MB0036 – Strategic Management & Business Policy

1. Explain the different circumstances under which a suitable growth strategy should be selected by any company to improve its performance (i.e., intensive, integrative or diversification growth). You may select an example of your choice to substantiate your views Sol:Strategies to Improve Sales There are three alternatives to improve the sales performance of a business unit, to fill the gap between actual sales and targeted sales:a) Intensive growthb) Integrative growthc) Diversification growtha) Intensive Growth:It refers to the process of identifying opportunities to achieve further growth within the company’s current businesses. To achieve intensive growth, the management should first evaluate the available opportunities to improve the performance of its existing current businesses. It may find three options:· To penetrate into existing markets· To develop new markets· To develop new productsAt times, it may be possible to gain more market share with the current products in their current markets through a market penetration strategy. For instance, SONY introduced TV sets with Trinitron picture tubes into the market in 1996 priced at a premium of Rs.10,000 and above over the market through a niche market capture strategy. They gradually lowered the prices to market levels. However, it also simultaneously launched higher-end products (high-technology products) to maintain its global image as a technology leader. By lowering the prices of TVs with Trinitron picture tubes, the company could successfully penetrate into the markets to add new customers to its customer base.Market Development Strategy is to explore the possibility to find or develop new markets for its current products (from the northern region to the eastern region etc.). Most multinational companies have been entering Indian markets with this strategy, to develop markets globally. However, care should be taken to ensure that these new markets are not low density or saturated markets, which could lead to price pressures.Product Development Strategy involves consideration of new products of potential interest to its current markets (e.g. Gramaphone Records to Musical Productions to CDs)– as part of a Diversification strategy.

Study the following example to understand what Product Development Strategy is.

MICROSOFT’s New StrategyIt is called PC-plus. It has three elements:

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a) Providing computer power to the most commonly used devices such as cell phone, personal computer, toaster oven, dishwasher, refrigerator, washing machines and so on.b) Developing software to allow these devices to communicate.c) Investing heavily to help build wireless and high-speed internet access throughout the world to link it all together.Microsoft envisions a home where everyday appliances and electronics are smart. According to Bill Gates, ‘In the near future, PC-based networks will help us control many of our domestic matters with devices that cost no more than $ 100 each ‘.It is also said at Microsoft that VCRs can be programmed via e-mail, laundry washers can be designed to send an instant message to the home computer when the load is done and refrigerators can be made to send an e-mail when there’s no more milk. Microsoft plans to give these appliances ‘brains‘ and provide them the means to talk to each other through their Windows CE Operating System.

b) Integrative Growth:It refers to the process of identifying opportunities to develop or acquire businesses that are related to the company’s current businesses. More often, the business processes have to be integrated for linear growth in the profits. The corporate plan may be designed to undertake backward, forward or horizontal integration within the industry.If a company operating in music systems takes over the manufacturing business of its plastic material supplier, it would be able to gain more control over the market or generate more profit. (Backward Integration)Alternatively, if this company acquires some of its most profitably operating intermediaries such as wholesalers or retailers, it is forward integration. If the company legally takes over or acquires the business of any of its leading competitors, it is called horizontal integration (however, if this competitor is weak, it might be counter-productive due to dilution of brand image).c) Diversification Growth:It refers to the process of identifying opportunities to develop or acquire businesses that are not related to the company’s current businesses. This makes sense when such opportunities outside the present businesses are identified with attractive returns and that industry has business strengths to be successful. In most cases, this is planned with new products that have technological or marketing synergies with existing businesses to cater to a different group of customers (Concentric Diversification).A printing press might shift over to offset printing with computerised content generation to appeal to higher-end customers and also add new application areas ( Horizontal Diversification ) – or even sell stationery.Alternatively, the company might choose new businesses that have nothing to do with the current technology, products or markets (Conglomerate Diversification).The classic examples for this would be engineering and textile firms setting up software development centres or Call Centres with new service clients.

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Situation AnalysisSales Improvement Strategies:a) A supplier of computer stationery invests in a computer stationery manufacturing unit.b) A vendor supplying engine boxes to Maruti decides to supply the same with modifications to Hyundai.c) A company dealing in computer floppies plans to set up a Software Technology Park.

2. What are the components of a good Business Plan and briefly explain the importance of each Sol.The format of a Business Plan is something that has been developed and refined over the years and is something that should not be changed. Like a good recipe, a business plan needs to include certain ingredients to make it work.When you create a business plan, don't attempt to recreate its format. Those reviewing this type of document have expectations you must meet. If they do not see those crucial decision-making components, they'll see no reason to proceed with their review of your business plan, no matter how great your business idea.Executive Summary SectionEvery business plan must begin with an Executive Summary section. A well-written Executive Summary is critical to the success of the rest of the document. Here is where you need to capture the attention of your audience so that they will be compelled to read on. Remember, it's a summary, so each and every word must be carefully selected and presented.Use the Executive Summary section of your business plan to accurately describe the nature of your business venture including the need that you plan to fill. Show the reasons why people need

your product or service. Show this by including a brief analysis of the characteristics of your potential market.Describe the organization of your business including your management team. Also, briefly describe your sales and marketing plan or approach. Finally include the numbers that those reviewing your business plan want to see - the amount of capital you seek, the carefully calculated sales projections and your plan to repay the loan.If you've captured your audience so far they'll read on. Otherwise, they'll close the document and add your business plan to the heap of other rejected ideas.Devote the balance of your business plan to providing details of the items outlined in the Executive Summary.The Business SectionBe sure to include the legal name, physical address and detailed description of the nature of your business. It's important to keep the description easy to read using common terminology. Never

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assume that those reading your business plan have the same level of technical knowledge that you do. Describe how you plan to better serve your market than your competition is currently doing.Market Analysis SectionAn analysis of the market shows that you have done your homework. This section is basically a summary of your Marketing Plan. It needs to show the demand for your product or service, the proposed market, trends within the industry, a description of your pricing plan and packaging and a description of your company policies.Financing SectionThe Financing section must show that you are as committed to your business venture as you expect those reading your business plan to be. Show the amount of personal funds you are contributing and their source. Also include the amount of capital you need and your plan to repay this debt. Include all pertinent financial worksheets in this section: annual income projections, a break-even worksheet, projected cash flow statements and a balance sheet.Management SectionOutline your organizational structure and management team here. Include the legal structure of your business whether it is a partnership, corporation or limited liability corporation. Include resumes and biographies of key players on your management team. Show staffing projection data for the next few years.By now you're probably thinking that you don't need Business Plan just yet. Well you do, and there is business plan building software that can help you through this immense project. These software packages are easy to use and affordable. Use one today and produce a professional-quality Business Plan - including all critical components - tomorrow!

3. You wish to start a new venture to manufacture auto components. Explain different stages in the process of starting this new business Sol.Every business starts out as an idea. This idea usually involves the invention of a new product, or revolves around a better way of making and marketing an existing one. While many would argue that the idea stage is not a stage at all, it is actually a turning point, as business adviser Mike Pendrith points out. After this, you as a business builder must refine this idea into a money-making reality. Here in this case supposing we are to start a new venture of manufacturing auto components and also to market them. We will see here in the following paragraphs different stages of achieving the same goal.

1. Idea ResearchingIn this stage, you are researching your idea. The object of your research is to find out who is marketing the same product or service in your area, and how successful the marketer has been. You can accomplish this by a Google search on the Internet, launching a test-marketing campaign, or conducting surveys. Also, you are attempting to find what the level of interest is in the products (or services) you wish to market.

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Here as the main goal is to start a company that manufactures the auto components, we are to make a research on all the auto companies which are procuring the spares from the outside vendors. And also the competitors who are all marketing that, their existence and also how successful they are.As part of the initial research process, it is important to consider the legal requirements of selling your product or service. According to the Biz Ed website, examine the legal ramifications of your business. Know the tax laws governing your business. If insurance is a requirement, prepare to budget for it. Also, be aware of any safety laws governing you as an employer. Hence we are also to make a research on the feasible area where we can start our organization and licenses that we need to take keeping in mind the environmental factors as well.

2. Business Plan FormulationYou must write a business plan. As Pendrith points out, this is crucial if you want funding, such as a small business loan or grant, or if you wish to lease a building. At this stage, Pendrith advises, you need to consult with an attorney or business adviser for assistance. In the business plan you typically include following heads:

i) Executive Summaryii) Company and Product Description

iii) Market Description

iv) Equipment and Materials

v) Operations

vi) Management and Ownership

vii) Financial Information and Start-Up Timeline

viii) Risks and Their Mitigation

3. Financial PlanningFinancial planning involves thinking about the financial costs of starting and maintaining your business. According to the Biz Ed website, you should consider such issues as the costs of running the business; the prices you wish to charge your customers; cash flow control; and how you wish to set up financial reserves in case of an emergency or an event causing significant loss to the business. This includes the planning of whether to take any loans or make personal investments in the company.

4. Advertising Campaign

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Decide how you will market your product. Consider your budget and your target audience. Make up business cards with your logo on it, your name and the name of your business. Make sure that they are of the most professional quality. Utilizing print, the newspaper, the Internet, radio or TV is also wise, considering, of course, the size of your advertising budget. Here in this case more than TV, a better advertising media will be road side sign boards placed close to the auto companies for getting the deals to manufacture their spares. As TV is useful only to reach the common man and he is not our target customer. Hence sign boards is the feasible solution and also pamphlets circulated across the pioneers. This apart personal marketing is much more suggested.

5. Preparing for LaunchAdvertise for employees. This also requires adequate planning. Think about what you look for in an employee. Be specific about the requisite skills and experience you are seeking. Then begin requesting resumes and setting up interviews, making hiring decisions based on the standards you have set. In this case we will be looking for a few candidates in managerial position who must be good in managing things apart from minimal technical knowledge. Lower level people at the shopfloor people. They need to have real time experience in the shop floor activities. The employees apart, one needs to plan on the plant and machinery as well. Thus these are all the stages that I would consider performing if incase I plan to start a manufacturing unit producing automobile components.

4. Explain the process of due Diligence and why it is necessary Sol.Due diligenceOf course, your commercial partner will need some reassurance about the quality of the offer you are making to them. If you are involved in licensing technology or seeking commercial support for your research you are likely to hear of ‘due diligence.’ When a future partner is considering whether or not to license technology, to buy a share of patent rights, or to support your research, they will need to satisfy themselves that it is a viable proposition. The process of assessing the viability, risk, potential liabilities and commercial prospects of a project is known as ‘due diligence.’ Indeed, if a potential partner seems not to be interested in this kind of issues, it may actually raise questions about their commitment to the project or the credibility of their business plan, particularly if the relationship assumes some degree of risk and investment on their part.

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Generally, due diligence will involve assessing the overall commercial operations, cash flow, assets and liabilities of a business that is being purchased or otherwise financially supported. You would think twice about purchasing a business if you found that it was burdened with debts, or was about to be involved in difficult litigation, or if there were doubts about whether it really owned its assets. The same applies to a potential investment involving intellectual property. For instance, a potential commercial partner would not want to invest in patented technology only to find out that patent renewal fees have not been paid and the patent has lapsed, or to find out that the patent was being opposed by another company, or to find that there is prior art available that calls into question its validity. It may transpire that a student, a contractor or a visiting researcher could actually be legally entitled to some or all of the patent rights. Even a serious level of uncertainty or doubt could be enough to deter a potential partner, especially if they have run into this kind of difficulty before.Due diligence may also involve searching for information about the full range of IP rights that might impact on the relevant technology – for instance, to check whether you have later filed patent applications on improvements to the original patented technology, that may limit the value of their investment in the original technology. Other intellectual property rights – such as related trade mark or design registrations, or key trade secrets or copyright material (such as manuals or software) – may also need to be identified or located, as these may also affect the commercial partner’s interests in the technology. For example, they may be unwilling to take out a licence for your patent without getting access to the software you have developed for a related process. They may want the right to use your trade mark in association with the patented technology.So in a due diligence process, your commercial partner may undertake a range of checks and need various forms of information. These may include:· Checks on external records, such as patent registers and patent databases, including foreign patents;· Searches of patent databases for conflicting technology;· Independent advice from patent attorneys on issues such as patent ownership, patent validity and scope of patent claims;· Checks on employment contracts, confidentiality arrangements, and contracts with other parties that may interfere with the exercise of IP rights;· Details of the patent prosecution such as examiners’ reports and other opinions;· Details of any legal challenges to the patent, and the way the proceedings were resolved;· Checks on laboratory notebooks in the event that the validity of US patents is of concern to the commercial partner (this also provides reassurance as to claims of ownership of the patent);· Surveys of the activity of competitors and owners of competing technology, and possibilities of conflict; and· Analysis of freedom to operate issues.In preparing to licence your technology, you should consider in advance these kind of due diligence issues. If you can anticipate and provide comprehensive answers to these questions, you will be able more effectively to reassure your commercial partner, and you will be in a stronger negotiating position in negotiating licence terms. It should also speed up the licensing negotiations, and ultimately the commercialization of your intellectual property.

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5. Is Corporate Social Responsibility necessary and how does it benefit a company and its shareholders?Sol. Corporate social responsibility (CSR), also known as corporate responsibility, corporate citizenship, responsible business, sustainable responsible business (SRB), or corporate social performance,[1] is a form of corporate self-regulation integrated into a business model. Ideally, CSR policy would function as a built-in, self-regulating mechanism whereby business would monitor and ensure its support to law, ethical standards, and international norms. Consequently, business would embrace responsibility for the impact of its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere. Furthermore, CSR-focused businesses would proactively promote the public interest by encouraging community growth and development, and voluntarily eliminating practices that harm the public sphere, regardless of legality. Essentially, CSR is the deliberate inclusion of public interest into corporate decision-making, and the honoring of a triple bottom line: people, planet, profit.The practice of CSR is much debated and criticized. Proponents argue that there is a strong business case for CSR, in that corporations benefit in multiple ways by operating with a perspective broader and longer than their own immediate, short-term profits. Critics argue that CSR distracts from the fundamental economic role of businesses; others argue that it is nothing more than superficial window-dressing; others yet argue that it is an attempt to pre-empt the role of governments as a watchdog over powerful multinational corporations. Corporate Social Responsibility has been redefined throughout the years. However, it essentially is titled to aid to an organization's mission as well as a guide to what the company stands for and will uphold to its consumers.Development business ethics is one of the forms of applied ethics that examines ethical principles and moral or ethical problems that can arise in a business environment.In the increasingly conscience-focused marketplaces of the 21st century, the demand for more ethical business processes and actions (known as ethicism) is increasing. Simultaneously, pressure is applied on industry to improve business ethics through new public initiatives and laws (e.g. higher UK road tax for higher-emission vehicles).Business ethics can be both a normative and a descriptive discipline. As a corporate practice and a career specialization, the field is primarily normative. In academia, descriptive approaches are also taken. The range and quantity of business ethical issues reflects the degree to which business is perceived to be at odds with non-economic social values. Historically, interest in business ethics accelerated dramatically during the 1980s and 1990s, both within major corporations and within academia. For example, today most major corporate websites lay emphasis on commitment to promoting non-economic social values under a variety of headings (e.g. ethics codes, social responsibility charters). In some cases, corporations have re-branded their core values in the light of business ethical considerations (e.g. BP's "beyond petroleum" environmental tilt).

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The term "CSR" came in to common use in the early 1970s, after many multinational corporations formed, although it was seldom abbreviated. The term stakeholder, meaning those on whom an organization's activities have an impact, was used to describe corporate owners beyond shareholders as a result of an influential book by R Freeman in 1984.[2]

ISO 26000 is the recognized international standard for CSR (currently a Draft International Standard). Public sector organizations (the United Nations for example) adhere to the triple bottom line (TBL). It is widely accepted that CSR adheres to similar principles but with no formal act of legislation. The UN has developed the Principles for Responsible Investment as guidelines for investing entities.Potential business benefitsThe scale and nature of the benefits of CSR for an organization can vary depending on the nature of the enterprise, and are difficult to quantify, though there is a large body of literature exhorting business to adopt measures beyond financial ones (e.g., Deming's Fourteen Points, balanced scorecards). Orlitzky, Schmidt, and Rynes found a correlation between social/environmental performance and financial performance. However, businesses may not be looking at short-run financial returns when developing their CSR strategy.The definition of CSR used within an organization can vary from the strict "stakeholder impacts" definition used by many CSR advocates and will often include charitable efforts and volunteering. CSR may be based within the human resources, business development or public relations departments of an organization,[11] or may be given a separate unit reporting to the CEO or in some cases directly to the board. Some companies may implement CSR-type values without a clearly defined team or program.The business case for CSR within a company will likely rest on one or more of these arguments:Human resourcesA CSR program can be an aid to recruitment and retention,[12] particularly within the competitive graduate student market. Potential recruits often ask about a firm's CSR policy during an interview, and having a comprehensive policy can give an advantage. CSR can also help improve the perception of a company among its staff, particularly when staff can become involved through payroll giving, fundraising activities or community volunteering. See also Corporate Social Entrepreneurship, whereby CSR can also be driven by employees' personal values, in addition to the more obvious economic and governmental drivers.Risk managementManaging risk is a central part of many corporate strategies. Reputations that take decades to build up can be ruined in hours through incidents such as corruption scandals or environmental accidents. These can also draw unwanted attention from regulators, courts, governments and media. Building a genuine culture of 'doing the right thing' within a corporation can offset these risks.[13]

Brand differentiationIn crowded marketplaces, companies strive for a unique selling proposition that can separate them from the competition in the minds of consumers. CSR can play a role in building customer loyalty based on distinctive ethical values.[14] Several major brands, such as The Co-operative Group, The Body Shop and American Apparel [15] are built on ethical values. Business service organizations can benefit too from building a reputation for integrity and best practice.

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License to operateCorporations are keen to avoid interference in their business through taxation or regulations. By taking substantive voluntary steps, they can persuade governments and the wider public that they are taking issues such as health and safety, diversity, or the environment seriously as good corporate citizens with respect to labour standards and impacts on the environmentStakeholder prioritiesIncreasingly, corporations are motivated to become more socially responsible because their most important stakeholders expect them to understand and address the social and community issues that are relevant to them. Understanding what causes are important to employees is usually the first priority because of the many interrelated business benefits that can be derived from increased employee engagement (i.e. more loyalty, improved recruitment, increased retention, higher productivity, and so on). Key external stakeholders include customers, consumers, investors (particularly institutional investors), communities in the areas where the corporation operates its facilities, regulators, academics, and the media.

6. Distinguish between a Financial Investor and a Strategic Investor explaining the role they play in a Company? Sol.In the not so distant past, there was little difference between financial and strategic investors. Investors of all colors sought to safeguard their investment by taking over as many management functions as they could. Additionally, investments were small and shareholders few. A firm resembled a household and the number of people involved – in ownership and in management – was correspondingly limited. People invested in industries they were acquainted with first hand.As markets grew, the scales of industrial production (and of service provision) expanded. A single investor (or a small group of investors) could no longer accommodate the needs even of a single firm. As knowledge increased and specialization ensued – it was no longer feasible or possible to micro-manage a firm one invested in. Actually, separate businesses of money making and business management emerged. An investor was expected to excel in obtaining high yields on his capital – not in industrial management or in marketing. A manager was expected to manage, not to be capable of personally tackling the various and varying tasks of the business that he managed.Thus, two classes of investors emerged. One type supplied firms with capital. The other type supplied them with know-how, technology, management skills, marketing techniques, intellectual property, clientele and a vision, a sense of direction.In many cases, the strategic investor also provided the necessary funding. But, more and more, a separation was maintained. Venture capital and risk capital funds, for instance, are purely financial investors. So are, to a growing extent, investment banks and other financial institutions.The financial investor represents the past. Its money is the result of past - right and wrong - decisions. Its orientation is short term: an "exit strategy" is sought as soon as feasible. For "exit strategy" read quick profits. The financial investor is always on the lookout, searching for willing buyers for his stake. The stock exchange is a popular exit strategy. The financial investor has

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little interest in the company's management. Optimally, his money buys for him not only a good product and a good market, but also a good management. But his interpretation of the rolls and functions of "good management" are very different to that offered by the strategic investor. The financial investor is satisfied with a management team which maximizes value. The price of his shares is the most important indication of success. This is "bottom line" short termism which also characterizes operators in the capital markets. Invested in so many ventures and companies, the financial investor has no interest, nor the resources to get seriously involved in any one of them. Micro-management is left to others - but, in many cases, so is macro-management. The financial investor participates in quarterly or annual general shareholders meetings. This is the extent of its involvement.The strategic investor, on the other hand, represents the real long term accumulator of value. Paradoxically, it is the strategic investor that has the greater influence on the value of the company's shares. The quality of management, the rate of the introduction of new products, the success or failure of marketing strategies, the level of customer satisfaction, the education of the workforce - all depend on the strategic investor. That there is a strong relationship between the quality and decisions of the strategic investor and the share price is small wonder. The strategic investor represents a discounted future in the same manner that shares do. Indeed, gradually, the balance between financial investors and strategic investors is shifting in favour of the latter. People understand that money is abundant and what is in short supply is good management. Given the ability to create a brand, to generate profits, to issue new products and to acquire new clients - money is abundant.

These are the functions normally reserved to financial investors:Financial ManagementThe financial investor is expected to take over the financial management of the firm and to directly appoint the senior management and, especially, the management echelons, which directly deal with the finances of the firm.

1. To regulate, supervise and implement a timely, full and accurate set of accounting books of the firm reflecting all its activities in a manner commensurate with the relevant legislation and regulation in the territories of operations of the firm and with internal guidelines set from time to time by the Board of Directors of the firm. This is usually achieved both during a Due Diligence process and later, as financial management is implemented.

2. To implement continuous financial audit and control systems to monitor the performance of the firm, its flow of funds, the adherence to the budget, the expenditures, the income, the cost of sales and other budgetary items.

3. To timely, regularly and duly prepare and present to the Board of Directors financial statements and reports as required by all pertinent laws and regulations in the territories of the operations of the firm and as deemed necessary and demanded from time to time by the Board of Directors of the Firm.

4. To comply with all reporting, accounting and audit requirements imposed by the capital markets or regulatory bodies of capital markets in which the securities of the firm are traded or are about to be traded or otherwise listed.

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5. To prepare and present for the approval of the Board of Directors an annual budget, other budgets, financial plans, business plans, feasibility studies, investment memoranda and all other financial and business documents as may be required from time to time by the Board of Directors of the Firm.

6. To alert the Board of Directors and to warn it regarding any irregularity, lack of compliance, lack of adherence, lacunas and problems whether actual or potential concerning the financial systems, the financial operations, the financing plans, the accounting, the audits, the budgets and any other matter of a financial nature or which could or does have a financial implication.

7. To collaborate and coordinate the activities of outside suppliers of financial services hired or contracted by the firm, including accountants, auditors, financial consultants, underwriters and brokers, the banking system and other financial venues.

8. To maintain a working relationship and to develop additional relationships with banks, financial institutions and capital markets with the aim of securing the funds necessary for the operations of the firm, the attainment of its development plans and its investments.

9. To fully computerize all the above activities in a combined hardware-software and communications system which will integrate into the systems of other members of the group of companies.

10. Otherwise, to initiate and engage in all manner of activities, whether financial or of other nature, conducive to the financial health, the growth prospects and the fulfillment of investment plans of the firm to the best of his ability and with the appropriate dedication of the time and efforts required.

Collection and Credit Assessment1. To construct and implement credit risk assessment tools, questionnaires, quantitative

methods, data gathering methods and venues in order to properly evaluate and predict the credit risk rating of a client, distributor, or supplier.

2. To constantly monitor and analyse the payment morale, regularity, non-payment and non-performance events, etc. – in order to determine the changes in the credit risk rating of said factors.

3. To analyse receivables and collectibles on a regular and timely basis.4. To improve the collection methods in order to reduce the amounts of arrears and overdue

payments, or the average period of such arrears and overdue payments.5. To collaborate with legal institutions, law enforcement agencies and private collection

firms in assuring the timely flow and payment of all due payments, arrears and overdue payments and other collectibles.

6. To coordinate an educational campaign to ensure the voluntary collaboration of the clients, distributors and other debtors in the timely and orderly payment of their dues.

The strategic investor is, usually, put in charge of the following:

Project Planning and Project ManagementThe strategic investor is uniquely positioned to plan the technical side of the project and to implement it. He is, therefore, put in charge of:

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1. The selection of infrastructure, equipment, raw materials, industrial processes, etc.;2. Negotiations and agreements with providers and suppliers;3. Minimizing the costs of infrastructure by deploying proprietary components and

planning;4. The provision of corporate guarantees and letters of comfort to suppliers;5. The planning and erecting of the various sites, structures, buildings, premises, factories,

etc.;6. The planning and implementation of line connections, computer network connections,

protocols, solving issues of compatibility (hardware and software, etc.); 7. Project planning, implementation and supervision.

Marketing and Sales1. The presentation to the Board an annual plan of sales and marketing including: market

penetration targets, profiles of potential social and economic categories of clients, sales promotion methods, advertising campaigns, image, public relations and other media campaigns. The strategic investor also implements these plans or supervises their implementation.

2. The strategic investor is usually possessed of a brandname recognized in many countries. It is the market leaders in certain territories. It has been providing goods and services to users for a long period of time, reliably. This is an important asset, which, if properly used, can attract users. The enhancement of the brandname, its recognition and market awareness, market penetration, co-branding, collaboration with other suppliers – are all the responsibilities of the strategic investor.

3. The dissemination of the product as a preferred choice among vendors, distributors, individual users and businesses in the territory.

4. Special events, sponsorships, collaboration with businesses.5. The planning and implementation of incentive systems (e.g., points, vouchers).6. The strategic investor usually organizes a distribution and dealership network, a

franchising network, or a sales network (retail chains) including: training, pricing, pecuniary and quality supervision, network control, inventory and accounting controls, advertising, local marketing and sales promotion and other network management functions.

7. The strategic investor is also in charge of "vision thinking": new methods of operation, new marketing ploys, new market niches, predicting the future trends and market needs, market analyses and research, etc.

The strategic investor typically brings to the firm valuable experience in marketing and sales. It has numerous off the shelf marketing plans and drawer sales promotion campaigns. It developed software and personnel capable of analysing any market into effective niches and of creating the right media (image and PR), advertising and sales promotion drives best suited for it. It has built large databases with multi-year profiles of the purchasing patterns and demographic data related to thousands of clients in many countries. It owns libraries of material, images, sounds, paper

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clippings, articles, PR and image materials, and proprietary trademarks and brand names. Above all, it accumulated years of marketing and sales promotion ideas which crystallized into a new conception of the business.Technology

1. The planning and implementation of new technological systems up to their fully operational phase. The strategic partner's engineers are available to plan, implement and supervise all the stages of the technological side of the business.

2. The planning and implementation of a fully operative computer system (hardware, software, communication, intranet) to deal with all the aspects of the structure and the operation of the firm. The strategic investor puts at the disposal of the firm proprietary software developed by it and specifically tailored to the needs of companies operating in the firm's market.

3. The encouragement of the development of in-house, proprietary, technological solutions to the needs of the firm, its clients and suppliers.

4. The planning and the execution of an integration program with new technologies in the field, in collaboration with other suppliers or market technological leaders.

Education and TrainingThe strategic investor is responsible to train all the personnel in the firm: operators, customer services, distributors, vendors, sales personnel. The training is conducted at its sole expense and includes tours of its facilities abroad.The entrepreneurs – who sought to introduce the two types of investors, in the first place – are usually left with the following functions:Administration and Control

1. To structure the firm in an optimal manner, most conducive to the conduct of its business and to present the new structure for the Board's approval within 30 days from the date of the GM's appointment.

2. To run the day to day business of the firm.3. To oversee the personnel of the firm and to resolve all the personnel issues.4. To secure the unobstructed flow of relevant information and the protection of confidential

organization.5. To represent the firm in its contacts, representations and negotiations with other firms,

authorities, or persons.This is why entrepreneurs find it very hard to cohabitate with investors of any kind. Entrepreneurs are excellent at identifying the needs of the market and at introducing technological or service solutions to satisfy such needs. But the very personality traits which qualify them to become entrepreneurs – also hinder the future development of their firms. Only the introduction of outside investors can resolve the dilemma. Outside investors are not emotionally involved. They may be less visionary – but also more experienced.They are more interested in business results than in dreams. And – being well acquainted with entrepreneurs – they insist on having unmitigated control of the business, for fear of losing all their money. These things antagonize the entrepreneurs. They feel that they are losing their creation to cold-hearted, mean spirited, corporate predators. They rebel and prefer to remain

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MB0036 – Strategic Management & Business Policy

small or even to close shop than to give up their cherished freedoms. This is where nine out of ten entrepreneurs fail - in knowing when to let go.

RAHUL GUPTA, MBAHCS (4th SEM), SUBJECT CODE-MB0036, SET-1 Page 15