Q.1 Define the term Strategic Management. Explain the importance of strategic management. Ans 1.

:- The word strategy is derived from the Geek word strategia, and conventionally used as a military term. It means a plan of action that is designed to achieve a particular goal. Earlier, the managers adopted the day-to-day planning method without concentrating on the future work. Later the managers tried to predict the future events using control system and budgets. These techniques could not calculate the future happenings accurately. Thus, an effective technique called strategy was introduced in business to deal with long term developments and new methods of production. The different concepts of strategy are: It is defined as a plan to direct or guide a course of action It is a pattern to improve the performance over time It is a fundamental way to view an organisations performance It is a scheme to out-maneuver competitor Levels of strategy Strategy exists at different business levels. The different levels of strategies are as follows: Corporate Strategy This is regarding the general function and scope of the business to meet the stakeholders expectations. As it is significantly influenced by the investors in the business, it is also called the critical level strategy. Business Strategy This is regarding how a business competes effectively in a particular market. It includes strategic decisions about the selection of products and meeting customer requirements. Operational Strategy This is regarding how each part of the business is organised and delivered to the corporate and business level. Operational strategy focuses on issues of resources and practices of an organisation. Difference between Goals and Objectives of Business Goals are statements that provide an overview about what the project should achieve. It should align with the business goals. Goals are long-term targets that should be achieved in a business. Goals are indefinable, and abstract. Goals are hard to measure and do not have definite timeline. Writing clear goals is an essential section of planning the strategy. Example - One of the goals of a company helpdesk is to increase the customer satisfaction for customers calling for support. Objectives are the targets that an organisation wants to achieve over a period of time. Example - The objective of a marketing company is to raise the sales by 20% by the end of the financial year. Example - An automobile company has a Goal to become the leading manufacturer of a particular type of car with certain advanced technological features and the Objective is to manufacture 30,000 cars in 2011.

Both goals and objectives are the tools for achieving the target. The two concepts are different but related. Goals are high level statements that provide overall framework about the purpose of the project. Objectives are lower level statements that describe the tangible products and deliverables that the project will deliver. Goals are indefinable and the achievement cannot be measured whereas the success of an objective can be easily measured. Goals cannot be put in a timeframe, but objectives are set with specific timelines. Q.2 Describe Porters five forces Model. Ans 2. Michael E. Porter developed the Five Force Model in his book, Competitive Strategy. Porter has identified five competitive forces that influence every industry and market. The level of these forces determines the intensity of competition in an industry. The objective of corporate strategy should be to revise these competitive forces in a way that improves the position of the organisation. Forces driving industry competitions are: Threat of new entrants New entrants to an industry generally bring new capacity; desire to gain market share and substantial resources. Therefore, they are threats to an established organisation. The threat of an entry depends on the presence of entry barriers and the reactions can be expected from existing competitors. An entry barrier is a hindrance that makes it difficult for a company to enter an industry. Suppliers Suppliers affect the industry by raising prices or reducing the quality of purchased goods and services. Rivalry among existing firms In most industries, organisations are mutually dependent. A competitive move by one organisation may result in a noticeable effect on its competitors and thus cause retaliation or counter efforts. Buyers Buyers affect an industry through their ability to reduce prices, bargain for higher quality or more services. Threat of substitute products and services Substitute products appear different but satisfy the same needs as the original product. Substitute products curb the potential returns of an industry by placing a ceiling on the prices firms can profitably charge. Other stakeholders - A sixth force should be included to Porters list to include a variety of stakeholder groups. Some of these groups include governments, local communities, trade association unions, and shareholders. The importance of stakeholders varies according to the industry.

Q.3 Define the term Business policy. Explain its importance. Ans 3. A strategy is an operational tool to achieve the goals, and thus, the corporate mission. Strategies do not attempt to outline exactly how the enterprise is to accomplish its objectives. A company may view downsizing as a strategy in a competitive market to render cost-effective services. Thus, strategy provides a framework to guide thinking and action. Strategies are very much useful in organizations for guiding, planning and control. Strategy is a way of life both at the macro as well as micro levels for everyone, whether it is a nation or a

company. To win over in a given complex situation, the organizations, even trans-nationals adopt strategies. They make changes, if necessary, even to their global strategies. An individual company may Formulate its own strategy to bring out the d e s i r e d r e s u l t s . T h e e v e n t u a l s u c c e s s o f t h e o r g a n i z a t i o n d e p e n d s u p o n s t r a t e g y formulation and implementation. The recently initiated moves such as globalization, privatization and liberalization are strategies to attain a globally competitive economy. Business management must focus on following issues a. Vision- For proper growth of the company. b. Mission What the company wants to achieve. c. Goals To achieve the above mission. d. Objectives To achieve the set goals e. Strategies To achieve the above objectives f. Policies To control strategies g. Programmes For implementation of objectives the above list outlines some of the key issues at every stage of action illustrating how: a. The mission springs out from vision statements b. Goals from the mission. Objectives from goals and Strategies from objectives. And programmes from objectives it is the crux of the strategic management process. Strategy refers to the course of action desired to achieve the objectives of the enterprise. Formulation, together with its implementation, constitutes an integral part of the management activity. Managers use strategies for different purposes such as to overcome competition, to increase sales, to increase production, to motivate the employees to provide their best, and so on. Implementation of a strategy is a crucial task as the formulation of it. There may be a lot of resistance during the implementation process. It is necessary for the manager to be very tactful to involve the members of his group in the formulation of strategy to facilitate the implementation process. Q. 4 what, in brief, are the types of Strategic Alliances and the purpose of each? Supplement answer with real life examples. Ans 4. Joint venture Joint venture is the most powerful business concept that has the ability to pool two or more organizations in one project to achieve a common goal. In a joint venture, both the organizations invest on the resources like money, time and skills to achieve the objectives. Joint venture has been the hallmark for most successful organizations in the world. An individual partner in joint venture may offer time and services whereas the other focuses on investments. This pools the resources among the organizations and helps each other in achieving the objectives. An agreement is formed between the two parties and the nature of agreement is truly beneficial with huge rewards such that the profits are shared by both the organisations. Merger is the process of combining two or more organisations to form a single organisation and achieve greater efficiencies of scale and productivity. The main reason to your

involve into mergers is to join with other company and reap the rewards obtained by the combined strengths of two organizations. A smart organizations merger helps to enter into new markets, acquire more customers, and excel among the competitors in the market. The participating organization can help the active partner in acquiring products, distribution channel, technical knowledge, infrastructure to drive into new levels of success. Collaborations and co-branding Collaboration is the process of cooperative agreement of two or more organizations which may or may not have previous relationship of working together to achieve a common goal. It is the beginning to pool resources like knowledge, experience and sharing skills of team members to effectively contribute to the development of a product rather working on narrow tasks as an individual team member in support to the development. Such collaborations are the foundation for concepts like concurrent engineering or integrated product development. Collaboration is a win-win methodology. It means that both the organizations insist upon each other to gain equal profits with no negative attitude of acquiring each others possessions. Effective collaboration can be obtained by the following actions: The organizations must get involved in the process from the beginning and avail the necessary resources for collaboration. The work culture in the organization must encourage teamwork, cooperation and collaboration. There must be effective team work and cooperation among the employees of both the organizations to achieve the goal. Systematic approach of product development process must be based on sharing of information, technology etc. Co-branding involves the process of combining two or more brands into a single product or service. It is becoming a positive way to associate different brands and develop a strong brand in the market. It creates synergy among the various brands. An organized co-branding strategy leads the co brand partners to a win-win situation and helps in realizing large demands in the market. The cobranding agreement includes the important aspects such as rights, obligations, and restrictions that are abiding to both the organizations. It also includes important provisions and the needs must be carefully drafted to provide clear guidelines to the involved organizations. The organizations form co-branding to accomplish many goals which include expansion of customers, obtain financial benefits, respond to the needs of customers, strengthening its competitive position, introducing new product with strong image and to gain operational benefits. I t is more frequently used in the field of fashion and apparels. It can also be used for promoting campaigns, using cartoons on T-shirts, logos, distributing through branded retailer etc. Example The sportswear giant Nike formed co-branding agreements with Philips consumer electronic products. The Philips electronic products will contain Nikes logos and it is mainly marketed in United States since the market share of Philips is not much impressive. The newly introduced digital audio player and portable CD players of Philips will be unveiled with the Nike logo to enhance profits in the market share in United States. Technological partnering

It is the process of associating the technologies of two different companies to achieve a common goal. The two organizations work as co-owners in business and share the profits and losses. The technologies of individual organizations are shared to achieve desired outcome. The required resources like knowledge, machinery, and expertise are collaborated between the organizations. Example The software giant, Infosys Technologies Ltd. has entered into partnership with US based NVIDIA, GPU inventor and the worlds visual technologies giant. The purpose of this partnering is to develop NVIDIA CUDA (Compute Unified Device Architecture). This technology is viewed as the next big revolution in the field of technology in lending high performance in computing. The software helps the developers of various applications to tap into the previously uncultivated power of the GPU. This will enable certain applications to achieve high performance. The capacity of CUDA is expected to multiply fifty times the performance of existing computing and reduce the run time to advance the user enterprise. Contractual agreements It is the process of agreement with specific terms between two or more organizations which guarantee in performing a specific task in return for a valuable benefit. The contractual agreement is the heart of business dealings. It is the most significant areas of legal concern and involves variations in certain situations and complexities. The organizations require analyzing fundamental factors before involving in contractual agreements. The elements to be analyzed are: it is necessary to identify the type of offer being laid by the organization to make an agreement. The acceptance of the information involved in offer which results in meeting the market needs. The organizations are required to recognize the strong commitment towards the contractual agreement. Systematic scheduling of the process involved in manufacturing product without any hindrances to both the organizations. Discover the terms and conditions for manufacturing the product and the guarantee of the organizations in fulfilling it. The contract agreement includes several documents such as letters, orders, offers and counter offers. There are various types of contractual agreements. They are: Conditional It is based on occurrence of an event. Joint and several The organizations promise to perform together but still they possess individual responsibilities. Implied The judicial court will determine the contract between the organizations based on circumstances. The parties will be able to buy all manufactured products, enter into a contract to supply others requirements, or renewal of the existing contract. Problems Involved in Strategic Alliances

There are numerous problems related to strategic alliances. Some of them are: One of the organizations suffers benefits due to incoherent goals Lack of trust between the organizations lead to poor performance in achieving the desired goal The existence of conflicts between the organizations due to internal issues like personnel and resources causes problem to the strategic alliance Lack of commitment between the organizations leads to termination of the alliance contract Many organizations experience the risk of sharing too much knowledge with the partner organization to become a competitor Reduces the possibility of future opportunities of getting into agreement with partners competitors

Q.5 Explain the concept, need for and importance of a Decision Support System. Ans 5. Following are the three components of a Decision Support System Annual Budget: It is really a business plan. The budget allocates amounts of money to every activity and/or department of the firm. As time passes, the actual expenditures are compared to the budget in a feedback loop. During the year, or at the end of the fiscal year, the firm generates its financial statements: the income statement, the balance sheet, the cash flow statement. When putting together, these four documents are the formal edifice of the firms finances. However, they cannot serve as day-to-day guides to the General Manager. 2. Daily Financial Statements: The Manager should have access to continuously updated statements of income, cash flow, and a balance sheet. The most important statement is that of the cash flow. The manager should be able to know, at each and every stage, what his real cash situation is as opposed to the theoretical cash situation which includes accounts payable and account receivable in the form of expenses and income. 3. The Daily Ratios Report: This is the most important part of the decision support system. It enables the Manager to instantly analyse dozens of important aspects of the functioning of his company. It allows him to compare the behavior of these parameters to historical data and to simulate the future functioning of his company under different scenarios. It also allows him to compare the performance of his company to the performance of his competitors, other firms in his branch and to the overall performance of the industry that he is operating in the Manager can review these financial and production ratios. Where there is a strong deviation from historical patterns, or where the ratios warn about problems in the future management intervention may be required. Examples of the Ratios to be Included in the Decision System SUE measure deviation of actual profits from expected profits

ROE the return on the adjusted equity capital Debt to equity ratios ROA the return on the assets The financial average ROS the profit margin on the sales ATO asset turnover, how efficiently assets are used Tax burden and interest burden ratios Compounded leverage Sales to fixed assets ratios Inventory turnover ratios Days receivable and days payable Current ratio, quick ratio, interest coverage ratio and other liquidity and coverage ratios Valuation price ratios And many others A decision system has great impact on the profits of the company. It forces the management to rationalize the depreciation, inventory and inflation policies. It warns the management against impending crises and problems in the company. It specially helps in following areas: a. The management knows exactly how much credit it could take, for how long (for which maturities) and in which interest rate. It has been proven that without proper feedback, managers tend to take too much credit and burden the cash flow of their companies. b. A decision system allows for careful financial planning and tax planning. Profits group, non cash outlays are controlled, tax liabilities are minimized and cash flows are maintained positive throughout. The decision system is an integral part of financial management in the West. It is completely compatible with western accounting methods and derives all the data that it needs from information extant in the company. So, the establishment of a decision system does not hinder the functioning of the company in any way and does not interfere with the authority and functioning of the financial department, but infact helps the manager to take quick decisions and make profit to the company. Q.6 Write short notes on: Corporate social responsibility Business plan Ans 6. Ethics and corporate social responsibility are essential factors which influences business undertakings and its functional operations. Business ethics are referred as moral rules and regulations

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

Business obligations are the ties which bind an organization to pay or to do something agreeable by the laws and customs of the country in which the obligation is made. Obligations in terms of business are the duties of an organization towards the upliftment of the people and the country. Organizations also have to essentially take care of the interests of its stakeholders and employees. A portion of the business profits may be retained back so as to cycle the funds within the business. There are various obligations of a business. Following are some of the business obligations in terms of social, ethical, moral and environmental way: Social business obligations The sense of principles and morality regarding social and community issues may be referred to as the social obligations. Business is about the relationships with people and community. But in the current world, businesses follow limited obligation towards social issues. Social responsibility is demonstrated by the determination of the organization to treat customers, employees and investors fairly and honestly. There are several social issues that affect the current business workplace, but ethical standards play an important role in business decision making in an organization. Factors which enhance social business obligations are as follows: Implementing punishable act towards corruption or any illegal act in an organization the employer-employee relationships must be stable. Although an organization might succeed, but it must respect ethical values, people and community. The quality and loyalty of companys workforce must not change the higher officials must possess the following qualities like honesty, responsibility, consistency, dignity etc. Example

 The reasons for the death of employees who inhale fumes from chemical spill in factory is the negligence of social obligation that failed to provide safety and security for its employees. Moral business obligations Moral obligation is a responsibility of balancing various needs of an individual by accurate understanding of the right or wrong actions using the acquired knowledge by an organisation. Moral responsibility is based on the relationships among friends, neighbours, co-workers and

family members. The vital components of moral responsibility are deeply rooted in the structure of every society and are a part of social life. Wars, gang violence, toxic waste spills, corporate fraud, manufacture of unsafe and defective products, failure of legislative bodies, financial waste by governmental agencies are the outcomes of poor moral obligations of an organization. Collective moral responsibility of a business deals with appropriate arrangements of the wide spread harm and misconduct by different groups. Example The emergence of HIV infection and AIDS has refocused the interest of moral obligations in preventing the transmission of such communicable disease by the medical institutes of the nation. Ethical business obligations In the time of rapid technological and social change, a business organization must help their employees to develop a new understanding of ethical values. Many ethical conflicts have arisen around the business world in the past. An organization has certain responsibility towards reducing unethical issues. Example Worldwide inequality of income can result in unethical practices such as the child labor; monopoly suppliers can exploit the consumers, etc.Building ethical obligations in an organization is highly significant for a business. A company owes an ethical obligation to the individuals and groups who are responsible for the success of the company. There are four groups of people who are generally responsible for the success of a business. It includes employees, customers, community and shareholders. Ethical obligations in an organization include the following ethical duties with different values, assumptions and social constructions of the employment relationship. Example Infosys has developed its corporate social responsibility by establishing social rehabilitation and rural upliftment programme, educational system upliftment programme, etc.The company could fulfill its CSR due to its ethical obligations.