ASSIGNMENT

Course Code : MS-91

Course Title : Advanced Strategic Management

Assignment No. : MS-91/TMA/Sem-II/2020

Coverage : All Blocks

Note: Attempt all the questions and submit this assignment to the Coordinator of your Study
Centre on or before 31st October, 2020.

1. a) Discuss the nature and scope of corporate management.

b) Explain the major components of corporate strategy and the functions it

performs.

2. Explain the concept of Corporate Governance. Select any two organizations of your
choice (Name and describe them) and discuss in detail the Corporate Governance
practices being followed in those organizations.

3. a) Describe the classification of market structures.

b) Discuss the pricing strategies adopted by different market structures.

4. Briefly discuss the factors influencing creativity and innovation in an organisation.

5. Highlight the key developments in transparency and reporting from business

organizations. Give examples.
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ASSIGNMENT REFERENCE MATERIAL (July20 to Dec20)

MS-91
ADVANCED STRATEGIC MANAGEMENT

Q1. a) Discuss the nature and scope of corporate management.

Ans. Corporation management is a coordination among the various management to achieve

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the goal of the company. It is a broad phenomenon and covers a wide spectrum of activities.
It is a unified and integrated process to get best results. For the sake of convenience, the
concept of corporation management has moved through the five paradigm shifts given below
:

(a) Adhocism : When exigency used to force the managers to take appropriate action to deal

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with the situation.

(b) Planned policy : The great depression forced the planners and thinkers to take a planned
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policy. Unforeseen incidents and contingencies are to be anticipated.

(c) Environment strategy interface : The strategy has to cope with environment. The forces
of internal and external environment have created uncertainties. In order to cope with such

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situation, appropriate strategies are being formulated, keeping in mind the competitive
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advantage.
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(d) Corporate planning : Involves moving ahead from environmental appraisal to strategic
alternatives and choice. The planning need to be strategic.
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(e) Corporate Management : It is a unified and integrated process to get best result.

Nature of Corporate Management :

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1. It encompasses the entire management process.

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2. It is concerned with the choice of alternatives, determination of future course of action,

mobilization of resources and deployment of resources for attainment of goals.
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3. It is both short term and long term

4. It is related to all levels of management, strategic issues, however, are related to top
management

5. It includes the following phrases :

(a) Corporate planning

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(b) Implementation issues in corporate plan

(c) Evaluation and control.

b) Explain the major components of corporate strategy and the functions it performs.

Ans. The major components of corporate strategy are :

(a) Objectives/Purpose – The objective should be stated in such a way so that they provide
clear idea about the scope of the enterprises business objective give the direction for which
action plan is formulated. Objectives are open ended attributes denoting a future state. The
objectives should have:

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(b) Vector – Vector gives directions within an industry and across industry boundaries which
the firm proposes to pursue. If an organization has the objective to maximize sales the series
of decisions will be to enhance salesman’s commission, advertisements, introduction of new
products, introduce total quality management. Vector signifies that a series of decision are
taken in the same direction to accomplish the objectives.

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(c) Competitive Advantage – If an organization does not look at competitive advantage, it
cannot survive in a dynamic environment. When we formulate corporate strategies one
cannot ignore competitors. This aspect builds internal strength of the organization and
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enhanced the quality of corporate strategy.

(d) Synergy – It means measurements of the firm’s capability to take advantage of a new

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product market more. Its decisions are made in the same directions to accomplish the
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objectives there will be synergic impacts.

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Q2. Explain the concept of Corporate Governance. Select any two organizations of your
choice (Name and describe them) and discuss in detail the Corporate Governance
practices being followed in those organizations.
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Ans. The starting point in discussing an organization purpose will be the corporate
governance framework within which the organization is operating. This determines whom the
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organization is operating. This determines whom the organization is there to serve and how
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the purposes and priorities of the organization should be decided. It is concerned with both
the functioning of the organization and the distribution of power between different
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stakeholders.
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The concept of corporate governance has been known in both political and academic circles
for a long time referring generally to the task of running a government or any other
appropriate entity for that matter. It focuses on appropriate management and control structure
of a company. It also includes the concept of power relations between owners, the board of
directors, management and the stakeholder.

According to the Cadbury Report (UK), ‘Corporate governance is the system by which
businesses are directed and controlled.’

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According to OECD definition, ‘Corporate governance provides the structure through which
the objectives of the company are set and the means of attaining those objectives and
monitoring performances are determined.’

Thus, corporate governance is not just corporate management; it is something much broader
to include a fair, efficient and transparent administration to meet some well defined
objectives. It is a system of structuring, operating and controlling a company with a view to
achieve, long term strategic goals to satisfy shareholders, creditors, employees, customers
and suppliers and complying with the legal and regulatory requirements, apart from meeting
environmental and local community needs. When it is practiced under well laid out system it
leads to the building of a legal, commercial and institutional framework and demarcates the
boundaries within which these functions are performed.

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Large enterprise usually has an apex policy making body which is generally referred to as
Board of Directors (BOD). The members of the board of director have collective authority
and responsibility for the functioning of the enterprise. The compositor of the board of
director, the professional credentials and their commitment will have a profound impact on
the fortunes of the enterprise.

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The Indian companies act does not define the term ‘Board of Directors’. Even the post of
directors is not defined properly. According to Section 2(13) of Indian companies act the
term ‘Director’ includes any person occupying the position of the Directors. We can inter that
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the board of director is a group of persons each of whom is a director. The maximum number
of directorships a person can hold is twenty.

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The directors individually have no powers but the collective body of directors, viz the board
of director has total power over the Chief Executive. Section 292 defines the exclusive
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powers of board of directors. These relates to:

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(a) Making calls on the shareholders in respect of money unpaid on their shares
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(b) Issuing debentures

(c) Borrowing money other than through debentures

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(d) Taking loans

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Section 293 lists the restriction placed on the power of the board of director in respect of
selling, leasing or disposing of the company’s property remittance of debt due by any
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director, borrowing money to an extent which can exceed the net worth of the company etc.
The board of director is expected to meet once in every quarter. The quorum is one third of
the total strength of the directors or two directors whichever is higher. Only the board of
director can declare dividends to the shareholders.

Managerial responsibilities of the board of director – The dimension relating to the

managerially derived expectations of the board of director role seems to be of relatively
recent origin. In more than two decades, industrial development has been marked by far
reaching technological changes, leading to equally fundamental competitive reorientation at
the global level with such rapidly mounting changes and uncertainties. The role of board of

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directors has begun to be viewed from much wider and long term perspective beyond the
minimum requirements of the law. Some responsibilities of board of directors are:

(a) The enterprise remains effective on technical parameters.

(b) The enterprise continues to achieve healthy market growth.

(c) Diversification and disinvestment are done on sound lines.

(d) Productivity and quality are not sacrificed for short term profitability.

Q3. a) Describe the classification of market structures.

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Ans. Market means a place where people gather to carry out transaction and exchange
something for value. Market is an essential part of any economy and provides the sellers and
buyers a meeting place to facilitate change.

According to Benham, ‘Market is an area over which buyers and sellers are in close touch
with one another, either directly or through dealers, that the price obtainable in one part of the

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market affects the pries paid in other parts.’

According to Jevons, ‘ The work market has been generalized so as to mean any body of
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persons who are in intimate business relations and carry on extensive transactions in any
commodity.’

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Market can be classified on the basis of:
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(a) Area : Market can be classified as local, regional, national and international markets.
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(b) Volume of Business : Market can be classified as whole sale and retail markets. In the
wholesale market quantities exchanged are large and in bulk while in retail they are
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exchanged in smaller lots.

(c) Time : Markets are divided as very short period markets, short period markets and long
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period markets. Very short period markets are for commodities which are perishable and
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here supply is fixed. In short period markets, supply can be increased but to a limited extent
and in long period markets supply can be increased to any extent.
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(d) Status : Markets are classified as primary, secondary and terminal markets.
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Manufacturers are part of primary markets, wholesalers constitute secondary market and
retailers for part of terminal market.

b) Discuss the pricing strategies adopted by different market structures.

Ans:- Different market structures adopt different pricing strategies. A few pricing strategies
help deterring the entry of competitors. Various pricing strategies used by the firms in
different market structures have different implications. A few pricing strategies are:

(a) Price Lining Strategy : In this, the firm fixes the price of one product in the total line of
its product. Example – A firm producing dresses fixes up the price of particular size and

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price or the rest is then fixed on the basis of differences in sizes. This strategy eliminates
those competitors who cannot compete on price.

(b) Limit Pricing Strategy : In this, some sort of collusion is necessary among existing firms.
In this, the firm may try to establish a price that reduces or eliminates the threat of entry of
new firms into the industry in which the firm operates. Normally, oligopolist and firms
operating in monopolistic competition go for this alternatives.

(c) Stay-out Pricing Strategy : When a firm is not able to ascertain the price of the product,
it introduces the product at a very high price. If it is not able to sell its product at this price, it
would lower the price and go on lowering it till it meets the targeted sales. With the help of
this strategy, the firm get to know the maximum possible price it can charge from its
customers. Monopolists experiment this strategy to have maximum profits. They are also

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not having any fear from competitors.

(d) Psychological Pricing Strategy : In this, a firm fixes the price of its product in a manner
which gives the impression of being low. Example : If the price of the product is fixed at
Rs.199 rather than 200, it has psychological impact on customers that price is in 100s rather
than in 200s. This strategy may influence sales sometimes. In monopolistic competition, this

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alternative may give better results.

Q4. Briefly discuss the factors influencing creativity and innovation in an organisation.
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Ans:- Virtually all companies talk about innovation and many may actually attempt to “do
it”, but only a few actually succeed in doing it. The reality is that innovation, for the most

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part, frightens organizations because it is inevitably linked to risk. Many companies pay lip
service to the power and benefits of innovation. To a large extent most remain averse to the
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aggressive investment and commitment that innovation demands. Instead they dabble in
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innovation and creativity. Even though innovation is debated at senior level meetings as
being the lifeblood of the company, and occasional resources and R&D funds are thrown at
it, often the commitment usually ends there.
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Strategy:- An innovation strategy is a strategy that promotes the development and

implementation of new products and services. The origin of creativity and innovation lies in a
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shared vision and mission, which are focused on the future. Furthermore, the vision and
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mission of a creative and innovative organization are also customer and market oriented-
focusing on solving customers’ problems among other things. An example of a vision that
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emphasizes creative and innovative behaviour is: “Our company will innovate endlessly to
create new and valuable products and services and to improve our methods of producing
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them” (Lock and Kirkpatrick, 1995).

It is also important that employees should understand the vision and mission (which support
creativity and innovation) and the gap between the current situation and the vision and
mission to be able to act creatively and innovatively. Having a clear corporate philosophy
enables individuals to co-ordinate their activities to achieve common purposes, even in the
absence of direction from their managers. One effect of corporate statements is their
influence in creating a strong culture capable of appropriately guiding behaviours and
actions. However there is also a degree of doubt as to whether statements of principles have
any value in driving the organization forward. Most statements encountered often are of little

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value because they fail to grab people’s attention or motivate them to work toward a common
end.

Judge et al. (1997) describe successful innovation as chaos within guidelines; in other words
top management prescribes a set of strategic goals, but allows personnel great freedom within
the context of the goals. Organizational goals and objectives reflect the priorities and values
of organizations and as a result may promote or hinder innovation (Arad et al., 1997).
Personal and organizational goals that emphasize quality rather than effectiveness improve
the levels of innovation. It appears that reflecting the value of purposefulness in the goals and
objectives of organizations has an influence on creativity and innovation.

Structure:- In the innovation literature, much has been written about the structural
characteristics of organizations and it has been suggested that a flat structure, autonomy and

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work teams will promote innovation, whereas specialization, formalization, standardization
and centralization will inhibit innovation. As regards the influence of organizational culture
on a structure that supports creativity and innovation, values like flexibility, freedom and
cooperative teamwork will promote creativity and innovation. On the other hand, values like
rigidity, control, predictability, stability and order (mostly associated with hierarchical
structures) will hinder creativity and innovation (Arad et. al., 1997).

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Q5. Highlight the key developments in transparency and reporting from business
organizations. Give examples.
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Ans. The key developments on business environment which calls for better transparency and
a comprehensive reporting from business organisations are:

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(1) The Growth of Corporate Social Responsibility: The increased visibility of corporate
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social responsibility has encouraged companies to better account for their actions in a wide
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range of areas, including corporate governance, labour practices and employee relations,
environmental policies and practices, and community involvement.
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(2) Increased Demand for Transparency: Government regulators, financial analysts,

employees, nonprofit advocacy organizations, labour unions, community organizations and
the media are among the groups pressing companies to divulge greater amounts of
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information on CSR performance targets, decision-making, and results. These demands

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represent concern by stakeholders that companies will not hold themselves accountable for
CSR commitments without public disclosure.
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(3) Growth in Sustainability Reporting: Many companies find that comprehensive reporting
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can satisfy many stakeholders’ informational needs, there is considerable debate over the
relationship between reporting and actual changes in corporate behaviour. So, while sharing
information is an important first step in creating an accountable culture, stakeholders are now
looking at how the process of reporting creates change in company policies and practices.

(4) Greater Government Regulation: Government regulators at all levels are calling on
companies to increase the quantity and quality of information they disclose to the public
about their practices and performance.

(5) Increased Stakeholder Activism: Many stakeholder groups are engaging companies more
directly, utilizing a wide range of tools, techniques, and technologies to bring their interests

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to companies’ attention. These activists are also working to educate lawmakers, the media,
and the public about companies that are – or are not – deemed to be accountable. Among the
tactics being used by stakeholder groups are public information campaigns, public protests,
boycotts, and class-action lawsuits seeking action and redress for perceived company
misdeeds.

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