Chapter 1
Summary
• A Business is nothing more than a person or group of persons properly organized to produce or
distribute goods or services.
•Business principally comprises of an all profit seeking activities of the organisation which provide goods
and services that are necessary to economic system.
• Business may be defined as “the organised effort by individuals to produce goods and services, to sell
these goods and services in a market place and to reap some reward for this effort.”
• Business is to provide goods and services to the people. It provides the public with the things it needs
and wants in order to survive, enjoy life and improve in a material sense.
•Commerce has been defined as “the sum total of those processes which are engaged in the removal of
the hindrance of persons (trade), place (transport and insurance), and time (warehousing) in the
exchange (banking) of commodities.”
•Business and company environment is constantly evolving and changing in aspects.
•Environmental analysis helps the executive and manager to diagnosis the strategic competitive force
and components of strategic management.
•Environmental factors plays an important role and influences to identify the key issues, and find the
ways for coping with complex and rigid issues which are considered as challenging by managers.
Environment analysis is to analyse the changing pattern and its impact on business.
• SWOT is acronym of strengths, weakness, opportunity and threats.
• External environment offers wide range of opportunities, problems, threats and pressures and thereby
influences the structure of the business enterprise and its functions. Exchange of resource dominates
the relationship of the business enterprise and its environment.
• Formulation of an effective and efficient strategy is based on a clear definition of the organisation
mission, an accurate assessment of the external environment and a thorough internal analysis of the
organisation.
• External environment is an attempt to understand the outside forces of the organisational boundaries
that help to shape the organisation.
•Micro environment of business enterprise refers to the study of a small area or an immediate
periphery of the business organisation.
• Macro environment, on the other hand, study the overall issues of firms and its broader dimensions. It
principally consists of economical, technological, political, legal and socio-cultural aspects. The economic
environment constitutes of economic conditions, economic policies, and the economic system which is
important to the external factors of business
Self Assessment
The term _________ typically refers to the development and processing of economic values in society.
1.
a. Business
b. Land
c. Profit
d. Economics
2.Which of the following statements is false?
Profit is a surplus of business and it accrues and is then distributed to the owners of the business.
a.
Profit is the tool for measuring and evaluating business efficiency and productivity at the managerial
b. competence
Business efficiency is expressed in terms of percentage of profit, sales volume, capital employed, and
market
c. value of corporate shares.
The concept of strategy has been borrowed from the history and adapted for use in business.
d. Match the following
3.
Business
1. Produced or procured for sale in retail enter the realm of business.
A.
Goods
2. Biggest stimulus for the survival of the business and its future development
B.
Profit
3. Permits business to earn profit as a reward for assuming the risks of operating it.
C.
Society
4. Provide goods and services to the people
D. 1-C, 2-B, 3-D, 4-A
a. 1-D, 2-B, 3-A, 4-C
b. 1-D, 2-A, 3-B, 4-C
c. 1-A, 2-D, 3-C, 4-B
d. _____________ are those industries which are concerned with the extraction of wealth from the
surface of the
4. earth, soil, forest, and water. Manufacturing Industries
a. Extractive Industries
b. Genetic Industries
c. Construction Industries
d. _________ means sale, transfer, or exchange of goods and services, through certain ancillary
functions like
5. packing, warehousing, banking, transportation, insurance, and advertising.
Media
a. Service
b. Commerce
c. Trade
d. Environment __________ is helpful in the survival of the business and prospers the business activities.
6.
analysis
a. diagnosis
b. strategy
c. change
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Which of the following statement is not a characteristic of business?
7.
Environment is complex
a. Environment is multi-faceted
b. Environment is dull
c. Environment has a far reaching impact
d. A __________ is an unfavourable condition in the business organisation’s environment which causes
a risk for,
8. or damage to, the organisation.
strength
a. threat
b. opportunity
c. demand
d.
Which of the following statements is true?
9.
Strategy is never consistent with the conditions in the competitive environment.
a. Strategy is not about realistic requirements of the organisation/company.
b. Strategy does not need to be executed.
c. Strategy must be carefully formulated, implemented, controlled and executed.
d. Economic environment encourages liberalisation, privatisation and ____________ of the economic
policies in
10. the business environment. integrity
a. globalisation
b. accountability
c. movement
chapter 2
Summary
Strategy is the direction and scope of an organisation over the long term, which achieves advantage for
the
• organisation through its configuration of resources within a challenging environment, to meet the
need of markets and to fulfil stakeholder expectations.
It is a management’s game plan for strengthening the performance of the enterprise.
• Strategy is significant because it is not possible to foresee the future.
•
Strategy deals with long term developments rather than routine operations.
• Business policy defines the scope or spheres within which decisions can be taken by the subordinates
in an
•
organisation. Business policies are the guidelines developed by an organisation to govern its actions.
•
A business policy is an implied overall guide setting up boundaries that supply the general limit and
direction
•
in which managerial action will take place. Marketing, Financial and Personnel are three types of
policies.
•
An objective of business means the purpose for which the business is established.
• Economic objectives of business refer to the objective of earning profit and also other objectives that
are necessary
• to be pursued to achieve the profit objective, which includes creation of customers, regulating
innovations and
best possible use of available resources.
Social objectives are those objectives of business, which are desired to be achieved for the benefit of the
•
society.
Human objectives refer to the objectives aimed at the well-being as well as fulfilment of expectations of
employees
•
as also of people who are disabled, handicapped and deprived of proper education and training.
Self Assessment
Which of the following statements is false?
1.
Strategy is about the direction where the business is trying to get to in the long term.
a. Strategy is about the market in which a business should compete in and the scope of the activities
that are
b. to be involved.
Strategy is about the environmental factors that affect the businesses’ ability to compete.
c. Strategy is about the direction where the business is trying to get to in the short term.
d. Strategy is a/an ____________ game plan for strengthening the performance of the enterprise.
2.
financial
a. organisation’s
b. management’s
c. CEO’s
d. Without a ___________, management has no roadmap to guide them.
3.
strategy
a. plan
b. business
c. enterprise
d. Strategy deals with ___________ developments rather than routine operations.
4.
long term
a. short term
b. periodic
c. yearly
d.
What is concerned with the overall purpose and scope of the business to meet stakeholder
expectations?
5.
Business unit strategy
a. Corporate strategy
b. Operational strategy
c. Business policy
d.
Which of the following statements is true?
6.
Operational strategy is concerned more with how a business competes successfully in a particular
market.
a. Business policy is concerned more with how a business competes successfully in a particular market.
b. Business unit strategy is concerned more with how a business competes successfully in a particular
c. market.
Corporate strategy is concerned more with how a business competes successfully in a particular market.
d.
What focuses on issues of resources, processes and people?
7.
Operational strategy
a. Business strategy
b. Corporate strategy
c. Business policy
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Which of the following statements is true?
8.
Business strategy defines the scope or spheres within which decisions can be taken by the subordinates
in
a. an organisation.
Corporate policies are the guidelines developed by an organisation to govern its actions.
b.
Business policy defines the scope or spheres within which decisions can be taken by the subordinates in
an
c. organisation.
Business policies are the guidelines developed by CEO of the organisation to govern its actions.
d.
What is the basic attitude underlying a company’s marketing activity known as?
9.
Business policy
a. Financial policy
b. Economic objective
c. Marketing policy.
d.
Which of the following statements is false?
10.
Social objectives are those objectives of business, which are desired to be achieved for the benefit of the
a. society.
Economic objectives of business refer to the objective of earning profit and also other objectives that
are
b.
necessary to be pursued to achieve the profit objective, which includes creation of customers,
regulation
innovations and best possible use of available resources.
Global objectives refer to the objectives aimed at the well-being as well as fulfilment of expectations
c. of employees as also of people who are disabled, handicapped and deprived of proper education and
training.
Human objectives refer to the objectives aimed at the well-being as well as fulfilment of expectations
d. of employees as also of people who are disabled, handicapped and deprived of proper education and
training.
Chapter 3
Summary
Strategic management is the process of specifying an organisation’s objective, developing policies and
plans to
•
achieve these objectives, and allocating resources so as to implement the plans. Strategic management
helps the top executives to forecast changes well in advance and to take advantage of
•
the opportunities and reduce the risk.
Strategy formulation includes defining corporate mission, specifying objectives, developing strategies
and
•
setting policy guidelines. A strategic intent is a company’s vision of what it wants to achieve in the long
term.
• A budget is a statement of organisation’s programs in numeric terms. Budgets are expressed in
financial
•
terms.
The performance of strategic management is justified in terms of its ability to improve an organisation’s
• performance, typically measured in terms of profits and return on investment (ROI).
Top level management formulates overall objective and develops corporate strategy based on the
objectives to
•
be accomplished. Success of strategic management is dependent not only on the strategy formulation
but also on affective
•
implementation. Executive in charge of strategy must know the principles of management, effect of
business cycles and internal
•
working condition. Risk involved in the implementation of a strategy is more since strategy involves
long-range planning which is
•
subject to greater degree of uncertainty. Success of strategy depends on the joint efforts and cooperation of people in the organisation and in practice,
•
it is seldom expected and therefore, there are more unforeseen impediments in the successful
implementation of the strategy
Self Assessment
Which of the following statements is false?
1.
A company’s strategy provides a central purpose and direction to the activities of organisation.
a. Strategic management including the nature and extent of competition and exploits available
opportunities.
b. Strategic management exercises systematic and disciplined approach towards policy making.
c. Strategic formulation exercises systematic and disciplined approach towards policy making.
d.
What are expresses in financial terms?
2.
Budgets
a.
Profits
b. Loses
c. Strategies
d. Strategic management helps the _________ to forecast changes well in advance and to take
advantage of the
3. opportunities and reduce the risk. middle level management
a.
first line management
b. top executives
c. CEO
d.
Which of the following statements is false?
4.
The simplest way to conduct environmental scanning is through SWOT analysis.
a. Opportunities and threats are the elements of external environment over which organisation does not
have
b. any control.
Strength and weaknesses are the variables of the external environment.
c. Strength and weaknesses are the variables of the internal environment.
d.
_______ statement clearly specifies the purpose of the organisation.
5.
Strategic
a. Mission
b. Vision
c. Management
d.
________ are operational definitions of the organisation’s goals.
6.
Strategic statement
a. Strategic intent
b. Objectives
c. Mission statement
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Which of the following statements is true?
7.
Strategic statement should not focus so much on today’s problems, which are normally dealt with by
company
a. visions and missions, but rather on tomorrow’s opportunities.
Strategic panning should not focus so much on today’s problems, which are normally dealt with by
company
b. visions and missions, but rather on tomorrow’s opportunities.
Strategic intent should focus so much on today’s problems, which are normally dealt with by company
c. visions and missions, but rather on tomorrow’s opportunities.
Strategic intent should not focus so much on today’s problems, which are normally dealt with by
company
d. visions and missions, but rather on tomorrow’s opportunities.
What involve restructuring the organisation change in the internal culture?
8.
Programs
a. Procedures
b. Budgets
c.
Profits
d.
_________ helps a company to adopt suitable strategies for exploiting opportunities and fight threats.
9.
Strategic formulation
a. Strategic planning
b. Strategic management
c. Strategic intent
d. _________ is a continuous dynamic process.
10.
Strategic planning
a. Strategy formulation
b. Strategic management
c. Strategic intent
chapter 4
Summary
Corporate management is a broad phenomenon and covers a wide spectrum of activities.
•
Corporate strategy is formulated at the higher level of management. At operational level, operational
strategies
•
are also formulated. Corporate planning is a comprehensive planning process which involves continued
formulation of objectives
•
and the guidance of affairs towards their attainment. The process of corporate planning integrates
strategic planning with short range operational plans.
•
A formal planning system can help the management in responding to a dynamic environment and in
managing
•
a strategically complex organisation with limited resources. The chief executive must be totally
committed and involved in the corporate planning process.
•
The process of corporate planning should be introduced on continuous basis to cope with ever changing
•
environmental factors. Corporate strategy improves the capability of management in coping with the
volatile external environmental
•
forces. The corporate strategy formulation process calls for considerable time, money and effort.
•
Corporate policy helps the manager to identify the solution to the problems.
•
Corporate policy consists of a variety of subject that affects various interest groups in the organisation
and
•
outside it. Corporate policy areas have two broad categories namely, major and minor policies.
•
Good policies provide a direction in which all management activities are focused
Self Assessment
Which of the following statements is false?
1.
Corporate strategy is related mostly to external environment.
a. Corporate strategy is formulated at the higher level of management.
b. Corporate management is a broad phenomenon and covers a wide spectrum of activities.
c. Corporate planning is a broad phenomenon and covers a wide spectrum of activities.
d. Which is a comprehensive planning process which involves continued formulation of objectives and
the guidance
2.
of affairs towards their attainment?
Corporate planning
a. Corporate policy
b. Corporate strategy
c. Strategy planning
d. The _________ must be totally committed and involved in the corporate planning process.
3.
managers
a. middle level managers
b. chief executive
c.
first line managers
d.
_________ signifies that a series of decisions are taken in the same direction to accomplish the
objectives.
4.
Synergy
a. Vector
b. Policy
c. Strategy
d.
What means measurement of the firm’s capability to take advantage of a new product market move?
5.
Synergy
a. Policy
b. Vector
c. Objective
d.
Which of the following statements is false?
6.
Corporate strategy motivates employee’s examples to shape their work in the context of shared
corporate
a. goals.
Strategy assists management to meet unanticipated future changes.
b. Organisational effectiveness is ensured through implementing and evaluating the strategy.
c. Corporate objective motivates employee’s examples to shape their work in the context of shared
corporate
d. goals.
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Which of the following statements is true?
7.
Implementation of corporate planning is influenced by organisational factors, behavioural factors and
a. motivational factors. The gap between formulation and implementation of corporate strategy does
not give desired results to the organisation.
Implementation of corporate policy is influenced by organisational factors, behavioural factors and
b. motivational factors. The gap between formulation and implementation of corporate strategy does
not give desired results to the organisation.
Implementation of corporate strategy is influenced by organisational factors, behavioural factors and
c. motivational factors. The gap between formulation and implementation of corporate strategy does
not give desired results to the organisation.
Implementation of corporate objective is influenced by organisational factors, behavioural factors and
d. motivational factors. The gap between formulation and implementation of corporate strategy does
not give desired results to the organisation.
_________ is concerned with the various functional areas like production, human resources, marketing
and
8.
finance.
Corporate objective
a. Corporate policy
b. Corporate strategy
c. Strategic planning
d. Which policies are framed by the top management and spell out the basic approach of a company to
its activities
9.
and its environment?
General policies
a. Basic policies
b.
Specific policies
c. Expressed policies
d. The policies which are understood by the employees, code of conduct or behaviour and are not
expressed orally
10. or through written statements are known as _________.
expressed policies
a. general policies
b. implied policies
c. basic policies
chapter 5
Summary
Highest ranking executives with titles such as chairman, chief executive officer, managing director,
president,
•
executive directors, executive vice-presidents, etc, are responsible for the growth of the entire
enterprise. Managers are organisational members who are responsible for the work performance of
other organisational
•
members.
In organisations, there are typically three levels of management, namely, top level, middle level, and
first
•
level. Top level managers or top managers are also senior management or executives.
•
Middle level managers are those in the levels below top level managers. Middle managers’ job titles
include
•
General Manager, Plant Manager, Regional Manager and Divisional Manager.
First level managers are also called first-line managers or supervisors.
•
First line managers are responsible for the daily management of line workers, the employees who
actually
•
produce the product or offer the service. A board of directors is a body of elected or appointed
members who jointly oversee the activities of a company
•
or organisation. A subcommittee is a subordinate committee consists of members who belong to a
larger committee. Subcommittees
•
are a critical part of committee organisation, as they allow committees to focus on several issues
without needing
to involve all of the members, and they create more flexibility within the committee structure.
Planning should be realistic based and framework within which a new strategy will be implemented.
•
Organising is the act of arranging certain elements following some rules.
•
Controlling is one of the foremost managerial functions like planning and organising but it is continuous,
and
•
can be entrenched at any of hierarchy.
The executive officer is the highest ranking corporate officer or administrator in charge of total
management
•
of an organization
Self Assessment
Which of the following statements is false?
1.
Managers are organisational members who are responsible for the work performance of other
organisational
a. members.
Board of directors has formal authority to use organisational resources and to make decisions.
b. In most organisations, the number of managers at each level is such that the hierarchy resembles a
c. pyramid.
Managers have formal authority to use organisational resources and to make decisions.
d.
___________ make decisions affecting the entirety of the firm.
2.
Top level managers
a. Middle level managers
b. First line managers
c.
Executive officers
d.
Which of the following statements is true?
3.
First line managers do not direct the day-to-day activities of the firm; rather, they set goals for the
organisation
a. and direct the company to achieve them.
Middle level managers do not direct the day-to-day activities of the firm; rather, they set goals for the
b. organisation and direct the company to achieve them.
Top managers do not direct the day-to-day activities of the firm; rather, they set goals for the
organisation
c. and direct the company to achieve them.
Managers do not direct the day-to-day activities of the firm; rather, they set goals for the organisation
and
d. direct the company to achieve them.
Who is responsible for carrying out the goals set by top management?
4.
Executives
a. First line managers
b.
Officers
c. Middle level managers
d.
Who are also called first-line managers or supervisors?
5.
First level managers
a. Middle level managers
b. Top level managers
c. Managers
d. There are ___________ in every work unit the organisation.
6.
managers
a. middle level managers
b.
first level managers
c. top level managers
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A __________ is a body of elected or appointed members who jointly oversee the activities of a
company or
7. organisation. sub committee
a. working committee
b. standing committee
c. board of directors
d. In a non-stock corporation with no general voting membership, e.g. a university, who is the supreme
governing
8.
body of the institution?
The committee
a. The sub committee
b. The board
c. The standing committee
d. A ___________ is a subordinate committee consists of members who belong to a larger committee.
9.
committee
a. sub committee
b. board
c. standing committee
d.
Which of the following statements is false?
10.
A working committee is tasked with dealing with a specific and often temporary issue.
a.
A working subcommittee is one which is always in existence, covering specific issues which pertain to
the
b. committee in general.
Members of a subcommittee are usually chosen or elected by other members of the committee, and
they are
c.
selected on the basis of experience, qualification and willingness to serve. A standing subcommittee is
one which is always in existence, covering specific issues which pertain to the
d. committee in general.
Chapter 6
Summary
Strategic planning consists of a set of decisions which leads to the development of an effective strategy.
• Strategic planning can be defined as “the continuous process of making present entrepreneurial
decisions
•
systematically and with the greatest knowledge of their futurity; organising systematically the efforts
needed to carry out these decisions; and measuring the results of these decisions against the
expectations through
organised systemic feedback”.
Strategic planning is a systematic and disciplined exercise to formulate strategy.
• Strategic planning is an organisation’s process of defining its strategy or direction, and making
decisions on
•
allocating its resources to pursue this strategy, including its capital and people. Formulation of a strategy
needs complete analysis of the situation.
•
Strategic plan is a long range plan of action in which plan and strategy are integrated.
•
Mission statement tells the current position of the organisation. It informs you about the desired level of
•
performance needed for the organisation. Vision statement outlines what a company wants to be. It
concentrates on the future. It is a source of inspiration.
•
It provides clear decision-making criteria and process.
Values main values protected by the organisation during the progression, reflecting the organisation’s
culture
•
and priorities. Corporate vision is a short, concise and inspiring statement of what the organisation
intends to become and
•
to achieve at some point in the future and is often stated in competitive terms. Vision is the image that a
business must have about its goals before it sets out to reach them.
•
A mission statement is an organisation’s vision translated into written form. It makes the leader’s view
of the
•
direction and purpose of the organisation concrete.
A mission statement defines the purpose or broader goal for being in existence or in the business. It
serves as
•
an ongoing guide without time frame.
Vision is more specific in terms of objective and future and future state. Vision is related to some form
of
•
achievement if successful. When wording the mission statement, consider the organisation’s products,
services, markets, values and
•
concern for public images, and maybe priorities of activities for survival.
When refining the mission, a useful exercise is to add or delete a word from the mission to realise the
change
•
in scope of the mission statement and assess how concise is its wording. Strategic planning takes place
at the highest levels; other managers are involved with operational planning.
•
SWOT analysis is a very vital activity in strategy planning.
•
SWOT analysis is a strategic planning tool used to evaluate the strengths, weaknesses, opportunities and
•
threats involved in a project or in a business venture.
Conducting a SWOT analysis before defining and agreeing upon an objective. SWOTs should not exist in
the
• abstract. They can exist only with reference to an objective. If the desired end state is not openly
defined and
agreed upon, the participation may have different end states in mind and the results will be ineffective.
The strategies should also know the business conducted by the organisation, what type of business
should it
• be over coming years, whether the same business should be continued or diversified, what technology
should
be adopted, know the type of market the organisation has, the consumers of the organisation, etc.
Strategies formulated in accordance with the policy will have a common language which communicates
the
•
policies to the lower level of management; convince the managers about the relevance of mission,
vision and purpose of the enterprise to implement the strategy and to obtain strategic commitment
from all concerned.
Strategies formulated in accordance with policies should be consistent with overall strategies
implemented
•
for various purposes, like meeting competition in the market, create a favourable image for the
enterprise in the market, to tackle extreme competition situation, etc.
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The business units with share of a low growth market need no allocation of resources as they will be
contemplating
•
to close down the activities. Every employee and every operation should be properly linked and coordinated. This facilitates smooth
•
implementation of strategy. Continuous discussions relating to strategy and operations at all levels
should be done until they are mutually
•
understood and accepted by the key members of the management and then transmitted to the entire
organisation continuously so that organisation’s objectives and strategies are imbibed in operational
plans. This is the real integration.
Self Assessment
Which of the following statements is false?
1.
Strategic planning is a forward-looking exercise which determines the future posture of the enterprise.
a. Strategic plans helps in enhancing and sustaining the organisational competitive advantage based on
external
b. and internal variables.
Strategic planning is a well organised effort aiming at fulfilling business objectives in a systematic
c. manner.
Strategic management is a well organised effort aiming at fulfilling business objectives in a systematic
d. manner.
__________ is a long range plan of action in which plan and strategy are integrated.
2.
Strategic management
a. Strategic plan
b. Business strategy
c. Business policy
d. _________ tells the current position of the organisation. It informs you about the desired level of
performance
3. needed for the organisation. Mission statement
a. Value statement
b. Vision statement
c. Business statements
d.
Which of the following statements is true?
4.
Corporate mission is a short, concise and inspiring statement of what the organisation intends to
become
a. and to achieve at some point in the future and is often stated in competitive terms.
Corporate value is a short, concise and inspiring statement of what the organisation intends to become
and
b. to achieve at some point in the future and is often stated in competitive terms.
Corporate vision is a short, concise and inspiring statement of what the organisation intends to become
and
c. to achieve at some point in the future and is often stated in competitive terms.
Corporate strategy is a short, concise and inspiring statement of what the organisation intends to
become
d. and to achieve at some point in the future and is often stated in competitive terms.
Which of the following statements is false?
5.
The most effective visions are those that inspire, usually asking employees for the best, the most or the
a. greatest.
A mission statement should be a short and concise statement of goals and priorities.
b.
Vision is more specific in terms of objective and future and future state.
c.
Value is more specific in terms of objective and future and future state.
d.
What describes the overall purpose of the organisation?
6.
Mission statement
a. Value statement
b. Vision statement
c. Business statements
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What helps the firm to formulate a workable strategy?
7.
Strategic planning
a. Strategic management
b. SWOT analysis
c. Mission statement
d. _________ is a strategic planning tool used to evaluate the strengths, weaknesses, opportunities and
threats
8. involved in a project or in a business venture.
Strategic planning
a. SWOT analysis
b. Mission statement
c. Strategic management
d. _________ of the corporate enterprises provide the direction in which the strategies are to be
formulated.
9.
Policies
a. Strategies
b. Planning
c. Corporate planning
d.
Which of the following statements is true?
10.
While selecting policy of the alternatives, strategist must look into the possibilities of gaining in the
process
a. of implementation of strategy, at least possible cost.
While selecting strategy of the alternatives, strategist must look into the possibilities of gaining in the
process
b. of implementation of strategy, at least possible cost.
While selecting strategy of the alternatives, strategist must look into the possibilities of losing in the
process
c. of implementation of strategy, at least possible cost.
While selecting strategy of the alternatives, strategist must look into the possibilities of gaining in the
process
d. of implementation of policy, at least possible cost.
Chapter 7
Summary
After designing strategies to be adopted in plans and finalising them, the top management should take
necessary
•
steps for implementing the designed strategy. Necessary resources, both monetary and non-monetary,
are to be provided to the concerned departments for
•
implementations. Strategy formulation and implementation are intertwined. They are not separate
activities.
•
Strategy formulation is concerned with the development of long-term plans for effective management
of
•
environmental opportunities and threats, in the light of the organisational strengths and weaknesses.
Strategy implementation is the process by which strategies and policies are out to action through the
development
•
of programs, budgets and procedures. For the smooth running of each strategic operational plan, the
concerned managers and the key workforce like
•
managers, have to be delegated with certain authority and power. This is required for smooth execution
of the plans.
The co-ordination between various operations within the same task is very essential for smooth
discharging of
•
the task. There is a necessity of decision support system. The quality of decision depends on
understanding the
•
circumstances surrounding an issue and knowing the available alternatives and states of nature.
Management Information System (MIS) reduces risk and uncertainty in decision-making.
•
There will be little difference between the actual and planned programmes. This has to be closely
observed and
•
the deviations have to be informed to the top management through a sound feedback system.
Successful implementation of a strategy depends on how efficient the organisation is in allocating
resources,
•
designing suitable structure, formulating functional strategies, etc. Environmental scanning reveals
various potential opportunities to the organisation. These opportunities are to
•
be categorised into various projects. Implementation stage ensures that the project is ready for the
operation.
•
Licensing procedure indicates the permission to be obtained from the government. Industries
Development and
•
Regulation Act, 1951 (IDRA) provides licensing system for the industries. SEBI issues guidelines from time
to time to supervise matters under its control.
•
Foreign collaboration, in a way, is a partnership between home and foreign industrialist for the
establishment
•
of joint venture in the home country. The objective of exchange control is to regulate the demand for
foreign exchange within the limits set by the
•
available supply.
Government formulates policies to safeguard the interests of the labour. These legislative rules certainly
influence
•
strategy formulation. Customers are the central focus of any activity of an organisation.
•
Strategists should prioritise activities for the optimum utilisation of available resources.
•
Organisation structure is not a mere graphical representation of activities and people responsible for
various
•
activities. All products and services have certain life cycles. The life cycle refers to the period from the
product’s
first launch into the market until its withdrawal.
The BCG method is based on the product life cycle theory that can be used to determine what priorities
should
•
be given in the product portfolio of a business unit. Market growth rate is assumed to indicate market
maturity.
•
Cash cows are dominant business in low growth industries that require little investment to maintain
their market
• share and consequently produce substantial profits.
Question marks are business in industries that are doing well, but where the specific business unit is not
doing
•
as good as the industry.
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BCG model is helpful for managers to evaluate balance in the firm’s current portfolio of Stars, Cash Cow,
•
Question Marks and Dogs. The GE matrix is a technique used in brand marketing and product
management to help a company decides what
•
products to add to its product portfolio, and which market opportunities are worthy of continued
investment. The acronym PEST is used to describe a framework for the analysis of the macroenvironmental factors.
• Technological factors can lower barriers to entry. Reduce minimum efficient production levels, and
influence
•
outsourcing decisions.
Self Assessment
___________ and implementation are intertwined.
1.
Strategy formulation
a. Strategic management
b. Strategic planning
c. Strategic implementation
d.
Which of the following statements is false?
2.
Business organisation is not static. It constantly interacts with the external environment and its own
internal
a. environmental changes.
Strategy implementation is concerned with the development of long-term plans for effective
management
b. of environmental opportunities and threats, in the light of the organisational strengths and
weaknesses.
Strategy formulation is concerned with the development of long-term plans for effective management
of
c. environmental opportunities and threats, in the light of the organisational strengths and weaknesses.
Strategy implementation is the process by which strategies and policies are out to action through the
d. development of programs, budgets and procedures.
What is the secondary function of the organisation, based on the strategy formulated?
3.
Strategy formulation
a. Strategic management
b. Strategic planning
c. Strategy implementation
d.
What reduces risk and uncertainty in decision-making?
4.
Management Information System (MIS)
a. Decision Support System (DSS)
b. Industries Development and Regulation Act(IDRA)
c. Capital Issues Control Act, 1956 (CICA)
d. _______ shapes the information to management needs which is provided by MIS.
5.
MIS
a. IDRA
b. DSS
c. CICA
d.
Which of the following statements is false?
6.
Successful implementation of a strategy depends on how efficient the organisation is in allocating
resources,
a. designing suitable structure, formulating functional strategies, etc.
Environmental scanning does not reveal potential opportunities to the organisation.
b. Priority helps organisation to choose an appropriate alternative for further development.
c. Environmental scanning reveals various potential opportunities to the organisation. These
opportunities are
d. to be categorised into various projects.
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Which of the following statements is true?
7.
SEBI requirement indicates the permission to be obtained from the government.
a. Foreign collaboration indicates the permission to be obtained from the government.
b. Licensing procedure indicates the permission to be obtained from the government.
c. Business incentives indicate the permission to be obtained from the government.
d. _________, in a way, is a partnership between home and foreign industrialist for the establishment of
joint
8. venture in the home country. Foreign collaboration
a. Business incentives
b. Licensing procedure
c. SEBI requirement
d.
What must be formulated to suit the basic objective of the organisation?
9.
Principle of span of control
a. Principle of activity structure
b. Principle of specialisation
c. Principle of exception
d.
In ____________, human, technical and financial factors must be properly balanced towards the
accomplishment
10. of the objectives.
principle of efficiency
a. principle of unity of direction
b. principle of continuity
c. principle of balance
chapter 8
Summary
The social responsibility of a business refers to such decisions and activities of a business firm which
provide
• for the welfare of the society as a whole along with the earning of profit for the firm.
The concept of social responsibility of business applies to all business organisations both in private and
public
• sectors which have been established for earning profits.
The responsibility of business enterprises towards their owners is payment of a fair rate of dividend
regularly.
•
Social responsibility is an additional responsibility. Business enterprise has economic responsibility of
maximising
• profits to serve the interests of the owners, employees and creditors.
Business units have already rendered great services to the society by providing goods at lower prices.
•
Business concern should justify its basic objective of economic performance. It is not concerned with
any other
•
obligations including social responsibility. Organisations must utilise available opportunities in the
environment for the economic development of the
•
society. Every organisation obtains critical inputs from the environment and converts them into
products and services
•
to be used by the society at large.
Business may postpone investments in social areas, while trying to maximum profits, and expect others
to take
•
the initiative. This way, it is hoped, the organisation would be able to price its products much cheaper
and get ahead of competition.
The macro social factors include the social goals expected by society in terms of health, safety,
education,
•
housing, accidents, pollution control measures, etc. The micro social indicators are measures of the
performance of the company in those areas measured by macro social indicators.
Self Assessment
Which of the following statements is false?
1.
The business firm functions and acts in such a way that it will accomplish social gains along with the
a.
traditional economic gains in which the business firm is interested.
The concept of social responsibility is based on the idea that a business functions in the society and uses
b. the physical and human resources of the society for its operations and hence it is under the obligation
to serve the society.
The concept of social responsibility is also based on the idea that anything good done by a business firm
for
c. the society is good for the business itself in the long run.
The concept of social welfare is also based on the idea that anything good done by a business firm for
the
d. society is good for the business itself in the long run.
The concept of ___________ of business applies to all business organisations both in private and public
sectors
2.
which have been established for earning profits.
business strategy
a. social responsibility
b. strategic planning
c. strategic formulation
d. The responsibility of business enterprises towards their _________ is ensuring full participation of
owners in
3. the management of the affairs of the enterprise.
workers
a. society
b. owners
c. consumers
d. Developing appropriate products and services for satisfying the needs of the consumers, towards who
is this
4.
responsibility of the business enterprise?
Workers
a. Society
b. Owners
c. Consumers
d.
Which of the following statements is false?
5.
Business concern is accountable for the poor welfare service rendered by it.
a. The social welfare is the responsibility of the Government and not that of business concerns.
b. Business concern should justify its basic objective of economic performance. It is not concerned with
any
c. other obligations including social responsibility.
Business concern is not accountable for the poor welfare service rendered by it.
d.
Which of the following statements is true?
6.
Organisations draw outputs from the society in which it operates. These outputs are converted into
products
a. or services which serve the society.
Organisations must not concentrate only on the principle of profit maximisation.
b. Organisations draw inputs from the society in which it operates. These inputs are converted into
products
c. or services which do not serve the society.
Organisations must concentrate only on the principle of profit maximisation.
Business Environment
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Which type of audit tries to measure the effectiveness of those activities of the organisation which are
largely
7.
taken up to meet certain social objectives?
Financial statements format social audit
a. Macro-micro social indicator audit
b. Social process audit
c. Social performance audit
d. _________ type of audit requires evaluation of a company’s performance in terms of social measures
against
8. macro social measures.
Financial statements format social audit
a. Macro-micro social indicator audit
b. Social process audit
c. Social performance audit
d.
Which of the following statements is true?
9.
Organisations must utilise available opportunities in the environment for the economic development of
the
a. society.
Organisations must concentrate only on the principle of profit maximisation.
b. Organisations must not utilise available opportunities in the environment for the economic
development of
c. the society.
Organisations must not concentrate only on the principle of profit minimisation.
d. _______ is not accountable for the poor welfare service rendered by it.
10.
Business concern
a. Business strategy
b. Strategic planning
c. Strategic implementation