes. hacking. Millions of dollars invested and many years of hard work were lost. They are critical for the continuous operations in all types of businesses. Ellery systems went out of business and its employees lost their jobs. Corporate espionage organised crime. To accomplish this. or any common causes of systems disasters.BCP is a collection of procedures which is developed. This is an alarming statistic. recorded and maintained in readiness for use in the event of an emergency or disaster. In spite of giving attention to Business Continuity Planning following recent terrorist activities. They become highly vulnerable to loss of information and service a result of catastrophe. Organizations must plan for the recovery of critical business functions. contingency. In today’s scenario. BCP is very important due to the following reasons: — Advanced planning — Threats Advanced planning Many companies have realised that it is not sufficient to implement a generic BCP. with respect to continuous operations. As they didn’t implement BCP. To respond to this threat. Hackers could destabilise an organization’s entire operation. BCP must cover the requirements of IT. it is critical to ensure that employees and other users still get access to their data and applications as quickly and securely as possible. an analyst firm estimates that only 35% of the organizations have a comprehensive disaster recovery plan in place and fewer than 10% have crisis management. For an efficient response. Gartner. companies can organise various information management solutions by implementing network management procedures. it is important to use results generated from risk analysis and management activity to undertake focused. data and voice communications as well as of essential personnel and offsite locations. organization-specific security testing. Example for corporate espionage and organised crime – An employee of Ellery Systems Inc. Every company needs a detailed contingency plan that ensures continuous business operations in case of any unforeseen. using priorities and timescales that were obtained from assessed risks and accompanying data. Sometimes it can also be due to human interference like hacking or virus attack. organizations are still failing to put strategic contingency plans in place. Threats Natural disasters are not the only threats to a business operation. business recovery and business resumption plans. Business Continuity Planning is important to the continued success of an organization. it must adopt to specific risks and catastrophic situations which could range from major building loss to local system failure. . including vulnerability assessment and penetration testing of the network infrastructure. Where an event causes a company to close down its entire network. it is no longer sufficient for an organization to recover its technology and communications infrastructure but it must also have accessible people and accommodations in which they can work. Every organization is at risk due to natural disasters like flooding. difficult or catastrophic event occurs. Recently most of the organizations rely on technology to do business and give more importance to IT and communication services. The codes had a potential market value of billion dollars. whacking packet sniffing etc are some of the man-made disasters. resigned and took the computer software codes with him.

and working down the list to more costly and difficult strategies. It is an alternative course of action that can be implemented in the event when a primary approach fails to function as it should. Contingency plans should overcome these failures and continue with the functions of the organization. so it is best to have a variety of flexible and responsive solutions available.8. — Evaluate the costs and benefits of each strategy. — Evaluate the costs and benefits of each strategy. — Implement the required strategies to achieve the targets. The ranking can take other significant factors into account such as implementation and other additional benefits. It generally starts with the most cost effective and easy to implement strategies. The ranking can take other significant factors into account such as implementation and other additional benefits. It involves the following steps: — Identify the objectives and targets — Identify various strategies that help to achieve objectives and targets. assess the programs and strategies with regard to various performance measures. and working down the list to more costly and difficult strategies. It involves the following steps: — Identify the objectives and targets — Identify various strategies that help to achieve objectives and targets. to ensure that they are effective. and rank them according to costeffectiveness or benefit/cost ratios. to ensure that they are effective.2 Implementation Contingency plans can be practically applied to any level of organization as a part of planning process. Contingency plans can be practically applied to any level of organization as a part of planning process. 8. 8. — Emergency plan minimizes inconvenience to customers. — Evaluate overall results with regard to targets to decide if the additional strategies should be implemented. . It generally starts with the most cost effective and easy to implement strategies. allowing the organization to continue providing good and services. — After they are implemented.8. Organizations create contingency plans to achieve the objectives that are listed below: — Day to day operations of the organization continue without a great deal of interruption or interference. assess the programs and strategies with regard to various performance measures. — After they are implemented. — Backup plan is capable of remaining functional as long as it takes to restore primary plan. Contingency planning realises that future is impossible to predict.Contingency planning is a planning strategy that deals with uncertainty by identifying specific responses to possible future conditions. — Implement the required strategies to achieve the targets. — Evaluate overall results with regard to targets to decide if the additional strategies should be implemented.1 Concepts Contingency plans are developed by identifying possible failure in the usual flow of operations and strategies. and rank them according to costeffectiveness or benefit/cost ratios. Contingency plans allow the businesses and other entities to quickly adapt to the changing circumstances.

time and skills to achieve the objectives. acquire more customers. Merger is the process of combining two or more organizations to form a single organization and achieve greater efficiencies of scale and productivity. Collaboration is a win-win methodology. In a joint venture. cooperation and collaboration. The participating organization can help the active partner in acquiring products. The main reason to involve into mergers is to join with other company and reap the rewards obtained by the combined strengths of two organizations. Joint venture Joint venture is the most powerful business concept that has the ability to pool two or more organizations in one project to achieve a common goal. and excel among the competitors in the market. An individual partner in joint venture may offer time and services whereas the other focuses on investments. technical knowledge.Q. Collaborations and co-branding Collaboration is the process of cooperative agreement of two or more organizations which may or may not have previous relationship of working together to achieve a common goal. What kinds of problems were faced by companies that were involved in these strategic alliances? (10 marks) Ans. technology etc. This pools the resources among the organizations and helps each other in achieving the objectives. — The work culture in the organization must encourage teamwork. An agreement is formed between the two parties and the nature of agreement is truly beneficial with huge rewards such that the profits are shared by both the organizations. Joint venture has been the hallmark for most successful organizations in the world. — There must be effective team work and cooperation among the employees of both the organizations to achieve the goal. Effective collaboration can be obtained by the following actions: The organizations must get involve in the process from the beginning and avail the necessary resources for collaboration. distribution channel. It means that both the organizations insist upon each other to gain equal profits with no negative attitude of acquiring each other’s possessions. Such collaborations are the foundation for concepts like concurrent engineering or integrated product development. 5 Mention any 5 successful strategic alliances and discuss the key aspects concerned with it. . — Systematic approach of product development process must be based on sharing of information. A smart organization’s merger helps to enter into new markets. infrastructure to drive into new levels of success. experience and sharing skills of team members to effectively contribute to the development of a product rather working on narrow tasks as an individual team member in support to the development. It is the beginning to pool resources like knowledge. both the organizations invest on the resources like money.

and expertise are collaborated between the organizations. GPU inventor and the world’s visual technologies giant. respond to the needs of customers. It can also be used for promoting campaigns. This technology is viewed as the next big revolution in the field of technology in lending high performance in computing. The purpose of this partnering is to develop NVIDIA CUDA (Compute Unified Device Architecture). It also includes important provisions and the needs must be carefully drafted to provide clear guidelines to the involved organizations. machinery. The required resources like knowledge. An organised cobranding strategy leads the co brand partners to a win-win situation and helps in realising large demands in the market.Co-branding involves the process of combining two or more brands into a single product or service. introducing new product with strong image and to gain operational benefits. This will enable certain applications to achieve high performance. using cartoons on T-shirts. obligations. The contractual agreement is the heart of business dealings. The elements to be analysed are: — It is necessary to identify the type of offer being laid by the organization to make an agreement. The technologies of individual organizations are shared to achieve desired outcome. The two organizations work as co-owners in business and share the profits and losses. strengthening its competitive position. Example – The sportswear giant Nike formed co-branding agreements with Philips consumer electronic products. Technological partnering It is the process of associating the technologies of two different companies to achieve a common goal. The newly introduced digital audio player and portable CD players of Philips will be unveiled with the Nike logo to enhance profits in the market share in United States. Example – The software giant. Contractual agreements It is the process of agreement with specific terms between two or more organizations which guarantee in performing a specific task in return for a valuable benefit. Infosys Technologies Ltd. The capacity of CUDA is expected to multiply fifty times the performance of existing computing and reduce the run time to advance the user enterprise. It creates synergy among the various brands. has entered into partnership with US based NVIDIA. distributing through branded retailer etc. It is the most significant areas of legal concern and involves variations in certain situations and complexities. The organizations form co-branding to accomplish many goals which include expansion of customers. and restrictions that are abiding to both the organizations. . The co-branding agreement includes the important aspects such as rights. It is more frequently used in the field of fashion and apparels. It is becoming a positive way to associate different brands and develop a strong brand in the market. The software helps the developers of various applications to tap into the previously uncultivated power of the GPU. logos. obtain financial benefits. The organizations require analysing fundamental factors before involving in contractual agreements. The Philips electronic products will contain Nike’s logos and it is mainly marketed in United States since the market share of Philips is not much impressive.

provides feedback to the management to take corrective measures. All strategies are subject to constant modifications as the internal and external factors influencing a strategy change constantly. — Discover the terms and conditions for manufacturing the product and the guarantee of the organizations in fulfilling it. Strategic evaluation and control ensures that the organization is implementing the relevant strategy to reach its objectives. or renewal of the existing contract. It compares the current performance with the desired results and if necessary. Strategic evaluation and control consists of data and reports about the performance of the organization. The core aim of strategic management succeeds only if it generates a positive outcome. — The organizations are required to recognise the strong commitment towards the contractual agreement. Problems Involved in Strategic Alliances There are numerous problems related to strategic alliances. Some of them are: — One of the organizations suffers benefits due to incoherent goals — Lack of trust between the organizations lead to poor performance in achieving the desired goal — The existence of conflicts between the organizations’ due to internal issues like personnel and resources causes problem to the strategic alliance — Lack of commitment between the organizations leads to termination of the alliance contract — Many organizations experience the risk of sharing too much knowledge with the partner organization to become a competitor — Reduces the possibility of future opportunities of getting into agreement with partner’s competitors Q. It is essential for the strategist to constantly evaluate the performance of the strategies on a timely basis. 6 Give a note on strategic evaluation and strategic control. There are various types of contractual agreements. offers and counteroffers. — Systematic scheduling of the process involved in manufacturing product without any hindrances to both the organizations. enter into a contract to supply other’s requirements. The parties will be able to buy all manufactured products. They are: — Conditional – It is based on occurrence of an event. orders. — Joint and several – The organizations promise to perform together but still they possess individual responsibilities. The contract agreement includes several documents such as letters. Ans. Improper analysis.— The acceptance of the information involved in offer which results in meeting the market needs. The top management needs to be updated about the performance to take corrective actions for controlling the undesired performance. — Implied – The judicial court will determine the contract between the organizations based on circumstances. planning or implementation of the strategies will result in negative performance of the organization. .

activities that generate the performance (behaviour) and the result of actual performance (output). when necessary. Strategic control is established to focus on the resources used in the performance (input). • • • • • Control is taking measures that synchronize outcomes as closely as possible with plans Traditionally. Successful strategists combine patience with a willingness to take corrective actions promptly. the manager will have knowledge about the cause of the problem and the corrective actions. After the evaluation. The strategic-evaluation process with constantly updated corrective actions results in significant and long-lasting consequences. Strategic control involves tracking the strategy as it is being planned. new implementation procedures are introduced. If performance results are beyond the tolerance range.Strategic evaluation consists of performance and activity reports. One of the obstacles to effective strategic control is the difficulty in developing appropriate measures for important activities. Strategy evaluation is vital to an organization’s well-being as timely evaluations can alert the management about potential problems before the situation becomes critical. top internal accounting officer became the “In Charge” official for organization control policies and procedures What do we call the chief accounting officer of an organization? Answer: The Controller o Financial Information was primary source o Rewarded Efficiency o Encouraged Dysfunctional Behavior . Strategic control stimulates the strategic managers to investigate the use of strategic planning and implementation. has been almost completely based on financial performance Hence. implemented and take necessary actions when it indicates any negative performance.

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