Master of Business Administration- MBA Semester 4 MB0052 Strategic Management and Business Policy- 4 Credits Q1.

Explain the corporate strategy in different types of organization. Ans. A well-formulated strategy is vital for growth and development of any organizationwhether it is a small business, a big private enterprise, a public sector company, a multinational corporation or a non-profit organization. But ,the nature and focus of corporate strategy in these different types of organizations will be different, primarily because of the nature of their operations and organizational objectives and priorities Small businesses, for example, generally operate in a single market or a limited number of markets with a single product or a limited range of products. The nature and scope of operations are likely to be less of a strategic issue than in larger organizations. Not much of strategic planning may also be require or involved; and, the company may be content with making and selling existing product(s) and generating some profit. In many cases, the founder or the owner himself forms the senior/top management and his (her) wisdom gives direction to the company. For all large private sector enterprises, there is a clear growth perspective, because the stakeholders want the companies to grow, increase market share and generate more revenue and profit. For all such companies, both strategic planning and strategic management play dominant roles. Multinationals have a greater focus on growth and development, and also diversification in terms of both products and markets. This is necessary to remain internationally competitive and sustain their global presence. For example, multinational companies like General Motors, Honda and Toyota may have to decide about the most strategic locations or configurations of plants for manufacturing the cars. They are already operating multi location (country) strategies, and, in such companies, roles of strategic planning and management become more critical in optimizing manufacturing facilities, resource allocation and control. In public sector companies, objectives and priorities can be quite different from those in the private sector. Generation of employment and maximizing output may be more important objectives than maximizing profit. Stability rather than growth may be the priority many times. There is also greater focus on corporate social responsibility. The corporate planning system and management have to take into account all these factors and evolve more balancing strategies. In non-profit organizations, the focus on social responsibilities is even greater than in the public sector. In these organizations, ideology and underlying values are of central strategic significance. Many of these organizations have multiple service objectives, and the beneficiaries of service are not necessarily the contributors to revenue or resource.

Q2.What is the role consultants play in the strategic planning and management process of the company? Is it an essential role? A strategy consultants role is to provide companies with advice on their goals and future direction so that they can plan effective strategies for growth. These consultants use expertise, industry experience and analysis to help their clients identify strategies that will increase revenue and market share by improving competitive advantage. Strategy consultants can help companies grow faster and increase the value of their business. The various role played by consultants in the strategic planning and management process of the company are as followsFramework Strategy consultants provide a companys management team with a framework for making effective decisions about their direction. They provide a way of thinking about how to deal with the future and a process to guide decision-making. according to Interisle Consulting Group, in a White Paper entitled "The Changing Role of Strategy." Strategic consultants participate in initial meetings with the company's management team to establish the requirements of the consultancy project, prepare a proposal, and carry out research, analysis and assessment of growth scenarios and options. The independent perspective as a strategy consultant and the detailed recommendations in the report enable a management team to make more informed decisions. Focus A key role for strategy consultants is to help companies define what they do and identify their capabilities, strengths and weaknesses as a basis for going forward. Consultants examine the companys product range, the skills of its employees, its customer base and its marketing communications to build a picture of its current capabilities. Options Strategy consultants help management teams compare their current capabilities with market opportunities. They analyze a range of opportunities, compare market requirements with the companys capabilities and set out a range of options. The options might include developing or sourcing new products, expanding into wider geographical territories or entering new market sectors. For each option, consultants highlight the associated risk and identify the changes required for success. Differentiate Independent strategy consultants bring the expertise and experience of solving strategy problems for small and large businesses across different industry sectors. That perspective and experience can help a management team to focus on what the company should do to differentiate itself from the competition as part of their role, strategic

consultants help management teams identify priorities and focus the team on the requirements for making the strategy a reality.

Q3.What is strategic audit? Explain its relevance to corporate strategy and corporate governance?
Strategic audit is a formal strategic-review process, which imposes its own discipline on both the board and the management very much likes the financial audit process8. But, it is different from management audit, which is under taken in many companies by the senior/top management on the progress and outcome of important corporate activities. To understand strategic audit in the correct perspective, one needs to analyze this in terms of its various elements. Donaldson has specified five elements of strategic audit. These are: 1. Establishing criteria for performance 2. Database design and maintenance 3. Strategic audit committee 4. Relationship with the CEO 5. Alert to duty (by board members) For effective strategic audit, a strategic audit committee should be constituted. According to Donaldson, outside directors should select three of their own members to form the committee. This will impart regularity and more commitment to the strategic audit process. The committee would decide on the frequency of their meeting, periodicity of interaction with the CEO or top management of the company. Corporate strategy is relevant to strategic audit in the sense that corporate strategy achievements can be evaluated of strategic audit process. Strategic audit find its application in corporate governance as well in order to understand this concept let us first understand What is corporate governance?

Corporate governance ensures that long-term strategic objectives and plans are stablished and that the proper management structure (organization, systems and people) is in place to achieve those objectives while at the same time, making sure that the structure functions to maintain the corporates integrity, reputation and responsibility to its various constituencies Corporate governance denotes direction and control of the affairs of the company. The role of corporate governance is to ensure that the directors of a company are subject to their duties, obligations andresponsibilities to act in the best interest of their company, to give direction and remain accountable to their shareholders, and other beneficiaries for their action. Strategic audit is a formal strategic-review process therefore the
practices of corporate governance can be well checked by this process.

Q4. What is Corporate Social Responsibility (CSR)? Which are the issues involved in analysis of CSR? Name three companies with high CSR rating.

Ans. Corporate social responsibility (CSR, also called corporate conscience, corporate citizenship, social performance, or sustainable responsible business/ Responsible Business) is a form of corporate self-regulation integrated into a business model. CSR policy functions as a built-in, self-regulating mechanism whereby a business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms. In some models, a firm's implementation of CSR goes beyond compliance and engages in "actions that appear to further some social good, beyond the interests of the firm and that which is required by law."[2][3] CSR is a process with the aim to embrace responsibility for the company's actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere who may also be considered as stakeholders. The term "corporate social responsibility" came into common use in the late 1960s and early 1970s after many multinational corporations formed the term stakeholder, meaning those on whom an organization's activities have an impact. It was used to describe corporate owners beyond shareholders as a result of an influential book by R. Edward Freeman,Strategic management: a stakeholder approach in 1984.[4] Proponents argue that corporations make more long term profits by operating with a perspective, while critics argue that CSR distracts from the economic role of businesses. McWilliams and Siegal's article (2000) published in Strategic Management Journal, cited by over 1000, compared existing econometric studies of the relationship between social and financial performance. They concluded that the contradictory results of previous studies reporting positive, negative, and neutral financial impact, were due to flawed empirical analysis. McWilliams and Siegal demonstrated that by properly specifying the model, by controlling for investment in Research and Development, an important determinant of financial performance, they found that CSR had a neutral impact on financial outcomes.[5] In his widely-cited book[6][7] entitled Misguided Virtue: False Notions of Corporate Social Responsibility (2001) David Henderson argued forcefully against the way in which CSR broke from traditional corporate value-setting. He questioned the "lofty" and sometimes "unrealistic expectations" in CSR.[8]

Some argue that CSR is merely window-dressing, or an attempt to pre-empt the role of governments as a watchdog over powerful multinational corporations. CSR is titled to aid an organization's mission as well as a guide to what the company stands for and will uphold to its consumers. Development business ethics is one of the forms of applied ethics that examines ethical principles and moral or ethical problems that can arise in a business environment. ISO 26000 is the recognized international standard for CSR. Public sector organizations (the United Nations for example) adhere to the triple bottom line (TBL). It is widely accepted that CSR adheres to similar principles but with no formal act of legislation. The UN has developed the Principles for Responsible Investment as guidelines for investing entities. Q5. Distinguish between core competence, distinctive competence, strategic competence and threshold competence. Use examples.

Competency refers to the ability of a firm to carry out an activity well. It is built and developed by firms consciously through experience and learning. A competency resides in people in the firm and not in physical assets. Core competence Core competence of a company is one of its special or unique internalcompetence. Core competence is not just a single strength or skill or capabilityof a company; it is nterwoven resources, technology and skill or synergyculminating into a special or core ompetence. Core competence gives acompany a clear competitive advantage over its competitors. Sony has a corecompetence in miniaturization; Xeroxs core competence is in photocopying;Canons core competence lies in optics, imaging and laser control; Hondascore competence is in engines (for cars and motorcycles); 3Ms core competenceis in sticky tape technology; JVCs in video tape technology; ITCs in tobaccoand cigarettes and Godrejs in locks and storewels. Distinctive competence Distinctive competence is the unique capability that helps an organizationin capitalizing upon a particular opportunity; the competitive edge it maygive a firm in the marketplace. Strategic competence Strategic competence coexists with, or supports, core competence and distinctivecompetence. Strategic competence is the competence level required to formulate, implement and produce results with a particular strategy, for example, to outwit competitors. Hindustan Unilever did this. In the mid- and the late 80s, they used their strategic competence to out manoeuvre Nirma (which was launched very aggressively) and re-establish their leadership in the detergent market. Strategic competence may also involve combination or convergence of

different capabilities as in the case of Hindustan Unilever

Threshold Competence Threshold competence is the competence level required just for survival in the market or business. The competence level of a company may be weaker than many of its competitors. Threshold competence may be adopted by No. 5 or No. 6 player in the market or those struggling to survive. Companies with threshold competence can, over time, graduate to a higher level of competence.But, continued threshold competence can also lead to closure of business.

Q6. What is global industry? Explain with examples, international strategy, multi-domestic strategy, global strategy and transnational strategy. The term global industry specifically means an industry where a firms competitive position in one country is affected by its position in other countries and the reverse is also true. The industries exhibiting global pattern in todays world include automobiles, television sets, commercial aircrafts and boats, sporting equipment, watches, clothing, semiconductors, copiers and also the transfer of funds. International strategy The way firms make choices about acquiring and using scarce resources in order to achieve their international objectives Involves decisions that deal with all the various functions and activities of a company. Multi domestic strategy is a strategy by which companies try to achieve maximum local responsiveness by customizing both their product offering and marketing strategy to match different national conditions. Production, marketing and R&D activities tend to be established in each major national market where business is done.

An alternate use of the term describes the organization of multi-national firms. International or multinational companies gain economies of scale through shared overhead and market similar products in multiple countries. Multi domestic companies have separate headquarters in different countries, thereby attaining more localized management but at the higher cost of forgoing the economies of scale from cost sharing and centralization Transnational strategy An international business structure where a company's global business activities are coordinated via cooperation and interdependence between its head office, operational divisions and internationally located subsidiaries or retail outlets. A transnational strategy offers the centralization benefits provided by a global strategy along with the local responsiveness characteristic of domestic strategies. Global strategy 'Global Strategy' is a shortened term that covers three areas: global, multinational and international strategies. Essentially, these three areas refer to those strategies designed to enable an organization to achieve its objective of international expansion.