SIKKIM MANIPAL UNIVERSITY, D E

Student Name: Vaibhav Porwal Registration No.: 521102153 Subject Name: SMBP Course: MBA LC Code: 00918 Subject Code: MB0052

Ques1- Explain the corporate strategy in different types of organization. Answer - Strategy or corporate strategy is better described and more easily put into practice than defined. However strategy, as mostly used or understood, is an action plan or, a scheme of action or design of execution of a plan. Corporate Strategy in Different Types of Organizations 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 Business 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 Scopes of operations are likely to be less of a strategic issue than in Larger organizations. Not much of strategic planning may also be required or involved; and, the company may be content with making and selling existing products and generating some profits. In many cases, the founder or the owner himself form the senior/top management and his (her) wisdom gives direction to the company. Large businesses or companies The private sector, public sectors or multinationals-the situation is Entirely different . Both the internal and the external environment And the organizational objectives and priorities are different .For all large private sector enterprises, there is 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 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, multination companies like general motors, Honda and Toyota may have to decide about the most strategic

SIKKIM MANIPAL UNIVERSITY, D E

locations or configurations of plants for manufacturing the cars. They are already operating multi location strategies, and, in such companies, roles of strategic planning and management become more critical in optimizing manufacturing facilities, resource allocation and control. Public Sector Companies Objectives and priorities can be quite different from those in the private sectors. Generation of employment and maximizing output May be more important objectives than maximizing profits. Stability rather than growth may be the priority many times. Accountability system is also very different in public sector from that in private sector. 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. Non Profit Organization 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. All these make strategic planning and management in these organizations quite different from all other organizations. Quse-2What is the role consultants play in the strategic planning and management process of a company? Is it an essential role? Answer Strategic Planning and Strategic Management A strategic plan, also called a corporate plan or perspective plan, is a blueprint or document which incorporates details regarding different elements of strategic management . This includes vision/mission, goals, organizational appraisal, environmental analysis, resource allocation and the manner in which an organization proposes to put the strategies into action. the concept and role of strategic planning would be clear if we mention the major areas of strategic planning in an organization. Role of Consultants Management consultants can play very useful roles in the strategic planning process of a company. Consultants render services in different functional areas of management including the strategic planning and management process. In companies with no separate planning division or unit, consultants can fill that gap. They can undertake

SIKKIM MANIPAL UNIVERSITY, D E

planning and strategy exercise as an when the company management feels the need for such exercise or consultants. Even in companies with a corporate planning division \unit, consultants may provide specialized inputs or insights into identified management or strategy areas .top strategic consultants like McKinsey & company use or develop latest tools, techniques or models to work out solution to specific strategic management problems or issues be it productivity, cost efficiency, restructuring ,longterm growth or diversification. Consultants bring with them diversified skills (most of the consulting companies are multidisciplinary) and experience from various companies which may not be available internally in a single company. This is the reason why even large multinational companies hire consultants for achieving their goals or objectives. There are many international consultants who are in demand in different countries .there are also national consultants. Leading international consultants, in addition to McKinsey & company, are Boston consulting group (BCG) , Arthur D little and Accenture (Formerly Anderson consulting ).prominent Indian consulting companies are AF Ferguson, Tata consultancy services(TCS) and ABC consultants Consultants, sometimes have a difficult or delicate role to play. In many companies, a situation develops when the chief executive or the top management needs to bank upon the support of an external agency like a consultant to push through a strategic change in the organizational structure or management system of the company. Ques3-What is strategic audit? Explain its relevance to corporate strategy and corporate governance. Answer-Strategic Audit With increasing pressure on boards from external stakeholders to be more active, many directors are seeking more practical ways to conduct strategic overview of company management without getting directly involved in it. Donaldson (1995) has suggested strategic audit as a new tool for systematic review of strategy by board members without directly involving themselves with management of companies. Strategic audit is a formal strategic-review process, which imposes its own discipline on both the board and the management very much like the financial audit process 8. But , it is different from management audit, which is undertaken in many companies by the senior\top management on progress and outcome of important corporate activities . to understand strategic audit in the correct perspective ,one needs to analyze this is terms of its various elements . Donaldson has specified five elements of strategic audits . These are:1- Establishing criteria for performance.

SIKKIM MANIPAL UNIVERSITY, D E

2- Database design and maintenance. 3- Strategic audits committee. 4- Relationship with the CEO. 5- Alert to duty (by board members).

The performance criteria should be simple, well-understood and well-accepted measures of financial performance. A number of measures of financial performance are available. One common measure, used by many companies, is return on investment (ROI). The ROI can be analyzed like this: profit per unit of sales (profit margin); sales per unit of capital employed(asset turnover ) ; and, capital employed per unit of equity invested (leverage ). If these three ratios are multiplied together, the resultant ratio will give profit per unit of equity

Corporate Strategy and Corporate Governance The analysis so far has focused on different aspects or characteristics of corporate strategy and corporate governance, the way they are differentiated and, also, areas of complementarities and some possible conflicts between the two. The starting points of both are the same, i.e., achievement of organizational objectives. But, it is also here that some difference begins between the two and also is the source of some possible conflict. The most important objectives of corporate governance is to protect the interests of the stockholders whose primary concern is maximization of return on investment or short-term profitability. The objective of corporate strategy is more to focus on long-term growth and profitability, which gives sustenance to the company. This, however, is a common organizational conflict in many companies, i.e., matching or balancing the short-term and long-term goals of the organization. In corporate governance, there is a growing emphasis on inclusiveness or inclusive governance, i.e., focusing on the society , community and environmental development. The strategic management processes of companies are also trying to find ways to strike a balance between corporate social responsibility (CSR) and profitability, realizing that, ideally , both should coexist for optimal\proper organizational growth. this is one area where both corporate

SIKKIM MANIPAL UNIVERSITY, D E

strategy and governance are showing a common focus . Companies like Bajaj Auto, Tata Motors and Nirma are good examples.

Ques-4 What is corporate social responsibility (CSR)? Which are the issues involved in analysis of CSR? Name three companies with high CSR rating. Answer- external stakeholders of an organization are too many and varied and many of them represent different section groups. The implies that organizations should be socially responsible ; businesses or companies should also serve the society. This is corporate social responsibility (CSR). Corporate social responsibility can be defined as the alignment of business operations with social values. The conflict between internal and external stakeholders can go much further than mentioned so far. Some feel that this is the most problematic issue in deciding company responsibility. External stakeholders argue that internal stakeholder demand be made secondary to the greater need of the society; that is greater good of the external stakeholder. Many of them feel that issues like pollution, waste disposals, environmental safety and conservation of natural resources should be the overriding considerations for formulation of policy and strategic decision making. Internal stakeholders on the other hand, think that the competing or social claims of external stakeholders should be balanced in such a way that it protects the company mission, objectives and profitability Ques-5 Distinguish between core competence, distinctive competence, strategic competence and threshold competence. Use examples. Answer-Competence is the ability to perform a task or achieve some objectives competence levels vary across organizations, and, also, within an organization from time to time. Difference in performance among companies in the same market and product category is , due to the difference in their competence levels . Four major types of levels of competence may be distinguished: 1. Core competence 2. Distinctive competence 3. Strategic competence 4. Threshold competence Core competence

SIKKIM MANIPAL UNIVERSITY, D E

Core competence of a company is one of its special or unique internal competence. Core competence is not just a single strength or skill or capability of a company. it is interwoven resources. Technology and skill or synergy culminating into a special or core competence. Core competence gives a company a clear competitive advantage over its competitors. Sony has a core competence in miniaturization; Xeroxs core competence is in photocopying; Canons core competence lies in optics, imaging and laser control; Hondas core competence is in engines; 3Ms core competence is in sticky tape technology; JVCs in video tape technology. Distinctive Competence Core competence may not be enough, because it focuses predominantly on the product or process and technology, or, as Hamel and Prahalad put it; The combination of individual technologies and production skills; There are two problems with this. first, strong and aggressive competitors may develop, either through parallel innovations or imitations, similar products or processes which are highly competitive. This is what Japanese companies have done in the fields of electronics and automobiles, and now south Korea is doing to Japanese electronics; IBMs core computer technology is also facing the same problem. Second, to secure competitive advantage, only product, process, or technology or technological innovation may not be enough; this has to be amply supported by special capabilities in the related vital areas like resource of financial management, cost management, marketing, logistics, etc. Strategic Competence Strategic competence coexists with, or supports , core competence and distinctive competence . strategic competence is the competence level required to formulate , implement and produced results with a particular strategy, for example , to outwit competitors . Hindustan Unilever did this and re-establishes their leadership in the detergent market. Strategic competence may also involve combination or convergence of different capabilities as in 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 competitor. Threshold competence may be adopted by No.5, orNo. 6 players in the market or those struggling to survive. Companies with threshold competence can, overtime, graduate to a higher level of competence. But, continued threshold competence can also lead to closure of business.

SIKKIM MANIPAL UNIVERSITY, D E

Ques-6 What is global industry ? Explain with examples, international strategy, multi-domestic strategy, global strategy and transnational strategy. Answer In global industry, the strategic position of companies in different countries or national markets are governed by their overall global positions . For example IBMs strategic position in competing for computer sales in France and Germany has improved significantly because of technology and marketing skills developed in other countries , and a worldwide manufacturing system which is well coordinated. To be called a global industry, an industrys economics and competitors in different national markets should be considered jointly rather than individually. International Strategy International strategy can be adopted for those product and services which are not available in some countries and can be transferred from other countries. These are standard products with little or no differentiation. International strategies are not very common or popular. Some examples are: Kelloggs, Indian software, and Indian handicrafts. Multi-domestic Strategic Multi-domestic strategic is almost opposite of international strategy. Multi-domestic strategy involves high degree of local responsiveness or local content. Products are highly customization, cost pressure is less; cost effectiveness may be also difficult to achieve because of lack of scale economies. Examples : Asian paints , Indian Garments. Global Strategy Global strategy suits companies which make highly standardized sophisticated products , and ,are in a position to reap benefits of economies of scale and experience effects. These also include high technology products which have universal applicability and hardly require any local adaptation. Examples are: Intel, Motorola, Microsoft, Texas Instruments. Global retail chains like Wal-Mart and Marks & Spencer also come under this category. Transnational Strategy Transnational strategy is the most difficult strategy to follow because this is based on a combination of two apparently contradictory factors, i.e., cost effectiveness and local adaptation. But , this may be a True global strategy because, in global business , there is always a price pressure .and, also the need to make the product as close to a particular countrys expectation as possible to maximize value offerings. In fact, many,

SIKKIM MANIPAL UNIVERSITY, D E

including Bartiett and Ghoshal (1989) , feel that the transnational strategy is the only viable competitive strategy in global business successful . Some good examples are: Caterpillar (taking on Komatsu and Hitachi), McDonalds, Coca-Cola, Pepsi and Dominos Pizza. Many multinational FMCG companies like Unilever and Procter & Gamble follow transnational strategies through their fully owned subsidiaries in different countries.