CU-BCOM-SEM-V-Corporate Strategy-Second Draft

BACHELOR OF COMMERCE SEMESTER V CORPORATE STRATEGY

First Published in 2021 All rights reserved. No Part of this book may be reproduced or transmitted, in any form or by any means, without permission in writing from Chandigarh University. Any person who does any unauthorized act in relation to this book may be liable to criminal prosecution and civil claims for damages. This book is meant for educational and learning purpose. The authors of the book has/have taken all reasonable care to ensure that the contents of the book do not violate any existing copyright or other intellectual property rights of any person in any manner whatsoever. In the event, Authors has/ have been unable to track any source and if any copyright has been inadvertently infringed, please notify the publisher in writing for corrective action. 2 CU IDOL SELF LEARNING MATERIAL (SLM)

CONTENT Unit 1: Introduction To Strategy............................................................................................ 4 Unit 2: Corporate Planning And Budgeting ......................................................................... 30 Unit 3: Defining Strategic Intent ......................................................................................... 50 Unit 4: Strategy Formulation & Process .............................................................................. 72 Unit 5: Techniques For Environmental Scanning................................................................. 85 Unit 6: Organizational Appraisal ....................................................................................... 102 Unit 7: Methods ................................................................................................................ 117 Unit 8: Corporate Level Strategy....................................................................................... 130 Unit 9: Business Level Strategy......................................................................................... 150 Unit 10: Porter’s Generic Business Strategy Strategic Choice............................................ 169 Unit 11: Bcg Matrix .......................................................................................................... 190 Unit 12: Strategic Implementation ..................................................................................... 207 Unit 13: Aspects Of Strategy Implementation.................................................................... 219 Unit 14: Evolution And Control ........................................................................................ 228 3 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT 1: INTRODUCTION TO STRATEGY STRUCTURE 1.0 Learning Objectives 1.1 Introduction 1.2 Significance of Planning 1.3 Types 1.4 Needs 1.5 Requisites 1.6 Planning System 1.7 Role of Planner. 1.8 Approach 1.9 Summary 1.10 Keywords 1.11 Learning Activity 1.12 Unit End Questions 1.13 References 1.0 LEARNING OBJECTIVES After studying this unit, you will be able to:  Explain the concept of Strategy.  Identify the Requisites of Strategy.  Illustrate the Role of planner. 1.1 INTRODUCTION When reviewing strategic thinking, we realize how this phenomenon has gone through different phases and semantic contexts. With a millennium distancing the word from its origins, the word strategy has had several meanings but without ever losing its semantic roots. In the beginning, strategy took on a military significance and represented the action of commanding or leading armies in times of war, i.e. a military campaign. It meant a way of prevailing over the adversary, a tool of victory in war and only afterwards was it applied to other contexts and fields of human relationships: political, economics, business, among others, but always retaining in all its uses the semantic root, to define paths. After several 4 CU IDOL SELF LEARNING MATERIAL (SLM)

phases and meanings, the concept of strategy has evolved into a field of knowledge in management, strategic management, with content, concepts and practical reasoning, ending up by carving out its own role in the academic and business fields. Management uses this old military concept to associate the activities of a general with those of an organization’s manager. Since it represents an important tool for business management in a competitive and turbulent marketplace, the main objective of strategy involves preparing the organization to confront the current hostile environment, to this end systematically and objectively deploying the skills, qualifications and internal resources of the enterprise. On the other hand, the concept of strategy still seems to be a very vague concept and subject to various interpretations. An exact definition of strategy may not actually be fundamental, however, within the context of organizational knowledge management, specifically the knowledge that new professionals bring into companies, grasping which type of strategic understanding new managers bring into the organization is clearly of importance. Thus, we may question whether concepts of strategy and strategic management are understood by business managers, especially the younger, the newly graduated in management. Therefore, this research aims to assess the acquired knowledge of university management students relating to strategy and strategic management concepts with the purpose of answering the following question: What is strategy and strategic management to future managers? Are they understood and recognized? To answer this question, this study seeks to examine management student understanding as to the meaning of these two concepts. As specific objectives, we seek : to build a model explaining the definition of strategy according to the perceptions of students graduating in management, and to identify which concept of strategic management in the existing literature comes closest to the perceptions of current management students. To understand the perceptions of individuals about a particular concept, we adopt phenomenography type research practices. The main feature of the research method is its description of a phenomenon as it is experienced, emphasizing the collective significance of the studied phenomena, and should in no way be confused with phenomenological studies. Phenomenology is far more concerned with the individual experience of the people involved than with the phenomena studied. The study is justified due to the sheer importance of the themes of strategy and strategic management to contemporary organizations. In this sense, the survey sought to contribute towards management knowledge in the organizational environment by clarifying what is the real understanding of management graduates on the themes of strategy and strategic management. According to Tseng andObembe, knowledge management in an organization begins by identifying the knowledge that individuals bring in from outside the company. In this case, the development of organizational strategy depends on understanding the perceptions of their managers on what strategy and strategic management actually is. The identification of perceptions of future managers on the two concepts, as used in this study, contributes significantly to organizational management practice. This enables the organization’s management strategies as organizational knowledge on the field of strategy can hardly be managed should each manager understand the concept 5 CU IDOL SELF LEARNING MATERIAL (SLM)

differently. The study findings may also be expected to contribute to Higher Education Institutions (HEI), by identifying what level of understanding their graduating management students attain regarding the subjects under analysis. The research contribution also extends to the academic world by presenting the concepts of strategy and strategic management most present and active in the minds of future managers, findings rarely encountered in the literature. There are few studies relating strategy as a theoretical approach and its practical application in organizations. Thus, this study contributes to research on strategy demonstrating that the field of strategy, comprising as it does of several concepts and approaches, generates confusion among management practitioners. After all, the same phenomenon is approached in several distinctly different ways and individuals working in management would also seem to hold various perspectives, often understanding neither the real meaning of strategy nor its management. Furthermore, this research aims to provide some insights for lecturers bearing in mind that student opinions and knowledge on this matter reflect the efficiency and the effectiveness of the strategy related learning process, potentially revealing a need to change the didactics of these classes. Another reason that led to this study was the method adopted, phenomenography, whose main characteristic is its ability to capture the perceptions of a group of people about a concept. After an exhaustive search of available scientific databases, only one study of a similar nature was found, the Shanahan and Gerber research on the concept of quality in HEIs, which proved the inspiration for the research set out here. Most of the other phenomenography studies found deal with educational teaching methods or, in fewer cases, the behaviour of consumers. In the field of strategy, they both represent an innovation and a new alternative for research. The paper is structured as follows: firstly, a literature review of the strategy and strategic management concepts from a historical perspective is carried out. Afterwards, the phenomenography research is described and explained. The methodology adopted in the survey is presented in the next section. Subsequently, the collected data are analysed and our model is tested. The article ends up with final considerations and future recommendations Strategy was created by the Greeks, who endowed the concept with a military connotation. The term derives from the Greek strategies, translated as a general in command of troops or the art of the general or plan to destroy enemies through effective use of resources. This term in itself contained the idea of objectives to be achieved and plans of action to be performed in various scenarios, depending on the enemy’s behaviour. According to Mint berg and Quinn, strategy was already considered as an organizational skill at the time of Pericles (450 BC), meaning management skills (administrative, leadership, public speaking, power). However, it was only after World War II that strategy fully entered into the business world, which has since grown significantly and needed guidance, lines and paths to be followed by their entire structures. This growth increased organizational complexity and, together with the accelerated pace of environmental changes, began requiring enterprises deploy greater capacity to create and manage strategies enabling them to meet the challenges of the market, reaching their objectives in the short, medium and long term. 6 CU IDOL SELF LEARNING MATERIAL (SLM)

According to Mint berg it was only in the 1980s that strategies underwent great development within the corporate environment. Phenomena such as corporate restructuring, joint decisions and actions impacting on organizational size, financing and portfolios were driven by the technological advance in means of communication and transport and, since then, an interactive dynamic and integration on a global level have become predominant. Nowadays, thinking strategically has acquired the status of an indispensable factor in leading and managing organizations, whether for profit or otherwise. After all, strategy addresses the link between the inner world of business and its external environment. Considering its importance, talking about strategy opens up a discussion of theoretical approaches, ranging from the more conventional, considering strategy as a business logic, rational and sequential, to the most dynamic, that understand this process as associated with cultural and learning factors, politics and power relations. Thus, there are two major problems affecting the understanding of what the concept of strategy really means: confusion between strategy and effectiveness tools and confusion between strategy and strategic planning. The root of the problem seems to be the lack of a full understanding as to what strategy really is. pre-empting different scenarios and action plans to be triggered on encountering them. However, there has never been a single and definite definition of strategy. The term has had several meanings, different in scale and complexity which can mean policies, objectives, tactics, goals, programs, among others, in an attempt to express the concepts necessary for its definition. 1.2SIGNIFICANCE OF PLANNING This toolkit is an overview of the different aspects involved in planning for an organisation or project. It should enable the user to make a clear distinction between strategic planning and action planning, both of which are dealt with in detail in separate toolkits. It also provides some ideas about techniques to use in planning. It should provide a fairly inexperienced planning team in any organisation with a clear picture of what planning should involve, and of how planning links to monitoring and evaluation. Planning is a complex process that can take many forms. There are different kinds of planning and different ways of planning. There are many planning tools. Knowing what kind of planning is needed for what situation is a skill in itself. This toolkit is intended to help you sort out what kinds of planning you need when, and the tools that are appropriate to your needs. The toolkits that deal with strategic planning, action planning and monitoring and evaluation will give you more details of how to carry out the actual processes This toolkit is aimed specifically at those who have had only limited experience in planning. Perhaps you have not been involved in running an organisation, project or department before. Or perhaps you have not been involved in the planning side of the work before. Now you are faced with 7 CU IDOL SELF LEARNING MATERIAL (SLM)

the task of planning for your organisation, project or department, and you are not quite sure where to start. If you are in a situation like this, then this toolkit will be useful for you. Planning is the systematic process of establishing a need and then working out the best way to meet the need, within a strategic framework that enables you to identify priorities and determines your operational principles. Planning means thinking about the future so that you can do something about it now. This doesn’t necessarily mean that everything will go according to plan. It probably won’t. But if you have planned properly, your ability to adjust, without compromising your overall purpose, will be that much greater. Planning is the process of thinking about the activities required to achieve a desired goal. It is the first and foremost activity to achieve desired results. It involves the creation and maintenance of a plan, such as psychological aspects that require conceptual skills. There are even a couple of tests to measure someone’s capability of planning well. As such, planning is a fundamental property of intelligent behaviour. An important further meaning, often just called \"planning\", is the legal context of permitted building developments. Also, planning has a specific process and is necessary for multiple occupations, In each field there are different types of plans that help companies achieve efficiency and effectiveness. An important, albeit often ignored aspect of planning, is the relationship it holds to forecasting. Forecasting can be described as predicting what the future will look like, whereas planning predicts what the future should look like for multiple scenarios, Planning combines forecasting with preparation of scenarios and how to react to them. Planning is one of the most important project management and time management techniques. Planning is preparing a sequence of action steps to achieve some specific goal. If a person does it effectively, they can reduce much the necessary time and effort of achieving the goal. A plan is like a map. When following a plan, a person can see how much they have progressed towards their project goal and how far they are from their destination. Planning provides Direction Planning is concerned with predetermined course of action. It provides the directions to the efforts of employees. Planning makes clear what employees have to do, how to do, etc. By stating in advance how work has to be done, planning provides direction for action. Employees know in advance in which direction they have to work. This leads to Unity of Direction also. If there were no planning, employees would be working in different directions and organisation would not be able to achieve its desired goal. Planning Reduces the risk of uncertainties Organisations have to face many uncertainties and unexpected situations every day. Planning helps the manager to face the uncertainty because planners try to foresee the future by making some assumptions regarding future keeping in mind their past experiences and scanning of business environments. The plans are made to overcome such uncertainties. The 8 CU IDOL SELF LEARNING MATERIAL (SLM)

plans also include unexpected risks such as fire or some other calamities in the organisation. The resources are kept aside in the plan to meet such uncertainties. Planning reduces over lapping and wasteful activities The organisational plans are made keeping in mind the requirements of all the departments. The departmental plans are derived from main organisational plan. As a result there will be co-ordination in different departments. On the other hand, if the managers, non-managers and all the employees are following course of action according to plan then there will be integration in the activities. Plans ensure clarity of thoughts and action and work can be carried out smoothly. Planning Promotes innovative ideas Planning requires high thinking and it is an intellectual process. So, there is a great scope of finding better ideas, better methods and procedures to perform a particular job. Planning process forces managers to think differently and assume the future conditions. So, it makes the managers innovative and creative. Planning Facilitates Decision Making Planning helps the managers to take various decisions. As in planning goals are set in advance and predictions are made for future. These predictions and goals help the manager to take fast decisions. Planning establishes standard for controlling Controlling means comparison between planned and actual output and if there is variation between both then find out the reasons for such deviations and taking measures to match the actual output with the planned. But in case there is no planned output then controlling manager will have no base to compare whether the actual output is adequate or not. For example, if the planned output for a week is 100 units and actual output produced by employee is 80 units then the controlling manager must take measures to bring the 80 unit production up to 100 units but if the planned output, i.e., 100 units is not given by the planners then finding out whether 80 unit production is sufficient or not will be difficult to know. So, the base for comparison in controlling is given by planning function only. Focuses attention on objectives of the company Planning function begins with the setting up of the objectives, policies, procedures, methods and rules, etc. which are made in planning to achieve these objectives only. When employees follow the plan they are leading towards the achievement of objectives. Through planning, efforts of all the employees are directed towards the achievement of organisational goals and objectives. 9 CU IDOL SELF LEARNING MATERIAL (SLM)

1.3 TYPES It is worth noting, that a common consideration across different types of strategy are people, process, and technology. Without this, strategy is a set of lofty ideas, ungrounded in reality. Let’s look further into each of the three that come to mind. What strategy types do you see? Competitive Strategy Firstly, competitive strategy is the first of the kinds of strategies in strategic management. It refers to a plan that combines the clout of the external situation, Along with the integrative concerns of the personal status of an organization. The competitive strategy aims at gaining a competitive advantage in the marketplace against competitors. Competitive advantage comes from strategies that lead to some uniqueness in the market. Winning a competitive strategy is grounded in sustainable competitive advantage. Examples of the competitive strategy include contrast strategy, low-cost strategy, and focus or market-niche strategy. The competitive strategy consists of business approaches and initiatives. It undertakes a company to attract clients and deliver. Superior values to them through fulfilling their looking forward as well as to strengthen its market position. This definition of Thompson and Strickland emphasizes the ‘tactics and ingenuities’ of directors in outlining the strategy. It means that competitive strategy is concerned with actions. Its managers undertake to improve the company’s market position by satisfying the customers. The enlightening market situation infers undertaking actions contrary to competitors in the industry. Therefore, the notion of competitive strategy has a competitor-angle. The competitive strategy includes those tactics that lay down various ways to build a lovable, competitive advantage. Management’s action plan is the focus of the competitive strategy. The objective of the competitive strategy is to win the customer’s heart by satisfying their needs. Finally, it is to outcompete competitors and attain competitive advantages. Corporate Strategy Secondly, corporate strategy is a type of strategy in strategic management. It draws up at the top level by the senior management of a diversified company. In our country, a diversified company is known as a ‘group of companies, such as Bashundhara, Partex, Beximco, and Square Group. Such a strategy describes the company’s overall corporate strategy. As well, corporate strategy defines the long-term objectives and generally affects all the business-nits under its umbrella. A corporate strategy (Bashundhara) may be acquiring the major tissue paper companies in Bangladesh to become the unquestionable market leader. Corporate strategy deals with the overall firm. These strategic decisions cannot be made at a lower level without risking sub-optimization of resources. The first task is to conduct an environmental scan in order to identify strengths and weaknesses. Next would be to scrutinize the firm's mission, the segmentation of its businesses and the integration of those businesses. Completion of these tasks yields answers to the questions corporate strategy must answer: 10 CU IDOL SELF LEARNING MATERIAL (SLM)

What are the corporate performance objectives? How should the firm's resources be allocated to satisfy corporate, business and functional requirements? Should the design of the managerial infrastructure and the selection, promotion and motivation of key personnel change? Business Strategy Thirdly, the different types of strategies in marketing third one are a business strategy. Business strategy formulates at the business-unit level. It is popularly known as the ‘business- unit strategy.’ This strategy emphasizes the building up of the company’s competitive position of products or services, Business strategies compos of a competitive and cooperative approach. The business strategy covers all the activities and tactics for competing in denial of the competitors. And behaviour management addresses various strategic matters. As Hill and Jones have remarked, the business strategy consists of plans of action, its strategic managers who adapt to use a company’s resources. Additionally, managers change distinctive attitudes to gain a competitive advantage over their rivals in a market. The business strategy usually formulates in line with the corporate strategy. The business strategy’s main focus is product development, innovation, integration, market development, diversification, and the like. In doing business, companies confront a lot of strategic issues. Management has to address all these issues effectively to survive in the marketplace. Business strategy deals with these issues, in addition to ‘how to compete.’ Business, It is primarily concerned with how a company will approach the marketplace - where to play and how to win. Where to play answers questions like, which customer segments will we target, which geographies will we cover, and what products and services will we bring to market. How to win answers questions like, how will we position ourselves against our competitors, what capabilities we will employ to differentiate us from the competition, and what unique approaches will we apply to create new markets? Senior managers typically create business strategy. After it is created, business architects play an important role in clarifying the strategy, creating tighter alignment among different strategies, and communicating the business strategy across and down the organization in a clear and consistent fashion. Executives are just beginning to bring advanced, highly credible business architecture practices into the strategy discussions early to provide tools, models, and facilitation that enable better strategy development. Operational Strategy Finally, the operating strategy is the fifth type of strategy in strategic management. It gives form to the operating units of an organization. A company may strategy, As an instance, for its sales zones. An operating strategy is put across at the field level, usually to achieve on- 11 CU IDOL SELF LEARNING MATERIAL (SLM)

hand objectives. In some companies, managers develop an operating strategy for each set of annual goals in the divisions. The second of the three types of strategy is Operational. It is primarily concerned with accurately translating the business strategy into a cohesive and actionable implementation plan. Operational Strategy answers the questions:  Which capabilities need to be created or enhanced?  What technologies do we need?  Which processes need improvement?  Do we have the people we need? The vast majority of business architects are currently working in the operational strategy domain reaching up into the business strategy domain for direction. They work from the middle out to bring clarity and cohesiveness to the organization’s operating model typically working vertically within a single business unit while resolving issues at the business unit boundaries. More mature business architecture practices work in multiple verticals or move from one vertical to another creating common business architecture patterns. Transformational Strategy It is seen less often as it represents the wholesale transformation of an entire business or organization. This type of strategy goes beyond typical business strategy in that it requires radical and highly disruptive changes in people, process, and technology. Few organizations go down this path willingly. Transformational strategy is generally the domain of Human Resources, organizational development, and consultants. These efforts are incredibly complex and can experience significant benefit from applying business architecture discipline though it is rare to see business architects playing a significant role here. 1.4 NEEDS The oil industry holds relatively few surprises for strategists. Things change, of course, sometimes dramatically, but in relatively predictable ways. Planners know, for instance, that global supply will rise and fall as geopolitical forces play out and new resources are discovered and exploited. They know that demand will rise and fall with incomes, GDPs, weather conditions, and the like. Because these factors are outside companies’ and their competitors’ control and barriers to entry are so high, no one is really in a position to change the game much. A company carefully marshals its unique capabilities and resources to stake out and defend its competitive position in this fairly stable firmament. 12 CU IDOL SELF LEARNING MATERIAL (SLM)

The internet software industry would be a nightmare for an oil industry strategist. Innovations and new companies pop up frequently, seemingly out of nowhere, and the pace at which companies can build or lose volume and market share is head-spinning. A major player like Microsoft or Google or Face book can, without much warning, introduce some new platform or standard that fundamentally alters the basis of competition. In this environment, competitive advantage comes from reading and responding to signals faster than your rivals do, adapting quickly to change, or capitalizing on technological leadership to influence how demand and competition evolve. Clearly, the kinds of strategies that would work in the oil industry have practically no hope of working in the far less predictable and far less settled arena of internet software. And the skill sets that oil and software strategists need are worlds apart as well, because they operate on different time scales, use different tools, and have very different relationships with the people on the front lines who implement their plans. Companies operating in such dissimilar competitive environments should be planning, developing, and deploying their strategies in markedly different ways. But all too often, our research shows, they are not. That is not for want of trying. Responses from a recent BCG survey of 120 companies around the world in 10 major industry sectors show that executives are well aware of the need to match their strategy-making processes to the specific demands of their competitive environments. Still, the survey found, in practice many rely instead on approaches that are better suited to predictable, stable environments, even when their own environments are known to be highly volatile or mutable. What’s stopping these executives from making strategy in a way that fits their situation? We believe they lack a systematic way to go about it a strategy for making strategy. Here we present a simple framework that divides strategy planning into four styles according to how predictable your environment is and how much power you have to change it. Using this framework, corporate leaders can match their strategic style to the particular conditions of their industry, business function, or geographic market. 13 CU IDOL SELF LEARNING MATERIAL (SLM)

Figure 1.1: Strategy pyramid How you set your strategy constrains the kind of strategy you develop. With a clear understanding of the strategic styles available and the conditions under which each is appropriate, more companies can do what we have found that the most successful are already doing deploying their unique capabilities and resources to better capture the opportunities available to them. Strategy usually begins with an assessment of your industry. Your choice of strategic style should begin there as well. Although many industry factors will play into the strategy you actually formulate, you can narrow down your options by considering just two critical factors: predictability and malleability Put these two variables into a matrix, and four broad strategic styles which we label classical, adaptive, shaping, and visionaryemerge. Each style is associated with distinct planning practices and is best suited to one environment. Too often strategists conflate predictability and malleability thinking that any environment that can be shaped is unpredictable and thus divide the world of strategicpredictable and immutable or unpredictable and mutable, whereas they ought to consider all four. So it did not surprise us to find that companies that match their strategic style to their environment perform significantly better than those that don’t. In our analysis, the three-year total shareholder returns of companies in our survey that use the right style were 4% to 8% higher, on average, than the returns of those that do not. Thompson, Strickland and Gamble define strategy as management’s action plan for running the business and conduction operations.” They further assert that “a company’s strategy consists of the competitive moves and business approaches that managers are employing to grow the business, attract and please customers, compete successfully, conduct operations, and achieve the targeted levels of organizational performance.” Strategic management therefore entails the environmental scanning process, strategy formulation, strategy 14 CU IDOL SELF LEARNING MATERIAL (SLM)

implementation and monitoring, evaluation and review of the implementation process to ensure effective and efficient accomplishment of organizational long term objectives. Eden and Ackerman perceive strategy as ‘a coherent set of individual discrete actions is support of a system of goals, and which are supported as a portfolio by a self-sustaining critical mass, or momentum of opinion in an organization.’ Ackerman’s “coherent set of individual discrete actions” may be equated to Thompson, Strickland and Gamble’s “competitive moves and business approaches”. The other common element between these authors in their definition of strategy is that its focus is sustainable achievement of targeted levels of organizational performance. Mint bergetal as quoted by Beckman and Rosen field captures the bulk of the key issues that organizations need to focus on in crafting and executing strategy: “Strategy depends on basic building blocks, which are used in attack, defence and manoeuvre. Strategy making relies on finding and executing new combinations of these blocks. In every age, technology and social organization limit the combinations. After some time, these limits seem inevitable and hence natural. Strategists cease to question received wisdom and confine themselves to variations on accepted themes. It is therefore left to the great commanders, such as Napoleon, to innovate strategically by recognizing and bringing about new combinations.” Thompson, Strickland and Gamble identify two primary reasons why strategy is important in business organization. The first important aspect about strategy is that management needs to proactively craft how the organization’s business will be conducted. They further assert that a clear and well thought out strategy is management’s prescription for doing business, its road map to competitive advantage, its game plan for pleasing customers and improving financial performance. Secondly, they say that a strategy-focused enterprise is more likely to be a strong bottom line performer that a company whose management views strategy as secondary and puts its priorities elsewhere. Effective strategy formulation and execution have a significantly positive impact on revenue growth, earnings, and return on investment. Dyson etal prefer terming the strategic management process a ‘strategic development process.’ They assert that the strategic development process embraces the management process that inform, shape and support the strategic decisions confronting an organization. Their inclination towards the term strategic development process is premised on three key issues which they highlight. Firstly these authors argue that strategy formulation and implementation are inseparable business activities in which organizations engage on a continuous basis; hence the idea of ongoing development is central to their thinking. Their second reason for their approach is that the widely used term ‘strategic planning’ has become debased by association with the creation of deterministic, one-shot 5-and 10-year plans, which suggests rigidity in thinking about the future. Their third argument is that ‘strategic management’ is too loose a term to describe the emphasis that has to be placed upon reflective engagement and analytical questioning that characterizes their recommended approach. Despite their slight digression from the conventional approach to strategic management, they share a common view with 15 CU IDOL SELF LEARNING MATERIAL (SLM)

Thompson, Strickland and Gamble who assert that crafting and executing strategy are core management functions; excellent execution of an excellent strategy is the best test of managerial experience and the most reliable recipe for turning companies into standout performers. It is the latter authors’ contention that how well an organization’s management team charts the company’s direction, develops competitively effective strategic moves and business approaches, and pursues what needs to be done internally to produce good day-in, day-out strategy execution and operating excellence, determines an organization’s ultimate success or failure. 1.5REQUISITES There are many different models and action steps for strategic planning. Attempting to \"jump right in,\" however, is ill-advised. Undertaking some basic pre-work will help to ensure better success for the strategic planning process. Here are three perquisites for strategic planning: You should provide an understanding of what strategic planning is and how it is done as well as discuss its potential value to the practice, in terms of providing a common vision and focus with agreed-upon goals and strategies. Consider the costs of doing strategic planning, in terms of staff time and other resources - and what might need to be given up in order to develop a plan. If the practice is in crisis or is financially or organizationally unstable, it may be difficult or unwise to enter into a strategic planning process until the immediate problems and needs have been successfully addressed. Consider whether the practice is \"ready\" for a long-range plan or whether it may be best to focus on a short-term plan, perhaps doing a one- year plan and then undertaking longer-term planning at the end of that year. If strategic planning seems appropriate, consider what procedures or steps can be used to establish and implement a strategic plan. Next, agree upon a process and establish responsibilities for the various steps in the process. Your practice may also want to include an outside facilitator or consultant who will assist with the process and with preparation of the strategic planning document - or this may be done by staff. Be sure to allocate sufficient staff time to the strategic planning process. Depending on the size of the practice, it may be necessary to reduce the regular workloads or responsibilities of staff and physicians who are expected to play a key role in developing the strategic plan. Carry out a SWOT analysisin order to provide an understanding of how the practice relates to its patients, community, and competitors. Look at changing demographics, community values, economic trends, the implications of new or changing laws and regulations affecting the practice - and consider their impact on your practice and the patient population it serves. Consider opportunities and challenges related to practice resources and reimbursement. Also, look at actual and potential collaborators and competitors. Depending on the size of your catchment area, this process may involve something as extensive as a community needs assessment with interviews, focus groups, and email surveys that is conducted by a 16 CU IDOL SELF LEARNING MATERIAL (SLM)

consultant, or may be limited to a small number of informal discussions with referring physicians and key community leaders. The internal component of the analysis may include a number of components or approaches. You may want to assess current practice performance in terms of financial and staff resources, services offered, and outcomes. Try to understand how patients or stakeholders in the broader community view the practice. Once you have this information, be sure to further analyse the reasons for perceived weaknesses. It is often valuable to identify critical success factors for the practice. This step is not always included in strategic planning, but can be very useful. Try to understand what factors are necessary to the future and continued success of the organization. These may be factors like relationships with referring physicians, practice strategies, governance structure, and staff skills and personalities. Depending on the size of the practice, you might want to review or formalize organizational values and operating principles. Some practices have written values and principles which guide their decision making and their ongoing activities. These can be very helpful in \"defining\" the practice. A consultant can be hired to assist with the SWOT analysis, contacting stakeholders to provide an external view, and staff to obtain an internal assessment. The result of the analysis should essentially be an investigation of practice strengths and weaknesses and external opportunities and threats. This may be oral or written, and requires careful review and discussion by those involved in the strategic planning process - everyone should be familiar with the findings before strategic planning decisions are made. Identify key issues, questions, and choices to be addressed as part of the strategic planning effort. This may mean specifying \"strategic issues\" or questions that the practice should address, and setting priorities in terms of time or importance. If there is little disagreement about issues and priorities, it may be possible to move immediately to the practice vision and then goals. If there is no agreement on general directions and practice goals, it may be important to explore issue priorities and identify critical choices. Exploring options might be done in several ways. For example, you may want to ask those involved to identify strategic issues from the SWOT analysis, with individuals identifying a specified number of such issues and indicating why each is strategic, including the benefits of addressing it and the negative consequences of not addressing it. The consultant working with the group might work to identify strategic issues emerging from the SWOT analysis, and then prioritize them in terms of importance, timing, and feasibility. The result should be a set of strategic issues that will be addressed as part of the strategic planning process, and a second set that will not be addressed or will receive limited attention during the process, but will be considered by physicians or appropriate staff. Whatever the method used, the issues discussion should generate some level of agreement about issues or choices to be considered and decisions to be made as part of the strategic planning process. 17 CU IDOL SELF LEARNING MATERIAL (SLM)

1.6 PLANNING SYSTEM Production function is that part of an organization, which is concerned with the transformation of a range of inputs into the required outputs having the requisite quality level. Production may be understood as “the step-by-step conversion of one form of material into another form through chemical or mechanical process to create or enhance the utility of the product to the user. Thus production is a value addition process. In any manufacturing enterprise, the main objective of production department is to produce the things in desired quantity at desired time so that they may be made available to end users when they demand it. Production, being a very complex process is very difficult to manage for the people. This includes a large number of activities and operations which need to be planned appropriately and in turn controlled for the effective production of the output. The main purpose of production planning and control is to establish routes and schedules for the work that will ensure the optimum utilization of materials, workers, and machines and to provide the means for ensuring the operation of the plant in accordance with these plans. There are different types of production systems. The choice of production system depends upon the nature of products, variety of products and volume of products. These production systems have been discussed in this chapter in detail. Entrepreneurs, after finalizing the production system to be used are required to go for the production planning and control which essentially depends upon the type of production system. Production planning and control is necessarily concerned with implementing the plans, i.e. the detailed scheduling of jobs, assigning of workloads to machines the actual flow of work through the system. Production is an organized activity of converting row materials into useful products. Production system requires the optimal utilization of natural resources like men, money, machine, materials and time. Production planning and control coordinate with different departments: such as production, marketing, logistics, warehouse and other departments depending upon the nature of organization. Production planning and control receives data related to orders from marketing departments. Production plan based on marketing and production data is prepared in production planning and control. This production plan provides clear idea about utilization of manufacturing resources for production. Prepared production plan is delivered to production department. Production department manufacture products according to that plan. The ultimate objective of production planning and control, like that of all other manufacturing controls, is to contribute to the profits of the enterprise. As with inventory management and control, this is accomplished by keeping the customers satisfied through the meeting of delivery schedules. 1.7ROLE OF PLANNER Planners normally perceive themselves as policy experts assisting clients in the decision- making process. In recent years this conventional view has been criticized as being superficial and inaccurate. The purpose of this paper is to review these criticisms and to identify alternative roles for planners. In all, seven alternative roles are identified and 18 CU IDOL SELF LEARNING MATERIAL (SLM)

evaluated. These include the role of planners as technocrats, public servants, referees, advocates, bureaucrats, state agents, social learners and social reformers. It is argued that although each of these alternative roles offers important insights into the nature of planning and policy-making, they all suffer from serious weaknesses. The failure to develop an acceptable role definition, however, should be viewed positively, for it helps guard against narrowed vision caused by the dominance of a single-role perspective. It is concluded that the search for a single role is, therefore, counterproductive and that planners should concentrate on learning what roles should be used in various situations. While this view of planning is still widely held, a number of alternative view of planning and the role of planners halve developed during the last several decades. With such a range of alternative roles the planning profession is increasingly confused about the function that it is expected to play in the policy-making process. The purpose of this article is to review this debate on the role of planners in the hope of assisting planners to understand the range of alternative roles and the nature of their profession. Formal planning arose in respite to the devastating problems caused by the rapid and chaotic growth of industrial cities in the nineteenth century. The nature of these problems was all too evident and the solutions, such as and sewer services and regulating the quality of construction, we’re hardly contentious. Consequently, planners first viewed themselves as professional comets above politics and ideology employing objective, scientific: knuckle to solve society's problems. Their method n-as to survey the problem, analyse the data and formulate a plan of action. The idea of conflicting interests and competing ends seemed conspicuously irrelevant. This perception of planners as scientists quickly gained ascendancy. It was some force by the works of people such as Patrick Geddes and Ebenezer Hovwd who attempted to develop the \"objective principles\" on n4iich planning should be basedTIierc was little disagreement with this scientific view from the public health experts, engineers and architects who formed the basis of the new profession and who had already been well exposed to the ideology of by virtue of their training.? The planners as technocrats gained increasing popularity with the collapse of the prevailing order in the 1930s. In Europe, intellectuals such as Karl fannheim and Barbara S'ootton advocated the imposition of central planning undertaken by independent experts as the only means of maintaining social stability. In America, technocrats such as Rex Tug well, on the traditions of planning as an activity undertaken by lay commissions above politics, urged the acceptance of planning as a \"fourth estate\" with independent powers similar to those of the judiciary. This tradition continued into the postwar period. Encouraged by the work of people such as R.A. Walker, who argued in his seminal study that planning was a professional activity that should be undertaken by a group of experts in permanent government departments instead of by amateurs, governments hired full-time planners. New university programs to train planners were established, organizations which attempted to regulate the profession sprang up, and numerous articles 19 CU IDOL SELF LEARNING MATERIAL (SLM)

appeared in major journals promoting the idea that planning was a profession which, like law or medicine was based on a specialized body of scientific theory, was in the public interest, had a clearly defined function and had explicit standards of admission and conduct. By virtue of these professional attributes, planners had a long-range view which enabled them to have a better grasp of the public interest than parochial politicians had. While this view is not as strongly held as it once was, some planners, such as Aversely, have recently suggested that the planning profession should become even more like medicine and law in order to shield itself from growing criticism. Many theorists also maintain that the success of planning still depends on the planners having their own vision of desired ends and effective political skills to realize those ends. Formal planning arose in respite to the devastating problems caused by the rapid and chaotic growth of industrial cities in the nineteenth century. The nature of these problems was all too evident and the solutions, such as water and sewer strikes and regulating the quality of construction, were hardly contentious. Consequently, planners first viewed themselves as professional above politics and ideology employing objective, scientific: knowledge to solve society's problems,their method n-as to survey the problem, analyse the data and formulate a plan of action. The idea of conflicting interests and competing ends seemed conspicuously irrelevant. This perception of planners as scientists quickly gained ascendancy. It was some force by the works of people such as Patrick Geddes and Ebenezer Hovwd who attempted to developthe \"objective principles\" on planning should be based Tierce was little disagreement with this scientific view from the public health experts, engineers and architects who formed the basis of the new profession and who had already been well exposed to the ideology of positive by virtue of their training? The riot of planners as techno cratesgained increasing popularity with the collapse of the prevailing order in the 1930s. In Europe, intellectuals such as Barbara S'ootton advocated the imposition of central planning undertaken by independent experts as the only means of maintaining social stability. In America, technocrats such as Rex Tug well, billing on the traditions of planning as an activity undertaken by lay commission above politics, urged the acceptance of planning as a \"fourth estate\" with independent powers similar to those of the judiciary. This tradition continued into the postwar period. Encouraged by the work of people such as R.A. Walker, who argued in his seminal study that planning was a professional activity that should be undertaken by a group of experts in permanent government departments instead of by amateurs, governments hired full-time planners. New university programs to train planners were established, organizations which attempted to regulate the profession sprang up, and numerous articles appeared in major journals promoting the idea that planning was a profession which, like law or medicine was based on a specialized body of scientific theory, was in the public interest, had a clearly defined function and had explicit standards of admission and conduct. By virtue of these professional attributes, planners had a long-range view which enabled them to have a better grasp of the public interest than parochial politicians had.5 While this view is not as strongly held as it 20 CU IDOL SELF LEARNING MATERIAL (SLM)

once was, some planners, such as Eversley, have recently suggested that the planning profession should become even more like medicine and law in order to shield itself from growing criticism. Many theorists also maintain that the success of planning still depends on the planners having their own vision of desired ends and effective political skills to realize those ends. Daikloff and Reiner had helped rescue the profession from a difficult dilemma. I-Ion could planning be both a technical exercise requiring the services of professionals and a political exercise? The formal distinction between ends being set by clients and means identified arid evaluated by experts seined to provide a satisfactory solution, But just as this new view was gaining popularity, attention was drawn to several case studies of post war planning which raised increasing doubts about the nature of the profession. One case study by AIeyerson and Banfield examined planning in Chicago during the 1950s and discovered the reality of planning practice was far different from the theories of planning developed by people such as Davidoff and Reiner.!‘ Instead of being a rational activity managed by a group of experts guided by a body of accepted scientific theory, planning was a seemingly irrational process dominated by petty political concerns that had nothing to do with science. This conclusion was supported by another major case study by Altshuler in the 1960~.’~ Hcdiscoxwed that the goals and objectives that were supposed to guide the planning process were never well articulated and that the decisions had little to do with expert advice. Further, Altshuler questioned whether planning could even be considered a profession. Its practitioners did not appear to have a clearly recognized function nor a body of scientific theory to guide their analysis. Inspired by these and other case studies, American political economist Charles Lindblom developed a new theory of planning which was not as flattering to the profession as Davidoff and Reiner’s.llLindblom’s theory was based on a view of society commonly known as pluralism. According to this view, society was comprised of a small number of competing interest groups who lobbied government for certain policies. These interest groups were often forced to forge certain alliances with each other and make trade-offs in order to garner necessary support. The state, meanwhile, was supposed to be an independent adjudicator seeking out compromises and refereeing conflicts between competing interest groups. The electoral process forced politicians to seek out compromises that pleased the greatest number of interest groups thereby generating the greatest number of votes. Lindblom maintained that it was through this seemingly chaotic process, which he referred to as partisan mutual adjustment, that the public interest could best be realized. Public policy, then, was the outcome of a bargaining process between interest groups mediated by the state. Planning, therefore, was an incremental process of seeking compromises instead of a comprehensive rational process based on technical analysis. Ideally, the planner would consider only limited ends and limited means for realizing them. The ends would normally consist of short-term problems and the means would differ only marginally from existing programs and policies. 21 CU IDOL SELF LEARNING MATERIAL (SLM)

This was realistic, argued Lindblom, because politicians and interest groups would rarely accept anything but minor change anyway. Further, minor changes would allow planners to learn the implications of certain policies without making monumental errors. The evaluation of means would be based on the extent of agreement and not on any rational effort to evaluate means in light of some specified ends. Lindblom maintained that ends were implied in policies and therefore a debate on appropriate policies was all that was necessary. Lindblom concluded that this process of incremental planning was more democratic, cheaper, more workable and more likely to lead to action than the comprehensive, rational theories proposed by people such as Davidoff and Reiner This theory of incremental planning demoted planners to the status of referees assisting interest groups and politicians in reaching acceptable compromises. It stripped planning of any pretence of objectivity. Planners, feeling somewhat uncomfortable about this demotion, soon mounted a counter-attack. Some planners attacked Lindblom for making an illogical step in his analysis.’? They agreed with Lindblom’s description of planning as an incremental process. They admitted that comprehensive planning was a utopian ideal that could neither be fully realized because of the difficulties of identifying ends with which everyone could agree, the impossibility of valuating all available means, and the inability to predict the impact of means on the desired ends. But these planners criticized Lindblom for concluding that because it was difficult to be comprehensive, planners should not at least attempt to be comprehensive. Instead of giving up and undertaking on partial analysis as Lindblom had proposed, these critics urged planners to strive to make the process as rational and comprehensive as possible. Slany planners seemed to agree, for it was not long before a new generation of planning tests appeared advocating luxurious types of comprehensive approaches and illustrating ne~ techniques that could help realize the goal of comprehensions.‘~ These tests, however, ignored one of Lindblom’s main points: the costs OF being more comprehensive often exceed the benefits. This argument \\vas dealt with in a third generation of planning texts which advocated a strategic approach to p1anning.l’ According to this approach? planning should he an iterative process. During the first round, planners would run through the ndiole process of setting ends and selecting means in a Lowy quick and rough WI!~. This first run through the process could solve the lxoblcm. If not, this first round would identify where more analysis was required. The planners would then run through the process again and again until the problem was solved. They would, then, start off being incremental and be conic, increasingly comprehensive as the problem required. 1.8 APPROACH Authors have proposed different approaches to strategy formulation and they have used words like schools of thought, perspectives, frameworks and models instead of the word ‘approach’. Strategy has been classified into various mutually exclusive groups such as planned strategy, emergent strategy, positioning strategy etc and this has led to the 22 CU IDOL SELF LEARNING MATERIAL (SLM)

ambiguities in the taxonomy in strategy. The objective of this paper is to find out whether groupings made by authors are entirely different or those can be collapsed into few dominant approaches and the study has used dominantly the terms used by Mint berg. By analysing the classification system proposed by 13 eminent authors, this study found that there are broadly six approaches into which most of the groups can be collapsed into. The approaches are namely Fit approach, Planning approach, Emergent approach, positioning approach, Resource based approach and Stakeholder approach. The reduction in number of groups through a process of collapsing not only enables more focussed understanding of strategy but also makes the term more manageable from a researcher’s point of view. Success of any organisation, to a large extent, depends on the strategy it has adopted. Therefore, organisations, consultants, researchers and planners constantly are in lookout for an appropriate strategy, which would drive organisation to success. However, despite the obvious importance of strategy and in spite of the fact that it is one of the most studied and thought of concept, it is paradoxically one of the least understood. The confusion over the concept of strategy, as argued by Ulwickis due to the different ways the organizations, consultants and academicians have defined strategy and used different approaches of strategy to achieve a variety of strategic objectives in organisation. The increase in complexity over the strategy concept can also be ascribed to its base discipline which is Strategic Management. This is because, on one hand, the roots of Strategic Management field are diverse and can be traced to several disciplines and, on the other hand, there has been exponential growth of literature on the subject. Researchers in different period of evolution of Strategic Management have proposed various approaches to strategy formulation. Stonehouse and Snowdon argued that the abundance of literature reflecting divergent views has provided variability in perspectives of strategy by different authors. Luomaargued that alongside the development of the theory of strategy, there has been an on-going effort to identify different schools of thought on strategy formulated around different sets of beliefs and assumptions held by such groups. This paper argues that the central tenets of some of the classifications of authors are same, although the nomenclatures used by them are different. Elfring and Volberda argued that the diversity in schools of thoughts signifies, on one hand, an enrichment of the research within the field of study while, on the other hand, it implies a lack of consistency and coherence. However, referring to Minztberg ten schools of thoughts, they added that the characteristic of each school clarifies specific contribution to the strategic management field. Further, they argued that each of the schools represent a specific angle or approach to strategy formulation. Several scholars have also attempted to organise ideas similar to that of Mint berg. It indicates that scholars have also identified the strategic approaches like that of Mint berg in their classifications. Meyer and Chaffee have identified three such classifications. However, the nomenclature used by De Wit and Meyer was ‘perspectives’ while that of Chaffee was ‘model’. The above classifications clearly explain that evolution of strategy research is very much associated with the emergence of diversity of paradigms. Each of the classifications through various 23 CU IDOL SELF LEARNING MATERIAL (SLM)

nomenclatures such as schools of thought, perspectives, models, approaches etc. signifies the richness of the research and diversity in the views in the concept of strategy. The first and second objective of this paper is to understand the central theme of strategy in each of the classifications made by various authors and identify those views which are similar. In order to identify the strategies adopted by companies, Mishra, Mohanty and Mohanty studied cases of 25 Indian companies. Their study revealed that companies in order to succeed adopt different approaches to strategy during their life time. However, the authors observed that most of the companies adopt one of the six dominant approaches. As the methodology used by the authors to understand the nature of strategy was different compared to the thirteen studies included in this article, their classification was not included in this study. However, it will be observed later in this study that there are incidentally six dominant approaches to strategy making similar to the ones identified by Mishra, Mohanty and Mohanty. This paper as stated earlier, systematically reviews different schools of thought based on a classification developed by Minzberg. Mint berg’s classification was chosen firstly, because his ten schools of strategy were more elaborate or comprehensive. Further, it is based on findings of studies spanning about 30 years, Secondly, each school of thought, as explained by Elfring and Volberda, is formed out of range of thoughts of a specific group of researchers in the field of Strategic Management. The authors argued that the characteristic of each school is clearly distinguishable from the content, the process and the context of strategy formation. Finally, each of the nine schools represents a specific angle or approach to strategy formulation. The central theme of strategy process in each of the Mint berg’s nine schools of thoughts and it identifies the specific strategic approach to which each of the schools of thought can belong. After identifying the different approaches to strategy formulations, this study, through a process of review and interpretation of the classifications of other authors, will try to identify the views which are similar to the central themes of approaches already identified in Table 50.2. It can be observed that the various approaches identified from the Table 50.2 are planning (deliberate) approach, Fit approach, Emergent approach, Planning and Emergent approach, Positioning approach and Stakeholder approach. After such identification of the strategic approaches, classifications by other authors are interpreted. The views which are similar to the strategic approaches already identified are then grouped together. It can be inferred that if certain approach is supported by many studies or scholars, then the said approach can be considered as a dominant strategic approach. In order to find commonalities in approaches, the opinions similar to the central theme to each of the strategic approaches are identified and grouped in the next section. The main motto behind Mintzberg’s design school is to “establish fit”, where strategy making basically seeks to attain a match, or fit, between internal capabilities and external possibilities. Strategy making in this school of thought is concerned with the assessment of strengths and weaknesses of the organization in light of the opportunities and threats in its environment. Thus, the central idea of strategy in this approach is to match or fit companies’ 24 CU IDOL SELF LEARNING MATERIAL (SLM)

internal factors such as strengths and weaknesses with that of environmental factors such as opportunities and threats and therefore it has been named as fit approach to strategy. Other authors who have identified this aspect to strategy formulation in their studies are discussed below. Chaffee in her ‘adaptive’ model explained the fit aspects of strategy. She stated that the main concern of strategy in her model is to develop a viable match between the opportunities and risks present in the external environment and the organization’s capabilities and resources for exploiting those opportunities. In his ‘evolutionary approach’, Whittington expressed that successful strategies appear to be those which have adapted themselves to environment and the role of managers in his approach is to formulate strategy that best fits with the turbulence in the environment. In a framework which they named as Harvard policy framework, they considered strategy is concerned with systematic assessment of the strengths, weaknesses, opportunities, and threats and it is applicable both to profit and non- profit organizations. McKiernan seems to have included both planning and fit aspects in his ‘prescriptive approach’. His approach focuses on long-term planning aimed at achieving a ‘fit’ between an organization and its environment. Thus, all the above authors emphasise on the concept of ‘fit’ in strategy. This concept has served as an important building block for theory construction in several areas of management research (Woodward, 1965; Katz & Kahn, 1966; Thompson; 1967; Aldrich, 1979; Venkatraman and Camillus, 1984) and hence was considered one of the dominant strategic approaches. 1.9 SUMMARY  The ‘planning’ school of thought proposed by Mint bergconsiders strategies resulting from controlled, conscious and sequential process of formal planning where detail attention is given to objectives, budgets, programs, and operation plans. Further, the planning school considers strategy as deliberate and rational process and is very much within the restricted domain of top management. In the ‘linear’ model, Chaffee discussed the planning process where strategy emphasises upon methodical, sequential, and directed action indicating a rational decision making process and here the role for the top management is predominant.  Thus, Mint berg’s planning school and Chaffee’s linear model possesses similar characteristics. Richardson proposed a framework called ‘8Ps plus Environment’ to explain different ways of strategy process. In his first ‘P’, which he named as ‘process of decision making’, he discussed the planning process. Strategy in this process emphasized a linear sequential sequence of decision making which involves top management.  In the ‘planning’ approach, Luoma stresses the role of an analysis-driven strategy process and the implementation procedure with complete reliance on structured action plans, budgets and balanced scorecards. Thus, his approach of strategy emphasizes the planning aspect. Similar views are also reflected in ‘planning process approach’ by 25 CU IDOL SELF LEARNING MATERIAL (SLM)

Naziin ‘planning process framework’ of Gilbert et. al, ‘rational’ school of thought of Faulkner and Campbell and ‘rational perspective’ of Hutzschenreuter and Kleindienst.  Mint berg locates Porter in his ‘positioning school’ which advocates strategy formation as an analytic process and it places the business within the context of its industry. Porter who is the main proponent of this school of thought argued that a firm in order to succeed need to assess both the attractiveness in an industry and its competitive position within that industry through an evaluation using the five forces framework. Thus, he brought the context of competition out to the industry level not in the firm level. This aspect has been discussed by Mint berg in his positioning school of thought. Porter proposed four generic strategies which attempt to place firm on a well-defined ‘position’ in the economic market-place, thus strategy in this mode was termed as ‘Positioning approach’ to strategy.  The positioning approach has been the central idea in Richardson ‘strategy as position’ perspective. In his perspective, he claims that the aim of the organization is to occupy an attractive and productive position in its environment to gain competitive advantage. The central idea in McKiernan competitive positioning approach’ is the analysis of the competitive environment using Porter’s five-force framework. This process assists firms to identify potential profitability of an industry and choosing appropriate generic strategy for acquiring competitive advantage. Thus, McKiernan also supported Mint berg’s positioning school of thought in his competitive positioning approach. In a competitive environment, choosing an attractive market and maintaining a winning position in the marketplace is one of the major tasks of the strategist.  In the ‘leaning school’, Mint bergargues that strategies can arise in all kinds of strange places and unusual ways and therefore it cannot be planned. In this school of thought, mangers use their ‘lessons learned’ in the organisation into their overall plan of action. From the experiences gained in the organisations the managers introduce small initiatives and pay close attention over time to what does work and what does not. The successful initiatives of the managers create streams of experiences that can converge into patterns and become emergent strategies.  Thus, ‘emergent strategies’ reflect past patterns contrast to planning approach which focuses on future actions. In the ‘procession approach’, Whittington discussed about the emergent aspects of strategy. In this approach, he stated that strategy is an outcome of gradual adjustment of routine activities in the organisation as per the changes in the environment. Hence, strategy many a times cannot be planned rather it emerges gradually from a combination of influences within the organisation. The central theme in this approach, thus, matches with that of Mint berg’s learning school. Strategy is a discernible pattern, as viewed by Richardson, which is an outcome of similar successful approaches which merge into a pattern of action. He placed this 26 CU IDOL SELF LEARNING MATERIAL (SLM)

emergent aspect of strategy in his ‘strategy as pattern’ framework. The emergent aspect has been reflected by McKiernan in his ‘emergent approach. He suggested that strategy emerge and evolve incrementally over time in response to changes in the environment. Thus, all the above researchers have discussed the emergent aspect of strategy in their classifications. 1.10 KEYWORDS  Alert – Notifications by email or to a home page, updating users to changes to items that they have subscribed. Examples might include notifications about performance changes or commentary.  Balanced Scorecard – An integrated framework for describing strategy through the use of linked performance measures in four, balanced perspectives ‐ Financial, Customer, Internal Process, and Employee Learning and Growth. The Balanced Scorecard acts as a measurement system, strategic management system, and communication tool.  Benchmarking – The comparison of similar processes across organizations and industries to measure progress, identify best practices, and set improvement targets. Results may serve as potential targets for key performance indicators.  Budget – A description of the funding of existing and/or proposed actions.  Business Plan -These comprise the Corporate, Directorate, Service and Team plans, which specify the key priorities and activities to be undertaken. 1.11 LEARNING ACTIVITY 1. Create a survey on Significance of Planning. ___________________________________________________________________________ ___________________________________________________________________________ 2. Create a session on Planning System. ___________________________________________________________________________ ___________________________________________________________________________ 1.12 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. What is planning? 27 CU IDOL SELF LEARNING MATERIAL (SLM)

2. Define the term Strategy. 28 3. Who is Planner? 4. What is Corporate Strategy? 5. What do you mean by the term system? Long Questions 1. Explain the Significance of Planning. 2. Illustrate the Types of Planning. 3. Illustrate the concept of Planning System. 4. Explain the different types of approaches for Planning. 5. Examine the Requisites of Planning. B. Multiple Choice Questions 1. Which is the functional area of Strategic Management? a. Production and operation b. Finance c. Marketing d. All of these 2. Write the Expansion of BCG a. Boston Consulting Group b. Boston Corporate Group c. British Consulting Group d. Boston Calmette Group 3. Which of the following is not part of the micro environment? a. Technology b. Shareholders c. Competitors d. Publics 4. What does Dog symbolize in BCG matrix? a. Introduction b. Growth CU IDOL SELF LEARNING MATERIAL (SLM)

c. Decline d. Maturity 5. Which of the following factor in macro environment Cultural values would be part of? a. Demographic b. Social c. Ecological d. Natural Answers 1-d, 2-d, 3-a, 4-c, 5-b 1.13 REFERENCES References book  Abernathy, W., and K. Wayne. 1974. Limits of the learning curve. Harvard Business Review.  Adams, David, and Edward Maine. 1997. Business ethics for the 21st century. Mayfield Publishing Company.  Amit, R., and P. J. H. Schoemaker. 1993. Strategic assets and organizational rent. Strategic Management Journal. Textbook references  Andrews, K. 1971. The concept of corporate strategy. Illinois: Burr Ridge. Dow Jones-Irwin.  Ansoff, I. 1965. Corporate strategy: An analytical approach to business policy for growth and expansion. New York: McGraw-Hill.  Baghai, M., S. Coley, and D. White. 1996. Staircases to growth. New York: McKinsey & Company. Website  https://www.open.edu/openlearn/money-business/what-strategy/content-section--- references  https://www.introduction-to-management.24xls.com/en315  https://www.researchgate.net/publication/229927533_The_role_of_the_professional_ planner 29 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT 2:CORPORATE PLANNING AND BUDGETING STRUCTURE 2.0 Learning Objectives 2.1 Introduction 2.2Corporate Planning &Budgeting 2.3 CorporateResponsibility vs.Profitability and Productivity 2.4 Summary 2.5 Keywords 2.6 Learning Activity 2.7 Unit End Questions 2.8 References 2.0 LEARNING OBJECTIVES After studying this unit, you will be able to:  Appreciate the concept of Marginal cost.  Illustrate the Corporate planning&budgeting.  Explain the concept of corporate responsibility. 2.1 INTRODUCTION By analysing the behaviour of costs in relation to changes in volume of output it becomes evident that there are some items of costs which tend to vary directly with the volume of output, whereas there are others which tend to vary with volume of output, are called variable cost and those remain unaffected by change in volume of output are fixed cost or period costs. Marginal costing is a study where the effect on profit of changes in the volume and type of output is analysed. It is not a method of cost ascertainment like job costing or contract costing. It is a technique of costing oriented towards managerial decision making and control. Marginal costing, being a technique can be used in combination with other technique such as budgeting and standard costing. It is helpful in determining the profitability of products, departments, processes, and cost centres. While analysing the profitability, marginal costing interprets the cost on the basis of nature of cost. The emphasis is on behaviour of costs and their impact on profitability. 30 CU IDOL SELF LEARNING MATERIAL (SLM)

Marginal costing is a principle whereby variable costs are charged to cost units and the fixed costs attributable to the relevant period is written off in full against the contribution for that period. Marginal costing is the ascertainment of marginal cost and the effect on profit of changes in volume or type of output by differentiating between fixed costs and variable cost. In marginal costing, costs are classified into fixed and variable costs. The concept of marginal costing is based on the behaviour of costs that vary with the volume of output. Marginal costing is known as ‘variable costing’, in which only variable costs are accumulated and cost per unit is ascertained only on the basis of variable costs. Sometimes, marginal costing and direct costing are treated as interchangeable terms. The major difference between these two is that, marginal cost covers only those expenses which are of variable nature whereas direct cost may also include cost which besides being fixed in nature identified with cost objective. In marginal costing, costs are classified into fixed and variable costs. The concept marginal costing is based on the behaviour of costs with volume of output. From this approach, it is not possible to identify an amount of net profit per product, but it is possible to identify the amount of contribution per product towards fixed overheads and profits. The contribution is the difference between sales volume and the marginal cost of sales. In marginal costing it is not possible to determine the profit per unit of product because fixed overheads are charged in total to the profit and loss account rather than recovered in product costing. Contribution is a pool of amount from which total fixed costs will be deducted to arrive at the profit or loss. Sales — Variable cost + Fixed cost + Profit Sales – Variable cost = Contribution Sales – Variable cost = Fixed cost + Profit Contribution = Fixed cost + Profit Marginal costing is a technique/system of presentation of sales and cost data with a view to guide the managers for taking short term decisions like sales mix selection, make or buy, acceptance of special order, etc. It is also used by the managers for cost control, budgeting and profit planning purposes. Marginal costing system is not a method of costing like job or batch costing or process costing or contract costing or operating costing which are used for the purpose of calculating the cost of products or services. Different costs behave differently with the increase or decrease in the volume of production. Some costs change proportionately with the change in volume of production; they are called the variable cost. Some costs are fixed, irrespective of the volume of production. They are called the fixed cost. In the marginal costing system, only variable cost of production is included in the unit cost. Fixed cost is treated as period cost and charged to the Profit and Loss Account in full. 31 CU IDOL SELF LEARNING MATERIAL (SLM)

2.2CORPORATEPLANNING &BUDGETING Organizations must engage planning and not just simple planning, but effective planning in order to survive in today’s business arena. This is one of the major management functions that managers must execute in order to fulfil their responsibilities to their organizations in achieving organizational goals and living up to its mission and vision. Planning takes place at different levels of the organization, and it is important that planning align all resources and activities with the mission and vision of the organization. Furthermore, in an era of rapid change and uncertainty, the planning function within organizations must become even more vital in determining the key success factors for growth and survival. Planning is one of the four major management functions, the other three being organizing, leading, and controlling. Planning refers to the process of setting organizational goals and deciding on the best ways of achieving them. Thus, an important part of planning is decision making, which requires managers to select the most appropriate set of action from several alternatives designed to achieve organizational goals. Because planning occurs within environment contexts, managers need to fully understand their organizational internal and external environments and the impact or influence on the planning process. Failure to fully understand the internal and external organizational environments can hinder effective or successful planning. Hax and Majlufidentify three levels of planning in organizations: corporate, business, and functional planning. When it comes to planning, corporate strategic planning refers to planning that takes a big- picture approach. In that, corporate strategic planning establishes the overall plan for the organization and its place and position in the business environment and market Functional planning on the other hand, describes the incremental steps that are executed at operational levels per organizational activities and programs to achieve the broader strategic planning. Bryson and Roeringnote that, “corporate strategic planning typically focuses on an organization and what it should do to improve its performance”. Corporate strategic planning positions an organization for long-term success. Functional planning aims to promote standardized management practices for corporate functions decentralized corporate management structure via departments of an organization As such, functional planning is implemental in its approach as it mirrors or reflect or align action steps with corporate strategic goals. Corporate strategic planning is carried out by top management or organizational executives while functional planning is carried out at lower levels by middle and some first-line managers in organizations. Corporate strategic planning requires higher levels of decision making and risks than functional planning. Furthermore, while corporate strategic planning requires a long-term view or perspective, functional planning is more short-term and can more easily change with organizational environment and events. Corporate strategic planning requires comprehensive planning goals and the ability of top level managers or executives to identify resources from all areas and how to most effectively and efficiently coordinate these to develop competitive advantage, According to Thompson, 32 CU IDOL SELF LEARNING MATERIAL (SLM)

Peteraf, Gamble, and Strickland, corporate strategic planning aims to build competitive advantage for organizations, while functional planning are coordinated actions and decisions designed to further strategic implementation. Miner and Gray have used Corporate Planning and long range planning synonymously. Such conceptual similarity may not necessarily obliterate the conceptual difference between the two terms; we will maintain the difference for our analysis. D.E. Hussey while defining Corporate Planning stated that “Corporate long range planning, is not a technique, it is a complete way of running a business. Under it, the future implication of every decision is evaluated in advance of implementation. Standards of performance are set up beyond the time horizon of the annual budget. The company clearly defines what it is trying to achieve. A continued study is made of the environment in which the company operates so that the changing patterns are seen in advance and incorporated into the company’s decision process. According to Dr. Scott “Strategic Long range Planning is a systematic approach by a given company to making decisions about issues which are of fundamental and crucial importance to its continuing long term health and vitality. The fundamental and crucial importance of issues is derived from the fact that they provide an underlying and unifying basis for all other plans to be developed within the company, over a determinate period of time. Thus a long range strategy is designed to provide information about a company’s basic direction and purpose which will serve as a guide for all the operational activities of that company.” Likewise, Professor Stoner states that “Strategic Planning is the process of selecting an organisation’s goals, determining the policies and strategic programmes necessary to achieve specific objectives enrooted to the goals, and establishing the methods necessary to assume that the policies and strategic programmes are implemented.” Stoner elaborates further the concept of strategic planning by making distinction with the operational planning. The distinction between the two may be summarised in a few words “Whereas operational planning focuses on operating planning, problems such as present profit, present resources, environment, efficiency and even low risk, strategic planning focuses on long term survival and development. For this purpose, the emphasis shifts from present to future and from present operation to future growth and development. With the drift from present to future, there ought to be a change from the low risk to high risk.” Peter Drucker defines corporate planning as a “continuous process of making entrepreneurial decisions systematically and with the least possible knowledge of their fraternity; organising systematically, the effort needed to carry out these decisions; and measuring the results against expectations through organised systematic feedback.” Corporate Planning may be defined as the process of deciding long term goals and objectives within the ambit of organisation’s strength and weaknesses in the existing and prospective environmental setting to ensure their achievement either by integrating the short term and 33 CU IDOL SELF LEARNING MATERIAL (SLM)

long term plans or by adopting such measures which may bring even structural changes in the composition of the organisation, after taking recourse to financial resources. Corporate planning is a sophisticated planning tool. It has been introduced into the corporate world recently, first in USA and later in all advanced industrial countries. A humble beginning has been made in India also. For example, BHEL practices corporate planning vigorously. In simple words, corporate planning is the determination of the long-term goals of a company as a whole and then developing plans to achieve these goals giving due weight age to environmental changes. It is planning for overall organisational performance. Hussey defines corporate planning as, “the formal process of developing objectives for the corporation and its component parts, evolving alternative strategies to achieve these and doing this against a background of systematic appraisal of internal strengths and weaknesses and external environmental changes, the process of translating strategy into detailed operational plans and seeing that these plans are carried out.” This is a comprehensive definition of corporate planning which includes deterministic, motivational and directional elements of corporate planning. In the words of Steiner, “Corporate planning is the process of determining the major objectives of an organisation and the policies and strategies that will govern the acquisition, use and disposition of resources to achieve these objectives.” According to Drucker, “Corporate planning is the continuous process of making present entrepreneurial decisions systematically and with the best possible 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 systematic feedback.” As per Drucker’s view, “Corporate planning is not confined to taking strategic decisions in the light of future conditions but is also concerned with the implementation of these decisions in the best possible way and undertaking periodic review of these decisions in the light of new development.” Corporations owned by private investors have a clear objective of increasing the monetary value of the corporations for the owners while those that are not for profit have the objective or service mission. A business budget has to have estimates of the unit volume of production or sales, the unit cost of the production and the unit price of sales for a specific term or period. The budget then has to have performance measures that will guide execution, mostly cost volume profit analysis as well as analysis that help management to make choices between alternatives like net present value, internal rate of return and modified the internal rate of return. A business that is a going concern should break even or make a profit on every transaction unless a conscious decision is made to do a loss leader transaction, any case the loss leaders should lead to a profitable transaction. A budget should, therefore, have a pro 34 CU IDOL SELF LEARNING MATERIAL (SLM)

forma profit and loss that shows net sales, the cost of goods sold, general sales expenses taxes and projected net income. The basic components of a budget are sales, expenses, personnel, loans, investments, and the assumption made in outing together the budget. The assumptions management make in assembling a budget could include the annual growth rate of expenses among others. They also include the distribution of both sales and costs, the salary ranges of personnel, target unit prices, target unit costs, sales volume, rates of bad debts, personnel strength, the cost of loans, terms of loans and the product lines. Management has to establish these and many more criteria before they can embark on assembling a budget that moves the organization in the direction they aspire. The master budget is the projected cash budget report. The beginning cash balance added to cash collected from customers makes the total cash available for the budget period. The cash outflows are obtained in two steps: Total production outflows which include direct materials, direct labour, variable overhead and fixed overhead is added to total selling and administration outflows which include variable S&A and fixed S&A. These outflows are then subtracted from the total available cash to get cash available from normal operations. Investment outflows are added to cash from normal operations to obtain cash available after investments. Income tax, Bond interest payments, and dividends make miscellaneous cash outflows, which when added to cash available after investments create cash before loans or line of credit if any. The operating budget consists of sales and marketing costs, the operating expenses, the human resources costs and the human capital costs. We estimate that the hospital will incur two hundred dollars a months on communication; this will grow at an annual rate of 3%. We also forecast that the hospital website will cost five hundred dollars in the first months and also incur a monthly expense of $59 growing annually at 5%. The hospital will need to maintain liability insurance at $1500 per month. It will have miscellaneous expenses of $1200 per month, office supplies will cost $500 per month, postage, and ship $500, pharmaceuticals will cost $10,000 monthly, rent $1000 monthly, travel $1010, Medical Imaging $6000 monthly and Laboratory Medicine $5,000 monthly. All these expenses will grow at a 3% annual over five years. The Hospital plans to retain the services of three consultants over a sixty months period. A Hospital Management consultant will cost $8,000 per month, HR& Staffing Consultant will cost $6000 per month, and African Wood Inc. will cost $5000 per month. The hospital has 160 establishment posts at different monthly rates ranging from $140,000 per year for the chief executive officer to $10000 per year for clerks. Twenty-six registered nurses and 70 Licensed practical nurses make the core of the human resources. The hospital will be offering 12 services that they will charge their patients. The first is Basic inpatient Bed Occupancy at $250 per day which costs the hospital $50 daily to provide. Following closely is the amenity Bed Occupancy at $450 per day which costs the hospital $150 daily to provide. Doctor’s bedside visits at $650 per visit at the cost of $350 to the hospital and nursing services at $350 per occupied bed per day costing $100 to provide 35 CU IDOL SELF LEARNING MATERIAL (SLM)

are next. Medical imaging unit price $400 at a unit cost $250, and Laboratory Medicine at $350 costing $102 come next. Ambulance & EMT at $500 at $200 cost to the hospital, Occupational therapy at $300 costing the hospital $150, and Dental Services at $700 at a unit cost of $550 follow closely, Pharmacy services at $300 at a unit cost of $100, Orthopaedics services at $400 costing $200 to the hospital, and finally funeral home services at $500 costing the hospital $100. The hospital anticipates that 15% of all services will result in bad debts except pharmacy which will be at 25%, orthopaedic at 10% and funeral home at 75%. The Hospital has to pay 5% royalties to the Church of God mission for both basic and amenities bed occupancy for founder’s shares. The hospital has 25-year agreement to pay one of the consultants 25% royalties on both medical imaging and laboratory medicine billings. Lastly, by agreement, all funeral home billings generate 15% royalties to a consulting company that installed the facilities. 2.3 CORPORATERESPONSIBILITY VS PROFITABILITY AND PRODUCTIVITY In this introductory paper to this new journal, I should like to set the stage with a definition of CSR followed by its relation to the literature and other definitions. The definition has served me well and, as with all substantive definitions, its use will allow you to develop a CSR strategy with your eye always on the ball. Over the years I have developed such a strategy and my forthcoming CSR Text Book takes each element of the definition and develops a path to follow. Now readers of this journal will undoubtedly take my definition and its implicit steps and revise, challenge, hopefully not reject but that also happened in all serious journals. As such I am happy to challenge future authors to do exactly that, improve where necessary, certainly question but always keep your eye on the ball as, in fact, the famous US scholar Jere Behrman once advised me when I was astonished with both his excellent writings and his productivity. In this case the ball is harnessing the corporate world to ensure it contributes to sustainable development. To begin within this paper, I shall to put a definition of Corporate Social Responsibility. No definition is perfect but the one I present is based upon academic work, mainly in the USA, but has been updated and improved mainly through feedback from the, literally, hundreds of times the definition has been presented, dissected and discussed. You will see that many other definitions are similar and encompassed by the following definition. Since I first presented this definition in my book The Planetary Bargain1many similar offshoots have arisen, as shown below. Corporate Responsibility has emerged as a significant theme in the global business community and is gradually becoming a mainstream activity, according to a new survey by the Economist Intelligence Unit, in cooperation with Oracle Corporation. The growing emphasis on corporate responsibility is affecting the relationship between companies and their various stakeholders, such as investors, customers, vendors, suppliers, employees, communities and governments. In October 2004 we conducted an online survey of corporate 36 CU IDOL SELF LEARNING MATERIAL (SLM)

executives around the world and a separate online survey of institutional investors, asking them to assess the importance of corporate responsibility. Corporate Responsibility is not an academic topic to A.J. Devanesan, the president of one of the world’s largest pulp and paper companies, Asia Pacific Resources International Ltd based in Indonesia. In September 2004 an angry crowd of 250 illegal loggers ambushed APRIL’s staff on a remote logging road deep in the rainforests of Sumatra. They were upset that APRIL had prevented them from illegally harvesting APRIL’s forests. The mob started hurling stones and firebombs, setting one of the APRIL workers ablaze. Welcome to the brave new world of CR. As it becomes more generally accepted, it is also moving further afield, even into the remote rainforest. Indonesian timber companies are not often upheld as paragons of CR but APRIL is an exception. After being criticized for years by rainforest groups for its logging policies, APRIL is seeking to become a good corporate citizen. “We want to be known as a world-class company, one which does the right thing,” says MrDevanesan. APRIL is not only trying to stop illegal logging, but has also set aside around 20% of its total 330,000 hectares of forest for conservation purposes In some cases, firms such as APRIL take it upon themselves to improve their CR. In others, there is a ripple effect, as one company practising CR requires all its vendors and suppliers to uphold the same standards. A US fruit company, Chiquita, requires all its fruit suppliers to adhere to its CR standards in order to continue to do business with the firm, a decision that affects fruit growers across Latin America. The Singapore-based Olam, the world’s secondlargest trader of cocoa and Robusta coffee, imposes its own CR standards on all the farms supplying it with raw products, affecting cocoa farmers in Ghana, Ivory Coast and other African nations. “As we sell to many confectioners, they are very concerned that we are not buying from farms that use child labour,” says Olam CEO, Sunny Varghese. Among Olam’s clients are Nestle and Cadbury. CSR vs Profit making business 37 CU IDOL SELF LEARNING MATERIAL (SLM)

Table 2.1: Corporate responsibility vs profitability and productivity The terms Corporate Social Responsibility “CSR” and Corporate Sustainability have become buzzwords in the private sector. Indeed, as van Marrewijk observes, “many consider corporate sustainability and CSR as synonyms”. Yet the two terms have distinct meanings and it has become increasingly clear that there is a great need for clarification and related precision. In addition to these private sector terms, in the public sector, the terms “sustainability” and “sustainable development” are used adding further confusion. These four different but related terms give rise to two important questions: first, do the terms mean essentially the same thing? Second, if they have different meanings, is that difference significant. This article answers these two questions using a method drawn from the history of ideas scholars who aim to understand the social relations of ideas to identify how each of the terms supports distinct objectives, objectives that are obscured by the current lack of clarity. Ganapathi, Williams Aguilera and Rupp, nor did their study explore the enduring policy objective, whether environmental, certain hard law rights, or broader soft law, global policy obligations. Finally, their study did not explore the implications for decision-makers. Indeed, Mohrman and Lawler III note the challenge of these different sustainability initiatives at the organizational level and the need to understand the different organizational objectives. These distinctions are important as delimiting toward relevant goals and more effectively and strategically focus their limited resources to those goals. Given our different objective connecting the terms to the distinct decision-making contexts, policy objectives and scopesour paper makes its contribution using a method drawn from the scope and objective 38 CU IDOL SELF LEARNING MATERIAL (SLM)

allows advocates, challengers and managers to identify and work m intellectual history similar to Carroll’s highly cited work tracing the evolution of the idea. This method allows us to identify the core ideas concepts from the private sector CSR and corporate sustainability and place them in the larger context of public sector policies of sustainability and sustainable development. After tracing their intellectual provenance and their conceptual frameworks, it provides examples of how the terms apply to specific decision-making in distinct public and private sector organisational and institutional settings. In their essence, the three terms CSR, corporate sustainability and sustainability can be distinguished as follows: CSR has evolved into a form of international private business regulation focused on the environmental and social impacts of business. It includes a host of individual and collective rights in addition to guidance on ethical and environmental issues. It has been a bottom-up push focused on business which has led to a response from global policymakers. By way of contrast, corporate sustainability is a term that has both strong public orientated and weak private orientated forms. It contains a rather diverse set of ideas, originates from different groups focused on either sustainable development or environmental concerns but both have a focus on business. Finally, although CSR and corporate sustainability both refer to the concept of business ethics, they do so in quite different ways. The third term, sustainability, is a term that describes a broader public global policy agenda, forming a foundation for sustainable development, focused on the maintenance of ecology that allows the human species to flourish. We argue that the terms CSR and corporate sustainability have been drawn into the broader term sustainability. Aligning these concepts is important. Bebbington and Grey, for example, in an effort to integrate the concepts of sustainability, sustainable development and business state, “at a minimum, the sustainable business is one that leaves the environment no worse off at the end of each accounting period than it was at the beginning”. As we will argue, however, the term sustainability and the related terms CSR and corporate sustainability have expanded to encompass so much as to threaten to lose all meaning. The main other term in this area of scholarship and professional activity that is unnecessarily confused, corporate citizenship, has been addressed by others. See for example. All of these terms are certainly related. To some degree at least, they all draw attention to non-financial aspects of business operations. Further, they all include an element of concern about the impacts of business on the natural environment. They each address Lawler and Conger’s observation that business as usual is inadequate, and that the core of business operations must have a more positive impact on the environment and society. This sustainable effectiveness approach, they have argued requires organizations to be managed in ways that produce positive results with respect to financial, environmental, and social performance. As we will argue, however, they differ in important ways in terms of policy scope and policy objective. We begin our discussion with a graphic representation of our basic conceptualizations of the terms. Corporate Social Responsibility 39 CU IDOL SELF LEARNING MATERIAL (SLM)

Corporate Social Responsibility is the concept that has gained prominence in business reporting. Every corporation has the policy concerning CSR, which produces a report, annually, detailing its activities. Every corporation is able to recognize the corporate activity, which is socially responsible and the activities, which are not socially responsible. There are two interesting points regarding this. Firstly, one does not necessarily agree with each other in terms of what is socially responsible. Although one claim to recognise what it is or is not, when one is asked to define it, then normally, it is difficult. The comprehensive definition of social responsibility is concerned with what is or should be the relationship between global corporations, governments of countries and individual citizens. More locally, the definition is concerned with the relationship between the corporation and the local society in which it resides or operates. Another definition is concerned with the relationship between a corporation and its stakeholders. CSR is a concept, whereby the organizations integrate social and environmental concerns in their business operations and their interaction with the stakeholders on a voluntary basis. An increasing number of researchers and writers have recognized that the activities of the organization have an impact upon the external environmental conditions and have suggested that one of the roles of accounting should report upon the influence of the organization in this respect. There is not any reason to think that shareholders are willing to tolerate an amount of corporate non-profit activity which appreciably causes a reduction either in the dividends or the market performance of the stock. Every large corporation should be thought of as a social enterprise that is an entity, whose existence and decisions can be justified as long as they serve public and social purposes. Sustainability Sustainability is concerned with the effect in terms of which action is taken into consideration in the present, which has an impact upon the options that are available in the future. If resources are utilized in the present, then they are no longer useful in future. This point is of particular concern, if the resources are finite in quantity. Therefore, the raw materials of an extractive nature, such as, coal, iron or oil are finite in quantity and once they are used will not be available for future use. In the future, therefore, alternatives will be needed to implement the functions that are provided by these resources. In production and manufacturing organizations, these resources are made use of. This may be at some point in the relatively distance future but of more immediate concern is the fact that as resources get depleted, then the cost price of the remaining resources tend to increase. Therefore, in this manner, the operational costs of the organizations tend to increase. Viewing an organization as a part of the wider social and economic system implies that these effects must be taken into account, not just for the measurement of the cost and value created in the present, but also for the future of business itself. Measures of sustainability would consider the rate at which resources can be regenerated. Unsustainable operations can be accommodated either through the development and implementation of sustainable operations 40 CU IDOL SELF LEARNING MATERIAL (SLM)

or by planning for the future lacking in resources, which are required at present. In practice, the organizations mostly tend to aim towards less un-sustainability by increasing the efficiency in the ways in which resources are utilized. An example would be an energy efficiency program. The human resources need to be well-aware of the methods and approaches required to make best use of resources and promote their sustainability. Accountability Accountability is concerned with an organization recognising that its actions affect the external environment and therefore assuming responsibility for the effects of its actions. This concept therefore implies a quantification of the effects of actions taken, both internal and external to the organization. More specifically, the concept implies a reporting of those quantifications to all parties affected by those actions. This implies a reporting to external stakeholders of the effects of actions that are put into operation by the organizations and how they influence the functions of the stakeholders. This concept therefore, implies recognition that the organization is a part of the wider societal network and has responsibilities to that entire network rather than just to the owners of the organization. Alongside this acceptance of responsibility, there must be recognition that those external stakeholders have the power and authority to affect the ways in which those actions of the organization are taken and role is played in making decisions. Accountability therefore, necessitates the development of appropriate measures of the environmental performance and reporting of the actions of the organizations. This necessitates costs on the part of the organization in developing, recording and reporting such performance. Benefits must be determined by the usefulness of the measures selected to the decision-making processes and by the ways in which they facilitate the allocation of resources. It takes place both within the organization and between it and other stakeholders. Such reporting has to be based upon various characteristics. These are, understanding of all parties concerned, relevance to the users of the information provided, reliability in terms of accuracy of measurement, representation of impact and freedom from prejudice, and comparability, which implies consistency, both over time and between different organizations. However, such reporting will involve qualitative facts and judgements as well as quantifications. This qualitative aspect will inhabit comparability over time and will tend to mean that such impacts are assessed differently by various users of the information, reflecting their identical values and priorities. Transparency CSR is a comprehensive subject area, which leads to a variety of opinions and can be considered in number of different ways. When the stakeholders within as well as outside the organization are engaged in the decision making processes or they are formulating measures and laws concerning goodwill and welfare of the organization and its members, they need to ensure that these must be clear to the members. When these aspects will be clear to the 41 CU IDOL SELF LEARNING MATERIAL (SLM)

members, they will be able to adequately abide by them. Transparency needs to be depicted in the implementation of tasks and activities as well. The reason being, when the members of the organization will not be clear and feel perplexed, then they would be unable to carry out their job duties in a well-organized manner and achieve the desired outcomes. Therefore, it is vital to ensure that laws, measures, procedures, rules, tasks and activities all should be in accordance to the goals and objectives of the organization and transparency should be their main quality. Transparency, as a principle, means that the external impact of the actions of the organization can be ascertained from that organization’s reporting and pertinent facts are not disguised within this reporting. Therefore, all the effects of the actions of the organization, including external impacts, should be apparent to all from using the information provided by the organization’s reporting mechanisms. Transparency is of particular importance to the external users of such information, as these users are unaware in terms of the background details and knowledge available to the internal users, such as, information. Transparency, therefore, can be viewed to follow from the other two principles and equally can be seen to be a part of the process of recognition of responsibility on the part of the organization for the external affairs of the actions and equally part of the process of transferring power to the external stakeholders. In the utilitarian theory, the corporation serves as part of the economic system in which the function is mechanical. It is traditionally known in profit maximization. CSR ideas emerge after the realization that there is a need for the economics of responsibility, embedded in the business ethics of the corporation. The utilitarian theory could also be taken synonymously with the instrumental theories. In the case of these theories, the organization is viewed as an entity for the creation of wealth. The social activities are regarded as one of the means for achieving appropriate economic outcomes. Utilitarian theories are also based upon the idea in terms of the investment in the local community in which it has been stated that investment will be in the long term make provision of adequate resources, amenities and facilities that would enable the individuals to live their lives in an enhanced manner. The utilitarian theories are related to the strategies for competitive advantages. The proponents of these theories are the ones, who viewed these theories as the bases for the formulation of strategies and approaches in the dynamic utilization of the natural resources of the corporation for competitive advantages. The strategies also include the altruistic activities that are recognized as the social instruments for marketing. Altruistic activities are the selfless activities that are carried out for the welfare of the community. The utilitarian theory suggests that the corporation needs to accept social duties and rights to participate in the activities of social co-operation. Within it, the functionalist theory, specifically advocates that the corporation is viewed as an integral part of the economic system of which one of the important goals is profit-making. The organization is viewed as an investment and investment should be productive and profitable to the investors and stakeholders. From the perspective of 42 CU IDOL SELF LEARNING MATERIAL (SLM)

the internal aspect of the organization, CSR was regarded as the defence strategy of the industrial system against the external attacks. The reason being, there should be a balance between profit making and social objectives of the economic system’s equilibrium. The Managerial Theory The managerial theory is primarily concerned with the management of the organization. The managerial theory puts emphasis upon the corporate management in which the CSR is approached by the corporation internally. This is regarded as the main point of difference between the utilitarian and managerial perspective of CSR. This suggests that all the factors that are external to the corporation are taken into account. The managerial theories have been divided into three sub-groups, these are, corporate social performance, social responsibility, auditing and reporting and social responsibility for multinationals. CSR for multinationals grows as a result of global competitions and challenges they experienced. This aspect of managerial theory comes into being as a result of the responsibility that the managers have experienced. This is facilitated by defining useful tools about the CSR for the multinational companies to survive in foreign countries. The members of the organization are required to make moral and wise decisions, which are aimed at maximization of profit. Managerial theories are also strongly related to political theories based on conceptualization. They put emphasis upon the social responsibilities of organizations that arise from the power and authority that is vested among individuals, especially the ones, who are in leadership positions. Organization is understood like being a citizen with certain involvement in the community. The origin of the political power of the CSR is based on the Davis idea, who proposed that business is the social institution and it should make use of power and authority in a responsible manner. It is also noted that causes that generate the social power are from inside and outside of the corporation. Managerial theories are also covered under the integrative theories of Gargia and Mele, namely, the entities of public responsibility and corporate social performance. Public responsibility puts emphasis upon law and public policy processes that are taken as a reference for social performance. The Relational Theory Relational theory has an origin from the complex firm environment relationships. As a term, it implies that the interrelationships between the two are focused on the analysis of CSR. Relational theory is divided into four sub-groups of theories. These include, business and society, stakeholder approach, corporate citizenship and social contract. Business and society is proposed to mean business in society in which CSR emerges as the matter of interaction between two entities. One of the measures of CSR is the development of economic values in a society. Another person is the obligation to consider the effects the decisions and actions on the whole social system. Stated in the form of a general relationship, social responsibilities of the businesses need to reflect upon the social power they have. The stakeholder approach has been developed as one of the strategies in improving the management of the organization. It 43 CU IDOL SELF LEARNING MATERIAL (SLM)

is also stated as a way of acquiring an efficient understanding of the reality in order to manage the socially responsible behaviour of the organization. The stakeholder approach has been developed as one of the strategies in making improvements in the management of the organization. It is also stated as the way of understanding reality in order to manage the socially responsible behaviour of the organization. The stakeholder approach further considers an organization as the interconnected web of different interests, where self-creation and community creation take place independently. Corporate citizenship of the relational theory strongly depends on the type of community to which it is referred. It is the approach that the organization has to adopt to implement the tasks and activities in a responsible manner. Fundamentally, it is about the relationship that an organization develops with its stakeholders, and therefore, the former has to continuously implement the traits of commitment and dedication. In other words, it can be stated that within the organization, it is vital for the members to form effective terms and relationships with each other. In this manner, they will be able to incur profitability, productivity and job satisfaction. 2.4 SUMMARY  Corporate Social Responsibility is the concept that has acquired eminence in particularly business organizations. Every corporation has the policy that puts emphasis upon CSR, which produces a report, annually, detailing its activities. Every corporation is able to identify the corporate activity, which is publically accountable and the activities, which are not publically accountable. The three main principles of CSR are to be taken into consideration to comprise all of the CSR activities, these are, sustainability, accountability and transparency. The theories of CSR are utilitarian theory, managerial theory and relational theory. In understanding the concept of CSR, it is vital to understand, how it renders a significant contribution in promoting effective growth and development of the communities. Within communities, there are number of aspects that need to be taken into consideration, these are, changes, well- being, alleviation of societal problems and so forth. The individuals need to make effective use of knowledge and competencies to promote well-being and development of the community.  The roles of CSR in CD have been identified in the areas, which are, to share the negative consequences as a result of industrialization, closer linkages between the corporations and communities, helping to acquire talents, role in transfer of technology, CSR contributes in the protection of the environment, CSR is for human right corporate sustainability, interdependence between corporation and community, a CSR program is an aid in the alleviation of poverty, a CSR program helps in collection of data, for achievement of corporate sustainability goals, promoting social equity and promoting gender balance. The CSR has been rendering a significant 44 CU IDOL SELF LEARNING MATERIAL (SLM)

contribution in leading to well-being and progression, taking into account the above stated areas. Finally, it can be stated that corporate social responsibility is primarily concerned with the relationship between corporation and the local society. The tasks and functions of the corporation have to be put into operation in such a manner that would lead to well-being and progression of the individuals and society.  Research has indicated that within the country, women have experienced discriminatory treatment and are regarded as inferior as compared to males. In some cases, they have not even been given equal pay for the same work performed as their male counterparts. As a consequence they had to quit their jobs and source of income. Hence, it can be stated that discriminatory treatment is regarded as one of the major impediments within the course of attainment of empowerment opportunities and enhancing one’s livelihoods. In promoting gender balance, it is vital for the individuals, particularly in leadership positions to act as role models, particularly for women within the organizations. Promoting gender balance within the corporations is regarded as indispensable for the individuals in terms of number of factors. These include, achieving the desire goals and objectives, retaining employees, promoting women empowerment, providing them opportunities to achieve the desired goals, generating promotional opportunities and leading to well-being and goodwill. Therefore, it can be stated that focus has to be put on gender balance in the implementation of various tasks and activities.  Social equity is one of the essential areas, which enables the individuals to socialize with each other in an operative manner. Inequalities are regarded as major impediments to sustainable development. Therefore, to bring about effective growth and development of the community and nation, it is essential to promote social equity. Inclusive sustainable development requires dealing with the structural causes of inequalities in accordance to the human rights principles of universality, indivisibility, equality, non-discrimination, participation and accountability. Promoting social equity and dealing with social exclusion and discrimination are vital aspects that need to be emphasised within the corporation and the external environmental conditions. Incentives need to be provided to the policymakers that are necessary to formulate programs and procedures to promote social equity and well-being of the individuals and community. Furthermore, it is necessary to prioritize the disadvantaged groups through setting of targets and disaggregating data on the basis of factors such as, caste, race, gender, age, income, occupation, location, and socio-economic background.  In order to achieve the corporate sustainability goals, it is vital to put into operation the sustainable business practices. The sustainable business practices cover five areas. These include awareness and perceived importance among employees, employee sustainable behaviours, social and community performance, environmental 45 CU IDOL SELF LEARNING MATERIAL (SLM)

performance and ethical and legal performance. These five areas are to be paid adequate attention, as without awareness in terms of them, it is not possible to implement the program in a successful manner.  The employees need to acquire adequate awareness in terms of various areas that are necessary for the successful functioning of the organization. The employees need to conduct themselves and implement the behaviours that would enable them to achieve the desired goals and objectives. Social and community performance is essential to augment one’s competencies and understanding in terms of various areas. The environmental conditions need to be pleasant and amiable, which may encourage the employees to work satisfactorily. It is of utmost significance for the members of the corporation to inculcate the traits of morality and ethics. Therefore, it can be stated that in order to achieve the desired goals and objectives, it is vital to generate awareness in terms of these factors. 2.5 KEYWORDS  Cascading – The process of developing aligned goals throughout an organization, connecting strategy to operations to tactics, allowing each employee to demonstrate a contribution to overall organizational objectives. Methods of cascading include identical, contributory (translated, but congruent, objectives and measures), unique (unique objectives and measures; do not link directly to parent) and shared.  Critical Success factor– A CSF is a business event, dependency, product, or other factor that, if not attained, would seriously impair the likelihood of achieving a business objective. This term is always included in a glossary of strategic terms  Customer-Facing Operations – Encompasses those facets of the organization that interface directly with customers; typically an organization’s sales, service and marketing functions. Also referred to as Demand Chain.  Customer Perspective – Measures are developed based on an organization’s value proposition in serving their target customers. In many organizations, especially public sector and non-profit, the Customer perspective is often elevated above or placed alongside the Financial perspective.  Dashboard – A dashboard is a reporting tool that consolidates aggregates and arranges measurements, metrics (measurements compared to a goal) and sometimes scorecards on a single screen so information can be monitored at a glance. Dashboards differ from scorecards in being tailored to monitor a specific role or generate metrics reflecting a particular point of view; typically they do not conform to a specific management methodology. 46 CU IDOL SELF LEARNING MATERIAL (SLM)

2.6 LEARNING ACTIVITY 1. Create a session on corporate planning & budgeting. ___________________________________________________________________________ ___________________________________________________________________________ 2. Create a survey on corporate responsibility. ___________________________________________________________________________ ___________________________________________________________________________ 2.7UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. What is meant by corporate budgeting? 2. Define the term budgeting? 3. Define the term corporate planning? 4. What is corporate responsibility? 5. Write about the term profitability? Long Questions 1. Explain in brief about corporate budgeting. 2. Explain the term productivity. 3. Illustrate the Corporate planning & budgeting. 4. Illustrate the concept of accountability in corporate responsibility. 5. Examine the marginal theory of corporate profitability. B. Multiple Choice Questions 1. What does Stars symbolize in BCG matrix? a. Introduction b. Maturity c. Growth d. Decline 2. What does Question Mark (?) symbolize in BCG matrix? 47 a. Remain Diversified CU IDOL SELF LEARNING MATERIAL (SLM)

b. Invest c. Stable d. Liquidate 3. What do Cash Cows symbolize in BCG matrix? a. Remain Diversified b. Invest c. Stable d. Liquidate 4. What does Green symbolize in BCG matrix? a. Invest & Expand b. Select & Earn c. Harvest & Divest d. Both a & b 5. What does Yellow symbolize in BCG matrix? a. Invest & Expand b. Select & Earn c. Harvest & Divest d. Both a & b Answers 1-b, 2-a, 3-c, 4-a, 5-c 2.8 REFERENCES References book  Bain, J. 1951. Relation of profit rate to industrial concentration: American manufacturing, 1936–1940. Quarterly Journal of Economics.  Bain, J. 1956. Barriers to new competition. Cambridge, MA: Harvard University Press.  Bain, J. 1959. Industrial organization. New York: John Wiley & Sons Textbook references 48 CU IDOL SELF LEARNING MATERIAL (SLM)

 Baldrige national quality award. 2007. The National Institute of Standards and Technology (NIST), an agency of the U.S. Commerce Department’s Technology Administration, manages the Baldrige National Quality Program (BNQP).  Barney, J. 1986. Strategic factor markets: Expectations, luck, and business strategy. Management Science.  Barney, J. 1991. Firm resources and sustained competitive advantage. Journal of Management. Website  https://www.researchgate.net/publication/340124593_Special_features_of_corporate_ budget_planning_contemporary_approach/link/5e7a02f5299bf1b2b9ac28d5/downloa d  https://www.economicsdiscussion.net/management/corporate-planning/corporate- planning/32471  https://www.accountingnotes.net/cost-accounting/marginal-costing/marginal-costing- meaning-and-features-cost-accounting/10533 49 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT 3: DEFINING STRATEGIC INTENT STRUCTURE 3.0 Learning Objectives 3.1 Introduction 3.2 Vision 3.3 Mission 3.4 Business Definition 3.5 Strategy 3.6 Goals 3.7 Objectives 3.8 Summary 3.9 Keywords 3.10 Learning Activity 3.11 Unit End Questions 3.12 References 3.0 LEARNING OBJECTIVES After studying this unit, you will be able to:  Understand the concept of vision.  Illustrate the nature of Business.  Examine the concept of Goals. 3.1 INTRODUCTION New approaches to management in the public sector are imperative as governments enter the new trajectory. Market dynamics have created challenges for public organisations, with the emergence of the global economy, advances in technology, increased societal demands, and the need to provide more social services with fewer resources. As well, a widespread desire for increased organisational scrutiny has increased the pressure for change, given more accessible globalized information systems and heightened media attention critical of government inefficiencies in service delivery. Strategic management has gained a sustained prominence in the management of public services in the past two decades or so. South African Public Sector departments are increasingly being asked to use it as part of their 50 CU IDOL SELF LEARNING MATERIAL (SLM)