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Master of Business Administration - Semester 4 MB0052: Strategic Management and Business Policy (Book ID: B1314) ASSIGNMENT Q1.

Define the term Strategic Management. Explain the importance of strategic management.
Strategic Management Strategic management is a systematic approach of analyzing, planning and implementing the strategy in an organization to ensure a continued success. Strategic management is a long term procedure which helps the organization in achieving a long term goal and its overall responsibility lies with the general management team. It focuses on building a solid foundation that will be subsequently achieved by the combined efforts of each and every employee of the organization. Importance of strategic management A rapidly changing environment in organizations requires a greater awareness of changes and their impact on the organization. Hence strategic management plays an important role in an organization. Strategic management helps in building a stable organization. Strategic management controls the crises that are aroused due to rapid change in an organization. Strategic management considers the opportunities and threats as the strengths and weaknesses of the organization in the crucial environment for survival in a competitive market. Strategic management helps the top level management to examine the relevant factors before deciding their course of action that needs to be implemented in changing environment and thus aids them to better cope with uncertain situations. Changes rapidly happen in large organizations. Hence strategic management becomes necessary to develop appropriate responses to anticipate changes. The implementation of clear strategy enhances corporate harmony in the organization. The employees will be able to analyze the organization's ethics and rules and can tailor their contribution accordingly. Systematically formulated business activities helps in providing consistent financial performance in the organization. A well designed global strategy helps the organization to gain competitive advantages. It increases the economies of scale in the global market, exploits other countries resources, broadens learning opportunities, and provides reputation and brand identification. This section described the concept of strategic management and its need in the organization. Next section classifies the role of strategies in decision making in an organization.

Q2. Describe Porters five forces Model.


Porters Five Force model Michael E. Porter developed the Five Force Model in his book, Competitive Strategy. Porter has identified five competitive forces that influence every industry and market. The level of these forces determines the intensity of competition in an industry. The objective of corporate strategy should be to revise these competitive forces in a way that improves the position of the organization.

Forces driving industry competitions are: Threat of new entrants New entrants to an industry generally bring new capacity; desire to gain market share and substantial resources. Therefore, they are threats to an established organisation. The threat of an entry depends on the presence of entry barriers and the reactions can be expected from existing competitors. An entry barrier is a hindrance that makes it difficult for a company to enter an industry. Suppliers Suppliers affect the industry by raising prices or reducing the quality of purchased goods and services. Rivalry among existing firms In most industries, organizations are mutually dependent. A competitive move by one organization may result in a noticeable effect on its competitors and thus cause retaliation or counter efforts. Buyers Buyers affect an industry through their ability to reduce prices, bargain for higher quality or more services. Threat of substitute products and services Substitute products appear different but satisfy the same needs as the original product. Substitute products curb the potential returns of an industry by placing a ceiling on the prices firms can profitably charge. Other stakeholders - A sixth force should be included to Porters list to include a variety of stakeholder groups. Some of these groups include governments, local communities, trade association unions, and shareholders. The importance of stakeholders varies according to the industry.

Q3. Define the term Business policy. Explain its importance.


Business policies are the instructions laid by an organization to manage its activities. It identifies the range within which the subordinates can take decisions in an organization. It authorizes the lower level management to resolve their issues and take decisions without consulting the top level management repeatedly. The limits within which the decisions are made are well defined. Business policy involves the acquirement of resources through which the organizational goals can be achieved. Business policy analyses roles and responsibilities of top level management and the decisions affecting the organization in the long-run. It also deals with the major issues that affect the success of the organization. Importance of Business Policies A company operates consistently, both internally and externally when the policies are established. Business policies should be set up before hiring the first employee in the organization. It deals with the constraints of real-life business. It is important to formulate policies to achieve the organizational objectives. The policies are articulated by the management. Policies serve as a guidance to administer activities that are repetitive in nature. It channels the thinking and action in decision making. It is a mechanism adopted by the top management to ensure that the activities are performed in the desired way. The complete process of management is organized by business policies. Business policies are important due to the following reasons:

Coordination Reliable policies coordinate the purpose by focusing on organizational activities. This helps in ensuring uniformity of action throughout the organization. Policies encourage cooperation and promote initiative. Quick decisions Policies help subordinates to take prompt action and quick decisions. They demarcate the section within which decisions are to be taken. They help subordinates to take decisions with confidence without consulting their superiors every time. Every policy is a guide to activities that should be followed in a particular situation. It saves time by predicting frequent problems and providing ways to solve them. Effective control Policies provide logical basis for assessing performance. They ensure that the activities are synchronized with the objectives of the organization. It prevents divergence from the planned course of action. The management tends to deviate from the objective if policies are not defined precisely. This affects the overall efficiency of the organization. Policies are derived objectives and provide the outline for procedures. Decentralization Well defined policies help in decentralization as the executive roles and responsibility are clearly identified. Authority is delegated to the executives who refer the policies to work efficiently. The required managerial procedures can be derived from the given policies. Policies provide guidelines to the executives to help them in determining the suitable actions which are within the limits of the stated policies. Policies contribute in building coordination in larger organizations.

Q4. What, in brief, are the types of Strategic Alliances and the purpose of each? Supplement your answer with real life examples.

Types of Strategic Alliances and Business Decisions The mutual agreements between the organizations can take a number of forms and are increasing their common goals to get upper hand over their competitors. The different types of strategic alliances are listed below: 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. In a joint venture, both the organizations invest on the resources like money, time and skills to achieve the objectives. Joint venture has been the hallmark for most successful organizations in the world. An individual partner in joint venture may offer time and services whereas the other focuses on investments. This pools the resources among the organizations and helps each other in achieving the objectives. 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. Example The China Wireless Technologies, a mobile handset maker is getting into an agreement with the Reliance Communications Ltd (RCom) to launch its new mobile. The joint venture between the two companies is to gain profits and provide affordable mobile phones to the market that consists of advanced features and aims to earn eight billion dollars in the next five years. The new mobile consists of dual SIM smart phone with 3G technology at a cheaper rate.

Mergers and acquisitions

Merger is the process of combining two or more organizations to form a single organization and achieve greater efficiencies of scale and productivity. 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. A smart organization's merger helps to enter into new markets, acquire more customers, and excel among the competitors in the market. The participating organization can help the active partner in acquiring products, distribution channel, technical knowledge, infrastructure to drive into new levels of success. Acquisition is the process of purchasing an organization by another organization, either through the purchase of its shares or assets

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. It is the beginning to pool resources like knowledge, 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.

Co-branding involves the process of combining two or more brands into a single product or service. It is becoming a positive way to associate different brands and develop a strong brand in the market. It creates synergy among the various brands. An organized co-branding strategy leads the co brand partners to a win-win situation and helps in realizing large demands in the market. Example The sportswear giant Nike formed co-branding agreements with Philips consumer electronic products. The Philips electronic products will contain Nikes logos and it is mainly marketed in United States since the market share of Philips is not much impressive. 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. Technological partnering

It is the process of associating the technologies of two different companies to achieve a common goal. The two organizations work as co-owners in business and share the profits and losses. The technologies of individual organizations are shared to achieve desired outcome. The required resources like knowledge, machinery, and expertise are collaborated between the organizations. Example The software giant, Infosys Technologies Ltd. has entered into partnership with US based NVIDIA, GPU inventor and the world's visual technologies giant. The purpose of this partnering is to develop NVIDIA CUDA (Compute Unified Device Architecture). This technology is viewed as the next big revolution in the field of technology in lending high performance in computing. The software helps the developers of various applications to tap into the previously uncultivated power of the GPU. This will enable certain applications to achieve high performance. 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.

Contractual agreements

It is the process of agreement with specific terms between two or more organisations which guarantee in performing a specific task in return for a valuable benefit. The contractual agreement is the heart of business dealings. It is the most significant areas of legal concern and involves variations in certain situations and complexities. The contract agreement includes several documents such as letters, orders, offers and counteroffers.

Outsourcing

It is the process of entering into a contract with an organization or a person to perform a particular function. Most of the organizations outsource the work in numerous ways. The function being outsourced is considered as noncore to the organization. Example Tatvasoft is an Indian outsourcing company that offers software development services to its clients in United States, Canada and Australia. They provide software outsourcing services and solutions with the focus on secure, scalable, and reliable business systems. The key benefits of outsourcing are cost efficiency, availability of trained staff, flexible manpower utilization, and risk minimization.

Q6. Write short notes on: a) Corporate social responsibility b) Business plan
Corporate Social Responsibilities (CSR) Corporate Social Responsibility (CSR) is the continuing obligation of a business to behave ethically and contribute to the economic development of the organization. It improves the quality of life of the organization. The meaning of CSR has two folds. On one hand, it exhibits the ethical behavior that an organization exhibit towards its internal and external stakeholders. And on the other hand, it denotes the responsibility of an organization towards the environment and society in which it operates. Thus CSR makes a significant contribution towards sustainability and competitiveness of the organization. CSR is effective in number of areas such as human rights, safety at work, consumer protection, climate protection, caring for the environment, sustainable management of natural resources, and such other issues. CSR also provides health and safety measures, preserves employee rights and discourages discrimination at workplace. CSR activities include commitment to product quality, fair pricing policies, providing correct information to the consumers, resorting to legal assistance in case of unresolved business problems, so on. Example TATA implemented social welfare provisions for its employees since 1945.

Business plan
A business plan is a complete internal document that summarizes the operational and financial objectives of a business. It also contains the detailed plans which show how the objectives are being accomplished. An accurately made business plan helps to allocate resources properly, to handle unforeseen complications like financial crisis and to make good business decisions.