Smu Assignment Semester-4

MB0052 Strategic Management and Business Policy

SUBMITTED BY: Name Program Code Roll No Centre Code

:SAYAD IMRAN ALLI :MBA :571119224 :2765

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MB0052 Strategic Management and Business Policy 1: The corporate strategy in different types of organizations: A well-formulated strategy is vital for growth and development of any Organization Whether it is a small business, a big private enterprise, a public sector company, a multinational corporation or anon-profit organization. But, the nature and focus of corporate strategy in these different types of organizations will be different, primarily because of the nature of their operations and organizational objectives and priorities. i)Small businesses, for example, generally operate in a single market or a limited number of markets with a single product or a limited range of products. The nature and scope of operations are likely to be less of a strategic issue than in larger organizations. Not much of strategic planning may also be required or involved; and, the company may be content with making and selling existing product(s) and generating some profit. In many cases, the founder or the owner himself forms the senior/top management and his(her) wisdom gives direction to the company. ii)In large businesses or companies whether in the private sector, public sector or multinationals the situation is entirely different. Both the internal and the external environment and the organizational objectives and priorities are different. For all large private sector enterprises, there is a clear growth perspective, because the stakeholders want the companies to grow, increase market share and generate more revenue and profit. For all such companies, both strategic planning and strategic management play dominant roles. iii)Multinationals have a greater focus on growth and development, and also diversification in terms of both products and markets. This is necessary to remain internationally competitive and sustain their global presence. For example, multinational companies like General Motors, Honda and Toyota may have to decide about the most strategic locations or configurations of plants for manufacturing the cars. They are already operating multi location (country) strategies, and, in such companies, roles of strategic planning and management become more critical in optimizing manufacturing facilities, resource allocation and control. iv)In public sector companies, objectives and priorities can be quite different from those in the private sector. Generation of employment and maximizing output may be more important objectives than maximizing profit. Stability rather than growth may be the priority many times. Accountability system is also very different in public sector from that in private sector. There is also greater focus on corporate social responsibility. The corporate planning system and management have to take into account all these factors and evolve more balancing strategies. v)In non-profit organizations, the focus on social responsibilities is even greater than in the public sector. In these organizations, ideology and underlying values are of central strategic significance. Many of these organizations have multiple service objectives, and the beneficiaries of service are not necessarily the contributors to revenue or resource. All these make strategic planning and management in these organizations quite different from all other organizations. The evaluation criteria also become different. Johnson and Stoles (2005) have given a good and detailed exposition of strategic management in various types of organizations mentioned above. 2: i)meaning of business planning: Business continuity planning (BCP) "identifies an organization's exposure to internal and external threats and synthesizes hard and soft assets to provide

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effective prevention and recovery for the organization, while maintaining competitive advantage and value system integrity. It is also called business continuity and resiliency planning (BCRP). ii) Importance of business continuity planning: As indicated in the definition, businesses today can be exposed to different types of threats-natural or man-made. Major threats are: a-natural disasters such as floods or earthquakes or accidents b-man made threats like sabotage or terrorism c-financial crisis or disaster can be partly man made and partly due to environmental factors. BCP prepares companies to prevent or respond to such situations so that the damages or losses are minimized and the business or company survives. Thus, bcp plays a critical role in a business its survival and sustainability. iii) Following business continuity planning: 1-prevention Conventionally, prevention is the best strategy; this means taking steps or actions to prevent or minimize the chances of occurring of a disaster. Companies can adopt May preventive control measures as safeguards. Common preventive control measures are: a-security controls: These involve controls by setting up barriers to protect the site and prevent unauthorized entry into the premises. This means, in other words, manned surveillance at the location. b-infrastructure controls: These include appropriate infrastructural facilities like UPS/back-up power, smoke/fire detectors, fire extinguishers, weather forecast ion systems, etc. c-Personnel controls: Skilled personnel are posted to man sensitive zones where key or critical resources may be located. d-software controls: These involve modern methods of controls through computerized systems or software .These includes authentication, encryption, firewall, intrusion detection systems, etc. 2-Response Prevention is a pre-emptive measure; response is a reactive step. If prevention is not possible, fast response is the next best alternative strategy. After an interruption or damage has taken place, the bop team should immediately inform the management and the damage assessment team. Two other teams would also be involved: the technical team and the operations team. The Damage assessment team would assess the nature and magnitude of the damage. More specifically, the team should investigate into: -the cause of disruption or damage -the scope for preventing additional damage -what can be salvaged -what repirs, restorations and replacements are required 3: Meaning of governed corporation: Governed corporation refers to the way a corporation is governed. It is the technique by which companies are directed and managed. It means carrying the business as per the stakeholders desires. It is actually conducted by the board of Directors and the concerned committees for the companys stakeholders benefit. Definition of governed corporation:

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Corporate governance ensures that long-term strategic objectives and plans are established and that the proper management structure is in place to achieve those objectives while at the same time, making sure that the structure functions to maintain the corporate integrity, reputation and responsibility to its various constituencies. Distinguish between managed corporation and governed corporation: I) managed corporation: a-boards role is to hire, monitor and , when necessary, change failed management. b)power sufficient to control the coo and the performance evaluation process c)independence to ensure that the ceo is impartially evaluated and those directors are not compromised or co-opted by management. ii) governed corporation: a-boards role is to foster effective decisions and monitor and reverse failed policies b-expertise sufficient to allow the board to add value to the decision making process and performance. b-expertise sufficient to allow the board to add value to the decision making process and performance. c-incentives to ensure that the board is committed to create organizational value. 4: Interdiction of cost efficiency: Various factors contribute to cost efficiency in an organization. These may even include factors which are not directly related to cost or cost management like general work environment or culture in the organization, motivation levels of managers, approach of the top management, etc. However, here we shall consider the factors that are directly related to cost competence or cost efficiency. Four factors of cost efficiency: i)Economies of scale: We know from economics that economies of scale are the most conventional and, also a very important source of cost efficiency. In manufacturing organizations, fixed cost (per unit of output), which initially remains very high, starts going down progressively as output increases. Because of this, average cost of output decreases as output increases, or the scale of operations increases. This also means increase in capacity utilization of plant and machinery. In nonmanufacturing organizations or non-manufacturing activities, economies of scale can be affected through mass advertising, mass marketing, extensive distribution, etc. Economies of scale can also be achieved through global partnering and global networks. Many MNEs sustain their competitiveness in the market through scale advantage. ii)Supply cost: Costs of raw materials and various inputs constitute supply cost. Inputs generally include raw material inputs or intermediate inputs and energy inputs. In an extended sense, these inputs can include factor inputs like labour also. In highly raw material-intensive industries like steel, cement adnoun-ferrous metals, supply costs constitute a very high proportion of total cost of the product and, therefore, become a very important determinant of the level of cost efficiency. In these industries, location influences supply cost because transportation becomes a significant component of total raw material cost. Thesis the reason why, in these industries, many plants are located near the raw material source or mines. This gives cost advantage to companies. In such

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industries, ownership of raw material can also give definite cost advantage. This

is why steel manufacturers like Tata Steel and nonferrous metal manufacturers, like NALCO, BALCO, and HINDALCO, have their own captive sources of raw materials (ores). In fact, NALCO, primarily because of
its captive sourcing of high quality bauxite, is one of the lowest cost producers of aluminium the world. Even in those industries which are not highly raw material-intensive, supply cost management becomes an important determinant of cost advantage or cost disadvantage. Inventory (of raw materials, components and spares) planning and management are also part of this. Companies are becoming increasingly aware of this. iii)Experience: Experience in any activity in an organization can be an important source of cost advantage or cost efficiencybe it manufacturing or any other functional area. Many studies have been conducted to establish the relationship between cumulative experience gained in an organization and its unit cost. The relationship is generally expressed as an inverse relationship between cumulative output and unit costunit cost decreases as cumulative output increases. The experience curve is the result of two major factors, namely, the learning effects and economies of scale. Learning effects refer to cost saving which comes from learning by doing. Labour, for example, learns through repetitive processes, how to perform a task more efficiently on the shop floor or in assembly lines. iv) Product/process design: Product design starts at the R&D stage even if its an imitation. Many feel that product design is the first step in efficient cost management, because the nature of the product determines, to a large extent, the raw material and other input requirements and supply cost. Cost efficiency in production processes can be achieved through better process engineering, increase in productivity (depends partly on the technology level) and better working capital management. Many companies have achieved cost efficiency through these methods. 5: Following are six situations when it is good/best to pursue stability strategy:i) Perception of management about performance: if the management is satisfied with present performance and, is not willing to take market risks, they may lime to adopt stability strategy and continue with it. The management may consider change of strategy only if results are not forthcoming. ii)Slowness to change: Some organizations are slow to change or resistant to change. This is particularly true of public sector companies. Many such companies are not organizationally equipped for fast or sudden change and latch the ability to cope with risk and uncertainty inherent in such change. iii) Frequent past changes: If a company had made frequent strategic changes in the past, it should follow stability strategy for some period for more efficient management. In fact, it is always recommended that, after a period of internal change and restructuring or expansions, stability strategy should be pursued as a pause or rehabilitation. Otherwise, the organization may show signs of destabilization. iv)Strategic advantage: If an organizations strategies lies in the present business an market, it should pursue stability strategy.If,for example, an organization has high market share, it can continue in the same business and defend its position through incremental strategic changes. v)Profit objective/maximization: Every company has some profit objective which is commensurate whit the level of investment, output level, market structure, willingness to take risk, etc.If the stability strategy helps the company

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achieve its profit objective, the company should stick to this. Sometime, stability strategy may even help in profit maximization. vi)Stable environment: Given the organizational resources and capablites.the nature of environment determines, to a large extent, the kind of strategy to be followed by a company. Exp: If the environment is generally stable in terms of macroeconomic situation, government policy regulations and competition, stability strategy may be the best. The particular strategy to be followed depends on the precise nature of the environmental impact. If the environment is hostile or volatile, stability strategy is not recommended. 6: Bbusiness ethics in Indian companies: As Rattan Tata, chairman of the Tata Group, observed, "If you choose not to participate in [corruption], you leave behind a fair amount of business." Much has been written about the benefits of doing business in India -- low input costs, easy access to labour and a massive consumer base. Less has been said about the ability of companies in India to thrive by bending rules, greasing palms and broadening ethical boundaries. Tarms of KPMG business ethics survey: A host of others, I have been asked multiple times if we reached a point where White Collar Crime may be on the decline. My response is heavens no! In fact, there are three components of an ethical lapse and the proliferation of White Collar Crime and NEED is at the top of the list. When the Economy stinks NEED IS HIG.To my left is a graph from a KPMG India Fraud Survey the entire report is found .In their report KPMG states that White-collar crime in corporate India has witnessed a substantial increase over the last two years.The graph shows the areas where respondents indicated that fraud had taken place. Interestingly enough, according to the report the incidents of fraud had increased by 10% from 2010 to the same survey in 2012.According to the KPMG Survey: Cracking down on fraud is critical for a country that needs investment. India is a fast-growing economy. The problem is a level of low confidence in international investors, which stems from corruption, Remit Mahakam, partner and co-head, forensic services, KPMG India, said at a press briefing in New Delhi. Besides international investors, this has also impacted entrepreneurial spirit in India.The infringements are of various kinds, with bribery and corruption making up 83% of cases. A large part of the frauds also relate to cyber crime (71%) and diversion of assets (65%). The sectors most affected are financial services (33%) and information and entertainment (17%), according to the survey. Most frauds (85%) are investigated internally and very little of the money is actually recovered, the survey said. The most effective methods for detecting frauds are whistleblowers, internal audits and data analytics. The challenge represented by this report is not limited to India. Other data suggests that similar patterns of fraud and white collar crime exist in all developed economies especially those whose development has been spurned by rapid economic growth. India and China for example. The challenge becomes how to stop the proliferation of white collar crime? Policies alone will not be the most significant deterrent. We must stem the gap between ethical policies and practical behavior.Often misconduct either never gets reported or when reported is somehow never escalated beyond direct managers. This silo of data prohibits effective solutions when combating white collar crime. For purposes of this post however the primary value is to observe

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the patterns of white collar crime so organizations will have an intelligent methodology to target abuse and curb unethical and potentially illegal practices.

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