Set 2 Q.1 Explain with respect to policies steps in framing business policy and stages of policy cycle.

. Will these help in decision making? (10 marks)

Policy is a proposed or adopted course or principle of action.

The idea of policy formulation suggests several images. The literature typically features one or the other, rarely both simultaneously. The technically minded see this as an act of correct analysis, finding the optimal solution to a complicated problem. The politically minded see it as gaining support for a policy through the cumbersome legislative process. The former casts policy formulation in terms of rationality; the latter in terms of compromise and majority-building. Policy formulation is the development of effective and acceptable courses of action for addressing what has been placed on the policy agenda. Notice that there are two parts to this definition of policy formulation: 1. Effective formulation means that the policy proposed is regarded as a valid, efficient, and implementable solution to the issue at hand. If the policy is seen as ineffective or unworkable in practice, there is no legitimate reason to propose it. Policy analysts try to identify effective alternatives. This is the analytical phase of policy formulation. 2. Acceptable formulation means that the proposed course of action is likely to be authorized by the legitimate decision makers, usually through majority-building in a bargaining process. That is, it must be politically feasible. If the policy is likely to be rejected by the decision making body, it may be impractical to suggest it. This is the political phase of policy formulation. There are, then, two aspects to policy formulation: the analytical and the political. First, effective policy alternatives, presumably based on sound analysis, must be conceived and clearly articulated. Second, a political choice among these alternatives must be made: The policy must be authorized through a political process, such as legislation or regulation. Both phases --analysis and authorization --comprise policy formulation.

The process of framing policies consists of the following steps: y Definition of purpose The first step towards framing policies includes the process of identifying the objectives and the philosophy of the organisation. The purpose is to select the guidelines for measuring the performance based on the organizations strengths and weaknesses, its available resources and the personnel. The basic concept of the business activities is defined in this phase. Example The perception of the garment company is to develop the finest cloth at less cost. Adding to such a conceptual view, the company must define the purpose in terms of guidelines needed for measuring the performance and obtaining the desired targets. y Preparation of strategic intelligence This step involves analyzing the internal environment of the organisation. The strategic intelligence is the process of detailed description of what the company is and assessing its sphere of operations. The prediction of the future happenings including the opportunities and risks must be known because it lays heavy impact on the companys position in the market. y Policy alternatives Alternating policies must be identified and analyzed once the objectives of the organisation are defined. The managers recognize the problems faced by the organisation and discover the alternative policies. This step is the central phase of framing a policy. A list of policy alternatives is generated by considering the probabilities of the problems faced by the organisation.

Example Inventory systems in Das n Das Company The Das n Das Company invested on control systems to avoid taking decisions on the routine matter regarding the orders, timings of production, etc. In such a situation, many factors are considered by the top level management to increase the production rate and

the size of orders. Hence meetings are held to discuss the implementation of the policy that suits the best. The top level management introduced an alternative to the inventory control policy that consisted of determination and evaluation of various conflicting factors. The policy is adopted to represent a balance between the internal factors like employees, resources and the production. y Policy analysis This step involves analyzing the alternative policies and examining its contribution towards the objectives of the organisation. An alternative policy is based on the consequences to be faced by the organisation. The elements of policy analysis process include evaluating the consequences of various alternatives and their effects on the objectives of the organisation. y Strategic choice It is the process of selecting the policies that is best suited for the organisation. This is done by the top level management. The policies act as guidelines to fulfill the organizations purpose. Establishing the specific policies represents the strategic commitment towards achieving the objective of organisation. y Policy review Policy review is the process to evaluate whether the framed policy is matching the organizational performance. A periodical review of policies is necessary to maintain the policies up to date. This section explained the various steps involved in framing business policies. The next section defines policy cycle and describes the stages of policy cycle. Policy cycle is the process of analyzing, planning, designing, and implementing the policies in the organisation. Every organisation typically has high and low level policies. The high level policies govern the entire company in all circumstances. They mainly deal with the organizations needs. It forms a standard and does not lend procedures. The low level policies deal with a set of specific circumstances. It helps in creating procedures to govern the organisation in specific situations.

These policies are necessary to govern the organisation. Hence it must be reviewed and reshaped as the objectives of the organisation changes. The policy cycle is necessary to implement this process. Stages of policy cycle The policy cycle consists of the following stages: Setting the policy agenda Policy agenda is the process of describing the sequence of business activities in the organisation and planning the measures to frame a policy. A list of factors is considered which includes processes, resources, revenue etc. The top level management organizes committee meetings to discuss these factors and make a detailed planning for framing a policy. Writing policy It is the process of drafting the policy for the organisation. The policy is drafted based on the various factors discussed in the meetings. A separate team under framing business policies is responsible for writing policies. The policy statements must be clear, concise and easily implemented in the organisation. The policies are created in such a way that it does not lead to controversies. The drafted policies adhere to the organizations objectives. Implementation of policy The implementation process is necessary to effectively communicate the drafted policies. This phase makes the policy visible to the employees in the organisation. An environment of compliance is achieved between the organisation norms and the employees only if the employees are aware of policies in the organisation. Generally, employees view the policies as restrictions. Hence, implementing the policies systematically reduces the negative perception of the employees. Policy implementation tasks are:

 Policy legitimating The proposed policy must obtain authenticity from the team implementing the policy. Constituency structure The policy must be marketed in such a way that it promotes the relationship between the beneficiaries. Resource allocation The resources that are supporting the implementation of policy must be acquired or reallocated depending on the implementation of the strategy. Organizational design and modification The existing organisation must be re-engineered or modified according to the new policy. Resource mobilization The resources in the organisation must be redirected to provide the capacity to conduct action as per the implemented policy. Enforcing policy Enforcing policy is the process of applying the drafted policies in situations that are in compliance between the organisation and the employees. The top level management has the clear responsibility for enforcing the policies. If the employees are found exploiting the policies then the organisation has powers to impose penalties to the employees. Hence enforcing policies develops responses to the problems faced in the organisation without hampering the organizations success. Reviewing the policy Reviewing the policies is the process of checking whether the policies are matching the business activities in the organisation. This phase includes re-examining the existing policies. All the policies must be reviewed on daily basis. If any errors are found that are not compatible to the organizations views then it is reverted to the policy drafting team to re-draft. Reviewing policies ensures that they reflect the business realities of the moment. Updating policy

If any changes are made in the process of the business activities then the existing policies also must be changed. The review team holds the responsibilities of updating policies. If the policies are not updated then the organisation experiences issues with various factors in the organisation. enever any business policy is framed, it has to be observed by the decision makers as feasible and beneficial for the organizations growth and success. Just because a policy is in place, it doesnt mean that it will help business decisions. Therefore, business policies have to be framed after a careful scrutiny and then decided whether such policies are needed or not. Once policies are in place and implemented, it should further help in functional and operational decisions without causing any ambiguities or delays in procedures. Policies should act as guiding light to lead the organisation and business strategies in the right path. A change in policy or amendments done to existing policies should also be considered in decision making before implementing them. Further, it should not cause any major disruptions in the internal environment. Policy making decisions together with strategic decisions must provide clarity, flexibility and assistance to other business decisions. Interdependence between policy and strategy Business policies and business strategies requires compatibility. A policy should not hinder strategic decisions and in the same way, a strategy should not restrict policy decisions. Both have to be complementary to each other.

Q.2 Assess the challenges involved in Strategic Management in the near future. (10 marks) 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 each strategy 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. (Lamb, 1984:ix)

Strategic management is a technique you can use to create a favorable future and help your organization to prosper. To create this favorable future, you must involve your organization's stakeholders (i.e., anyone with a vested interest in achieving your organization's goals) in envisioning the most desirable future and then in working together to make this vision a reality. The key to strategic management is to understand that people communicating and working together will create this future, not some words written down on paper

The field of strategic management has grown significantly as organizations find new and better ways to gather information about operational and financial performance. Two decades ago, strategic management was limited to rudimentary analysis which was often backed by qualitative data. Today, quality management systems have created a strategic framework based on a statistical tools driven by business software applications and process improvement methodologies. The challenge is finding a point of common ground

1. Too Much Data

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Statistical management tools are used across industries, from government and nonprofit agencies to corporations and banks. The challenge with most management information systems is one of data, and identifying consistent ways to apply that data to strategic planning efforts.

Bridging the Gap

Quality management systems (QMS) like Six Sigma and LEAN manufacturing are two commonly used business management solutions which are helping organizations to build a common language for interpreting data and reporting results. While these management systems are effective, they are often incompatible with business systems. As a result managers must find ways to bridge the gap between quality assessment tools and the data provided by business information systems.

Customized Tools
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One way to bridge the gap between management information systems and QMS is to build customized tools which are specific to the organization or business unit. While this is by far the most efficient solution, organic models created from database and spreadsheet applications (like MS Access and Excel) can make it difficult to pass on roles and business processes from one employee to the next. This reduces productivity levels. A more effective solution is to ask users of business information data to provide insight into the common uses of data. Programmers can then customize a solution to the business operating system (OS) used, i.e., SAP. Operating systems which speak directly to your QMS will save your organization both time and money.

Read more: Challenges in Strategic Management | eHow.com http://www.ehow.com/way_5519790_challenges-strategic-management.html#ixzz1lEbVC7gB

Strategic management includes strategic planning, implementation and review/control of the strategy of an organization. All most all the modern organizations engage in strategic management to ensure that they achieve the desired level of performance. But in the modern business context strategic management faces many challenges such as:
y

Orientation for globalization-

Every aspect of the business is getting globalised and business organizations step in to global operations with MNC and other foreign business operations methods. Due to the globalised operations of the business world there are new orientations such as international human resource management (IHRM) and international finance are emerging. Companys strategic management process has to be updated to cope up with these new orientations.

Emerging e-commerce and internet culture-

With the wide expansion of worldwide web (www) and the technology businesses have moved on to e-commerce where they conduct business electronic means such as online purchasing/selling and online advertising. Strategic management process of the business should be able to accommodate e-commerce motives into the business process.
y

Cut throat competition-

With the globalization, e-commerce and other changes in the business environment, todays business world has become hyper competitive where the organization can no longer survive without executing proper competitive strategy. Strategic management process should generate competitive intelligence and predict the next moves of the competitors and build the competitive strategy to win the battle with competitors.

Diversification-

With the rapid changing business environment and increased uncertainty the business risk has increased drastically. To diversify the business risk companies now engage in diversified operations where they focus on more than one business area/industry rather than specializing in one area. The strategic management should be able to identify diversified business opportunities and manage them well.
y

Active pressure groups-

In the modern world there are active pressure groups operating such as environmental activism and consumer protectionism. Strategic management should identify these external pressure groups and hear about their concerns.
y

Motive for Corporate Social Responsibility (CSR) and ethics-

The modern business organizations have engage in CSR and ethics to keep up their corporate reputation and be competitive in the environment. Strategic management should look into possible CSR activities and implement those to be in line with expectations of the society.

Q.3 Four years back, Pure Ltd. was a newly started company. It deals in designer fabrics. Its top management comprises mainly of young talented persons. They would to know to make the company follow ethical codes and practice CSR as the company moves ahead. They are also interested in meeting its business obligations. Could you suggest to the management on how to go about it? (10 marks)

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 organisation. It improves the quality of life of the organisation. The meaning of CSR has two folds. On one hand, it exhibits the ethical behaviour that an organisation exhibit towards its internal and external stakeholders. And on the other hand, it denotes the responsibility of an organisation 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 organisation 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 organisation 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 organisation 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 organisation. Factors which enhance social business obligations are as follows: Implementing punishable act towards corruption or any illegal act in an organisation The employer-employee relationships must be stable. Although an organisation 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 a 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 agenciesc are the outcomes of poor moral obligations of an organisation. Collective moral responsibility of a business deals with appropriate arrangements of the widespread 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 organisation 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 organisation has certain responsibility towards reducing unethical issues. Example Worldwide inequality of income can result in unethical practices such as the child labour; monopoly suppliers can exploit the consumers, etc. Building ethical obligations in an organisation 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 organisation 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.

Q.4. What is BCP? Discuss its importance and influence on strategic management. How contingency planning is related to BCP? (10 marks) Business continuity plan (BCP) is a process followed by an organisation to survive in an event that causes disruption to normal business processes. BCP not only includes major disasters (e.g. loss of a building due to natural calamities, fire accident etc) but also routine interruption (e.g. hard disk crash due to virus, major power interruption etc).In such cases BCP ensures that critical operations continue to be available. Document containing the recovery timeline methodology, test-validated documentation, procedures, and action instructions developed specifically for use in restoring organisation operations in the event of a declared disaster. To be effective, most Business Continuity Plans also require testing, skilled personnel, access to vital records, and alternate recovery resources including facilities.

BCP is a collection of procedures which is developed, recorded and maintained in readiness for use in the event of an emergency or disaster. Every organisation is at risk due to natural disasters like flooding, hurricanes or earthquakes, or any common causes of systems disasters. Sometimes it can also be due to human interference like hacking or virus attack. Business Continuity Planning is important to the continued success of an organisation. They are critical for the continuous operations in all types of businesses. Every company needs a detailed contingency plan that ensures continuous business operations in case of any unforeseen, difficult or catastrophic event occurs. Recently most of the organisations rely on technology to do business and give more importance to IT and communication services. They become highly vulnerable to loss of information and service a result of catastrophe. BCP is very important due to the following reasons: advanced planning Threats Advanced planning Many companies have realized that it is not sufficient to implement a generic BCP. For an efficient response, with respect to continuous operations, it must adopt to specific risks and catastrophic situations which could range from major building loss to local system failure. Organizations must plan for the recovery of critical business functions, using priorities and timescales that were obtained from assessed risks and accompanying data. BCP must cover the requirements of IT, data and voice communications as well as of essential personnel and offsite locations. In todays scenario, it is no longer sufficient for an organisation to recover its technology and communications infrastructure but it must also have accessible people and accommodations in which they can work. Threats

Natural disasters are not the only threats to a business operation. Corporate espionage organised crime, hacking, whacking packet sniffing etc are some of the man-made disasters. Hackers could destabilize an organizations entire operation. To respond to this threat, it is important to use results generated from risk analysis and management activity to undertake focused, organisationspecific security testing, including vulnerability assessment and penetration testing of the network infrastructure. Where an event causes a company to close down its entire network, it is critical to ensure that employees and other users still get access to their data and applications as quickly and securely as possible. To accomplish this, companies can organize various information management solutions by implementing network management procedures. In spite of giving attention to Business Continuity Planning following recent terrorist activities, organizations are still failing to put strategic contingency plans in place. Gartner, an analyst firm estimates that only 35% of the organizations have a comprehensive disaster recovery plan in place and fewer than 10% have crisis management, contingency, business recovery and business resumption plans. This is an alarming statistic. Example for corporate espionage and organized crime An employee of Ellery Systems Inc. resigned and took the computer software codes with him. The codes had a potential market value of billion dollars. As they didnt implement BCP, Ellery systems went out of business and its employees lost their jobs. Millions of dollars invested and many years of hard work were lost. Contingency planning is a planning strategy that deals with uncertainty by identifying specific responses to possible future conditions. Contingency planning realises that future is impossible to predict, so it is best to have a variety of flexible and responsive solutions available. It is an alternative course of action that can be implemented in the event when a primary approach fails to function as it should. Contingency plans allow the businesses and other entities to quickly adapt to the changing circumstances. Contingency plans are developed by identifying possible failure in the usual flow of operations and strategies. Contingency plans should overcome these failures and continue with the functions

of the organisation. Organizations create contingency plans to achieve the objectives that are listed below: Day to day operations of the organisation continue without a great deal of interruption or interference. Backup plan is capable of remaining functional as long as it takes to restore primary plan. Emergency plan minimizes inconvenience to customers, allowing the organisation to continue providing good and services. Implementation Contingency plans can be practically applied to any level of organisation as a part of planning process. It involves the following steps: Identify the objectives and targets Identify various strategies that help to achieve objectives and targets. Evaluate the costs and benefits of each strategy, and rank them according to costeffectiveness or benefit/cost ratios. The ranking can take other significant factors into account such as implementation and other additional benefits. Implement the required strategies to achieve the targets. It generally starts with the most cost effective and easy to implement strategies, and working down the list to more costly and difficult strategies. After they are implemented, assess the programs and strategies with regard to various performance measures, to ensure that they are effective. Evaluate overall results with regard to targets to decide if the additional strategies should be implemented.

Contingency plans can be practically applied to any level of organisation as a part of planning process. It involves the following steps: Identify the objectives and targets Identify various strategies that help to achieve objectives and targets. Evaluate the costs and benefits of each strategy, and rank them according to costeffectiveness or benefit/cost ratios. The ranking can take other significant factors into account such as implementation and other additional benefits. Implement the required strategies to achieve the targets. It generally starts with the most cost effective and easy to implement strategies, and working down the list to more costly and difficult strategies. After they are implemented, assess the programs and strategies with regard to various performance measures, to ensure that they are effective. Evaluate overall results with regard to targets to decide if the additional strategies should be implemented. Q. 5 Mention any 5 successful strategic alliances and discuss the key aspects concerned with it. What kinds of problems were faced by companies that were involved in these strategic alliances? (10 marks) 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 organizations.

Merger is the process of combining two or more organizations to form a single organisation and achieve greater efficiencies of scale and productivity. The main reason to 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 organisation 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 organisation 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 co-branding 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. It 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 organisation 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 counteroffers. 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. 6 Give a note on strategic evaluation and strategic control. (10 marks) The core aim of strategic management succeeds only if it generates a positive outcome. Strategic evaluation and control consists of data and reports about the performance of the organisation. Improper analysis, planning or implementation of the strategies will result in negative performance of the organisation. The top management needs to be updated about the performance to take corrective actions for controlling the undesired performance. All strategies are subject to constant modifications as the internal and external factors influencing a strategy change constantly. It is essential for the strategist to constantly evaluate the performance of the strategies on a timely basis. Strategic evaluation and control ensures that the organisation is implementing the relevant strategy to reach its objectives. It compares the

current performance with the desired results and if necessary, provides feedback to the management to take corrective measures. Strategic evaluation consists of performance and activity reports. If performance results are beyond the tolerance range, new implementation procedures are introduced. One of the obstacles to effective strategic control is the difficulty in developing appropriate measures for important activities. Strategic control stimulates the strategic managers to investigate the use of strategic planning and implementation. After the evaluation, the manager will have knowledge about the cause of the problem and the corrective actions. The strategic-evaluation process with constantly updated corrective actions results in significant and long-lasting consequences. Strategy evaluation is vital to an organizations well-being as timely evaluations can alert the management about potential problems before the situation becomes critical. Successful strategists combine patience with a willingness to take corrective actions promptly, when necessary.

Strategic control is established to focus on the resources used in the performance (input), activities that generate the performance (behaviour) and the result of actual performance (output). Strategic control involves tracking the strategy as it is being planned, implemented and take necessary actions when it indicates any negative performance.

 Control is taking measures that synchronize outcomes as closely as possible with plans  Traditionally, has been almost completely based on financial performance  Hence, top internal accounting officer became the In Charge official for organization control policies and procedures  What do we call the chief accounting officer of an organization?  Answer: The Controller Financial Information was primary source Rewarded Efficiency Encouraged Dysfunctional Behavior