QUESTION BANK

SECTION B
Paper 1
1. a) Explain the nature of strategic management implementation?
Ans: Nature of Strategic Implementation: Strategic management can be defined as the art and science of
formulating, implementing, and evaluating cross-functional decisions that enable and organisation to achieve its
objectives. As this definition implies, strategic management focuses on integrating management, marketing,
finance/accounting, production/operations, research and development, and computer information systems to
achieve organizational success. Sometimes the term strategic management is used to refer to strategy
formulation, implementation, and evaluation, with strategic planning referring only to strategy formulation.
The purpose of strategic management is to exploit and create new and different opportunities for tomorrow;
long-range planning, in contrast, tries to optimize for tomorrow the trends of today.
Strategy implementation requires a firm to establish annual objectives, devise policies, motivate employees, and
allocate resources so that formulated strategies can be executed. Strategy implementation includes developing
a strategy-supportive culture, creating an effective organizational structure, redirecting marketing efforts,
preparing budgets, developing and utilizing information systems, and linking employee compensation to
organizational performance.
Strategy implementation often is called the action stage of strategic management. Implementing strategy
means mobilizing employees and managers to put formulated strategies into action. Often considered to be the
most difficult stage in strategic management, strategy implementation requires personal discipline,
commitment, and sacrifice. Successful strategy implementation hinges upon managers ability to motivate
employees, which is more an art than a science. Strategies formulated but not implemented serve no useful
purpose.
Interpersonal skills are especially critical for successful strategy implementation. Strategy implementation
activities affect all employees and managers in an organization. Every division and department must decide on
answers to questions, such as What must we do to implement our part of the organizations strategy? and
How best can we get the job done? The challenge of implementation is to stimulate managers and employees
throughout an organization to work with pride and enthusiasm toward achieving stated objectives.
Finally Strategic Implementation is:
Strategy implementation is managing forces during the action.
Strategy implementation focuses on efficiency.
Strategy implementation is primarily an operational process.
Strategy implementation requires special motivation and leadership skills.
b) Define conflict? How a firm can manage conflicts?
Ans: Conflict refers to some form of friction, disagreement, or discord arising within a group when the beliefs
or actions of one or more members of the group are either resisted by or unacceptable to one or more members
of another group. Conflict can arise between members of the same group, known as intragroup conflict, or it
can occur between members of two or more groups, and involve violence, interpersonal discord, and
psychological tension, known as intergroup conflict.
Conflict in the workplace is inevitable, but it doesn't have to bring down morale or effect productivity. Here are
eight things you can do to handle conflict and restore the peace.

Conflict in the workplace is a painful reality and a key reason for poor productivity and frustration. Do you
have people in your workplace that cause problems for everyone else? Do they create additional work for
others? One point is clear--conflict does not magically go away and only gets worse when ignored.
8 strategies to manage conflict are:
Understand the situation. Few situations are exactly as they seem or as presented to you by others. Before you
try to settle the conflict insure you have investigated both sides of the issue.
Acknowledge the problem. I remember an exchange between two board members. One member was frustrated
with the direction the organization was taking. He told the other, Just dont worry about it. It isnt that
important. Keep in mind what appears to be a small issue to you can be a major issue with another.
Acknowledging the frustration and concerns is an important step in resolving the conflict.
Be patient and take your time. The old adage, Haste makes waste, has more truth in it than we sometimes
realize. Take time to evaluate all information. A too-quick decision does more harm than good when it turns out
to be the wrong decision and further alienating the individual involved.
Avoid using coercion and intimidation. Emotional outbursts or coercing people may stop the problem
temporarily, but do not fool yourself into thinking it is a long-term solution. Odds are the problem will
resurface. At that point not only will you have the initial problem to deal with, but also the angry feelings that
have festered below the surface during the interim.
Focus on the problem, not the individual. Most people have known at least one problematic individual
during their work experience. Avoid your own pre-conceived attitudes about individuals. Person X may not be
the most congenial individual or they may just have a personality conflict with someone on your staff. This
does not mean they do not have a legitimate problem or issue. Focus on identifying and resolving the conflict.
If, after careful and thorough analysis, you determine the individual is the problem, then focus on the individual
at that point.
Establish guidelines. Before conducting a formal meeting between individuals, get both parties to agree to a
few meeting guidelines. Ask them to express themselves calmlyas unemotionally as possible. Have them
agree to attempt to understand each others perspective. Tell them if they violate the guidelines the meeting will
come to an end.
Keep the communication open. The ultimate goal in conflict resolution is for both parties to resolve the issue
between themselves. Allow both parties to express their viewpoint, but also share your perspective. Attempt to
facilitate the meeting and help them pinpoint the real issue causing conflict.
Act decisively. Once you have taken time to gather information, talked to all the parties involved, and reviewed
all the circumstances, make your decision and act. Dont leave the issue in limbo. Taking too long to make a
decision could damage your credibility and their perception of you. They may view you as either too weak, too
uncaring, or both, to handle the problem. Not everyone will agree with your decision, but at least they will
know where you stand.
2. a) What are the different marketing issues in strategic implementation?
Ans: Countless marketing variables affect the success or failure of strategy implementation, and the scope of
this text does not allow us to address all those issues. Some examples of marketing decisions that may require
policies are as follows:

1. To use exclusive dealerships or multiple channels of distribution.

2. To use heavy, light, or no TV advertising.
3. To limit (or not) the share of business done with a single customer.
4. To be a price leader or a price follower.
5. To offer a complete or limited warranty.
6. To reward salespeople based on straight salary, straight commission, or a combination
salary/commission.
7. To advertise online or not.
A marketing issue of increasing concern to consumers today is the extent to which companies can track
individuals movements on the Internet---and even be able to identify an individual by name and e-mail address.
Two variables are of central importance to strategy implementation: market segmentation and product
positioning. Market segmentation and product positioning rank as marketings most important contributions to
strategic management.
Market Segmentation
Market segmentation is widely used in implementing strategies, especially for small and specialized firms.
Market segmentation can be defined as the subdividing of a market into distinct subsets of customers according
to needs and buying habits.
Market segmentation is an important variable in strategy implementation for at least three major reasons. First,
strategies such as market development, product development, market penetration, and diversification require
increased sales through new markets and products. To successfully implement these strategies, new or
improved market-segmentation approaches are required. Second, market segmentation allows a firm to operate
with limited resources because mass production, mass distribution, and mass advertising are not required.
Market segmentation enables a small firm to compete successfully with a large firm by maximizing per-unit
profits and per-segment sales.
Evaluating potential market segments requires strategists to determine the characteristics and needs of
consumers, to analyze consumer similarities and differences and to develop consumer group profiles.
Segmenting consumer markets is generally much simpler and easier than segmenting industrial markets,
because industrial products, such as electronic circuits and forklifts, have multiple applications and appeal to
diverse customer groups.
Segmentation is a key to matching supply and demand, which is one of the thorniest problems in customer
service. Segmentation often reveals that large, random fluctuations in demand actually consist of several small,
predictable, and manageable patterns. Matching supply and demand allows factories to produce desirable
levels without extra shifts, overtime, and subcontracting. Matching supply and demand also minimizes the
number and severity of stock-outs. The demand for hotel rooms, for example, can be dependent on foreign
tourists, businesspersons, and vacationers. Focusing separately on these three market segments, however, can
allow hotel firms to more effectively predict overall supply and demand.
Does the Internet Make Market Segmentation Easier?

Yes. The segments of people who marketers want to reach online are much more precisely defined than the
segments of people reached through traditional forms of media, such as television, radio, and magazines. For
example, Quepasa.com is widely visited by Hispanics. Marketers aiming to reach college students, who are
notoriously difficult to reach via traditional media, focus on sites such as collegeclub.com and
studentadvantage.com. The gay and lesbian population, which is estimated to comprise about 5 percent of the
U.S. population, has always been difficult to reach via traditional media but now can be focused on at sites such
as gay.com. Marketers can reach persons interested in specific topics, such as travel or fishing, by placing
banners on related Web sites.
People all over the world are congregating into virtual communities on the Web by becoming
members/customers/visitors of Web sites that focus on an endless range of topics. People in essence segment
themselves by nature of the Web sites that comprise their favorite places, and many of these Web sites sell
information regarding their visitors. Businesses and groups of individuals all over the world pool their
purchasing power in Web sites to get volume discounts.
Product Positioning
After markets have been segmented so that the firm can target particular customer groups, the next step is to
find out what customers want and expect. This takes analysis and research. A severe mistake is to assume the
firm knows what customers want and expect. Countless research studies reveal large differences between how
customers define service and rank the importance of different service activities and how producers view
services. Many firms have become successful by filling the gap between what customers and producers see as
good service. What the customer believes is good service is paramount, not what the producer believes service
should be.
Identifying target customers upon whom to focus marketing efforts sets the stage for deciding how to meet the
needs and wants of particular consumer groups. Product positioning is widely used for this purpose.
Positioning entails developing schematic representations that reflect how your products or services compare to
competitors on dimensions most important to success in the industry. The following steps are required in
product positioning:
1. Select key criteria that effectively differentiate products or services in the industry.
2. Diagram a two-dimensional product-positioning map with specified criteria on each axis.
3. Plot major competitors products or services in the resultant four-quadrant matrix.
4. Identify areas in the positioning map where the companys products or services could be most
competitive in the given target market. Look for vacant areas (niches).
5. Develop a marketing plan to position the companys products or services appropriately.
Because just two criteria can be examined on a single product-positioning map, multiple maps are often
developed to assess various approaches to strategy implementation. Multidimensional scaling could be used to
examine three or more criteria simultaneously, but this technique requires computer assistance and is beyond
the scope of this text. Some examples of product-positioning maps are illustrated in Figure 8-3.
Some rules for using product positioning as a strategy-implementation tool are the following:
1. Look for the hole or vacant niche. The best strategic opportunity might be an unserved segment.

2. Dont squat between segments. Any advantage from squatting (such as a larger target market) is offset
by a failure to satisfy one segment. In decision-theory terms, the intent here is to avoid sub optimization
by trying to serve more than one objective function.
3. Dont serve two segments with the same strategy. Usually, a strategy successful with one segment
cannot be directly transferred to another segment.
4. Dont position yourself in the middle of the map. The middle usually means a strategy that is not
clearly perceived to have any distinguishing characteristics. This rule can vary with the number of
competitors. For example, when there are only two competitors, as in U.S. presidential elections, the
middle becomes the preferred strategic position.
An effective product-positioning strategy meets two criteria: (1) it uniquely distinguishes a company from the
competition, and (2) it leads customers to expect slightly less service than a company can deliver. Firms should
not create expectations that exceed the service the firm can or will deliver. Network Equipment Technology is
an example of a company that keeps customer expectations slightly below perceived performance. This is a
constant challenge for marketers. Firms need to inform customers about what to expect and then exceed the
promise. Under promise and then over deliver is the key!
b) Explain the strategic evaluation framework?
Ans: Organizations are most vulnerable when they are at the peak of their success -R.T. Lenz
-- Strategies become obsolete
-- Internal environments are dynamic
-- External environments are dynamic
Strategy Evaluation
Vital to the organizations well-being
Alert management to potential/actual problems in a timely fashion
Erroneous strategic decisions can have severe negative impact on organizations
3 Basic Activities
1. Examine the underlying bases of a firms strategy
2. Compare expected to actual results
3. Identify corrective actions to ensure that performance conforms to plans
Complex & sensitive undertaking
Overemphasis can be costly & counterproductive
Appraisal of Strategic Performance
Have assets increased
Increase in profitability
Increase in sales
Increase in productivity
Profit margins, ROI, & EPS ratios increased

 Consistency: Strategy should not present inconsistent goals & policies

Consonance: Need for strategies to examine sets of trends
Feasibility: Neither overtax resources or create unsolvable sub-problems
Advantage: Creation or maintenance of competitive advantage
3. a) What do you mean by Expansion ? explain its types?
Ans:
Expansion is a form of restructuring, which results in an increase in the size of the firm. It can take place
in the form of a merger, acquisition, tender offer, asset acquisition or a joint venture.
Brooke Bond Lipton
India Ltd

Oriental Bank Of
Commerce

Hero Honda

Public Offer

B
b) What is the significance of joint ventures in this globalized scenario?
Ans:
Foreign direct investment (FDI) and other forms of association to MNEs operations, such as subcontracting,
original equipment manufacturing (OEM), participation in global value chains (GVCs), global manufacturing
networks (GMNs), joint ventures (JVs) and various kinds of alliances have been the movers of technological
progress, economic growth and success in international markets for many developing countries. Success stories
are widely known and will be highlighted in this work. But it has to be emphasized that success is not an
accident, and successful experiences cannot be simply transplanted. MNEs take their strategic and locational
decisions on the basis of their stakeholders interests, and this includes perception of risks, profit expectations
and pursuit of increased market share; host countries, on the other hand, have their own set of values and
endowments, cultural and social patterns, and development policy options. Furthermore, the characteristics of
industry competition and factor markets are constantly changing, which adds to the complexity of the situation
confronting developing countries and their enterprises, in particular those with inadequate levels of
technological capacity and insufficient access to information on opportunities for internationalization.

This training package is intended to be an instrument to help firms of developing countries improve their
competitive position and grow domestically and internationally by linking with foreign partners, leveraging the
relationships with them, and learning further in order to achieve technological self-sufficiency and innovative
capabilities of their own. In this connection, particular attention will be given to joint ventures and alliances,
including the motivations of the participating enterprises, the opportunities for partnerships, and their
negotiation, implementation and management. While the main expected users of this package are developing
country entrepreneurs, and special focus is given to the subject of alliances and joint ventures, it was found
convenient to frame the package with a supplementary body of knowledge based on two kinds of
considerations:
First, the development of entrepreneurial activities involves issues that are of interest to policy makers. When
thinking of technological progress at the enterprise level in developing countries, and the contribution of joint
ventures and alliances to achieving this aim, one has also to consider the role and interplay of many enabling
factors, such as: international political and development agenda, related rules and conventions, and
multilateral and bilateral agreements and what they mean for a country in terms of constraints and
opportunities; the countrys macro-economic and policy environment with its institutions and regulatory
framework and how they influence entrepreneurial activities and induce the activities of foreign enterprises;
the physical and technological infrastructure available in the country, the national innovation system, and the
mechanisms in place to support technological development and innovation at enterprise level.
Second, the opportunities for internationalization available to firms of developing countries are dependent upon
the business strategies of multinational companies and the way they manage their global operations.
This training package will therefore bring to both policymakers and managers of enterprises of developing
countries not only an awareness of the international development scenario and the competitive forces they have
to cope with, but also an understanding of the strategies and behaviour of multinational companies, of the
opportunities available for growth and internationalization in that context, and of how to seize and take
advantage of such opportunities. Related to this, the package will enable the users to handle the practical issues
associated to the preparation, formation, negotiation and management of the various types of alliances and joint
ventures that firms of developing countries may wish to enter into with foreign partners.
The envisaged purpose is to focus on joint ventures and alliances as a path for growth and internationalization
for developing countries firms and at the same time shed light on the conditions under which they have to
operate, find their opportunities and make their choices
4. a) Define managerial ownership? Discuss its levels?
Ans:
This theory emphasizes that managers own shares to maximize their welfare subject to constraints and
that firms start their life with highly concentrated ownership.
Managerial ownership is a cheap form of financing.
Managers would rather diversify their wealth and reduce their ownership, but they have to take into
account the impact of their sales on the value of their stake and on their ability to control the firm.
Market for the firms stock may not be sufficiently liquid for managers to be able to sell their shares
without affecting adversely the share price, so that they may be better off to wait.
The market can infer from managerial sales that management has adverse information and that its
interests might become less well-aligned with those of shareholders, so that sales may affect adversely
the value of the shares held by management
As management holds fewer shares, its ability to control the firm falls.
Theories:
The agency theory
The contracting theory
The managerial discretion theory.
Agency theory:
Jensen and Meckling (1976), greater managerial ownership aligns the interests of management better
with the interests of shareholders.
The agency theory does not offer predictions about the determinants of ownership structure: it is
assumed to be exogenous.

The problem with the agency theory approach is that it is not clear why managers hold shares in the first
place and why they would choose to hold more shares.
The Contracting theory:
Higher managerial ownership increases shareholder wealth because it aligns the interests of
management better with the interests of shareholders.
The Managerial discretion theory:
Oliver E. Williamson hypothesized (1964) that profit maximization would not be the objective of the
managers of a joint stock organisation. This theory, like other managerial theories of the firm, assumes
that utility maximisation is a managers sole objective. However it is only in a corporate form of
business organisation that a self-interest seeking manager can maximise his/her own utility, since there
exists a separation of ownership and control.
The basic assumptions of the model are:
Imperfect competition in the markets.
Divorce of ownership and management.
A minimum profit constraint exists for the firms to be able to pay dividends to their share holders
b) what is takeover? Explain different kinds of takeovers?
Ans:
Takeover is the purchase of one company (the target) by another (the acquirer, or bidder).
A corporate action where an acquiring company makes a bid for an acquiree. If the target company is
publicly traded, the acquiring company will make an offer for the outstanding shares.
1. Friendly takeovers
A "friendly takeover" is an acquisition which is approved by the management. Before a bidder makes
an offer for another company, it usually first informs the company's board of directors.
In an ideal world, if the board feels that accepting the offer serves the shareholders better than rejecting
it, it recommends the offer be accepted by the shareholders.
2. Hostile takeovers
A "hostile takeover" allows a suitor to take over a target company whose management is unwilling to
agree to a merger or takeover.
A takeover is considered "hostile" if the target company's board rejects the offer, but the bidder
continues to pursue it, or the bidder makes the offer directly after having announced its firm intention to
make an offer
A hostile takeover can be conducted in several ways.
TENDER OFFER: It can be made where the acquiring company makes a public offer at a fixed price
above the current market price.
PROXY FIGHT: Whereby it tries to persuade enough shareholders, usually a simple majority, to replace
the management with a new one which will approve the takeover.
CREEPING TENDER OFFER: Quietly purchasing enough stock on the open market.
BEAR HUG: The acquirer firm mount a pressure on target by threaten management to go directly to
shareholders in market and offer a price much more than its market value. The target has no option
except accepting the proposal,
3. Reverse takeovers:
A "reverse takeover" is a type of takeover where a private company acquires a public company.
This is usually done at the instigation of the larger, private company, the purpose being for the private
company to effectively float itself while avoiding some of the expense involved in a conventional IPO.
PROS:
Increase in sales/revenues.
Venture into new businesses and markets.
Profitability of target company.
Increase market share.
Decreased competition.
Reduction of overcapacity in the industry.
Enlarge brand portfolio.
Increase in economies of scale
Increased efficiency as a result of corporate synergies/ redundancies.

CONS:
Goodwill, often paid in excess for the acquisition.
Culture clashes within the two companies causes employees to be less-efficient or despondent.
Reduced competition and choice for consumers in oligopoly markets.
Likelihood of job cuts.
Cultural integration/conflict with new management.
Hidden liabilities of target entity.
The monetary cost to the company.
Lack of motivation for employees in the company being bought.
5. a)what are the different challenges in 21st century ?
b) What do you mean by corporate Ethics ? Explain any company which is following corporate Ethics ?
6. a) What do mean by Ecological challenges ? Explain in detail?
b) Explain the role of core competencies in the corporates?
Paper 2
1. a) What is difference between objectives and policies ?
Ans: Annual Objectives
Establishing annual objectives is a decentralized activity that directly involves all managers in an organization.
Active participation in establishing annual objectives can lead to acceptance and commitment. Annual
objectives are essential for strategy implementation because they (1) represent the basis for allocating
resources; (2) are a primary mechanism for evaluating managers; (3) are the major instrument for monitoring
progress toward achieving long-term objectives; and (4) establish organizational, divisional, and departmental
priorities. Considerable time and effort should be devoted to ensuring that annual objectives are well
conceived, consistent with long-term objectives, and supportive of strategies to be implemented. Approving,
revising, or rejecting annual objectives is much more than a rubber-stamp activity.
The purpose of annual objectives can be summarized as follows: Clearly stated and communicated
objectives are critical to success in all types and sizes of firms. Annual objectives, stated in terms of
profitability, growth, and market share by business segment, geographic area, customer groups, and product, are
common in organizations. Objectives should be consistent across hierarchical levels and form a network of
supportive aims. Horizontal consistency of objectives is as important as vertical consistency of objectives. For
instance, it would not be effective for manufacturing to achieve more than its annual objective of units
produced if marketing could not sell the additional units.

Annual objectives serve as guidelines for action, directing and

channeling efforts and activities of organization members. They
provide a source of legitimacy in an enterprise by justifying
activities to stakeholders. They serve as standards of performance.
They serve as an important source of employee motivation and
identification. They give incentives for managers and employees to
perform. They provide a basis for organizational design.

Annual
objectives
should
be
measurable,
consistent,
reasonable,
challenging,
clear,

communicated throughout the organization, characterized by an appropriate time dimension, and accompanied
by commensurate rewards and sanctions. Too often, objectives are stated in generalities, with little operational
usefulness. Annual objectives, such as to improve communication or to improve performance, are not
clear, specific, or measurable. Objectives should state quantity, quality, cost, and time---and also be verifiable.
Terms and phrases such as maximize, minimize, as soon as possible, and adequate should be avoided.

Annual objectives should be compatible with employees and managers values and should be supported by
clearly stated policies. More of something is not always better. Improved quality or reduced cost may, for
example, be more important than quantity. It is important to tie rewards and sanctions to annual objectives so
that employees and managers understand that achieving objectives is critical to successful strategy
implementation. Clear annual objectives do not guarantee successful strategy implementation, but they do
increase the likelihood that personal and organizational aims can be accomplished. Overemphasis on achieving
objectives can result in undesirable conduct, such as faking the numbers, distorting the records, and letting
objectives become ends in themselves. Managers must be alert to these potential problems.
Policies
Changes in a firms strategic direction do not occur automatically. On a day-to-day basis, policies are needed to
make a strategy work. Policies facilitate solving recurring problems and guide the implementation of strategy.
Broadly defined, policy refers to specific guidelines, methods, procedures, rules, forms, and administrative
practices established to support and encourage work toward stated goals. Policies are instruments for strategy
implementation. Policies set boundaries, constraints, and limits on the kinds of administrative actions that can
be taken to reward and sanction behavior; they clarify what can and cannot be done in pursuit of an
organizations objectives. For example, Carnivals Paradise ship has a no-smoking policy anywhere, anytime
aboard ship. It is the first cruise ship to comprehensively ban smoking. Another example of corporate policy
relates to surfing the Web while at work. About 40 percent of companies today do not have a formal policy
preventing employees from surfing the Internet, but software is being marketed now that allows firms to
monitor how, when, where, and how long various employees use the Internet at work.
Policies let both employees and managers know what is expected of them, thereby increasing the likelihood that
strategies will be implemented successfully. They provide a basis for management control, allow coordination
across organizational units, and reduce the amount of time managers spend making decisions. Policies also
clarify what work is to be done and by whom. They promote delegation of decision making to appropriate
managerial levels where various problems usually arise. Many organizations have a policy manual that serves
to guide and direct behavior. Wal-Mart has policy that it calls the 10 Foot Rule, whereby customers can find
assistance within 10 feet of anywhere in the store. This is a welcomed policy in Japan where Wal-Mart is trying
to gain a foothold; 58 percent of all retailers in Japan are mom-and-pop stores and consumers historically have
had to pay top yen rather than discounted prices for merchandise.
Policies can apply to all divisions and departments (for example, We are an equal opportunity employer).
Some policies apply to a single department (Employees in this department must take at least one training and
development course each year). Whatever their scope and form, policies serve as a mechanism for
implementing strategies and obtaining objectives. Policies should be stated in writing whenever possible. They
represent the means for carrying out strategic decisions.
b.)What is the relationship between structure and strategy?
Ans: An organizations strategy is its plan for the whole business that sets out how the organization will use its
major resources. In other words, an organizations strategy is a plan of action aimed at reaching specific goals
and
staying
in
good
stead
with
clients
and
vendors.
On the other hands, an organizations structure is the way the pieces of the organization fit together internally.
For the organization to deliver its plans, the strategy and the structure must be woven together seamlessly. In
other words, organizational structure is a term used to highlight the way a company thinks about hierarchy,
assigns tasks to personnel and ensures its workforce works collaboratively to achieve a common goal. The goal
is to avoid task overlap and workforce confusion, especially when it comes to laying a strong foundation for
long-term productivity. Task overlap, a situation in which two or more employees perform the same task in
different departments, costs a company money. This creates confusion, inefficiencies and lack of accountability
-- because no employee ultimately has a clear responsibility over who does what, where and when.
It is important to highlight that for too long, structure has been viewed as something separate from strategy.
Revising structures are often seen as ways to improve efficiency, promote teamwork, create synergy, eliminate

or create new department or reduce cost, including personnel. Yes, restructuring can do all that and more. What
has been less obvious is that structure and strategy are dependent on each other. You can create the most
efficient, team oriented, synergistic structure possible and still end up in the same place you are or worse if a
good
strategy
is
not
adopted.
Organizational structure and strategy are related because organizational strategy helps a company define and
build its organizational structure. A company's organizational structure is based on the result of the analysis of
organizational strategy. The company will use these results to determine its areas of concentration and how to
position
itself
in
order
to
succeed.
One of the first steps a company takes in its initial stages is assessing its operational environment in order to
determine the conditions in which it must operate. This involves checking out the competition, consumer
trends, culture and other factors. The company will find out the strengths and weaknesses of its competition, the
buying
habits
of
the
consumers,
and
its
economic
capabilities.
The relationship between organizational structure and strategy becomes clearer when the companys strategy is
in place. With a clear focus of what it wants to achieve, the organization will proceed to align its structure in
such a manner to best achieve this. It will allocate responsibilities for optimal results, create branches, and
decide whether individual efforts or group participation is the best method for it to achieve its goals. The
organizational structure and strategy will also help the company decide if the tone of the company should be
strictly formal, semi-formal or informal. All of these decisions can be made after determining the organizational
strategy
of
the
company.
Structure is not simply an organization chart. Structure is all the people, positions, procedures, processes,
culture, technology and related elements that comprise the organization. It defines how all the pieces, parts and
processes work together. This structure must be totally integrated with strategy for the organization to achieve
its mission and goals. Structure supports strategy. If an organization changes its strategy, it must change its
structure to support the new strategy. When it doesnt, the structure acts like a bungee cord and pulls the
organization
back
to
its
old
strategy.
Strategy follows structure. What the organization does defines the strategy. Changing strategy means changing
what everyone in the organization does. When an organization changes its structure and not its strategy, the
strategy will change to fit the new structure. Strategy follows structure. Suddenly management realizes the
organizations strategy has shifted in an undesirable way. It appears to have done it on its own. In reality, an
organizations structure is a powerful force. You cant direct it to do something for any length of time unless the
structure
is
capable
of
supporting
that
strategy.
The sum total of how an organization goes about its work is its strategy. Structure and strategy are married to
each other. When a company makes major changes, it must carefully think out every aspect of the structure
required to support the strategy. That is the only way to implement lasting improvements. Every part of an
organization, every person working for that organization needs to be focused on supporting the vision and
direction. How everything is done and everything operates needs to be integrated so all the effort and resources
support
the
strategy.
It takes the right structure for a strategy to succeed. Management that is solely focused on results can have a
tendency to direct everyone on what they need to do without paying attention to the current way the
organization works. While people may carry out these actions individually, it is only when their daily way of
working is integrated to support strategy that the organizations direction is sustainable over time.
Top management cant just send out a proclamation about a new strategy, direction and vision and expect
everyone to follow it. To implement such a strategic shift requires a complete change within the organization
itself. Strategy and structure are married to each other. A decision to change one requires an all-out effort to
change the other. But that structural change must be well thought out and based on a thorough cause and effect
analysis. You dont just change a structure to change it. You have to make sure the changes will support that
strategy. At the same time, you dont just implement a better leadership and engagement approach in a company
or alter the organizational chart without evaluating how that is going to effect the firms ability to carry out its
current strategies.

2. a) What are the different ways to manage Resistance to change?

Ans:
Force change strategy
involves giving orders and enforcing those orders
Educative change strategy
one that presents information to convince people of the need for change
Self-interest change strategy
one that attempts to convince individuals that the change is to their personal advantage
1. Do change management right the first time
Much of the resistance faced by projects can be avoided if effective change management is applied on
the project from the very beginning. While resistance is the normal human reaction in times of change,
good change management can mitigate much of this resistance. Change management is not just a tool
for managing resistance when it occurs, it is most effective as a tool for activating and engaging
employees in a change. Capturing and leveraging the passion and positive emotion surrounding a
change can many times prevent resistance from occurring - this is the power of utilizing structured
change management from the initiation of a project.
Participants in the 2009 benchmarking study commented on the fraction of resistance they experienced
from employees and managers that they felt could have been avoided with effective change
management (see graph below). Participants cited that much of the resistance they encountered could
have been avoided if they applied solid change management practices and principles. The moral here
is: if you do change management right the first time, you can prevent much of the resistance from
ever occurring.
2. Expect it
Do not be surprised by resistance! Even if the solution a project presents is a wonderful improvement to a
problem that has been plaguing employees, there will still be resistance to change. Comfort with the status
quo is extraordinarily powerful. And fear of moving into an unknown future state creates anxiety and stress,
even if the current state is painful. Project teams and change management teams should expect resistance and
work to address it and mitigate it - but they should never be surprised by it.
3. Address it formally
Managing resistance should not be solely a reactive tactic for change management practitioners. There are
many proactive steps that can be used to address and mitigate resistance that should be part of the change
management approach on a project.
Resistance is addressed in all three phases of Prosci's organizational change management methodology.

In Phase 1 - Preparing for change: During the creation of the change management strategy,
anticipated points of resistance and special tactics are generated based on the readiness assessments that
are part of this phase.

In Phase 2 - Managing change: The resistance management plan is one of the five change
management plans created - along with the communication plan, sponsorship roadmap, coaching plan
and training plan. These levers all focus on moving individuals through their own change process and
addressing the likely barriers for making the change successfully. The resistance management plan
provides specific action steps for understanding and addressing resistance.

In Phase 3 - Reinforcing change: In the final phase of the process, feedback is collected to understand
employee adoption and compliance with the new workflows and processes prescribed by the change.

Evaluating this feedback allows the team to identify gaps and react to resistance that may still be
occurring. This phase also includes the top 10 steps for dealing with resistance which can be a powerful
tool for managers and supervisors in the organization.
4. Identify the root causes
Managing resistance is ineffective when it simply focuses on the symptoms. The symptoms of resistance are
observable and often overt - such as complaining, not attending key meetings, not providing requested
information or resources, or simply not adopting a change to process or behavior. While they are more evident,
focusing on these symptoms will not yield results. To be effective at managing resistance, you must look
deeper into what is ultimately causing the resistance. Effective resistance management requires identification of
the root causes of resistance - understanding why someone is
5. Engage the "right" resistance managers
The "right" resistance managers in an organization are the senior leaders, middle managers and front-line
supervisors. The change management team is not an effective resistance manager. Project team members,
Human Resources or Organization Development staff are not effective resistance managers either. Ultimately, it
takes action by leadership in an organization to manage resistance.
At a high level, senior leaders can help to mitigate resistance by making a compelling case for the need for
change and by demonstrating their commitment to a change. Employees look to and listen to senior leaders
when they are deciding if a change is important and they will judge what they hear and what they see from this
group. If senior leaders are not committed to a change or waver in their support, employees will judge the
change as unimportant and resist the change.
b) Define supportive culture ? Explain the its role in present conditions?
Ans: Supportive Culture: Strategists should strive to preserve, emphasize, and build upon aspects of existing
culture that supports proposed new strategies. Numerous techniques are available to alter an organizations
culture, including recruitment, training, transfer, promotion, restructure of an organizations design, role
modeling, positive reinforcement, and mentoring.

Create a strategy for a flexible, supportive work environment, one that will be comprehensive and lasting, that
will transform our culture and serve the needs of both employee and employer.
1. Formal statements of organizational philosophy, charters, creeds, materials used for recruitment and
selection, and socialization
2. Designing of physical spaces, facades, buildings
3. Deliberate role modeling, teaching, and coaching by leaders
4. Explicit reward and status system, promotion criteria
5. Stories, legends, myths, and parables about key people and events
6. What leaders pay attention to, measure, and control
7. Leader reactions to critical incidents and organizational crises
8. How the organization is designed and structured
9. Organizational systems and procedures
10. Criteria used for recruitment, selection, promotion, leveling off, retirement, and excommunication of
people
3. a) What are the finance and Accounting issues in strategic implementation?

Ans: In this section, we examine several finance/accounting concepts considered to be central to strategy
implementation: acquiring needed capital, developing projected financial statements, preparing financial
budgets, and evaluating the worth of a business. Some examples of decisions that may require
finance/accounting policies are these:
1. To raise capital with short-term debt, long-term debt, preferred stock, or common stock.
2. To lease or buy fixed assets.
3. To determine an appropriate dividend payout ratio.
4. To use LIFO (Last-in, First-out), FIFO (First-in, First-out), or a market-value accounting approach.
5. To extend the time of accounts receivable.
6. To establish a certain percentage discount on accounts within a specified period of time.
7. To determine the amount of cash that should be kept on hand.
Projected Financial Statements
Projected financial statement analysis is a central strategy-implementation technique because it allows an
organization to examine the expected results of various actions and approaches. This type of analysis can be
used to forecast the impact of various implementation decisions (for example, to increase promotion
expenditures by 50 percent to support a market-development strategy, to increase salaries by 25 percent to
support a market-penetration strategy, to increase research and development expenditures by 70 percent to
support product development, or to sell $1 million of common stock to raise capital for diversification). Nearly
all financial institutions require at least three years of projected financial statements whenever a business seeks
capital. A projected income statement and balance sheet allow an organization to compute projected financial
ratios under various strategy-implementation scenarios. When compared to prior years and to industry
averages, financial ratios provide valuable insights into the feasibility of various strategy-implementation
approaches.
Financial Budgets
A financial budget is a document that details how funds will be obtained and spent for a specified period of
time. Annual budgets are most common, although the period of time for a budget can range from one day to
more than 10 years. Fundamentally, financial budgeting is a method for specifying what must be done to
complete strategy implementation successfully. Financial budgeting should not be thought of as a tool for
limiting expenditures but rather as a method for obtaining the most productive and profitable use of an
organizations resources. Financial budgets can be viewed as the planned allocation of a firms resources based
on forecasts of the future.
There are almost as many different types of financial budgets as there are types of organizations. Some
common types of budgets include cash budgets, operating budgets, sales budgets, profit budgets, factory
budgets, capital budgets, expense budgets, divisional budgets, variable budgets, flexible budgets, and fixed
budgets. When an organization is experiencing financial difficulties, budgets are especially important in
guiding strategy implementation.
Perhaps the most common type of financial budget is the cash budget. The Financial Accounting Standards
Board (FASB) has mandated that every publicly held company in the United States must issue an annual cashflow statement in addition to the usual financial reports. The statement includes all receipts and disbursements

of cash in operations, investments, and financing. It supplements the Statement on Changes in Financial
Position formerly included in the annual reports of all publicly held companies.
Financial budgets have some limitations. First, budgetary programs can become so detailed that they are
cumbersome and overly expensive. Overbudgeting or underbudgeting can cause problems. Second, financial
budgets can become a substitute for objectives. A budget is a tool and not an end in itself. Third, budgets can
hide inefficiencies if based solely on precedent rather than on periodic evaluation of circumstances and
standards. Finally, budgets are sometimes used as instruments of tyranny that result in frustration, resentment,
absenteeism, and high turnover. To minimize the effect of this last concern, managers should increase the
participation of subordinates in preparing budgets.
b) What do you mean Balance score card? How can you apply in the corporate?
Ans: The balanced scorecard is a strategic planning and management system that is used extensively in business
and industry, government, and nonprofit organizations worldwide to align business activities to the vision and
strategy of the organization, improve internal and external communications, and monitor organization.
The balanced scorecard supplemented traditional financial measures with criteria that measured performance
from three additional perspectivesthose of customers, internal business processes, and learning and growth.
(See the exhibit Translating Vision and Strategy: Four Perspectives.) It therefore enabled companies to track
financial results while simultaneously monitoring progress in building the capabilities and acquiring the
intangible assets they would need for future growth. The scorecard wasnt a replacement for financial measures;
it was their complement.
Recently, we have seen some companies move beyond our early vision for the scorecard to discover its value as
the cornerstone of a new strategic management system. Used this way, the scorecard addresses a serious
deficiency in traditional management systems: their inability to link a companys long-term strategy with its
short-term actions.
Most companies operational and management control systems are built around financial measures and targets,
which bear little relation to the companys progress in achieving long-term strategic objectives. Thus the
emphasis most companies place on short-term financial measures leaves a gap between the development of a
strategy and its implementation.
Managers using the balanced scorecard do not have to rely on short-term financial measures as the sole
indicators of the companys performance. The scorecard lets them introduce four new management processes
that, separately and in combination, contribute to linking long-term strategic objectives with short-term actions.
(See the exhibit Managing Strategy: Four Processes.)

The first new processtranslating the visionhelps managers build a consensus around the organizations
vision and strategy. Despite the best intentions of those at the top, lofty statements about becoming best in
class, the number one supplier, or an empowered organization dont translate easily into operational terms
that provide useful guides to action at the local level. For people to act on the words in vision and strategy
statements, those statements must be expressed as an integrated set of objectives and measures, agreed upon by
all senior executives, that describe the long-term drivers of success.
The second processcommunicating and linkinglets managers communicate their strategy up and down the
organization and link it to departmental and individual objectives. Traditionally, departments are evaluated by
their financial performance, and individual incentives are tied to short-term financial goals. The scorecard gives
managers a way of ensuring that all levels of the organization understand the long-term strategy and that both
departmental and individual objectives are aligned with it.
The third processbusiness planningenables companies to integrate their business and financial plans.
Almost all organizations today are implementing a variety of change programs, each with its own champions,
gurus, and consultants, and each competing for senior executives time, energy, and resources. Managers find it
difficult to integrate those diverse initiatives to achieve their strategic goalsa situation that leads to frequent
disappointments with the programs results. But when managers use the ambitious goals set for balanced
scorecard measures as the basis for allocating resources and setting priorities, they can undertake and
coordinate only those initiatives that move them toward their long-term strategic objectives.
The fourth processfeedback and learninggives companies the capacity for what we call strategic learning.
Existing feedback and review processes focus on whether the company, its departments, or its individual
employees have met their budgeted financial goals. With the balanced scorecard at the center of its management
systems, a company can monitor short-term results from the three additional perspectivescustomers, internal
business processes, and learning and growthand evaluate strategy in the light of recent performance. The
scorecard thus enables companies to modify strategies to reflect real-time learning.
4. a) Explain the scenario of strategic alliances in India ? Do you support?
b) What is difference between mergers and acquisitions ?
5. a) Explain different forms of managerial ownership ?
b) What are the different issues in takeovers ?

6. a)What is corporate social responsibility ? Explain the social responsibility activities of any of the
company?
Ans: Corporate Social Responsibility is a management concept whereby companies integrate social and
environmental concerns in their business operations and interactions with their stakeholders. CSR is generally
understood as being the way through which a company achieves a balance of economic, environmental and
social imperatives (Triple-Bottom-Line- Approach), while at the same time addressing the expectations of
shareholders and stakeholders. In this sense it is important to draw a distinction between CSR, which can be a
strategic business management concept, and charity, sponsorships or philanthropy. Even though the latter can
also make a valuable contribution to poverty reduction, will directly enhance the reputation of a company and
strengthen its brand, the concept of CSR clearly goes beyond that.
Aditya Birla Group:
Our focus areas
Our rural development activities span five key areas and our single-minded goal here is to help build model
villages that can stand on their own feet. Our focus areas are healthcare, education, sustainable livelihood,
infrastructure and espousing social causes.

Education
Formal and non-formal education, adult education
Scholarships for girls, merit scholarships and technical education for boys
Distance education
Girl child education
Digital literacy / computer education
Health care and family welfare
Pulse polio programme
Mobile clinics doctors' visits
General and multispeciality medical camps, cleft lips
Reproductive and child health care, supplementary nutrition / mid-day meal projects
Safe drinking water, sanitation household toilets, community hospitals
HIV / AIDS, cancer, TB awareness and prevention camps
Blood donation
Responsible parenting
Social causes
Widow re-marriage / dowry-less mass marriages
Social security (insurance)
Culture and sports
Women empowerment
Infrastructure development
Community centres
Schools in villages
Health care centres and hospitals
Roads
Homes for the homeless
Rural electrification
Irrigation and water storage structures
Sustainable livelihood
Self-help groups (microfinance for women and farmers)
Integrated agriculture development
Integrated livestock development
Watershed management

Microenterprise development
Skill development / vocational training through Aditya Birla Technology Park for integrated
training programme and VT centres at most of our plants in collaboration with ITIs
b) What do mean by Employee Empowerment ? it is need of the hour comment ?
Ans: Employee empowerment means different things in different organizations, based on culture and work
design. However,empowerment is based on the concepts of job enlargement and job enrichment. Job
enlargement: Changing the scope of the job to include a greater portion of the horizontal process.
Building strong teams and developing employee capacity are two important elements of achieving
employee empowerment. In addition to the confidence, knowledge and skill to undertake increasingly new
challenges and assignments, employees need opportunities for growth and career development. The confidence
and capabilities of the employees will be enhanced as they attain more experience in management and
organisation, as well as develop new skills and knowledge, including the capability of passing the acquired
knowledge. Employee empowerment is not a simple and one-time task. Empowerment is an ongoing process
for which effort and dedication are the prime requisites in order to improve the relationships at work, which
ultimately improves the effectiveness of the organisation.
Many a times in organisations superiors are fully hesitant to fully adapt to the principles of employee
empowerment. This is because the superiors have a feeling that empowerment of employees means
relinquishment of their own power. But, it should be understood that empowerment doesn`t mean giving up
their entire power. Rather, it is about sharing their knowledge and power together with others in the hierarchy.
However, employee empowerment will only end up in changes in procedures and processes. Key factors like
decision making and problem solving needs the involvement and active participation from the employees in
lower levels of command. Empowering employees doesn`t just mean participation of the employees. It is about
decision making, independence in analysis and action. Employees experience authority to make independent
decisions in their own area of expertise. For which reason true empowerment requires a great deal of mutual
respect, trust among the superiors and the subordinates coupled with transparency
Empowerment of employees means enlargement of an employees job responsibility by giving him
freedom in decision making about his own job without approval of his immediate supervisor. The degree of
responsibility and authority given to an employee is empowerment. Through empowerment, the employees are
supported and encouraged to use their skills, abilities and creativity by accepting accountability for their work.
Empowerment happens when employees are trained enough, given information and best possible tools , fully
involved in decision making and are rewarded fairly. Employee empowerment identifies how much an
individual can effectively handle without becoming over-burdened or stressed.
The process of empowerment includes superiors and employees working together in order to establish
clear goals and expectations with-in agreed boundaries. Employee is a strategy and philosophy that enables
employees to take decisions about their jobs.
Empowering employees will help them in owing their work and take responsibility for their actions.
Empowerment helps employees in serving the customers at that level in the organisation where the interface
with the customer exists. Empowerment of the employees is an important organisational issue. The process of
enabling and authorizing an employee to think, behave, take action, control work and make decision in
autonomous ways is employee empowerment. It is the state of feeling of self empowerment to take control of
one`s own action. The strategy and philosophy that enables employees to make decisions in their jobs is
employee empowerment. It helps the employees to own their work and take responsibility for their actions and
helps employees to serve customers at that level where the customer interface exists. In order to face changes in
dynamic work environments, employees who are empowered with new ideas and innovative attributes may
increase their ability respond more effectively.
Employees who are empowered will be balanced, confident, aware, vital, caring, and ready. Empowered
employees are not depressed, confused, aggressive, divisive, or indecisive. The organizations that successfully
implement employee empowerment have certain values at their core from which the process of empowerment
comes. Respect and appreciation and value that they bring to the organization are among the values.It can`t be
said that values alone do not make up an organization's culture and it is also respect for individuals is one of the
outward signs of an empowered culture.
Paper 3
1. a) What are the problems in strategic implementation ?

Ans:

b) what is the link between performance and pay ?

Ans:
People join a firm because of Pay
People stay in a firm (or leave) because of Pay
Employees more readily agree to develop job skills because of Pay
Employees perform better on their jobs because of Pay
The effectiveness of a pay model depends upon three things- efficiency, equity and compliance.
1. Efficiency: it involves three general areas of concern.
(i) Strategy:
Does the pay-for-performance plan support corporate objectives?
The plan should link well with HR strategy and objectives.
The reward should not be on the basis of status quo.
Finally, management has to address the most difficult question like- How much of an increase makes a
difference? How does it take to motivate an employee?
(ii) Structure:

Structure of the organization should be sufficiently decentralized to allow different operating units to
create flexible variations on a general pay for performance plan.
Different operating units may have different competences and different competitive advantages, so the
organization should not have a rigid pay-for-performance system that detracts from these advantages.
(iii) Standards:
The key to designing a pay-for-performance system rests on standards:
Objectives
Measures
Eligibility
Funding
2. Equity/Fairness :
The second design objective is to ensure that the system is fair to employees. Two types of fairness are
concerns of employees:
Distributive justice: Fairness in the amount that is distributed to the employees. Managers have little
influence over the size of employees pay check. It is influenced more by external market conditions,
pay policy decisions of organization and occupational choices.

Procedural justice: Fairness of the procedure used to determine the amount of reward employee
receives. Managers have control over this type and the organizations that use fair procedures and
supervisors are perceived as more trustworthy and command higher levels of commitments.
A key element in fairness is communication regarding what is expected from employees.
3. Compliance:

The pay for performance system should comply with existing laws as a good reward system enhances
the reputation of the firm.

2. a) What are the R&D Issues in strategic implementation ?

Ans:
Research and Development (R&D) Issues
Research and development (R&D) personnel can play an integral part in strategy implementation. These
individuals are generally charged with developing new products and improving old products in a way that will
allow effective strategy implementation. R&D employees and managers perform tasks that include transferring
complex technology, adjusting processes to local raw materials, adapting processes to local markets, and
altering products to particular tastes and specifications. Strategies such as product development, market
penetration, and related diversification require that new products be successfully developed and that old
products be significantly improved. But the level of management support for R&D is often constrained by
resource availability.
Technological improvements that affect consumer and industrial products and services shorten product life
cycles. Companies in virtually every industry are relying on the development of new products and services to
fuel profitability and growth. Surveys suggest that the most successful organizations use an R&D strategy that
ties external opportunities to internal strengths and is linked with objectives. Well-formulated R&D policies
match market opportunities with internal capabilities. R&D policies can enhance strategy implementation
efforts to:
1. Emphasize product or process improvements.
2. Stress basic or applied research.
3. Be leaders or followers in R&D.
4. Develop robotics or manual-type processes.
5. Spend a high, average, or low amount of money on R&D.
6. Perform R&D within the firm or to contract R&D to outside firms.
7. Use university researchers or private-sector researchers.
There must be effective interactions between R&D departments and other functional departments in
implementing different types of generic business strategies. Conflicts between marketing, finance/accounting,
R&D, and information systems departments can be minimized with clear policies and objectives.
Many firms wrestle with the decision to acquire R&D expertise from external firms or to develop R&D
expertise internally. The following guidelines can be used to help make this decision:
1. If the rate of technical progress is slow, the rate of market growth is moderate, and there are significant
barriers to possible new entrants, then in-house R&D is the preferred solution. The reason is that R&D,
if successful, will result in a temporary product or process monopoly that the company can exploit.

2. If technology is changing rapidly and the market is growing slowly, then a major effort in R&D may be
very risky, because it may lead to the development of an ultimately obsolete technology or one for
which there is no market.
3. If technology is changing slowly but the market is growing quickly, there generally is not enough time
for in-house development. The prescribed approach is to obtain R&D expertise on an exclusive or
nonexclusive basis from an outside firm.
4. If both technical progress and market growth are fast, R&D expertise should be obtained through
acquisition of a well-established firm in the industry.
There are at least three major R&D approaches for implementing strategies. The first strategy is to be the first
firm to market new technological products. This is a glamorous and exciting strategy but also a dangerous one.
Firms such as 3M and General Electric have been successful with this approach, but many other pioneering
firms have fallen, with rival firms seizing the initiative.
A second R&D approach is to be an innovative imitator of successful products, thus minimizing the risks and
costs of start-up. This approach entails allowing a pioneer firm to develop the first version of the new product
and to demonstrate that a market exists. Then, laggard firms develop a similar product. This strategy requires
excellent R&D personnel and an excellent marketing department.
A third R&D strategy is to be a low-cost producer by mass-producing products similar to but less expensive
than products recently introduced. As a new product is accepted by customers, price becomes increasingly
important in the buying decision. Also, mass marketing replaces personal selling as the dominant selling
strategy. This R&D strategy, requires substantial investment in plant and equipment but fewer expenditures in
R&D than the two approaches described previously.
b) What is the role of contingency planning in the competitive world ?
Ans: Contingency planning and risk management are essential components of any business strategy. A small
business owner working on limited funds must pay careful attention to contingency planning and risk
management when evaluating the strengths and weaknesses of a proposed business strategy. Smart planning can
provide the edge the small business owner needs to establish a niche in the market and sustain growth.
Anticipating Business Risks
A business plan that only considers the best-case scenario for your small business isn't likely to last long.
Anticipating risks to your company, including seasonal drops in revenue and new competitor products entering
the market, is crucial to ensure your overall business strategy has the wide vision necessary to keep your
business from being caught off-guard by foreseeable events. The more risks your business can anticipate, the
better your company is at meeting the many challenges that can arise for a small business in any industry.
Developing Mitigation Strategies
Contingency planning and risk management are only as good as the strategies developed to help mitigate the
potential financial damage to your company. Mitigation strategies may include a variety of methods for limiting
the affects of future problems to your business, including storing capital for revenue shortfalls as well as
making improvements to facilities to reduce the chances of employee injury. These strategies provide your
small business with a plan of action in the event of a problem. This allows your company to devote more time
to solving a problem in the moment without having to first sit down and develop a plan of action.
Mobility of Business Strategies
In evaluating your business strategy, contingency plans should give your company the mobility necessary to
shift focus to different aspects of your company and change operating strategies as needs in the market shift.

Mobility is an essential element of contingency planning and your business strategy as a whole. If you notice
your company's strategy isn't working, you must have the systems in place to switch gears and find the
profitable solution. Without mobility, your small business could remain locked in the same money-draining
strategy until you're broke and out of business.
Seizing Business Opportunities
Planning for business opportunities is just as important as developing risk management strategies for your
business. Incorporating opportunity planning into your contingency plans can allow your company to get ahead
of the competition in a variety of areas, including developing new products to meet a need in the market or
increasing promotional campaigns in advance of a tourist season. Taking advantage of these opportunities helps
your company maximize its profit potential and secure new customers or clients.
3. a) Define joint ventures ? Explain any of the joint venture industry of your own choice?
Ans: A business arrangement in which two or more parties agree to pool their resources for the purpose of
accomplishing a specific task. This task can be a new project or any other business activity. In a joint venture
(JV), each of the participants is responsible for profits, losses and costs associated with it. However, the venture
is its own entity, separate and apart from the participants' other business interests.
Maruti Suzuki:
Maruti Suzuki is India and Nepals leading automobile manufacturing company and the market leader in
the car segment both in terms of volume of vehicles sold and revenue earned. Until recently, 18.28% of the
company was owned by the Indian government and 54.2% by Suzuki of Japan. The BJP led government held
an initial public offering of 25% of the company in June 2003. As of 10 May 2007 Govt. of India sold its
complete share to Indian financial institutions. The Govt. of India no longer has stake in Maruti Udyog.
Relationship between the Government of India under the United Front (India) coalition and Suzuki
Motor Corporation over the joint venture was a point of heated debate in the Indian media till Suzuki Motor
Corporation gained the controlling stake. The success of the joint venture led Suzuki to increase its equity from
26% to 40% in 1987, and further to 50% in 1992. In 1982 both the venture partners had entered into an
agreement to nominate their candidate for the post of Managing Director and every Managing Director will
have a tenure of five years.
Joint Venture related Issues:
Relationship between the Government of India, under the United Front (India) coalition and Suzuki Motor
Corporation over the joint venture was a point of heated debate in the Indian media until Suzuki Motor
Corporation gained the controlling stake. This highly profitable joint venture that had a near monopolistic trade
in the Indian automobile market and the nature of the partnership built up till then was the underlying reason for
most issues. The success of the joint venture led Suzuki to increase its equity from 26% to 40% in 1987, and
further to 50% in 1992. In 1982 both the venture partners had entered into an agreement to nominate their
candidate for the post of Managing Director and every Managing Director will have a tenure of five years.
R.C. Bhargava was the initial managing director of the company since the inception of the joint venture. Till
today he is regarded as instrumental for the success of Maruti Suzuki. Joining in 1982 he held several key
positions in the company before heading the company as Managing Director. Currently he is on the Board of
Directors. After completing his five-year tenure, Mr. Bhargava later assumed the office of Part-Time Chairman.
The Government nominated Mr. S.S.L.N. Bhaskarudu as the Managing Director on 27 August 1997. Mr.
Bhaskarudu had joined Maruti Suzuki in 1983 after spending 21 years in the Public sector undertaking Bharat
Heavy Electricals Limited as General Manager. In 1987 he was promoted as Chief General Manager. In 1988
he was named Director, Productions and Projects. The next year (1989) he was named Director of Materials and
in 1993 he became Joint Managing Director.

Suzuki did not attend the Annual General Meeting of the Board with the reason of it being called on a short
notice. Later Suzuki Motor Corporation went on record to state that Bhaskarudu was "incompetent" and wanted
someone else. However, the Ministry of Industries, Government of India refuted the charges. Media stated from
the Maruti Suzuki sources that Bhaskarudu was interested to indigenise most of components for the models
including gear boxes especially for Maruti 800. Suzuki also felt that Bhaskarudu was a proxy for the
Government and would not let it increase its stake in the venture. If Maruti Suzuki would have been able to
indigenise gear boxes then Maruti Suzuki would have been able to manufacture all the models without the
technical assistance from Suzuki. Till today the issue of localization of gear boxes is highlighted in the press.
b) What is merger? what is the procedure for mergers ?
Ans: (Refer 3rd answer in paper 1) and

4. a) What are the determinants of managerial ownership?

Ans:
This theory emphasizes that managers own shares to maximize their welfare subject to constraints and
that firms start their life with highly concentrated ownership.
Managerial ownership is a cheap form of financing.
Managers would rather diversify their wealth and reduce their ownership, but they have to take into
account the impact of their sales on the value of their stake and on their ability to control the firm.
Market for the firms stock may not be sufficiently liquid for managers to be able to sell their shares
without affecting adversely the share price, so that they may be better off to wait.
The market can infer from managerial sales that management has adverse information and that its
interests might become less well-aligned with those of shareholders, so that sales may affect adversely
the value of the shares held by management
As management holds fewer shares, its ability to control the firm falls.
Determinants:
Economic variables influence ownership-performance relationship
Relative growth rates of industries
Differences in demand-supply relationships among industries

Relative value change patterns among industries and firms within them
Stock price movements

b) What is takeovers ? Explain the defenses against takeovers?

Ans:
Takeover is the purchase of one company (the target) by another (the acquirer, or bidder).
A corporate action where an acquiring company makes a bid for an acquiree. If the target company is
publicly traded, the acquiring company will make an offer for the outstanding shares.
There are several ways to defend against a hostile takeover. The most effective methods are built-in defensive
measures that make a company difficult to take over. These methods are collectively referred to as "shark
repellent." Here are a few examples:

The Golden Parachute is a provision in a CEO's contract. It states that he will get a large bonus in cash or
stock if the company is acquired. This makes the acquisition more expensive, and less attractive. Unfortunately,
it also means that a CEO can do a terrible job of running a company, make it very attractive for someone who
wants
to
acquire
it,
and
receive
a
huge
financial
reward.

The supermajority is a defense that requires 70 or 80 percent of shareholders to approve of any acquisition.
This makes it much more difficult for someone to conduct a takeover by buying enough stock for a controlling
interest.

A staggered board of directors drags out the takeover process by preventing the entire board from being
replaced at the same time. The terms are staggered, so that some members are elected every two years, while
others are elected every four. Many companies that are interested in making an acquisition don't want to wait
four years for the board to turn over.

Dual-class stock allows company owners to hold onto voting stock, while the company issues stock with
little or no voting rights to the public. That way investors can purchase stocks, but they can't purchase control of
the company.
In addition to takeover prevention, there are steps companies can take to thwart a takeover once it has
begun. One of the more common defenses is the poison pill. A poison pill can take many forms, but it basically
refers to anything the target company does to make itself less valuable or less desirable as an acquisition:
The people pill - High-level managers and other employees threaten that they will all leave the company if
it is acquired. This only works if the employees themselves are highly valuable and vital to the company's
success.
The crown jewels defense - Sometimes a specific aspect of a company is particularly valuable. For example,
a telecommunications company might have a highly-regarded research and development (R&D) division. This
division is the company's "crown jewels." It might respond to a hostile bid by selling off the R&D division to
another company, or spinning it off into a separate corporation.
Flip-in - This common poison pill is a provision that allows current shareholders to buy more stocks at a
steep discount in the event of a takeover attempt. The provision is often triggered whenever any one
shareholder reaches a certain percentage of total shares (usually 20 to 40 percent). The flow of additional cheap
shares into the total pool of shares for the company makes all previously existing shares worth less. The
shareholders are also less powerful in terms of voting, because now each share is a smaller percentage of the
total.
Some of the more drastic poison pill methods involve deliberately taking on large amounts of debt that the
acquiring company would have to pay off. This makes the target far less attractive as an acquisition, although it
can lead to serious financial problems or even bankruptcy and dissolution. In rare cases, a company decides that
it would rather go out of business than be acquired, so they intentionally rack up enough debt to force
bankruptcy. This is known as the Jonestown Defense.

5. a) What is global competitiveness ? How this culture can be inculcated?

b) what is the role of government in handling the global challenges?
6. a) What is the link between quality and productivity ?
b) What is workforce Diversity ? How industries are managing this culture ?

Paper 4:
1. a) What are the Operational issues in strategic implementation?
Ans: Problems of successful implementation centre around how well or badly the existing organization
responds and how adequate its reporting proves to be.
According to Arthur A. Owen, in practice there are four problem areas associated with the successful
implementation of strategies:
The first problem is that, although strategies need to be developed around the business units (SBUs), of the
corporation, these units often do not correspond to parts of the organizations structure. Business units have an
external market-place for goods and services, and their management can plan and execute strategies
independent of other pieces of the company. Moreover, the organization structure - and how that functions derives from its history of take-over, tax considerations, shareholders considerations, economies of scale,
personnel strengths and weaknesses, national legal requirements, and so on. Therefore, at any time strategy and
structure need to be matched and supportive of each other.
Strategic planners must attempt to cut through the culture of diversified corporation and to plan in relation to
the various competitive environments by identifying the strategies for them.
Moreover, these strategies still have to be implemented by the organization as a whole.
A second problem area is that traditional management reports are not sensitive enough to monitor the
implementation strategies, thus the strategic manager not fully aware of what is happening. Hence the
performance of existing structure is not monitored properly, and as a result control mechanisms may be
ineffective.
Third, implementing strategy involves change, which in turn involves uncertainty and risk. Therefore,
motivating managers to make changes is a key determinant.
Finally, management systems (such as compensation schemes, management development, communications
systems and so on) are often in place as a result of past strategies; they are rarely tuned or revised to meet the
needs of new ones.
Alexander adds additional factors that are also significant:

the failure to predict the time and problems which implementation will involve;

other activities and commitments that distract attention and possibly cause resources to be diverted;

that the bases upon which the strategies were formulated change, or were forecast poorly and
insufficient flexibility has been built in.

To counter these problems Owen suggests the following:

allocating clear responsibility and accountability for the success of the overall strategy project;

limiting the number of strategies pursued at any one time;

identifying actions to be taken to achieve the strategic objective, allocating detailed responsibilities for
actions - and getting agreement for them;

identifying a lists of emilestonesl, or major intermediate progress points;

identifying key performance measures to be monitored throughout the life of the strategy project, and
creating an information system to record progress.

b) what is the role of resource allocation in strategic implementation ?

Ans:
Resource allocation

central management activity that allows for strategy execution

often based on political or personal factors

Strategic management enables resources to be allocated according to priorities established by annual

objectives

T
F
P
H
i
h
u
e
n
y
m
c
s
a
h
i
n
c
o
i
a
l
a
l
o
l
g
i
c
a
l
There are two contingency mechanisms. There

is

a priority ranking of items excluded from the

showing which items to fund if more resources should become available; and there is

plan,

a priority ranking of

some items included in the plan, showing which items should be sacrificed if total funding must be reduced.
Resource allocation is a major management activity that allows for strategy execution. In organizations that
do not use a strategic-management approach to decision making, resource allocation
political or personal factors. Strategic management enables resources to
established by annual objectives. Nothing could
organizational success than for resources to

be more detrimental

is often based on

be allocated according to priorities

to strategic management and to

be allocated in ways not consistent with priorities indicated

by

approved annual objectives.

All organizations have at least four types of resources that can be used to achieve desired objectives:
financial resources, physical resources, human resources, and technological resources. Allocating resources

to

particular divisions and departments does not mean that strategies will be successfully implemented. A number
of factors commonly prohibit effective resource allocation, including an overprotection of
resources, too great an emphasis on short-run financial

criteria,

targets, a reluctance to take risks, and a lack of sufficient knowledge.

organizational

politics, vague strategy

Managers normally have many more tasks than they can do. Managers must allocate time and resources
among these tasks. Pressure builds

up. Expenses are too high. The CEO wants a good financial report for

the third quarter. Strategy formulation and implementation activities often get deferred. Today's problems
soak up available energies and resources. Scrambled accounts and budgets fail to reveal the shift in
allocation away from strategic needs to currently squeaking wheels.
The real value of any resource allocation program lies in the resulting accomplishment of an organization's
objectives. Effective resource allocation does not guarantee successful strategy implementation because
programs, personnel, controls, and commitment must breathe life into the resources provided. Strategic
management itself is sometimes referred to as a "resource allocation process."

2. a) What are the Accounting and financial Issues in strategic implementation ? Refer paper 2-3.a
Answer
b) Explain different expansion strategies ? Refer paper 1 3rd answer
3.a) what is turnaround management ? what are the ways to achieve turnaround management ?
Ans: Turnaround management is a process dedicated to corporate renewal. It uses analysis and planning to
save troubled companies and returns them to solvency, and to identify the reasons for failing performance (or
decreasing presence and position) in the market, and rectify them.
Stages in the Turnaround Process: There are five stages in the turnaround process: Management Change,
Situation Analysis, Emergency Action, Business Restructuring, and Return to Normality. We will look at these
individually to understand what should transpire at each stage by each function within the company; see
Turnaround Process Phases and Actions Chart. The timing is important to coordinate what is happening
between functions. Stages can overlap, and some tasks may impact more than one stage. The process is
designed to first stabilize the situation, which is done by addressing management issues, assessing the situation,
and implementing emergency actions. The restructuring process begins with preparations during the emergency
action phase. The positioning for growth starts with restructuring and grows when normalcy stage is reached.
Management Change Stage It is very important to select a CEO who can successfully lead the turnaround.
This individual must have a proven track record and the ability to assemble a management team that can
implement the strategies to turn the company around. This individual most often comes from outside the
company and brings a special set of skills to deal with crisis and change. Their job will be to stabilize the
situation, implement plans to transform the company, then hire their replacement.
It is essential to eliminate obstructionists who may hamper the process. This could require replacing some or all
of top management depending on the deal. This will undoubtedly mean also replacing some of the board
members who did not keep a watchful eye.
Management must address the issues related to major stakeholder groups (executives, function managers,
employees, lenders, vendors, customers, others). There must be change in the focus of how the company will
operate to accomplish a turnaround. Most companies have a lack-ofsales problem, which necessitates a change
to jump-start sales and drive revenue. There must be information that all can rely on for decision making.
Production management must support and make what the market wants to purchase, at competitive price. You
must nurture critical human capital resources that are left within the company, while at the same time holding
them accountable for results.

Changing management is synonymous with changing the philosophy of how we will run the place to achieve
results. Communication with all stakeholders is paramount through all stages of the process. Set goals that
achieve stakeholder objectives, then apply incentive-based management to motivate the proper results. Tie
everyone to the same broad set of goals and accent how functions can compliment the performance of related
departments.
Situation Analysis Stage
Your objective is to determine the severity of the situation and if it can be turned around. Answer questions like
is the business viable? Can it survive? Should it be saved? Are there sufficient cash resources to fuel the
turnaround? This analysis should culminate in formulating a preliminary action plan stating what is wrong, how
to fix them, key strategies to turn the entity in a positive direction, and a cash flow forecast (at least 13 weeks)
to understand cash usage.
Identify effective turnaround strategies. Operational strategies include increasing revenue, reducing costs,
selling and redeploying assets, and competitive repositioning. Strategic initiatives include adopting sound
corporate and business strategies and tactics, setting specific goals and objectives that align with the ultimate
goals of the stakeholders. Too often, goals are misaligned with the ultimate direction and cause confusion,
wasted time, false-starts, and send employees in the wrong direction. Understand that many of the good
employees have already left the company, you will have to work with the second string in the essence of time
and build as you go.
You must understand the life cycle of the business and how it relates to the chosen turnaround strategy.
Document key issues so that all will understand what you are trying to accomplish, and all will pull in the same
direction. Identify what product and business segments are most profitable, particularly at the gross margin
level, and eliminate weak and nonperformers. Make certain that all functional areas (sales, production) are
working to support the goals of their counterparts. Selling work with flexible delivery times can fill valleys in
production cycles, which reduce costs per unit. Producing only what sales can sell to meet customer demand
will increase sales and gross margin.
Turnaround strategies are often impacted by local government policy considerations and regulations. In the
United States the WARN Act requires 60 day notice of massive lay-offs, which certainly impacts cash flow. In
many countries in Europe and Far East there are stringent rules (local country driven) governing the payment of
wages after lay-offs, dealing with the local authorities regarding the process, and even prioritizing which
workers can be laid off when in fact others may be more qualified. When government policy favors labor and
employment is not at will there will be complications to the process.
Emergency Action Stage
Your objective is to gain control of the situation, particularly the cash, and establish breakeven. Centralize the
cash management function to ensure control. If you stop the cash bleed, you enable the entity to survive. Time
is your enemy. Protect asset value by demonstrating that the business is viable and in transition.
You must raise cash immediately. Review the balance sheet for internal sources of cash such as collecting
accounts receivable, and renegotiating payments against accounts payable. Sell unprofitable business units, real
estate, unutilized assets. Secure asset-based loans if needed. Restructure debt to balance the amount of interest
payments with the level the company can afford.
Lay off employees quickly and fairly. It is much better to cut deep all at once, than to make small cuts
repeatedly. Remaining employees are more prone to focus if they believe in job security, rather than look for the
next action.

Rightsizing the company is much more than employee layoffs. Correct underpricing of products, prune product
lines to only those profitable and that meet demand, and weed out weak and problem customers. Sometimes
there is to much overhead applied to support a customer who isnt paying their fair share of that service.
Emphasize selling more product at profitable rates. Reward those that change the situation, sanction or release
those that dont.
Business Restructuring Stage
Your objective is to create profitability through remaining operations. Stress product line pricing and
profitability. Restructure the business for increased profitability and return on assets and investments. At this
stage your focus should change from cash flow crisis to profitability. Fix the capital structure and renegotiate
the long and short term debt.
Ensure that reporting systems put in place are operationalized to show profitability at each revenue center, cost
center, profit center, cash center, incentive center. Unless employees can see it they cant manage it.
Incentive-based management will drive employees to get involved smartly, and manage to the goals all ascribe
to. Create teams of employees to identify and rework inefficiencies and promote profitability.
There are only two ways to increase sales. Sell existing product to new customers. Sell new products to existing
customers. Do both if you want growth.
Return to Normal Stage
Your objective is to institutionalize the changes in corporate culture to emphasize profitability, ROI, and return
on assets employed. Seek opportunities for profitable growth. Build on competitive strengths. Improve
customer service and relationships. Build continuous management and employee training and development
programs to raise the caliper of your human capital.
This could be a time to restructure long term financing at more reasonable rates now that the company is stable
and on a path to growth.
The odds of a successful turnaround are increased dramatically if a Turnaround Process Phases and Actions
Plan is implemented and followed. This plan can certainly be adapted to unique situations when required. Turn
one around.
b) What is the difference between mergers acquisitions ?
Ans: Merger and acquisition is often known to be a single terminology defined as a process of combining two
or more companies together. The fact remains that the so-called single terminologies are different terms used
under different situations. Though there is a thin line difference between the two but the impact of the kind of
completely
different
in
both
the
cases.
Merger is considered to be a process when two or more companies come together to expand their business
operations. In such a case the deal gets finalized on friendly terms and both the companies share equal profits in
the
newly
created
entity.
When one company takes over the other and rules all its business operations, it is known as acquisitions. In this
process of restructuring, one company overpowers the other company and the decision is mainly taken during
downturns in economy or during declining profit margins. Among the two, the one that is financially stronger
and bigger in all ways establishes it power. The combined operations then run under the name of the powerful
entity
who
also
takes
over
the
existing
stocks
of
the
other
company.

Another difference is, in an acquisition usually two companies of different sizes come together to combat the
challenges of downturn and in a merger two companies of same size combine to increase their strength and
financial gains along with breaking the trade barriers. A deal in case of an acquisition is often done in an
unfriendly manner, it is more or less a forceful or a helpless association where the powerful company either
swallows the operation or a company in loss is forced to sell its entity. In case of a merger there is a friendly
association where both the partners hold the same percentage of ownership and equal profit share.
4. a)What is the level and structure of managerial ownership ? (refer paper 1 - 4th answer)
b) What is takeovers ? Explain the economic issues in takeovers?
Ans:

General term referring to transfer of control of a firm from one group of shareholders to another group
of shareholders. Change in the controlling interest of a corporation, either through a friendly acquisition
or an unfriendly, hostile, bid.

When an "acquirer" takes over the control of the "target company", it is termed as Takeover.

When an acquirer acquires "substantial quantity of shares or voting rights" of the Target Company, it
results into substantial acquisition of shares.

Barriers to entry include:

Economies of scale in established competitors

Differentiated products by competitors

Enduring relationships with customers that create product loyalties with competitors

Common reasons that acquisition strategies fail:

Integration difficulties and an inability to achieve synergy

Inadequate evaluation of target

Large or extraordinary debt

Too much diversification

Managers too focused on acquisitions

Firms become too large

Additional Discussion Notes for Problems with Acquisitions - These notes include additional materials that
discuss problems in achieving acquisition success and includes the HP-Compaq merger case to demonstrate
implementation of a merger/acquisition.
Problems in Achieving Acquisition Success
Research suggests that about 20% of all mergers and acquisitions (M&A) are successful, 60% produce
disappointing results, and the last 20% are clear failures. Successful acquisitions demand a well-conceived
strategy, avoiding paying too high a premium, and an effective integration process. As shown in Figure 8.1 in

the text, several problems may prevent successful acquisitions. Integration is complex and involves a large
number of activities. For instance, Intel acquired (DEC) Digital Equipment Corporations semiconductors
division. Successful integration was crucial. On the day Intel began to merge the acquired division into its
operations, hundreds of employees working in dozens of different countries needed to complete 6,000
deliverables.
Merger & Acquisition Implementation: HP-Compaq Merger
Managing M&A implementation is challenging and often times beyond the scope of a firms core competence.
Research and history shows that M&A is not value creating, rather it generally results in value-destroying. So
why do firms do it? And what separates the great integrators from the rest?
HP-Compaq Merger
Integration Difficulties: Two very distinct cultures without a shared history. Compaq coming off a badly
integrated merger with Digital.
Inadequate Evaluation of Target: Did HP realize the erosion of Compaqs market position in key product
domains vis--vis competitors like Dell, Gateway, Sun Microsystems, etc.?
Debt: No evidence of threat to date (May just ignore)
Too Large of Firm: Does HP have any history absorbing a merger partner of this size?
Managers Overly Focused on Acquisition(s): A proxy fight is not the best way to kick off a merger deal.
Too Much Diversification: Low margin product lines may need to be jettisoned?
Inability to Achieve Synergy: Too early to tell, but melding the culture will go along way towards achieving
synergy
Anecdotal Evidence
HP and Compaq claim to have dedicated some 1-million working hours to integration planning, which
represents a thoroughness that is likely to pay off in the most well-organized transition plan in IT merger
history, according to Paul McGuckin, an analyst at Stamford, CN-based Gartner Inc.
Ask
Could that one million working hours be dedicated to better R&D, cost-saving measures, customer service,
etc.?
If you were a strategic planner for IBM how would you react to the HP-Compaq merger?
What lessons did HP-Compaq learn from previous mergers, and why will this time be any different?
5. a) What is global competitiveness ? Explain the relook of global competitiveness ?
b) what are the different global challenges?
6. a) What is the link between workforce diversity and empowerment ?
b) What are different ways of identifying core competencies ?
Paper 5

1. a) What are the issues involved in strategic implementation? ( Refer paper 4 1.a answer)
b) what is the Significance of corporate restructuring?
Ans: The financial crises of the late 1990s devastated emerging-market economies and presented considerable
obstacles to achieving a sustainable recovery. The rises in unemployment, sharp jumps in interest rates, doubledigit declines in output, and plummeting exchange rates engendered considerable suffering, enormous shifts in
the profitability of business activities, and a massive overhang of bankrupt corporations and bad loans on the
balance sheets of banks. The scope of banking and corporate sector difficulties dwarfed the financial and human
resources available to devote to their resolution. In some countries, effective laws, strong institutions, and
decisive government leadership combined to recognize losses quickly, limit the overhang of impaired bank
assets, and make progress in resolving corporate distress. In other countries, archaic laws and weak institutions
and leadership compounded the problems, slowing economic recovery and increasing the ultimate fiscal costs
of the crisis.
The key role of the corporate sector in precipitating the East Asian crises and the fundamental
importance of corporate sector restructuring to the health of the banking system and the achievement of
sustainable recovery have focused attention on the role of public policy responses in corporate restructuring.
Nevertheless, detailed information on the steps that governments have taken to remedy systemic corporate
distress remains limited. Policymakers, regulators, bankers, restructuring specialists, and corporate managers
confronting financial crises require answers to numerous questions of policy and implementation that may be
informed by past experience. For example, what are the best practices for regulatory measures? Should
governments establish asset management companies to take over impaired loans? How should out-of-court
workout procedures be structured? What techniques have proven effective in restructuring distressed firms?
This volume relies on the experience of senior public officials, private businessmen, and staff of the World
Bank and International Monetary Fund (IMF) involved in corporate restructuring to address these questions.
The papers that follow were commissioned as part of a World Bank seminar on Corporate Restructuring:
International Best Practices, held in Washington, D.C. in March 2004. In this initial chapter, we touch on the
major issues raised in papers and oral presentations given at the conference. The subjects addressed can be
grouped into efforts to monitor corporate sector vulnerability; the legal, regulatory, and policy responses to
systemic corporate crises; and financial restructuring techniques used to deal with insolvent companies.
2. a) What are the MIS Issues in strategic implementation ?
Ans:
Management Information Systems (MIS) Issues
Firms that gather, assimilate, and evaluate external and internal information most effectively are gaining
competitive advantages over other firms. Recognizing the importance of having an effective management
information system (MIS) will not be an option in the future; it will be a requirement. Information is the basis
for understanding in a firm. In many industries, information is becoming the most important factor in
differentiating successful from unsuccessful firms. The process of strategic management is facilitated
immensely in firms that have an effective information system. Many companies are establishing a new
approach to information systems, one that blends the technical knowledge of the computer experts with the
vision of senior management.
Information collection, retrieval, and storage can be used to create competitive advantages in ways such as
cross-selling to customers, monitoring suppliers, keeping managers and employees informed, coordinating
activities among divisions, and managing funds. Like inventory and human resources, information is now
recognized as a valuable organizational asset that can be controlled and managed. Firms that implement
strategies using the best information will reap competitive advantages in the twenty-first century.

A good information system can allow a firm to reduce costs. For example, online orders from salespersons to
production facilities can shorten materials ordering time and reduce inventory costs. Direct communications
between suppliers, manufacturers, marketers, and customers can link together elements of the value chain as
though they were one organization. Improved quality and service often result from an improved information
system.
b) How can you design contingency planning ? (Refer Paper 3 2nd b. answer)
3. a) Define joint ventures ? Explain the procedure in joint venture ?
Ans: A joint venture (JV) is a business agreement in which the parties agree to develop, for a finite time, a
new entity and new assets by contributing equity. They exercise control over the enterprise and consequently
share revenues, expenses and assets. Joint ventures are set up for a specific business purpose and exist only for
a period of time that is set in the agreement.There are other types of companies such as JV limited by guarantee,
joint ventures limited by guarantee with partners holding shares.
Process for Entering into JV Agreements.
Prior to entering into a JV Agreement, the proposed JV activity shall be approved in principle, in accordance
with the procedure stipulated below:
7.1 Approval in Principle by the Head of a Government Entity. For JV Agreements regardless of cost, the
Head of the Government Entity concerned shall have the authority to approve the proposed JV Agreement in
principle, subject to the compliance to the conditions listed hereunder:
a. Justification that the JV activity is within the mandate and charter of the Government Entity concerned as
certified and notarized by the head of the Government Entity;
b. Clear description of the proposed investment, including its activities, objectives, source(s) of funding, extent
and nature of the proposed participation of the investing Government Entity, period of participation of the
Government Entity, and the relevant terms and conditions of the undertaking under the proposed JV Agreement,
among others;
c. Justification as to the responsiveness and relative priority of the proposed JV activity in meeting national or
specific development goals and objectives; and
d. All other components of the JV Agreement, including the technical, financial, legal and other aspects in
determining the over-all feasibility of the proposed JV activity, among others, shall be established.
7.2 For JV activity that will require national government undertakings, subsidies or guarantees,
clearance/approval of the Department of Finance (DOF) and/or the Department of Budget and Management
(DBM), as the case may be, shall be secured.
7.3 Modes of Selecting a JV Partner
a. Competitive Selection The process for the conduct of Competitive Selection, contract award and final
approval shall be stipulated under Annex A of these guidelines. In the conduct of the Competitive Selection
process, the Government Entity shall ensure the following:
i. all activities during the competitive selection, award, and final approval are conducted in a transparent and
competitive process that promotes accountability and efficiency; and
ii. the competitive selection parameters are clearly defined and shall include the parameters as approved by the
Head of the Government Entity.
b. Negotiated Agreements Negotiated agreements may be entered under the following circumstances:
i. When a Government Entity receives an unsolicited proposal;
ii. When there is failure of competition when no proposals are received or no private sector participant is found
qualified and the Government Entity decides to seek out a JV partner; and
iii. When there is failure of competition, i.e., there is only a single interested party remaining as defined under
VIII(6) of Annex A.

In the case of subsection b(iii) above, the procedures outlined in Annex B (Limited Negotiation Procedures in
case of Failed Competitive Selection under Section 6 of Annex A of the Guidelines) shall apply. Subsections
b(i) and b(ii) shall be governed by the rules under Annex C (Detailed Guidelines for Competitive Challenge
Type Procedure Public-Private Joint Ventures).
7.4 Deviations and Amendments to the JV Agreement.
The concerned Government Entity shall not proceed with the award and signing of the contract if there
are material deviations from the parameters and terms and conditions set forth in the proposal/tender documents
that tend to increase the financial exposure, liabilities, and risks of government or any other factors that would
cause disadvantage to government and any deviation that will cause prejudice to losing private sector
participants. Said material deviations and amendments shall be subjected to the approval requirements under
Sections 7.1 and 7.2 hereof. The Head of the Government Entity concerned shall be responsible for compliance
with this policy. Violation of this provision shall render the award and/or the signed JV Agreement invalid.
Any amendment to a JV Agreement after award and signing of contract, which does not materially
affect the substance of the competitive selection, shall be subjected to the requirements stipulated under
Sections 7.1 and 7.2 hereof. Noncompliance with the corresponding approval process stated shall render the
amendment null and void.
b) What is merger ? Discuss its advantages ?
Ans:
Merger-activity-is-an-example-of-integration-taking-place within industries. This can be:
Vertical-integration,where-firms -at different stages in the production chain merge and
horizontal integration, where competing firms in the same industry merge
However, mergers can give benefits to the public.

1. Economies of scale. This occurs when a larger firm with increased output can reduce average costs.
Lower average costs enable lower prices for consumers.

Different economies of scale include:

Technical economies; if the firm has significant fixed costs then the new larger firm would have lower
average costs,
Bulk buying A bigger firm can get a discount for buying large quantities of raw materials
Financial better rate of interest for large company
Organisational one head office rather than two is more efficient

2. International Competition. Mergers can help firms deal with the threat of multinationals and compete on an
international scale.
3. Mergers may allow greater investment in R&D This is because the new firm will have more profit which
can be used to finance risky investment. This can lead to a better quality of goods for consumers. This is
important for industries such as pharmaceuticals which require a lot of investment.
4. Greater Efficiency. Redundancies can be merited if they can be employed more efficiently.
5. Protect an industry from closing. Mergers may be beneficial in a declining industry where firms are
struggling to stay afloat. For example, the UK government allowed a merger between Lloyds TSB and HBOS
when the banking industry was in crisis.
6. Diversification. In a conglomerate merger two firms in different industries merge. Here the benefit could be
sharing knowledge which might be applicable to the different industry. For example, AOL and Time-Warner
merger hoped to gain benefit from both new internet industry and old media firm
4. a)what are the different forms of managerial ownership ?(Refer paper 1 - 4th answer)
b) What is takeovers ? Explain any success story in takeovers ?
Ans:
General term referring to transfer of control of a firm from one group of shareholders to another group
of shareholders. Change in the controlling interest of a corporation, either through a friendly acquisition
or an unfriendly, hostile, bid.
When an "acquirer" takes over the control of the "target company", it is termed as Takeover.
When an acquirer acquires "substantial quantity of shares or voting rights" of the Target Company, it
results into substantial acquisition of shares.
Why takeover is done?
To gain opportunities of market growth more quickly than through internal means.
To seek to gain benefits from economies of scale.
To seek to gain a more dominant position in a national or global market.
To acquire the skills or strengths of another firm to complement the existing business.
To acquire a speedy access to revenue streams that it would be difficult to build through normal internal
growth.
To diversify its product or service range to protect itself against downturns in its core markets.
PANKAJ PIYUSH TRADE & INVESTMENT LTD
Name of the Acquirer Mr. Vinod Kumar Bansal.
No. of shares 1,04,000 equity shares.
Price for shares Rs. 34 per share.
Date April 17, 2012.
Name of the Target Company Pankaj Piyush Trade & Investment Ltd
Reasons to Acquire
1. In the last 3 years, the target co. has achieved very low turnover & profit after tax. Even EPS is very
Low.
2. The fair value of shares issued by Avesh Patel (C.A.) is Rs. 33.53 per equity share which is lower than
the offer price of Rs. 34 per equity share.
3. There has been no trading of shares on BSE. Thus its highly illiquid on BSE. It will provide an exit
opportunity to the existing shareholders.
5. a) What is global competitiveness ? What is the indias positions in global competitiveness?
b) Do you recommend government should involve in solving global challenges?
6. a) What are the different methods to ensure the employee empowerment ?
b) What is workforce Diversity ? How industries are managing this culture ?