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STRATEGIC MANAGEMENT & BUSINESS POLICY

MB0036

Assignment Set- 1

Q.1 What are the 4 four main areas of Strategic Alliances among two or more
Companies? Explaining the purpose/s of each, briefly.
Ans. a) Product and/or service alliance: Two or more companies may get together to
synergise their operations, seeking alliance for their products and/or services.
The product or service alliance may take any of the following forms:
A manufacturing company may grant license to another company to produce its
products. The necessary market and product support, including technical know-
how, is provided as part of the alliance. Coca cola initially provided such support
to Thums Up. Two companies may jointly market their products which are
complementary in nature. Chocolate companies more often tie up with toy
companies. TV Channels tie-up with Cricket boards to telecast entire series of
cricket matches live. Two companies, who come together in such an alliance,
may produce a new product altogether. Sony Music created a retail corner for
itself in the ice-cream parlors of Baskin-Robbins.

b) Promotional alliance: Two or more companies may come together to promote


their products and services. A company may agree to carry out a promotion
campaign during a given period for the products and/or services of another
company. The Cricket Board may permit Coke’s products to be displayed during
the cricket matches for a period of one year.

c) Logistic alliance: Here the focus is on developing or extending logistics


support. One company extends logistics support for another company’s products
and services. For example, the outlets of Pizza Hut, Kolkata entered into a
logistic alliance with TDK Logistics Ltd., Hyderabad, to outsource the
Shamit Shrivastava
E-mail: shamitds@gmail.com
requirements of these outlets from more than 30 vendors all over India – for
instance, meat and eggs from Hyderabad etc.

d) Pricing collaborations: Companies may join together for special pricing


collaborations. It is customary to find that hardware and software companies in
information technology sector offer each other price discounts. Companies
should be very careful in selecting strategic partners. The strategy should be to
select such a partner who has complementary strengths and who can offset the
present weaknesses. The acid test of an alliance is greater sales at lesser cost. It
is a common practice to develop organisational structures or modify them, if
necessary, to support the alliances and make them successful.

Q.2 You have taken over as CEO of a Company and have formulated a Strategy
document to improve its share value by 50% in 3 years. What steps would you
follow in the implementation of the Strategy?
Ans. The resources allocated are said to be well-utilised only when they are well
monitored.
For this purpose, it is essential:
• To develop policies and plans.
• To assign and reassign leaders the tasks and decisions to support the
chosen strategy.
• To provide a conducive environment in the organisation through proper
administration to achieve the given objectives directly and indirectly.

The implementation of plans and policies is designed in accordance with the


strategy chosen. The firm creates plans and policies to guide managerial
performance, and these make the chosen strategies work. The corporate
success lies ultimately in the ability to convert corporate strategy into plans and
policies that are compatible and workable.

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The implementation of the strategy becomes easy when the organization:
• Plans for career development of its personnel at all levels.
• Applies organisational development concepts in its normal functioning.
(Organisational development aims at enhancing organizational
effectiveness by applying diagnostic and problem solving skills through
behavioral approach)
• Ensures that the strategist is capable, experienced and versatile enough
to match the strategy demands.
It is always prudent to develop minimal plans, policies and programmes in all the
functional areas such as marketing, production, R&D, Finance, HRD and others.
If the company wants to retain its staff, the following programmes may be helpful:
• Focus on periodic appraisal through an objective and participative
performance appraisal system.
• Measure employee satisfaction levels regularly and respond promptly by
launching corrective measures to any signs of employee dissatisfaction or
frustration.
• Institutionalise the career counseling function and fill the vacancies that
arise by promoting the qualified candidates.
• Do not depend on one single employee or group at any level in the
organisation. Create multiple responsibilities on the well-chosen group of
managers at different levels.
• Ensure that the functional heads and the CEO are involved in this
process.
• Recognise those variations, which are bound to exist across
organisational levels and functions, and formulate specific retention strategies
to suit them.

Q.3 Explain the main features of a Business Plan for a Company with production and

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marketing operations.
Ans. Describe the steps for creating your product, from the raw material or initial stage
to the finished product, packaged and ready for distribution and sale. If you plan
to provide a service, describe the process of service deliver (such as the initial
interview, for instance, if you are offering consulting services), assessment,
research and design, and final presentation. Provide a description of any sub-
contractors or external services you plan to use in the production process. The
reader of the plan may be unfamiliar with the industry, so avoid using industry
jargon to describe the production process.

Q.4 What are the three types of capital needed for a start-up Company?
Ans. Present an estimate of how many people you expect will purchase your product
or service. Your estimate should be based on the size of your market, the
characteristics of your customers and the share of the market you will gain over
your competition. Project how many units you will sell at a specified price over
several years. The initial year should be broken down in monthly or quarterly
increments. Account for initial presentation and market penetration of your
product and any seasonal variations in sales, if appropriate.

Q.5 You are the Marketing Head of a multi product marketing company for consumer
goods in South India. Explain the method and elements of a Sales projection for
the following budget year.
Ans. The following are steps for developing sales projections.
Step I: Estimate
For each product or service, estimate the number of people who are likely to buy
and when they will buy it. You can get this information from asking your likely
customers about their possible use of your business, or you can base your
estimates on your knowledge of the market.
Step 2: Use a Calendar

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Estimate your sales and number of customers served during one week. Using
the totals for a week, make projections for each month. For the first few months,
keep in mind that business will start off slowly before people become more aware
of your business. Use will most likely increase as people learn about your
products and services. Seasonal variations may affect your business as well.
You will use these numbers to project your equipment, supply and staffing needs,
as well as income.
Cost Account Heads:
• Organizational Start up Costs
• Product Design/Development
• Research & Development
• Legal/Licensing Expenses
• Property & Facilities
• Land/Building Purchase
• Initial Lease Deposit
• Building Repairs/Improvements
• Equipment/Machinery
• Production-related
• Administrative/Office Equip.
• Materials & Supplies
• Personnel
• Key Employees
• Contract Labour/Temps
• Training Expenses
• Marketing Expenses
• Advertisements
• Brochures/Literature/Other
• Insurance Premiums
• Distributor Contracts

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• Contingency (5%)
Expenses: Costs of Goods Sold
• Materials/Supplies
• Labour
• Rent
• Utilities
• Insurance
• Administrative Exp. (PT Sec.)
• Legal & Accounting
• Marketing
• Equipment Maintenance/Supplies
• Facility Maintenance
• Fees/Miscellaneous
Debt / Equity Investment:
• Equipment Loan
• Building Rehabilitation Loan
• Grants
• Owner Equity
Expenses
• Cost of Goods Sold
• Wages & Benefits
• Materials
• Supplies
Overhead Expenses:
• Rent
• Utilities
• Building Maintenance/Security
• Marketing
• Accounting

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• Legal
• Administrative Expense
• Interest Expense
• Depreciation

Q.6 A Business Continuity Plan is a Disaster Management Plan. Discuss this


statement, explaining how such a plan could be useful for a business affected by
recession.
Ans. Recent world events have challenged us to prepare to manage previously
unthinkable situations that may threaten an organization’s future. This new
challenge goes beyond the mere emergency response plan or disaster
management activities that we previously employed. Organizations now must
engage in a comprehensive process best described generically as Business
Continuity. It is no longer enough to draft a response plan that anticipates
naturally, accidentally, or intentionally caused disaster or emergency scenarios.
Today’s threats require the creation of an on-going, interactive process that
serves to assure the continuation of an organization’s core activities before,
during, and most importantly, after a major crisis event.
In the simplest of terms, it is good business for a company to secure its assets.
CEOs and shareholders must be prepared to budget for and secure the
necessary resources to make this happen. It is necessary that an appropriate
administrative structure be put in place to effectively deal with crisis
management. This will ensure that all concerned understand who makes
decisions, how the decisions are implemented, and what the roles and
responsibilities of participants are. Personnel used for crisis management should
be assigned to perform these roles as part of their normal duties and not be
expected to perform them on a voluntary basis.
Regardless of the organization–for profit, not for profit, faith-based,
nongovernmental–its leadership has a duty to stakeholders to plan for its

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survival. The vast majority of the national critical infrastructure is owned and
operated by private sector organizations, and it is largely for these organizations
that this guideline is intended. ASIS, the world’s largest organization of security
professionals, recognizes these facts and believes the BC Guideline offers the
reader a user-friendly method to enhance infrastructure protection.

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STRATEGIC MANAGEMENT & BUSINESS POLICY

MB0036

Assignment Set- 2

Q.1 List and explain the objectives of a Bankruptcy Law.


Ans. A Bankruptcy case is the Process that is set into motion by the filing of a petition
seeking relief under the Bankruptcy Code. Petitions may be filed voluntarily or
involuntarily (by Creditor). Generally Speaking there are two types of relief
available through bankruptcy:
1. Liquidation

2. Rehabilitation

A Case Filed under chapter 7 of the Bankruptcy code is a Liquidation case. A


bankruptcy trustee is appointed in every chapter 7 case to take or acquire
possession of all property in which the debtor has a legal or equitable interest as
of the time the petition was filed. The debtor is permitted to exempt certain
property under a mix of state and federal law in order to facilitate the debtor post
bankruptcy “Fresh Start”. The trustee may avoid invalid liens that encumber or
set aside certain pre filling transfer of the debtor property. On the other hand
when property is fully secured by valid liens it will usually be abandoned by the
trustee as of no value to the estate.
After collecting all of the assets comprising the bankruptcy estate, the
trustee will liquidate the non exempt and unencumbered property and after
paying valid liens exemption and the proceeds of sale to non priority unsecured
creditor on a prodata basis.
Corporation and other entities do not receive a discharge in a chapter 7
case and partly for that reason do not typically file for relief under chapter 7. A
chapter 11 reorganization is a type of rehabilitation proceeding. A business
debtor will ordinarily file a voluntary chapter 11 case in an effort to the pressure
some portion of the going concern value of the business for its owners which

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value would otherwise be lost through piece meal liquidation of the firms
productive assests.
Creditors are rapid in a chapter 11 case by means of a plan of re
organization initially only the debtor can file the re organization plan. The typical
plan of re organization provides for the repayment over an extended period of
time of the entire value of fully secured claims and a ratable portion of the
aggregate claims of unsecured creditors.

Q.2 If you are made the CFO (Chief Financial Officer) of a Company what would you
consider to be the KRAs (Key Result Areas) of your job?
Ans. As a CFO I would consider the following KRA s
1. Establish systems controls for and procedure for financial and accounting
systems to achieve corporate objectives.

2. Directs installation & maintenance of accounting timekeeping, payroll,


inventory, property & related procedure & controls.

3. Designs, manages & reporting systems to all departments and to aid


management decision in achievement of stated objectives regarding revenue,
profitability & market share.

4. Prepare reports & Statements of estimated future cost & revenue.

5. Direct internal audit involving review of accounting & administrative controls.


Co ordinate preparation for external audit & External financial reporting.

6. Oversee bank work regarding document inward / outward remittances etc.

7. Direct the preparation and filing of returns for sales tax, income tax, Excise &
other form of taxes & charges.

Q.3 What is a Decision Support System? Name one example of critical Reporting
for each of the Production, Marketing and Finance departments of the Company.

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Ans. A decision Support system is a class of information system that supports
business and organizational decision making activities. A properly designed DSS
is an interactive software based system intended to help decision makers
compile useful information from a combination of raw data, documents , personal
knowledge or business models to identify and solve problems and make
decision. DSS are usually computer application along with a human component
that can shift through large amounts of data & pick between the many choices.

It is important to note that although computers and artificial intelligence is at work


or in play with data it is ultimately up to humans to execute these strategies or
comprehend the data into a usable hypothesis.

It is important to note that the field of DSS does not have a universally accepted
model, meaning that there are many theories vying for supremacy in this broad
field. A co operative decision support system is when data is collected, analyzed
& then is provided to a human component which then can help the system revise
or refine it.

While the above DSS model takes the relationship of the user in mind & another
popular DSS model takes into consideration the mode of assistance as the
underlying basis of the DSS model. It includes the following models:

1. Model Driven DSS: It is when decision makers use statistical, simulation or


financial models to come up with a solution or strategy. Keep in mind that these
decisions are based on models however they do not have to be overwhelming
data intensive.

2. Communication Driven DSS: It is when many collaboration works together to


come up with a series of decision to set in motion a solution or strategy. This
communication driven DSS model can be in an office environment or on the web.

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3. Data Driven DSS: It put its emphasis on collected data that is then manipulated
to fit the decision makers need. This data can be internal, external and in a
variety of formats.

4. Knowledge Driven DSS: It uses special rules stored in a computer or used by a


human to determine whether a decision should be made.

Typical information that a decision support application might gather & present are
an inventory of all of your current data sourse, cubes, data where house and data
marts.

Benefits of DSS :
1. Improves Personal Efficiency

2. Expedites Problem solving

3. Facilitates interpersonal communication

4. Promotes learning or training

5. Increases organizational control

6. Creates a competitive advantage over competition

7. Helps automate the managerial processes

Q.4 Trace the sequence of operations involved in a credit card system. What is the
advantage to each participant in the system?
Ans. The following sequence of events is, thus, fairly common:
1. The cardholder presents his card to a merchant (aka: an acceptor of
payment system cards).

2. The merchant may request an authorization for the transaction, either by


electronic means (a Point of Sale / Electronic Fund Transfer apparatus) or

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by phone (voice authorization). A merchant is obliged to do so if the value
of the transaction exceeds predefined thresholds. But there are other
cases in which this might be either a required or a recommended policy.

3. If the transaction is authorized, the merchant notes down the authorization


reference number and gives the goods and services to the cardholder. In
a face-to-face transaction (as opposed to a phone or internet/electronic
transaction), the merchant must request the cardholder to sign the sale
slip. He must then compare the signature provided by the cardholder to
the signature specimen at the back of the card. A mismatch of the
signatures (or their absence either on the card or on the slip) invalidate the
transaction. The merchant will then provide the cardholder with a receipt,
normally with a copy of the signed voucher.

4. Periodically, the merchant collects all the transaction vouchers and sends
them to his bank (the "acquiring" bank).

5. The acquiring bank pays the merchant on foot of the transaction vouchers
minus the commission payable to the credit card company. Some banks
pre-finance or re-finance credit card sales vouchers in the form of credit
lines (cash flow or receivables financing).

6. The acquiring bank sends the transaction to the payments system (VISA
International or Europay International) through its connection to the
relevant network (Visa Net, in the case of Visa, for instance).

7. The credit card company (Visa, Mastercard, Diners Club) credits the
acquirer bank.

8. The credit card company sends the transaction to the issuing bank and
automatically debits the issuer.

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9. The issuing bank debits the cardholder's account. It issues monthly or
transaction related statements to the cardholder. In some countries -
mainly in Central and Eastern Europe, the Middle East, Africa, and Asia -
credit card companies sometimes work directly with their cardholders who
pay the companies via money order or bank transfer. The cardholder is
often required to provide a security to the credit card company.

Q.5 Intellectual Property Rights have increased prices. Intellectual Property Rights
have the effect of encouraging investment in research, resulting in new products
and in reducing costs. Discuss these two apparently contradictory statements.
Ans. Intellectual property rights can be very valuable commercial rights for inventors,
creators and researchers. Intellectual property rights are legal rights to do certain
things in relation to an invention or creation. In general terms, intellectual
property rights are infringed if someone exercises an intellectual property right
without the permission of the owner of the right One constant factor in the
development of new technologies has been the cost and difficulty of the process
of putting new technologies on the market. The technical merit or scientific
brilliance of an invention is only one aspect of actually bringing a new technology
to the public in a useful practical form. This can be a costly and complex process.
Normally, it is not possible without a range of different partnerships and
relationships – as sources of funding, expertise and other resources. Intellectual
property protection needs to be properly managed so that it facilitates this
process, and doesn’t itself become a burden. The problems of getting worthwhile
benefits from the patent system – even ago makes clear: Patenting was
unnecessarily and unwisely expensive, and the poor patentee was left almost
without any aid or guidance. Intellectual property rights recognize innovative and
creative activities, and are intended to reward useful and valuable contributions
to society. But they are not direct rewards in themselves. All they do is to create
an opportunity for the inventor or creative person to seek rewards for their
invention or returns from their investment in the research. In short, obtaining

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registered intellectual property rights can be expensive, and do not in themselves
make you any returns for your investment. Patents can be costly liabilities to you,
your business or your research institute, unless you can find a way to apply your
invention commercially or can get other forms of financial support. This calls for a
range of skills and experience quite apart from technological and scientific skills.
Depending on these factors, you can choose between a number of different ways
of managing your IP rights to get the benefits from your research. These options
typically include:
- licensing your rights (an IP right such as a patent can be licensed out to
others – either partially or fully, exclusively or to several parties) assigning
your rights (an IP right such as a patent can be assigned, or its ownership
transferred, to another – this can be in exchange for a financial payment
or for some other valuable consideration, such as shares in the company).
– entering into a joint venture arrangement (you can effectively pool your
intellectual property rights and other resources with a partner, to form a
joint venture to develop and exploit a new technology), and – starting up
your own company to exploit the technology (often called ‘spinning off’ a
new company, or a ‘start-up’ - this one approach taken by research
institutions and university faculties to create a suitable commercial vehicle
for putting new technology to work, while keeping basic research separate
from applied development and commercialisation).

Q.6 In today’s context, would you consider Corporate Social Responsibility as a cost
adding activity and not the duty of Companies or as an essential role with
advantages to the firm?
Ans. CSR is “a concept whereby companies integrate social and environmental
concerns in their business operations and in their interaction with their
stakeholders on a voluntary basis” as they are increasingly aware that
responsible behaviour leads to sustainable business success. CSR is also about
managing change at company level in a socially responsible manner. In this
context, an increasing number of firms have embraced a culture of CSR. Despite
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the wide spectrum of approaches to CSR, there is large consensus on its main
features:
CSR is behaviour by businesses over and above legal requirements,
voluntarily adopted because businesses deem it to be in their long-term
interest;
CSR is intrinsically linked to the concept of sustainable development:
businesses need to integrate the economic, social and environmental
impact in their operations;

CSR is not an optional "add-on" to business core activities - but about the
way in which businesses are managed.

The business case for CSR within a company will likely rest on one or more of
these arguments
Human Resources: A CSR Programme can be an aid to recruitment and
retention, particularly within the competitive graduate student market. Potential
recruits often ask about a firms CSR policy during an interview and having a
comprehensive policy can give an advantage.

Risk Management: Managing risk is a central part of many corporate strategies.


Reputation that take decades to build up can be reuined in hours through
incidents such as corruption scandals or environmental accidents.

License to operate: Corporations are keen to avoid interference in their


business through taxation or regulations by taking substantive voluntary steps
they can persuade government and wider public that they are taking issues such
as health & safety.

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