Name SAM. C. B.

DAVID

Role No. 520960228

L.C .No.00120

Master of Business Administration -MBA Semester IV

Subject Code – MB0036
Subject Name – Strategic Management & Business Policy
Assignment Set- 2

Q.1 Explain the importance of licensing and assigning IP rights.

One basic choice is whether you should actively exploit your IP rights yourself, or to
keep your IP rights and license them to others to use, or sell or assign the rights to
another person. You can, in principle, make different choices in different countries for
exploiting IP rights for the same underlying invention. If you are based in Malaysia, you
could in theory decide to exploit your patent yourself in the East Asian region, grant a
licence a Canadian company to use the invention in North America, and sell or assign the
rights in Europe to a Danish company – whether or not this is the best approach in
practice is a different matter, of course.

A licence is a grant of permission made by the patent owner to another to exercise any
specified rights as agreed. Licensing is a good way for an owner to benefit from their
work as they retain ownership of the patented invention while granting permission to
others to use it and gaining benefits, such as financial royalties, from that use. However,
it normally requires the owner of the invention to invest time and resources in
monitoring the licensed use, and in maintaining and enforcing the underlying IP right.

The patent right normally includes the right to exclude others from making, using, selling
or importing the patented product, and similar rights concerning patented processes. The
license can therefore cover the use of the patented invention in many different ways.

For instance, licences can be exclusive or non-exclusive. If a patent owner grants a non-
exclusive licence to Company A to make and sell their patented invention in Malaysia,
the patent owner would still be able to also grant Company B another non-exclusive for
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the same rights and the same time period in Malaysia. In contrast, if a patent owner
granted an exclusive licence to Company A to make and sell the invention in Malaysia,
they would not be able to give a licence to

anyone else in Malaysia while the licence with Company A remained in force.

Licenses are normally confined to a particular geographical area – typically, the

jurisdiction in which particular IP rights have effect. You can grant different exclusive
licences for different territories at the same time. For example, a patent owner can grant
an exclusive licence to make and sell their patented invention in Malaysia for the term of
the patent, and grant a separate exclusive licence to manufacture and sell their patented
invention in India for the term of the patent.

Separate licences can be granted for different ways of using the same technology. For
example, if an inventor creates a new form of pharmaceutical delivery, she could grant
an exclusive licence to one company to use the technology for an arthritis drug, a
separate exclusive licence to another company to use it for relief of cold symptoms, and
a further exclusive licence to a third company to use it for veterinary pharmaceuticals.

A licence is merely the grant of permission to undertake some of the actions covered by
intellectual property rights, and the patent holder retains ownership and control of the
basic patent.

An assignment of intellectual property rights is the sale of a patent right, or a share of the
patent.

It should be remembered that the person who makes an invention can be different to the
person who owns the patent rights in that invention. If an inventor assigns their patent
rights to someone else they no longer own those rights. Indeed, they can be in
infringement of the patent right if they continue to use it.

Patent licences and assignments of patent rights do not have to cover all patent rights
together.

Licences are often limited to specific rights, territories and time periods. For example, a
patent owner could exclusively licence only their importation right to a company for the
territory of Indonesia for 12 months. If an inventor owns patents on the same invention
in five different countries, they could assign (or sell) these patents to five different
owners in each of those countries. Portions of a patent right can also be assigned – so
that in order to finance your invention, you might choose to sell a half-share to a
commercial partner.

If you assign your rights, you normally lose any possibility of further licensing or
commercially exploiting your intellectual property rights. Therefore, the amount you
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charge for an assignment is usually considerably higher than the royalty fee you would
charge for a patent licence. When assigning the rights, you might seek to negotiate a
licence from the new owner to ensure that you can continue to use your invention. For
instance, you might negotiate an arrangement that gives you licence to use the patented
invention in the event that you come up with an improvement on your original invention
and this falls within the scope of the assigned patent. Equally, the new owner of the
assigned patent might want to get access to your subsequent improvements on the
invention.

Q.2 Assess the need for Corporate Social Responsibility with supporting
instances.
Corporate Responsibility is considered a key development in connecting corporate
practices with the societal goal of sustainable development, as firms can “contribute to
more sustainable patterns of production and consumption within society” (Roome, 2006:
p. 137). This has been supported by research about business and the natural environment
and society, which has over the last decade predominantly focused on the business case
for sustainability and the competitive advantages of environmental responsibility (e.g.
Aragon-Correa and Sharma, 2003; Berry and Rondinelli, 1998; Maignan and Ferrell,
2001; Porter and Van der Linde, 1995; Simpson et al, 2004). Within this field, various
scholars have argued for integration of corporate responsibility into established business
routines (e.g. Banerjee, 2001; Menon and Menon, 1997), yet in practice that does not
appear to be the case (e.g. Knox et al, 2005).

Most research about corporate responsibility focuses on investigation of managers, and

particularly on managers responsible for health, safety and environmental issues (e.g.
Cormier et al, 2004; Egri and Herman, 2000; Sarkis, 1998). Banerjee (2002) argued that
it was important to understand the interpretations of decision makers regarding
environmental issues. Some researchers have looked at different levels of management
(e.g. Andersson and Bateman, 2000; Floyd and Wooldridge, 2002; Sharma, 2000).
However, little research has been published on the integration of corporate responsibility
throughout the organisation and the possible implications of wider employee
understanding of environmentalism (Wehrmeyer and McNeil, 2000) and social issues
(e.g. Lyon, 2004; McNutt and Batho, 2005). Similarly, based on the idea that strategy
development and implementation is underpinned by the understanding of people (Floyd
and Woodridge, 2000; Mintzberg et al., 1998 and 2002), even experience and culture
(Johnson and Scholes, 2003), it is also important to understand how decision-
implementers influence the development, implementation and success of responsible
strategies and actions. Yet, we have found little research on how employees perceive
corporate values regarding responsible behaviour.

A variety of authors (e.g. Banerjee, 2001; Gladwin et al. 1995; Hoffman, 2000) have
demonstrated how using traditional management theories (in particular institutional
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theory, strategic choice, transformational leadership) can hinder efforts to change to a
more responsible state of doing business at the institutional as well as the organisational
level. Therefore, new perspectives, preferably from new domains, can challenge current
assumptions and facilitate the transition of developing appropriate organisational values
(Starkey and Crane, 2003). The aim of this discussion paper is to review the current
literature on corporate values regarding Corporate Responsibility, and to reflect on the
role of employees in attaining responsible practices in an organisation. From this, we
propose two complementary, multi-disciplinary approaches to further understanding of
the role of shared values in attaining corporate responsible behaviour. Finally, these two
approaches will lead to the development of concrete research questions for future studies.

Q.3 What are the obstacles faced by small business units? Explain with
examples.

Running a small business is not an easy process. Since most small business owners have
built their companies from the ground up, they have a stronger devotion to it and it can
be quite challenging and even frustrating to hire people that do not have the same focus
and drive that you have. Small business hiring is one of the hardest things to do as you
have to find a person that is ideal for their job but also has the ability to multi-task and
help out with several other

When the firm is properly legally established, registered with all the relevant
authorities and has appointed an accounting firm – it can go on to tackle its main
business: developing new products and services. At this stage the firm should adopt
Western accounting standards and methodology. Accounting systems in many countries
leave too much room for creative playing with reserves and with amortization. No one in
the West will give the firm credits or invest in it based on domestic financial statements.

A whole host of problems faces the new firm immediately upon its formation.

Good entrepreneurs do not necessarily make good managers. Management techniques

are not a genetic heritage.

They must be learnt and assimilated. Today’s modern management includes many
elements: manpower, finances, marketing, investing in the firm’s future through the
development of new products, services, or even whole new business lines. That is quite a
lot and very few people are properly trained to do the job successfully.

On top of that, markets do not always react the way entrepreneurs expect them to react.
Markets are evolving creatures: they change, develop, disappear and re-appear. They are
exceedingly hard to predict. The sales projections of the firm could prove to be
unfounded. Its contingency funds can evaporate.

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Sometimes it is better to create a product mix: well-recognized brands which sell well –
side by side with innovative products.

Q.4. Are decision support systems beneficial in strategic management and

business policies? Justify your answer.
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:

· 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.

· A decision system allows for careful financial planning and tax planning. Profits go up,
non cash outlays are controlled, tax liabilities are minimized and cash flows are
maintained positive throughout.

As a result of all the above effects, the value of the company grows and its shares
appreciate.

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.

Decision Support Systems cost as little as 20,000 USD (all included: software, hardware,
and training). They are one of the best investments that a firm can make.

Q. 5 Mr. Kevin is a CFO of a multinational company. What would be his

role and responsibilities in the company?
The CFO (Chief Financial Officer) is fervently hated by the workers. He is thoroughly
despised by other managers, mostly for scrutinizing their expense accounts. He is
dreaded by the owners of the firm because his powers that often outweigh theirs.
Shareholders hold him responsible in annual meetings. When the financial results are
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good – they are attributed to the talented Chief Executive Officer (CEO). When they are
bad – the Chief Financial Officer gets blamed for not enforcing budgetary discipline. It is
a no-win, thankless job. Very few make it to the top. Others retire, eroded and
embittered.

The job of the Chief Financial Officer is composed of many elements. Here is a universal
job description which is common throughout the West.

Organizational Affiliation

The Chief Financial Officer is subordinated to the Chief Executive Officer, answers to
him and regularly reports to him.

The CFO is in charge of:

1. The Finance Director

2. The Financing Department
3. The Accounting Department which answers to him and regularly reports to him.

Despite the above said, the CFO can report directly to the Board of Directors through the
person of the Chairman of the Board of Directors or by direct summons from the Board
of Directors.

In many developing countries, this would be considered treason – but, in the West every
function holder in the company can – and regularly is – summoned by the (active) Board.
A grilling session then ensues: debriefing the officer and trying to spot contradictions
between his testimony and others’. The structure of business firms in the USA reflects its
political structure. The Board of Directors resembles Congress, the Management is the
Executive (President and Administration), the shareholders are the people. The usual
checks and balances are applied: the authorities are supposedly separated and the Board
criticizes the Management.

The same procedures are applied: the Board can summon a worker to testify – the same
way that the Senate holds hearings and cross-questions workers in the administration.
Lately, however, the delineation became fuzzier with managers serving on the Board or,
worse, colluding with it. Ironically, Europe, where such incestuous practices were
common hitherto – is reforming itself with zeal (especially Britain and Germany).

Developing countries are still after the cosy, outdated European model. Boards of
Directors are rubber stamps, devoid of any will to exercise their powers. They are staffed
with cronies and friends and family members of the senior management and they do and
decide what the General Managers tell them to do and to decide. General Managers –
unchecked – get involved in colossal blunders (not to mention worse). The concept of

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corporate governance is alien to most firms in developing countries and companies are
regarded by most general managers as milking cows – fast paths to personal enrichment.

Functions

(1) To regulate, supervise and implement a timely, full and accurate set of accounting
books of the firm reflecting all its activities in a manner commensurate with the relevant
legislation and regulation in the territories of operation of the firm and subject to internal
guidelines set from time to time by the Board of Directors of the firm.

This is somewhat difficult in developing countries. The books do not reflect reality
because they are "tax driven" (i.e., intended to cheat the tax authorities out of tax
revenues). Two sets of books are maintained: the real one which incorporates all the
income – and another one which is presented to the tax authorities. This gives the CFO
an inordinate power. He is in a position to blackmail the management and the
shareholders of the firm. He becomes the information junction of the firm, the only one
who has access to the whole picture. If he is dishonest, he can easily enrich himself. But
he cannot be honest: he has to constantly lie and he does so as a life long habit.

Q. 6 Give a note on strategies that improve sales.

There are three alternatives to improve the sales performance of a business unit, to fill
the gap between actual sales and targeted sales:

a) Intensive growth

b) Integrative growth

c) Diversification growth

a) Intensive Growth:

It refers to the process of identifying opportunities to achieve further growth within the
company’s current businesses. To achieve intensive growth, the management should first
evaluate the available opportunities to improve the performance of its existing current
businesses.

It may find three options:

· To penetrate into existing markets

· To develop new markets

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· To develop new products

At times, it may be possible to gain more market share with the current products in their
current markets through a market penetration strategy. For instance, SONY introduced
TV sets with Trinitron picture tubes into the market in 1996 priced at a premium of
Rs.10,000 and above over the market through a niche market capture strategy. They
gradually lowered the prices to market levels. However, it also simultaneously launched
higher-end products (high-technology products) to maintain its global image as a
technology leader. By lowering the prices of TVs with Trinitron picture tubes, the
company could successfully penetrate into the markets to add new customers to its
customer base.

Market Development Strategy is to explore the possibility to find or develop new markets
for its current products (from the northern region to the eastern region etc.). Most
multinational companies have been entering Indian markets with this strategy, to develop
markets globally. However, care should be taken to ensure that these new markets are
not low density or saturated markets, which could lead to price pressures.

Product Development Strategy involves consideration of new products of potential

interest to its current markets (e.g. Gramaphone Records to Musical Productions to
CDs)– as part of a Diversification strategy.

b) Integrative Growth:

It refers to the process of identifying opportunities to develop or acquire businesses that

are related to the company’s current businesses. More often, the business processes have
to be integrated for linear growth in the profits. The corporate plan may be designed to
undertake backward, forward or horizontal integration within the industry.

If a company operating in music systems takes over the manufacturing business of its
plastic material supplier, it would be able to gain more control over the market or
generate more profit. (Backward Integration)

Alternatively, if this company acquires some of its most profitably operating

intermediaries such as wholesalers or retailers, it is forward integration. If the company
legally takes over or acquires the business of any of its leading competitors, it is called
horizontal integration (however, if this competitor is weak, it might be counter-
productive due to dilution of brand image).

c) Diversification Growth:

It refers to the process of identifying opportunities to develop or acquire businesses that

are not related to the company’s current businesses. This makes sense when such
opportunities outside the present businesses are identified with attractive returns and that
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industry has business strengths to be successful. In most cases, this is planned with new
products that have technological or marketing synergies with existing businesses to cater
to a different group of customers (Concentric Diversification).

A printing press might shift over to offset printing with computerised content generation
to appeal to higher-end customers and also add new application areas ( Horizontal
Diversification ) – or even sell stationery.

Alternatively, the company might choose new businesses that have nothing to do with
the current technology, products or markets (Conglomerate Diversification).

The classic examples for this would be engineering and textile firms setting up software
development centres or Call Centres with new service clients.

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