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EIS-SM
BOOSTER
CA INTERMEDIATE
May/November – 2022 Attempt
New Edition
Prof. Om Trivedi Edited By:

IIM-C Alumnus, Guest Faculty of Prof. Eesha Narang
LVC and External Subject Expert Assistant Professor, DAV College,
at the BOS of ICAI, Visiting Abohar, Eminent Author,
Faculty Member of NIRC and MA (English), M.Phil., Delhi
WIRC of ICAI University
www.eissmpendrive.in
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Preface
Welcome to this new edition of ‘EIS-SM Booster: अंतिम-प्रहार’!
As an author, I am sensitive to your learning as well as examination needs. I believe that a quick and
super revision coupled with citation of the right content with right answers to questions and their
presentation in the examination is an effective tool that determines the success of a student.
For this very reason, I have taken your point of view into consideration. In writing each chapter, I have
taken every care to make the content informative as well as easy and interesting to read, write and
present in examination.
The aim of EIS-SM Booster: अंतिम-प्रहार is to help CA Intermediate (New Course) students by quickly
revising, clearly explaining, analyzing, and evaluating important EIS-SM concepts.
My approach in writing this book was essentially twofold: to write an accessible Chart-Book that students
feel comfortable with but without compromising on the academic rigour.
The examples and visuals herein, have been taken from contemporary world, ICAI literatures and leading
brands around us. These help to bridge the gap between theory to practice; aiming not only at a
comprehensive learning experience but also offering an interesting reading.
To supplement this, I have tried to adopt a user-friendly writing style that gives clear and concise
explanations to help students engage readily with the content and grasp complex strategic concepts easily.
The book has been divided into 2 Parts.

Part 1: EIS Booster
Part 2: SM Booster
I would be happy to get your feedback, comments and queries. You can get in touch with me at
omtrivedi@ymail.com or call me at 9958300572 (between 8 pm – 10 pm).
Good luck for a challenging and successful learning experience!

Prof. Om Trivedi
“Live as if you were to die tomorrow. Learn as if you were to live forever.”
― Mahatma Gandhi
About Prof. Om Trivedi

IIM-C Alumnus, An Entrepreneur, Guest Faculty of LVC and External Subject
Expert at the BOS of #ICAI, Visiting Faculty Member of #NIRC and #WIRC of
ICAI, Author, Publisher, Educationist, Management Consultant, and Corporate
Speaker.
Synopsis
▪ Over 11 years of teaching experience in various CA, CS, CMA and MBA courses.
▪ Guided more than 45,000 CA, CS, and CMA students through Face to Face Classes and more
than 10,000 students through LIVE Virtual & Online Classes.
▪ My students scored AIR 20, 23, 36 and 37 with 100s of exemptions.
▪ Taken batches at NIRC and WIRC of ICAI, LVC of the BOS of ICAI, ETEN CA, Unacademy, IGP Institute,
Prime Academy, Rajesh Makkar Classes & Om Trivedi Classes Delhi.
▪ His student scored “Highest - 87 Marks” in this subject and more than 890 students scored
exemptions and more than 1200+ students scored 50+ marks.
▪ Done researches and projects in areas like competition studies, value creation, and competitive advantages,
MIS, and Process Improvement Techniques.
▪ Author of books on Enterprise Information Systems, Strategic Management, Information Technology,

Strategic Cost Management & Performance Evaluation, Risk Management, Mercantile Law, Generic
Skills & Ethics, and Communication. Case Study Developer and Content writer on Management subjects
for different Distance Learning Programmer (DLPs) of eminent universities of India.
▪ Over 17 years of industry experience in Publishing, Content Development and Editing, Instructional
Design, Instructor’s Resource Development, Acquisitions of Businesses, Authors and Imprints, Sales and
Marketing, Publishing solution, and operations. Partner with LexisNexis India (A Reed Elsevier Company).
▪ Worked with Thomson Learning as Regional Head (East India, Nepal, Bangladesh, and Bhutan), with Tata
McGraw-Hills as Acquisition Editor (North, East, and West India), with Macmillan as Commissioning
Editor and with Firewall Media as Business Development Manager.
▪ Worked as a Consultant business head- HEP of Trinity Press (Formerly Macmillan India’s Higher
Education Programme) in 2013-14 and played an instrumental role in the acquisition of Macmillan India’s
Higher Education Programme by LPPL under the brand name Trinity Press.
▪ Worked as a consultant and business advisor on book publishing, content development, instructional design,
case study development, instructor’s resources, and copyright matters to several companies like Macmillan,
LexisNexis India, Vikas Publishing, Excel Books, Firewall Media, Biztantra and Taxmann.

E I S Hotne s s G ri d
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EIS Hotness Grid

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Chapter 5: Core Banking Systems

Chapter 1 Unit 1 Business Process Automation
Business Business and Enterprise Business Vs. Enterprise
A business is an economic Business and enterprise are To understand the difference

activity of providing valuable used interchangeably. between business and
goods and services to satisfy However, these terms have enterprise, we will have a face-
the needs of the society. different meanings. off between a businessman and
an entrepreneur.
Enterprise System
“Life has got all those twists and turns. You’ve got to hold on tight and off you go.”
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EIS-SM BOOSTER
Enterprise Information System Purpose of EIS

EIS refers to a system that - i. A single technology platform to integrate and
• Collects, coordinate their business processes.
• Stores, ii. Used in conjunction with CRM and SCM.
• Analyses iii. Creates Value.
• Processes data and iv. Increases business productivity and reduce cycle-
• Distributes Information time.
within the enterprise for decision-making, co-ordination v. Promotes higher operational efficiency and cost
and control. It can be manual as well as computer- savings.
based information system (CBIS).
Business Process
➢ Business process is a set of steps of the co-ordinated and standardized
activities that you and the personnel providing services perform to
complete the transaction.
➢ Business process is the radical redesign of the business as a collection of

activities that take one or more kinds of input and create an output
that is of value to the customer.
Categories of Business Processes

Operational Process Supportive Process Management Process
Operational or Primary Supporting Processes back core Management processes
Processes deal with the core processes and functions within measure, monitor and control
business and value chain. an organization. activities related to business
Examples: Examples: procedures and systems.
• O2C • Accounting Cycle Examples:
• P2P • HRM Cycle • Budgeting Process
• Strategic Planning
"To live a creative life, we must lose our fear of being wrong."
EIS-SM BOOSTER
BPA - Business Process Automation

➢ A business process automation is a set of
activities or strategies to automate
business processes so as to bring benefit
to an enterprise in terms of cost, time
and effort.
Benefits of BPA Which BPs should be automated?

1. Quality 1. Processes involving need for Compliance and
2. Consistency audit trail.
3. Governance and Reliability 2. Processes involving high-volume of tasks or
4. Improved Operational Efficiency Repetitive tasks.
5. Reduced Turnaround Time 3. Processes requiring Multiple people to
execute tasks.
6. Time Saving
7. Visibility 4. Processes having significant Impact on other
processes and systems.
8. Reduced Cost
5. Time-sensitive The Memory’s Eye
The Memory’s Eye CRM through IT
processes.
QC is done to GET TV at Reduced Cost
Steps in BPA Implementation
Factors Affecting BPA Success 1. Define Why we plan to implement BPA?
2. Understand the Rules/regulation Compliance.
1. Confidentiality
2. Integrity The Memory’s Eye 3. Document the process, we wish to automate.
3. Availability 4. Define the objectives/goals to be achieved by
CIAT implementing BPA.
4. Timeliness
5. Engage a business process consultant.
Challenges involved in BPA 6. Calculate the ROI for project.
1. Automating Redundant Processes 7. Developing the BPA
2. Implementation Cost 8. Testing of the BPA
3. Defining Complex Processes.
The Memory’s Eye
4. Staff Resistance.
The Memory’s Eye Plan Compliance DOCs to Calculate
AIDS ROI and DT.
Om Trivedi’s Strategy for U

✓ In depth understanding of the concepts of Categories of Business Processes, BPA
Implementation Steps, Challenges involved in BPA and Which BPs should be automated
with corporate examples is compulsory, as the question setter has all the liberty to ask
practical and scenario based questions in this area.
✓ You must read and practice all the study-material and “Bhishma Pratigya Question
Bank” questions to cover all the aspects of such questions and their answers’
presentation.
"If you are not willing to risk the usual you will have to settle for the ordinary."

Chapter 1 Unit 2 Flowcharts and DFDs
DFD
Data flow diagram is a graphic representation of the flow of data through an information system.
Types of DFDs: 1. Logical DFD 2. Physical DFD
Logical DFD
A logical DFD focuses on the
business and how the business
operates.
Physical DFD
A physical DFD shows how the
system will be implemented.
Flowcharts
• Flowchart is a graphic representation of an algorithm.
• Flowcharts play a vital role in the programming of a problem and are quite helpful in understanding
the logic of complicated and lengthy problems.
BPMN
• Business Process Modelling Notation is a flow-chart based notation for defining business
processes. It is an extension of the traditional flowcharting mechanism.
• In BPMN, who performs each step and what is performed in each step is properly clarified and
Which department completes which one of the activities is also clarified.
Advantages of Flowcharts The Memory’s Eye

i. Communication v. Quicker grasp of Effective CAD and Efficient
ii. Effective Analysis relationships PC for Quicker Control over ID
iii. Documentation vi. Establishing Controls
iv. Efficient Program Maintenance vii. Identifying Responsibilities
v. Efficient Coding viii. Debugging
Disadvantages of Flowcharts
The Memory’s Eye
i. Link between conditions and actions Link CARS
ii. Complex Logic
iii. Alterations and Modifications
iv. Reproduction
v. Standardization

✓ In depth understanding of the concepts of Flowcharts and it’s techniques, are needed as the
ICAI is asking 6-8 marks Practical questions from Flowcharts in alternative attempt.
✓ You can practice around 35 FLOWCHARTS from “Bhishma Pratigya Question Bank” to cover
all the aspects of such questions and their answers’ presentation.
"All our dreams can come true if we have the courage to pursue them."

Chapter 1 Unit 3 Enterprise Risk Management
RISK
• Effect of uncertainty on objectives.
• Uncertainty may be positive, negative or a deviation from the expected.
Strategic Risk Reputational or Credit Risk

Prevents an organization from Exposes the organization to negative
meeting its strategic goals and publicity.
objectives. Example: Maggi, Dairy Milk.
Example: Kodak, Xerox.
Hazard Risk
Financial Risk
Risks that are insurable.
Results in a negative financial impact to the Example: Natural disasters, various insurable
organization in terms of waste or loss of assets. liabilities, impairment of physical assets, Terrorism,
Example: Over-reliance on a large distributor. etc.
Regulatory or Compliance Risk Residual Risk
Exposes the organization to fines ➢ Any risk remaining even after the counter
and penalties from a regulatory measures are analyzed and implemented is
agency due to non-compliance with called Residual Risk.
laws and regulations. ➢ Even when safeguards are applied, there is
Example: Maggi, Mother Dairy. probably going to be some residual risk.
Operational Risk
Prevents the organization from operating in the most effective and
efficient manner or be disruptive to other operations.
Example: Vodafone, Jio, Airtel.
Technology Risk
➢ Frequent changes or obsolescence of technology. ➢ Segregation of Duties (SoD).
➢ Multiplicity and complexity of systems. ➢ Downtime due to technology failure.
➢ Different types of controls for different types of ➢ Higher impact due to intentional or unintentional acts
technologies. of internal employees.
➢ Proper alignment with business objectives and ➢ New social engineering techniques employed to
legal/regulatory Requirements. acquire confidential credentials.
➢ Dependence on vendors due to outsourcing of IT ➢ Need for information security.
services.
➢ Vendor related concentration risk. ➢ External threats leading to cyber frauds/ crime.
Risk Management and

Related Terms
➢ RM is the process of assessing risk,

taking steps to reduce risk to an
acceptable level and maintaining that
level of risk.
➢ RM involves identifying, measuring,
and minimizing uncertain events
affecting resources.
"If you do what you always did, you will get what you always got."
EIS-SM BOOSTER
Vulnerability Attack
Inherent weakness in the system safeguards that • An attempt to gain unauthorized access to the
exposes the system to threats. system’s services or to compromise the system’s
Example: dependability.
• Poor access control method • Bug in Programs • Set of actions designed to compromise CIAT
• Leaving the front door • Inexperienced User (Confidentiality, Integrity, Availability &
unlocked • Bad Protocols Timeliness)
• Short passwords-easy to • Timing Window Likelihood
guess
Threat The estimation of the probability that the threat will
Any entity, circumstance, or event with the potential to succeed in achieving an undesirable event.
harm the software system or component through its
Counter Measures
unauthorized access, destruction, modification, and/or
denial of service. An action, device, procedure, technique or other
Types: • Internal • Structured measure that reduces the vulnerability of a component
• External • Unstructured or system is referred as Counter Measure.
Exposure Risk Management Strategies
The extent of loss the enterprise has to face when a ✓ Transfer/Share the risk
risk materializes. ✓ Tolerate/Accept the risk
Example: • Loss of reputation, ✓ Treat/Mitigate the risk The Memory’s Eye
• violation of privacy ✓ Terminate/Eliminate the SAME
• Loss of resources risk
ERM – Enterprise Risk Management

➢ ERM is an on-going process to setting the best course of action to manage uncertainty by
✓ identifying, ✓ assessing, ✓ monitoring and
✓ analyzing, ✓ responding to, ✓ communicating risk issues/events
that may have an impact on an organization successfully achieving their business objectives.
Components of ERM
The Memory’s Eye
ROI related CRIME
ISO-31000
ERM system is based on the Establishes the entity’s risk culture Internal Environment
principle of the PDCA cycle
(Plan-Do- Check-Act). Sets the Enterprise Risk Objectives Objectives Setting
Sarbanes Oxley Act Identifies events that effect entity’s objectives Event Identification
Regulation passed by the US
Assesses risks based on likelihood and impact Risk Assessment
Congress in 2002 as a reaction
to different financial
Evaluates possible responses to risks Risk Response
scandals.
COSO I & II Establishes policies, procedures and controls Control Activities
COSO is the combination of Enables information exchange Information and Communication
tasks and components of an
internal control system. Evaluates effectiveness of the ERM Program Monitoring
"Success is walking from failure to failure with no loss of enthusiasm."

EIS-SM BOOSTER
Benefits of ERM The Memory’s Eye

➢ Link Risk and Strategy Link Risk to Strategy, Growth and
➢ Link Risk to Growth and Return Returns to Seize PRIME opportunity
➢ Seize Opportunity
➢ Identify and manage cross enterprise-risks
➢ Provide integrated responses to risks
➢ Minimize operational surprises and losses
➢ Realize capital
➢ Enhance risk response decisions
Controls
Policies, procedures, practices and organization structure, Designed to provide reasonable assurance
that business objectives are achieved and Undesired events are prevented or detected and
corrected.
Control Based on Implementation

Manual Control Semi-automated Control Automated Control
IT Control (Ref. to Chapter 3)
General Control Application Control
Information Technology General Controls (ITGC)

• Information Security Policy • User Training and qualification of operations personal
• Administration, Access and Authentication • Proper Development and Implementation of Application
• Separation of key IT functions Software
• Management of Systems Acquisition and • Confidentiality, Integrity and Availability of Software & data files
Implementation • Incident response and management
• Change Management • Monitoring of Applications and supporting Servers
• Backup, Recovery and Business Continuity • Value Add areas of Service Level Agreements (SLA)
Internal Control (IC)

• Systematic Reviews • Checks and Balances • Methods and Procedures
(Assessment and Feedback) (Corrective Measures) (Tools)
Installed and adapted by an organization to:

• Prevent and detect errors, fraud, theft and misappropriation
• Run its business in an orderly, efficient and effective manner.
• Ensure accuracy and completeness of its accounting data and The Memory’s Eye
records and Regulatory Compliance IC means SCM Installed and
• Supply Timely and reliable financial and management information adapted by an organization to
• Safeguarding of assets. For Integrity PRESS for Integrity
Forms of Internal Control: Internal Control(As per SA-315)

• Segregation of Duties (SOD) The process - Designed, implemented and maintained
• Management by those charged with governance, management and
• Internal Auditors other personnel to provide reasonable assurance about
• Authorize Access the achievement of an entity’s objectives with regard to:
• Safeguarding the Assets ➢ Reliability of financial reporting;
➢ Effectiveness and efficiency of operations,
The Memory’s Eye
➢ Safeguarding of assets, and
SOD Managed by an IAS ➢ Compliance with applicable laws and regulations.
"Just when the caterpillar thought the world was ending, he turned into a butterfly."
EIS-SM BOOSTER
Components of an Effective Internal Control As per SA-315
Control Risk Information and Control Monitoring

Environment Assessment Communication Activities Control
Risk Assessment Control Activities

✓ To obtain an understanding of the entity and its
environment, including the entity’s internal control. Segregation of Duties (SOD)
✓ To identify and assess the risks of material
General Controls
misstatement.
✓ RAP Includes: Application Controls
• Inquiries of management
• Analytical procedures
• Observation and inspection
Information and Communication
Internal External
How information is disseminated It is of 2 folds

throughout the organisation
Inbound Communication Outbound Communication
of relevant external provides relevant information to external in

information response to requirement and expectation.
Monitoring of Controls (Evaluation)

Separated
Ongoing
Provided timely information Its frequency depends

Conducted periodically
assessment of
Inbound Communication Outbound Communication
of relevant external provides relevant information to external in

information response to requirement and expectation.
Limitations of Internal Control System

• Cost or Budget involved
• Abuse of control or Potential for Human Error
• Manipulation by management
• Collusion The Memory’s Eye
• Abuse of Authority and Responsibility CA manipulates CA
"Opportunities don't happen, you create them."

EIS-SM BOOSTER
Risks and controls for Specific Business Processes

• Procure to Pay/Purchase to Payment/P2P – Risks and Controls • Human Resources – Risks and Controls
• Order to Cash (O2C) – Risks and Controls • Fixed Assets – Risks and Controls
• Inventory Cycle: Risks and Controls • GL – Risks and Controls
Procure to Pay/P2P Risks and Controls Inventory Cycle: Risks and Controls
Stages: Stages:
• User Department • Vendor • Ordering • Finished Goods
• Procurement Department • Stores • Production • Delivery
• A/c Payable Transactions:
• Raw Material Received • Quality Check
Transactions: • Vendor Invoice
from Procurement • Approved Customer
• Purchase Requisition • Purchase Returns
Department (PO) Orders
(PR) • Credit Notes
• Inventory Price and • Shipments to
• Quotation • Material Issue Note
Quantity Customers
• Purchase Order (PO) • A/c Payable
• Defective Raw Material • Shipment Cost
• Goods Receipt Note • Disbursements
• Direct and Indirect • Cost of Sales
(GRN) • System Access
Expenses • FG Returned by
Master: • Finished Goods Customers
• Supplier/Vendor Master • System Access Inventory • System Access
Order to Cash (O2C) – Risks and Controls Master:
Stages: • Inventory Management Master • System Access
• Sales and Marketing • Manufacturing Human Resources – Risks and Controls
• Order Fulfilment • Receivables
Stages:
Transactions: • Recruiting and on boarding • Career Development
• Orders • Shipping • Orientation and Career • Termination or
• Credit Limit • Sales Return Planning Transition
• Recording of Orders • Credit Note Configuration:
• Discounts • Cash Discount • Rule based system Access
• Cancellation of Orders • Accounts Receivable • Role based system Access
• Pick and Release • System Access
• Invoicing Master: (Payroll Master)
Master: • Employees • Terminated Employees
• Customer Master • System Access • New Employees
Fixed Assets – Risks and Controls

Stages: • Adjusting Assets Transactions: Master:
• Methods of Depreciation
• Procurement • Transferring • Acquisition of FA • • Fixed Assets Master
Maintenance of FA
• Adding an • Depreciating • Depreciation • System Access
• Disposing • FA Disposal or Transfer
Asset
GL – Risks and Controls

Stages: Configuration: Transaction:
✓ Entering financial transactions ✓ System Access ✓ GL Balances
into the system. ✓ Posting Approvals ✓ Interrelated B/S and Income Statement
✓ Reviewing Transactions. ✓ Variance Reports ✓ Account Code
✓ Approving Transactions. ✓ System Controls ✓ Transaction Amount
✓ Posting of Transactions. ✓ Journal Entries of Exceptional ✓ Report of all Journal Entries Completed
✓ Generating Financial Reports. Amounts ✓ Actual to Actual, Actual to Budget and Yield Reports
Master: ** GL Master ** Standard Charts of Accounts
"I have not failed. I've just found 10,000 ways that won't work."

Chapter 2 Unit 1 Financial and Accounting System
Computerized Accounting Systems

Master Data Types of Master Data
➢ Permanent Data, not expected to change
➢ Accounting Master Data Names of ledgers, groups, cost
frequently.
centres, accounting vouchers, etc. Capital Ledger, Sales,
➢ Pre-defined structure and content of AIS.
Purchase, Income, Expenses, etc.
➢ Default templates into which information are
➢ Inventory Master Data Stock Items, stock groups, Godown,
entered using vouchers.
inventory voucher types, etc.
➢ Heads, which will be set once and used in
➢ Payroll Master Data Name of employees, group of
many places such as Accounting Voucher
employees, salary structure, payment heads, etc.
Creation, Reports Generation etc.
➢ Statutory Master Data TDS, Excise, Customs, GST, etc.
➢ Data stored in Masters is independent.
Non-Master Data
➢ Non-permanent data, Expected to change frequently.
➢ Amounts recorded in each transaction shall be different every time and expected to change again and again.
➢ Date recorded in each transaction is expected to change again and again and will not be constant in all the
transactions.
Voucher Ledger
Voucher is a documentary evidence of a transaction. Types of Voucher:
1. Ledger having Debit Balance
1. Accounting Voucher Sales, Purchase, Payment, Receipt, Contra, Journal,
Credit Note, Debit Note; etc. 2. Ledger having Credit Balance
2. Inventory Voucher PO, SO, Stock Journal, Physical Stock, Delivery Note,
Receipt Note; etc.
3. Payroll Voucher Attendance, Payroll; etc.
Application Software
➢ Installed Application Installed on the hard disc of the user’s computer.
Example: Electronic spreadsheets, MS Excel, MS Word, Internet Explorer,
Mozilla Firefox, Google Chrome, Safari, Windows Media Player, iTunes,
Solitaire, etc. The Memory’s Eye
➢ Web Application Installed on a web server, accessed by using a browser Basis of Web vs. Installed Application
and internet connection. Define Installation MAP of DFD
Example: Google Docs, Web versions of Visual Studio or Open Office, with Example
webmail, online retail sales, online auctions, wikis, instant messaging
services; etc. • Definition • Performance
➢ Cloud Application A Hybrid application. A software program where cloud- • Installation • Data Storage
based and local components work together. • Mobile Application • Flexibility
Example: LinkedIn, Boomerang, Zomato, Salesforce, Dropbox, NetSuite, • Accessibility • Data Security
and Zoho.com. etc. • Example
Working of Any Software (Ex. Tally)

The Memory’s Eye
➢ Front End: A part of the overall software which interacts with the user. USP of Domain Language
• Presents information in proper format.
• Speaks in the language understood by the users. • User Experience (CRM)
• Handles processed data. • Speed (Work Division)
➢ Back End: A part of the overall software which interacts with Front End only. • Presentation
• Increases the speed of operation. • Domain Expertise (Specialization)
• Speaks in technical language. • Language (Communication)
• Stores and handles data.
Financial and Accounting Software

➢ Non-Integrated System: A system of maintaining data in a decentralized way.
Major Issues 1. Communication Gap 2. Mismatch of data.
➢ Integrated System: An overall system that caters to the needs of all the people connected with the organization.
"No one can make you feel inferior without your consent."

EIS-SM BOOSTER
Installed Vs. Cloud Based Application

Particulars Installed Application Cloud based Application
Installation As software is installed on hard disc of the Installation on user computer is not required.
and computer used by user, it needs to be installed on Update and maintenance are defined
maintenance every computer one by one. This may take lot of responsibility of service provider.
time. Also, maintenance and updating of software
may take lot time and efforts.
Accessibility As software is installed on the hard disc of the user’s As software is available through online access, to
computer, user needs to go the computer only, i.e., use the software a browser and an internet
the computer where software is installed, to use the connection is needed. It can be used from any
software. It cannot be used from any computer. computer in the world. Access to the software
becomes very easy. Also, it can be used 24 x 7.
Mobile Using the software through mobile application is Mobile application becomes very easy as data is
Application difficult in this case. available 24x7. As technology evolves mobile
technology is becoming an industry norm. That makes
cloud-based application future oriented.
Data Storage Data is physically stored in the premises of the Data is not stored in the user’s server computer. It is
user, i.e., on the hard disc of the user’s server stored on a web server. Ownership of data is
computer. Hence, user will have full control over defined in Service Level Agreement (SLA). SLA
the data. defines the rights, responsibilities and authority of
both service provider and service user.
Data Security As the data is in physical control of the user, user Data security is a challenge in case of cloud-based
shall have the full physical control over the data, and application as the data is not in control of the user or
he/she can ensure that it is not accessed without owner of data. As time evolves; SLAs provides for
proper access. details of back-up, disaster recovery alternatives
being used by service provider.
Performance A well written installed application shall always be Access is dependent on speed of internet. Slow
faster than web or cloud application, reason being internet slows access to information and may slow
data is picked from local server without internet. operations.
Flexibility It shall have more flexibility and controls as The success of cloud-based applications is that they
compared to cloud application. It is very easy to allow flexibility against both capital expenditure
write desktop applications that take advantage of the (CAPEX) and Operating Expense (OPEX) to the
user’s hardware (such as: scanners, cameras, Wi-Fi, user. User can scale up operations as per need.
serial ports, network ports, etc.). Installed
applications have this disadvantage of higher
capital expenditure (CAPEX) in comparison to
cloud-based application.
Enterprise Resource Planning

Enterprise Resource Planning (EPR) is essentially a software which integrates all the departments and their
functions within a company through a single IT system.
Examples: SAP-ERP 6.0/EPH-8, MS Dynamic, People Soft, Oracle ERP, iDempiere.
Advantages of ERP
Improvements in Is Possible through Reduction in
➢ Shipment and Delivery The Memory’s Eye ➢ Cycle Time

➢ Information accuracy Improvement in ➢ Lead Time
➢ Resource utilization SIR’S Analysis is ➢ Quality Costs
➢ Supplier Performance Possible through Reduction in ➢ Flexibility
➢ Analysis and Planning CL Time, QC and Flexible Use ➢ Use of Latest Technology
Capabilities of Tech. for Customers. ➢ Customer Satisfaction
"If you're going through hell keep going."

EIS-SM BOOSTER
ERP Implementation Related Risks and Controls
People Issues Process Issues Technology Issues Implementation Post Implementation

Issues Issues
The Memory’s Eye

Risks and corresponding controls related to People Issues Top. Management changed in TCS
Aspect Risk Associated Control Required

Top Top management does not provide the support for Top management is fully convinced and assure of
Management the availability of resources that are required providing the full support.
Support during the transition and Implementation.
Change Change will occur in the employee’s job profile. Proper training of the users with well documented
Management Changing the scope of the project. manuals during transition from old system to ERP.
** Employee’s Resistance ** Top Management’s Role
Training Since the greater part of the raining takes place Training is a project-managed activity and shall be
towards the end of the ERP implementation cycle, imparted to the users in an organization by the
management may curtail the training due to skilled consultants and representatives of the
increase in the overall cost budget. hardware and package vendors.
Consultants These are experts in the implementation of the ERP The consultants should be assigned a liaison officer
package and might not be familiar with the internal - a senior manager - who can familiarize them with
workings and organizational culture. the company and its working.
Staff Employee turnover – qualified and skilled This can be controlled and minimized by allocation
Turnover personnel leaving the company – during the of employees to tasks matching their skill-set;
implementation and transition phases can affect fixing of compensation package and other
the schedules and result in delayed implementation benefits accordingly- thus keeping the employees
and cost overrun. happy and content and minimizing the staff turnover.
Risks and corresponding controls related to Process Issues

Program Information gap between day-to-day program This requires bridging the information gap
Management management activities and ERP-enabled between traditional ERP-based functions and
functions like materials and procurement planning, high value operational management
logistics and manufacturing. functions.
Business Process BPR means not just change – but dramatic change New organizational structures, management
Reengineering and dramatic improvements. systems, job descriptions, performance
(BPR) measurements, skill development, training, etc.
The Memory’s Eye

Risks and corresponding controls related to Technological Issues
SEAT

Software Implementing all the functionality and Incorporate the features that are required by the
Functionality features just for the sake of it can be organization and supporting additional features and
disastrous for an organization. functionality that might be required at a future date.
Enhancement and ERP Systems are not upgraded and kept up- Care must be taken while selecting the vendor
Upgrades to date. and upgrade/support contracts should be signed.
Application Portfolio Focus on the selection of new business Reduce duplication and complexity of applications
Management applications and the projects. in the current portfolio
Technological Advent of more efficient technologies. Technology, architecture of the product, ease of
Obsolescence enhancements, upgrading, quality of vendor support.
"Don't raise your voice, improve your argument."

EIS-SM BOOSTER
Risks And Corresponding Controls Related to Implementation Issues

System Failure As everybody is connected to a central database, in Proper back up of data, alternate hardware /
case of failure of system, the whole business may internet arrangements. When primary system
come to stand still may get affected badly. fails, secondary system may be used.
Lengthy ERP projects are lengthy that takes anywhere between Care must be taken to keep the momentum high,
implementation 1 to 4 years. The business and technological and enthusiasm live amongst the employees.
Time environment during the start and completion of the
project will never be the same. The Memory’s Eye
Employee turnover is another problem. SLIDE for Data Access
Insufficient Lack of funds may stop the Implementation mid-way. It is necessary to allocate necessary funds.
Funding
Data Safety If this data is lost, business may come to stand still. Back up arrangement needs to be very strong.
Speed of As data is maintained centrally, gradually the data size This can be controlled by removing redundant
Operation becomes more and more and it may reduce the speed data, using techniques like data warehousing
[Efficiency] of operation. and updating hardware on a continuous basis.
Data Access Data is stored centrally, and all the departments access Access rights need to be defined very carefully
the central data. This creates a possibility of access to and to be given on “Need to know” and “Need
non-relevant data. to do” basis only.
Risks And Corresponding Controls Related to Post-Implementation Issues

Even after the ERP implementation, there will always be new This requires a strong level of commitment
Lifelong modules/versions to install, new persons to be trained, new and consistency by the management and
commitment technologies to be embraced, refresher courses to be users of the system.
conducted and so on.
ACCESS CONTROL in ERP
Definition • A control to safeguard software systems, procedures are developed and implemented for protecting
them from unauthorized modification, disclosure or destruction.
Functions • Identity Management • Authorization The Memory’s Eye
• Authentication • Accountability
IAAA
Approaches 1. Role Based Access Control (RBAC) 2. Rule Based Access Control (RAC)
• Mandatory Access Control (MAC)
• Discretionary Access Control (DAC).
Types • Create • Alter • View • Print
ERP Modules 1. Financial Accounting
11. CRM 2. Controlling

10. Supply Chain 3. Sales & Distribution
9. Project Systems 4. Human Resources

ERP Module
8. Plant Management 5. Production Planning
7. Quality Management 6. Materials Management
"What seems to us as bitter trials are often blessings in disguise."

EIS-SM BOOSTER
1. Financial • Creation of Organizational Structure • A/c Payable

• Financial Accounting Global Settings Integration Point:
Accounting • A/c Receivable
S&D+MM
Module • General Ledge Adjustment A/c • Assets Accounting
• Tax Configuration
2. Controlling A. Cost Elements B. Revenue Elements

Integration Point:
Module • Cost • Activity Based Costing • Profit Centre FA
• Cost Centre • Product Cost Control • Profitability Analysis
3. Sales and • Setting up Organization Structure • Setting up Sales Document Types Integration Point:
Distribution • Assigning Organizational Units • Setting up Customer Master Data FA+CO+MM+PP+
Module • Defining Pricing Components Records and Configuration SCM
4. Human Resource Module • Pre-Selection • Selection • Post-Selection
5. Production Issue of Raw Conversion into Conversion into Stock Transfer

Planning Module Material from stores WIP Finished Goods to Godown
Features of PP Module ➢ Master Data ➢ Production Planning

➢ SOP ➢ Capacity Planning
➢ MRP ➢ Product Cost Planning
➢ DRP
6. Material • Purchase Requisition • Evaluation of Quotations • Issue of Material

Management • Evaluation of PR • Purchase Order • Purchase Invoice
Module • Asking for Quotation • Material Receipt • Payment to Vendor
7. Quality • Master data • Identify quality issues

Management • Set Quality Standards and Targets • Improvements and changes needed
Module • Quality management plan • If any change is needed in the product, change requests are sent
• Implementation of plan • Report on the overall level of quality achieved
• Take the actions needed to measure quality • Quality is checked at multiple points
8. Plant • Plant and Equipment Master • PM Schedule Report

Maintenance • Maintenance Data • Monthly PM Report
Module • Yearly PM Schedule • Maintenance History Report
• PM Reminder Report • Plant and Equipment Master Report
9. Project System • Project Request

• Budgeting
Module • Create Template
• Project Implementation
• Create Project
• Project Completion
• Project Planning
• Procurement • Customer
10. SCM Module The Memory’s Eye
• Operations • Consumer POD to Customer
• Distribution
11. CRM Module • Analytics The Memory’s Eye

• Operations A O C
• Collaborations
12. Benefits of • Improved Customer Relations

CRM Module • Increase Customer Revenues
• Maximize Cross-Selling and Up-Selling
• Better Internal Communication The Memory’s Eye
• Optimize Marketing CRMSCM
"The distance between insanity and genius is measured only by success."

Chapter 2 Unit 2 MIS, Data Analytics and XBRL
Business Reporting, Data Analytics and XBRL

Business or Enterprise Reports MIS Reports
➢ A Business Report simply means presentation of ➢ Reports required by the management
information in proper and meaningful way.
➢ To assess the performance of the organization
➢ Business Reporting is the public reporting of
operating and financial data by an enterprise. ➢ Allow for faster decision-making.
Types of MIS Reports Criteria to make MIS Reports Useful

➢ Accounting Reports ➢ Inventory Reports • Structured • Accurate • Timely
➢ Financial Reports ➢ Management Control Reports • Manageable • Relevant The Memory’s Eye
SMART
Data Analytics
• The process of examining data sets to draw conclusions about the information they contain with the aid of
specialized systems and software.
Types of Data Analytics Applications

Exploratory Data Analysis (EDA): EDA aims to find patterns and relationships in data
Confirmatory Data Analysis (CDA): CDA applies statistical techniques to determine whether hypotheses about a data set are true or false
Quantitative Data Analysis (QDA): It involves analysis of numerical data with quantifiable variables that can be compared
or measured statistically.
Qualitative Data Analysis (QDA): It is more interpretive- it focuses on understanding the content of non-numerical data like
text, images, audio and video, including common phrases, themes and points of view.
Data Analytics Process

The Memory’s Eye
Step 1: Data Collection Step 4: Data Manipulation or Organization Collect IQ data of OM to issue TC
Step 2: Data Integration Step 5: Data Modelling
Step 3: Data Quality Fixation Step 6: Testing and Run Step 7: Communication
Application Areas of Data Analytics Business Intelligence (BI)
• Banking • Election Campaigns • All applications and technologies in the organization

• Stock Exchange • Mobile Network • Focused on the gathering and analysis of data and information.
• E-commerce Operators • That can be used to drive strategic business decisions
Business Intelligence Tools
BI tools are a type of software that is designed to retrieve, analyze and report data.
• Simple Reporting and Querying (OLTP) • Dashboards (Real-time BI) • Data Mining (Locational BI)
• Business Analysis (OLAP) • Scorecards (Operational BI) • Process Gap Analysis (Cloud BI)
eXtensible Business Reporting Importance Features

➢ Language
XBRL International in more than 50 countries. 1. Errorless Reporting 1. Strong Software
➢ International standard for digital business reporting. 2. Accurate Analysis Support
➢ Effective and accurate digital versions. 3. Accurate Reports 2. Clear Definition
➢ It’s a language that can be used and extended as needed. 4. Need Based Reporting 3. Testable Business Rules
• Multi-lingual Support 5. Sophisticated Reporting 4. Multi-lingual Support
• Strong Software Support
The Memory’s Eye The Memory’s Eye
➢ The language is XML-based and uses the XML syntax and
EARNS Strong CRM
related XML technologies.
Tagging Users
• Accountants
• Period • Units of Measure • AS/IND-AS • Companies • Regulators • Data providers
• Currency • Meaningful Terms • Laws • Analysts • Governments • Investors
Join Us"Noon
masterpiece
Telegram was ever created by a lazy artist."
http://t.me/canotes_ipcc
Chapter 3 Unit 1 Information System Components
Information System Components

It refers to a system that collects, stores, analyses, processes and distributes information in the enterprise for
decision-making, co-ordination and control. It can be manual as well as computer-based information system (CIS).
Components of Information System Why Information System?
1. People Resources (Specialists and End Users) 1. Operational excellence
2. Hardware (Machine and Media) 2. Better decision-making
The Memory’s Eye
3. Data (DBMS) 3. Competitive advantage
4. Information Products PHD IN Sw.
4. Customer-supplier intimacy
5. Network (Devices, Media, Software and Protocols) The Memory’s Eye
6. Software (Programs and Procedures) OBCC
Functions of Information System
HARDWARE
Input and Output Devices
Input Devices Output Devices
Used to provide data & instructions to computer. E.g., keyboard, mouse Used to provide required output from computer. E.g., Printer, VDU
Online Data Entry Devices Direct Data Entry Devices
Keyboard Mouse Track Ball Light Pen Joy-Stick Voice Input Devices
SOURCE DOCUMENT DATA COMPUTER
SCANNER
MICR OCR OMR Image Scanner Bar Code Reader Smart Card Reader
Printer VDU COM Graph Voice Output

(Visual Display Unit) (Computer Output on Microfilm) Plotter Device (Speakers)
"Do one thing every day that scares you."

EIS-SM BOOSTER
PROCESSING DEVICES
CPU ( Central Processing Unit)

Control Arithmetic
Unit Logic Unit • CPU is the processor that computes and processes data
Input Devices (CU) (ALU) and delivers the results based on the instructions that are
Input Devices
fed to the PC.
Memory
• Every CPU has two basic parts, the Control Unit and
Register Cache
the Arithmetic Logic Unit.
CU (Control Unit) ALU (Arithmetic Logical Unit)

Primary Memory • Computer’s resources are • Carries out mathematical operations.
managed by CU. • Arithmetic: Addition, subtraction,
• It is the logical hub of the multiplication, division, etc.
Secondary Memory computer. • Logical: Comparisons, such as, whether
• CPU’s instructions for carrying one number is equal to, greater than, or less
out commands are built into CU. than another number.
Registers Cache Memory (Pronounced as ‘Cash’)

Internal memory within CPU, which are very fast and very • There is a huge speed difference between Registers and Primary
small. Types of Registers: Memory.
a) Accumulators (AR) d) Memory Registers (MR) • To bridge these speed differences, we have cache memory.
b) Data Registers (DR) e) Index Registers • Cache is a smaller, faster memory, which stores copies of the data
c) Instruction Registers (IR) from the most frequently used main memory locations so that
Processor/Registers can access it more rapidly than main memory.
MEMORY UNIT
Memory Unit Read Only Memory Random Access Memory
(ROM) (RAM)
Primary Secondary Virtual • It is only readable memory. • RAM is temporary and is
Memory Memory Memory
• The data written on it cannot erased when computer is
be modified. switched off.
RAM ROM CMOS • The instructions required • RAM is read/write type of
Internal External
Memory Memory during booting of a system are memory, and thus, can be
retrieved from ROM. written by user.
Virtual Memory
• VM is not a separate device; but an imaginary memory area
• Supported by operating systems in conjunction with the hardware.
• If a computer lacks RAM, needs to run a program or operation, Windows uses virtual memory to compensate.
• Virtual memory combines computer’s RAM with temporary space on the hard disk.
• When RAM runs low, virtual memory moves data from RAM to a space called a paging file.
• Moving data to and from the paging file frees up RAM to complete its work.
• Virtual memory is an allocation of hard disk space to help RAM.
Software
System Software Application Software
• A computer software designed to operate the • Application software has been created to perform a
computer hardware and to provide and maintain a specific task for a user.
platform for running any application software.
Functions of OS The Memory’s Eye

PUsH MTNL File
1. Performing hardware functions 4. Memory Management
2. User Interfaces 5. Task Management 7. Logical access security
3. Hardware Independence 6. Networking Capability 8. File management
"Life is not about finding yourself. Life is about creating yourself."
EIS-SM BOOSTER
Database Management System (DBMS)

Database Database System DBMS Objectives of DBMS
• A collection of interrelated data stored together • Computer Based • A set of computer 1. To know its
to serve multiple applications. Record-Keeping programs that information needs.
• Data is stored in such a way that it is independent System. controls the 2. To acquiring that
of the programs which use the data. creation, information.
maintenance, and 3. To organize the
utilization of the acquired
databases of an information in a
organization. meaningful way.
• A System 4. To assure
software that information
provides facility quality.
to create and 5. To provide
maintain a well- software tools so
organized that users can
database. access the
Example: SQL, information they
Oracle, DB2, etc. require.
Database Management Models

Hierarchical DBM Network DBM Relational DBM Object Oriented DBM
• Records are logically organized • It views all records in sets. • A relational • Object-oriented has its
into a hierarchy of relationships. • Each set is composed of an owner database is origins in Object oriented
• In an inverted tree pattern. record and one or more member structured into a programming languages.
• Records in the hierarchy are called records. series of two- (C++, Ruby, Python, etc.)
nodes. • A logical data structure that allows dimensional • An object typically has two
• Each node is related to the others many-to-many relationships among tables. components; state (value)
in a parent-child relationship. data records. and behavior (operations).
• Implements one-to-one and one- • It allows entry into a database at • Object oriented databases
to-many relationships. multiple points, because any data provide a Unique Object
• The top parent record in the element or record can be related to Identifier (OID) for each
hierarchy is called the root record. many other data elements. object.
Advantages of DBMS Disadvantages Big Data Data Data Mining Knowledge

of DBMS Warehouse Discovery
✓ Permits Data ✓ Cost Big data is high- DW is a small Data mining is a Knowledge
Sharing ✓ Security volume and high- database major use of Discovery in
✓ Maintains velocity and/or extracted from data warehouse Databases
Integrity high-variety the larger databases and systems also
✓ Minimizing data information assets database. the static data assist us
Redundancy that demand cost- Extract data they contain. establish,
✓ Program and file effective, from one or The data in a contact, and
Consistency innovative forms more of the data warehouse communicate
✓ Program/data of information organization’s are analyzed to with experts
Independence processing that databases and reveal hidden (knowledgeable
✓ Faster The Memory’s enable enhanced load it into the patterns and people) on
Application Eye insight, decision- data trends in various subjects,
Development making, and warehouse for historical surrounded by
SIR has CIA’s process storage and business activity. our organization,
✓ Improved
security Security Data automation. analysis. or perhaps even
✓ User-friendly for Us. outside.
Benefits of Big Data Processing
Access to Early identification Improved Better operational

Intelligence
social data of risk customer service efficiency
"Nothing in the world is more common than unsuccessful people with talent."
EIS-SM BOOSTER
Criteria to Create DW DW Design Approaches Benefits of DW

A. Uses non-operational A. Bottom-Up Approach A. Consistency in Data The Memory’s Eye
data B. Top-Down Approach B. Truth Finding CTC Trend
B. Data is time-variant C. Clear Understanding of Databases
C. Data is standardized D. Trend Analysis
Data
Mining
Steps involved in Data Mining
Data Data Data Data Data Pattern Decision

Integration Selection Cleaning Transformation Mining Evaluation Making
Networking And Communication Systems
Computer Network Types of Networks Network Principles Benefits of Networks

A network is a set of 1. Connection 1. Routing 1. Distributed nature of information
devices (also known Oriented 2. Resilience 2. Resource Sharing
as nodes, terminals networks 3. Bandwidth 3. Computational Power
or stations) 2. Connectionless 4. Contention 4. User communication
interconnected by a Networks 5. Reliability
communication link. 6. Shared Databases
The Memory’s Eye 7. Remote Access
RRBC 8. Fault Tolerance
9. Internet and Security
The Business Value of Telecommunications

• Overcome Geographical Barriers
The Memory’s Eye
• Overcome Structural Barriers GST Cost
• Overcome Time Barriers
• Overcome Cost Barriers
"Your problem isn't the problem. Your reaction is the problem."

Chapter 3 Unit 2 Information System Controls and Auditing
Auditing in IT Environment
Audit in IT Manual Tools and Importance of IT Risk of IT in
Environment Audit Techniques of in CIS Audit
Audit in CIS CIS Audit
Environment
• Computerized Env. • Manual Env. Approaches: • Processes Large • Unauthorized
• IT enabled • Manual compilation • Black Box Volume of Data Access
compilation process process of BOA • White Box • Security is • False Sense of
of BOA and Docs. and Docs. CAAT: improved Security
• Automated • Manual Processes • BI Tools • SAS • Monitoring the • Privilege
Processes • Manual Reporting • ACL • SPSS Performance Violations
• (BPMS/ERP/TPS/CB • Auditors don’t • IDEA • Lindo • Analysis is • Process becomes
S/Tally, etc.) require Concurrent Audit enhanced (DA) wrong
• Automated IT/IS/BPMS and Tools: • Reduced Risk • Malware
Reporting CAAT Knowledge. • Snapshots and better • Manual
• Auditors require • ITF Controls Intervention
IT/IS/BPMS • SCARF
• Timeliness and
Knowledge. • CIS
CIAT
• Tools: CAAT • Audit Hooks.
Objectives of Controls
Causes of the Exposure to Potential Loss Critical controls lacking in a CIS Environment
1. Errors or omissions 1. Lack of management’s understanding of IS risks

2. Improper authorizations 2. Lack of IT staff’s knowledge of IS risks
3. Improper accountability 3. Weak general controls and IS controls
4. Inefficient activity 4. Complexity of implementation of controls
Controls Based on Objectives of Control

Preventive Detective Corrective Compensatory
Prevent errors, Detect errors, omissions or Correct errors, Alternative control that is put
omissions, malicious malicious acts that occur and omissions, or incidents in place to satisfy the
acts or security incidents report the occurrence. once they have been requirement for a security
from occurring. Example: detected. measure that is deemed too
Example: • Monitoring Example: difficult or impractical to
• Access Control • Review • Removing implement at the present
• IPS, Firewall, Anti-virus • Cash count unauthorized users time.
• SOD • Anti-virus • Disaster recovery Example:
• Documentation • Bank Reconciliation • Back-up Procedure • Data Centre
• Training • Internal Audit • BCP • Biometric Installation
• Authorization • IDS • Resolving queries • SOD
• Validation • Budgeted Vs. Actual • Correcting Entries • Log Storage - Extra Hard-
• Passwords Expenses • MOC disk Space to store Logs
• Encryption
Environmental Controls Types of Environmental Exposures
FIRE POWER WATER POLLUTION
"You can do anything, but not everything."

EIS-SM BOOSTER
Physical Access Controls Logical Access Controls

• Mobile Computing
• OS Access Control
• Nw. Access Control
• App. SW. Access Control
• User’s Responsibility
• Users Access Management
The Memory’s Eye

MONA is a Responsible User
Logical Access Violators

• Hackers • Former
• Employees Employees
• Information System • End Users
Personnel
Technical Exposure
Data Diddling Change of data before or after they entered the system.
Christmas Card Trojan that was detected on internal E-mail of IBM system.
Worms A program that copies itself to another machine on network. Ex.: Existential Worm, Alarm clock Worm etc.
Bomb A piece of bad code deliberately planted by an insider or supplier of a program. Logical time based bomb.
Trap Doors Allow insertion of specific logic, such as program interrupts that permit insertion of unauthorized logic.
Spoofing A spoofing attack involves forging one’s source address.
Rounding Down Rounding of small fractions of a denomination and transferring them into an authorized account.
Salami Techniques This involves slicing of small amounts of money from a computerized transaction or account.
Asynchronous Attack
• They occur in many environments where data can be moved asynchronously across telecommunication lines.
• Data that is waiting to be transmitted are liable to unauthorized access called Asynchronous Attack.
• These attacks are hard to detect because they are usually very small pin like insertions.
Data Leakage Subversive Attacks Wire-tapping Piggybacking
This involves leaking These can provide This involves This is the act of following an authorized person
information out of intruders with important spying on through a secured door or electronically
the computer by information about messages information attaching to an authorized telecommunication
means of dumping being transmitted and the Being link that intercepts and alters transmissions.
files to paper or intruder may attempt to transmitted over This involves intercepting communication
stealing computer violate the integrity of some Communication between the operating system and the user and
reports and tape. components in the sub-system. network. modifying them or substituting new.
User Access Management User Responsibilities Application & Monitoring System Access Control
• Privilege management • Password Use The Memory’s Eye
• Monitor System Use
• User Password Management • Unattended user • Information Access
• User’s Access Review Equipment Restriction MICES
• User Registration
• Clock Synchronization
The Memory’s Eye • Event Logging
User’s Privilege @ PAR • Sensitive System isolation
"Innovation distinguishes between a leader and a follower."

EIS-SM BOOSTER
Network Access Management

• Security of Network Services The Memory’s Eye
• Nw Connection and Routing Ctrl. • Enforced Path Nw. Connection and Routing Policy
• Policy on use of Nw. Services • Call back Devices for 2 SONs is enforced by Calling
• Segregation of Networks • Firewall and Encryption back Firewall and Encryption
Operating System Access Control

• Access Control List • Use of system utilities
• Automated terminal identification • Discretionary Access Control • Terminal Time Out
• Terminal login-in procedures • User Identification and Authentication • Duress alarm to safeguard users
• Access Token • PMS
Controls Based on Audit Functions
Managerial Control Application Control

Controls over the managerial functions that must be performed Controls in-built in the application software ensure accurate
to ensure the development, implementation, operation and and reliable processing. Application controls ensure that all
maintenance of information systems in a planned and transactions are authorized, complete and accurate.
controlled manner in an organization.
▪ Top Management Control ▪ Boundary Control

▪ IS management ▪ Input Control
▪ Program Development management Control ▪ Communication Control
▪ System Development management Control ▪ Process Control
▪ Quality Assurance management Control ▪ Output Control
▪ Data Resources management Control The Memory’s Eye ▪ Database Control
▪ Operations management Control
TIPS on Quality of DOS
▪ Security management Control
Managerial Controls
Top Management and IS Management System Development Management Control

Control
❖ IT Policies, procedures and standards ❖ Problem Identification and Feasibility Assessment
❖ Top-Bottom Communication of Controls ❖ System Analysis
Major Functions: ❖ System Design
• Planning ❖ System Acquisition
✓ Strategic Plan (LT) ❖ Acceptance, Testing and Conversion
✓ Operational Plan (ST) ❖ Operations and Maintenance
➢ Steering Committee
➢ Review Committee Program Development Management Control
❖ Organizing
❖ Planning ❖ Testing
❖ Leading
❖ Design ❖ Operations
❖ Controlling
❖ Coding ❖ Maintenance
Data Resources Management Control The Memory’s Eye
PDC To OM
❖ Data Definition Control
❖ Updated Control
Quality Assurance Management
❖ Access Control
Control
❖ Quality Control – CIAT The Memory’s Eye ❖ Quality of IS/BPMS/ERP ❖ Updated
❖ Concurrency Control DU A QC for Data Back-up ❖ No Defects ❖ ISO-3100
❖ Data Administrator’s logs ❖ Less Error ❖ License/Legal
❖ Back-up Control-Data repository system ❖ Less Maintenance Feasibility
"The starting point of all achievement is desire."

EIS-SM BOOSTER
Operations Management Program Development Management Control

Control
❖ Computer Operations ❖ Safeguarding of Assets
❖ Nw. Operations ❖ Environmental Controls
❖ Data Entry operations ❖ Physical Access Controls
❖ Production Control ❖ Logical Access Controls
❖ File Library ❖ Unauthorized Intrusion
❖ Help-Desk/Tech Support ❖ Malware and Hackers
❖ Capacity Planning ❖ DRP, BCP and Insurance
Application Controls
Boundary Control
❖ Access Controls ❖ Cryptographic Controls The Memory’s Eye
❖ PIN
❖ Biometric Devices ❖ Digital Signature ❖ Plastic Card ABCD is PIN of Card
Input Control
❖ Source Document Control ❖ Batch Controls The Memory’s Eye
❖ Data Coding Controls ❖ Validation Controls Valid batch and Source Data Code
Source Document Control Data Coding Control

• Use pre-numbered source Transcription Error Transposition Error
documents • Addition Error (ASCI09186-ASCI091866) • Single (ASCI09116-
• Use source documents in sequence • Truncation Error (ASCI09186-ASCI0918) ASCI09161)
• Periodically audit of source • Substitution Error (ASCI09186-ASCI09166) • Double (ASCI09116-
documents ASCI0961)
Batch Control Validation Control

• Physical Controls Field Interrogation Record Interrogation File Interrogation
• Logical Controls • Code Check • Valid Sign • Security of data file
Types of errors in batch • Arithmetic Check • Reasonableness • Logging
Control • Limit Check Check • Authorization of File
✓ Grand Total • Cross Check
• Sequence Check • Version Usage
✓ Hash Total • Digit Check
• Ext. and Int. labelling
✓ Document Count • Picture Check
The Memory’s Eye The Memory’s Eye The Memory’s Eye
CALC ki DP VRS le lo SLAVE
Process Control Communication Control Output Control

❖ Processor Control ❖ Physical Components Control ❖ Inference Controls
❖ Real Memory Control ❖ Internetworking Control ❖ Batch Output Production and Distribution
❖ Virtual Memory Control ❖ Flow Control Controls
❖ Application Software Controls ❖ Topology Control ❖ Batch Report Design Controls
❖ Control over Subversive Threats ❖ Online output production and Distribution
Controls
Database Control
❖ Application Software Controls
❖ Access Control ❖ Concurrency Controls
❖ Integrity Control ❖ File Handling Controls
"Success is the sum of small efforts, repeated day-in and day-out."

EIS-SM BOOSTER
Information System Auditing

Systematic and Independent Examination of the Need for Audit of Information System
controls within an entity’s Information technology
infrastructure. (To ensure CIAT for T&F View)
Organizational Costs of High Costs of Controlled
Objectives of ISA Need for ISA Costs of Data Computer Computer evolution of
Loss Abuse Error computer Use
• Assets Safeguarding • Same as E-Commerce
• Data Integrity Control Objectives Cost of Incorrect Value of Computer hardware, Maintenance of
• System Effectiveness (Chapter 4) Decision Making Software and Personnel Privacy
• System Efficiency
Information System Audit and Audit Evidence

SA 230 Why are audit evidences
Inherent Limitations of ISA
Documentation needed?
Audit Documentation • Means of controlling current • Nature of Financial Reporting
refers to the: audit work. • Nature of Audit Procedures
• Record of audit • Evidence of audit work • Audit to be conducted within a reasonable period
procedures performed. and at a reasonable cost
performed, • Schedules supporting or • Fraud involving senior management or collusion
• Relevant audit additional item in the • The existence and completeness of related party
evidence obtained, accounts. relationships and transactions.
• Conclusions the • Information about the • Non-compliance with laws and regulations
auditor reached business being audited, • Future events or conditions that may cause an
including the recent history. entity to cease to continue as a going concern
Audit Trail
• Step-by-step record by which accounting data can be traced to their source.

• Logs that can be designed to record activity at the system, application, and user level
Types of Audit Trail Objectives
• Detecting Unauthorized Access (Detective)

• Personal Accountability (Preventive)
Accounting Audit Trail Operations Audit Trail • Restructuring Events (Corrective)
Concurrent Audit
Real-time auditing to provide continuous 1. Snapshot Tools
assurance about the quality of the data that is 2. ITF – Integrated Test Facility
continuous auditing, through: 3. SCARF – System Control Audit Review File
1. Embedded Modules 4. CIS – Continuous and Intermittent Simulation
2. Special Audit Records 5. Audit Hooks
ITF
"All progress takes place outside the comfort zone."

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SCARF
Transaction File Input Master File
Update Program Containing

SCARF Embedded audit routines
Update Reports Output Master File SCARF Reporting System Audit Reports
CIS
SM IN GOVERNMENTOrganization Structure and Responsibilities

AND NOT-FOR-PROFIT
ORGANISATIONS
Executive Management Software Development Data Management Network Management
▪ CIO (Chief Information ▪ Systems Architect • Database Architect • Network Architect
Officer)
▪ System Analyst • Database • Network Engineer
▪ CTO (Chief Technical
Officer) ▪ Software Developer Administrator (DBA) • Network
▪ CSO (Chief Security ▪ Software Tester • Database Analyst Administrator
Officer) • Telecom Engineer
▪ CISO (Chief Information
Security Officer)
▪ CPO (Chief Privacy
Officer)
Systems Management General Operations Security Operations Service Desk

▪ Systems Architect ▪ Operations Manager ▪ Security Architect • Help desk Analyst
▪ Systems Engineer ▪ Operations Analyst ▪ Security Engineer • Technical Support
▪ Storage Engineer ▪ Controls Analyst ▪ Security Analyst Analyst
▪ Systems Administrator
▪ Systems Operator ▪ User Account
▪ Data Entry Management
▪ Media Librarian ▪ Security Auditor
Segregation of Duties (SOD)

❖ SOD Controls ❖ Examples of SOD Controls
▪ Preventive controls ▪ Transaction Authorization
▪ Detective controls ▪ Split custody of high-value assets
▪ Workflow
❖ Mitigation of an SOD issue
▪ Periodic reviews
▪ Reduce access privileges
▪ Introduce a new mitigating control
"Courage is resistance to fear, mastery of fear--not absence of fear."

Chapter 4 Unit 1 E-Commerce and M-Commerce
“Failure is so important. We speak about success all the time. It is the ability to resist
failure or use failure that often leads to greater success. I've met people who don't
want to try for fear of failing.”
- J.K. Rowling
E-Commerce – M-Commerce Operations
"The only place where success comes before work is in the dictionary."

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SM IN GOVERNMENTE-Commerce – M-Commerce Fundamentals

AND NOT-FOR-PROFIT
ORGANISATIONS
Traditional Commerce E-Commerce E-Business M-Commerce
Traditional commerce E-Commerce means carrying It includes any process that a M-commerce (mobile
includes all those activities out commercial business organization commerce) is the buying and
which encourage transactions or exchange of conducts over a computer- selling of goods and
exchange, in some way or information, electronically mediated network. In e- services through wireless
the other, of goods or on the internet. business IT is used to handheld devices such as
services which are manual enhance one’s business. cellular telephone and
and non-electronic. personal digital assistants
(PDAs).
Steps in E-Commerce
➢ Dispatch and Shipping Process
➢ Customers login ➢ Customer Places Order ➢ Delivery Tracking
➢ Product/Service Selection ➢ Payment Gateway ➢ COD Tracking
Benefits of E-Business
Benefits to Users Benefits to Sellers/Vendors
✓ Convenience The Memory’s Eye ✓ Customer Base
The Memory’s Eye
✓ Reviews ✓ Reduced Cost
CR TO CA CREDIT of Payment
✓ Time Saving ✓ Efficiency
✓ Options to New Market
✓ Dynamic Markets
✓ Coupons and Delas
✓ Instant Transactions
✓ Anytime Access
✓ Less Time Delay
Benefits to Government ✓ Payment Made Easy
✓ Reduction in Corruption ✓ New Market Development and Entry
✓ Green Computing
Disadvantages of E-Commerce
➢ Some Business Processes may not be

➢ Internet Connection The Memory’s Eye
➢ Cultural Issues
part of e-commerce operations.
➢ Legal Issues Some HI
➢ High Start-up cost
➢ Security Concerns CLS Concerns
E-Commerce Business Models

E-marketing Terms Business Models for E-Commerce
✓ Portal (Example: Yahoo Store) ✓ Business-to-Consumer (B2C) – www.amazon.com)
✓ e-Shop (Example: www.wforwomen.com) ✓ Business-to-Business (B2B) – www.indiamart.com)
✓ e-Mall (Example: General stores/malls, ✓ Consumer-to-Consumer (C2C) – www.olx.com)
Specialized stores/malls - www.99acres.com)
✓ Consumer to Business (C2B) – www.paisabazaar.com)
✓ e-auction (Example:
www.salasarauction.com) ✓ Consumer to Government (C2G) –
✓ Buyer Aggregator (Example: www.incometaxindia.gov.in)
www.zomato.com) ✓ Consumer to Government (C2G) –
✓ Virtual Community (Example: www.incometaxindia.gov.in)
www.facebook.com)
✓ Government to Consumer (G2C) – (Example: e-Seva)
✓ e-distribution (Example: www.wipro.com)
✓ Business to Government (B2G) –
✓ e-procurement (Example: www.incometaxindia.gov.in)
www.eprocure.gov.in)
"It's not what you look at that matters, it's what you see."

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The Memory’s Eye

E-Commerce Components
STUPID
Seller Technology Users Payment Gateway Internet Dashboard (WP)
Payment Gateway
✓ Payment gateway is fundamentally a service
used to process credit card transactions
when orders are accepted online from clients.
✓ It is a physical POS (Point-of-sale) terminal,
which is set in every retail outlet these days.
✓ Payment gateways use a special code for
acquiring sensitive information like credit
card numbers, so that information passes
securely.
Technology – 3 Tier Architecture
Single Tier Architecture Two Tier Architecture Three Tier Architecture

A single computer that contains A two-tier system consists of a The third-tier architecture (middle tier server) is
a database and a front end to client and a server. The database is between the user interface (client) and the
access the database. stored on the server, and the data management (server) components.
interface used to access the
database is installed on the client.
Advantages E-Commerce Architecture

✓ Hidden Database Structure E-commerce vide Internet E-commerce vide Mobile App
✓ Scalability Client/Use ✓ User Client/Use ✓ User
✓ Improved Data Integrity Interface ✓ Web-browser Interface ✓ Mobile Web-browser
✓ Management of Change ✓ Internet ✓ Internet
✓ Improved Security
Application ✓ E-merchant Application ✓ E-merchant
✓ Dynamic Load Balancing Layer Reseller
Layer ✓ Reseller ✓
The Memory’s Eye ✓ Logistics Partner ✓ Logistics Partner
✓ Payment Gateway ✓ Payment Gateway
Hidden SIM ID
Database ✓ Database Database ✓ Database
Disadvantages Layer Layer
✓ Inadequate Maintenance
The Memory’s Eye
✓ Complexity
✓ Change Management ICC
"The road to success and the road to failure are almost exactly the same."

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Risks and Controls in E-commerce Environment

Risks Controls Objectives of Control
Goods and Services On Whom to Apply? Prevent from:
✓ Piracy ✓ Users ✓ Cost of Loss of Data
✓ Denial of Services ✓ Seller/Buyer/Merchant ✓ Unauthorized Access
✓ Quality ✓ Technology Service Provider ✓ Loss of IT Tools
✓ Hidden cost ✓ Internet and Network Service
The Memory’s Eye ✓ Incorrect Decision-making
Security Provider
✓ Cost of Computer Errors
✓ Hacker ✓ Payment Gateways
To Ensure:
GST CAP
✓ Anonymity of Users ✓ Logistics Service Provider
✓ Data Integrity
Technology The Memory’s Eye
✓ System Efficiency
✓ Network Failure US Tech. in IPL ✓ System Effectiveness
✓ Payment Gateway
Compliance How to Apply? The Memory’s Eye
✓ Non-recognition of Digital ✓ Educating the Participants Prevent CA from entering
Signatures and E-records ✓ Communication of Policy to LIC to Ensure DSS
✓ Contract Repudiation Customers
Audit Trail ✓ Regulatory Compliances The Memory’s Eye
Privacy and Data Theft ✓ Protection from Intrusions Educating CRP
Digital Payments (DPs)

• A way of payment which is made through digital modes.
• Payer and payee both use digital modes to send and receive money.
Types of DPs Traditional DPs Advantages of DPs Drawbacks of DPs
A. Unified Payment Interface (UPI) 1. E-Wallets 1. Easy and convenient 1. Difficult for a
Apps 2. Credit Cards 2. Pay or send money Non-technical
B. Immediate Payment Service (IMPS) from anywhere person
3. Smart Cards
C. BHIM (Bharat Interface for Money) 3. Discounts from taxes 2. Risk of data theft
4. Electronic
D. Mobile Wallets Purses 4. Written record 3. Overspending
E. Aadhar Enabled Payment Service 5. Less Risk 4. Disputed

(AEPS) Transactions
6. Competitive
F. Unstructured Supplementary Advantages to 5. Increased
Service Data (USSD) Business Business Costs
G. Cryptocurrency 7. Environment 6. Necessity of

Friendly Internet Access
H. e-Rupi
Trends in E-Commerce
Content
Predictive
Biometric
Analysis
The Memory’s Eye
CBS MAP
Artificial Social
Intelligence Commerce
Mobile
Communication
"Success is liking yourself, liking what you do, and liking how you do it."
Chapter 4 Unit 2 Emerging Computing Technologies
Emerging Computing Technologies

Emerging computing technologies are those technical innovations which represent progressive
developments for competitive advantage within a field of business.
Virtualization
✓ Virtualization means to create a virtual version of a
device or resource, such as a server, storage
device, network or even an operating system.
✓ The core concept of Virtualization lies in
Partitioning, which divides a single physical
server into multiple logical servers.
✓ Once the physical server is divided, each logical
server can run an operating system and
applications independently.
Benefits of Virtualization
✓ Less Power Consumption
✓ Cost Effective
✓ Efficiency
✓ Interoperability
✓ Resources Pooling
✓ Resources Balancing
✓ Resources Optimization
✓ Back-up & Recovery
✓ BCP and DRP
✓ Minimized Risk
✓ Maximization of Controls
✓ Better Security
✓ Value Creation
✓ Competitive Advantages
"A real entrepreneur is somebody who has no safety net underneath them."

EIS-SM BOOSTER
SM IN GOVERNMENT ANDVirtualization Types and Applications

NOT-FOR-PROFIT
Hardware Virtualization Network Virtualization Storage Virtualization Applications
ORGANISATIONS
✓ Hardware or Platform Network virtualization is a Storage virtualization is the 1. Portable Application
Virtualization refers to the method of combining the apparent pooling of data 2. Portable Workspace
creation of a virtual available resources in a from multiple storage
machine that acts like a devices, even different 3. Server Consolidation
network by splitting up the
real computer with an available bandwidth into types of storage devices, 4. Testing and Training
operating system. channels, each of which is into what appears to be a 5. Disaster Recovery
✓ Software executed on independent from the others, single device that is
these virtual machines is and each of which can be managed from a central The Memory’s Eye
separated from the assigned to a particular console.
underlying hardware server or device in real time. Portable STD
resources.
CLOUD COMPUTING
➢ Cloud computing refers to the delivery of computing resources
over the Internet.
➢ Cloud services allow individuals and businesses to use software
and hardware that are managed by third parties at remote
locations.
➢ The third party is called CSP-Cloud Services Provider.
Cloud Computing Architecture
"The successful warrior is the average man, with laser-like focus."

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NIST – Nation Institute of Standards and Technologies

Characteristics of Cloud 4 Deployment Models of Cloud
✓ Resource Pooling ✓ Public Cloud
✓ Resiliency ✓ Private Cloud
✓ On Demand Self-service ✓ Community Cloud
✓ Broad Network Service
✓ Hybrid Cloud
✓ Measured Services
3 Services Models of Cloud
✓ Multi Tenancy
✓ SaaS
✓ Elasticity
✓ Network Access Capacities ✓ PaaS
✓ Workload Movement ✓ IaasS
Other Models
The Memory’s Eye
✓ CaaS
ROB ME for Nw
✓ NaaS
Cloud Computing Services Model

Software as a Service Platform as a Infrastructure as a Service Other Cloud Service
(SaaS) Service (PaaS) (IaaS) Models
✓ SaaS includes a ✓ PaaS system goes ✓ Foundation of cloud services. 1. Data as a Service
complete software a level above the ✓ Provides clients with access to (DaaS): Provides data
offering on the cloud. Software as a server hardware, storage, on demand of the
✓ Users can access a Service setup. bandwidth and other users, systems and
software application fundamental computing applications including
hosted by the cloud ✓ A PaaS provider resources. security of data.
vendor on pay per-use gives subscribers ✓ Provides access to shared 2. Security as a Service
basis. access to the resources on need basis, (SECaaS: Security
✓ A SaaS provider gives components that without revealing details like service provided by the
subscribers access to they require to location and hardware to service provider on a
both resources and develop and clients. pay-per-use basis.
applications. operate Instances of IaaS: 3. Identity as a Service
Instances of SaaS: applications over ▪ Database as a Service (DBaaS) (IDaaS): Authentication
▪ Testing as a Service the internet. ▪ Desktop as a Service (DTaaS) services, risk and event
(TaaS) ▪ Network as a Service (NaaS) monitoring, single sign-
▪ Email as a Service ▪ Storage as a Service (STaaS) on services, and
(EaaS) ▪ Backend as a Service (BaaS) identity and profile
▪ API as a Service management.
(APIaaS) The Memory’s Eye The Memory’s Eye
TEA DD Nw’s Storage at Backend
"There is no traffic jam along the extra mile."

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Communication as a Service (CaaS)

➢ CaaS is customized SaaS. CaaS is an outsourced enterprise communication solution that can be leased from a
single vendor.
➢ The CaaS vendor is responsible for all hardware and software management and offers guaranteed Quality of
Service (QoS).
➢ It allows businesses to selectively deploy communication devices and modes on a pay-as-you-go, as needed basis.
Examples: Voice over IP (VoIP), Instant Messaging (IM), Collaboration and Video conferencing application using
fixed and mobile devices.
Characteristics of IaaS
Web access
to resources
Metered Centralized
Services Management
Shared Elasticity and

Infrastructure Dynamic Scaling
Characteristics and Advantages/Disadvantages Of Deployment Models

Characteristics Private Cloud Public Cloud Community Cloud Hybrid Cloud
Cloud Service
Controlled by Organization Community CSP and User, Both
Provider
Scalability As per need High Medium High
Security High Less Partial Partial
Affordability Costly Yes Yes Yes
Availability Medium High Better Medium
SLAs Weak Stringent Moderate Stringent
Cloud Deployments Advantages Limitations

Public Cloud ☺ Affordable ☺ Security
☺ Highly Scalable ☺ Privacy
☺ Strict SLAs ☺ Autonomy of Organizations
☺ Elasticity
Private Cloud ☺ Ample Resources ☺ Budget

☺ Security ☺ Weak SLAs
☺ Well Controlled
Community Cloud ☺ Cost Effective ☺ Security

☺ Collaborative ☺ Complex to Manage
☺ Better Security than Public Cloud
Hybrid Cloud ☺ Highly Scalable ☺ Security

☺ Better Security than Public Cloud ☺ Collaboration Issues
"Don't let the fear of losing be greater than the excitement of winning."

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Advantages/Disadvantages/Pertinent Issues/Problems of Cloud Computing

Advantages of Cloud Disadvantages of Cloud
1. Reduced Spending on IT Infrastructure 1. Technical Issues
The Memory’s Eye
2. Interoperability
2. Accessibility
3. Prone to Attack TIPS
3. Reduced Capital Cost 4. Security in the Cloud
4. Economies of Scale Pertinent Issues Related to Cloud

1. Threshold Policy
5. Flexibility The Memory’s Eye
2. Interoperability
6. Globalize the Workforce 3. Hidden Costs PIHU
4. Unexpected Behaviour
7. Streamline the Workforce
Problem to be solved before obtaining Cloud
8. Training of Workforce less Needed
1. Bugs in large scale distribution system
9. Projects Monitored more Effectively
2. Security Issues
10. Minimized Maintenance 3. Software Development in Cloud
The Memory’s Eye 4. Legal Issues The Memory’s Eye
RARE & Flexible GST by PM Bugs in SSL
Mobile Computing Technologies

Mobile Computing, is the use of portable computing devices (such as laptop and handheld
computers) in conjunction with mobile communications technologies to enable users to
access the Internet and data on their home or work computers from anywhere in the world.
Components of MC Benefits of MC Limitations of MC

Mobile Communication 1. Workforce productivity 1. Health hazards
✓ Include devices such as 2. Improved business processes 2. Transmission Interference
Protocols, Services, Bandwidth 3. Dynamic and efficient 3. Insufficient Bandwidth
and Portals necessary to business offerings 4. Power consumption
facilitate and support the stated 4. Efficient incident management 5. Security Standards
services.
5. Improved customer service 6. Human Interface with Devices
Mobile Hardware 6. Availability of data at multiple
✓ Portable Full-Duplex devices locations The Memory’s Eye
laptops, Smart phones, Tablet
PC’s to PDAs with receptors.
Health TIPS for Human
Mobile Software The Memory’s Eye
✓ Mobile operating systems and
applications. WIDE & Improved Availability of Data
Grid Computing Technologies

✓ Grid computing is a special kind of Parallel Computing
▪ With complete computers (Grid and Donors)
▪ Connected through networks
▪ Many computers create the impact of a Super-Computer
▪ They have access of each other
✓ Grid computing is a special kind of Distributed Computing too.
"You must expect great things of yourself before you can do them."

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Applications of Grid
✓ Civil Engineering Research
✓ Large scale Science and Engineering Researches
✓ Shake-table Experiments
✓ Data mining by Insurance Companies and
Hospitals
✓ To support e-business workloads
Resources of Grid
1. Special Devices, Equipment, Policies
2. Communication
3. Software and Licence
4. Computation The Memory’s Eye
5. Storage Spl. Com. Sw. for CS
Benefits of Grid
1. Parallel Computing
2. Resource Pooling
3. Virtualization
The Memory’s Eye
4. Security of
Parallel Res. VS. Rel.
Data Resources & Mgt. of Addll. Res.
1. Reliability
2. Management
3. Additional Resource Access
4. Resource balancing
Security over Grid ❖ Support for secure group comm. ❖ Data Management
❖ Interoperability with local security solutions ❖ Support for multiple implementations ❖ Standardization
❖ Single Sign-on ❖ Resources Mgt. The Memory’s Eye
❖ Protection of Credentials ❖ Exportability ISP’s Support for REDS
GREEN COMPUTING
✓ Green Computing refers to the study and practice of environmentally sustainable
computing.
✓ The study and practice of designing, manufacturing, using, and disposing of
computers, servers, and associated subsystems—such as monitors, printers,
storage devices, networking and communications systems—efficiently and effectively
with minimal or no impact on the environment.
Advantages Disadvantages
✓ Promote the recyclability or biodegradability. 1. Conserve Energy The Memory’s Eye
✓ Reduce the use of hazardous materials. 2. Reduce Paper Consumption
3. Recycle
CRP
✓ Implement energy-efficient CPU, servers and
peripherals. 4. Develop a Sustainable Green Computing Plan
✓ Maximize energy efficiency. 5. Make Environmentally Purchasing Decisions
BYOD
✓ BOYD is a business policy that allows employees to use their preferred
computing devices, like smart phones and laptops for business purposes.
✓ BYOD policy has rendered the workspaces flexible, empowering employees to
be mobile and giving them the right to work beyond their required hours.
"Motivation is what gets you started. Habit is what keeps you going."

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Advantages of BYOD Disadvantages of BYOD

✓ Lower IT Budgets 1. Device Risk
✓ Increased Employee Efficiency 2. Application Risk
✓ IT reduces Support Requirement 3. Network Risk
✓ Early Adoption of New Technologies 4. Implementation Risk
✓ Happy Employees The Memory’s Eye The Memory’s Eye
BEST and Happy Employee DANI
Web 3.0/4.0
✓ Web 3.0 is an advancement over Web 2.0.
Web 3.0 is an extension of the World Wide
Web.
✓ It can be linked to an artificial intelligence
assistant that understands its user and
personalizes everything.
Components of Web 3.0
1. Semantic Web
2. Web Services
Web 4.0 or “Intelligent Web”
✓ Proposed to be autonomous, proactive, content-
exploring, self-learning, collaborative, and
content-generating agents
✓ Based on fully matured semantic and reasoning technologies as well as Artificial Intelligence. These services will
support adaptive content presentation and use the Web database via an intelligent agent.
Example: Services interacting with sensors and implants, natural-language services or virtual reality services.
Web 5.0 or “The Telepathic Web/The Symbionet Web”

✓ It is set to be highly complex future web generation, to be present after the year 2030 in which some things such as brain
implants are expected to be popular.
✓ Brain implants will give people the ability to communicate with the internet through thought, to think of a question and
open up a web page.
Artificial Intelligence
✓ Artificial intelligence (AI) is a field of science and technology based on disciplines such
as computer science, biology, psychology, linguistics, mathematics, and
engineering.
✓ Artificial Intelligence (AI) The effort to develop computer-based systems that can behave
like humans, with the ability to learn languages, accomplish physical tasks, use a
perceptual apparatus, and emulate human expertise and decision making.
Internet of Things (IOT)

Definition Applications of IOT Risk to Product Risk of these products to
manufacturer the user
IOT is a system of 1. Smart city 1. Manufacturers may 1. Security
interrelated computing 2. Smart Home be out of business 2. Privacy, autonomy and
devices, mechanical and 3. Connected Cars 2. Data storage and control
digital machines, objects, 4. Smart Retail analytics 3. Intentional
animals or people. 5. IOT in agriculture obsolescence of
Provided with unique 6. IOT in Healthcare devices
identifiers and the ability to 7. Home security CCTV 4. Technology Risk
transfer data over a network monitored through hand 5. Environmental Risk
without requiring human-to- held devices. due to Technology
human or human-to- 8. Office machines shall be
computer interaction. connected through net.
"People rarely succeed unless they have fun in what they are doing."

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Machine Learning
Definition Applications Risk
Machine Learning is a 1. Autonomous vehicles (Ex.: drones and 1. AI relies heavily on the data it
type of Artificial self-driving cars). gets. Incorrect data can lead to
Intelligence (AI). Machine 2. Medical diagnosis, in cancer research. incorrect conclusions.
learning focuses on the 3. Predicting the chances of an individual 2. AI (robots) carries a security
development of computer getting ill by a disease. threat.
programs that can change 3. AI, in the long term may kill
4. Playing games (Chess or Go), and
when exposed to new human skills of thinking the
predicting the outcomes.
data. The process of unthinkable.
machine learning is 5. Search engines (Google search).
similar to that of data 6. Online assistants (Siri).
mining.
Blockchain
✓ Blockchain, also referred as Distributed Ledger Technology (DLT) is
✓ a shared,
✓ peer-to-peer, and
✓ decentralized
✓ open ledger of transactions system with no trusted third parties in between.
✓ This ledger database has every entry as permanent as it is an append-only database which cannot be changed.
✓ All transactions are fully irreversible with any change in the transaction being recorded as new transaction.
✓ The decentralised network refers to the network which is not controlled by any bank, corporation, or
government.
✓ A blockchain generally uses a chain of blocks, with each block representing the digital information stored in
public database (“the chain”).
✓ A simple analogy for understanding blockchain technology is a Google Doc.
Applications of Blockchain Risks of Blockchain

❖ Financial Services ❖ Responsible for managing risks is not clear.
❖ Government ❖ Reliability of financial transactions is dependent on the underlying
❖ Travel Industry: technology.
❖ Economic Forecasts ❖ Absence of any central authority to administer.
❖ Healthcare
❖ Risk related to information overload
"Be miserable. Or motivate yourself. Whatever has to be done, it's always your choice."

Chapter 5 CBS - Core Banking Systems
What is Core Banking System (CBS)?

❖ Core Banking System may be defined as the set of basic software components that manage the
services provided by a bank to its customers through its branches.
❖ CBS is networking of branches, which enables customers to operate their accounts, and avail
banking services from any branch of the bank on CBS network, regardless of where he maintains
his account.
Some of the Important Banking Services
Electronic Clearing Services (ECS) Letters of Credit and Guarantees

ECS is used extensively now for clearing of instruments on Letter of Credit (LC):
behalf of the customer. Undertaking by a bank to the payee (the supplier of goods
✓ ECS Credit: Number of beneficiary accounts are and/or services) to pay to him, on behalf of the applicant (the
credited by debiting periodically a single account of buyer).
the bank. Ex.- Dividend distribution, interest, etc. Guarantee:
✓ ECS Debit: Large number of accounts with the bank Required by the customers of banks for submission to the
are debited for credit to a single account. Ex.- Tax buyers of their goods or services to guarantee the
collections, loan installment repayment, investments in performance of contractual obligations.
mutual funds etc.
Characteristics of CBS
➢ Common database in a central server located at a Data Centre
➢ Branches function as delivery channels
➢ CBS is centralized Banking Application software
➢ Supported by advanced technology infrastructure
➢ Customer is a customer of the bank and not only of the branch
➢ CBS software also enables integration of all third-party applications
"To accomplish great things, we must not only act, but also dream, not only plan, but also believe."

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Component and Architecture of CBS

CBS Software Key aspects into CBS Key Modules of CBS
✓ Finacle ✓ Information Flow
✓ FinnOne ✓ Customer centric
✓ Flexcube ✓ Regulatory
compliance
✓ BaNCS
✓ Resource
✓ BankMate optimization
Applications Functioning
Back Office Include settlements, clearances, record maintenance, regulatory compliance, accounting, and IT
services.
Data Warehouse Used to simplify and standardize the way they gather data - and finally get to one clear version of the
truth.
Credit-Card Provides credit card management, account management, customer information management and general
system ledger functions, online transaction authorization and service of the bank card.
ATM Allows customers to complete basic transactions without the aid of a branch representative or teller.
Central Server CORE banking applications supports customers operations by creating a Centralized Online Real-time
Exchange (or Environment) (CORE).
Internet Banking Conduct a range of financial transactions through the financial institution’s website.
Mobile and Phone It uses an app, provided by the financial institution for the purpose of Mobile banking on a 24*7 basis.
Banking
Branch Banking
Creating manual documents capturing data required for input into software; Internal authorization; Beginning-Of-Day (BOD)
operations; End-Of-Day (EOD) operations; and Reviewing reports for control and error correction.
Functional Architecture of Banks and CBS Technological Architecture of CBS
"It is better to fail in originality than to succeed in imitation."

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CBS IT Environment
Servers
✓ Server is a system (software and/or hardware) that responds to requests across a computer network to provide, or
help to provide, a network service.
✓ Servers can be run on a dedicated computer, which is also often referred to as “the server”.
✓ From a hardware perspective, a server is a computer (Hardware) or device on a network dedicated to run one or
more services (as a host), to serve the needs of the users of other computers on a network.
Application Server Web Server

▪ Hosts the core banking application ▪ Runs software that enables the computer to host an
▪ A robust system for CBS operations. Internet website.
▪ Receives data from all the client machines installed at ▪ A web host attached to the web server has an OS and
the branches. runs the services from the web server.
▪ It performs necessary operations and updates the ▪ It accepts web page requests from the customers and
central database. processes the same.
Internet Banking Application Server (IBAS) Internet Banking Channel Server (IBCS)
▪ The Internet Banking Software which is stored in the ▪ Stores the user name and password of all the internet
IBAS authenticates the customer with the login details banking customers.
stored in the IBCS. ▪ It also contains the home branch details of each
▪ Authentication process is the method by which the internet banking customer.
details provided by the customer are compared with ▪ IBCS software stores the name and password of the
the data already stored in the data server to make sure entire internet banking customers.
that the customer is genuine and has been provided ▪ It also contains the details about the branch to which
with internet banking facilities. the customer belongs.
Automated Teller Machine (ATM) Server Database Server
▪ Contains the details of all ATM account holders and ▪ Contains the entire data of the bank.
temporarily holds data that is converted by the
▪ Accessed by the application server for processing.
middleware as requested by title ATM switch.
▪ ATM server and IBAS access the DB Server through
▪ When the Central Database is busy with central end-of-
their own channel of middleware and firewall.
day (EOD) activities, the file containing the account
balance of the customer is sent to the ATM switch. ▪ All customer transactions performed from branches or
internet or ATM are updated at this central database.
▪ Such a file is called Positive Balance File (PBF).
Antivirus Server Proxy Server
✓ It facilitates better ✓ Acts in conjunction with
administration as the the firewall and
antivirus software is provides network
updated in the central security by filtering
location and becomes malicious data from
available to all the entering the network.
systems in the Bank’s ✓ Secures IP addresses of
network unlike in the the Bank’s servers by
previous setup. performing a Network
Address Translation
(NAT).
"Failure is the condiment that gives success its flavor."

EIS-SM BOOSTER
Key Technology Components of CBS CBS Stages

The Memory’s Eye ✓ Planning
✓ Database Environment ✓ Approval
✓ Application Environment MY DAD is a CEO ✓ Selection
✓ Data Centre and Disaster Recovery Centre ✓ Design and develop or procured
✓ Testing
✓ Connectivity to the Corporate Network and the Internet
✓ Implementation
✓ Enterprise Security Architecture and Solution ✓ Maintenance
✓ Online Transaction monitoring for fraud risk management ✓ Support
✓ Updation
✓ Audit
Risks associated with CBS Risks associated with CBS

Credit Risk
The Memory’s Eye
When an asset or a loan becomes irrecoverable in the
case of outright default or the risk of an unexpected delay COSMIC
in the servicing of a loan.
Operational Risk IT Risk Related to CBS
➢ Transaction Processing Risk Once the complete business is captured by technology
➢ Information Security Risk and processes are automated in CBS; the Data Centre
(DC) of the bank, customers, management and staff are
➢ Legal Risk
completely dependent on the DC.
➢ Compliance Risk
▪ Identity Management of Users
➢ People Related Risk
▪ Change Management
Strategic Risk
Earnings decline due to a changing business ▪ Access Control
environment.
▪ Incident Handling Procedure
Market Risk
The risk of losses in the bank’s trading book due to ▪ Authorization and Authentication Process
changes in equity prices, interest rates, credit spreads,
▪ Response Time Maintenance
foreign-exchange rates, commodity prices, and other
indicators whose values are set in a public market. ▪ Ownership of Data
IT Risk ▪ Interfaces of Software Across Network
Refer to Next Chart for Details on IT Risk
Compliance Risk The Memory’s Eye

Exposure to legal penalties, financial penalty and ICAI Authorized ROI
material loss.
Core Business Processes Flow and Relevant Risks and Controls

Golden Rule for Risks and Controls in CBS
Authorized CREDIT LINE (CL) being Approved by Authorized Person as per SOD and
Bank’s Policy has been recorded Accurately in Correct Master of CBS.
❖ Credit Line Set-up ❖ Interest Calculation

❖ Authorization ❖ Approval of CASA by Authorised Personnel
❖ As per Bank’s Policy ❖ SOD
❖ Customer Master ❖ Accurate Accounting
"Don't let what you cannot do interfere with what you can do."

EIS-SM BOOSTER
Risks and Controls in CASA Risks and Controls in Credit Cards
Points of Risks and Controls around CASA Points of Risks and Controls around Credit Cards
❖ Credit Line Set-up ❖ Interest Calculation ❖ Credit Line Set-up ❖ Interest Calculation
❖ Authorization ❖ Approval of CASA by ❖ Authorization ❖ Disbursement
Authorised Personnel Certificate
❖ As per Bank’s Policy ❖ SOD ❖ As per Bank’s Policy ❖ Accurate Accounting
❖ Customer Master ❖ Accurate Accounting ❖ Customer Master ❖ Balance Reconciliation
Risks and Controls in Mortgages

= Home Loan
= Top-up Loan
= Loan for Under-construction
Property
Points of Risks and Controls

around Mortgages
❖ Customer ❖ Interest
Identification Calculation
❖ KYC ❖ Disbursement
of Amount
❖ As per Bank’s ❖ Accurate
Policy Accounting
❖ Loan Master ❖ Authorization
to change Loan
Master
"You may have to fight a

battle more than once to
win it."

EIS-SM BOOSTER
Points of Risks and Controls around Treasury Process
Risks Controls
✓ Unauthorized securities setup in systems such as ✓ Appropriate Segregation of duties and review
Front office/ Back office. controls around securities master setup/amendments.
✓ Inaccurate trade is processed. ✓ Appropriate SOD and review controls to ensure the
accuracy and authorization of trades.
✓ Unauthorized confirmations are processed. ✓ Complete and accurate confirmations to be obtained
from counter-party.
✓ Insufficient Securities available for Settlement ✓ Effective controls on securities and margins.
✓ Incomplete and inaccurate data flow between ✓ Inter-system reconciliations, Interfaces and batch
systems. processing controls.
✓ IInsufficient funds are available for settlements. ✓ Controls at CCIL/NEFT/RTGS settlements to ensure
the margin funds availability and the timely funds
settlements.
✓ Incorrect Nostro payments processed. ✓ Controls at Nostro reconciliation and payments.
Points of Risks and Controls around Loans and Advances Process

Fund Based Loans Non-Fund Based Loans
Points of Risks and Controls around Credit Cards

❖ Credit Line Set-up ❖ Interest Calculation
❖ Authorization ❖ Disbursement Certificate
❖ As per Bank’s Policy ❖ Accurate Accounting
❖ Customer Master ❖ Balance Reconciliation
"Little minds are tamed and subdued by misfortune; but great minds rise above it."

x SM Hotness Grid
SM Hotne s s G ri d
SM Hotness Grid
(Based on Examination Papers Trend Analysis)
12
10 10
10
8 8 8
8
6
6 5 5
0
Chapter 1
Chapter 2
Chapter 3
Chapter 4
Chapter 5
Chapter 6
Chapter 7
Chapter 8
8 12
10
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8
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Chapter 1: Introduction to Strategic Management Chapter 2: Dynamics of Competitive Strategy

SM Hotness Grid xi
SM Hotne s s G ri d
6 12
5 10
4 8
3 6
2 4
1 2
0 0
Nov-18
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Chapter 3: Strategic Management Process Chapter 4: Corporate Level Strategies
12 20
10
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6 10
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0 0
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Chapter 5: Business Level Strategies Chapter 6: Functional Level Strategies
8 12
10
6
8
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0 0
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Chapter 7: Organisation and Strategic Leadership Chapter 8: Strategic Implementation and Control

Chapter 1 Introduction to Strategic Management
Introduction to Strategic Management
Concept of Concept of Limitations of Strategic

Business Strategic Strategic Management in
Policy Management Management NPOs and Govt.
Concept of Importance of Strategic

Strategy and Strategic Levels in
Management Management Organizations
Business Policy (Christensen) The Memory’s Eye

➢ Study of the functions and responsibilities of the top SFM-2
management.
➢ Determines the Future course of action.
➢ Moulding the character and identity of an organization.
➢ Helps in Mobilization of resources to achieve goals.
Strategy Hyundai Motor Unveils 'Strategy 2025’
➢ The concept of strategy has been borrowed from
the military and adapted for use in business.
➢ Hyundai announces a set of strategies to
achieve steady growth:
✓ Boost profitability
✓ Enhanced customer value and cost structure
➢ Originated from the word “Strategos”.
✓ Sell 670,000 EVs annually
Definition 1 ✓ Become top three EV manufacturer by 2025
➢ Strategy refers to the ✓ Offer most new models with EV drivetrain by 2030
✓ ideas, in major markets, 2035 in emerging markets
✓ plans, ✓ Invest KRW 61.1 trillion into R&D and future
✓ action and technologies through 2025
✓ support ✓ Target operating margin of 8% in automotive
➢ that firms employ to compete successfully against business
their rivals. ✓ 5% market share by 2025
➢ It helps firms achieve competitive advantage.
Competitive Advantage
Definition 2
• It allows a firm to gain an edge over rivals
➢ A long range blueprint of an organization’s
when competing.
desired:
• The set of unique features of a company
✓ Image: What it wants to be?
and its products that are perceived by the
✓ Direction: What it wants to do? target market as significant and superior to
✓ Destination: Where it wants to go? the competition.
Value Creation
Providing products and services to the customers
with more worth (Value).
- Feature - Technology - After-sales Services

- Quality - Availability - Marketing
- Durability - Services - Adv. & Branding
“Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.”
EIS-SM BOOSTER
Value Created= Rs. 17,000
CM= Rs. 1,500
Profitability Band
Price Offered = Rs. 15,500
FM= Rs. 5,000
✓ 2021 Model
Cost (Ind. Avg.)= Rs. 10,000
✓ 10 Features
✓ 10 Hr. Playtime
✓ No Waterproof
✓ 1 Year Warranty
Value Created= Rs. 18,000
CM= Rs. 3,000

Profitability Band
Price Offered = Rs. 15,000
FM= Rs. 7,000
✓ 2022 Model Cost (Ind. Avg.)= Rs. 8,000

✓ 12 Features
✓ 12 Hr. Playtime
✓ IPX7 Waterproof
✓ 2 Year Warranty
Slowly is the fastest way to get to where you want to be.

EIS-SM BOOSTER

There are two things that exist in business:
✓ Strategy and
✓ Innovation, Rest are Cost and Details…………
Walmart Inc. CAon

Om Trivedi in 2008’s Recession
Business McDonald’s CA in 2008’s Recession
➢ Self-service Super Market ➢ In 120 countries, 37,000+ outlets.
➢ In 1962 by Sam Walton
➢ 2/3rd revenue comes from out of US.
➢ Feeds 69 million customers everyday.
➢ Sales- 374 Billion Dollars.
➢ Over 1.9 million employees.
➢ 11000+ stores in 15 countries in 2018 ➢ Revenue: 22.7 Billion in 2007 to 23.5 in 2008.
➢ Over 2 million employees ➢ Income: 2.4 Billion in 2007 to 4.3 Billion in 2008.
➢ ROIC: 14.5% ($13.5 Billion) ➢ 60 Million new customers, 650 new outlets.
➢ Competitors: Costco (11.7%) & Target (9.5%) ➢ Competitors: Burger King, KFC, Subway, etc.
Om Trivedi on BusinessStarlink’s Strategy 2021

➢ Super-fast internet around the world, which beams down from satellites.
➢ SpaceX is building an expansive satellite internet network in space called Starlink.
➢ Launched its first batch of Starlink satellites into orbit in May 2019.
➢ At present: 1,200 working satellites on service.
➢ Goal: 42,000 satellites in orbit by mid-2027.
➢ To provide internet to people especially in rural areas without connection.
➢ Internet access with speeds up to 300 Mbps and 1Gbps plans with unlimited data
for around Rs 3,999 plus taxes per month.
➢ Installation Charges: ₹7,100/- (One Time)
Strategy 1 Intended or Planned Strategy

✓ Plan at the beginning. The strategy that an organization hopes to execute.
Strategy 2 Emergent Strategy
✓ Plan that develops over time. An unplanned strategy that arises in response to unexpected environmental changes.
Strategy 3 Realized Strategy
✓ How the plan worked at the end. The strategy that is in fact followed by an organization.
Honda’s Strategy
❖ Business Plan of Honda Automobiles for Indian market to increase its market share through direct
marketing, advertising, sales promotions etc. with the help of dealers and showrooms.
❖ Further, Honda Automobiles started the use of digital marketing and emergence of social media,
dashboards and social websites to enhance a marketing plan.

✓ The key to understand the whole SM syllabus lies in the concept of Competitive Advantage and Value creation and
the derivation, “the more value a firm creates the more competitive advantages it gains.”
✓ The above Numeric Example of Portronics and JBL Ltd. with McD and Walmart establishes the philosophy of strategy,
strategic management and the application of value creation and Competitive Advantages.
✓ The above examples will help you understand this subject in totality.
✓ Further, it will definitely help you write and present answers according to the expectations of ICAI, Study Module
and the Examiners.
An investment in knowledge pays the best interest.

EIS-SM BOOSTER
Facebook’s Strategy for U

In 2003, Mark Zuckerberg after being dumped by his girlfriend, created a website
called “FaceMash” where the attractiveness of young women could be voted on.
This evolved first into an online social network called ‘Thefacebook’ that was for
Harvard students only. When the network became extremely popular, it then
morphed into Facebook, a website open to everyone. Facebook is so pervasive today
that it has changed the way we speak, such as the word friend being used as a
verb. Ironically, Facebook’s emphasis on connecting with existing and new
friends is about as different as it could be from Mark Zuckerberg’s original
concept. In fact, Mark Zuckerberg’s emergent and realized strategies turned out
to be far nobler than the intended strategy.
Strategy is partly proactive and partly reactive
Components of an Effective Strategy
Proactive Reactive Abandoned Current Actual

Strategy Strategy Strategy Strategy Strategy
Strategic Management
Definition 1 Definition 2
Strategic management is an ongoing process that: Strategic management is a process to determine
❖ Evaluates and controls the business and the industries mission, vision, values, goals, objectives, roles and
❖ Assesses its competitors and sets goals and responsibilities, timelines, etc.
strategies to meet all existing and potential
competitors; and
❖ Reassesses each strategy to determine how it has
been implemented.
The roots of education are bitter, but the fruit is sweet.

Objectives of SM Benefits of SM
❖ To create competitive advantage. a. Proactive: Helps to become more proactive.
b. Decision-making: Provides decision-making framework.
❖ To guide the company successfully through all
c. Direction-setting for the company.
changes in the environment. d. Avoid costly mistakes.
Limitations of SM e. Competitive Advantages and Core competencies
f. Threat Identification:
i. Complex and turbulent environment. g. Reputation: Building of the organizations.
ii. Costly process. h. Longivity: Helps to enhance the longevity of the
iii. Time-consuming process. business.
iv. Competition analysis is a challenging task. i. Future Oriented: Prepare the corporation to face the
future.
Complex CTC Analysis PD-2 Avoid and CTRL. Future
Reliance
Industries -
Future Group
deal
Strategic Levels in Organizations
Corporate’s Business Business’s Product

Basket Basket
Corporate Strategy Business Strategy

Corporate strategy is the growth design of the firm as it i. Plans and actions that firms
spells out the growth objective the direction, extent, pace devise to compete in a
and timing of the firm’s growth. given product/market scope
Corporate level strategy is concerned with: or setting.
i. Competitive Contact ii. Addresses the question-
“How do we compete within
ii. Reach
an industry?”
iii. Managing Activities and Business Interrelationships
iii. Strategic Business Unit
iv. Management Practices (SBU) (A profit centre)
The Memory’s Eye

CRN-2
“Live as if you were to die tomorrow. Learn as if you were to live forever.”
EIS-SM BOOSTER
Functional Strategy
❖ Strategy related to a single functional operation. Example: Human resources, purchasing, product
development, customer service, finance, R&D, etc.
❖ Strategy at this level is Tactical in Nature.
SM IN GOVERNMENT AND NOT-FOR-PROFIT ORGANISATIONS
Educational Institutions Medical Organizations Governmental Agencies
✓ EIs are adopting different ✓ Mis strategy for the future will ✓ Central, state, municipal
strategies for attracting best require renewed and agencies, Public Sector Units,
students. deepened collaboration with departments are responsible
physicians, who are central for formulating, implementing,
✓ EIs have also joined hands
to hospitals’ well-being and and evaluating strategies that
with industries in order to
a reallocation of resources use taxpayers’ money in the
deliver education to make
from acute to chronic care most cost-effective way to
graduates more employable.
in home and community provide services and
✓ The educational delivery programs.
settings.
system has also undergone
✓ Backward integration ✓ Government agencies and
considerable changes with
strategies that some Mis are departments and their
the introduction of computers
pursuing include acquiring employees participate in the
and internet technologies.
ambulance services, waste SM process and thereby have
✓ Online college degrees are an effect on the
disposal services, and
becoming common and organization’s mission,
diagnostic services.
represent a threat to objectives, strategies, and
traditional Colleges and ✓ Millions of persons research
policies.
universities. medical ailments online,
which is causing a dramatic ✓ Government agencies are
shift in the balance of using a SM approach to
power between doctor, develop and substantiate
patient, and hospitals. formal requests for additional
funding.

✓ In depth understanding of the concepts of SM, their benefits and limitations with corporate
examples is compulsory, as the question setter has all the liberty to ask practical and scenario based
questions in this area.
✓ The above 2 topics, Levels of Strategy and SM in NPOs is very popular among the question setters
and the ICAI in both the categories – descriptive/practical questions and MCQs.
✓ It has been observed in previous attempts that the ICAI asks either of these topics in alternative
attempts.
✓ You must read and practice all the study-material and “Bhishma Pratigya Question Bank”
questions to cover all the aspects of such questions and their answers’ presentation.
Education is not preparation for life; education is life itself.

Chapter 2 Dynamics of Competitive Strategy
Dynamics of Competitive Strategy
Competitive Industry and

Portfolio Globalization
Landscape Competition
Analysis
Analysis
Strategic Core SWOT

Analysis Competence Vs.
and VCA TOWS
Competition How to Deal with Competition?

➢ Competition is a contest between Organisms, Animals, ➢ Who are the competitors?
Individuals, Groups, etc. ➢ What are their product and services?
➢ What kind of Value do they create?
Competitors ➢ What are their market shares and position?
➢ A company in the same industry or a similar industry ➢ What gives them cost and price advantage?
which offers a similar product or service. ➢ What gives them competitive advantage?
Example: ➢ What are their Resources, capabilities and Core
Competencies?
➢ Coca-Cola and Pepsi
➢ What are their Futuristic Strategies?
➢ Wal-Mart and Target ➢ How strong is their distribution network?
➢ McDonald’s and Burger King ➢ What are their financial positions?
➢ A competitor can be direct or indirect. ➢ What are their manpower strengths?
Competitive Landscape
➢ Competitive landscape is a business analysis which identifies competitors, either direct or indirect.
➢ It’s about identifying and understanding the competitors
➢ It permits the comprehension of their vision, mission, core values, niche market, strengths and weaknesses.
➢ Understanding of competitive landscape requires an application of “competitive intelligence”.
Example: Hyundai is a competitive company inside the Automobiles (car) market because they have achieved constant
success every year. This company is based on the development of new strategies that helps Hyundai to differentiate from
the competitors like Honda, Toyota, Suzuki, Ford, GM, etc.
What is Competitive Strategy?

➢ Competitive strategy is designed to help firms
1. Identify the achieve Competitive Advantage.
competition ➢ A competitive strategy consists of moves to:
i. Attract customers
ii. Face Competition
iii. Beat Competition
5. Put all the Things 2. Understand the iv. Strengthen an organization’s market position
Together Competition
Steps to
Understand
Competitive Landscape
4. Determine the 3. Determine the

Weaknesses of the Strengths of the
Competition Competition
A person who won’t read has no advantage over one who can’t read.
EIS-SM BOOSTER

✓ CL and CS is considered as VVH topic among question setters.
✓ You must read and practice all the study-material and “Bhishma Pratigya Question Bank”.
Role of Resources, Capabilities in Achieving Competitive Advantages

Tangible Resources
➢ Assets that can be seen and quantified.
Intangible Resources
➢ Assets that typically are rooted deeply in the firm’s
history and have accumulated over time.
Intangible Resources
➢ Capabilities exist when resources have been
purposely integrated to achieve a specific task or
set of tasks.
Characteristics of Resources that Provide Sustainable Competitive Advantages
Imitability Durability Transferability Appropriability
The Memory’s Eye
IDT App.
What is Core Competencies?

❖ Core Competencies are created by superior integration of
technological, physical and human resources.
❖ They represent distinctive skills as well as intangible,
invisible, intellectual assets and cultural capabilities.
❖ It also refers to the strengths of an organization that provide
competitive advantage and value to it.
CK Prahlad Gary Hamel
The Memory’s Eye
Three competencies that can be termed CCs
CV Application
Competency 1 Competitor differentiation or CA
✓It allows the company to provide better products or services to market with out the fear that of copy.
✓The company has to keep on improving these skills in order to sustain its competitive position.
Competency 2 Customer value or Value creation

✓The service product has to have real impact on the customer as the reason to choose to purchase them.
✓If customer has chosen the company without this impact, then competence is not a core competence and it
will not affect the company’s market position.
Competency 3 Application of competencies

✓Core competence must be applicable to the whole organization; it cannot be only one particular skill or
specified area of expertise.
✓It is a unique set of skills and expertise, which will be used throughout the organisation to open up
potential markets to be exploited.

EIS-SM BOOSTER
Tools to identify and build CC

Four Criteria of Sustainable CA Value Chain Analysis
❖ Valuable
❖ Non-substitutable
❖ Costly to Imitate
❖ Rare
The Memory’s Eye

Valuable NCR
Value Chain Analysis
Managing Linkages in Value Chain

Internal Linkages External Linkages
i. Between Primary Activities Vertical Linkages
▪ Involving suppliers while finalizing specifications for raw-
ii. Primary and Support Activities material.
▪ Involving distributors at the design stage of a product.
iii. Between Support Activities Horizontal Linkages
Strategic Analysis
✓ Strategic analysis seeks to determine alternative course of
action that could best enable the firm - to achieve its mission
and objectives.
✓ Strategic analysis tries to find out:
✓ How effective has the present strategy been?
✓ How effective will that strategy be in the future?
✓ How effective will the selected alternative strategy be in the
future?

✓ Core Competence, VCA and CA is very conceptual as well as integrated with each other.
✓ Therefore, it can be asked it in different forms, i.e. MCQs, practical and descriptive questions.
“Educating the mind without educating the heart is no education at all.”

EIS-SM BOOSTER
Issues to be Considered for Strategic Analysis

Time Balance Risk
Strategy evolves over a period of (Balance between the internal Strategic Risk (Analyzing risk
time (Result of a series of small and external factors) involved and consequences
Decisions) Balance Between thereon)
✓ Strategy is the result of a series Resources, Capabilities, ✓ Competitive markets,

of small decisions taken over an Competencies, Strengths and liberalization, globalization,
extended period of time. Weaknesses. booms, recessions,
technological advancements,
And
inter-country relationships, etc.
Events, Trends, Influences, affect businesses and pose risk
Constraints and Opportunities. at varying degrees.
✓ An important aspect of strategic

analysis is to identify potential
imbalances or risks and assess
their consequences.
Certainty Risk Uncertainty
Strategic Analysis Framework Situation Analysis
A systematic approach for

identifying and analyzing macro-
environmental factors external to
the organization and matching them
with the firm’s capabilities.
Important Factors Considered

while doing a Situation Analysis
- Product Situation
- Market Situation
- Competitive Situation
- Distribution Situation
- Environmental Factors
- Opportunity and Threat analysis
Learning is not compulsory. Neither is survival.

EIS-SM BOOSTER
The Methods of Industry and Competitive Analysis

Why Industry and Competitive Analysis? Dominant Economic Features of Industry
Industries differ widely in their: ➢ Market size
▪ Economic characteristics, ➢ Competitors and competition
➢ Industry Size and Growth
▪ Technological situation, ➢ Capital Requirement
▪ Competitive situations, and ➢ Rate of Return
▪ Future profit prospects. ➢ Customer Segments
➢ Pace of Technological Change
➢ Distribution Channels
➢ EOS, LC and EC
➢ Entry and Exit Barriers
➢ Product Differentiation
➢ Vertical Integrations
Industry and Competitive Analysis Methods
Drivers or Triggers of Change
i. Dominant Economic Features of Industry
✓ Decreasing cost or price
ii. Intensity of Competition
✓ Globalization
iii. Drivers of Change ✓ Number of players
iv. Identifying Companies in Strongest and ✓ Innovations
Weakest Position ✓ Entry of firms
v. Strategic or Competitive Moves of Rivals ✓ Exit of firms
✓ Availability of funds
vi. Examine Key Factors for Competitive
✓ Internet and E-commerce
Success
vii. Evaluate Financial Attractiveness of Industry Strategic Groups
The Memory’s Eye The companies pose competition to each other on
many variables like:
DID I SEE • Price/Quality Range
• Product Line Breadth
• Services Offered
Competitive Moves of Rivals
• Technological Usage
✓ Knowing rivals’ competitive intelligence helps • Distribution Channel
company to determine whether it needs to • Geographical Coverage
defend against specific moves of rivals. • Vertical Integration
There can be many strategic groups in the
industry.
Key Success Factors (KSFs) Strategic Group Mapping
✓ The Key Success Factors (KSFs) are the One technique, which can be used to analyze the
elements that affect the ability of a firm to competition position of rivals is- “Strategic Group
prosper in the market or industry space. Mapping”
Steps in Strategic Group Mapping Process:
✓ KSFs are rules, which when followed, then
1. Identify the different variables
provide success to firm.
2. Plot the firm on multivariable map
✓ Every industry has its own KSFs. 3. Assign the firm fall in same strategy space
4. Draw circle around each strategic group
Answers to 3 questions help identify an industry’s KSFs

❖ On what basis do customers choose between the competing brands of sellers?
❖ What product attributes are crucial to sales?
❖ What resources and competitive capabilities does a seller need to have to be competitively successful,
better human capital, quality of product or quantity of product, cost of service, etc.?
❖ What does it take for sellers to achieve a sustainable competitive advantage, something that can be
sustained for long term?
Learning starts with failure; the first failure is the beginning of education.
EIS-SM BOOSTER
Factors Justifying the Financial Attractiveness of Industry

❖ The industry’s growth potential, is it futuristically viable?
❖ Whether competition currently permits adequate profitability
❖ Whether competitive forces will become stronger or weaker?
❖ Whether industry profitability will be favourably or unfavourably affected by the prevailing driving forces?
❖ The competitive position of an organisation in the industry and whether itis likely to grow stronger or weaker.
❖ The potential to capitalize on the vulnerabilities of weaker rivals.
❖ Whether the company is able to defend against or counteract the factors that make the industry unattractive?
❖ The degrees of risk and uncertainty in the industry’s future.
❖ The severity of problems confronting the industry as a whole.
❖ Whether continued participation in this industry adds importantly to the firm’s ability to be successful in other
industries in which it may have business interests?
Portfolio Analysis
Business Portfolio Portfolio Analysis Advantages of PA

A business portfolio is a collection A set of techniques that help i. Helps to evaluate each of the
of businesses and products that strategists in taking strategic businesses.
make up the company. decisions with regard to individual ii. Helps to set objectives and
http://www.ril.com/ products or businesses in a firm’s allocate resources.
portfolio. iii. Data for intuitive judgment.
https://www.itcportal.com/ iv. Cash flow projections.
Experience Curve
Economies of Scale (EOS) Learning Curve (LC) Experience Curve (EC)

✓ Adam Smith - 1776 ✓ Hermann Ebbinghaus - 1885 ✓ Experience curve shows the
✓ Theory of Mass Production ✓ German Psychologist relationship between production
cost and cumulative production
The more times a task has been
quantity.
performed, the less time is
required on each subsequent ✓ Unit costs decline as a firm
iteration. accumulates experience in
terms of a cumulative volume of
production.
✓ BCG – 25% Reduction
✓ Concorde – Upto 40% Reduction
Implications of Experience Curve

❖ Significant cost advantage.
❖ Business with the highest market share likely to have the best
experience.
❖ Experience is a key barrier to entry.
❖ External growth might be the best way to do this if a business can acquire
firms with strong experience.
"Stop chasing the money and start chasing the passion."

EIS-SM BOOSTER
PLC – Product Life Cycle BCG-Boston Consulting Group Matrix

Sales and Profits
Losses and Investments
Four strategies Based on BCG Matrix
Build Hold Harvest Divest
GE Matrix (Stop Light Model)
Market Attractiveness Competitive Strength BCG Vs. GE Matrix

✓ Market Size ✓ Strength of competencies ✓ Market attractiveness
✓ Market growth ✓ Relative brand strength replaces market growth as the
dimension of industry
✓ Market profitability ✓ Market share
attractiveness, and includes a
✓ Pricing trends ✓ Customer loyalty broader range of factors other
✓ Competitive intensity ✓ Relative cost position than just the market growth
✓ Overall risk-return situation ✓ Distribution strength rate.
✓ Opportunity to differentiate ✓ Record of technological or ✓ Competitive strength replaces
other innovation market share.
✓ Segmentation
✓ Access to financial and other ✓ This works in 3*3 Grid while
✓ Distribution structure BCG matrix works in 2*2 Grid.
investment resources
"Success is walking from failure to failure with no loss of enthusiasm."

EIS-SM BOOSTER
Ansoff’s Product Market Growth Matrix

Market Penetration Product Development Market Development Differentiation
✓ Enter markets with their ✓ New products into ✓ Existing products into ✓ New products into new
existing products. Existing markets. new markets. markets.
✓ Take partly or all of a ✓ Even if the new products ✓ Current product can be ✓ Starting up or acquiring
competitor’s market need not be new to the changed, improved and businesses outside the
share. market, they remain new marketed to Target company’s current
✓ Find new customers. to the business. another segment. products and markets.
✓ Get current customers to ✓ Risk: Moderate ✓ New geographical ✓ Risk: High

use more of your markets, new product
products. dimensions or packaging,
new distribution channels
✓ Risk: Low or different pricing
policies.
✓ Risk: Moderate

✓ In the above topic, Intensity of Competition
will be the same as discussed in Porter’s 5
Forces Model (chapter 5).
✓ The above concept is very popular among the
question setters and the ICAI in both the
categories – descriptive/practical questions
and MCQs.
✓ At least 1 question is expected from the above
in this attempt.
✓ You must read and practice all the study-
material and “Bhishma Pratigya Question
Bank” questions to cover each and every
aspect of such questions and their answers’
presentation.
ADL- Arthur D Little Matrix

✓ The ADL Matrix is a two dimensional 4*5 matrix
✓ Based on the Product Life Cycle (PLC) and Competitive positioning.
Dominant Tenable
✓ A rare position and in many cases ✓ Although the firms within this
is attributable either to a category are able to perform
monopoly or a strong and satisfactorily and can justify
protected technological staying in the industry, they are
leadership. generally vulnerable in the face of
Strong increased competition
✓ The firm has a considerable Tenable

degree of freedom over its
choice of strategies. ✓ The performance of firms in this
category is generally
Favourable unsatisfactory although the
✓ The industry is fragmented and opportunities for improvement do
no one competitor stands out exist.
clearly.

EIS-SM BOOSTER
SWOT Vs. TOWS Matrix
SWOT Matrix TOWS Matrix
i. Provides a Logical Framework i. SO - Aggressive strategy

ii. WO - Competitive strategy
ii. Presents a Comparative Analysis
iii. ST - Conservative strategy
iii. Guides strategist in Strategy Identification iv. WT - Defensive strategy
Globalization
Global Environment Factors Reasons why Companies go Global

i. Positive and negative impact of significant i. Domestic markets are no longer enough to
international events absorb whatever is produced
ii. Emerging global markets ii. Foreign markets have grown enough to
justify foreign investment
iii. Changing global markets
iii. Availability of cheaper and reliable resources
iv. Cultural attributes of individual global in other countries
markets.
iv. Reduction in transportation cost for export to
v. Institutional attributes of individual global remote countries
markets.
v. Rapid shrinking of time and distance across
the globe
Characteristics of a Global Company Types of Global Companies
i. Common ownership i. MNC – Multi-national Company
ii. Common pool of resources ii. TNC – Trans-national Company
iii. Common strategy iii. MNC – Super-national Company
"The successful warrior is the average man, with laser-like focus."

Chapter 3 Strategic Management Process
Strategic Management Process
Strategic
Strategic Strategic
Management Mission
Decision Making Uncertainty
Model
Strategic Goals and

Planning Vision
Objectives
The Memory’s Eye

UPSC
Strategic Planning Why Strategic Planning?
➢ Strategic planning is a disciplined process of ➢ Understand the current situation.
making key decisions and agreeing on actions ➢ Plan for the future.
that will shape and guide what an organization is, ➢ Simulate the future to prepare the organization
what it does, and why it does it. for future
Strategic Planning Key Concerns ➢ Concern for changes and it’s impact on growth
➢ Why do we exist? of the organization.
➢ What are we doing? Approaches for Strategic Planning
➢ What are the major goals and objectives of the
organization?
➢ For whom do we do it?
➢ How to improve and excel?
➢ What resources do we need for a successful future?
➢ Who will be our customers?
Operational Planning
➢ Deals with current deployment of resources. ➢ Makes modifications to the business
➢ Develops tactics rather than strategy. ➢ functions but not fundamental changes.
➢ Projects current operations into the future. ➢ Is the responsibility of functional managers.
Strategic Uncertainty
Meaning Impact How to Deal?
✓ The strategic uncertainty is ✓ Impact on present, i. Strategic Grouping of
represented by a future trend or proposed, and even Uncertainty
event that has inherent potential businesses. ii. Scenario Analysis
unpredictability.
✓ Impact on potential growth iii. Strategic Flexibility in
✓ It can be judged by Scenario as present market share, Organization.
Analysis. position, sales, profits, or
✓ Scenario analysis basically accepts costs may suffer. The Memory’s Eye
the uncertainty as given and uses it
to drive a description of two or 3S
more future scenarios.
Strategic Decision Making

✓ Strategic decisions encompass the definition of the business, products to be handled, markets to
be served, functions to be performed and major policies needed for the organisation to execute
these decisions to achieve the strategic objectives.
✓ Strategic decisions are different in nature from all other decisions which are taken at various levels
of the organization during their day-to-day working.

EIS-SM BOOSTER
Meaning Om Trivedi’s Strategy for U

✓ Top-management decisions ✓ Strategic Decision-making is
✓ Allocation of large amounts of company resources considered as VVH topic among
question setters.
✓ Impact on the long term prosperity
✓ You must read and practice all the
✓ Future-oriented questions related to this topic from
✓ Multi-functional or multi-business consequences study-material and “Bhishma
✓ Consideration of firm’s external environmental factors Pratigya Question Bank”.
Strategic Management Model

✓ Every model represents some kind of process. The process by which managers make a choice of a set of
strategies for the organization that will enable it to achieve better performance.
✓ The strategic management process begins with careful analysis of a firm’s internal strengths and
weakness and external opportunities and threats.
Strategic Intent
A company must determine what directional
path the company should take and what
changes in the company’s product – market –
customer – technology – focus would improve
its current market position and its future
prospect.
Strategic Analysis
The diagnostic phase of strategic analysis. It
entails two types of analysis:
✓ Environmental scanning
✓ Organisational analysis
Strategic Formulation
✓ Strategy formulation is developing
strategic alternatives in the light of
organisation strengths and weaknesses and
opportunities and threats in the environment.
✓ It is the deep analysis of various strategic

alternatives for the purpose of choosing
the most appropriate alternative which will
serve as strategy of the firm.
Strategic Implementation
To convert strategic plans into actions and
results, a manager must be able to direct
organisational change, motivate people, build
and strengthen company competencies and
competitive capabilities, create a strategy-
supportive work climate, and meet or beat
performance targets.
"There are no secrets to success. It is the result of preparation, hard work, and learning from failure."
EIS-SM BOOSTER
Principle Aspects of Strategy Execution Process

❖ Developing budgets that steer ample resources into those activities that are critical to strategic success.
❖ Staffing the organization with the needed skills and expertise, consciously building and strengthening
strategy-supportive competencies and competitive capabilities and organizing the work effort.
❖ Ensuring that policies and operating procedures facilitate rather than impede effective execution.
❖ Using the best-known practices to perform core business activities and pushing for continuous
improvement.
❖ Installing information and operating systems that enable company personnel to better carry out their
strategic roles day in and day out.
❖ Motivating people to pursue the target objectives energetically.
❖ Creating culture and climate conducive to successful strategy implementation and execution.
❖ Exerting the internal leadership needed to drive implementation forward and keep improving strategy
execution.
Strategic Intent (Vision-Mission-Goals-Objectives, etc.)

Vision Hair Salon’s Vision
Vision represents an IDEA, IMAGINATION, DREAM and “Our salon will change the way you think about a
DNA about: haircut. Full service comfort, friendly staff, a relaxing
✓ What an organization is today? atmosphere, and the best prices in town give you an
✓ What it wants to be tomorrow? experience that will leave you glowing both inside and
✓ What kind of company it wants to create? out.”
✓ It is a macro-view of an organization’s philosophy.
✓ Organization’s roadmap to future.
Definition
Strategic Vision is a road map of a company’s future –
providing specifics about ........
✓ technology and customer focus,
✓ the geographic and product markets to be pursued,
✓ the capabilities it plans to develop, and Mission
✓ the kind of company that management is trying to
create. “Purpose” of being there.
✓ Why the firm exists?
Elements of a strategic vision ✓ What it does?
❖ Who we are and Where we are now? ✓ How it does?
❖ Where are we going? ✓ For whom it does?
❖ Clear communication of vision in the organization. ❖ It is an action mode to achieve vision.
❖ A company’s Mission statement is typically focused on
How to Develop a Strategic Vision? its present business scope – “who we are and what we
The Memory’s Eye do”.
i. Creativity
❖ Mission statements broadly describe an organizations
ii. Intelligence In CID’s Direction present capabilities, customer focus, activities, and
business makeup.
iii. Direction Setting
❖ According to Peter Drucker, A mission statement is the
iv. Shared Vision same as asking the question: What business are we in?
v. Direction Change Components of a Mission Statement
www.flipkart.com Vision ✓ Customers
✓ Products or Services
✓ Technology
✓ Self-concept The Memory’s Eye
“We intend to provide our customers with the best ✓ Markets
online shopping experience from beginning to end, ✓ Image of Firm CPT then SM in IPCC
with a smart, searchable website, easy-to-follow ✓ Philosophy
instructions, clear and secure payment methods, and ✓ Concern for employees
fast, quality delivery.” ✓ Concern for survival/growth/profitability
Failure is the raw material of success.

EIS-SM BOOSTER
Strategic Intent (Vision-Mission-Goals-Objectives, etc.) Continued…

Dell’s Mission Statement Goals
Dell’s mission is to be the most successful computer Goals are outcome statements that define what an
company in the world at delivering the best customer organization is trying to accomplish, both
experience in markets we serve. In doing so, Dell will programmatically and organizationally.
meet customer expectations of:
➢ Highest quality
➢ Leading technology Goal:
➢ Competitive pricing 20% Turnover Growth
➢ Individual and company accountability Objectives
➢ Best-in-class service and support Objectives are very precise, time-based, measurable
➢ Flexible customization capability actions that support the completion of a goal.
➢ Superior corporate citizenship Obj. 1: 20 New Stores in North

Obj. 2: Add 10 New Product-lines
➢ Financial stability Obj. 3: Introduce Weekdays Offers
Obj. 4: Organize Holiday Bazars
Useful points while writing the Mission Obj. 5: Organize Household quizzes
i. Give the organization its own special identity, Characteristics of Objectives
business emphasis and path for
development. ✓ Define the organization’s relationship with its
environment.
ii. Customer groups it is targeting, ✓ Facilitative towards achievement of mission.
iii. Technologies and competencies it uses ✓ Provide the basis for strategic decision-making.
✓ Provide standards for performance appraisal.
iv. Activities it performs to satisfy own needs. ✓ Understandable.
v. Indicate the boundaries on business ✓ Concrete and specific.
✓ Related to a time frame.
operation.
✓ Measurable and controllable.
vi. Highly personalized and unique to the ✓ Challenging.
organization. ✓ Correlate with other objectives
Long-term Objectives
Why should an organisation have a Mission?
✓ Long-term objectives expect accomplishment in a
i. To ensure unanimity of purpose. longer period of time.
ii. A basis, or standard, for allocating organisational ✓ Strategic planners commonly establish long-term
resources. objectives in seven areas:
iii. A basis for motivating the use of the resources. = Profitability = Productivity = Competitive Position
iv. To establish a general tone or organisational = Employee Development = Employee Relations
climate. = Technological Leadership = Public Responsibility
v. To serve as a focal point for those who can identify Short-term Objectives
with the organisation’s purpose and direction.
✓ Short-term objectives expect accomplishment in a short
vi. To facilitate the translation of objective and goals.
period of time.
vii. Translation of purposes into goals in such a way
✓ Planners usually define short-term objectives in relation
that cost, time, and performance parameters can
to a long-term objective or objectives.
be assessed and controlled.
Business Definition Business Model
✓ It seeks to explain the business undertaken by the ✓ Business model, as the name implies is a strategy for
firm, with respect to the customer needs, target the effective operation of the business,
audience, and alternative technologies. ascertaining sources of income, desired customer
✓ With the help of business definition, one can ascertain base, and financing details.
the strategic business choices. ✓ Rival firms, operating in the same industry relies on the
✓ The corporate restructuring also depends upon the different business model due to their strategic
business definition. choice.

✓ Strategic Management Model, How to Develop a Strategic Vision?, Useful points while writing the Mission and
Business Definition Vs. Business Model is considered as VVH topic among question setters and ICAI.
✓ You must read and practice all the questions related to this topic from study-material and “Bhishma Pratigya
Question Bank”.

Chapter 4 Corporate Level Strategy
Corporate Level Strategy
Typologies of Stability Retrenchment Expansion through

Strategies Strategy Strategy Strategic Alliance
Strategic Expansion Turnaround

Alternatives Strategy Strategy
Typologies of Strategies Glueck and Jauch Generic Strategic

Strategic Levels Alternative
➢ Corporate Level ➢ Stability Strategies
➢ Business Level ➢ Expansion Strategy

➢ Retrenchment Strategy
➢ Functional Level
➢ Combination Strategies
Stages of Business Life Cycle
➢ Entry/Introduction Stage: Market Penetration
Strategy
➢ Growth Stage: Growth/Expansion Strategy
➢ Maturity Stage: Stability Strategy
➢ Decline Stage: Retrenchment/ Turnaround
Strategy
Competition
➢ Competitive Strategies
➢ Collaboration Strategies
Grand Strategies/Directional Strategies
The sole purpose of education is to open and show more windows for mankind than mirrors.
EIS-SM BOOSTER
Stability Strategy
Definition Stability Approach
In stability strategy, the firm - ✓ Frequency
✓ Stays with its current businesses and product-market, ✓ Resources
postures and functions. ✓ Investment The Memory’s Eye
✓ Maintains the existing level of effort. ✓ Definition
✓ Remains satisfied with incremental growth. ✓ Growth FRIDGER
Objectives of Stability Strategy ✓ Efficiency
✓ Safeguard existing interests and strengths. ✓ Risk
✓ Continue the chosen path of business. Stability Approach
✓ Pursue well tried and tested objectives. ✓ Stable Environment
✓ Consolidate the reigning position. ✓ Less Risky The Memory’s Eye
✓ Maintain operational efficiency. ✓ Less Threatening
SRTC
✓ Optimize returns on resources invested. ✓ Consolidation
Expansion Strategy
Definition Expansion Approach
✓ It is one in which we are growing significantly ✓ Frequency
The Memory’s Eye
faster than the market or market segment is ✓ Resources
growing overall. ✓ Investment FRIDGER
✓ It implies that the company is willing to take on ✓ Definition
competitors in order to take market share from ✓ Growth
them, in addition to absorbing the growth in the ✓ Efficiency
market place itself. ✓ Risk
Reason for Adopting Expansion Expansion Approach

Strategy
Growth
Environmental Advantage over

Demand Competition
Market Share
and Position The Memory’s Eye
GAME
The more doors of educational institutions you open, the more prisons are closed.
EIS-SM BOOSTER
Expansion through Diversification Strategy

Definition and Types of Diversification Related Div. Vs. Unrelated Div.
✓ When a firm tries to grow and expand by ▪ Exchange or share ▪ Investment in new
diversifying into various products or fields. assets or competencies product portfolios.
✓ An entry into new products or product lines, new by exploiting.
services or new markets, involving substantially
different skills, technology and knowledge. ▪ Economies of scale. ▪ Employment of new
Related Diversification technologies.
▪ Brand name. ▪ Focus on multiple

✓ It is when a business adds or
products.
expands its existing product
lines or markets. ▪ Marketing skills. ▪ Reduce risk by operating
in multiple product
Unrelated Diversification markets.
✓ It is when a business ▪ Sales and distribution ▪ Defend against takeover

adds new, or capacity bids.
unrelated product
lines or markets. ▪ R&D and Manufacturing
skills.
Reasons for Diversification

Reasons for
Diversification
Reasons for
Diversification
Reasons for
Diversification
Technical Capacity Synergy

Innovations Utilization The Memory’s Eye
TCS
Vertical Integration Paper

Diversification Paper Manufactures
Manufactures
✓ Firm engages in businesses that Backward
are related to its existing Integration
business.
✓ It remains vertically within the Publisher Publisher
same product-process chain.
Types of VI: Forward
✓ Backward Integration Integration
✓ Forward Integration Book Distributor Book Distributor
Horizontal Integration
Diversification
This involves addition or acquisition
of one or more similar businesses
at the same stage of the
production marketing chain
through:
✓ Production of Complementary
products
The Memory’s Eye
PEST
✓ Entering into Repairs and

servicing of products
✓ Sale of By-products
✓ Taking over Competitors’
products

EIS-SM BOOSTER
Concentric
Diversification
✓ Extends the firm’s distinctive
competence to the other lines of
business that are similar to the
firm’s initial base through:
✓ Process
✓ Technology The Memory’s Eye
✓ Marketing. PTM
Conglomerate Diversification
✓ It is a strategy that expands the firm’s operation into industries
and markets that are not similar or related to the firm’s initial
base. It does not involve sharing the firm’s distinctive competence
across different lines of business.
Expansion
SM IN GOVERNMENT through Mergers and Acquisitions
AND NOT-FOR-PROFIT
Horizontal Merger Vertical Merger Circular Merger Conglomerate Merger
ORGANISATIONS
A merger of two competing ✓ When two or more ✓ In Co-generic or circular ✓ It is the combinations of
firms which are engaged in companies involved in merger two or more companies engaged in
the production of similar different stages of merging organizations are unrelated businesses.
products or services. activities like production associated in some way or
✓ It helps to obtain or distribution combine the other related to the ✓ There are no linkages
economies of scale in with each other the production processes, with respect to
production by combination is called business markets, or customer groups,
✓ Eliminating duplication of Vertical merger. basic required customer functions and
facilities, technologies. technologies being used.
✓ Widening the product line, Forward Integration
✓ Such mergers include Such a combination helps
reduction in investment, in:
Example: A refinery getting the extension of the
✓ Elimination of i. Lowering of cost of
into petrol pumps (like RIL) or product line or acquiring
competition in product capital,
a film production house components that are
market, ii. Optimum utilization of
getting into distribution and required in the daily
✓ Increase market share, financial resources
subsequently, into running of operations.
✓ Reduction in advertising and
cinema halls.
costs etc. iii. Enlarging debt
Example: Organization in the
Example: Tata Steel Backward Integration capacity.
white goods categories such
acquiring Corus, Mittal Steel
as refrigerators can
acquiring Arcelor and Jet Example: Starting with Vimal
diversify by merging with
Airways acquiring Sahara range of fabrics, RIL went
another organization
Airlines. backward into manufacture of
having business in kitchen
polyester fiber and yarn.
appliances.
To be successful, you have to have your heart in your business, and your business in your heart.
EIS-SM BOOSTER
Expansion through Strategic Alliance

Definition Why Strategic Alliance?
A strategic alliance is an ✓ To create Synergy
agreement between ✓ To Avoid barriers to entry
Two or more companies ✓ To gain Access to new markets
To share Knowledge ✓ To Reduce/share risk
or resources To their
✓ To gain Access raw materials
mutual benefit.
✓ To Undertake development projects that are too big
Types of Strategic Alliance for a single company to fund.
Intra-industry Inter-industry The Memory’s Eye
SAARA will Undertake Dev. Projects
Advantages of Strategic Alliances Disadvantages of Strategic Alliances

Helps to learn Formed with a Sharing
necessary skills local foreign knowledge
and obtain
Political
business to and skills that
certain gain entry into a otherwise
Sharing
capabilities foreign market. organisations
may not like to Sharing knowledge and
share.. skills can be problematic
Economical Organizational if they involve trade
secrets.
Rivals can join

Economies of
together to
scale, reduction Competition Trade Secrets
cooperate
in costs and Strategic instead of
risks, co-
compete.
specialization, An ally may become
creating The Memory’s Eye a competitor in The Memory’s Eye
additional value, future when it
etc. POSE decides to separate STC
out.
Retrenchment Strategy
Definition Why Retrenchment Strategy?
▪ A strategy used by corporations to reduce the diversity ✓ Obsolescence of product/process.
or the overall size of the operations of the company. ✓ High competition
Typically the strategy involves withdrawing from ✓ Industry overcapacity
certain markets or the discontinuation of selling ✓ Management non-willingness continue
certain products or service in order to make a ✓ Continuous losses
beneficial turnaround. ✓ Unavailability of resources
Retrenchment Approach ✓ Unmanageable threats
✓ Reallocation of resources to profitable businesses
✓ Frequency The Memory’s Eye ✓ Situation of strategic failure.
✓ Resources
Turnaround Strategy
✓ Investment FRIDGER
✓ Definition Turnaround Strategies are those which are formulated by
✓ Growth laying emphasis on improving internal efficiency so as to
✓ Efficiency bring about internal retrenchment.
✓ Risk Turnaround Strategy
Ways of Retrenchment ✓ Mismanagement.
▪ Cutting back on capital and revenue expenditure. ✓ Negative cash flow and profits
▪ Reduction in operation. ✓ Declining market value
▪ Withdrawal of some products and offices. ✓ Deterioration in physical facilities
▪ Disposal of plant and product divisions. ✓ Over manning
▪ Retirement from production/marketing stage. ✓ High turnover of employees and low morale
▪ Offering itself for takeover. ✓ Uncompetitive products or services
▪ Seeking liquidation or winding up.

EIS-SM BOOSTER
Turnaround Action Plan

Stage 1
•Assessment of Current
Problem
✓ Assess the current problems and the extent

of damage the problem has caused.
✓ Find out the root causes of the problem.
Stage 5 Stage 2
•Return to Normal •Analyze the Situation and
Develop a Strategic Plan
▪ Determine the chances of the business’s

✓ Organization should begin to show signs of
survival.
profitability, return on investments and enhancing
economic value-added. ▪ Identify appropriate strategies and develop
a preliminary action plan.
Stage 4 Stage 3
•Restructure the •Implement an
Business Emergency Action Plan
✓ Finance mix: Prepare cash forecasts, analyze assets and debts. Includes human resource, financial, marketing
and operations actions to restructure debts,
✓ Product mix: Immediate attention over core products to remain
improve working capital, reduce costs,
competitive.
improve budgeting practices, prune product
✓ People mix : Rewards, compensation and change management. lines and accelerate high potential products.
Divestment Strategy Liquidation Strategy
Divestment strategy involves the sale or liquidation of a A retrenchment strategy considered as the most extreme
portion of business, or a major division or SBU. and unattractive is liquidation strategy, which involves
Compulsions for divestment in case of: closing down a firm and selling its assets.
▪ Obsolescence of product/process
▪ Business becoming unprofitable and unviable Major Reasons Liquidation Strategy
▪ Inability to cope up with cut throat competition
Same as Retrenchment Strategy.
▪ Industry overcapacity
▪ Failure of existing strategy Combination Strategy
Reasons of Divestment (Why to Divest?) An enterprise may seek stability in some areas of activity,
expansion in some and retrenchment in the others.
✓ Acquisition proves to be a mismatch.
✓ Persistent negative cash flows Major Reasons Combination Strategy:
✓ Severity of competition • Large Organizations
✓ Failure to do Technological upgradation • Complex Environment
✓ Availability of more profitable alternative
• Businesses in Multiple Industries

✓ Stability, expansion, strategic alliances and turnaround strategies are very popular among the question setters
and the ICAI in both the categories – descriptive/practical questions and MCQs.
✓ It has been observed in previous attempts that the ICAI asks either of these topics in alternative attempts.
✓ You must read and practice all the study-material and “Bhishma Pratigya Question Bank” questions to
cover each and every aspect of such questions and their answers’ presentation.
Whether it’s Google or Apple or free software, we’ve got some fantastic competitors and it keeps us on our toes.
Chapter 5 Business Level Strategy
Failure doesn’t mean you are a failure, it just means you haven’t
succeeded yet.
Porter’s
5 Forces
Model
Porter’s Threat
Generic from the
Strategy New
Chapter - 5 Entrants
Business
Level
Bargaining Strategy
Threat from
Power of
Direct
Buyers and
Competition
Suppliers
Threat from
Indirect
Competition
Michael Porter’s Five Forces Model

EIS-SM BOOSTER
Michael Porter’s 5 Forces Model
Competitive Environment Overall

The competitive environment is the dynamic
system in which the business competes.
Competitive Environmental Variables-
✓ New Entrants
✓ Suppliers
✓ Buyers
✓ Direct Competitors
✓ Indirect Competitors/Potential substitutes
▪ Competition within an industry is determined by

its own particular structure.
▪ Industry structure refers to the interrelationship
among five different forces that drive the
behavior of the firms competing in that industry.
Factors of Threat from New Entrants
+
Value
✓ Capital Requirements
Customer’s
Profitability Band
Margin
✓ Economies of Scale, EC and LC
Price
✓ Product Differentiation
Firm’s
✓ Brand Identity Margin
✓ Switching Costs Cost

✓ Distribution Channels
✓ Aggressive Retaliation
Threat from New Entrants
Firm’s Value Creation Grid

EIS-SM BOOSTER
+
Bargaining Power of the Buyers
Value
✓ Buyer’s Knowledge Customer’s
Profitability Band
Margin
✓ Purchase Size
✓ Product Function
Price
✓ Buyer’s Concentration
Firm’s
✓ Vertical Integration Margin
✓ Switching Cost
Cost
Bargaining Powers of Buyers
Bargaining Power of the Suppliers

Value
✓ Purchase Size Customer’s

Margin
Profitability Band
✓ Product Function
✓ Supplier’s Concentration
Price
✓ Vertical Integration
Firm’s
✓ Switching Cost Margin
+
Cost
Bargaining Powers of Suppliers

The only limits are, as always, those of vision.
EIS-SM BOOSTER
=
Value
✓ Real estate, insurance, bonds and
bank deposits for example are Customer’s
clear substitutes for common Margin
Profitability Band
stocks, because they represent
alternate ways to invest funds. Price
✓ Digital cell phones currently pose
this kind of threat to landline
telecommunications firms.
Firm’s
Margin
Cost
Threat from Substitutes

Value
✓ Industry Leader + Customer’s

Margin
Profitability Band
✓ Number of Competitors
✓ Type of Competition
Price
✓ Entry Barrier and Exit Barrier
✓ Fixed Cost
Firm’s
✓ Product Differentiation Margin
✓ Industry Growth Rate
Cost
+ Threat from Direct Competitors


EIS-SM BOOSTER
Michael Porter’s Generic Strategies
Cost Leadership Differentiation

✓ This generic strategy calls for being the low ✓ Development of a product or service that offers
cost producer in an industry for a given level unique attributes that are valued by
of quality. customers to be better than or different from
✓ The firm sells its products either at average the products of the competition.
industry prices to earn a profit higher than that ✓ The value added by the uniqueness of the
of rivals, or below the average industry prices to product may allow the firm to charge a premium
gain market share. price for it.
Internal Strengths needed for Cost Internal Strengths needed for cost
Advantages advantages
✓ Access to the capital required. ✓ Leading scientific research or R & D.
✓ Skill in designing products. ✓ Creative product development team.
✓ High level of expertise in manufacturing and ✓ Strong sales team
process engineering.
✓ Reputation for quality and innovation.
✓ Efficient distribution channels.

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Focus Strategy
❖ The focus strategy concentrates on a particular group of customers or a particular product-
line segment and within that segment attempts to achieve either a cost advantage or
differentiation.
❖ The whole idea is that the needs of the group can be better serviced by focusing entirely on it.
Risks associated with each Base of Generic Strategy

Cost Leadership Differentiation Focus
i. Other firms may lower their i. Imitation by competitors. i. Imitation by competitors.
costs as well. ii. Changes in customer tastes. ii. Changes in target segment or
ii. As technology improves, the iii. Various firms pursuing focus customer tastes.
competitors may eliminate the strategies may be able to iii. Other focusers may be able to
competitive advantage by achieve even greater carve out sub-segments that
increasing their production differentiation in their market they can serve even better.
capabilities. segments.
iii. Buyer interest may swing to
differentiating Products.
Michael Porter’s Best Cost Provider Strategy

i. All of the techniques
discussed above
involve generic
strategies, the
phrase is most often
associated with
Porter’s framework
or Best-Cost
Provider Strategy.
ii. It is an extension of
Michael Porter’s
Generic
Strategies.

✓ There are two major strategies in this chapter and both are very popular among question
setters for drafting practical, case-scenario based questions.
✓ Most importantly, both the Porter’s strategies are the backbone of New Course SM Syllabus.
“The secret of success in battle lies often not so much in the use of one’s own strength but in the exploitation
of the other side’s weaknesses.”
Chapter 6 Functional Level Strategy
“Management is doing things right; leadership is doing the

right things.”
– Peter Drucker
Marketing
Strategy
Human
Resources Finance
Strategy Strategy
Chapter – 6
Functional
Level
Strategy Production
R&D and
Strategy Operations
Strategy
Logistics
Strategy
Functional Strategy
❖ Known as tactical strategies.
❖ Functional strategies operate below business-level strategies.
❖ Functional strategies are made within the higher level strategies.
❖ There might be several sub-functional areas, like sales, advertising, market research, etc.
Need for Functional Strategy
❖ Functional strategies lay down clear direction to the functional staff.

❖ Focus at the implementation of corporate and business strategies.
❖ They act as basis for controlling activities in the different functional areas of business.
❖ They help in bringing harmony and coordination.
❖ Help functional managers in handling similar situations occurring in different functions.

EIS-SM BOOSTER
Marketing
❖ Marketing is an organizational
process or a societal process.
❖ A set of processes for creating,
communicating, and delivering
value to customers for managing
customer relationships in ways
that benefit the organization and its
stakeholders.
Marketing Process
Concept of Exchange Value Delivery Network Delivering Value
Marketing Strategy
Definition Issues Marketing Mix (4 Ps)
✓ Marketing strategy refers to ✓ Customers i. Product
actions for developing, ✓ Distribution network ii. Price
pricing, distributing, and ✓ Warranty iii. Place
promoting products that ✓ Remuneration/incentives
iv. Promotion
meet the needs of specific ✓ Advertising
customer groups. ✓ Pricing ✓ Personal Selling
✓ Advertising
✓ It analyses and selects target The Memory’s Eye ✓ Publicity
market, and develops
suitable marketing mix. CD-WRAP ✓ Sales Promotion

EIS-SM BOOSTER
Expanded Marketing Mix

i. People
ii. Process
iii. Physical Evidences
Skimming Pricing Policy

Initially prices are set at a very high level
and gradually they are decreased.
Pre-requisites of Marketing Strategy
i. Marketing Analysis
ii. Swot Analysis
iii. Competition Analysis
iv. Scenario Analysis
Pre-requisites of Marketing Strategy

Marketing Plan
i. Table of Contents
ii. Mission Statement
iii. Actuals till Date
iv. Financial Projections
(FP) till Date
v. SWOT Analysis
vi. Portfolio Summary
vii. Market Assumptions
viii. Objectives - Goals
ix. FP of Three Years
x. Marketing Strategy
xi. Action Plans

EIS-SM BOOSTER
Strategic Marketing Techniques
Social Marketing Augmented Marketing Direct Marketing

Design, implementation, and Additional customer services Marketing through various
control of programs seeking to and benefits that a product can advertising media that
increase the acceptability of a offer besides the core and interact directly with
social ideas, cause, or actual product that is being consumers.
practice among a target group offered. Examples: catalogue selling, e-
to bring in a social change. Examples: Movies on demand, mail, telecomputing, electronic
online computer repair services, marketing, shopping, etc.
secretarial services, etc.
Relationship Marketing Services Marketing Demarketing

The process of creating, The concepts, tools, and Marketing strategies to reduce
maintaining, and enhancing techniques, of marketing to demand temporarily or
strong, value-laden services. permanently. The aim is not to
relationships with customers Examples: Telecommunications destroy demand, but only to
and other stakeholders services, financial services, reduce or shift it.
through CRM. hospitality, tourism, etc.
Differential Marketing Synchro-marketing Concentrated Marketing

Market-coverage strategy in Used to find ways to alter the Market-coverage strategy in
which a firm decides to target pattern of demand through which a firm goes after a large
several market segments and flexible pricing, promotion, and share of one or few sub-
designs separate offer for each. other incentives. markets.
Examples: Maha Bachat Sales
Place Marketing Person Marketing Organization Marketing

EIS-SM BOOSTER
Financial Strategy
❖ The strategies related to several financial aspects of a business like acquiring capital,
sources of fund, developing projected financial statements/budgets, management and
usage of funds and evaluating the worth of a business etc. are called financial strategies.
Imp. Fin. Strategy Decisions Financial Strategy Areas Evaluating the Worth
❖ To raise capital. ❖ Acquiring funds ❖ Net Worth Method
❖ To lease or buy FA. ❖ Preparing budgets and
❖ To determine appropriate Projected financial ❖ Capitalisation of Earnings
dividend pay-out ratio. statements ❖ Market Price Method
❖ To define the credit policy. ❖ Management and usage of
❖ To define discount policy. funds
❖ To determine the amount of ❖ Evaluating the Worth of a
cash in hand. Business
Evaluating the Worth of a Business
Net Worth Method Capitalisation of Earnings Market Price Method

✓ Net worth represents the ✓ Largely based on the future ❖ Firm’s worth on the selling
sum of common stock, benefits its owners may
additional paid-in capital, derive through net profits. price of a similar company.
and retained earnings. ✓ A rule of thumb is to ❖ PE Ratio method.
✓ Further, add or subtract an establish a business’s
appropriate amount for worth as five times the ❖ Outstanding shares method
goodwill and overvalued or firm’s current annual profit.
undervalued assets.
Production and Operations Strategy

❖ Production/operations strategy is related to the production system, operational
planning and control and logistics management.
Production System
✓ Concerned with production capacity,
plant location, layout, product or
service design, work systems, degree
of automation, extent of vertical
integration, etc.
Operations Planning and Control
✓ Concerned with aggregate
production planning; materials
supply; inventory, cost, and quality
management; and maintenance of
plant and equipment.
The cynic says, “One man can’t do anything”. I say, “Only one man can do anything.”
EIS-SM BOOSTER
Logistics Strategy
Ensures that the right materials are available at the right place, at the right time, of the right quality,
and at the right cost.
Logistic strategy provides solutions to following questions:
✓ Which sources of raw materials and components are available?
✓ How many manufacturing locations are there?
✓ What products are being made at each manufacturing location?
✓ What modes of transportation should be used for various products?
✓ What is the nature of distribution facilities?
✓ What is the nature of materials handling equipment possessed? Is it ideal?
✓ What is the method for deploying inventory in the logistics network?
✓ Should the business firm own the transport vehicles or hire?
Logistics Strategy Benefits Supply Chain Management Effective Imp. Of SCM
❖ Cost savings ✓ The process of planning, ❖ Procurement

implementing, and ❖ Product development
❖ Reduced inventory controlling the supply chain
operations ❖ Manufacturing
❖ Improved delivery time
✓ A cross-functional approach ❖ Warehousing management
❖ Customer satisfaction to managing the movement
of raw materials into an ❖ Physical distribution
❖ Competitive advantage
organization and the ❖ Outsourcing/partnerships
movement of finished goods ❖ Customer service
out of the organization
toward the end-consumer. ❖ Performance measurement
Research and Development (R&D) Strategies

Technical Progress Market Growth R&D Decision
R & D Approaches
Slow Moderate Develop in-house
✓ Be the leader
Slow Quick Outsource
✓ Be an innovative imitator
✓ Be a low-cost producer Quick Quick Buy
HR Strategy
Strategic HR= Pre-selection practices, Selection practices and Post-selection practices.
Concerns related to HRM:
i. Disruption of social and political structures
ii. Failure to match individuals’ aptitudes with implementation tasks
iii. Inadequate top management support for implementation activities
Areas where the HR Manager can play Strategic Role in Managing HR:
i. Providing purposeful direction
ii. Creating competitive atmosphere
iii. Facilitation of change
iv. Diversity of workforce
v. Empowerment of human resources
vi. Building core competency
vii. Development of work ethics and culture
Sometimes when you innovate, you make mistakes. It is best to admit them quickly and get on with improving
your other innovations.
Chapter 7 Organizations and Strategic Leadership
“New opinions are always suspected, and usually opposed, Without

any other reason but because they are not already common.”
Organisation
Structure
Entrepreneur-
-eship and Chandler’s
Intrapreneurshi Strategy-
p Structure
Chapter – 7
Organizations
and Strategic
Leadership
Strategy Types of
Supportive Organizational
Culture Structure
Strategic
Leadership
Organizational Structure
Organizational structure is typically hierarchical arrangement of lines of authority,
communications, rights and duties of an organization.
An organization is structured for two major reasons:
▪ Structure largely dictates how objectives and policies will be established.
▪ Structure dictates how resources will be allocated.
✓ Small firms are functionally structured (centralized).
✓ Medium sized firms are divisionally structured (decentralized).
✓ Large firms are in SBU or matrix structure.
Chandler’s Strategy-Structure Relationship
❖ Changes in strategy
❖ Leads to Changes in Structure
❖ Structures follow the growth
strategies
❖ Growth strategies follow certain
patterns to achieve Goals & Obj.

EIS-SM BOOSTER
Functional Structure
▪ Functional Organization
structure is a hierarchical type.
▪ People are grouped as per their
area of specialization.
▪ Supervised by a functional
manager with expertise in the
same field.
▪ Promotes specialization.
▪ Workers are very skilled and
efficient.
▪ Allows quick decision-making.
▪ Expert can manage each
department.
Divisional Structure
▪ More suited to every large enterprise.
▪ Independent divisions are created
under the overall control of the HO.
Types of Divisions:
✓ Divisional by geographic area
✓ Divisional by product
✓ Divisional by customer
✓ Divisional by process
Advantages:
✓ Promotes accountability
✓ Employee Morale
✓ Career Development opportunities
✓ Allows better control of local situations
✓ Competitive climate
Multi-Divisional Vs. SBU Structure

Multi-Divisional Structure SBU Structure
Multidivisional (M-form) structure is composed of It is a single business or a collection of related
operating divisions where each division businesses which offer scope for independent
represents a separate business to which the top planning and which might feasibly standalone
corporate officer delegates responsibility for day- from the rest of the organization.
to-day operations and business unit strategy to ▪ It has its own set of competitors.
division managers. ▪ It has a manager who has responsibility for
▪ Creating separate divisions strategic planning and profit performance, and
▪ Each division would house its functional who has control of profit-influencing factors.
hierarchy. ▪ Individual SBUs are treated as profit centres.
▪ Division managers would be given ▪ It facilitates comparisons between divisions,
responsibility for managing day-to-day improving the allocation of resources and can
operations. be used to stimulate managers of poorly
▪ A small corporate office that would determine performing divisions.
the long-term strategic direction of the firm ▪ SBU is a business tool whose main aim is to
and exercise overall financial control over the serve a clear and defined market segment with
semi-autonomous divisions. a defined strategy.
The golden rule for every business man is this: “Put yourself in your customer’s place.
EIS-SM BOOSTER
Matrix Structure
▪ Structure which aims at combining
the advantages of vertical and
horizontal flows of authority and
communication.
▪ Personnel who are deputed to
work full time in different projects;
sometimes in more than one
projects under the overall
guidance and direction of project
managers.
Employees have two superiors –
i. Functional Manager (vertical
flow) and
ii. Project or Product Manager
(horizontal flow)
Phases for Development of Matrix Structure (As per Davis and Lawrence)
Cross-functional Task Force Brand Management Mature Matrix

✓ It is initially used when a ✓ If the cross-functional task ✓ The functional and product
new product line is being forces become more structures become
introduced. A project permanent, the project permanent and it involves a
manager is in charge as the manager becomes a true dual-authority
key horizontal link. product or brand manager. structure.
Network Structure Hourglass Structure

▪ Many activities are outsourced. ▪ The tasks performed by middle management
▪ Non-structure have been replaced by the information and
▪ Virtual Organization Communication technological tools.
▪ Most Suitable in unstable environment ▪ Short and narrow middle-management level.
▪ Acting as a boroker. ▪ IT links the top and bottom levels
Example: Flipkart, Amazon, Snapdeal, etc. Example of IT behind HGS: CaaS, VOIP, etc.
The cynic says, “One man can’t do anything”. I say, “Only one man can do anything.”
EIS-SM BOOSTER
Strategic Leadership
Strategic Leadership Responsibilities Leadership Roles - Managers

Strategic leaders are ✓ Managing human capital ✓ Monitoring Execution Progress
those at the top of the ✓ Strategic Management ✓ Promoting High Performance
company, the CEO, the ✓ Sustaining high performance over culture
members of the board of time. ✓ Change Management
directors, the top ✓ Willing to make courageous ✓ Focus on CC and CA
management team, and decisions. ✓ Corporate Ethics
division general ✓ Seeking feedback through face-to- ✓ Corrective actions to ensure
managers. face communications. Strategic Success
Managing SM PDF MP’s CM Focuses on CC
Transactional Leadership Transformational Leadership

✓ Focuses more on designing systems and ✓ Uses charisma and enthusiasm to inspire
controlling the organization’s activities and are people to exert them for the good of the
more likely to be associated with improving the organization.
current situation. ✓ Appropriate in turbulent environments, in
✓ Appropriate in static environment, in mature industries at Intro Level of their life-cycles, in
industries, and in organizations that are performing poorly performing organizations when there is a
well. need to embrace major changes.
Corporate Culture
Corporate Culture Role of Culture Changing a problem culture
✓ Management practices ✓ Culture promotes good ✓ Diagnose the present strategy
✓ Ethical standards strategy execution. non-supportive cultures.
✓ Official policies ✓ Nurtures and motivates ✓ Role models for the desired
✓ Dealings and relationships people cultural behaviour.
✓ Traditions ✓ Employees are ✓ Replacing key executives who
✓ Employees’ passionate about are strongly associated with the
✓ Legends company’s vision. old culture
✓ Organization’s politics ✓ Taking every opportunity to
communicate to employees
Entrepreneur
An entrepreneur is an An intrapreneur is an
individual who conceives the entrepreneur who is an
idea of starting a new venture, employee of organisation, and
Intrapreneur
takes all types of risks, not only is vested with authority of

to put the product or service initiating creativity and
into reality but also to make it innovation in the company’s
an extremely demanding one. products and services.

Chapter 8 Strategy Implementation and Control
“New opinions are always suspected, and usually opposed, Without

any other reason but because they are not already common.”
Strategic Imp.
And Strategic
Formulation
Relationship
Benchmarking Strategic
Change
Chapter – 8
Strategy
Implementation
and Control
Business Process Strategic
Reengineering Controls
Strategy Audit
Strategic Management Model

EIS-SM BOOSTER
Relationship between Strategy Implementation and Formulation
Strategy Formulation Strategy Implementation Matrix

✓ Placing the forces before ✓ Managing forces during
the action the action
Strategy Formulation
✓ Entrepreneurial activity ✓ Administrative task
✓ Focus on effectiveness ✓ Emphasizes on efficiency
✓ Rational process ✓ Operational process
✓ Coordination among few ✓ Co-ordination among
individuals many individuals
✓ Requires a great deal of ✓ Requires motivational and
initiative and logical skills leadership traits
Strategy Implementation
Relationship between Efficiency and Effectiveness
Efficiency Effectiveness Matrix

✓ Operational in nature Strategic Management
✓ Strategic in nature
✓ To do the things right ✓ To do the right things
✓ Defines relationship ✓ Concerned with the
Operations Management
between inputs-outputs attainment of goals
✓ Links with internal ✓ Links with external
environment environment
✓ Responsibility for ✓ Responsibility for
efficiency lies with effectiveness lies with top
operational managers managers
✓ Implementation viewpoint ✓ Formulation viewpoint
Relationship between Strategy Implementation and Formulation
✓ Formulation of strategies is linked with ✓ Formulation process is affected by

their implementation. factors related with implementation.
✓ With the formulation of new strategies, ✓ Organizations tend to adopt those
or reformulation of existing strategies, strategies which can be implemented
many changes have to be effected with the help of present structure of
within the organization. resources
Issues Considered in Strategy Implementation
= Project Implementation = Procedural Implementation = Resource Allocation

= Structural Implementation = Functional Implementation = Behavioural Implementation
Success in business requires training and discipline and hard work. But if you’re not frightened by these things, the
opportunities are just as great today as they ever were.
EIS-SM BOOSTER
Strategic Change
Steps to Initiate Strategic Kurt Lewin’s Phases of
Change Strategic Change
Compliance
H C Kellman
Step 1: Recognize the need Step 1: Unfreezing the
for change Situation Identification
Step 2: Create a shared Step 2: Changing to new
vision to manage change Situation Internalization
Step 3: Institutionalize the Step 3: Refreezing
change
Strategic Control
Strategy Audit
Strategy Audit Why Strategy Audit? Richard Rumelt’s Criteria for
✓ How well is the current Strategy Audit
“A strategic audit is an
strategy working? ✓ Consistency
examination and evaluation of
✓ How well will the current ✓ Consonance
The Memory’s Eye
areas affected by the operation of strategy be working in future?
✓ How can this be evaluated in
✓ Feasibility C-2FA
a strategic management process
present and future? ✓ Advantages
within an organization”.
✓ How urgent is there a need to
change the strategy?
It is not enough to have great qualities; we should also have the management of them.
EIS-SM BOOSTER
Business Process Reengineering
BPR Why BPR? Business processes of a firm

“Fundamental revision and ✓ For operational excellence
that need redesigning
radical redesign of ✓ To be a customer-focussed ✓ Development and delivery
processes to reach organization of product(s) and/or
spectacular improvements in ✓ To manage processes services
critical and contemporary
✓ Ccontinuous improvement ✓ Interaction(s) with
measurements of efficiency,
as per industry standards customers
such as costs, quality,
service and quickness.” ✓ For Dramatic improvement ✓ Management activities
✓ To answer- How to
compete?
Steps in BPR Imp. Benchmarking Benchmarking Stepls
Step 1: Determining Benchmark: A standard or a Step 1: Identifying the need for

point of reference.
objectives and framework. Benchmarking: The benchmarking
continuous activity of Step 2: Understanding existing
Step 2: Identify customers-
identifying, understanding
their profile and adapting best practice business processes
and processes that will lead to
Step 3: Develop a flowchart superior performance. Step 3: Identifying best
Step 4: Try to simplify the processes
process by eliminating tasks Step 4: Comparing own
and steps processes and performance

with others and steps
Step 5: Automation
Step 5: Preparing a report and
Step 6: Evaluation
Implementing the steps
Step 7: New structure
necessary to close the
Step 8: Implement redesign. performance gap
Step 6: Evaluation

✓ Relationship between Strategy Formulation and Implementation, strategic controls, change
and strategy audit are very popular among the question setters and the ICAI in both the
categories – descriptive/practical questions and MCQs.
✓ It has been observed in previous attempts that the ICAI asks either of these topics in
alternative attempts.
✓ You must read and practice all the study-material and “Bhishma Pratigya Question Bank”
questions to cover each and every aspect of such questions and their answers’ presentation.
“If you are the master be sometimes blind, if you are the servant be sometimes deaf.”

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India’s Revision Charts

Prof. Om Trivedi Edited By:

Welcome to this new edition of ‘EIS-SM Booster: अंतिम-प्रहार’!

The book has been divided into 2 Parts.

Good luck for a challenging and successful learning experience!

About Prof. Om Trivedi

▪ My students scored AIR 20, 23, 36 and 37 with 100s of exemptions.

▪ Author of books on Enterprise Information Systems, Strategic Management, Information Technology,

Join Us on Telegram http://t.me/canotes_ipcc

EIS Hotness Grid

Chapter 1: Automated Business Processes Chapter 2: Financial and Accounting Systems

Chapter 4: E-Commerce, M-Commerce and

Chapter 5: Core Banking Systems

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Business Business and Enterprise Business Vs. Enterprise

A business is an economic Business and enterprise are To understand the difference

Enterprise Information System Purpose of EIS

➢ Business process is the radical redesign of the business as a collection of

Categories of Business Processes

BPA - Business Process Automation

Benefits of BPA Which BPs should be automated?

Om Trivedi’s Strategy for U

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Advantages of Flowcharts The Memory’s Eye

Om Trivedi’s Strategy for U

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Strategic Risk Reputational or Credit Risk

Risk Management and

➢ RM is the process of assessing risk,

ERM – Enterprise Risk Management

"Success is walking from failure to failure with no loss of enthusiasm."

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Benefits of ERM The Memory’s Eye

Control Based on Implementation

IT Control (Ref. to Chapter 3)

General Control Application Control

Information Technology General Controls (ITGC)

Internal Control (IC)

Installed and adapted by an organization to:

Forms of Internal Control: Internal Control(As per SA-315)

Components of an Effective Internal Control As per SA-315

Control Risk Information and Control Monitoring

Risk Assessment Control Activities

Information and Communication

How information is disseminated It is of 2 folds

Inbound Communication Outbound Communication

of relevant external provides relevant information to external in

Monitoring of Controls (Evaluation)

Provided timely information Its frequency depends

Inbound Communication Outbound Communication

of relevant external provides relevant information to external in

Limitations of Internal Control System

"Opportunities don't happen, you create them."

Risks and controls for Specific Business Processes

Fixed Assets – Risks and Controls

GL – Risks and Controls

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Computerized Accounting Systems

Working of Any Software (Ex. Tally)

Employee’s Resistance Top Management’s Role