1. SMU
ASSIGNMENT
SEMESTER – 4
MB0052
SUBMITTED BY:
DEVESH NIDARIA (MBA)
ROLLNO:-581125616

2. Q1 Define the term “Strategic Management”. Explain the
importance of strategic management?
Ans: Strategic Management
Definition: Strategic management is a systematic approach of analysing, planning and
implementing the strategy in an organisation to ensure a continued success. Strategic
management is a long term procedure which helps the organisation in achieving a long
term goal and its overall responsibility lies with the general management team. It focuses
on building a solid foundation that will be subsequently achieved by the combined efforts
of each and every employee of the organisation.
Importance of strategic management
• A rapidly changing environment in organisations requires a greater awareness of
changes and their impact on the organisation. Hence strategic management
plays an important role in an organisation.
• Strategic management helps in building a stable organisation.
• Strategic management controls the crises that are aroused due to rapid change in
an organisation.
• Strategic management considers the opportunities and threats as the strengths and
weaknesses of the organisation in the crucial environment for survival in a
competitive market.
• Strategic management helps the top level management to examine the relevant
factors before deciding their course of action that needs to be implemented in
changing environment and thus aids them to better cope with uncertain
situations.
• Changes rapidly happen in large organisations. Hence strategic management
becomes necessary to develop appropriate responses to anticipate changes.
• The implementation of clear strategy enhances corporate harmony in the
organisation. The employees will be able to analyse the organisation’s ethics and
rules and can tailor their contribution accordingly.
• Systematically formulated business activities helps in providing consistent financial
performance in the organisation.
• A well designed global strategy helps the organisation to gain competitive
advantages. It increases the economies of scale in the global market, exploits
other countries resources, broadens learning opportunities, and provides
reputation and brand identification.

3. Q 2. Describe Porter’s five forces Model.
Ans: Porter’s Five Force model
Michael E. Porter developed the Five Force Model in his book, ‘Competitive Strategy’.
Porter has identified five competitive forces that influence every industry and market.
The level of these forces determines the intensity of competition in an industry. The
objective of corporate strategy should be to revise these competitive forces in a way that
improves the position of the organisation.
Figure below describes forces driving industry competitions.
Figure: Forces Driving Industry Competitions
Forces driving industry competitions are:
Threat of new entrants – New entrants to an industry generally bring new capacity;
desire to gain market share and substantial resources. Therefore, they are threats to an
established organisation. The threat of an entry depends on the presence of entry
barriers and the reactions can be expected from existing competitors. An entry barrier is
a hindrance that makes it difficult for a company to enter an industry.
Suppliers – Suppliers affect the industry by raising prices or reducing the quality of
purchased goods and services.
Rivalry among existing firms – In most industries, organisations are mutually dependent.
A competitive move by one organisation may result in a noticeable effect on its
competitors and thus cause retaliation or counter efforts
Buyers – Buyers affect an industry through their ability to reduce prices, bargain for higher quality
or more services.
Threat of substitute products and services – Substitute products appear different but satisfy the
same needs as the original product. Substitute products curb the potential returns of an industry
by placing a ceiling on the prices firms can profitably charge.
Other stakeholders - A sixth force should be included to Porter’s list to include a variety of
stakeholder groups. Some of these groups include governments, local communities, trade
association unions, and shareholders. The importance of stakeholders varies according to the
industry.

4. Q 3. Define the term “Business Policy”, Explain its importance.
Ans Business Policies
Business policies are the instructions laid by an organisation to manage its activities. It
identifies the range within which the subordinates can take decisions in an organisation.
It authorises the lower level management to resolve their issues and take decisions
without consulting the top level management repeatedly. The limits within which the
decisions are made are well defined. Business policy involves the acquirement of
resources through which the organisational goals can be achieved. Business policy
analyses roles and responsibilities of top level management and the decisions affecting
the organisation in the long-run. It also deals with the major issues that affect the
success of the organisation.
Importance of Business Policies
A company operates consistently, both internally and externally when the policies
are established. Business policies should be set up before hiring the first employee
in the organisation. It deals with the constraints of real-life business.
It is important to formulate policies to achieve the organisational objectives. The
policies are articulated by the management. Policies serve as a guidance to
administer activities that are repetitive in nature. It channels the thinking and action
in decision making. It is a mechanism adopted by the top management to ensure
that the activities are performed in the desired way. The complete process of
management is organised by business policies.
Business policies are important due to the following reasons:
— Coordination – Reliable policies coordinate the purpose by focusing on
organisational activities. This helps in ensuring uniformity of action
throughout the organisation. Policies encourage cooperation and promote initiative.
— Quick decisions – Policies help subordinates to take prompt action and quick
decisions. They demarcate the section within which decisions are to be taken. They
help subordinates to take decisions with confidence without consulting their

5. superiors every time. Every policy is a guide to activities that should be followed in a
particular situation. It saves time by predicting frequent problems and providing ways
to solve them.
— Effective control – Policies provide logical basis for assessing performance. They
ensure that the activities are synchronised with the objectives of the organisation. It
prevents divergence from the planned course of action. The management tends to
deviate from the objective if policies are not defined precisely. This affects the overall
efficiency of the organisation. Policies are derived objectives and provide the outline
for procedures.
— Decentralisation – Well defined policies help in decentralisation as the executive
roles and responsibility are clearly identified. Authority is delegated to the executives
who refer the policies to work efficiently. The required managerial procedures can be
derived from the given policies. Policies provide guidelines to the executives to help
them in determining the suitable actions which are within the limits of the stated
policies. Policies contribute in building coordination in larger organisations.

6. Q 4: What, in brief, are the types of Strategic Alliances and the Purpose
of each? Supplement your answer with real life examples.
Ans: Strategic alliances constitute a viable alternative in addition to Strategic
Alternatives. Companies can develop alliances with the members of the strategic group
and perform more effectively. These alliances may take any of the following forms.
Following are the different types of strategic Alliances:
1. Product and/or service alliance: Two or more companies may get together to
synergies their operations, seeking alliance for their products and/or services. A
manufacturing company may grant license to another company to produce its
products. The necessary market and product support, including technical know-how,
is provided as part of the alliance. Example: - Coca-cola initially provided such
support to thumps Up.
Two companies may jointly market their products which are complementary in nature.
Example:- 1) Chocolate companies more often tie up with toy companies. 2) TV
Channels tie-up with Cricket boards to telecast entire series of cricket matches live.
Two companies, who come together in such an alliance, may produce a new product
altogether. Example: - Sony Music created a retail corner for itself in the ice-cream
parlors of Baskin-Robbins.
2. Promotional alliance: Two or more companies may come together to promote their
products and services. A company may agree to carry out a promotion campaign
during a given period for the products and/or services of another company.
Example :- The Cricket Board may permit Coke’s products to be displayed during the
cricket matches for a period of one year.
3. Logistic alliance: Here the focus is on developing or extending logistics support.
One company extends logistics support for another company’s products and
services. Example:- The outlets of Pizza Hut, Kolkata entered into a logistic alliance
with TDK Logistics Ltd., Hyderabad, to outsource the requirements of these outlets
from more than 30 vendors all over India – for instance, meat and eggs from
Hyderabad etc.
Pricing collaborations: Companies may join together for special pricing collaborations.
Example :- It is customary to find that hardware and software companies in information
technology sector offer each other price discounts. Companies should be very careful in
selecting strategic partners. The strategy should be to select such a partner who has
complementary strengths and who can offset the present weaknesses.

7. Q 5. Explain the concept, need for and importance of a Decision
Support System.
Ans: Annual Budget: It is really a business plan. The budget allocates amounts of
money to every activity and/or department of the firm. As time passes, the actual
expenditures are compared to the budget in a feedback loop. During the year, or at the
end of the fiscal year, the firm generates its financial statements: the income statement,
the balance sheet, the cash flow statement. When putting together, these four
documents are the formal edifice of the firm’s finances. However, they can not serve as
day-to-day guides to the General Manager.
1. Daily Financial Statements: The Manager should have access to continuously
updated statements of income, cash flow, and a balance sheet. The most important
statement is that of the cash flow. The manager should be able to know, at each and
every stage, what his real cash situation is – as opposed to the theoretical cash
situation which includes accounts payable and account receivable in the form of
expenses and income.
2. The Daily Ratios Report: This is the most important part of the decision support
system. It enables the Manager to instantly analyse dozens of important aspects of
the functioning of his company. It allows him to compare the behaviour of these
parameters to historical data and to simulate the future functioning of his company
under different scenarios. It also allows him to compare the performance of his
company to the performance of his competitors, other firms in his branch and to the
overall performance of the industry that he is operating in.
The Manager can review these financial and production ratios. Where there is a
strong deviation from historical patterns, or where the ratios warn about problems in
the future – management intervention may be required.
Examples of the Ratios to be Included in the Decision System
 SUE measure – deviation of actual profits from expected profits
 ROE – the return on the adjusted equity capital
 Debt to equity ratios
 ROA – the return on the assets
 The financial average
 ROS – the profit margin on the sales
 ATO – asset turnover, how efficiently assets are used
 Tax burden and interest burden ratios

8.  Compounded leverage
 Sales to fixed assets ratios
 Inventory turnover ratios
 Days receivable and days payable
 Current ratio, quick ratio, interest coverage ratio and other liquidity and coverage
ratios
 Valuation price ratios
 And many others
A decision system has great impact on the profits of the company. It forces the
management to rationalize the depreciation, inventory and inflation policies. It warns the
management against impending crises and problems in the company. It specially helps
in following areas:
a. The management knows exactly how much credit it could take, for how long (for
which maturities) and in which interest rate. It has been proven that without proper
feedback, managers tend to take too much credit and burden the cash flow of their
companies.
b. A decision system allows for careful financial planning and tax planning. Profits go
up, non cash outlays are controlled, tax liabilities are minimized and cash flows are
maintained positive throughout.
The decision system is an integral part of financial management in the West. It is
completely compatible with western accounting methods and derives all the data that it
needs from information extant in the company.
So, the establishment of a decision system does not hinder the functioning of the
company in any way and does not interfere with the authority and functioning of the
financial department, but infact helps the manager to take quick decisions and make
profit to the company.

9. Q 6. Write Short Notes on:
1. Corporate Social Responsibility
2. Business Plan.
Ans: 1: Corporate Social Responsibilities (CSR)
Corporate Social Responsibility (CSR) is the continuing obligation of a business to
behave ethically and contribute to the economic development of the organization. It
improves the quality of life of the organization. The meaning of CSR has two folds. On
one hand, it exhibits the ethical behaviour that an organization exhibit towards its internal
and external stakeholders. And on the other hand, it denotes the responsibility of an
organization towards the environment and society in which it operates. Thus CSR makes
a significant contribution towards sustainability and competitiveness of the organization.
CSR is effective in number of areas such as human rights, safety at work,
consumer protection, climate protection, caring for the environment, sustainable
management of natural resources, and such other issues. CSR also provides
health and safety measures, preserves employee rights and discourages
discrimination at workplace. CSR activities include commitment to product
quality, fair pricing policies, providing correct information to the consumers,
resorting to legal assistance in case of unresolved business problems, so on.
Example – TATA implemented social welfare provisions for its employees since 1945.
Features of CSR
CSR improves the customer satisfaction through its products and services. It also
assists in environmental protection and contributes towards social activities. The
following are the features of CSR:
• Improves the quality of an organization in terms of economic, legal and ethical
factors – CSR improves the economic features of an organization by earning
profits for the owners. It also improves the legal and ethical features by fulfilling
the law and implementing ethical standards.
• Builds an improved management system – CSR improves the management
system by providing products which meets the essential customer needs. It
develops relevant regulations through the utilization of innovative technologies in
the organization
• Contributes to countries by improving the quality of management – CSR
contributes high quality product, environment conservation and occupational
health safety to various regions and countries.

10. • Enhances information security systems and implementing effective security
measures – CSR enhances the information security measures by establishing
improved information security system and distributing them to overseas business
sites. The information system has improved by enhancing better responses to
complex security accidents.
• Creates a new value in transportation – CSR creates a new value in
transportation for the greater safety of pedestrians and automobiles. This is done
by utilizing information and technology for automobiles. The information and
technology helps in establishing a safety driving assistance system.
• Creates awareness towards environmental issues – CSR serves in
preventing global warming by reducing the harmful gases emitted into the
atmosphere during the process of business activities.
2 Business Plans
A business plan is a complete internal document that summarises the operational and
financial objectives of a business. It also contains the detailed plans which show how the
objectives are being accomplished.
An accurately made business plan helps to allocate resources properly, to handle
unforeseen complications like financial crisis and to make good business decisions.
Strategies for creating a business plan
This section describes the strategies for creating a business plan. Every entrepreneur
creates a business plan and its completion will determine the feasibility of the plan. The
strategies for creating a business plan are as follows:
• Define your business vision – You must clear the following queries while defining
the business vision:
• Who is the customer?
• What business are you in?
• What do you sell (product/service)?
• What is your plan for growth?
• What is your primary competitive advantage?
• Make a list of your goals – You must create a list of goals after proper research.
In case of a start up business, more effort must be put on the short-term goals.
• Certain things must be kept clear before setting up your goal. They are listed
below:
• What do you want to achieve?
• How much growth you want to achieve?

11. • Describe the quality and quantity of the service and the customer satisfaction
levels?
• How would you describe your primary competitive advantages?
• Understanding the customer – Understanding the customer is essential for a
perfect business plan. You must understand the customer in terms of the
following factors:
• Needs – The following customer requirements should be understood clearly:
• What unmet needs do your customers have?
• How does your business meet those needs?
• Problems – Customers buy things to solve their specific problems. Always be
specific about the advantages of the product/services of your business which
resolve the customer’s problems.
• Perceptions – Always try to know the perception of the customer. Clarify the
doubts of the customer regarding your profession and the products/services of
your business.
• Learn from your competitors – You can learn a lot about the business and the
customers by looking at the business of your competitors. Always get the
answers of the following questions which will assist you in learning from your
competitor and focusing on your customer.
• What do you know about your target market?
• What competitors do you have?
• How are competitors approaching the market?
• What are the competitor’s weaknesses and strengths?
• How can you improve upon the competition’s approach?
• Resolving financial matters – Several questions might arise when we need to
make financial decisions. They are as follows:
• How will you make money?
• What is the profit potential of your business?
• You can resolve the financial issues by taking smart strategic investment
decisions.
• Identify your marketing strategy – Identifying the marketing strategy is another
essential skill which you must have. The following are the four steps to create a
marketing strategy for your business:
• Identify all the target markets
• Qualify the best target markets
• Identify the tools, strategies and methods
• Test the marketing strategy and tools