Q. 1 What do you understand by the term Strategy in the context of Business Management and Policy? And what are the stages in the formulation of a Strategy? (10 marks)
Answer : Strategy
Strategy is the method by which an organisation systematically achieves its future objectives. A business cannot progress for a long term without a reliable strategy. In this unit, you will learn meaning of business strategies, its conceptual evolution, scope and its importance, distinction between goals and objectives, analysing strategic intent through vision and mission statements and finding out the significance of core competencies of business and critical success factors
Business Management is the science of management of a business by the collective effort of those who take part in the decision making process of the business. Business management is a crucial branch of study for all types of businesses from small businesses to large corporations. Business management is the optimum allocation of resources, both human and physical to achieve various organizational goals. In more specific terms, business management deals with crucial decisions and steps that a business has to undertake to accomplish its desired output and stability. It is the summary of the issues addressed by the entrepreneur or the business authorities to realize the long-term as well as the short-term objectives of the business and the required profit margins.
Business management essentially deals with the issues of planning, organizing, directing and controlling. While planning is undertaken by the manager or supervisor, directing is the supervision so that workers work towards accomplishment of the goals the business has set to achieve and controlling is the process of evaluation of output produced towards that objective. It should be noted in this context that planning consists of tactical planning (short term), strategic planning (long term) and contingency planning which allows for alternative courses of the organization when the primary plans that have been developed do not meet the desired objectives.
Business Management Strategy can be defined as the strategies undertaken to attain the most efficient business management for a corporation, medium-sized or small scale business. It was first developed as a discipline in the 1950’s and 60’s which gained much momentum in the 1970’s through growth and portfolio theory. Business management strategies are the all inclusive steps that the businesses should follow to attain its long-term objectives so as to achieve the highest rates of growth and profits in the long run. Business management strategy can be illustrated as a process of specifying a company’s objectives, developing policies and plans to achieve these objectives and the allocation of resources in the direction of implementing the policies and attaining these objectives. Most importantly, business management strategy is a dynamic process which encompasses all the industries and businesses in which the company is involved in a framework akin to that of game theory.
In terms of advanced economic analysis, an optimal game theory solution can be theorized in which all participants of the game reach their optimal solution which will be identical to the solution if everybody behaves independently of each other. Business management strategy or strategic management is a combination of strategy formulation and strategy implementation and the fundamental premise rests on assessing the competitors of a business and setting goals and strategies to counter any moves of the existing and potential competitors and reviewing their personal strategies annually or quarterly to determine how it has been implemented and whether it needs to be replaced in the event of new competitors and a changed social, financial, political and economic environment. Business strategy based on the industrial organization approach is based on economic theory and deals with issues such as competitive rivalry, resource allocation and the economies of scale. Strategy formulations mainly include self evaluation and competitor analysis which determines the objectives and the planning strategies are devised according to them. Strategic planning sometimes will depend on various external factors such as the policies of the government and other extraneous reasons such as a market crisis. Strategy implementations deal with the allocation of resources and assigning responsibilities or tasks to specific individuals or groups towards the attainment of the planned objectives. It is also concerned with evaluating the efficiency and efficacy of the process of business management strategy, i.e. moving towards the set goals, adjustments to the process if needed and documentation and integration of the process.
Business management strategies can be said to be fundamentally hinged on the basic market principles of getting people their most suitable jobs, effective Research and Development activities, establishing certain standards, delegation of duties and improving the cash flow to the company.
Business Management strategies can be viewed from various approaches such as the industrial organization approach and the sociological approach based on human interactions and strong human relations between the lowest and highest level of managerial authority. There is also a strategy hierarchy that can be divided into functional strategy and operational strategy where functional strategies include marketing strategies, product development strategies, human resource strategies, financial strategies and information technology strategies as opposed to operational strategies which include the day-to-day functioning of the business or the corporate organization. In this context, we can mention the concept of the of Business Process Management (BPM) which is defined as the juncture between Business Management and Information Technology and deals with tools and techniques to design, control and analyze the operational business processes of a business. The main asset or quality of the business process management is the improvement in the business processes through new software tools called the BPM systems which have made such activities faster and cheaper.
Strategy formulation refers to the process of choosing the most appropriate course of action for the realization of organizational goals and objectives and thereby achieving the organizational vision. The process of strategy formulation basically involves six main steps. Though these steps do not follow a rigid chronological order, however they are very rational and can be easily followed in this order.
Setting Organizations’ objectives – The key component of any strategy statement is to set the long-term objectives of the organization. It is known that strategy is generally a medium for realization of organizational objectives. Objectives stress the state of being there whereas Strategy stresses upon the process of reaching there. Strategy includes both the fixation of objectives as well the medium to be used to realize those objectives. Thus, strategy is a wider term which believes in the manner of deployment of resources so as to achieve the objectives.
While fixing the organizational objectives, it is essential that the factors which influence the selection of objectives must be analyzed before the selection of objectives. Once the objectives and the factors influencing strategic decisions have been determined, it is easy to take strategic decisions.
Evaluating the Organizational Environment – The next step is to evaluate the general economic and industrial environment in which the organization operates. This includes a review of the organizations competitive position. It is essential to conduct a qualitative and quantitative review of an organizations existing product line. The purpose of such a review is to make sure that the factors important for competitive success in the market can be discovered so that the management can identify their own strengths and weaknesses as well as their competitors’ strengths and weaknesses.
After identifying its strengths and weaknesses, an organization must keep a track of competitors’ moves and actions so as to discover probable opportunities of threats to its market or supply sources.
Setting Quantitative Targets – In this step, an organization must practically fix the quantitative target values for some of the organizational objectives. The idea behind this is to compare with long term customers, so as to evaluate the contribution that might be made by various product zones or operating departments.
Aiming in context with the divisional plans – In this step, the contributions made by each department or division or product category within the organization is identified and accordingly strategic planning is done for each sub-unit. This requires a careful analysis of macroeconomic trends.
Performance Analysis – Performance analysis includes discovering and analyzing the gap between the planned or desired performance. A critical evaluation of the organizations past performance, present condition and the desired future conditions must be done by the organization. This critical evaluation identifies the degree of gap that persists between the actual reality and the long-term aspirations of the organization. An attempt is made by the organization to estimate its probable future condition if the current trends persist.
Choice of Strategy – This is the ultimate step in Strategy Formulation. The best course of action is actually chosen after considering organizational goals, organizational strengths, potential and limitations as well as the external opportunities
Q. 2 What, in brief, are the types of Strategic Alliances and the purpose of each? Supplement your answer with one real life example of each (10 marks)
Q. 3 What is a Business Plan? What purpose does it serve? (10 marks)
Q. 4 What is the chief purpose of a Business Continuity Plan and what are its components for effective implementation. Explain in a sentence or two as to how it is different from a Business Plan (10 marks)
Q. 5 Take any three examples of the components of a Decision Support System and explain how they help decision making (10 marks)
Q. 6 Name and explain any three ways in which a Company’s CSR can be expressed.(10 marks)
