MB0052 Strategic Management and Business Policy Q1. Define the term Strategic Management.

Explain the importance of strategic management. Answer: Strategic management is a systematic approach of analysing, planning and implementing the strategy in an organisation to ensure a continued success. Strategic management is a long term procedure which helps the organisation in achieving a long term goal and its overall responsibility lies with the general management team. It focuses on building a solid foundation that will be subsequently achieved by the combined efforts of each and every employee of the organisation. Importance of strategic management A rapidly changing environment in organisations requires a greater awareness of changes and their impact on the organisation. Hence strategic management plays an important role in an organisation. Strategic management helps in building a stable organisation. Strategic management controls the crises that are aroused due to rapid change in an organisation. Strategic management considers the opportunities and threats as the strengths and weaknesses of the organisation in the crucial environment for survival in a competitive market. Strategic management helps the top level management to examine the relevant factors before deciding their course of action that needs to be implemented in changing environment and thus aids them to better cope with uncertain situations. Changes rapidly happen in large organisations. Hence strategic management becomes necessary to develop appropriate responses to anticipate changes. The implementation of clear strategy enhances corporate harmony in the organisation. The employees will be able to analyse the organisations ethics and rules and can tailor their contribution accordingly. Systematically formulated business activities helps in providing consistent financial performance in the organisation. A well designed global strategy helps the organisation to gain competitive advantages. It increases the economies of scale in the global market, exploits other countries resources, broadens learning opportunities, and provides reputation and brand identification.

Q2. Describe Porters five forces Model. Answer: Porter suggests that there are five basic competitive forces, which influence the state of competition in an industry. He calls the structural determinants of the intensity of competition, which collectively determine the profit potential of the industry as a whole. Some industries have a bigger profit potential than others, since keener competition means lower profits. These five competitive forces are as follows: Threat of New Entrants: A new entrant into an industry will bring extra capacity. The new entrant will have to make an investment to break into the market, and will want to obtain a certain market share. The strength of the threat from new entrants depends on two factors: The strength of the barriers of entry The likely response of existing competitors to the new entrants. Threat from Substitute Products: The products or services that are produced in one industry are likely to have substitutes that are produced by another industry, which satisfy the same customers need. Which firms in an industry are faced with threats from substitute products, they are likely to find that demand for their products is relatively sensitive to price. Bargaining Power of Customers: Customers should want better quality products and services at a lower price, and if they succeed in getting what they want, they will force down the profitability of supplies in the industry. The profitability of an industry is therefore dependent on the customers bargaining power. The Bargaining Power of Suppliers: Just customers can influence the profitability of an industry by exerting pressure for higher quality products or lower prices, so too can suppliers influence profitability by exerting pressure for higher prices. The Rivalry amongst Current Competitors in the Industry: The intensity of competitive rivalry within an industry will affect profitability of the industry as a whole. Competitive action might take the form of price competition, advertising battles, sales promotion campaigns, introducing new product from the market, improving after sales services or providing guarantee or warranties.

Q3. Define the term Business policy. Explain its importance. Answer: Definition of Business Policy Business Policy defines the scope or spheres within which decisions can be taken by the subordinates in an organization. It permits the lower level management to

deal with the problems and issues without consulting top level management every time for decisions. Business policies are the guidelines developed by an organization to govern its actions. They define the limits within which decisions must be made. Business policy also deals with acquisition of resources with which organizational goals can be achieved. Business policy is the study of the roles and responsibilities of top level management, the significant issues affecting organizational success and the decisions affecting organization in long-run.

1. Specific- Policy should be specific /definite. If it is uncertain, then the implementation will become difficult. 2. Clear- Policy must be unambiguous. It should avoid use of jargons and connotations. There should be no misunderstandings in following the policy. 3. Reliable/Uniform- Policy must be uniform enough so that it can be efficiently followed by the subordinates. 4. Appropriate- Policy should be appropriate to the present organizational goal. 5. Simple- A policy should be simple and easily understood by all in the organization. 6. Inclusive/Comprehensive- In order to have a wide scope, a policy must be comprehensive. 7. Flexible- Policy should be flexible in operation/application. This does not imply that a policy should be altered always, but it should be wide in scope so as to ensure that the line managers use them in repetitive/routine scenarios. 8. Stable- Policy should be stable else it will lead to indecisiveness and uncertainty in minds of those who look into it for guidance. Q4.What, in brief, are the types of Strategic Alliances and the purpose of each? Supplement your answer with example. Answer: A strategic alliance is an agreement between two or more firms to engage in an activity on a shared basis. The outside activities of each partner are not affected by the strategic alliance, which is designed to build on the expertise of each member and the way in which they complement each other. Strategic alliances are generally less formal than joint ventures and not as encompassing and may often be designed to last for a limited time. Partnering is an idea that is loosely used to describe anything from teamwork to strategic alliances to contractual partnerships. As I define it, it is the process of two or more entities coming together for the purpose of creating synergistic solutions to their mutual challenges. I recommend that you adopt strategic alliance agreements as a key part of your overall business strategy. The benefits are numerous, yet the strategic alliance path is not without its own set of obstacles and surprises. Creating a strategic alliance agreement is not meant to be a flavor-of-the-month management strategy to

be hastily adopted and then as quickly abandoned. It is a rather long-term paradigm for success. 1). Purpose of alliance: There are various factors which are driving the companies to enter into alliances which are globalization of market, rapid change in technology, increased in competition, high cost of R&D etc. Out of various corporative purposes there are eight purposes (Figure.1) on which companies are focusing for alliance formation. Four out of eight strategies- as strategic because these purpose impact on the competitiveness and future position of alliances. Other four purpose deal with the operational purpose. Purpose of Business Alliance Strategic Operation Figure 1. Purpose of Alliance 2). Motives and objectives of Alliance: Motive describes various reasons for which companies are going for alliances formation and how they achieve the desired objective. Motive for alliance formation can consist of cost advantages, decreasing risk and uncertainty, organizational learning, managing industry structure and timing. Objective of alliance deals with the outcome of the process. 3). Partner Selection: Partner selection plays a very important and vital role in the formation of alliance between the companies. Note: Please refer to the third part of this essay for more information about the importance of partner selection and relevant theories. 4). Types of alliances: Strategic Alliances are basically identified into two types:

Alliances between non-competing firms Alliances between competing firms

These both alliances are further divided into four types which are: Cartels, Competitive alliances, Co-operatives and Collaborative.

Q5. Explain the concept, need for and importance of a Decision Support system. Answer: Computerized decision support systems became practical with the development of minicomputers, timeshare operating systems and distributed computing. The history of the implementation of such systems begins in the mid-1960s. In a technology field as diverse as DSS, chronicling history is neither neat nor linear. Different people perceive the field of Decision Support Systems from various vantage points and report different accounts of what happened and what was important (cf., Arnott & Pervan, 2005; Eom & Lee, 1990b; McCosh & Correa-Perez, 2006; Power, 2003; Power, 2004a; Silver, 1991). As technology evolved new computerized decision support applications were developed and studied. Researchers used multiple frameworks to help build and understand these systems. Today one can organize the history of DSS into the five broad DSS categories explained in Power (2001; 2002; 2004b), including: communications-driven, data-driven, document driven, knowledge-driven and model-driven decision support systems. This hypertext document is a starting point in explaining the origins of the various technology threads that are converging to provide integrated support for managers working alone, in teams and in organization hierarchies to manage organizations and make more rational decisions. History is both a guide to future activity in this field and a record of the ideas and actions of those who have helped advance our thinking and practice. Historical facts can be sorted out and better understood, but more information gathering is necessary. This web page is a starting point in collecting more first hand accounts and in building a more complete mosaic of what was occurring in universities, software companies and in organizations to build and use DSS. This document traces decision support applications and research studies related to model and data-oriented systems, management expert systems, multidimensional data analysis, query and reporting tools, online analytical processing (OLAP), Business Intelligence, group DSS, conferencing and groupware, document management, spatial DSS and Executive Information Systems as the technologies emerge, converge and diverge. All of these technologies have been used to support decision making Q6.Write short notes on: a) Corporate social responsibility b) Business plan Answer: (a) corporate social responsibility:

While the term CSR may appear to be relatively new to the corporate world, the literature reveals that the evolution of the concept itself has taken place over several decades. The fact that the terminology itself has changed over this time also suggests that the meaning ascribed to concepts such as CSR will continue to evolve in tune with business, political and social developments. The impact of globalisation and mass communication also means that while definitions will reflect local situations, they will also be strongly influenced by global trends and changes in international law. b) Business plan: Set of documents prepared by a firm's management to summarize its operational and financial objectives for the near future (usually one to three years) and to show how they will be achieved. It serves as a blueprint to guide the firm's policies and strategies, and is continually modified as conditions change and new opportunities and/or threats emerge. When prepared for external audience (lenders, prospective investors) it details the past, present, and forecasted performance of the firm. And usually also contains pro-forma balance sheet, income statement, and cash flow statement, to illustrate how the financing being sought will affect the firm's financial position.