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RANJAN PAL , 511110942 Page 1

Q.1 What do you understand by the term Strategy in the context of Business

Management and Policy? And what are the stages in the formulation of a

Strategy?

Ans. A strategy is an operational tool to achieve the goals, and thus, the corporate mission. Strategies

do not attempt to outline exactly how the enterprise is to accomplish its objectives. A company may

view downsizing as a strategy in a competitive market to render cost-effective services. Thus,

strategy provides a framework to guide thinking and action. Strategies are very much useful in

organizations for guiding, planning and control.

Strategy is a way of life both at the macro as well as micro levels for everyone, whether it is a

nation or a company. To win over in a given complex situation, the organizations, even trans-

nationals adopt strategies. They make changes, if necessary, even to their global strategies. An

individual company may formulate its own strategy to bring out the desired results. The eventual

success of the organization depends upon strategy formulation and implementation.

The recently initiated moves such as globalization, privatization and liberalization are strategies to

attain a globally competitive economy. Business management must focus on following issues

a. Vision- For proper growth of the company.

b. Mission – What the company wants to achieve.

c. Goals – To achieve the above mission.

d. Objectives – To achieve the set goals

e. Strategies – To achieve the above objectives

f. Policies – To control strategies

g. Programmes – For implementation of objectives

h.

The above list outlines some of the key issues at every stage of action illustrating how:

a. The mission springs out from vision statements

b. Goals from the mission

c. Objectives from goals

d. Strategies from objectives

e. And programmes from objectives


It is the crux of the strategic management process. Strategy refers to the course of action desired to

achieve the objectives of the enterprise. Formulation, together with its implementation, constitutes

an integral part of the management activity. Managers use strategies for different purposes such as

to overcome competition, to increase sales, to increase production, to motivate the employees to

provide their best, and so on. Implementation of a strategy is a crucial task as the formulation of it.

There may be a lot of resistance during the implementation process. It is necessary for the

manager to be very tactful to involve the members of his group in the formulation of strategy to

facilitate the implementation process.

Stages in Strategy Formulation and Implementation

a. Identification of mission and objectives

b. Environment scanning

c. Generic strategy alternatives

d. Strategy variations

e. Strategic choice

f. Allocation of resources and formulation of organizational structure

g. Formulation of plans, policies, programmes and administration

b. h) Evaluation and control

Q.2 What, in brief, are the types of Strategic Alliances and the

purpose of each? Supplement your answer with one real life

example of each.

Ans. Strategic alliances constitute a viable alternative in addition to Strategic Alternatives. Companies

can develop alliances with the members of the strategic group and perform more effectively. These

alliances may take any of the following forms. Following are the different types of strategic

Alliances:

1. Product and/or service alliance: Two or more companies may get together to synergies their

operations, seeking alliance for their products and/or services. 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. Example: - Coca-cola

initially provided such support to thumps Up.

Two companies may jointly market their products which are complementary in nature.

Example:- 1) Chocolate companies more often tie up with toy companies. 2) 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.

Example: - Sony Music created a retail corner for itself in the ice-cream parlors of Baskin-

Robbins.

2. 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. Example :- The Cricket Board may permit

Coke’s products to be displayed during the cricket matches for a period of one year.

3. Logistic alliance: Here the focus is on developing or extending logistics support. One company

extends logistics support for another company’s products and services. Example:- The outlets of

Pizza Hut, Kolkata entered into a logistic alliance with TDK Logistics Ltd., Hyderabad, to

outsource the requirements of these outlets from more than 30 vendors all over India – for

instance, meat and eggs from Hyderabad etc.

4. Pricing collaborations: Companies may join together for special pricing collaborations.

Example :- 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.

Q.3 What is a Business Plan? What purpose does it serve?

Ans. A business plan is a detailed description of how an organization intends to produce, market and sell

a product or service. Whether the business is housing, commercial or some other enterprise, a

good business plan describes to others and to your own board of directors, management and staff

the details of how you intend to operate and expand your business.

A solid business plan describes who you are, what you do, how you will do it, your capacity to do it,

what financial resources are necessary to carry it out, and how you intend to secure those

resources. A well-written plan will serve as a guide through the start-up phase of the business. It

can also establish benchmarks to measure the performance of your business venture in

comparison with expectations and industry standards. And most important, a good business plan

will help to attract necessary financing by demonstrating the feasibility of your venture and the level

of thought and professionalism you bring to the task.

A well-written plan will serve as a guide through the start-up phase of the business. It can also

establish benchmarks to measure the performance of your business venture in comparison with

expectations and industry standards. And most important, a good business plan will help to attract


necessary financing by demonstrating the feasibility of your venture and the level of thought and

professionalism you bring to the task. A good business plan will help attract necessary financing by

demonstrating the feasibility of your venture and the level of thought and professionalism you bring

to the task. A good business plan serves the following purposes:

1. Revenue Generation – Your organization may hope to create a business that will generate

sufficient net income or profit to finance other programs, activities or services provided by your

organization.

2. Employment Creation – A new business venture may create job opportunities for community

residents or the constituency served by your organization.

3. Neighborhood Development Strategy – A new business venture might serve as an anchor to

a deteriorating neighborhood commercial area, attract additional businesses to the area and fill

a gap in existing retail services. You may need to find a use for a vacant commercial property

that blights a strategic area of your neighborhood. Or your business might focus on the

rehabilitation of dilapidated single family homes in the community.

4. Establish Goals: Once you have identified goals for a new business venture, the next step in

the business planning process is to identify and select the right business. Many organizations

may find themselves starting at this point in the process. Business opportunities may have been

dropped at your doorstep. Depending on the goals you have set, you might take several

approaches to identify potential business opportunities.

5. Local Market Study: Whether your goal is to revitalize or fill space in a neighborhood

commercial district or to rehabilitate vacant housing stock, you should conduct a local market

study. A good market study will measure the level of existing goods and services provided in the

area, and assess the capacity of the area to support existing and additional commercial or

home-ownership activity. A bad or insufficient market study could encourage your organization

to pursue a business destined to fail, with potentially disastrous results for the organization as a

whole. Through a market study you will be able to identify gaps in existing products and services

and unsatisfied demand for additional or expanded products and services.

6. Analysis of Local and Regional Industry Trends: Another method of investigating potential

business opportunities is to research local and regional business and industry trends. You may

be able to identify which business or industrial sectors are growing or declining in your city,

metropolitan area or region. The regional or metropolitan area planning agency for your area is

a good source of data on industry trends.

7. Internal Capacity: The board, staff or membership of your organization may possess

knowledge and skills in a particular business sector or industry. Your organization may wish to


draw upon this internal expertise in selecting potential business opportunities.

8. Internal Purchasing Needs/Collaborative Procurement: Perhaps, the organization frequently

purchases a particular service or product. If nearby affiliate organizations also use this service

or product, this may present a business opportunity. Examples of such products or services

include printing or copying services, travel services, transportation services, property

management services, office supplies, catering services, and other products.

Q.4 What is the chief purpose of a Business Continuity Plan and what

are its components for effective implementation. Explain in a

sentence or two as to how it is different from a Business Plan.

Ans. The Business Continuity Plan is a tool to allow organizations to consider the factors and steps

necessary to prepare for a crisis (disaster or emergency) so that it can manage and survive the

crisis and take all appropriate actions to help ensure the organization’s continued viability. The

advisory portion of the plan is divided into two parts:

Planning process: It provides step-by-step Business Continuity Plan preparation and

activation guidance, including readiness, prevention, response, and recovery/ resumption.

Implementation and maintenance: It gives the details of tasks required for the Business

Continuity Plan to be maintained as a living document, changing and growing with the

organization and remaining relevant and executable.

The purpose of the business continuity plan is to prepare to face the 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.

Following steps are required to fulfilled for effective implementation of the business continuity plan:


1. Educate and Train: The BCP is only as valuable as the knowledge that others have of it.

Education and training are necessary components of the BCP process. They require a time

commitment from the Crisis Management Team, the Response Teams, and the general

employee population.

2. Educate and Train Teams: The Crisis Management and Response Teams should be

educated about their responsibilities and duties. Check lists of critical actions and information

to be gathered are valuable tools in the education and response processes.

3. Educate and Train All Personnel: All personnel should be trained to perform their individual

responsibilities in case of a crisis. Such training could include procedures for evacuation,

shelter-in-place, check-in processes to account for employees, arrangements at alternate

worksites, and the handling of media inquiries by the company.

4. Review of BCP: The BCP should be regularly reviewed and evaluated. Reviews should occur

according to a pre-determined schedule, and documentation of the review should be

maintained as necessary. The following factors can trigger a review and should otherwise be

examined once a review is scheduled:

Risk Assessment

Sector/Industry Trends

Regulatory Requirements

Event Experience

Test/Exercise Results

5. Maintenance of BCP: Regular maintenance of the BCP cannot be overemphasized. Clear

responsibility for BCP maintenance should be assigned. Maintenance can be either planned or

unplanned and should reflect changes in the operation of the organization that will affect the

BCP.

Difference between a Business plan & Business continuity Plan

a. A Business plan is a detailed description of how an organisation intends to produce, market

and sale a product or service. A Business continuity plan is an ongoing process supported

by senior management and funded to ensure that the necessary steps are taken to identify

the impact of potential losses, maintain viable recovery strategies and plans, and ensure the

continuity of operations through personnel training, plan ,testing and maintenance.

b. A Business continuity plan is a tool which allows organisations to consider the factors and

steps necessary to prepare for a crisis.(disaster or emergency). Whereas a business plan is

not prepared for such type of disaster or emergency.


c. In a business continuity plan, a necessary Administrative structure is put in place to

effectively deal with crisis management, whereas,in a business plan, no such administrative

structure is available.

Q.5 Take any three examples of the components of a Decision

Support System and explain how they help decision making

Ans. Following are the three components of a Decision Support System

1. Annual Budget: It is really a business plan. The budget allocates amounts of money to every

activity and/or department of the firm. As time passes, the actual expenditures are compared to

the budget in a feedback loop. During the year, or at the end of the fiscal year, the firm

generates its financial statements: the income statement, the balance sheet, the cash flow

statement. When putting together, these four documents are the formal edifice of the firm’s

finances. However, they can not serve as day-to-day guides to the General Manager.

2. Daily Financial Statements: The Manager should have access to continuously updated

statements of income, cash flow, and a balance sheet. The most important statement is that of

the cash flow. The manager should be able to know, at each and every stage, what his real

cash situation is – as opposed to the theoretical cash situation which includes accounts payable

and account receivable in the form of expenses and income.

3. The Daily Ratios Report: This is the most important part of the decision support system. It

enables the Manager to instantly analyse dozens of important aspects of the functioning of his

company. It allows him to compare the behaviour of these parameters to historical data and to

simulate the future functioning of his company under different scenarios. It also allows him to

compare the performance of his company to the performance of his competitors, other firms in

his branch and to the overall performance of the industry that he is operating in.

The Manager can review these financial and production ratios. Where there is a strong deviation

from historical patterns, or where the ratios warn about problems in the future – management

intervention may be required.

Examples of the Ratios to be Included in the Decision System

SUE measure – deviation of actual profits from expected profits

ROE – the return on the adjusted equity capital

Debt to equity ratios

ROA – the return on the assets

The financial average


ROS – the profit margin on the sales

ATO – asset turnover, how efficiently assets are used

Tax burden and interest burden ratios

Compounded leverage

Sales to fixed assets ratios

Inventory turnover ratios

Days receivable and days payable

Current ratio, quick ratio, interest coverage ratio and other liquidity and coverage ratios

Valuation price ratios

And many others

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:

a. 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.

b. 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.

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, but infact

helps the manager to take quick decisions and make profit to the company.

Q.6 Name and explain any three ways in which a Company’s CSR can

be expressed.

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. This

happens when a company seeks to set the trade-offs between the requirements and the needs of


the various stakeholders into a balance, which is acceptable to all parties. If companies succeed in

managing change in a socially responsible manner, this will have a positive impact at the macro-

economic level.

Following are the different ways in which company's CSR can be expressed.

1. Employment and Social Affairs Policy

Within a business CSR relates to quality employment, life-long learning, information, consultation

and participation of workers, equal opportunities, integration of people with disabilities anticipation

of industrial change and restructuring. Social dialogue is seen as a powerful instrument to address

employment-related issues.

Employment and social policy integrates the principles of CSR, in particular, through the European

Employment Strategy, an initiative on socially responsible restructuring, the European Social

Inclusion Strategy, initiatives to promote equality and diversity in the workplace, the EU Disability

Strategy and the Health and Safety Strategy.

In its document "Anticipating and managing change: a dynamic approach to the social aspects of

corporate restructuring", the Commission has stressed that properly taking into account and

addressing the social impact of restructuring contributes to its acceptance and to enhance its

positive potential. The Commission has called upon the social partners to give their opinion in

relation to the usefulness of establishing at Community level a number of principles for action,

which would support business good practice in restructuring situations.

Deeply rooted societal changes such as increasing participation of women in the labour market

should be reflected in CSR, adapting structural changes and changing the work environment in

order to create more balanced conditions for both genders acknowledging the valuable contribution

of women as strategies which will benefit the society as well as the enterprise itself.

2. Enterprise policy

Only competitive and profitable enterprises are able to make a long-term contribution to sustainable

development by generating wealth and jobs without compromising the social and environmental

needs of society. In fact, only profitable firms are sustainable and have better chances to

adopt/develop responsible practices.

The role of enterprise policy is to help create a business environment, which supports the Lisbon

objective of becoming the world’s most dynamic knowledge-driven economy, supports

entrepreneurship and a sustainable economic growth. Its objective is to ensure a balanced

approach to sustainable development, which maximises synergies between its economic, social


and environmental dimensions.

3. Consumer Policy

CSR has partly evolved in response to consumer demands and expectations. Consumers, in their

purchasing behaviour, increasingly require information and reassurance that their wider interests,

such as environmental and social concerns, are being taken into account.

Consumers and their representative organisations have an important role to play in the evolution of

CSR. If CSR is therefore to continue to serve its purpose, strong lines of communication between

enterprises and consumers need to be created.