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1UNIT-IIUNIT-IWELCOME TO THIS COURSE BUSINESS ENVIRONMENTUNIT-IIIBUSINESS ENVIRONMENTINTRODUCTION TO BUSINESS STRATEGYSTRATEGIC MANAGEMENT FOR BUSINESSCORPORATE STRATEGYTOP MANAGEMENTSTRATEGIC PLANNINGIMPLEMENTATION OF STRATEGYSOCIAL RESPONSIBILITY

BUSINESS ENVIRONMENT

UNIT I2CHAPTER I

BUSINESS ENVIRONMENT

3Business is an important institution in society. Business is nothing more than a person or group of persons properly organised to produce or distribute goods or services.The term business typically refers to the development and processing of economic values in society.Business is any organisation which makes distribution or provides any article or service to the customers, who are members of the society.INTRODUCTION BUSINESS ENVIRONMENTUNIT IBUSINESS ENVIRONMENTDEFINITION OF BUSINESS4CHARACTERISTICS OF BUSINESSUNIT IBUSINESS ENVIRONMENT5PURPOSE OF A BUSINESSIt is to create customers/clients in market.It is to create customers for selling their products and services.It is to create market for redlining and buying of product and services.Customers determine the main purpose of the business.Customers are the basic foundation of the business and keep their existence in the market.It is to be catering to material needs and requirement of the society, individual persons, government institutions, company, firms and enterpriseBusiness should be running within the purview of the legal and general public interest.It is the ultimate result of an economic expansion, growth and change of firmCHARACTERISTICS OF BUSINESS ENVIRONMENTEnvironment is complexEnvironment is dynamicEnvironment is multi-facetedEnvironment has a far reaching impact

UNIT IBUSINESS ENVIRONMENT6 ENVIRONMENTAL INFLUENCES AND ANALYSIS ON BUSINESSThe process by which strategists monitor the economic, governmental, legal, market, competitive, supplier, technological, geographic, and social-cultural settings to determine opportunities and threats to their firms, company and organisation

UNIT IBUSINESS ENVIRONMENT7ENVIRONMENT INFLUENCE ON SWOTEnvironment influence is a part of SWOT analysis. SWOT is the acronym of strengths, weaknesses, opportunities and threats

Weakness: A weakness is an inherent limitation or constraint or problem of the organisation. It creates strategic disadvantages to the company or organisation.

Opportunity: An opportunity is a favourable condition in the business organisations environment which enables it to consolidate the resource and strengthen its position.

Threat: A threat is an unfavourable condition in the business organisations environment which causes a risk for, or damage to, the organisation. Strength: Strength is an inherent resource capability of the organisation or company which can be used to gain strategic advantages from their competitors in the market. UNIT IBUSINESS ENVIRONMENT8COMPONENTS OF BUSINESS ENVIRONMENTInternal environmentComponents of businessenvironment of firmExternal environmentMicro environmentMacro environmentUNIT IBUSINESS ENVIRONMENT9EXTERNAL ENVIRONMENTExternal environment is an attempt to understand the outside forces of the organisational boundaries that help to shape the organisation. UNIT IBUSINESS ENVIRONMENT10MACRO/REMOTE ENVIRONMENTThe macro/remote environment principally consists of the following elements which are listed in the figure below:Macro Environment ElementsDemographicEconomicsGovernmentLegalPoliticalCulturalTechnologicalUNIT IBUSINESS ENVIRONMENT11CHAPTER IIINTRODUCTION TO BUSINESS STRATEGY

12Introduction to Business StrategyINTRODUCTIONStrategy is the direction and scope of an organisation in the long-term, which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the need of markets and to fulfill stakeholders expectations.

FEATURES OF STRATEGY The following are the features of strategy:

Strategy is significant because it is not possible to foresee the future. Without a perfect foresight, the firms must be ready to deal with the uncertain events which constitute the business environment. Strategy deals with long-term developments rather than routine operations, i.e., it deals with probability of innovations or new products, new methods of productions, or new markets to be developed in future.

Strategy is created to take into account the probable behaviour of customers and competitors. Strategies dealing with employees will predict the employee behaviour.UNIT IINTRODUCTION TO BUSINESS STRATEGY13STRATEGY AT DIFFERENT LEVELS OF BUSINESSUNIT IINTRODUCTION TO BUSINESS STRATEGY14TYPES OF POLICIES Marketing Policy: The basic attitudes underlying a companys marketing activity is called marketing policy. Financial/Economic Policy: Economic policy refers to the actions that government takes in the economic field. Personnel Policy: Is a set of rules or guidelines that defines the way in which an organisation deals with matters relating to staff, or a particular rule or guideline relating to a particular issue affecting staff.FEATURES OF BUSINESS POLICYAn effective business policy must have following features: Specific: Policy should be specific/definite in nature. If it is uncertain, then the implementation will become difficult. Clear: Policy must be unambiguous. It should avoid use of jargons and connotations. There should be no misunderstanding in following the policy. Reliable/Uniform: Policy must be uniform enough, so that it can be efficiently followed by the subordinates. Appropriate: Policy should be appropriate to the present organisational goal. Simple: A policy should be simple and easily understood by all in the organisation.

UNIT IINTRODUCTION TO BUSINESS STRATEGY15FEATURES OF BUSINESS POLICYAn effective business policy must have following features: SpecificPolicy should be specific/definite in nature. If it is uncertain, then the implementation will become difficult.

ClearPolicy must be unambiguous. It should avoid use of jargons and connotations. There should be no misunderstanding in following the policy.

Reliable/UniformPolicy must be uniform enough so that it can be efficiently followed by the subordinates

AppropriatePolicy should be appropriate to the present organisational goal.

SimpleA policy should be simple and easily understood by all in the organisation.

Inclusive/ComprehensiveIn order to have a wide scope, a policy must be comprehensive.

UNIT IINTRODUCTION TO BUSINESS STRATEGY16

FlexiblePolicy should be flexible in operation/application. This does not imply thata policy should be altered always, but it should be wide in scope so as toensure that the line managers use them in repetitive/routine scenarios. StablePolicy should be stable else it will lead to indecisiveness and uncertaintyin minds of those who look into it for guidance.DIFFERENCE BETWEEN POLICY AND STRATEGYPolicyStrategya.Policy is a blueprint of the organisational activity which is repetitive/routine in nature.a.Strategy is concerned with those organisational decisions which have not been dealt/faced before in same form.b. Policy formulation is the responsibility of top-level management.b. Strategy formulation is basically done by middle-level management.c.Policy deals with routine/daily activities essential for effective and efficient running of an organisation.c.Strategy deals with strategic decisions.d. Policy is concerned with both thought and actions.d. Strategy is concerned mostly with actions.e.A policy is what is, or what is not done.e.A strategy is the methodology used to achieve a target as prescribed by a policy.UNIT IINTRODUCTION TO BUSINESS STRATEGY17OBJECTIVES OF BUSINESSUNIT IINTRODUCTION TO BUSINESS STRATEGY18CLASSIFICATION OF OBJECTIVES OF BUSINESSUNIT IINTRODUCTION TO BUSINESS STRATEGY19

BUSINESS ENVIRONMENT

UNIT II20CHAPTER IIISTRATEGIC MANAGEMENT FOR BUSINESS

21NEED FOR STRATEGIC MANAGEMENTA companys strategy provides a central purpose and direction to the activities of organisation. Company must employ strategies to accomplish its basic objectives. These strategies must be clearly communicated to the people working in the organisation. UNIT IISTRATEGIC MANAGEMENT FOR BUSINESS22NEED FOR STRATEGIC MANAGEMENT IS FELT FOR THE FOLLOWING REASONSUNIT IISTRATEGIC MANAGEMENT FOR BUSINESS23STRATEGIC MANAGEMENT PROCESSUNIT IISTRATEGIC MANAGEMENT FOR BUSINESS24

BENEFITS OF STRATEGIC MANAGEMENTUNIT IISTRATEGIC MANAGEMENT FOR BUSINESSFACILITATES BETTER DELEGATIONASSISTS IN REALISTIC AND EFFECTIVE PLANSPROACTIVE APPROACHEXPLOITING OPPORTUNITIESBOOST PROFITTO GAIN COMPETITIVE ADVANTAGEMINIMISES WEAKNESSESPROMOTES EMPLOYEES PARTICIPATIONSYSTEMATIC APPROACH FOR MANAGEMENT DECISIONEMPOWERMENT OF EMPLOYEES25ROLE OF STRATEGY IN STRATEGIC MANAGEMENTDeliberate Attempt To Counteract Actions Of OpponentsEmergence of Tactful DecisionCreates System ApproachHelps in Formulating General PoliciesProvides Integrated ApproachMinimises RiskOptimum Use of Organisational ResourcesContinues ReviewUNIT IISTRATEGIC MANAGEMENT FOR BUSINESS26REASONS BEHIND FAILURE OF STRATEGIC MANAGEMENTStrategy is concerned with future course of action and the future being uncertain due to various reasons, definite strategy cannot be determined. It is likely to be erroneous if adopted.

Business cycles, government rules, competitors role, etc., make strategy planners weak and force them to change strategy very often.

Risk involved in the implementation of a strategy is more since strategy involves long-range planning which is subject to greater degree of uncertainty.

Success of strategy depends on the joint efforts and co-operation of people in the organisation and in practice, it is seldom expected and therefore, there are more unforeseen impediments in the successful implementation of the strategy.

Conficts between managers goals and the company goals may be an additional impediment.

Management is generally reluctant either to drop or modify the predetermined strategy for achieving the benefits of market opportunities.UNIT IISTRATEGIC MANAGEMENT FOR BUSINESS27CHAPTER IVCORPORATE STRATEGY

28CORPORATE STRATEGYCorporate strategy is related mostly to external environment. Corporate strategy is formulated at the higher level of management. At operational level, operational strategies are also formulated. It requires systems and norms for its efficient adoption in any organisation. Corporate strategy is concerned with a unified direction and efficient allocation of organisational resources and encompasses the entire management process. UNIT IICORPORATE STRATEGYINTRODUCTIONCorporate management is a broad phenomenon and covers a wide spectrum of activities. It is the direction an organisation takes with the objective of achieving business success in the long-term. Recent approaches have focused on the need for companies to adapt to and anticipate changes in the business environment, i.e., a flexible strategy. 29SCOPE OF CORPORATE MANAGEMENTThe term corporate management is an extension of the term corporate planning and also includes implementation and control aspects. More specific, the scope of corporate management is spread over different areas. They are as follows:Role of top management in corporate governance.Code of conduct including audit committee, governance committee, etc.Competitive scenario for dynamic and global markets.Market structures and network externalities.Strategic enablers like IT, R&D, knowledge and innovations, etc.Corporate social responsibility including ethics, values and social audit.Philanthropy as a strategic choice.UNIT IICORPORATE STRATEGY30

ESSENTIALS OF CORPORATE PLANNINGCorporate planning deals with the future of current decisions.The process of corporate planning integrates strategic planning with short-range operational plans.A few authorities use comprehensive corporate planning, strategic planning, long-range planning, formal planning, corporate planning, etc., as synonymous to each other.Corporate planning is viewed as an organisational process resulting in developing strategic intent and action plans to achieve the objectives.UNIT IICORPORATE STRATEGY31STEPS OF CORPORATE PLANNING PROCESSFollowing are the steps of corporate planning process:UNIT IICORPORATE STRATEGY32

Following are the benefits of corporate planningCorporate planning ensures a rational allocation of resources and improves co-ordination between various units or divisions.With corporate planning, significant improvement in performance is reflected.A formal planning system can help the management in responding to a dynamic environment and in managing a strategically complex organisation with limited resources.With corporate planning, a sense of making a systematic and critical review of business is developed.This develops a visionary approach. A habit of forward thinking is encouraged in forward planning.BENEFITS OF CORPORATE PLANNINGUNIT IICORPORATE STRATEGY33NEED FOR CORPORATE MANAGEMENTUNIT IICORPORATE STRATEGY34

FUNCTIONS OF CORPORATE STRATEGYIt provides a dual approach to problem solving. Firstly, it exploits the most effective means to overcome difficulties and face competition. Secondly, it assists in the deployment of scarce resources among critical activities.It focuses attention upon changes in the organisational set up, administration of organisational process affecting behaviour and the development of effective leadership.It offers a technique to manage changes. The management is totally prepared to anticipate, respond and influenced to look at changes. It also offers a different way of thinking.It furnishes the management with a perspective whereby, the latter gives equal importance to present and future opportunities.It provides the management with a mechanism to cope with highly complex environment characterised by diversity of cultural, social, political and competitive forces.UNIT IICORPORATE STRATEGY35KINDS OF CORPORATE STRATEGYUNIT IICORPORATE STRATEGY36LIMITATIONS OF CORPORATE STRATEGY

The process of strategy formulation is not an easy task.Corporate strategies are useful for long-range problems.As future is uncertain and cannot be predicted accurately, the strategic planning system based on hazy and uncertain estimates is not exact.Implementation of corporate strategy is influenced by organisational factors, behavioural factors and motivational factors. UNIT IICORPORATE STRATEGY37CHAPTER VTOP MANAGEMENT

38INTRODUCTIONMANAGEMENT LEVELSTOP LEVEL MANAGERSMIDDLE LEVEL MANAGERSFIRST LEVEL MANAGERSUNIT IITOP MANAGEMENT

Highest ranking executives with titles such as chairman, chief executive officer, managing director, president, executive directors, executive vice-presidents, etc., are responsible for the growth of the entire enterprise. Top management translates the policy formulated by the board of directors into goals, objectives and strategies and projects a shared vision of the future.39

BOARD OF DIRECTORSA board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organisation. The body sometimes has a different name, such as board of trustees, board of governors, board of managers, or executive board. DUTIES OF BOARD OF DIRECTORSFollowing are the duties of board of directors:Governing the organisation by establishing broad policies and objectives.Selecting, appointing, supporting and reviewing theperformance of the chief executive.Ensuring the availability of adequate financial resourcesApproving annual budgets.Accounting to the stakeholders for the organisations performance.Setting their salaries and compensation.

UNIT IITOP MANAGEMENT40BOARD OF DIRECTORSCHAIRMANCHIEF EXECUTIVEOFFICERPRESIDENTCHIEF FINANCIALOFFICERBOARD OF DIRECTORSUNIT IITOP MANAGEMENT41Chief Responsibilities and Skills of Top ManagementDUTIES OF BOARD OF DIRECTORSUNIT IITOP MANAGEMENT42

BUSINESS ENVIRONMENT

UNIT III43CHAPTER VI

STRATEGIC PLANNING

44INTRODUCTIONStrategic Planning consists of a set of decisions which leads to the development of an effective strategy. Strategic planning can be defined as the continuous process of making present entrepreneurial decisions systematically and with the greatest knowledge of their futurity; organising systematically the efforts needed to carry out these decisions; and measuring the results of these decisions against the expectations through organised systemic feedback.

UNIT IIISTRATEGIC PLANNING45STRATEGIC PLANNING

Strategic planning is a systematic and disciplined exercise to formulate strategy. It is more comprehensive as it concentrates on the whole organisation. Strategic planning is a forward-looking exercise which determines the future posture of the enterprise. Strategic planning is an organisations process of defining its strategy or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people.UNIT IIISTRATEGIC PLANNING46SETTING ORGANISATIONAL GOALS AND OBJECTIVESThe major outcome of strategic road-mapping and strategic planning, after gathering all necessary information, is the setting of goals for the organisation based on its vision and mission statement. A goal is a long-range aim for a specific period.It must be specific and realistic.Long-range goals set through strategic planning are translated into activities that will ensure reaching the goal through operational planning.Setting objectives involves a continuous process of research and decision-making.Strategic planning takes place at the highest levels; other managers are involved with operational planning. The first step in operational planning is defining objectivesthe result expected by the end of the budget cycle.UNIT IIISTRATEGIC PLANNING47THE SWOT MATRIXUNIT IIISTRATEGIC PLANNING48CHAPTER VII

IMPLEMENTATION OF STRATEGY

49ACTIVATING STRATEGYAfter designing strategies to be adopted in plans and finalising them, the top management should take necessary steps for implementing the designed strategy.STRATEGY FORMULATION vs. STRATEGY IMPLEMENTATIONStrategy formulation and implementation are intertwined.Strategy formulation is concerned with the development of long-term plans for effective management of environmental opportunities and threats, in the light of the organisational strengths and weaknesses. Strategy implementation is the process by which strategies and policies are out to action through the development of programmes, budgets and procedures.Implementation requires changes in the culture, structure and management system to the entire organisation.Strategy formulation, the thinking process implementation is the doing process.UNIT IIIIMPLEMENTATION OF STRATEGY50ASPECTS OF STRATEGY IMPLEMENTATIONStrategy implementation includes the following:STEPS IN IMPLEMENTATION OF A STRATEGYUNIT IIIIMPLEMENTATION OF STRATEGY51ISSUES IN STRATEGY IMPLEMENTATIONSuccessful implementation of a strategy depends on how efficient the organisation is in allocating resources, designing suitable structure, formulating functional strategies, etc. It should be noted that the objectives give rise to issues; issues lead to plans and plans result in different projects and programmes. It may include modernisation of existing facilities or installation or new or additional plants, etc. Important issues relating to strategy implementation are as follows:UNIT IIIIMPLEMENTATION OF STRATEGY52

IMPORTANCE OF ORGANISATIONAL STRUCTUREFollowing points illustrates the importance of organisational structureIt determines the nature of work to be done by different people in the organisation.It establishes relationship between various activities in the organisation.It establishes an effective communication system in the organisation.It ensures proper delegation of authority and responsibility.It ensures smooth functioning of the organisation.It ensures co-ordination among workers.It helps in effective use of human resource of the organisation.It encourages creativity.It helps in measuring performance of people in the organisation.UNIT IIIIMPLEMENTATION OF STRATEGY53CHAPTER VIII

SOCIAL RESPONSIBILITY

54

INTRODUCTIONThe social responsibility of a business refers to such decisions and activities of a business firm which provide for the welfare of the society as a whole along with the earning of profit for the firm. The business firm functions and acts in such a way that it will accomplish social gains along with the traditional economic gains in which the business firm is interested.CHARACTERISTICS OF SOCIAL RESPONSIBILITYFollowing are the characteristics of social responsibility:The concept of social responsibility of a business applies to all business organisations both in private and public sectors which have been established for earning profits.Social responsibility of a business is continuous process as business is a regular and an on-going activity.The concept of social responsibility of business lays emphasis on the all-round development of all the sectors of the business.The concept of social responsibility of business is the basis of the success of business. Today, the business cannot survive without the active support of the society.UNIT IIISOCIAL RESPONSIBILITY55IMPORTANCE OF BUSINESS ETHICSFollowing points illustrates the importance of business ethics:UNIT IIISOCIAL RESPONSIBILITY56TYPES OF SOCIAL AUDIT UNIT IIISOCIAL RESPONSIBILITY57