ignou mba ms -11 solved assignments 2011 sm 1

8/2/2019 IGNOU MBA MS -11 Solved Assignments 2011 SM 1

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IGNOU MBA MS -91 Solved Assignment2011

Course Code : MS-91

Course Title : Advanced Strategic Management

Assignment Code : 91/TMA/SEM-I/2011

Coverage : All Blocks

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Q1. Identify the features of Corporate Philosophy and examine it with

reference to an organisation (Name and describe the organisation you

are referring to).

Solution: In marketing, a corporate identity is the "persona" of

a corporation which is designed to accord with and facilitate the attainment of

business objectives. It is usually visibly manifested by way ofbranding and the use

oftrademarks. Corporate identity comes into being when there is a common

ownership of an organizational philosophy that is manifest in a distinct corporateculture the corporate personality. At its most profound, the public feel that they

have ownership of the philosophy. Often referred to as organizational identity,

corporate identity helps organizations to answer questions like who are we? and

where are we going? Corporate identity also allows consumers to denote their

sense of belonging with particular human aggregates or groups.

In general, this amounts to a corporate title, logo (logotype and/or logogram), and

supporting devices commonly assembled within a set of guidelines. These

guidelines govern how the identity is applied and confirm approved colourpalettes, typefaces, page layouts and other such methods of maintaining visual

continuity and brand recognition across all physical manifestations of the brand.

These guidelines are usually formulated into a package of tools called corporate

identity manuals.

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Many companies, such as McDonald's and Electronic Arts, have their own identity

that runs through all of their products and merchandise. The trademark "M" logo

and the yellow and red appears consistently throughout the McDonald's packaging

and advertisements. Many companies pay large amounts of money for the research,

design and execution involved in creating an identity that is extremelydistinguishable and appealing to the company's target audience.

Concept

Corporate identity is often viewed as being composed of three parts:

Corporate design (logos, uniforms, corporate colours etc.)

Corporate communication (advertising, public relations, information, etc.)

Corporate behavior (internal values, norms, etc.)

Corporate identity has become a universal technique for promoting companies

and improving corporate culture. Most notable is the COCOMAS committee and

company PAOS, both founded by Motoo Nakanishi in Tokyo, Japan in 1968.

Nakanishi fused design, management consulting and corporate culture to

revolutionize corporate identity in Japan. In the United States, graphic design

firms such as Chermayeff & Geismarpioneered the application

ofmodernist principles to corporate identity design.

Organizational point of view

In a recent monograph on Chinese corporate identity (Routledge, 2006), Peter

Peverelli, proposes a new definition of corporate identity, based on the

general organization theory proposed in his earlier work, in particular Peverelli

(2000). This definition regards identity as a result of social interaction:

Corporate identity is the way corporate actors (actors who perceive

themselves as acting on behalf of the company) make sense of their company in

ongoing social interaction with other actors in a specific context. It includes

shared perceptions of reality, ways-to-do-things, etc., and interlocked

behaviour.

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In this process the corporate actors are of equal importance as those others;

corporate identity pertains to the company (the group of corporate actors) as

well as to the relevant others;

Corporate actors construct different identities in different contexts.

Visual identity

Corporate visual identity plays a significant role in the way an organization

presents itself to both internal and external stakeholders. In general terms, a

corporate visual identity expresses the values and ambitions of an organization, its

business, and its characteristics. Four functions of corporate visual identity can be

distinguished. Three of these are aimed at external stakeholders.

First, a corporate visual identity provides an organisation with visibility and

"recognizability". For virtually all profit and non-profit organisations, it is of

vital importance that people know that the organization exists and remember its

name and core business at the right time.

Second, a corporate visual identity symbolizes an organization for external

stakeholders, and, hence, contributes to its image and reputation (Schultz, Hatch

and Larsen, 2000). Van den Bosch, De Jong and Elving (2005) explored

possible relationships between corporate visual identity and reputation, and

concluded that corporate visual identity plays a supportive role in corporate

reputations.

Third, a corporate visual identity expresses the structure of an organization to

its external stakeholders, visualising its coherence as well as the relationships

between divisions or units. Olins (1989) is well-known for his "corporate

identity structure", which consists of three concepts: monolithic brands for

companies which have a single brand, a branded identity in which different

brands are developed for parts of the organization or for different product lines,

and an endorsed identity with different brands which are (visually) connected toeach other. Although these concepts introduced by Olins are often presented as

the corporate identity structure, they merely provide an indication of the visual

presentation of (parts of) the organization. It is therefore better to describe it as

a "corporate visual identity structure".

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A fourth, internal function of corporate visual identity relates to employees'

identification with the organization as a whole and/or the specific departments

they work for (depending on the corporate visual strategy in this respect).

Identification appears to be crucial for employees, and corporate visual identity

probably plays a symbolic role in creating such identification.

The definition of the corporate visual identity management is:

Corporate visual identity management involves the planned maintenance,

assessment and development of a corporate visual identity as well as associated

tools and support, anticipating developments both inside and outside the

organization, and engaging employees in applying it, with the objective of

contributing to employees' identification with and appreciation of the organization

as well as recognition and appreciation among external stakeholders.

Special attention is paid to corporate identity in times of organizational change.

Once a new corporate identity is implemented, attention to corporate identity

related issues generally tends to decrease. However, corporate identity needs to be

managed on a structural basis, to be internalized by the employees and to

harmonize with future organizational developments.

Efforts to manage the corporate visual identity will result in more consistency and

the corporate visual identity management mix should include structural, cultural

and strategic aspects.

Guidelines, procedures and tools can be summarized as the structural aspects of

managing the corporate visual identity.

However, as important as the structural aspects may be, they must be

complemented by two other types of aspects. Among the cultural aspects of

corporate visual identity management, socialization i.e., formal and informal

learning processes turned out to influence the consistency of a corporate visual

identity. Managers are important as a role model and they can clearly set an

example. This implies that they need to be aware of the impact of their behavior,which has an effect on how employees behave. If managers pay attention to the

way they convey the identity of their organization, including the use of a corporate

visual identity, this will have a positive effect on the attention employees give to

the corporate visual identity.

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Further, it seems to be important that the organization communicates the strategic

aspects of the corporate visual identity. Employees need to have knowledge of the

corporate visual identity of their organization not only the general reasons for

using the corporate visual identity, such as its role in enhancing the visibility and

recognizability of the organization, but also aspects of the story behind thecorporate visual identity. The story should explain why the design fits the

organization and what the design in all of its elements is intended to express.

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Q2. Highlight the Corporate governance practices in Indian context.

Solution : The concept of corporate governance is poorly defined because it coversvarious economics aspects. As a result of this different people have come up withdifferent definitions on corporate governance. It is hard to point on any onedefinition as the ultimate definition on corporate governance. So the best way todefine the concept is to provide a list of the definitions given by some noteworthy

people.

Various definitions of corporate governance:

1. According to Sir Adrian Cadbury.The system by which companies are directed and controlledCorporate Governance is concerned with holding the balance between economic

and social goals and between individual and communal goals. The corporategovernance framework is there to encourage the efficient use of resources andequally to require accountability for the stewardship of those resources. The aim isto align as nearly as possible the interests of individuals, corporations and society

2. According to Mathiesen (2002)

Corporate Governance is a field in economics that investigates how tosecure/motivate efficient management of corporations by the use of incentivemechanisms, such as contracts, organizational designs and legislation. This isoften limited to the question of improving financial performance, for example, howthe corporate owners can secure/motivate that the corporate managers will delivera competitive rate of return.The definition given by Mathiesen means that corporate governance is a methodwhich tries to find out the different incentives which would motivate the managersof a corporate to give a good return to the owners of the corporation.

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3. According to the Journal of Finance written by Shleifer and Vishnv (1997),

Corporate governance deals with the way in which suppliers of finance tocorporate assure themselves of getting a return on their investmentThe definition here means that corporate governance is basically a technique where

people who give money (lenders of the money) promise themselves or comfortthemselves about getting a return on their investment.

4. According to J. Wolfensohn, president of the World Bank, (in 1999)

Corporate governance is about promoting corporate fairness, transparency andaccountability

5. According to OECD (Organisation for Economic Co-operation andDevelopment)

Corporate governance is the system by which business corporations are directedand controlled. The corporate governance structure specifies the distribution ofrights and responsibilities among different participants in the corporation, such as,the board, managers, shareholders and other stakeholders, and spells out the rulesand procedures for making decisions on corporate affairs. By doing this, it also

provides the structure through which the company objectives are set, and themeans of attaining those objectives and monitoring performance.The definition given by OECD means that corporate governance is an arrangementwhich manages the corporations. The configuration of corporate governancedefines the duties and obligations of all the members of the corporation, gives thestructure of setting the objectives and the method of attaining the setIn short all the definitions stated above implies that corporate governance is amode by which the management is motivated to work for the betterment of the realowners of the corporation i.e. the shareholders.In other words corporate governance can be defined as the relationship of acompany to its shareholders or more broadly the relationship of the company to thesociety.Corporate governance thus refers to the manner in which a company is managedand states the rules, laws and regulation that affect the management of the firm. It

also includes laws relating to the formation of the firm, establishment of the firmand the structure of the firm. The most important concern of corporate governanceis to ensure that the managers and directors act in the interest of the firm and forthe shareholders.

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The focus has shifted to Corporate Governance (CG) time and again on account ofrepeat emergence of financial crises across the global, as well as frequent instancesof financial reporting failures. In competitive markets, Corporate Governance is areflection of market disciplines, and forms the cornerstone for efficient allocationof resources. CG enables managements to take decisions, while at the same time

being accountable for the decisions taken. Securities & Exchange Board of India(SEBI) appointed the Committee on Corporate Governance in May, 1999 under theChairmanship of Kumar Mangalam Birla, to promote and raise the standards ofCorporate Governance, in the particular context of companies of the Committeeincluded(i) to suggest measures to improve Corporate Governance in the listed companies,in areas such as continuous disclosure of material information, both financial andnon financial, manner and frequency of such disclosures, and the responsibilities ofindependent and outside directors;

(ii) to draft a code of corporate best practices; and(iii) to suggest safeguards to be instituted to deal with insider information andinsider trading.Based on the recommendations of the Birla Committee, SEBI laid downrequirements on Corporate Governance for listed entities in February, 2000.However, certain entities including public and private sector banks, financialinstitutions, insurance companies and those incorporated under a separate statutewere exempted from the requirements. Subsequently, the requirements of SEBIwere forwarded to Reserve Bank of India (RBI) to consider issuing appropriateguidelines to banks and financial institutions so as to ensure that all listedcompanies followed the same standards of Corporate Governance. While anumber of recommendations already stood implemented, with a view to furtherimproving the Corporate Governance standards in banks, additional measures wererecommended for implementations by banks. These measures includedconstitution of a Committee to look into the complaints of shareholders and halfyearly disclosure of unaudited results. The RBI also recommended compliancewith the requirements of the provisions of clause 49 of the Listing Agreement inJune, 2002. The Standing Committee on International Financial Standards andCodes, Reserve Bank of India constituted the Advisory Group on Corporate

Governance to study the status of applicability and relevance and compliance ofinternational standards and codes of industrialized and emerging countries andsuggest measures/recommendations for achieving the best practice in India. TheGroup while submitting its Report in March, 2001, drew attention to theOrganization for Economic Cooperation and Development (OECD) principles, themodels of corporate governance in various countries U.S., U.K., East Asia andEurope, and the status in India. The Group covered the mechanism in India with

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reference to (i) the private corporate sector, (ii) banks and the developmentfinancial institutions, and (iii) Central and State public sector enterprises set upunder the Companies Act, 1956. Comparisons were also drawn with Bank forInternational Settlement (BIS) principles. The report submitted that it wasessential to bring reforms quickly so as to make boards of corporates/banks/financial institutions/public sector enterprisesmore professional and truly autonomous. The first important step to improvegovernance mechanism in public sector units was to transfer the actual governancefunctions to the boards from the concerned administrative ministers and alsostrengthen the boards by streamlining the appointment process of directors. Furtherthere was a need for public sector banks to maintain a high degree of transparencyin regard to disclosure of information. The recommendations covered areas ofresponsibilities of the board of stakeholders/shareholders, selection procedures forappointment of directors of the board, size and composition of the board,

committees to be appointed by the board for corporate governance, disclosure andtransparency standards, role of shareholders and role of auditors. In August, 2002,the Department of Company Affairs (DCA) under the Ministry of Finance andCompany Affairs appointed the Naresh Chandra Committee to examine the variousCG issues including appointment of the auditors and his independence;determination of audit fees; measures to ensure that the managements andcompanies present true and fair financial statements and certification of the same

by the management and the directors; the necessary to have a transparent system ofrandom scrutiny of the audited accounts; adequacy of regulations for oversight ofstatutory functionaries; and the role of independent directors. SEBI appointed the

N.R. Narayana Murthy Committee in February, 2003 to evaluate the adequacy ofexisting Corporate Governance practices and to further improve upon them. TheCommittee was in line with the Boards belief that efforts to improve CG standardsin India must continue. The Committee focused on such issues as auditcommittees and reports, independent directors, related parties, risk management,directors and their compensation, code of conduct and financial disclosure. TheCommittees recommendations were based on such parameters as fairness,accountability, transparency, ease of implementation, verifiability andenforceability. Prior to these initiatives, in 1996, the CII had taken the first

institutional initiative to develop and promote a code of conduct for the Indianindustry. The initiative was in response to concerns regarding promotion ofinvestor interest, particularly, small investors interest; promotion of transparencywithin business and industry; need to move towards international standards interms of disclosure of information by the corporate sector; and to develop a highlevel of public confidence in Indian industry.

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The Department of Company Affairs, in May 2000, invited a group of leadingindustrialists, professionals and academics to study and recommend measures toenhance corporate excellence in India. The Study Group in turn set up a TaskForce, which examined the subject of Corporate Excellence through soundcorporate governance and submitted its report in Nov. 2000. The task force in itsrecommendations identified two classifications namely essential and desirable withthe former to be introduced immediately by legislation and the latter to be left tothe discretion of companies and their shareholders. Some of the recommendationsof the task force include:

Greater role and influence for nonexecutive independent directors

Stringent punishment for executive directors for failing to comply with

listing and other requirements

Limitation on the nature and number of directorship of managing and whole-

time directors Proper disclosure to the shareholders and investing community

Interested shareholders to abstain from voting on specified matters

More meaningful and transparent accounting and reporting

Tougher listing and compliance regimen through a centralized national

listing authority

Highest and toughest standards of Corporate Governance for listed

companies

A code of public behaviour for public sector units Setting up of a centre for Corporate Excellence

Recently, the Government has announced the proposal for setting up the Centre forCorporate Excellence under the aegis of the Department of Company Affairs as anindependent and autonomous body as recommended by the study group. Thecentre would undertake research on Corporate Governance; provide a scheme bywhich companies could rate themselves in terms of their corporate governance

performance; promote corporate governance through certifying companies whopractice acceptable standards of corporate governance and by instituting annualaward for outstanding performance in this area. Governments initiative in

promoting corporate excellence in the country by setting up such a center is indeeda very important step in the right direction. It is likely to spread greater awarenessamong the corporate sector regarding matters relating to good corporategovernance motivating them to seek accreditation from this body. Cumulativeeffect of the companies achieving levels of corporate excellence would

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undoubtedly be visible in the form of much enhanced competitive strength of ourcountry in the global market for goods and services.A large number of public sector companies both in the banking industry andfinancial sector have on their Boards representative of the Government / ReserveBank of India. It is for debate whether functionaries of the Government should siton their boards. While there is no easy or straightforward answer to this question,at some distant future it is hoped, all the Directors would be truly independent.The subject is no doubt complex and can be looked upon from various angles.Frauds in the banking system are also increasing but computer ManagementInformation Systems should be able to detect them early and the Board must havethe will to deal with such mischiefmakers in an exemplary manner. Zero toleranceshould be the goal for frauds in the banking system. It is the leader at the helm ofaffairs who makes a difference. A close coordination exists through High LevelCo-ordination Committee (HLCC) between RBI, SEBI, IRDA and the Secretary

Finance, Government of India who has a formal structure for reviewing the affairswhich impact the whole financial system. Although the US and UK models aredifferent, this model has served us well and we seem to be comfortable to continuewith the same for some more time to come.There is an entire subject called whistle blowing and there is enormous literatureon this subject when to blow the whistle, who should blow the whistle and wherethe whistle should be heard. These are the questions for which one needs to findthe answers between spate of anonymous letters to which any one working in

public sector is used to and honest officials are harassed sometimes on one sideand the damaging investigative audit reports and doctored balance sheets on theother side. Somewhere in between lies the governance and ethics; and standardsexpected to be set up by the virtuous men appointed for heading these institutions.In such organizations the shareholders and the other stakeholders derive full value.It is myopic, bordering on foolishness, to look for astronomical return by theshareholders, who would allow the boards to indulge in unethical practices likemarket rigging, insider trading, speculation and host of other irregular practices forthe sole purpose of making huge profits. One cannot argue that the shareholdersvalue is enhanced by higher profits and dividends are distributed by the boardacting merely as an agent of the shareholder who becomes the principal. Here lies

the test of governance of the board of directors walking the well defined, honestand straight path in conducting the affairs in the required atmosphere oftransparency seen and perceived by all the stakeholders, the markets and theregulators. Then only one can confidently state that corporate governance hastaken firm roots in this country.Satyam Computers services limited was a consulting and an InformationTechnology (IT) services company founded by Mr. Ramalingam Raju in 1988. It

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was Indias fourth largest company in Indias IT industry, offering a variety of ITservices to many types of businesses. Its networks spanned from 46 countries,across 6 continents and employing over 20,000 IT professionals. On 7th January2009, Satyam scandal was publicly announced & Mr. Ramalingam confessed andnotified SEBI of having falsified the account.Raju confessed that Satyams balance sheet of 30 September 2008 contained:

Inflated figures for cash and bank balances of Rs 5,040 crores (US$ 1.04

billion) [as against Rs 5,361 crores (US$ 1.1 billion) reflected in the books].

An accrued interest of Rs. 376 crores (US$ 77.46 million) which was non-

existent.

An understated liability of Rs. 1,230 crores (US$ 253.38 million) on account

of funds which were arranged by himself.

An overstated debtors position of Rs. 490 crores (US$ 100.94 million) [as

against Rs. 2,651 crores (US$ 546.11 million) in the books].

The letter by B Ramalinga Raju where he confessed of inflating his companysrevenues contained the following statements:What started as a marginal gap between actual operating profit and the onereflected in the books of accounts continued to grow over the years. It has attainedunmanageable proportions as the size of company operations grew significantly[annualised revenue run rate of Rs 11,276 crores (US$ 2.32 billion) in theSeptember quarter of 2008 and official reserves of Rs 8,392 crores (US$ 1.73

billion)]. As the promoters held a small percentage of equity, the concern was thatpoor performance would result in a takeover, thereby exposing the gap. Theaborted Maytas acquisition deal was the last attempt to fill the fictitious assets withreal ones. It was like riding a tiger, not knowing how to get off without beingeaten.

The Scandal:

The scandal all came to light with a successful effort on the part of investors toprevent an attempt by the minority shareholding promoters to use the firms cashreserves to buy two companies owned by them i.e. Maytas Properties and MaytasInfra. As a result, this aborted an attempt of expansion on Satyams part, which inturn led to a collapse in price of companys stock following with a shockingconfession by Raju, The truth was its promoters had decided to inflate the revenueand profit figures of Satyam thereby manipulating their balance sheet consistingnon-existent assets, cash reserves and liabilities.

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The probable reasons:

Deriving high stock values would allow the promoters to enjoy benefits allowingthem to buy real wealth outside the company and thereby giving them opportunityto derive money to acquire large stakes in other firms on another hand. There could

be the reason as to why Rajus family build its shareholding and shed it whenrequired.After the scandal, on 10 January 2009, the Company Law Board decided to bar thecurrent board of Satyam from functioning and appoint 10 nominal directors. On5th February 2009, the six-member board appointed by the Government of Indianamed A. S. Murthy as the new CEO of the firm with immediate effect.The board consisted of:1) Banker Deepak Parekh.2) IT expert Kiran Karnik.3) Former SEBI member C Achuthan S Balakrishnan of Life Insurance

Corporation.4) Tarun Das, chief mentor of the Confederation of Indian Industry and5) T N Manoharan, former President of the Institute of Chartered Accountantsof India.

Q3. Corporate Philanthropy is considered as a practice by companies of all

sizes and sectors making charitable contributions to address a variety of

social, economic and other issues as part of their overall corporate

citizenship strategy Discuss.

Solution :Corporate philanthropy or corporate giving is the act of corporationsdonating some of their profits, or their resources, to nonprofit organizations.

Corporate giving is often handled by the corporation, directly, or it may be donethrough a company foundation.

Corporations most commonly donate cash, but they also donate the use of their

facilities, property, services, or advertising support. They may also set upemployee volunteer groups that then donate their time.

Corporations give to all kinds of nonprofit groups, from education and the arts tohuman services and the environment.

Also Known As: Corporate Giving

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Examples:

IBM gives millions of dollars each year to nonprofits through its corporatephilanthropy program.

Founded in 1868, Tata Industries is the classic Indian example of a family-runbusiness that has built a reputation for philanthropy alongside that of businesssuccess. Now one of the largest corporations in India, with over 80 companiesoperating across seven sectors, the company funds a vast number of charitableTrusts that are involved in a range of community development works. Anant

Nadkarni is the general manager of Group CSR for the Tata Council forCommunity Initiatives, a network of over 30 Tata companies charged withcoherently driving projects across 200,000 employees and nearly 100 facilities. Hetalks proudly of projects run by TCCI, which include the Functional Adult LiteracyProgramme, which aims to make a substantial contribution to the fight against

illiteracy in India.

Tata does appear to be an example of pure corporate philanthropy. As Ranan Tata,chairman of Tata Sons, says, We are not doing this for propaganda or visibility.We are doing it for the satisfaction of knowing that we have really achieved andgiven something to the community in which we are working. The Indian

philanthropic tradition of Tata and thousands of other family businesses hasevolved for many reasons: partly because to live in India is to live in the midst ofgrotesque inequality, partly because families tend to be rooted in communities and

partly because good schools and hospitals produce an educated and healthyworkforce.

Q4. How are principles of corporate social responsibility being followed by

Amway

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Solution :

Corporate Social Responsibility (CSR) means businesses and organisationsworking responsibly and contributing positively to the communities they operatein. It involves working with employees, their families, the local community andsociety at large to improve theirquality of life. Companies that operate ina socially responsible way strengthen their reputations. In business, reputation is

everything. It determines the extent to which customers want to buy from you,partners are willing to work with you and your standing in the community.The company

Amway is one of the worlds largest direct sales organisations with over 3million IndependentBusiness Owners (IBOs) in over 80 markets and territoriesworldwide. It is a family-owned business with a strong emphasis on family values.Its IBOs are often couples. Many of these are raising families. They therefore have

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a strong bond with children. These families are more than happy to partner withAmway, who, as part of its Corporate Social Responsibility strategy, works withUNICEF, the United Nations Childrens Fund.As a family company, Amway is committed to playing a part in improving thelives of children in need across the globe. In this way, the company is able to showits commitment to the support of global causes.Amway defines a global cause as a social issue affecting many people around theworld engaged in a struggle or plight that warrants a charitable response.This case study shows how Amway is a business that does more than providecustomers with good quality products. It shows the practical realities of Amwaysglobal commitment and how it plays a key role in the communities in which itoperates.Growth and responsibility

An understanding of how Amway operates as an organisation gives a clearer

picture of the contribution it can make to help children in need across the globe.Amways vision is to help people live better lives. It does this every day by

providing a low-cost low-riskbusiness opportunity based onselling quality products.What does Amway do?

Amway distributes a range of branded products. These products are sold to IBOsworldwide. The IBOs are Amways links with consumers and the communities inwhich they operate. The IBOs are self-employed and are highly motivated. Theywork within the guidelines of Amways Rules of Conduct and Code ofEthics,which are about being honest and responsible in trading. IBOs sell to people thatthey know or meet. They can introduce others to the Amway business.Typical products that IBOs sell include:

personal care fragrances, body care

skin care and cosmetics

durables such as cookware and water treatment systems

nutrition and wellness products such as food supplements, food and drinks.

IBOs play a key part in helping Amway to deliver its Global Cause Programme.Amway programmes

In order to give many of the worlds children a chance to live a better life, Amwaylaunched the global One by One campaign for children in 2003. The One by One

programme:

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helps Amway to bring its vision to life

declares what the company stands for

builds trust and respect in Amwaybrands

establishes Corporate Social Responsibility at a high level.

Amway encourages staff and IBOs to support its One by One campaign forchildren.Since 2001, Amway Europe has been an official partner of UNICEF and has beenable to contribute over 2 million (about 1.4 million). The focus is on supportingthe worldwide Immunisation Plus programme.

This involves, for example, providing measles vaccines to children across theglobe. The Plus is about using the vehicle of immunisation to deliver other life-saving services for children. It is about making health systems stronger and

promoting activities that help communities and families to improve child-carepractices. For example the Plus could include providing vitamin A supplementsin countries where there is vitamin A deficiency.

Since 2001, Amway and its IBOs across Europe have been supporting UNICEFschild survival programme. The need is great. One out of ten children in Kenyadoes not live to see its fifth birthday, largely through preventable diseases. Malaria

is the biggest killer with 93 deaths per day. Only 58% of children under two arefully immunised.

The work of the One by One programme is illustrated by a field trip undertaken byAmway IBOs to Kenya. The IBOs travelled to Kilifi in 2006 to meet children andto find out what the problems are in various communities. They actas champions spreading the message throughout their groups. In Kilifi, the focus ison trying to reach the most vulnerable children and pregnant mothers. The aim is toincrease immunisation from 40% to 70%. Other elements of the programmeinvolve seeking to prevent the transmission of HIV/AIDS to infants.

As the Amway organisation grows and prospers, it is able through CSR actions tohelp communities to grow and prosper too.

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Q5. What do you understand by strategy? How does Amway develop and

implement its strategy?

Solution : Developing a strategy

A strategy is an organisational plan. Implementing a strategy involves putting thatplan into action. In other words a strategy shows how a business will achieveits goals. The strategy thus enables an organisation to turn its values into action.Values are what a company stands for. An important value for Amway is being acaring company. Amway believes in demonstrating this caring approach and this iswhy it has partnered with UNICEF.All Directors design strategies for the whole of an organisation. Effective strategiesinvolve discussion and communication with others. The views of IBOs areinfluential in creating strategies for Amway. Amways strategies forcorporate social responsibility are cascaded through the organisation as shown

below.Amways Global Cause strategy involves creating responsible plans that make adifference. However, the strategy is flexible. In shaping the strategy, research wascarried out to find out which global causes IBOs support. The results showed thatmany favoured a cause that helped children. There was a clear fit betweenAmways aims to help children and UNICEFs ImmunisationPlusprogramme for children.

Objectives

From the outset, Amway set out some clear objectives for its strategy. These wereto:

build loyalty and pride among IBOs and employees

enhance Amways reputation as a caring organisation

make a real difference to human lives.

Child mortality is particularly high in developing countries because of infectiousdiseases. Many children could still be alive if they had been vaccinated.For under 12 a child can be vaccinated against these diseases and has a fightingchance to reach adulthood. UNICEFs world child Immunisation Plus

programme is a fitting focus for the activities of Amway UK and its IBOs.

The UK initiative is part of a European-wide fundraising campaign for children. Itrecognises the importance of building good working relationships with UNICEF in

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each market in order to launch fundraising programmes through Amways IBOsand theircustomers. The objective is to raise 500,000 (about 350,000) everyyear until 2010 across Amway Europe.In 2005 Amway UKs partnership was deepened through becoming an officialCorporate Partner of UNICEF UK. The Corporate Partnership is a closer longer-term relationship whichbenefitsboth partners. Working together the two partiesraise money for UNICEF.

Identifying stakeholders

Amways Corporate Social Responsibilitystrategy has been developed with theinterests of the following stakeholders in mind:

Communicating the strategy

Good, clear communication is essential in making sure that the

CSRstrategy relates directly to the companybusiness objectives. Communicationalso helps in putting the strategy into practice.A number of communications media are used:1.Face-to-face communication: Regular meetings takeplace between UNICEF,Amway and its IBOs. Through meetings with UNICEF staff, Amway is able todiscuss the vision and objectives. It then passes the message on by meeting withIBOs. In 2005 the two organisations arranged a joint briefing day for IBO Leaders.They were able to hear firsthand experiences from UNICEF staff about their rolesand UNICEFs work as well as where the money goes.2.Printed material: Amway produces a monthly magazine for all IBOs calledAmagram.3.Public relations materials are also important, particularly at launch events for theinitiative (e.g. in Milton Keynes in 2006).4.Email communication: Email is very important in the company it plays asignificant part in keeping IBOs up-to-date.5. Online activities: There is a micro-site dedicated to the Amway UK/UNICEF

partnership on the UNICEF UK website.

Fundraising

Amway Europe provides support for fundraising to the extent of 500,000 (about350,000) per year through selling items such as:

greetings cards

multi-cultural gifts and cards

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stationery and wrapping paper

toys for children.

However, Amway UKs support goes well beyond these activities. In addition, it

involves staff fundraising events and raffles organised by the IBOs. UNICEFattends IBO major events (usually supported by 1,000 or more IBOs) whererequested. A UNICEF stand outlines the work with speakers, literature andmerchandise.

Conclusion

Amway is a family business with family values. Its IBOs are people who want tomake a difference to the communities in which they operate and to the wider worldcommunity. This is Corporate Social Responsibility (CSR) in action.

The clue to Amways success is the carefulplanning of its strategy and itsinvolvement with many stakeholders in getting the strategy right. Of course, it isearly days in the latest chapter of a strong relationship between Amway andUNICEF. Evaluation is takingplace to measure the success of the initiativein terms of meeting fundraising goals. Customerresearch is carried out totest customers views on the relationship and to find out how aware the general

public is about what Amway is doing in the field of CSR.===========================================================

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