Business Policy & Strategic Management- Answers -Word Document

8/3/2019 Business Policy & Strategic Management- Answers -Word Document

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Business Policies & SM

1) What are the different generic competitive strategies

Ans:

A competitive advantage is an advantage over competitors gained by offering consumers

greater value, either by means of lower prices or by providing greater benefits and servicethat justifies higher prices.

Competitive Strategies

Following on from his work analysing the competitive forces in an industry, Michael

Porter suggested four "generic" business strategies that could be adopted in order to gain

competitive advantage. The four strategies relate to the extent to which the scope of a

businesses' activities are narrow versus broad and the extent to which a business seeks todifferentiate its products.

The four strategies are summarized in the figure below:

The differentiation and cost leadership strategies seek competitive advantage in a broad

range of market or industry segments. By contrast, the differentiation focus and cost

focus strategies are adopted in a narrow market or industry.

Strategy - Differentiation

This strategy involves selecting one or more criteria used by buyers in a market - andthen positioning the business uniquely to meet those criteria. This strategy is usually

associated with charging a premium price for the product - often to reflect the higher

production costs and extra value-added features provided for the consumer.Differentiation is about charging a premium price that more than covers the additional

production costs, and about giving customers clear reasons to prefer the product over

other, less differentiated products.Examples of Differentiation Strategy: Mercedes cars; Bang & Olufsen

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Strategy - Cost Leadership

With this strategy, the objective is to become the lowest-cost producer in the industry.

Many (perhaps all) market segments in the industry are supplied with the emphasisplaced minimizing costs. If the achieved selling price can at least equal (or near) the

average for the market, then the lowest-cost producer will (in theory) enjoy the best

profits. This strategy is usually associated with large-scale businesses offering "standard"products with relatively little differentiation that are perfectly acceptable to the majority

of customers. Occasionally, a low-cost leader will also discount its product to maximise

sales, particularly if it has a significant cost advantage over the competition and, in doingso, it can further increase its market share.

Examples of Cost Leadership:Nissan; Tesco; Dell Computers

Strategy - Differentiation Focus

In the differentiation focus strategy, a business aims to differentiate within just one or a

small number of target market segments. The special customer needs of the segment

mean that there are opportunities to provide products that are clearly different from

competitors who may be targeting a broader group of customers. The important issue forany business adopting this strategy is to ensure that customers really do have different

needs and wants - in other words that there is a valid basis for differentiation - and thatexisting competitor products are not meeting those needs and wants.

Examples of Differentiation Focus: any successful niche retailers; (e.g. The Perfume

Shop); or specialist holiday operator (e.g. Carrier)

Strategy - Cost Focus

Here a business seeks a lower-cost advantage in just one or a small number of market

segments. The product will be basic - perhaps a similar product to the higher-priced andfeatured market leader, but acceptable to sufficient consumers. Such products are often

called "me-too's".

Examples of Cost Focus: Many smaller retailers featuring own-label or discounted labelproducts.

2) Define SWOT. How it is relevant for strategy formulation? Present SWOT analysis

of a company of your choice

Or Demonstrate SWOT on KPO industry in India. Justify your argument

Ans:

SWOT Analysis:

SWOT stands for Strengths, Weaknesses, Opportunities and Threats. The analysis is a

preliminary to strategic formulation exercise, which is a key element ofbusinessmanagement. The whole exercise starts with the setting of clear objectives to be

achieved; this objective can be a future business scenario towards which the company

wants to move.

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Once the objective is specified, a situation analysis is done to identify and list existing

factors that can prove helpful in achieving the objectives and also those that can pose

problems. The situation analysis looks at both internal factors and external environmentalfactors. The internal analysis seeks to reveal the strengths and weakness of the company,

while the external analysis looks at marketing and competitive environment as well as

other factors that can affect the particular business or businesses in general.

The SWOT Matrix

The results of the analysis are represented in a matrix with four quadrants, representingStrengths, Weaknesses, Opportunities and Threats. The following list illustrates typical

factors that are included under these heads:

Strengths: Technology Know-how, Strong Brand Name, Established DistributionChannels, Good Product Reputation, Excellent Customer Relationship, Effective

Management

Weaknesses: Lack of technical skills, No Brand Name, Poorly Organized DistributionNetwork, Quality Problems, Poor Customer Retention Record

Opportunities: New Technologies, Changing Market Conditions, Removal of Geographic

Trade Barriers, Changing Population Age Structure, New Distribution Channels

Threats: All the items listed as opportunities can work in reverse, posing threats to aparticular business. For example, new technologies can make the company's product

obsolete, and removal of trade barriers can flood the market with competing products

from other countries

It must be noted that only those factors that affect strategy formulation are relevant in the

analysis. If a factor is not going to affect strategy one way or other, it should be ignored.

Strategic formulation

The findings of the SWOT analysis should be consciously used in formulating thestrategies to achieve predefined objectives. Otherwise, the analysis becomes a mere

listing exercise.

The strategic formulation is related to the SWOT findings by:

Identifying how the strengths can be utilized to pursue those opportunities

that are a good fit for these strengths

If there are some excellent opportunities that are not such a good fit,identifying ways to overcome the weaknesses that stand in the way of

pursuing these

In the case of potential threats, identifying how the strengths of thecompany can be used to minimize the degree of vulnerability

Where the vulnerabilities are related to the company's weaknesses,

developing a plan to prevent the threats from destroying the business

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SWOT analysis is a strategic planning preliminary. It seeks to list the strengths and

weaknesses of the planning entity, and the opportunities and threats in the external

environment that can help or hinder achieving defined objectives.

SWOT Analysis on Indian KPO industry

Knowledge Processing Outsourcing is an emerging sector and is growing at a very rapidrate. Many high- end areas of specialization that were earlier not considered for

outsourcing are now being outsourced and are being handled by KPOs. Factors like cost,

technology and labour availability, etc force organizations to outsource their high- endwork. India has become a major KPO player in the world. Indian KPO sector has many

opportunities for SMEs. Indian economy, the education system, political stability,

technology, communication skills and qualified workforce altogether make India an

excellent location for KPOs. KPO industry has a bright future.

StrengthsLarge talented pool

Quality IT trainingLow labour costs

Success of BPOsGood knowledge of project management

skills

Supportive government policiesMany new areas of specialization are

being covered making KPO sector

spreading its wingsConsideration to quality standards like

ISO 900x and Six Sigma

Billing rates are lower as compared tobilling rates in other countries

Weaknesses Immoral and unethical practices related

to handling of crucial data Rising wages

The inability to uniformly develop andprovide infrastructural requirements as

real estate prices are rising in major cities.

Inadequate Intellectual Property Rights(IPR) protection regime in India

Billing rates are higher as compared to

billing rates in BPOs

Opportunities

Increasing domain expertise

More areas of specialization can be added

to KPOsAmple opportunities for SMEs

Threats

Non retention of talent

Expected labour supply gap as jobs grow

faster than the workforce.

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3) What do you mean by Social responsibility of business? Should social responsibility

be a part of business objectives? Explain

OrWhat are the basic social obligation of business organization? Do these conflict withprofit objective of business

Ans:

Definitions of social responsibility

An obligation, beyond that required by the law and economics, for a firm to

pursue long term goals that are good for society

The continuing commitment by business to behave ethically and contribute to

economic development while improving the quality of life of the workforce and

their families as well as that of the local community and society at large

About how a company manages its business process to produce an overall

positive impact on society

Business social responsibility means:

Conducting business in an ethical way and in the interests of the wider

community Responding positively to emerging societal priorities and expectations

A willingness to act ahead of regulatory confrontation

Balancing shareholder interests against the interests of the wider community

Being a good citizen in the community

The business responsibility view

Businesses do not have an unquestioned right to operate in society Those managing business should recognise that they depend on society

Business relies on inputs from society and on socially created institutions

There is a social contract between business and society involving mutual

obligations that society and business recognise that they have to each other

The responsibility includes a responsibility for the natural environment.

Decisions should be taken in the wider interest and not just the narrow

shareholder interest

Arguments for socially-responsible behavior

It is the ethical thing to do It improves the firm public image

It is necessary in order to avoid excessive regulation

Socially responsible actions can be profitable

Improved social environment will be beneficial to the firm

It will be attractive to some investors

It can increase employee motivation

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4) What are the implications of taking strategic management as a process? How is it

dynamic process

Or Discuss the nature and importance of Strategic management

Ans:

Strategic management is an ongoing process that evaluates and controls the business and

the industries in which the company is involved; assesses its competitors and sets goals

and strategies to meet all existing and potential competitors; and then reassesses eachstrategy annually or quarterly [i.e. regularly] to determine how it has been implemented

and whether it has succeeded or needs replacement by a new strategy to meet changed

circumstances, new technology, new competitors, a new economic environment., or a

new social, financial, or political environment.

The Strategic Planning Process

Mission

|

V

Objectives

|

V

Situation Analysis

|V

Strategy Formulation

|V

Implementation

|

V

ControlThis process is most applicable to strategic management at the business unit level of the

organization. For large corporations, strategy at the corporate level is more concernedwith managing a portfolio of businesses. For example, corporate level strategy involves

decisions about which business units to grow, resource allocation among the business

units, taking advantage of synergies among the business units, and mergers andacquisitions. In the process outlined here, "company" or "firm" will be used to denote a

single-business firm or a single business unit of a diversified firm.

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Mission

A company's mission is its reason for being. The mission often is expressed in the formof a mission statement, which conveys a sense of purpose to employees and projects a

company image to customers. In the strategy formulation process, the mission statement

sets the mood of where the company should go.

Objectives

Objectives are concrete goals that the organization seeks to reach, for example, anearnings growth target. The objectives should be challenging but achievable. They also

should be measurable so that the company can monitor its progress and make corrections

as needed.

Situation Analysis

Once the firm has specified its objectives, it begins with its current situation to devise a

strategic plan to reach those objectives. Changes in the external environment often

present new opportunities and new ways to reach the objectives. An environmental scanis performed to identify the available opportunities. The firm also must know its own

capabilities and limitations in order to select the opportunities that it can pursue with ahigher probability of success. The situation analysis therefore involves an analysis of

both the external and internal environment.

Strategy Formulation

Once a clear picture of the firm and its environment is in hand, specific strategic

alternatives can be developed. While different firms have different alternatives depending

on their situation, there also exist generic strategies that can be applied across a widerange of firms. Michael Porter identified cost leadership, differentiation, and focus as

three generic strategies that may be considered when defining strategic alternatives.

Implementation

The strategy likely will be expressed in high-level conceptual terms and priorities. For

effective implementation, it needs to be translated into more detailed policies that can beunderstood at the functional level of the organization.

Control

Once implemented, the results of the strategy need to be measured and evaluated, withchanges made as required to keep the plan on track. Control systems should be developed

and implemented to facilitate this monitoring. Standards of performance are set, the

actual performance measured, and appropriate action taken to ensure success.

Dynamic and Continuous Process

The strategic management process is dynamic and continuous. A change in onecomponent can necessitate a change in the entire strategy. As such, the process must be

repeated frequently in order to adapt the strategy to environmental changes. Throughout

the process the firm may need to cycle back to a previous stage and make adjustments.

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Drawbacks of this Process

The strategic planning process outlined above is only one approach to strategic

management. It is best suited for stable environments. A drawback of this top-downapproach is that it may not be responsive enough for rapidly changing competitive

environments. In times of change, some of the more successful strategies emerge

informally from lower levels of the organization, where managers are closer to customerson a day-to-day basis.

Another drawback is that this strategic planning model assumes fairly accurateforecasting and does not take into account unexpected events. In an uncertain world,

long-term forecasts cannot be relied upon with a high level of confidence. In this respect,

many firms have turned to scenario planning as a tool for dealing with multiple

contingencies.

5) Discuss the various stages in the organizational life cycle and the role of CEO during

each stageOr Detail the impact of changing environment on the organization life cycle

Ans:

Organizational life can be as unpredictable as the weather, but it is somewhat predictable

in stages of development. Like the human life cycle from birth to aging and death, some

organizations have a comparable life cycle. Unlike the human life cycle, which moves for

everyone through physical stages, the organization cycle is not inevitable.

The first challenge for leaders who wish to grow their organizations is to understand what

phase of the organizational life cycle one is in.Different experts will argue on how many

phases there are, but there is elegance in using something easy to remember. Let usdivide the organizational life cycle into the following phases:

Startup. (or Birth) ,Growth; this is sometimes divided into an early growth phase (fast

growth) and maturity phase (slow growth or no growth). However, maturity often leadsto Decline. When in decline, an organization will either undergo Renewal or Death

Each of these phases present different management and leadership challenges that one

must deal with.

The Start-Up Phase

In this phase, we see the thinking about the business, a management group formed, a

business plan written. For entrepreneurs needing money to kick start the business, thecompany goes into the growth phase once the investor writes the check. For those the

don't need outside funds, the start-up ends when you declare yourself open for business.

The Growth Phase

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In the growth phase, one expects to see revenues climb, new services and products

developed, more employees hired and so on. The management textbooks love to assume

that sales grow each year. The reality is much different since a company can have bothgood and bad years depending on market conditions.

In organizations that have been around for a few years, a very interesting thing happens

dry rot sets in.The Decline PhaseUsing the above definition, one finds a tremendous amount of corporate insanity out

there. Management that expects next year to be better, but doesn't know or is unwilling tochange to get better results. Many organizations will enter the decline phase unless there

are is in place a rigorous program oftransformational leadership development. Ifsenior leaders can detect the symptoms of decline early, they can more easily deal with it.Some of the more obvious signs include:

a. Declining sales relative to competitors,b. Disappearing profit margins, and

c. Debt loads which continue to grow year after year.

However, by the time the accountants figure out that the organization is in trouble, it

takes tremendous leadership to get the organization to change course.

The Renewal Phase

Decline doesn't have to continue, however. External experts have focused on the

importance of organizational development as a way of preventing decline or reducing its

affects.One way to reverse dry rot is through the use of training as a way of injecting new

knowledge and skills. One can also put in place a rigorous program to change and

transform the organization's culture.

This assumes, though, that one has enough transformational leaders to change the statusquo. Without the right type of leadership, the organization will likely spiral down to

bankruptcy.

Dealth

As many as 80% of business failures occur due to factors within the leadership's control.

Even firms close to bankruptcy can overcome tremendous adversity to nurse themselves

back to financial health. Lee Iacoccas turnaround of the Chrysler Corporation is one

shining example.

6) Examine the trends in globalization with some examples

Or Discuss elaborately the impact of globalization on the strategy formulation and

implementation in Indian Industries

Ans:

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Business can no more be contained inside the country since the globe has become very

small due to scientific advancement andglobalization is the new buzzword that has come

to dominate the world since the nineties of the last century. Globalization has brought innew opportunities to developing countries. Greater access to developed country markets

and technology transfer hold out promise improved productivity and higher living

standard. But globalisation has also thrown up new challenges like growing inequalityacross and within nations, volatility in financial market and environmental deteriorations.

Impact on India:

Till the nineties the process of globalisation of the Indian economy was constrained by

the barriers to trade and investment. India opened up the economy in the early nineties

following a major crisis that led by a foreign exchange crunch that dragged the economy

close to defaulting on loans. Major measures initiated as a part of the liberalisation andglobalisation strategy in the early nineties included scrapping of the industrial licensing

regime, reduction in the number of areas reserved for the public sector, amendment of the

monopolies and the restrictive trade practices act, start of the privatisation programme,

reduction in tariff rates and change over to market determined exchange rates.Over the years there has been a steady liberalisation of the current account transactions,

more and more sectors opened up for foreign direct investments and portfolioinvestments facilitating entry of foreign investors in telecom, roads, ports, airports,

insurance and other major sectors.

Globalisation in the form of increased integration though trade and investment is animportant reason why much progress has been made in reducingpoverty and global

inequality over recent decades.

Consequences:

The implications of globalisation for a national economy are many. Globalisation has

intensified interdependence and competition between economies in the world market.This is reflected in interdependence in regard to trading in goods and services and in

movement of capital. As a result domestic economic developments are not determined

entirely by domestic policies and market conditions. Rather, they are influenced by bothdomestic and international policies and economic conditions. It is thus clear that in a

globalising economy, while formulating and evaluating its domestic policy cannot afford

to ignore the possible actions and reactions of policies and developments in the rest of the

world. This constrained the policy option available to the government which implies lossof policy autonomy to some extent, in decision-making at the national level.

Examples:

The way businesses operate today with having many satellite locations or call centers in

other parts of the world to answer questions in another: example, KPOs; someone inIndia answering a call from the U.S. about a product or service

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7)Discuss the strategic control process and explain how it differ from operational control

Ans:

Strategic control focuses on the dual questions of whether: (1) the strategy is beingimplemented as planned; and (2) the results produced by the strategy are those intended."

This definition refers to the traditional review and feedback stages, which constitutes the

last step in the strategic management process; strategy formulation, strategy

implementation, and strategy evaluation (control).

Strategy control:

Once implemented, the results of the strategy need to be measured and evaluated, with

changes made as required to keep the plan on track. Control systems should be developedand implemented to facilitate this monitoring. Standards of performance are set, the

actual performance measured, and appropriate action taken to ensure success.

It is concerned primarily with traditional controls processes, which involves the reviewand feedback of performance to determine if plans, strategies, and objectives are being

achieved, with the resulting information being used to solve problems or take corrective

actions. Recent conceptual contributors to the strategic control literature have argued foranticipatory feed forward controls that recognize a rapidly changing and uncertain

external environment.

Strategic control Vs Operational control:

The differences between strategic and operational control are as follows:

i. Strategic control requires data from more sources. The typical operational control

problem uses data from very few sources.ii. Strategic control requires more data from external sources. Strategic decisions are

normally taken with regard to the external environment as opposed to internaloperating factors.

iii. Strategic control is oriented to the future. This is in contrast to operational control

decisions in which control data give rise to immediate decisions that haveimmediate impacts.

iv. Strategic control is more concerned with measuring the accuracy of the decision

premise. Operating decisions tend to be concerned with the quantitative value ofcertain outcomes.

v. Strategic control standards are based on external factors. Measurement standards

for operating problems can be established fairly by past performance on similarproducts or by similar operations currently being performed.

vi. Strategic control relies on variable reporting interval. The typical operating

measurement is concerned with operations over some period of time: pieces per

week, profit per quarter, and the like.

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8) Discuss impact of internet revolution on the Indian Corporate Sector.

Ans:

India is a country with a rich blend of culture, people, and lifestyles that are an inherent

part of its identity. For a long time, the general opinion about India was that of a poor,under developed third world country. Consequently the trade and transactions of the

nation were quite limited in their reach and volumes. However the negative perceptions

about the country have become a thing of the past. The power of the net has broughtgreater awareness of skills and resources, thus helping the various Indian markets reach a

diverse global audience. It has played a major role in opening up the untapped markets of

the country and bestowed the benefits of globalization on the Indian people.

Some ventures due to which the Internet has helped India become a global market forceare as follows:-

The Freelance Business

India has the largest pool of English speaking people who have the requisite expertise to

undertake freelance jobs in varied industries of software, writing, designing and so on.

The Internet has helped people across continents find the best fit for their job, in theskilled talent pool of the Indian people. There are various Indian sites and organizations

that offer varied freelance services like proofreading, content development, coding and

testing. There isnt a better example than this site itself that caters to providing the bestcontent from the contribution of its Indian freelance writers and developers. The

connectivity of the net and other supporting factors have encouraged the top US

companies to outsource their work to India and many more companies are expected to

follow suit.

Tourism and Travel Industry

There are scores of tourist destinations in our country that have an abundance of natural

beauty and historic significance. The Internet has proved to be a boon for the tourism

industry as these days you can get all the relevant information of these hitherto unknownplaces. Numerous online sites offer all the requisite information about these exotic

destinations within India- right from traveling to these places to hotel bookings and sight

seeing. The net has transformed the face of the Indian tourism industry, by making Indiaone of the top must-visit places in the world. International visitors now know that India

has many places to satiate a visitors interest, no matter what their budget.

E-commerce transactions

The net has proved to be the best method for buyers and sellers to transact their wares ina fast and convenient manner. Websites like Indiamart.com and Baazee.com are a few

examples of the online ventures that see outstanding volumes of e-commerce

transactions. Real time selling and buying on baazee.com enables a person to sell

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everything from cars, books, stocks and virtually anything that comes to mind. The net

has made the whole world your very own market place. The profits from online trading

are garnering a lot of appreciation as well as opening new markets for further tradingwithin India. Several sites also maintain the databases of all the Indian traders,

manufacturers and sellers. These listings have boosted sales and created a wider market

for the goods. Online fund transfer, an offshoot of the benefit of net penetration hasensured an inflow of money into the country from the expatriates. This has increased the

valuable foreign exchange of the country, leading to greater prosperity and more wealth.

Although e-commerce has not made a major impact in the country as compared to others,slowly and surely, Indians are realizing the benefits of online trading.

Online art auctions

Indian artists are among the most skilled in the world, creating exquisite artwork. Thanks

to the power of the net, online auctions of their prized masterpieces has become a reality.

To cite an example, a recent online art auction of Indian artworks by Saffronartonline

registered record sales of 100 crores. Most artists now display their art online helpingbuyers to view, understand and buy their choice of art from the comfort of their homes.

The Gifting Industry

Homemade Indian products have a huge overseas market. Keeping this aspect in mind,many sites on the net have introduced several products and gift schemes to woo the

buyers, thus creating many more jobs and opportunities in India. The sale of traditional

Indian handicrafts as well as the spices and apparel industry has had a tremendous boost

in recent years due to the proliferation of the net. Today anyone across the globe can logon to the sites of the Indian vendors and take their pick from goods as varied as sarees

to freshly ground spices. These vendors also take the onus of securely delivering yourselected gift to any place that you desire. This has in turn spawned another industry ofdelivery services in India that transport your gift to the right destination.

India has joined the Internet bandwagon a bit late in the day but the current statistics

indicate that the penetration of the net has been significant. Before the advent of the net,

there was very little information or awareness about the benefits of trading with India. Nolonger is the trade of the Indian goods restricted to only the buyers in and around the sub

continent. All the aforesaid industries have experienced tremendous success and the

Internet will only open up more avenues for other new and profitable online ventures.The net has helped Indian industries reach a wider audience, thus making the world sit up

and take notice of its artisans and their artistry.

9) Define and distinguish between vision, mission, goals, objectives and policies.

Ans:

Vision

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Corporate vision is a short, concise, and inspiring statement of what the organization

intends to become and to achieve at some point in the future, often stated in competitive

terms. Vision refers to the category of intentions that are broad, all-inclusive and

forward-thinking. It is the image that a business must have of its goals before it sets out

to reach them. It describes aspirations for the future, without specifying the means thatwill be used to achieve those desired ends.

Warren Bennis, a noted writer on leadership, says: "To choose a direction, an executive

must have developed a mental image of the possible and desirable future state of the

organization. This image, which we call a vision, may be as vague as a dream or as

precise as a goal or a mission statement."

Example: The Ford Motor Company vision is 'to become the world's leading consumer

company for automotive products and services'.

Mission Statement

A mission statement is an organization's vision translated into written form. It makes

concrete the leader's view of the direction and purpose of the organization. For many

corporate leaders it is a vital element in any attempt to motivate employees and to give

them a sense of priorities.

A mission statement should be a short and concise statement of goals and priorities. In

turn, goals are specific objectives that relate to specific time periods and are stated in

terms of facts.

Goals

The major outcome of strategic road-mapping and strategic planning, after gathering all

necessary information, is the setting of goals for the organization 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.

All business systems are directed towards the achievement of specific goals such as

production and supply of goods, services to the customers, profit making, service to the

society etc.

Objectives

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Objectives define strategies or implementation steps to attain the identified goals. Unlike

goals, objectives are specific, measurable, and have a defined completion date. They are

more specific and outline the who, what, when, where, and how of reaching the goals.

Comparison between goals and objectives

Goals are broad objectives are narrow.Goals are general intentions; objectives are precise.

Goals are intangible; objectives are tangible.

Goals are abstract; objectives are concrete.

Goals can't be validated as is; objectives can be validated.

Policy

A policy may be defined as an understanding by persons of a group that makes the

actions of each member more predictable to other members. Policy is a guide to making

decisions.It may also be defined as a plan or course of action, as of a government,political party, or business, intended to influence and determine decisions, actions, and

other matters.

Policies provide general guidelines to decide and adopt courses of action, and establish

the role theory to be practiced in organizations. Policies are not specific as that of

strategies as they aim at achieving general objectives, unlike strategies which aim at

specific portions of the objectives.

10) What do you understand by Business policy? How is it different from strategic

management? Or Explain using examples, how the principles of policy makingrationalize the decisions in strategic management and operations management.

Ans:

Definition of Business Policy

Business Policy defines the scope or spheres within which decisions can be taken by the

subordinates in an organization. It permits the lower level management to deal with the

problems and issues without consulting top level management every time for decisions.

Business policies are the guidelines developed by an organization to govern its actions.

They define the limits within which decisions must be made. Business policy also deals

with acquisition of resources with which organizational goals can be achieved. Business

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policy is the study of the roles and responsibilities of top level management, the

significant issues affecting organizational success and the decisions affecting

organization in long-run.

Features of Business Policy

An effective business policy must have following features-

a. Specific- Policy should be specific/definite. If it is uncertain, then the

implementation will become difficult.

b. Clear- Policy must be unambiguous. It should avoid use of jargons and

connotations. There should be no misunderstandings in following the policy.

c. Reliable/Uniform- Policy must be uniform enough so that it can be efficiently

followed by the subordinates.

d. Appropriate- Policy should be appropriate to the present organizational goal.e. Simple- A policy should be simple and easily understood by all in the

organization.

f. Inclusive/Comprehensive- In order to have a wide scope, a policy must be

comprehensive.

g. Flexible- Policy should be flexible in operation/application. This does not imply

that a policy should be altered always, but it should be wide in scope so as to

ensure that the line managers use them in repetitive/routine scenarios.

h. Stable- Policy should be stable else it will lead to indecisiveness and uncertainty

in minds of those who look into it for guidance.

Definition of strategy

A strategy is the grand design or the overall plan which an organization chooses in order

to move or reach towards the set objectives by using the resources. It usually establishes a

general program of action, and implied deployment of emphasis and resources, to attain

comprehensive objectives.

Strategy includes:

i. Awareness of mission, purpose and objectives, providing a central concept for

planning, identifying the business, customers, goods and services.

ii. Uncertainty due to economic, social, technological and political considerations.

iii. The need to take into account the probable behavior others in general, and rivals

in particular.

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Strategic management

1. Strategic management embraces a set of decisions, actions and interactions for

accomplishment of goals.2. It is a long term innovative program identifying the potential for changes.

3. The level of importance is at the top managerial level.

4. It aims at generating alternative strategies and to choose the best for

implementation.

5. It is dynamic and perpetual. It will not cease to exist at a particular period.

6. Strategic management is forward looking. It may even comprise of contradictory

actions if warranted by the environment.

7. It depends upon the resources, both internal and external, to the organization

Comparison

Policy Strategic mgt.

1 Guide lines or paths of action to reach

goals

Major courses of decisions, actions and

interactions to achieve goals.

2 Embraces both thought and action Concentrates mostly on decision and action

3 Usually spells out certain courses of

action or approach to accomplish

objectives.

Outlines ones approach to meet

competitive situations. Uncertainties, risks

etc. may arise in future.

4 Lays emphasis mainly on long-term

growth.

It is market, or situation oriented to meet

competition, with potential for changes.

5 Sets limit for managerial action Not so. It is used to mobilize resources.

6 Implementation may be delegated to

subordinates.

Not to be delegated.

7 Policy is what is, or what is not done Strategy is a methodology used to achieve

a target as prescribed by the policy

How the principles of policy making rationalize the decisions in strategic

management and operations management.

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Strategic management is basically a top management function and operational

management emphasizes day to day operations in the organization. Strategic management

decides its operational counterpart, but at times operational management influences

strategic management decisions. Operational management provides an extension of

strategic management towards achieving goals. In this context, it is to be acknowledgedthat policies of an organization are their day to day guide, which rationalizes the

decisions in strategic management and operations management. This advantage is

provided by the following features.

1. Precedents: Policies serve as precedents, reducing repetitive rethinking, or

reapplication of decisions in managerial functions.

2. Coordination:policies aid proper coordination as the whole organization is

guided by the same policy.

3. Stability: Uniform policies ascertain predictable actions, minimize deviations andpromote stability.

4. Decision making: Clear policies alleviate uncertainties and make the decision

making process easier.

5. Measuring scale: Policies are used as measuring scales or yardsticks to measure

the performance of an organization by comparing the actual results with the

expected results.

6. Motivation: Good policies promote enthusiasm, good will and loyalty to the

organization.

7. Participation: as it sets a pattern of behavior, it encourages active participation ofemployees, increases confidence and leads to better cooperation.

8. Control guides: Being the control guide for decision making, they ensure

consistency and uniformity in decision making and control all managerial and

staff activities.

9. Image: Good policies promote the Image of the company in public and make

known its social responsibilities.

11) What are the various types of diversification? Describe the strategies adopted by ITCin this regard or describe the product diversification strategies. How it affects the product

life cycle

Ans:

Diversification/diversification strategy

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Diversification is the process of entry into a field which is new to an organization, either

market wise or technology wise.

The diversification strategy is one by which the firm attains a growth level with the

addition of new products or services internally to the existing product or service line.

Features of diversification

i. Through diversification, the company is in a position to enter into a new industry

or market.

ii. It can enter into a technology area altogether, unconnected or somewhat related to

its original business.

iii. Diversification is aimed at growth of the company by adding new products or

services to the existing product line or service line.

iv. Business may also be acquired outside the premises of the company.

Types of diversification

i. Horizontal integration: Under this concept, the company expands the same type

of product capacity in the same product line.

ii. Vertical integration: Vertical integration is the combination of technically

distinct production, distribution and other economic processes within the confine

of a single organization. Vertical integration could either be Forward vertical

integration or Backward vertical integration.

By forward vertical integration an enterprise develops outlets for use or sale of its

products. For example, a TV picture tube manufacturer may go in for production

of television using its own picture tube, rather than supplying it as a component to

other TV manufacturers. In backward vertical integration, additional process is

undertaken in the reverse direction. For example, a weaving mill which is

purchasing yarn for its unit may go in for a spinning mill.

iii. Concentric diversification: in the concentric diversification, the diversification

strategy relates to old business or product market in some form. The relationship

may be in the market, technology, or both. For example, a company which is

producing food stuff introduces pickles as a new item, and uses similar marketing

techniques, distributors, dealers and retailers to reach its customers.

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iv. Conglomerate diversification: By this diversification, products not closely

related to each other by technology, market factors etc. are clustered together by a

company for its advantage. For example, SPIC which was into petrochemicals

and fertilizers diversified into pharmaceuticals.

ITCs diversification strategy

In February 2001, the Government of India (GoI) announced a ban on advertising by

cigarette companies and restrictions on the sale and consumption of tobacco products.

The declining sales of cigarettes, the ban on advertising, the increasing anti-tobacco

campaigns and the experience in developed countries seemed to suggest that tobacco

would no longer be a profitable business in the future. Consequently, ITC decided to

diversify into non tobacco businesses. ITC made its first foray into a non-tobacco

business long back in the 1970s, when it entered the hotel industry.

Since then the company has diversified into a variety of other businesses- sportswear,

greeting cards, and ready to serve packaged foods, confectionery and branded staples- to

reduce its dependence on its cigarette business. ITC diversified into retailing and

merchandising of sports goods and premium apparel under its cigarette brand, 'Wills' and

ran holiday packages under another cigarette brand, 'Gold Flake'. These businesses

helped keep alive the existing brands. However, so far ITC hasn't been able to earn

significant profits through any of its non-tobacco businesses. ITC's core business,

cigarettes, contributes almost 85 per cent to its revenues, while almost all the other

diversified businesses put together contribute only 15 percent. Analysts feel that ITC's

ability to grab a sizable share of the markets it has entered and progressively make profits

is doubtful, because it has diversified into areas where there is intense competition.

How it affected product lifecycle

A product progresses through a sequence of stages from introduction to growth, maturity

and decline. This sequence is known as product life cycle and is associated with changes

in the marketing situation, thus impacting the marketing strategy and marketing mix.

ITC was the market leader in the cigarette business with a share of over 78% in 2001(Refer Table III). The three major players, ITC, Godfrey Phillips India Ltd (GPIL), and

Vazir Sultan Tobacco (VST), together accounted for over 95% of the cigarette market.

The declining sales of cigarettes, the ban on advertising, the increasing anti-tobaccocampaigns and the experience in developed countries marked the decline of two of ITCs

major product brands Wills and Gold Flake

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In 2000, ITC extended one of its most valuable cigarette brands, Wills, to fashion

retailing. The product was called Wills Sport and ran holiday packages under anothercigarette brand, 'Gold Flake'. These businesses helped keep alive the existing brands.

12) Identify the factors that would either create opportunities or threats for businessprocess outsourcing (BPO) companies in the near future.

Ans:

Business process outsourcing (BPO)

BPO is a form of outsourcing that involves the contracting of the operations andresponsibilities of specific business functions (or processes) to a third-party service

provider. Originally, this was associated with manufacturing firms, such as Coca Cola

that outsourced large segments of its supply chain. In the contemporary context, it isprimarily used to refer to the outsourcing of services.

BPO is typically categorized into back office outsourcing - which includes internal

business functions such as human resources or finance and accounting, and front office

outsourcing - which includes customer-related services such as contact center services.

BPO that is contracted outside a company's country is called offshore outsourcing. BPO

that is contracted to a company's neighboring (or nearby) country is called near shore

outsourcing.

BPO benefits

By Outsourcing to third world developing nations such as India, China, Philippines,Mexico, Ireland etc companies can exploit the cheap labor and infrastructure facilities

available in those lands and in turn cut down on man power costs, reduce operational

costs and capital expenditure.

Concentrate on Core BusinessBack office operations of a company are highly tedious and need specialized attention.Most of them are critical for the company's progress. By outsourcing their back office

operations businesses can concentrate on their core competencies while their back office

operations are being managed smoothly by a specialized third party company.

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Skilled manpower at lower rates

Outsourcing gives an organization the chance to get access to skilled and trained man

power at extremely lower rates that will lead to an increase in productivity and save costsin a major way.

Advanced technologies at lower ratesThere are many technologically developed offshore destinations that can give the

companies access to high tech newly developed technologies at very affordable rates.

This in turn can help them progress at a rapid pace.

Tax benefits

By selecting the right BPO destination companies can save up on taxes in turn cuttingtheir costs.

Increased productivity

By employing skilled manpower in more numbers at lower costs companies can highly

boost up their productivity in turn resulting into better customer satisfaction andincreased profitability.

Beat Competition

In a fast paced economy a company needs to provide the best service to its customers inorder to retain them and do all this by keeping the rates low. Outsourcing in this case can

help the company maintain lower rates with better service thereby helping them to stay

abreast of the competition. These outsourcing advantages are well an indication that theoutsourcing market has a great future.

BPO limitations

A failure to meet service levels

Unclear contractual issues, changing requirements and unforeseen charges

Dependence on the BPO reduces flexibility

Outsourcing of an Information System can cause security risks, both from a

communication and from a privacy perspective.

From a knowledge perspective, a changing attitude in employees, underestimationof running costs and the major risk of losing independence.

Outsourcing leads to a different relationship between an organization and its

contractor.

BPO-opportunities

1. Outsourcing in traditional areas like customer care, financial services,

manufacturing, IT, ITES is growing.

2. Large multinational companies are investing in captive BPO units in suppliercountries in multiple locations, to reduce risk and control quality.

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3. Outsourcing is becoming more sophisticated. Customers are looking for business

process excellence, speed to market, improvement in quality, benchmarking to

world-class standards. CEOs are involved to ensure the long-term success ofstrategic off shoring decisions. On their part, suppliers understand that they must

compete globally and that outsourcing will play a more transformational and

strategic role for the client.4. There is increasing global competition and pressure on margins from emerging

lower-cost outsourcing destinations.

5. Risk factors for outsourcing like terrorism and war, disaster and disease makecontingency plans a necessity.

6. The IT industry will see roughly 10 to 15% of its jobs move overseas during

the next ten years, inviting more political debate.

7. For the past two decades, China has been growing at an astounding 9.5% a yearand India by 6%. They are impacting the global economy and leading the

outsourcing revolution.

BPO-threats

1. Outsourcing expenditure will continue to rise.2. Customers will take greatercontrol in driving and designing deals.

3. Risk factors and unexpected occurrences like war, terrorism, disease, natural

disasters and economic upheavals can throw a wrench in the works.4. The rising price of oil will cause oil consuming countries like the USA to be less

competitive resulting in more outsourcing to India and China.

5. Political backlash over outsourcing is likely to lessen over time as economiesstrengthen and companies continue to reap the benefits of off shoring.

6. Regional outsourcing hubs will developas companies will takestrategic near-shoring initiativesto minimize risk and leverage cultural and linguistic

compatibility. The supplier countries are in the same time zone as their customers.7. The large diverse Indian companies will face stiff competition from new focused

smaller companies. Because these companies are able to focus and become

excellent in one are they will be able to provide a higher level of service.

13) Explain the impact of cultural values on managerial effectiveness Or Detail, usingexamples, the impact of cultural values on the effectiveness of managers

Ans:

Culture

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Culture is the is the integrated pattern of human behavior that includes thought, speech,

action and artifacts and depends on mans capacity for learning and transmitting

knowledge to succeeding generations.

Culture binds people together and gives meaning and purpose to their day to day lives. It

is this bondage which helps shape ones personal and professional life.

Even companies have a culture, with widely shared philosophies, emphasizing on the

importance of people. The top management tries to spread the philosophies through

training and communication.

Elements of culture

Business environment: every company has its own business environment, which

influences the business culture.

Values: Values, which are basic concepts and beliefs of an organization, establish

the standards of achievement within the organization.

Heroes: Smart companies select talented, lovable, cultured people as role models

or heroes for the employees to follow.

Rites and rituals: these are programmed, systematic routines of day to day life,

which show the employees the kind of behavior that is expected out of them.

The cultural network: It is the carrier of the corporate values and heroic

mythology, like story tellers, spies, priests, cabals and whisperers from a hidden

hierarchy of power.

Managerial effectiveness and cultural values

1. Managers must understand clearly how the culture works in an enterprise if they

want to accomplish what they set out to do. Culture comes down to understanding

the importance of working with people in any organization.

2. A strong culture works as a system of informal rules that spell out how people are

expected to behave. A strong culture enables the managers as well as the

employees to feel better about what they do and are likely to work better.

3. If the managers are able to convey the corporate values and beliefs and project

some role models or heroes, the employees are likely to emulate them.

4. Cultural shock is one reason why people leave one organization for another.

Procter and Gamble example

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Procter and Gamble, Cincinnati, Ohio, is one of the companies which has adopted value

based principles in its business endeavors.

Their ideologies are as follows:

i. The consumer is importantii. Things dont just happen; you have to make them happen.

iii. We want to make employee interest our own.

iv. The stronger the culture, the richer and more complex the value system.

14) Enumerate the strategies for international operation Or Strategies for international

operations cannot be the same and uniform. Discuss and explain with respect to

Global business environment, competition, legal, ethical dimensions.

Ans:

Why to go global?

Business can no more be contained inside the country since the globe has become quite

small due to technological advancements, and the needs of human beings have crossed

the territorial boundaries of nations. Globalization compels the domestic firms to strivehard to sustain its business in the local market or to go global by establishing itself in the

world market. However, the competition in the global market being comparatively larger,

the companies must have clear strategies for international operations.

Strategies for international business

1. Looking at the international marketing environment.2. deciding whether to go abroad

3. Deciding which market to enter

4. Deciding how to enter the market5. Deciding on the market program

6. Deciding on the marketing organization

1) Looking at the international marketing environment.

a) International trade system:

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i. Imposes trade restrictions imports, which includes ban on certain products

which are detrimental to the economy, culture or interests of the country,

limits or quota for certain products etc.

b) Economic communities of free trade zones.

i. Such communities facilitate free business among member

countries, but limits business with non-members.

c) Economic environment:

The company must consider the countrys industrial structure and income

distribution.

Industrial structure:

i. Subsistence economies where the majority live on agriculture, which offervery few markets.

ii. Raw material exporting economies, which are ideal for large equipments,

tools, supplies, trucks etc.

iii. Industrializing economies-demand for raw materials, machinery, steelautomobile and imported goods for the rich and middle-class population.

Income distribution: the people can be segregated into 4 main groups.i. Very low income below poverty line

ii. Low income suffering for better survival

iii. Medium income, but cannot afford luxury.

iv. Higher income group

d) Political and legal environment:

Stability in political environment, monetary regulations, clear governmentbureaucracy and appreciable attitude towards international buying.

Political changes may dictate import/international buying policies Monetary regulations, controlled by the trade and foreign exchange

regulation practiced by the country.

Government and bureaucracy: harassment to foreign companies, lethargy,

red-tapism, inefficiency of various departments, insufficient information,and unreliable banking system are sure deterrents.

Cultural environment decides the business in certain areas. Each country

has its own folkways, norms and taboos which influence the decisions.Thus, the traditional and cultural style of behavior of each country must be

studied before entering into business.

2) Deciding whether to go abroad

Having understood the international marketing environment a company may venture intothe global markets. However, the company must consider the advantages and

disadvantages of going global. Competitions, both global and domestic, may provide the

following options for the company;

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a. Counter attack the domestic competitors

b. Discover global markets that present higher opportunities and profits.

c. May enlarge its customer base due to shrinking domestic market.d. Reduce dependency on one market and reduce risk

e. Expanding customer base abroad necessitates international servicing.

The company also has to weigh several risk factors and answer several questions as

follows:

a. Does it understand the needs, wants and buyer behavior of chosen country.

b. Do they have the abilities to adapt to the business cultures of the foreign country?

c. Do the managers have international business experience?

d. Is the company aware of the political and regulatory environment of the foreigncountry?

e. Is the company aware of the business risks in that country?

3) Deciding which market to enter

Steps to decide international marketing:

i. Define international marketing objectives and policies.

ii. What volume of foreign sales is proposed

iii. How many countries are selected for international marketing,iv. What are the types of countries to enter? (products, geographical factors, income

and population, political climate and other factors)

v. After listing all possible markets they should be arranged on priority and the bestis selected.

4) Deciding on how to enter the international market (market entry strategies0

There are 3 major choices for entry:

1. Exporting: the company may export its products, as such or with suitable

modifications. It may resort to indirect exporting where they act as middlemen,

while exporting a 3rd partys product.

2. Joint venturing: This adopts the method of joining with foreign companies toproduce or market its products or services. Joint ventures could be:

a. Licensing: By this agreement the licensee grants the company the rights to

use its manufacturing process, trade mark; trade secrets etc. the companythus gains direct entry into the foreign market.

b. Contract manufacturing: By this method the company contracts with

manufacturers in the foreign market to produce its products or provideservices.

c. Management contracting: Under this concept, the domestic firm supplies

the firm the knowhow to a foreign company which supplies the capital.

The domestic firm exports management services rather than products.

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d. Joint ownership: A company joins with one or more foreign investors to

create a local business in which they share joint ownership and control.

3. Direct investment:

Bigger involvement comes through direct foreign investment, development of

foreign based assembly or manufacturing facilities.

5) Deciding the global marketing program (marketing mix0

Under the global marketing program two types of marketing mix are adopted world wide.

i. Standard marketing mix under which a global marketing mix isstandardized by the company and adopted world wide.

ii. Adopted marketing mix under which the producer adjusts the marketing mix

elements to each target market. The products adapt to the needs, preferences,

tastes according to demographic, geographic and cultural heritages of thecountry.

The products could be straight product extensions (no change), product

adaptations (to meet local needs) or product inventions 9new product as per

demand).Promotional strategies, price and marketing channels are decided as a part of

this strategy.

6) Deciding on the global marketing organization.

1. Export department: The Company may set up an export department to export

whatever it intends to.2. International division: They may be geographically placed international

subsidiaries when the export ability of the company increases manifold.

3. Global division: when the company grows beyond the international divisions aglobal division may be considered, recruiting personnel from many countries,

buying components and supplies wherever it is cheap, and investing in countries

where the returns are the best.

15) Explain the different dimension of corporate image

Ans:

Refer page 160 / 161

16) Explain the different types of business policy

Ans:

A policy is a model of thought and principles underlying in the activities of the business

organization.

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Business policies can be classified on the basis of its custom, traditions of business /

industry and past experience.

1) Classification of policies according to nature or origin

Original or originated policies:

These policies are framed by the top management such as board of directors,

chairman/president, GM etc. They will flow through the hierarchy up to the level ofexecutives for implementation. Such type of policies emanates from company objectives

and are expected to shape the business policies further.

Appealed or suggested policies:

These are suggested by subordinates and will be approved upon general approval bt top

management.

Imposed policies:These are imposed policies by agencies such as government rules and regulations,

statutory laws, orders passed by through courts, pressure from trade unions etc.

Derivative policies:

These are subsets of major policies made by the organization. They are concerned withthe achievement of certain time bound and specific goals. Generally they are formed by

departments or sections such as production, finance, marketing, personal etc.

2) Classified as per level of formation

Top management policies:These policies are made at the top level and they are responsible for the effect of these

policies on the organization and their results.

Some areas of these policies are:

Long range product selection, diversification, acquisition, merger, capital mobilsation

and dividends, matters related to executives, goals / objectives of the organization etc.

Middle level management

These are the type of policies such as establishment of organization and departments,

operating policies and routines, methods and technology of production, channels ofdistribution, accounts, cost control, functional employment and training, lower level

functional policies etc.

Lower level management policies:

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The lower level management people have direct control over the working cadres and

hence these policies with regard to jobs to best suited persons, tools, raw material, job

setting etc.

3) Classification according to expression:

Business policies can be classified into two broad categories; express policies andimplied or hidden policies

Express policies:

These policies are explicitly stated in clear terms either orally or in writing

Implied policies:

These are policies which are neither expressed orally or in writing, but could be

understood by the behaviour of the executives, by the code of conduct or by their mode

of behaviour.

4) Classification according to scope of organization:

These are basic policies, general policies and specific policies

5) Classification according to Managerial functions:

These are planning, organizing, staffing, directing and controlling policies.

Planning policies are concerned with course of planning activities to accomplish the goals

of organization.

Organising policies are concerned with the division and allocation of necessary cometent

activities to members of various groups of the organization for better results.

Staffing policies concerned with the sub-functional activities such as locating

employment sources, recruiting, training etc.

Controlling policies aid to measure actual results of present performance comparing themwith the standard results or performance and to take remedial action for mistakes and

deviations.

17)Explain the steps involved in strategic planning

Or Enumerate the steps in strategic planning of a manufacturing organization

Ans: same as the answer for question # 4

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18) Discuss the nature of environment analysis required for strategic formulation

Ans:

Basic strategic planning is comprised of several components that build upon the previouspiece of the plan, and operates much like a flow chart. However, prior to embarking on

this process, it is important to consider the players involved. There must be a

commitment from the highest office in the organizational hierarchy. Without buy-in fromthe head of a company, it is unlikely that other members will be supportive in the

planning and eventual implementation process, thereby dooming the plan before it ever

takes shape.

Just as importantly, the strategic-planning team should be composed of top-level

managers who are capable of representing the interests, concerns, and opinions of all

members of the organization. As well, organizational theory dictates that there should be

no more than twelve members of the team. This allows group dynamics to function attheir optimal level.

The components of the strategic-planning process read much like a laundry list, with one

exception: each piece of the process must be kept in its sequential order since each part

builds upon the previous one.

The only exceptions to this are environmental scanning and continuous implementation,

which are continuous processes throughout.

ENVIRONMENTAL SCANNINGThis element of strategy formulation is one of the two continuous processes. Consistentlyscanning its surroundings serves the distinct purpose of allowing a company to survey a

variety of constituents that affect its performance, and which are necessary in order to

conduct subsequent pieces of the planning process. There are several specific areas thatshould be considered, including the overall environment, the specific industry itself,

competition, and the internal environment of the firm. The resulting consequence of

regular inspection of the environment is that an organization readily notes changes and isable to adapt its strategy accordingly. This leads to the development of a real advantage

in the form of accurate responses to internal

19) Explain the various steps in product development

Ans:

Step 1. IDEA GENERATION

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The first step of new product development requires gathering ideas to be evaluated as potential

product options. For many companies idea generation is an ongoing process with contributions

from inside and outside the organization. Many market research techniques are used to encourageideas including: running focus groups with consumers, channel members, and the companys sales

force; encouraging customer comments and suggestions via toll-free telephone numbers and website

and gaining insight on competitive product developments through secondary data sources.One important research technique used to generate ideas is brainstorming where open-minded,

creative thinkers from inside and outside the company gather and share ideas. The dynamic nature of

members floating ideas, where one idea often sparks another idea, can yield a wide range of possiblethat can be further pursued.

Step 2. SCREENING

In Step 2 the ideas generated in Step 1 are critically evaluated by company personnel to isolate themost attractive options. Depending on the number of ideas, screening may be done in rounds with

the first round involving company executives judging the feasibility of ideas while successive rounds

may utilize more advanced research techniques. As the ideas are whittled down to a few attractive o

rough estimates are made of an ideas potential in terms of sales, production costs, profit potential, ancompetitors response if the product is introduced. Acceptable ideas move on to the

next step.

Step 3. CONCEPT DEVELOPMENT AND TESTING

With a few ideas in hand the marketer now attempts to obtain initial feedback from customers, distrib

its own employees. Generally, focus groups are convened where the ideas arepresented to a group, often in the form of concept board presentations (i.e., storyboards) and not

in actual working form. For instance, customers may be shown a concept board displaying drawings

of a product idea or even an advertisement featuring the product. In some cases focus groups areexposed to a mock-up of the ideas, which is a physical but generally non-functional version of

product idea. During focus groups with customers the marketer seeks information that may include:

likes and dislike of the concept; level of interest in purchasing the product; frequency of purchase(used to help forecast demand); and price points to determine how much customers are willing to

spend to acquire the product.

20) How would you evaluate the performance of social auditOr Discuss the benefits of Social Audit

Ans:

The purpose of a social audit is to consider the impact a business has on the surroundingcommunity, environment and economy, as well as upon individual people.

In this fact sheet we look at some of the reasons why you might want to introduce social

auditing, provide an overview of what is involved and outline some of the approachesyou might take.

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Why a social audit is important

Businesses of all types and sizes introduce social audits into their annual reporting for

various reasons.

Reputation and image-building

By emphasising some of the good things that have resulted from the business, you candevelop a positive image and reputation.

Corporate social responsibility

This is the idea that businesses are like citizens and, as such, should play their part in a

local community. A social audit shows how well a company is fulfilling this

responsibility.

Tendering opportunities

Pragmatically, some organisations or agencies might require you to undertake a social

audit if you are to qualify to carry out work on their behalf.

Boosting morale

Staff and volunteers are very much part of the audit process, and it can be motivating forthem to be involved in a social audit.

Making a difference

Remember, your organisation exists for a social purpose. A social audit can showwhether or not you are succeeding in making a real difference. In particular, it can help

identify some of the soft outcomes of your work. These are the less tangible differences

you make to individuals or communities through your work.

21) Explain the various classifications of strategies

Ans:Refer pages: 48 / 49

22 Details various generic strategies involved in policy making. Explain any two of

them with corporate examples

Stable Growth strategy is followed by those firmswhichare having smooth sailing and

where environment is neither turbulent not hostile. Stable growth strategy will befollowed where no applicable deviation form the existing strategy is needed and no major

changes are made in the objectives or goals of the organization.

In addition, the enterprises will continue to serve the same targeted customers without

any major changes in the product line or product services. Also it should be noted that

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during this period environment is also calm so that a status quo can be maintained in the

marketing policy of the enterprise. Some more sub strategies are found for stable growth

strategy.

Incremental growth strategy

In this strategy the firms usually concentrate on one product or service line and go

slowly and incrementally by entering new territories, taking new product line etc.

Profit strategy

This strategy follow when the objective of the firm is to generate cash

immediately for itself or for the stock holder, profit strategies are followed. The

profit strategy is usually called as the young game strategy.

Pause Strategy

If any enterprise feel that higher growth becomes both inefficient and

unmanageable or when a firm requires breathing spell to stabiles itself before

taking up new machine, it may restrict its growth at a certain balance level in

doing so, it may concentrate on resources utility, better operations etc. to attain

higher level efficiency.

Growth Strategy

A strategy based on investing in companies and sectors which are growing faster thantheir peers. The benefits are usually in the formofcapital gains rather than dividends.

Retrenchment Strategy

Retrenchment is a corporate-level strategy that seeks to reduce the size or diversity of an

organization's operations. Retrenchment is also a reduction of expenditures in order tobecome financially stable. Retrenchment is a pullback or a withdrawal from offering

some current products or serving some markets. Retrenchment is often a strategy

employed prior to or as part of a Turnaround strategy.

Combination Strategy:

Also called horizon-matching, a variation ofmulti period immunization and cash flow-matching in which aportfolio is created that is always duration-matched and also cash-matched in the first few years.

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23 What are the reasons for adopting merger? Discuss the reason for failure of

mergers?

A merger takes place when two companies decide to combine into a single entity. An

acquisition involves one company essentially taking over another company. While the

motivations may differ, the essential feature of both mergers and acquisitions involves

one firm emerging where once there existed two firms. Another term frequently

employed within discussions on this topic is takeover. Essentially, the difference rests in

the attitude of the incumbent management of firms that are targeted. A so-called friendly

takeover is often a euphemism for a merger. A hostile takeover refers to unwanted

advances by outsiders. Thus, the reaction of management to the overtures from another

firm tends to be the main influence on whether the resulting activities are labeled friendly

or hostile.

There are a number of possible motivations that may result in a merger or acquisition.

One of the most oft cited reasons is to achieve economies of scale. Economies of scale

may be defined as a lowering of the average cost to produce one unit due to an increase in

the total amount of production. The idea is that the larger firm resulting from the merger

can produce more cheaply than the previously separate firms. Efficiency is the key to

achieving economies of scale, through the sharing of resources and technology and theelimination of needless duplication and waste. Economies of scale sounds good as a

rationale for merger, but there are many examples to show that combining separate

entities into a single, more efficient operation is not easy to accomplish in practice.

A similar idea is economies of vertical integration. This involves acquiring firms through

which the parent firm currently conducts normal business operations, such as suppliers

and distributors. By combining different elements involved in the production and delivery

of the product to the market, acquiring firms gain control over raw materials anddistribution out-lets. This may result in centralized decisions and better communications

and coordination among the various business units. It may also result in competitive

advantages over rival firms that must negotiate with and rely on outside firms for inputs

and sales of the product.

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A related idea to economies of vertical integration is a merger or acquisition to achieve

greater market presence or market share. The combined, larger entity may have

competitive advantages such as the ability to buy bulk quantities at discounts, the ability

to store and inventory needed production inputs, and the ability to achieve mass

distribution through sheer negotiating power. Greater market share also may result in

advantageous pricing, since larger firms are able to compete effectively through volume

sales with thinner profit margins. This type of merger or acquisition often results in the

combining of complementary resources, such as a fir

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