Assignment Ist 887 BP&amp M Spring 2010

Business Policy & Managment (887)
Department of Business Administration

Block No. 13, H-8
Islamabad
Strategic Management (887)

Assignment No. 01
Submitted to:
Prof. Safdar Ahmed Khan
House No. A-664, Block “N”,
North Nazimabad
KARACHI (0345- 210 1062)
Submitted By:
Muhammad Hammad Manzoor
MBA (HRM)-3rd Semester
Roll No. 508195394
th
508, 5 Floor, Continental Trade Centre (CTC)
Block – 08, Clifton, KARACHI
(0321-584 2326)
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By: M. Hammad Manzoor, MBA HRM-III, 508, 5th Floor, Continental Trade Centre (CTC), Clifton – 08, Karachi. (Roll No. 508195394)
Email: explorationist@gmail.com, Cell: 0321-584 2326
Q. No. 1: Develop your vision and mission statement for an organization of

your choice from broadcasting sector and compare your vision and mission
statement with the original vision and mission statement of that organization?
Answer)
NATIONAL PUBLIC RADIO PURPOSES:
Early in 1970, Bill Siemering — one of the organizers of National Public Radio and later
its first program director — put together a "mission statement" for NPR. The
statement supported NPR's request for aid from CPB and went on to define the
network's first daily program, All Things Considered, which debuted May 3, 1971.
By William H. Siemering
National Public Radio will serve the individual: it will promote personal growth; it will
regard the individual differences among men with respect and joy rather than derision
and hate; it will celebrate the human experience as infinitely varied rather than vacuous
and banal; it will encourage a sense of active constructive participation, rather than
apathetic helplessness.
National Public Radio, through live interconnection and other distribution systems, will
be the primary national non-commercial program service. Public radio stations will be a
source for programming input as well as program dissemination. The potentials of live
interconnection will be exploited; the art and the enjoyment of the sound medium will
be advanced.
In its cultural mode, National Public Radio will preserve and transmit the cultural past,
will encourage and broadcast the work of contemporary artists and provide listeners
with an aural esthetic experience which enriches and gives meaning to the human spirit.
In its journalistic mode, National Public Radio will actively explore, investigate and
interpret issues of national and international import. The programs will enable the
individual to better understand himself, his government, his institutions and his natural
and social environment so he can intelligently participate in effecting the process of
change.
The total service should be trustworthy, enhance intellectual development, expand
knowledge, deepen aural esthetic enjoyment, increase the pleasure of living in a
pluralistic society and result in a service to listeners which makes them more responsive,
informed human beings and intelligent responsible citizens of their communities and
the world.
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Implementation of Goals
Such statements of purpose are only platitudes and good intentions unless there is the
strong commitment, creative energy and specific strategy to implement them. The
detailed implementation of National Public Radio is the responsibility of the President
and his staff, but some priorities and suggested approaches are necessary to help
answer the how and why of NPR.
The priorities of NPR program development:
1. Provide an identifiable daily product which is consistent and reflects the highest
standards of broadcast journalism.
2. Provide extended coverage of public events, issues and ideas, and acquire and
produce special public affairs programs.
3. Acquire and produce cultural programs which can be scheduled individually by
stations.
4. Provide access to the intellectual and cultural resources of cities, universities and
rural districts through a system of cooperative program development with member
public radio stations.
5. Develop and distribute programs to specific groups (adult education, instructional,
modular units for local productions) which meet needs of individual regions or
groups.
6. Establish liaison with foreign broadcasters for a program exchange service.
7. Produce materials specifically intended to develop the art and technical potential of
radio.
DISCUSSION
1. Provide an identifiable daily product which is consistent and reflects the highest
standards of broadcast journalism.
Because National Public Radio begins with no identity of its own it is essential that a
daily product of excellence be developed. This may contain some hard news, but the
primary emphasis would be on interpretation, investigative reporting on public
affairs, the world of ideas and the arts. The program would be well paced, flexible,
and a service primarily for a general audience. It would not, however, substitute
superficial blandness for genuine diversity of regions, values, and cultural and ethnic
minorities which comprise American society; it would speak with many voices and
many dialects. The editorial attitude would be that of inquiry, curiosity, concern for
the quality of life, critical, problem-solving, and life loving. The listener should come
to rely upon it as a source of information of consequence; that having listened has
made a difference in his attitude toward his environment and himself.
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There may be regular features on consumer information, views of the world from
poets, men and women of ideas and interpretive comments from scholars. Using
inputs from affiliate stations, for the first time the intellectual resources of colleges
and universities will be applied to daily affairs on a national scale.
Philosophically, time is measured by the intensity of experience. Waiting for a bus

and walking through an art gallery may occupy the same time duration, but not the
same time experience. Listeners should feel that the time spent with NPR was
among their most rewarding in media contact. National Public Radio will not regard
its audience as a "market" or in terms of its disposable income, but as curious,
complex individuals who are looking for some understanding, meaning and joy in the
human experience. Represented in visual terms, the listener turning from a
commercial station to National Public Radio should sense a difference as that
between a shopper's newspaper and Consumer Reports; Teen Magazine and
Realities.
2. Provide extended coverage of public events, issues and ideas, and to acquire and
produce special public affairs programs.
Broadcasting of public hearings and public affairs programs is not just a "good thing
to do" but a necessity for citizens in a democratic society to be enlightened
participants. The mechanistic instruction about government we all recall from civics
classes ill prepares adults to know about the real legislative process and how to
effect change. Political scientist Fred Newmann wrote:
By teaching that the constitutional system of the United States guarantees a

benevolent government servicing the needs of all, the schools have fostered massive
public apathy.
He believes the legalistic curriculum should be "balanced if not replaced by emphasis

on the influence of personal motives and ambitions, emotions (envy, hate, love,
pride), political debts, accidents and even honest mistakes in the formulation of
public policy." [Newmann, p. 545] This requires investigative reporting and citizen
participation during the decision-making process. Broadcasts of public hearings are
one of the best ways to hear the evidence presented on proposed legislation and
public radio might develop some vehicle through local affiliates whereby citizens
could indicate their judgment to the decision makers. This coverage need not be
confined to Congressional Hearings but should apply to governmental regulatory
agencies as well. If no government body is holding hearings on an important issue,
National Public Radio could sponsor its own debate to help define the problem and
suggest alternate solutions with the consequences of each explored.
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Jack Gould, writing in the New York Times, testified that "radio retains the enormous
virtue of complete unobtrusiveness." In reviewing coverage of congressional
hearings he wrote:
Television, commercial or noncommercial, says it can attend a hearing without

causing any inconvenience; this is poppycock. The glaring lights needed by National
Educational Television, . . . are a short cut to a raging headache when experienced
morning and afternoon. The hearing room was bathed in artificial incandescence,
little short of nuisance, and that some witnesses donned sun glasses more
confirmed the annoyance.
Because the cost of radio coverage is one-tenth television coverage, Mr. Gould
concluded "...it may well prove that radio will be the most economical and
consistent means for uniting a citizen with his government in operation."
National Public Radio, through public affairs programs, would not only call attention
to a problem, but be an active agent in seeking solutions. Hiring of minorities in the
construction trades, for example, is a complex social, racial problem. A thorough
exposition by all sides would be instructive, but to enable persons struggling with
this issue to speak on live radio with those who developed the Philadelphia Plan and
Chicago Plan, could actually help solve the problem in many other communities and
probably evolve a better solution.
Everyone is aware that stopping environmental pollution is critical for survival, but
what can a single individual do to solve such a massive problem? Not use
detergents? Picket the local steel plant? Organize — but for what, to do what?
Obviously individuals and groups must solve this, and shared information and cross
fertilization of ideas by live national radio could do much to speed the process.
3. Acquire and produce cultural programs which can be scheduled individually by

stations.
Susan Sontag wrote, "Art today is a new kind of instrument, an instrument for
modifying consciousness and organizing sensibility." Art is no longer a pleasant
pastime for social elite, but at the core of contemporary life. Understanding is both
more essential and more difficult. Without adequate background, the artist's
message is frequently unintelligible and we wander as one in the forest unfamiliar
with trail markings, unable to "read" the environment. With the rapidity of change
and decline of local theaters and orchestras there is an equal need to preserve and
transmit the culture of the past. As the arts become less of a social occasion and
more of a personal experience, the role of radio as a creator and transmitter should
increase.
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National Public Radio might use any of the following to make the arts
understandable and engaging.
Listeners could gain a contemporary view of the world through the eyes of a
sensitive writer. National competitions might be held to encourage new radio
writers.
Encourage, and provide facilities for leading writers of fiction and dramatists to
prepare new materials for radio.
Standards of the radio art could be improved by broadcasting regular criticisms
of the medium.
Young people could be introduced to the beauty of the medium through
materials prepared for in-school listening. Writers of children's books could be
commissioned to write for radio.
Work cooperatively with National, State and local councils on the arts and
international agencies in developing greater understanding and appreciation of
the arts. For example, reproductions collected from around the country of a
period or school of art could be printed and distributed through local stations.
Leading art historians could lead the listener viewer through the book in a
broadcast series.
Stimulate local symphony orchestras, through national broadcasts. Rather than a
series of the New York Philharmonic, there could be a concert series with a
different local orchestra each week performing what it does best.
Compose and perform new works live across the country.
Use the products of the National Center for Audio Experimentation at the
University of Wisconsin as a contemporary esthetic experience and to help give
the service a unique identifiable sound.
A sense of the cultural diversity could be achieved by programs featuring the
music of the different ethnic groups across the country.
Competitions could be sponsored to encourage new artistic uses of the medium
and to improve the quality of the product.
4. Provide access to the intellectual and cultural resources of cities, universities and
rural districts through a system of cooperative program development with
member public radio stations.
One of the unique aspects of National Public Radio is that each member station will
have the potential of being an originator of programs as well as a transmitter; it will
be national in input as well as distribution. Since the majority of member stations
are part of large universities or near urban areas, for the first time the best
intellectual resources of the country will be able to he effectively used, quickly and
easily, on a national scale. Many Americans probably know only of one
anthropologist, Margaret Mead, and one historian, Arthur Schlesinger, Jr. Individual
stations may contribute short actualities, an interview of national interest, segments
of a longer special program, a complete program or program series or help to
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arrange for a live discussion of one specialist with another in a distant city. Stations
should receive appropriate compensation for their contributions.
Initially, many stations may lack the skilled personnel or experience for some of the
tasks necessary to implement this goal. Workshops for production personnel should
be provided so that standards of excellence can be established and maintained. A
significant by-product of this goal will be the considerable upgrading of staff and
service of many local public radio stations.
5. Develop and distribute programs for specific groups (adult education, instruction,
modular units for local productions) which may meet needs of individual regions
or groups, but may not have general national relevance.
The implementation of this priority will provide needed diversity of programming to

audiences presently served by some but not all public radio stations. Through a tape
distribution system, programs from the national production center could be supplied
to the public radio stations without live interconnection service, as well as special
interest programs to member stations. Even though some stations lack the staff and
facilities to use the live network service, they should receive a program service from
National Public Radio which can help strengthen their schedule and local service.
The tape service could include special documentaries and cultural programs
produced by member stations, the National Public Radio production center, off air
recordings of network programs, and materials acquired from foreign sources.
Most public radio stations have developed several distinct program services for
specific audiences: farmers, elderly, blind, low income, youth. These efforts could be
furthered and supplemented by NPR production on a national basis.
The largest specialized audience programming has been instructional programs for
in-school listening and continuing professional education. Hundreds of thousands of
youngsters presently receive enrichment programs by radio and while many of these
must be designed for local school district curricula, some live (a daily news
background program for elementary pupils) and taped programs drawn from
national resources could strengthen this important service. Similarly, the group of
stations now providing in-service training for health related professions could be
expanded and used to disseminate vital timely information to key health centers
across the country. An increasing number of stations will be developing instructional
programming on the side channel of FM (SCA) while broadcasting general audience
programs on the main channel. With the unique technical versatility of radio two
different program services can be offered simultaneously.
Programs in the "by and for" specific cultural, ethnic minorities’ category could be
developed. For example, there could be a linkup of stations in urban areas with
sizeable non-white audiences, or student groups studying ecology, or groups with
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distinct lifestyles and interests not now served by electronic media. As man pulls
himself out of the mass society to develop his unique humanness, his minority
identification (ethnic, cultural, value) becomes increasingly important. This diversity
is partially reflected in print media, but has not been manifested in the electronic. A
few of these growing interests are reflected in the comparative circulation figures
for the periodicals listed below. The figures are taken from Ayer's Directories based
upon the previous year's circulation.
1964 1969
American Home 3,357,988 3,693,307
Art in America 16,803 40,878
Better Nutrition -- 151,069
Business Week 412,173 578,600
Down Beat 50,747 74,878
Ebony 763,389 1,054,117
High Fidelity 118,275 150,003
Home and Garden -- 444,352
Gourmet 197,295 334,264
National Geographic 3,497,354 6,050,137
New York Review of Books -- 75,000
Sierra Club (Conservation) -- 43,000
Village Voice 27,779 116,708
In order to provide minorities access to the medium, it is not only important to

establish the identity of that group, but essential if the total population is to
understand and appreciate the interdependence of pluralism. In addition to the
cognitive information, these programs should help supply what Warren Bennis calls
the "need for affective education -- the cultivation of competence in the emotional
and interpersonal."
National Public Radio could also supply modular program units to network stations
which could be used in local news and public affairs programs. For example, there
may be congressional testimony on pollution problems in Lake Michigan which
would be of interest to stations in that region. There may be interviews with persons
from a specific region or about regional issues. Some of the material may be in
rough form, outs of national productions or actualities for local newscasts.
6. Establish liaison with foreign broadcasters for a program exchange service.
Although presently overwhelmed by domestic problems, the individual's role as a

citizen of the world should not be overlooked. International programs can be a
source of cultural enrichment and an effective means to further understanding
among peoples around the world. The speed and volume of international travel,
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economic interdependence among nations makes this area of programming more

important than ever. In time/space, New York now is closer to Asia than it was to
Washington, D.C. at the turn of the century; a plane can travel from New York to
London in the same time as an automobile or train travels across New York State.
We not only learn more about other peoples through international programs, but
also more about ourselves through the eyes of a distant observer.
Contact can be established with the Canadian Broadcasting Corporation, British

Broadcasting Corporation, Australian Broadcasting Commission and other
international sources for acquisition of programs of common interest.
In addition to the cultural fare usually associated with international programs, there
could be live interconnected broadcasts on aspects of foreign policy and problems
of common concern--development of the north country of Canada, ecology of Lakes
Erie and Ontario, balance of payments, etc. National Public Radio could also be a
primary resource for programs on U.S. life for distribution to foreign broadcasters.
7. Produce materials specifically intended to develop the art and technical potential
of radio.
There should be a close working relationship with the National Center for Audio
Experimentation at the University of Wisconsin to apply the principles discovered
there to the art of broadcasting. Improving the art of the sound medium should be
an on-going concern at the production center just as newspapers and magazines
constantly improve the format and appearance of their medium. The technical staff
will be concerned with new developments in studio and remote equipment and the
transmission of material by satellite. National Public Radio should utilize the most
advanced techniques of the medium, should introduce new concepts and have the
highest technical standards in the field.
odfrey Featherstone, writing in the British publication Anarchy suggests some of the
potentials:
Using sounds alone, with no imposed pictures or rigid, linear print tending to
fragment and narrow thought processes and imagination, can stimulate a habit of
thinking in terms of dynamic complexes of ideas or far-reaching constellations or
"fields" of imagery. Sound can tap the flow and structures of feelings of ordinary
people if they speak directly for themselves about their lives' central experiences in
actuality is made fuller, complex, concrete through the tone, pace, rhythm, and
stress of their speech ... Skillfully, tactfully and simply relating actuality material to
song, Charles Parker's Radio Ballads ... about the efforts, strengths, risks, hardships
discriminating wisdom rooted inmost people's working lives did this with an impact
greater than a multitude of political propaganda efforts.
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Vision and Mission: Seven Suggestions Why You Need Both
One of the most common questions that I’m asked is whether there is any
difference between a mission and a vision. It’s a question that has a quick answer –
yes!-with a whole lot of reasoning behind it.
I’m always glad to be asked this question because it’s usually asked by a thoughtful
person who wants to do their best for their organization. The person has likely
been reading or talking to someone who uses the words mission and vision or
perhaps has to fill out a form where they are required. People who ask this question
are actually aware that you need to have one if not both, and care enough to find
out which they should use.
I think there are good reasons why people talk about mission and vision these days.
1. The awareness of mission and vision has three major bases:
• There are many books, articles, conferences speakers that speak in lay
language about mission and vision. What used to belong to researchers and
high level consultants is now everywhere for anyone.
• There are consultants aplenty who are trained to use one or the other words
and justify neither.
• Business models for non-profits use these words and there continues to be a
transference of what is good for the ‘for profit’ sector to the ‘not for profit’
sector.
2. Funding requirements are now as never before asking for the mission and vision
to be filled in the blanks.
3. Semantics are more precise because people talk about it more often. When we
invent new words its because this is important for communication. I think that
the distinctions between mission and vision are becoming more important.
4. There is a trend to making sure that a framework is in place. People care more
about how we do things right and are moving away from the ‘just do it’ approach
to one that requires a more serious framework. The dot com hurry up and get
going had its place and lost it to be replaced by a calculated and considered
approach.
Here are 7 questions with answers that might help to provide more rationale as to
why an organization needs both a mission and a vision:
What exactly are a mission and a vision?
A mission and a vision are statements that have been written to guide certain
actions and future states:
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• A mission is what an organization does, its action; a vision is what an

organization would like to happen as a result of the action that it does.
• Mission equals the action; vision is the ultimate result of the action.
• Mission answers the question “What would not happen if we were not here as
an organization?” Or more positively, “What change is achieved because we
exist?
• Vision answers the question: “What are the results, the ends, the consequences
of our action?”
• Vision looks forward; mission looks at today.
Do we need both a mission and a vision?

Yes. You need to be able to tell yourself both what you do and why to make sense
of your work. I like Joel Barker’s quote from the Power of Vision, a training video for
organizations who need examples about how individuals and organizations use
vision for their success. Vision without action is merely a dream. Action without
vision just passes the time. Vision with action can change the world. If you have just
a mission, the action written, - and not the vision, you will not know where you’re
going or if you have arrived.
In an organization, vision is to leadership as mission is to management. Can
everyone be a leader? Can everyone be a manager? No, but you need to have some
of both leadership and management.
How do we figure out two when one is hard enough to do?
Vision-creating is one of those things that people either love or hate to do. If you
are part of a team that is giving birth to a vision you need to try and be creative
about how you do this. This kind of thinking, of visioning, takes time; takes lots of
input from members and other key stakeholders; and, I believe it takes a creative
and task-oriented facilitator to help it happen.
Which do we decide first - the vision or the mission?
Since the vision is the most difficult for most people to come up with, I suggest that
you find the mission first. Focus on the answering the easiest question first – “what
do we do?” which gives you the mission, then answer the question – “what will
happen as a result of what we do? - which gives you the vision.
How often do we change the mission and vision?
A vision is tied to the strategic plan and may not change in much less than 5 years if
not more. A mission could change annually and since it directs the annual or
business plan, depends on the external and internal changes. The mission could
change in less than 5 years as long as it still fits with the vision.
How do we know our vision and mission are right?
• People nod when you tell them what you do.
• People who are part of your organization can visualize themselves and what they
do in the vision and mission statements.
• The mission and vision are still exciting to the creators the morning after the
retreat.
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• The mission and vision make sense for our organization and fits with all we say
we are and do.
• There’s an irresistible pull of emotion in the center of us around the vision – that
makes us feel that it’s right.
How long are the vision and mission?
Vision and mission statements are just that – brief and concise. If you are writing
pages and pages you likely will cause confusion. On the other hand, if you make the
statements too short you are likely writing a slogan. Try to keep the vision and
mission statements long enough to make sense and short enough for people to
remember, and say, easily.
Vision and mission statement are foundational parts of good governance.
Organizations which work at having both will find that they will have no problem
distinguishing between a vision and mission and using them toward their success.
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Q: 2 a) As a manager of any service organization, how would you identify

and analyze strategic gap?
Answer)
The SWOT analysis is an extremely useful tool for understanding and decision-making for all
sorts of situations in business and organizations. SWOT is an acronym for Strengths,
Weaknesses, Opportunities, and Threats. Information about the origins and inventors of SWOT
analysis is below. The SWOT analysis headings provide a good framework for reviewing
strategy, position and direction of a company or business proposition, or any other idea.
Completing a SWOT analysis is very simple, and is a good subject for workshop sessions. SWOT
analysis also works well in brainstorming meetings. Use SWOT analysis for business planning,
strategic planning, competitor evaluation, marketing, business and product development and
research reports. You can also use SWOT analysis exercises for team building games. See also
PEST analysis, which measures a business's market and potential according to external factors;
Political, Economic, Social and Technological. It is often helpful to complete a PEST analysis
prior to a SWOT analysis. See also Porter's Five Forces model, which is used to analyse
competitive position.
A SWOT analysis measures a business unit, a proposition or idea; a PEST analysis measures a
market. A SWOT analysis is a subjective assessment of data which is organized by the SWOT
format into a logical order that helps understanding, presentation, discussion and decision-
making. The four dimensions are a useful extension of a basic two heading list of pro's and con's
(free pro's and con's template here).
SWOT analysis can be used for all sorts of decision-making, and the SWOT template enables
proactive thinking, rather than relying on habitual or instinctive reactions. The SWOT analysis
template is normally presented as a grid, comprising four sections, one for each of the SWOT
headings: Strengths, Weaknesses, Opportunities, and Threats. The free SWOT template below
includes sample questions, whose answers are inserted into the relevant section of the SWOT
grid. The questions are examples, or discussion points, and obviously can be altered depending
on the subject of the SWOT analysis. Note that many of the SWOT questions are also talking
points for other headings - use them as you find most helpful, and make up your own to suit the
issue being analysed. It is important to clearly identify the subject of a SWOT analysis, because
a SWOT analysis is a perspective of one thing, be it a company, a product, a proposition, and
idea, a method, or option, etc.
Here are some examples of what a SWOT analysis can be used to assess:
a company (its position in the market, commercial viability, etc)

a method of sales distribution
a product or brand
a business idea
a strategic option, such as entering a new market or launching a new product
a opportunity to make an acquisition
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a potential partnership
changing a supplier
outsourcing a service, activity or resource
an investment opportunity
Be sure to describe the subject for the SWOT analysis clearly so that people are contributing to the
analysis, and those seeing the finished SWOT analysis, properly understand the purpose of the
SWOT assessment and implications.

SUBJECT OF SWOT ANALYSIS: (DEFINE THE SUBJECT OF THE ANALYSIS HERE)
Strengths
Advantages of proposition? Weaknesses
Capabilities? Disadvantages of proposition?
Competitive advantages? Gaps in capabilities?
USP's (unique selling points)? Lack of competitive strength?
Resources, Assets, People? Reputation, presence and reach?
Experience, knowledge, data? Financials?
Financial reserves, likely returns? Own known vulnerabilities?
Marketing - reach, distribution, Timescales, deadlines and pressures?
awareness? Cashflow, start-up cash-drain?
Innovative aspects? Continuity, supply chain robustness?
Location and geographical? Effects on core activities, distraction?
Price, value, quality? Reliability of data, plan predictability?
Accreditations, qualifications, Morale, commitment, leadership?
certifications? Accreditations, etc?
Processes, systems, IT, communications? Processes and systems, etc?
Cultural, attitudinal, behavioural? Management cover, succession?
Management cover, succession?
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Opportunities Threats
Market developments? Political effects?
Competitors' vulnerabilities? Legislative effects?
Industry or lifestyle trends? Environmental effects?
Technology development and innovation? IT developments?
Global influences? Competitor intentions - various?
New markets, vertical, horizontal? Market demand?
Niche target markets? New technologies, services, ideas?
Geographical, export, import? Vital contracts and partners?
New USP's? Sustaining internal capabilities?
Tactics - surprise, major contracts, etc? Obstacles faced?
Business and product development? Insurmountable weaknesses?
Information and research? Loss of key staff?
Partnerships, agencies, distribution? Sustainable financial backing?
Volumes, production, economies? Economy - home, abroad?
Seasonal, weather, fashion influences? Seasonality, weather effects?
Swot analysis example

This SWOT analysis example is based on an imaginary situation. The scenario is based on a
business-to-business manufacturing company, who historically rely on distributors to take their
products to the end user market. The opportunity, and therefore the subject for the SWOT
analysis, is for the manufacturer to create a new company of its own to distribute its products
direct to certain end-user sectors, which are not being covered or developed by its normal
distributors.
Subject of SWOT analysis example: the creation of own distributor company to
access new end-user sectors not currently being developed.
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Strengths
End-user sales control and direction. Weaknesses
Right products, quality and reliability. Customer lists not tested.
Superior product performance vs Some gaps in range for certain sectors.
competitors. We would be a small player.
Better product life and durability. No direct marketing experience.
Spare manufacturing capacity. We cannot supply end-users abroad.
Some staff have experience of end-user Need more sales people.
sector. Limited budget.
Have customer lists. No pilot or trial done yet.
Direct delivery capability. Don't have a detailed plan yet.
Product innovations ongoing. Delivery-staff need training.
Can serve from existing sites. Customer service staff need training.
Products have required accreditations. Processes and systems, etc
Processes and IT should cope. Management cover insufficient.
Management is committed and confident.
Opportunities Threats
Legislation could impact.
Could develop new products.
Environmental effects would favour larger
Local competitors have poor products.
competitors.
Profit margins will be good.
Existing core business distribution risk.
End-users respond to new ideas.
Market demand very seasonal.
Could extend to overseas.
Retention of key staff critical.
New specialist applications.
Could distract from core business.
Can surprise competitors.
Possible negative publicity.
Support core business economies.
Vulnerable to reactive attack by major
Could seek better supplier deals.
competitors.
See also the free PEST analysis template and method, which measures a business according to
external factors; Political, Economic, Social and Technological. It is often helpful to complete a
PEST analysis prior to competing a SWOT analysis.
See also Porter's Five Forces model.
More on the difference and relationship between PEST

and SWOT
PEST is useful before SWOT - not generally vice-versa - PEST definitely helps to identify SWOT
factors. There is overlap between PEST and SWOT, in that similar factors would appear in each.
That said, PEST and SWOT are certainly two different perspectives:
PEST assesses a market, including competitors, from the standpoint of a particular proposition
or a business.
SWOT is an assessment of a business or a proposition, whether your own or a competitor's.
Strategic planning is not a precise science - no tool is mandatory - it's a matter of pragmatic
choice as to what helps best to identify and explain the issues.
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PEST becomes more useful and relevant the larger and more complex the business or
proposition, but even for a very small local businesses a PEST analysis can still throw up one or
two very significant issues that might otherwise be missed.
The four quadrants in PEST vary in significance depending on the type of business, eg., social
factors are more obviously relevant to consumer businesses or a B2B business close to the
consumer-end of the supply chain, whereas political factors are more obviously relevant to a
global munitions supplier or aerosol propellant manufacturer.
All businesses benefit from a SWOT analysis, and all businesses benefit from completing a
SWOT analysis of their main competitors, which interestingly can then provide some feed back
into the economic aspects of the PEST analysis.
The origins of the SWOT analysis model

This remarkable piece of history as to the origins of SWOT analysis was provided by Albert S
Humphrey, one of the founding fathers of what we know today as SWOT analysis. I am
indebted to him for sharing this fascinating contribution. Albert Humphrey died on 31 October
2005. He was one of the good guys.
SWOT analysis came from the research conducted at Stanford Research Institute from 1960-
1970. The background to SWOT stemmed from the need to find out why corporate planning
failed. The research was funded by the fortune 500 companies to find out what could be done
about this failure. The Research Team were Marion Dosher, Dr Otis Benepe, Albert Humphrey,
Robert Stewart, Birger Lie.
It all began with the corporate planning trend, which seemed to appear first at Du Pont in 1949.
By 1960 every Fortune 500 company had a 'corporate planning manager' (or equivalent) and
'associations of long range corporate planners' had sprung up in both the USA and the UK.
However a unanimous opinion developed in all of these companies that corporate planning in
the shape of long range planning was not working, did not pay off, and was an expensive
investment in futility.
It was widely held that managing change and setting realistic objectives which carry the
conviction of those responsible was difficult and often resulted in questionable compromises.
The fact remained, despite the corporate and long range planners, that the one and only
missing link was how to get the management team agreed and committed to a comprehensive
set of action programmes.
To create this link, starting in 1960, Robert F Stewart at SRI in Menlo Park California lead a
research team to discover what was going wrong with corporate planning, and then to find
some sort of solution, or to create a system for enabling management teams agreed and
committed to development work, which today we call 'managing change'.
The research carried on from 1960 through 1969. 1100 companies and organizations were
interviewed and a 250-item questionnaire was designed and completed by over 5,000
executives. Seven key findings lead to the conclusion that in corporations chief executive
should be the chief planner and that his immediate functional directors should be the planning
team. Dr Otis Benepe defined the 'Chain of Logic' which became the core of system designed to
fix the link for obtaining agreement and commitment.
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1. Values
2. Appraise
3. Motivation
4. Search
5. Select
6. Programme
7. Act
8. Monitor and repeat steps 1 2 and 3
We discovered that we could not change the values of the team nor set the objectives for the
team so we started as the first step by asking the appraisal question ie what's good and bad
about the operation. We began the system by asking what is good and bad about the present
and the future. What is good in the present is Satisfactory, good in the future is an Opportunity;
bad in the present is a Fault and bad in the future is a Threat. This was called the SOFT analysis.
When this was presented to Urick and Orr in 1964 at the Seminar in Long Range Planning at the
Dolder Grand in Zurich Switzerland they changed the F to a W and called it SWOT Analysis.
SWOT was then promoted in Britain by Urick and Orr as an exercise in and of itself. As such it
has no benefit. What was necessary was the sorting of the issues into the programme planning
categories of:
1. Product (what are we selling?)
2. Process (how are we selling it?)
3. Customer (to whom are we selling it?)
4. Distribution (how does it reach them?)
5. Finance (what are the prices, costs and investments?)
6. Administration (and how do we manage all this?)
The second step then becomes 'what shall the team do' about the issues in each of these
categories. The planning process was then designed through trial and error and resulted finally
in a 17 step process beginning with SOFT/SWOT with each issue recorded separately on a single
page called a planning issue.
The first prototype was tested and published in 1966 based on the work done at 'Erie
Technological Corp' in Erie Pa. In 1970 the prototype was brought to the UK, under the
sponsorship of W H Smith & Sons plc, and completed by 1973. The operational programme was
used to merge the CWS milling and baking operations with those of J W French Ltd.
The process has been used successfully ever since. By 2004, now, this system has been fully
developed, and proven to cope with today's problems of setting and agreeing realistic annual
objectives without depending on outside consultants or expensive staff resources.
The seven key research findings

The key findings were never published because it was felt they were too controversial. This is
what was found:
1) A business was divided into two parts. The base business plus the development business.
This was re-discovered by Dr Peter Senge at MIT in 1998 and published in his book the 5th
Dimension. The amount of development business which become operational is equal to or
greater than that business on the books within a period of 5 to 7 years. This was a major
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surprise and urged the need for discovering a better method for planning and managing
change.
2) Dr Hal Eyring published his findings on 'Distributive Justice' and pointed out that all people
measure what they get from their work and divide it by what they give to the work and this
ratio is compared to others. If it is not equal then the person first re-perceives and secondly
slows down if added demands are not met. (See for interest Adams Equity Theory and the
Equity Theory
3) The introduction of a corporate planner upset the sense of fair play at senior level, making
the job of the corporate planner impossible.
4) The gap between what could be done by the organisation and what was actually done was
about 35%.
5) The senior man will over-supervise the area he comes from. Finance- Finance, Engineering-
Engineering etc.
6) There are 3 factors which separate excellence from mediocrity:
a. Overt attention to purchasing
b. Short-term written down departmental plans for improvement
c. Continued education of the Senior Executive
7) Some form of formal documentation is required to obtain approval for development work. In
short we could not solve the problem by stopping planning.
In conclusion
By sorting the SWOT issues into the 6 planning categories one can obtain a system which
presents a practical way of assimilating the internal and external information about the
business unit, delineating short and long term priorities, and allowing an easy way to build the
management team which can achieve the objectives of profit growth.
This approach captures the collective agreement and commitment of those who will ultimately
have to do the work of meeting or exceeding the objectives finally set. It permits the team
leader to define and develop co-ordinated, goal-directed actions, which underpin the overall
agreed objectives between levels of the business hierarchy.
Q. 2) B. Select any firm from manufacturing sector; discuss the general

environment technology to leverage human capital and knowledge?
Answer)
ANALYSIS OF COMPETITION
The third element of Strategic analysis is to look at the competitive environment - what your
Competitors are doing, where the next technological developments are coming from and the
general directions the market is moving.
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Competitive and environmental analysis

A competitive and environmental analysis of your markets should include all the key influencing
factors that affect the way in which you can compete. A competitive review is important for
two reason.
Firstly, even if you know what the customers want and have the resources to meet the
customers' demands, it may be that the competitive environment means that it is not worth
pursuing particular parts of the market for a whole range of strategic reasons, such as the
threat a price war, channel conflict, or legal or ethical considerations.
Secondly, you need to know if your competitors are doing things better than you are, or more
dangerously, whether they are looking to change the basis of competition in the market, for
instance by moving to a direct sales model, or by introducing some revolutionary new product
or technology.
The main types of competitive analysis from a strategic point of view are:
"The Five Forces"
Benchmarking and competitive evaluation
Market Intelligence is the primary mechanism for gathering information about competitors
(although some may come from talking to customers in your own market surveys). Notanant is
our on-line market knowledge system for collecting, sharing and managing customer and
competitor knowledge provided by Gegen CIS.
Five forces
The five forces come from Porter's famous framework and are:
Power of Buyers
Power of Suppliers
Threat of substitutes
Barriers to entry
Competitors
The idea is that change in your market is likely to come as the basis of one of these five areas.
For instance, buyers may distort the market by forcing prices down, or by deciding to take build
products in-house.
In considering how these "forces" act on your markets, you get a picture of issues such as
channel conflict, threats from vertical integration, the impact of regulatory change or the
advent of new technology. You can also take a view as to how you are or can affect the
competitive situation for your own benefit, rather than statically accepting the status quo.
Consequently it becomes possible to play around with different future competitive scenarios
and to use these to test different propositions to try and guess how the market will change.
Your strategy can then include contingencies and responses to changes that might affect you,
or changes that you might make to the market.
BENCHMARKING
Benchmarking is used to ascertain how well you are doing against the competition. Are there
areas that you can learn from the competition? Are there ideas in markets outside your own
that would be worth bringing into your market to give you a competitive advantage?
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Your competitors can also be a source for information about the general market. Their
advertising and marketing is telling you something about the messages and approaches that
they think are applicable to your market. If they have done their research, you can learn from
their approaches.
One common issue that comes from looking at the competition is what do you do about it? The
options are:
Ignore
Fight
Adopt
In practice, if there is merit in something new and you ignore it, it is likely to bite you later. If
you fight against it, you add to your costs potentially just to save market share, rather than to
win market share.
Consequently often adoption of the competition's good ideas is the best way forward (although
perhaps after a little fighting to test whether the ideas are sound). Microsoft's Embrace and
Extend and Intel's "Only the Paranoid Survive" are good examples of companies that use the
competition to keep their products at the cutting edge.
Often there can internal cultural issues that mean this can be difficult to accept. But learning
from the competition, doesn't mean following the competition. This approach, known as an
"invest in your threats" strategy, can be an extremely effective way of keeping up with and
ahead of the market.
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Q3: Suppose you are running a large scale business organization, how will you
use the technology to leverage human capital and knowledge?
Answer)
Businesses are racing to gain and sustain advantage in today's globally competitive business
environment. Digital age technology is rapidly shifting where and how business is done. The
pressure for profitability, to decrease the cost of production and increase revenues, fuels the
need to leverage all of the sources of capital a company can access--including human capital.
HR's response has been to become HR strategic business partners. This is a great and necessary
step, but the stakes are high and we need to shift gears faster--and think bigger! Either we
move up the business value chain, or we slide down it driven by the twin and intertwined forces
of technology and outsourcing that are already reshaping HR.
The term human capital management (HCM) is entering our lexicon of change. Most use the
term interchangeably with HR, but HCM can and should be more than HR with a new name.
HCM is a C-suite business discipline that develops enterprise human capital strategies and
ensures the human capital portfolio is effectively managed. Just as the chief financial officer
(CFO) is a full senior partner in identifying and solving business issues from a financial
perspective, the chief human capital officer (CHCO) is a full senior partner in identifying and
solving business issues from a human capital perspective. As C-suite members, the CFO and
CHCO are accountable for overall enterprise performance. Both also have responsibilities for
enabling business operations and the performance of their organizations.
HCM provides decision support by combining business and workforce intelligence to the
development of enterprise human capital strategies: how to leverage people and their ideas
effectively to achieve bottom-line business goals such as growing the business, increasing
market share, margins, share price, and decreasing SG&A costs, as well as improving business
processes, benefiting from technology investments, and increasing productivity.
The future of HR and the emergence of HCM are big topics. In this article we touch on a few
starter points, hoping to open up further dialogue.
Human Capital Management--Strategic Domains
Leadership Capital: Executive performance and credibility
Structural Capital: Governance, business structure, processes, and technology
Workforce Capital: Employees, contingent labor, outsourcers, suppliers, and partners
Cultural Capital: Ethics, values, relationships, and reputation
Intellectual Capital: Innovations, inventions, and knowledge management
Leadership Capital: Strategy
Determining strategies for growth is a significant component of leadership performance.

Growing the business is as much a human capital decision as it is a product/service and financial
decision. Organic growth through extending existing products, adding new products, opening
sales channels or expanding into new markets requires human capital resources. HCM
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considers the state of the enterprise innovation engines, SG&A impact, and the leadership and
workforce options and costs of expanding and operating in new channels, markets, or
geographies.
Perhaps it is time to "buy" growth through a merger or acquisition (M&A). Have you noticed
when a major M&A deal is initially announced the stock of the acquired company usually goes
up and the stock of the acquiring company goes down? Shareholder skepticism is justified, as
many mergers do not produce all the promised results. The wheeling and dealing of an M&A is
heady, but the aftermath is often simply a headache. If the M&A value proposition is based on
anything more than merely buying the tangible book value assets and market footprint, then
increased HCM due diligence and preplanning for the post merger integration is critical before
deal fever kicks in.
STRUCTURAL CAPITAL: GOVERNANCE

Operating structure and governance exist to facilitate achievement of the business goals in the
current environment and at each stage of the business life cycle. To be public or private,
centralized, decentralized, or a holding company should be based on how well the needs of the
business are met now, not on just the preferences of the current management team or what
worked in the past.
Structuring the board and senior leadership team, defining management roles and
responsibilities, designing total executive compensation packages and employment contracts
are among the most powerful domains of HCM, and are currently under intense public and
stakeholder scrutiny.
Public companies need a balance of internal power and controls between the C-suite members
and the board of directors. Without better corporate discipline, plenty of regulatory and
legislative bodies are ready to step in with more regulations and legislation, and overreaching
requirements, like Sarbanes Oxley, will continue to drive up compliance costs. Part of that
balance could be a strong CHCO backed by a professional body of HCM ethics and standards.
Workforce Capital Strategy and structure are only as valuable as the results produced. The
"make vs. buy" decision extends to more than products and services. An employee-based
workforce is only one of today's many choices. HCM critically assesses the competitive
advantage of any work done in-house and explores an extended workforce portfolio to
determine the optimum mix of full- and part-time employees, contingent workers, outsourced
work, and suppliers or partners.
HCM includes influencing external workforce sourcing, contracting, and management to ensure
vendor capabilities and controls in areas such as training, turnover, and incentive transparency,
in addition to competitive pricing and service levels.
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In telecommunications, when a telemarketer's employees make bad sales in your name

("slamming"), it is your company that will be in the news and pay fines to regulatory agencies. If
your customer care outsourcer has poor training and high turnover, your company's customers
will be dissatisfied and perhaps lost. In business process outsourcing (BPO), you are buying
performance and results; you are not managing the vendor's processes, but you do need to
know that they are!
Offshoring work? HCM goes beyond labor arbitrage to review the decision drivers and business
implications of where work is done. Would an offshore investment add needed HCM capability
and flexible capacity? Would you recommend expansion via a "captive," an acquisition, or an
outsourcer? Do the risk management calculations of using a low-cost country and weigh the
business impact of outsourcing back office, mid office, and front office work.
The question must be asked: Why use people at all? HCM looks for cost-effective technology to
enable direct access and self-service across the value chain. Technology displacement of labor is
a fact of life in most industries (including HR). Use people where complexity, judgment, and
personal interaction add competitive advantage. Get ahead of the curve by ensuring technology
investments are made in alignment, managing the total cost of labor and the value propositions
of the business.
CULTURAL CAPITAL
Now more and more of a company's market value is in "intangibles" rather than book value.
Today's performance results and tangibles such as cash and inventory on the balance sheet are
easy to understand, measure, and manage--at least easier than concepts that drive stakeholder
actions founded on beliefs about the future. Belief in the sustainability of profitable growth and
competitive advantage drives much of the intangible market value. Perceptions about culture,
operational values, ethics, and behaviors of the leaders and the workforce influence customer,
investor, and employee decisions.
Effective cross-functional and organizational collaboration can increase speed to market and in
turn support external brand reputation. Cultural fit supports strategic alignment and
interdependence of action across increasingly diverse people and places, businesses and supply
chains. Cultural compatibility between alliance partners, or the talent acquired in an M&A, may
mean the difference in finishing first or worst.
Intellectual Capital
Human capital management is about people and their ideas, and the capability to leverage both
in achieving business strategies and goals. A great salesperson is a valued asset. But one
salesperson can only reach and serve so many clients, no matter how capable. People have
built-in capacity constraints. If you leverage the learning and competencies of the one to train
others or to improve staffing selection criteria, you can achieve a greater level of performance
for many.
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The common thread across income from patents and new products, proprietary processes that
enable competitive advantage (think Wal-Mart and eBay), or operational efficiencies that
increase productivity and reduce expense is people and the leveraging of their ideas to increase
transferable knowledge, repeatable results, and sustainable advantage.
What HCM Brings to the Table

Human capital decisions are made all the time in businesses. Why add HCM as a discipline?
Because a series of scattered one-off decisions may suboptimize the overall workforce
portfolio, and missteps with people in one area often have negative public consequences for
the whole company. The CHCO does not own or make sole decisions in every area mentioned.
The key is to have the enterprise HCM strategic view and management of the total cost of
human capital led by a responsible and accountable senior leader with the authority of a C-suite
seat at the CEO's table.
HCM strategic decision support requires extensive authoritative external and internal business
and workforce intelligence with a credible understanding of business financials and operations.
The CHCO should be the first and most informed source of what is going on externally with the
world of work related to your company, competitors, and industry. Internal business
intelligence requires data mining, metrics, and analytics. HR is too often well back in the pack in
terms of producing metrics at the business impact level. It is hard to have business intelligence
without intelligent IT systems and the analytic capabilities to interpret the data. When
upgrading the enterprise ERP or the internal HR technology infrastructure, or embarking on
comprehensive platform outsourcing, be sure to design in (and invest in) the diagnostic and
reporting capabilities to identify, analyze, and measure performance of the enterprise's use of
human capital.
Where Does HR Fit? The Push and the Pull

We have been looking at the pull: the strategic aspects and advantages to be gained, such as
business growth, improved productivity, and profitability. Leadership development and
succession planning, talent management, performance management, employee development,
compensation, and benefits are as important as ever. Depending on the company and culture,
the HCM elements may be led by HR, or the CHCO may be a separate office.
The push is on as well. HR technology that enhances employee and manager self-services at less
total cost is a win for our clients and customers, and HR outsourcing is an increasingly viable
option. But if HR technology is selected piecemeal and if outsourcing is based only on cost
cutting, you may end up perpetuating treatment of HR as a cost center to be driven down to
the lowest cost. Done well, technology and outsourcing (or a centralized shared services center)
will free up more of HR to be strategic business partners. But time availability does not equal
HCM capability. These twin forces will better serve HR and our businesses if they are part of an
overall HR strategy and transformation plan.
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HCM is about the enterprise, about human capital options expressed in dollars and data. This is
a hot-seat position, not one for the faint of heart. Nor is it a position for a cold, numbers-only
bottom liner. Each race is run and won, or lost, with real people with real lives. Trading the car I
drive does not hurt the feelings of the car--I have no obligation to it. Cutting jobs, adding jobs,
investing in a global extended workforce all carry obligations--moral, financial, legal, political--
and the entire enterprise network of customers, employees, shareholders, and communities
may be affected.
HCM is a cross-functional, cross-enterprise leadership discipline with oversight and decision-

making responsibility and accountability. It requires business and financially savvy, technology-
aware, data-embracing, senior leaders who bring strategic human capital expertise, business
intelligence, and judgment to the C-suite table.
There is much overlap with HR, but there is a core difference. Today's HR concentrates on
employees and not enough on the broader workforce and issues that impact the enterprise's
success. HCM increases the scope to include all of the sources of human capital, wherever they
reside in the human capital value chain.
The good news is that HCM is not yet fully defined. We can define it, shape it, and bring it into
creation--if we shift gears faster and think bigger!
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Q4: For any government Organization in Pakistan, What will be the challenges
and implications for the strategy development of Human Resource
Management? Discuss in detail.
Answer)
INFORMATION AND SERVICES

Government of Pakistan provides services in almost all departments of life. This section is about
facilitating citizen access to public services in a way that is significantly more convenient than what has
traditionally obtained. It is dedicated to the management of information and services related to
different departments of the country.
The section provides accurate information on government policies, programmes, services and activities,
with a view to generating public support for these government policies, programmes, services and
activities, thereby creating the environment of mutual success.
Why is HRM Strategy needed?

The HRM Strategy is the basic document of the HRM Function, which describes the desired
state of the human capital in the organization and the desired state of the HRM Function.
The HRM Strategy has to be developed based on the overall business strategy and it has fully
followed the main initiatives included in the business strategy. The HRM Management Team
has to focus on the clear design and definition of the HRM Strategy.
The HRM Strategy has two main goals:
• Helping the organization to understand to the priorities and initiatives of the HRM Function;
• Helping to the employees of the HRM Function to prioritize the activities of the function.
The HRM Strategy is the main document to make a good promotion of the initiatives and plans
of the HRM Function among the management population in the organization. The HRM
Strategy defines the final desired state of the HRM Function and the way how to get there.
The managers can support the initiatives of the HRM Function when they fully understand the
whole concept and can provide the employees with the correct explanation. The managers
cannot support any activities, when they do not know or understand the next steps to be taken.
The HRM Employees need the same as the managers. The HRM Strategy provides HRM
Employees with the common basis for the discussions with the employees, managers and other
members of the HRM Team. The employees of the HRM have to find their place in the HRM
Strategy and their own possible contribution. The employees of the HRM Function can use the
HRM Strategy as the basis for their own development and the possibility to find the gaps in
their skills and competencies.
The main role of the HRM Strategy is to provide the basis for the decision making in the HRM
Function, but the role of the main communication tool of the HRM Function is also very
important.
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SUCCESSFUL HR STRATEGY
HR Strategy is a much misused term in many HRM Departments. HR Strategy is the basic
document for Human Resources demonstrating the most important goals in the future. It is
derived directly from the Business Strategy and must be agreed by the top management of the
company.
HR Strategy is a document to show the employees in HRM and the rest of the organization the
main imperatives and key initiatives of Human Resources to be achieved and how they will
impact the whole organization.
HR Strategy can be completely new and innovative, but many times the HR Strategy uses the
basic blocks, which can be found on the market and putting just different priorities. Generally,
there are about 10 different HR Strategies, which are used and the priorities and initiatives
differ.
Also, the HR Strategy is very dependant on the sector, in which the organization operates. The
manufacturing company can have very different HR Strategy from the financial institution.
HRM STRATEGIC CHALLENGES

The HRM Function has some strategic challenges, which will affect the whole organization in
the future. The strategic challenges will change the organization of the HRM Function and its
role in the organization.
The current role of the HRM Function is about providing services to the organization and the
managers are clear clients of the HRM Processes. The HRM Function usually do not provide
challenging questions and initiatives to the organization and the business leaders do not have
to worry about the HRM Function as the salaries are paid correctly at every pay date defined by
the organization.
The main HRM Strategic Challenges can be defined in four main areas:
• Leadership Development;
• Management Development;
• Globalization;
• Outsourcing.
•
The Leadership Development is one of the biggest HRM Challenges. The leadership
development is the only way to secure the organization for the future. The supply of the
leaders is very limited and the organization has to focus on the growth of the potential available
inside the organization. The HRM Function has to take the responsibility for the initiatives to
identify and grow the potential inside the organization and to secure the best potential to stay
in the organization. The leadership development initiatives are extremely costly, but the
organization has to recognize the need to invest in such initiatives. This is a major HRM
Challenge.
The line management is another HRM Challenge. The line management is the main user and
client of the HRM Value Added processes and they have to be able to use the processes
correctly. The HRM Function can be seen as the enemy, but the HRM Challenge is to develop
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and train the line management in the daily usage of the value added HRM Processes to make
the organization more efficient.
The globalization is another HRM Challenge. The HRM Function has to make its policies,
procedures and processes to work on the global level. Currently, most of the HRM Policies is
focused on the concrete country, but the employees have to start to move from the country to
another country and the HRM Processes have to be able to support such a need in the
organization. The globalization has a huge impact on the HRM Function and the it is usually not
ready to take more responsibility in the movement of the workforce around the Globe.
The outsourcing is the main issue for the HRM Function. The HRM Function has to be able to
outsource its non-core services for the organization and it has to be able to keep the service
level for the organization. The outsourcing HRM Challenge is pretty huge as it requests a lot of
standardization and practice from the HRM Function.
IMPACT OF CORPORATE CULTURE ON HR STRATEGY

Corporate Culture is one of key elements for Human Resources. Corporate Culture is a very
difficult complex of corporate values, decision processes and human behavior in each
organization.
Generally, the Corporate Culture consists of 4 main building blocks:
• The attitudes,
• Experiences,
• Beliefs.
• Values
The Corporate Culture is not born, it evolves and develops over a longer period of time and it is not
created by the single person. The corporate culture forms the norms in the organization. The corporate
culture is the most important aspect, when evaluating the formal and informal decision processes in
different organizations. The corporate culture with the stress on informal behavior of employees will
definitely lead to less formal decision processes and will support the quick reaction to the external
changes on the market.
It is not possible to say, that one Corporate Culture is better than the other one. Each Corporate
Culture is very unique and the external observer can just make a judge about the general
approach and stresses inside the corporate culture.
HRM is responsible for recognizing the competitive advantages in the corporate culture. On the
job market the corporate culture can be an excellent opportunity for the company to differ
from the competitors. In case the other competitors are really formal companies, the informal
company can win a lot of excellent candidates, just based on the fact of the informal corporate
culture.
HRM is many time responsible for corporate culture, but this is a nonsense. The corporate
culture is not set by Human Resources and it is not set by any internal procedure. The corporate
culture is set by the behavior of top management and the potential change of the corporate
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culture is a very long run, which fails many times as the top management does not demonstrate
the will to change the corporate culture by its own decisions and examples.
For Human Resources the corporate culture is a huge challenge to adjust its own behavior and
style – internally and externally. The corporate culture is in many cases the most important
factor to sell the organization as the best employer in the neighborhood. For HRM, the
corporate culture is a very important input for setting the HR Strategy.
THE ORGANIZATIONAL CLIMATE
The organizational climate was defined by two psychologists ... Litwin and Stringer. Later Mr.
McClelland redefined their original version of the theory of the organizational climate.
The whole concept of the organizational climate refers to the main 6 key factors of the working
environment.
Generally, the organizational climate is not a topic to ignore in the serious business discussions
as the studies conducted bring the amazing results. The organizational climate has the overall
impact of 33, 3% on the success of the organization in the changing world around us.
The 6 key factors of the Organizational Climate
The organizational climate has 6 key elements:
• Flexibility – how free the employees are to innovate
• Responsibility – degree to which the employees feel free to work without asking for the
permission and guidance from the manager
• Standards – the sign the organization emphasizes the excellence, that the goals for the
employees are really high but attainable
• Rewards – the employees have to receive regular feedback and that they are rewarded
accordingly
• Clarity – the employees know, what is expected from them and how their efforts relate to the
organizational goals
• Team Commitment – the employees have to know they belong to the winning team or the
winning organization and that all of the employees work towards the same goals or objectives.
The Organizational Climate Paradox

The manager or the leader cannot fulfill all the 6 key elements immediately. But out of 6 key
elements of the organizational climate, the three ones are really key from the real beginning:
• Standards
• Clarity
• Team Commitment
When these three elements are not met, the motivation of employees is lost and the position
of the manager is in the danger as the team can start the search for the informal leader. Also,
you can read more about the corporate culture as this is also very important for the
organizational climate.
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Q. 5: (A) How an International organization develop its different strategies?

Explain the factors effecting international strategies.
Answer)
Globalization was the buzzword of the 1990s, and in the twenty first century, there is no
evidence that globalization will diminish. Essentially, globalization refers to growth of trade and
investment, accompanied by the growth in international businesses, and the integration of
economies around the world. According to Punnett (2004) the globalization concept is based on
a number of relatively simple premises:
o Technological developments have increased the ease and speed of international communication
and travel.
o Increased communication and travel have made the world smaller.
o A smaller world means that people are more aware of events outside of their home country,
and are more likely to travel to other countries.
o Increased awareness and travel result in a better understanding of foreign opportunities.
o A better understanding of opportunities leads to increases in international trade and
investment, and the number of businesses operating across national borders.
o These increases mean that the economies around the world are more closely integrated.
Managers must be conscious that markets, supplies, investors, locations, partners, and
competitors can be anywhere in the world. Successful businesses will take advantage of
opportunities wherever they are and will be prepared for downfalls. Successful managers, in
this environment, need to understand the similarities and differences across national
boundaries, in order to utilize the opportunities and deal with the potential downfalls.
The globalization of business is easy to recognize in the spread of many brands and services
throughout the world. For example, Japanese electronics and automobiles are common in Asia,
Europe, and North America, while U.S. automobiles, entertainment, and financial services are
also common in Asia, Europe, and North America. Moreover, companies have become
transnational or multinational-that is, they are based in one country but have operations in
others. For example, Japan-based automaker Honda operates the largest single factory in the
United States, while U.S. based Coca-Cola operates plants in other countries including France
and Belgium—with about 80 percent of that company's profits come from overseas sales.
During the early1990s, there were reasons to feel that globalization was working. The economic
success of Singapore, the rapid economic growth in the Asian Tigers (as the Asian countries that
grew rapidly were called), the industrializing of countries, such as Brazil and Mexico, and a
variety of other positive economic events around the world suggested that the results of
globalization were indeed good for development in poorer countries, as well as in richer ones.
During the 1990s, the United States experienced one of its most sustained periods of growth as
well, and there was much talk of a "new economy", based on globalization, which was immune
to economic shocks and recession.
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Unfortunately, this rapid growth was not without consequences. The Seattle meetings of the
World Trade Organization turned into a fiasco, with anti-globalization groups demonstrating
against globalization on all fronts—from animal rights to environmental concerns, poverty
alleviation, and jobs for Americans. The anti-globalization forces have not coalesced into a
coherent whole because they represent such diverse and often contradictory views. The
vehemence of their protests, however, makes it clear that globalization is not a panacea for the
world's problems. In addition, the Asian Tigers suffered major economic setbacks in the late
1990s. In 2002, Argentina's economy, which had been one of the stars of the 1990s, crashed,
when the country could no longer maintain its currency at par with the U.S. dollar.
Further problems occurred in the Triad economies. Japan, Europe, and the United States, often
referred to as the Triad, dominated international trade and investment for much of the second
half of the twentieth century. The Japanese economy went into a severe period of recession
and deflation in the late 1990s, and in 2001 both the European and the U.S. economies took a
downward turn as well. In turn, the rest of the world was negatively affected by the economic
situation in the Triad. The terrorist attacks in the United States in September, 2001,
exacerbated this already negative economic situation.
In developing appropriate global strategies, managers need to take the benefits and drawbacks
of globalization into account. A global strategy must be in the context of events around the
globe, as well as those at home.
International strategy is the continuous and comprehensive management technique designed

to help companies operate and compete effectively across national boundaries. While
companies' top managers typically develop global strategies, they rely on all levels of
management in order to implement these strategies successfully. The methods companies use
to accomplish the goals of these strategies take a host of forms. For example, some companies
form partnerships with companies in other countries, others acquire companies in other
countries, others still develop products, services, and marketing campaigns designed to
32/43
Table: 1 Differences between Domestic and International Strategy
Domestic Conditions Global Conditions
Factors
Culture Homogeneous Heterogeneous
Currency Uniform Different currencies and exchange rates
Economy Stable and uniform May be variable and unpredictable
Government Stable May be unstable
Labour Skilled workers available Skilled workers may be hard to find
Language Generally a single language Different languages and dialects
Marketing Many media, few restrictions May be fewer media and more restrictions
Transport Several competitive modes May be inadequate
Source: World Bank

Appeal to customers in other countries. Some rudimentary aspects of international strategies
mirror domestic strategies in that companies must determine what products or services to sell,
where and how to sell them, where and how they will produce or provide them, and how they
will compete with other companies in the industry in accordance with company goals.
The development of international strategies entails attention to other details that seldom, if
ever, come into play in the domestic market. These other areas of concern stem from cultural,
geographic, and political differences. Consequently, while a company only has to develop a
strategy taking into account known governmental regulations, one language (generally), and
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one currency in a domestic market, it must consider and plan for different levels and kinds of
governmental regulation, multiple currencies, and several languages in the global market.
The most recent wave of globalization by U.S. companies began in the 1980s, as companies
began to realize that concentrating on the domestic market alone would lead to stagnant sales
and profits and that emerging markets offered many opportunities for growth. Part of the
motivation for this globalization stemmed from the lost market share in the 1970s to
multinational companies from other countries, especially those from Japan. Initially, these U.S.
companies tried to emulate their Japanese counterparts by implementing Japanese-style
management structures and quality circles. After adapting these practices to meet the needs of
U.S. companies and recapturing market share, these companies began to move into new
markets to spur growth, enable the acquisition of resources (often at a cost advantage), and
gain competitive advantage by achieving greater economies of scale.
The globalization of U.S. companies has not been without concerns and detractors. Exporting
U.S. jobs, exploiting child labor, and contributing to poverty have all been charges laid at the
doors of U.S. companies. These charges have been accompanied by demonstrations and
consumer boycotts.
Nor have U.S. companies been the only ones affected. Companies in the rest of the developed
world have globalized along with U.S. companies, and they have also faced the sometimes
negative consequences.
Interestingly, in the late twentieth and early twenty-first century, there has also been a growth
in international companies from developing and transitional countries, and this trend can be
expected to continue and increase. Exports and investment from the People's Republic of China
are a notable example, but companies from Southeast Asia, India, South Africa, and Latin
America, to name some countries and regions, are making themselves known around the
world.
TYPES OF GLOBAL BUSINESS ACTIVITIES

Businesses may choose to globalize or operate in different countries in four distinct ways:
through trade, investment, strategic alliances, and licensing or franchising. Companies may
decide to trade tangible goods such as automobiles and electronics (merchandise exports and
imports). Alternatively, companies may decide to trade intangible products such as financial or
legal services (service exports and imports).
Companies may enter the global market through various kinds of international investments.
Companies may choose to make foreign direct investments, which allow them to control
companies and assets in other countries. In addition, companies may elect to make portfolio
investments, by acquiring the stock of companies in other countries in order to gain control of
these companies.
Another way companies tap into the global market is by forming strategic alliances with
companies in other countries. While strategic alliances come in many forms, some enable each
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company to access the home market of the other and thereby market their products as being
affiliated with the well-known host company. This method of international business also
enables a company to bypass some of the difficulties associated with internationalization such
as different political, regulatory, and social conditions. The home company can help the
multinational company address and overcome these difficulties because it is accustomed to
them.
Finally, companies may participate in the international market by either licensing or franchising.
Licensing involves granting another company the right to use its brand names, trademarks,
copyrights, or patents in exchange for royalty payments. Franchising, on the other hand, is
when one company agrees to allow a company in another country to use its name and methods
of operations in exchange for royalty payments.
OVERVIEW OF INTERNATIONAL STRATEGY DEVELOPMENT

Generally, a company develops its international strategy by considering its overall strategy,
which includes its operations at home and abroad. We can consider four aspects of strategy: (1)
scope of operations, (2) resource allocation, (3) competitive advantage, and (4) synergy. The
first component encompasses the geographic locations—countries and regions—of possible
operations as well as possible markets or niches in various regions. Since companies have
limited resources and since different regions offer different advantages, managers must select
the markets that offer the company the optimal opportunities.
The second component of the global strategy focuses on use of company resources so that a
company can compete successfully in the chosen markets. This component of strategy planning
also determines the relative importance of various company functions and bases the allocation
of resources on the relative importance of each function. For instance, a company may decide
to allocate its resources based on product lines or geographical locations.
Next, management must decide where the company can achieve competitive advantage over
other companies in the industry. Management can identify their competitive advantage by
determining what the company does better (or can do better) than its competitors. Companies
may realize this advantage through a host of techniques such as using superior technology,
implementing more efficient organizational practices and distribution systems, and cultivating
well-known brands. This component of the strategy involves not only identifying existing or
potential areas of competitive advantage but also developing a plan for sustaining areas of
competitive advantage. Finally, global strategy should involve establishing a plan for the
company that enables its various functions and operations to benefit one another. For example,
a company can use one line of products to encourage sales of another line of products and
thereby enabling different parts of a business to benefit from each other.
Many companies are now outsourcing many of their operations internationally. For example, if
you call to get information on your credit card, you may well be talking to someone in India or
Mexico. Equally, manufacturers often outsource production to low labor cost countries.
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Concerns over ethical issues, such as slave and child labor, have led to companies outsourcing
under controlled conditions—offshore production may be subject to surprise visits and
searches and outsourced factories are required to conform to specific criteria.
Stages of International Strategy Development

Strategy development itself generally takes places in two stages: strategy formulation and
strategy implementation. When planning a strategy, companies identify their international
objectives and put together a strategy that will enable them to realize their goals. During the
planning stage managers propose, revise, and finally ratify plans for entering new markets and
competing in them.
After a strategy has been agreed on, managers must take steps to have it implemented.
Consequently, this stage involves determining when to begin global operations as well as
actually starting operations and putting into action the other components of the global
strategy.
More specifically, the first stage—strategy formulation—entails analysis of the company and its
environment, establishing strategic goals, and developing plans to achieve goals as well as a
control framework. By assessing itself and the global business environment, a company can
determine what markets, products, services, etc. offer opportunities for growth. This process
involves the collection of data on a company and its environment, including information on
global markets, regulation, productivity, costs, and competitors. Therefore, the collection of
data should supply managers with economic, financial, political, legal, and social information on
various countries and their markets for different products or services. Based on this
information, managers can determine what markets and products offer economically feasible
opportunities for global expansion.
Once this analysis is complete, managers must establish strategic goals, which are the
significant goals a company seeks to achieve through a particular pursuit such as entering a new
regional market. These goals must be practicable, measurable, and limited to a specific time
frame. After the strategic goals have been established, companies should develop plans that
allow them to accomplish their goals, and these plans should concentrate on how to implement
strategic plans. Finally, strategy formulation involves a control framework, which is a process
management uses to help ensure that a company remains on the right course when
implementing its strategic plans. The control framework essentially responds to various
developments while the strategic plans are being implemented. For example, if sales are lower
than the projected sales that are part of the strategic goals, then a company might increase its
marketing efforts and temporarily lower its prices to stimulate additional sales.
International Market Evaluation

While many aspects of international strategy and its formulation are similar to their domestic
counterparts, some key aspects are not, and hence call for different methods and different
kinds of information. Gaining knowledge of international markets is one of these key
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differences—and a crucial part of developing an international strategy. In order for a company

to enter a new market, capture market share, and thereby increase sales and profits, it must
know what that market is like. At a basic level, a company must examine different markets,
evaluate the advantages and disadvantages of entering each, and select only the markets that
show the greatest potential for entry and growth.
When examining different international markets, a company should consider the market
potential, competition, regulation, and cultural factors of each. Company managers can assess
market potential by collecting data on the gross domestic product (GDP), per capita GDP,
population, transportation, and other figures of various countries. This kind of information will
enable managers to determine the spending power of the consumers in each country and
determine if that spending power allows them to purchase a company's
Table: 2 Differences between Domestic and International Strategy
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Country GDP per Capita (2003 Estimate in US$)

Luxembourg 55,100
United States 37,800
Norway 37,700
Bermuda 36,000
Cayman Islands 35,000
San Marino 34,600
Switzerland 32,800
Denmark 31,200
Iceland 30,900
Austria 30,000
Products or services. Managers also should consider the currency stability of the different
markets, which can be done by using documents from the home countries to determine
currency value and fluctuation over a period of years.
To select the best markets for entry, managers also should consider the degree of competition
within different markets and should anticipate future competition in them as well. Determining
the degree of competition involves the identification of all the companies competing in the
prospective markets as well as their sizes, market shares, and prices. Managers then should
evaluate a prospective market by considering the number of competitors and their
characteristics as well as the market conditions—that is, whether the market is saturated with
competition and cannot support any new entrants.
Next, managers should evaluate the regulatory environment of the prospective markets, since
knowing tax, trade, and other related policies is essential for a successful international
business. This step entails determining the respective tariffs and trade barriers of prospective
markets. Different types of trade barriers may influence the kind of business activity a company
chooses for a particular market. For example, if a prospective market has trade barriers that
restrict the entry of foreign-made goods, a company might decide to access the market through
foreign direct investment and manufacture its products in that country itself. Ownership
restrictions also may limit a company's interest in a particular market; some countries permit
foreign companies to set up local operations only if they establish a partnership with a local
company. In addition, managers should find out if prospective countries charge foreign
companies higher taxes or if they offer tax breaks and incentive to encourage economic
development. A final consideration companies must make concerning government is stability.
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Since some countries have rough government transitions resulting from coups and uprisings,
companies must countenance the possibility of political turmoil that could substantially disrupt
business.
The last step in international market evaluation is the assessment of cultural factors. To avoid
difficulties associated with cultural differences, some managers look for new markets that have
cultural similarities to their home market, especially for initial international market penetration
endeavors. Unlike market potential, competition, and regulation, cultural differences are more
difficult to evaluate. Nevertheless, managers must try to determine the consumer needs and
preferences in the prospective markets. Managers must also account for cultural differences in
labor relations such as worker motivation, compensation, hours, etc. if planning foreign direct
investment in an overseas company. Moreover, a thorough understanding of a prospective
country's culture will greatly facilitate any kind of global business enterprise. This cultural
knowledge should include a basic understanding of a prospective country's beliefs and
attitudes, language and communication styles, dress, food preferences and customs, time and
time consciousness, relationships, values, and work ethic. This kind of cultural information is
essential for developing an effective and realistic global strategy.
Since conducting primary research is labor intensive and time consuming, managers may obtain
preliminary information on prospective markets from books such as Dun & Bradstreet's Guide
to Doing Business Around the World and Business Protocol: How to Survive and Succeed in
Business, or the Economist's "Doing Business in…" series, which list potential trade
opportunities, policies, etiquette, taxes, and so on for various countries.
After examining the prospective markets in this manner, managers are ready to evaluate the
advantages and disadvantages of each potential market. One way of doing so is the
determination of costs, advantages, and disadvantages of each prospective market. The costs of
each market include direct costs and opportunity costs. Direct costs are those a company pays
when establishing a business in a new market, such as costs associated with purchasing
property and equipment and producing and shipping goods. An Opportunity cost, on the other
hand, refer to the costs associated with the loss of other opportunities, since entering one
market rules out or postpones entering another because of a company's limited resources.
Hence, the profits that could have been earned in the alternative market constitute the
opportunity costs.
Each prospective market usually has a variety of advantages, such as the possibility for growth,
which will lead to greater revenues and profits. Other advantages include relatively low
material and labor costs, new technology gaining strategic advantage over competitors, and
matching competitors' actions. However, each prospective market also usually has a number of
disadvantages, including opportunity costs, greater business complexity, and potential losses
stemming from unforeseen aspects of prospective markets and from currency fluctuations.
Other disadvantages might result from potential losses associated with unstable political
conditions.
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Analysis of Two International Strategies

In the late 1990s after a significant amount of globalization had taken place, business analysts
began to examine the success of various strategies for doing business in other countries. This
examination led to the distinction between various orientations of international strategies. The
main distinction was between multi-domestic (also called multi-local) international strategies
and global strategies. Multi-domestic international strategies refer to those that address
competition in each country or region on an individual basis, whereas global strategy refers to
addressing competition in an integrated and holistic manner across country and regional
boundaries. Hence, multi-domestic international strategies attempt to appeal to the needs of
customers in different countries or regions, while global strategies attempt to standardize
products and marketing to work across boundaries. Instead of relying on one of these
strategies, multinational companies might adopt a different strategy for different products or
services. For example, a company might use a global strategy for its electronics and a multi-
domestic strategy for its appliances.
Critics of the standardization approach argue that it makes two questionable assumptions: that
consumer' needs are becoming more homogenous throughout the world and that consumers
prefer high quality and low prices over advanced features and functions. Nevertheless,
standardized global strategies have some significant benefits. Companies can reduce their
marketing expenditures, for example, if they use the same ads in all their markets. PepsiCo, for
example, uses the same televisions ads in all of its national markets, saving an estimated $10
million a year. Besides marketing savings, global strategies can lead to other kinds of benefits
and advantages in areas such as design, packaging, manufacturing, distribution, customer
service, and software development.
Some people argue that companies must customize their products or services to meet the
needs of various international markets, and hence must use a multi-domestic strategy at least
in part. For example, KFC planned a standardized approach to its foray into the Japanese
market, but the company soon realized it had to change its strategy to meet the needs of
Japanese consumers and customize its operations in Japan. Consequently, KFC introduced
smaller pieces of foods to cater to a Japanese preference, and located restaurants in crowded
areas along with other restaurants, moving away from independent sites. As a result of these
changes, the fast-food restaurant experienced stronger demand in Japan.
The development of regional trading blocs has promoted an emphasis regional strategy as
companies develop plans to take advantage of the conditions within various trading blocs such
as the North American Free Trade Agreement (NAFTA), the European Union, the Asia-Pacific
Economic Cooperation (APEC) and the Association of Southeast Asian Nations (ASEAN). In
addition, the United States has signed 16 different trade agreements with South American
countries, creating a foundation for a trading bloc consisting of all North and South American
countries. Consequently, companies have been establishing regional strategies designed
around these trading blocs. Nike, for example, established central warehouses for its European
distribution, just as it has a central warehouse for its U.S. distribution. This strategy has enabled
40/43
Nike to reduce its inventory, cut down on redundancy, reduce costs, and enhance availability. In
addition, News Corporation originally relied on a global strategy with its STAR-TV satellite
television network; attempting to provide the same television shows across Asia in English. The
company quickly switched to a multi-domestic strategy, providing programming in local
languages after receiving low ratings and advertising dollars with its first approach.
5: (b) Describe the growth of any international business through related

diversification and through unrelated diversification.
Answer)
Diversification is a form of corporate strategy for a company. It seeks to increase profitability

through greater sales volume obtained from new products and new markets. Diversification can
occur either at the business unit level or at the corporate level. At the business unit level, it is
most likely to expand into a new segment of an industry which the business is already in. At the
corporate level, it is generally and it is also very interesting entering a promising business
outside of the scope of the existing business unit.
Diversification is part of the four main marketing strategies defined by the Product/Market
Ansoff matrix:
Ansoff pointed out that a diversification strategy stands apart from the other three strategies.
The first three strategies are usually pursued with the same technical, financial, and
merchandising resources used for the original product line, whereas diversification usually
requires a company to acquire new skills, new techniques and new facilities.
The different types of diversification strategies

The strategies of diversification can include internal development of new products or markets,
acquisition of a firm, alliance with a complementary company, licensing of new technologies, and
distributing or importing a products line manufactured by another firm. Generally, the final strategy
involves a combination of these options. This combination is determined in function of available
opportunities and consistency with the objectives and the resources of the company.
There are three types of diversification: concentric, horizontal and conglomerate:
Concentric diversification
This means that there is a technological similarity between the industries, which means that the firm is
able to leverage its technical know-how to gain some advantage. For example, a company that
manufactures industrial adhesives might decide to diversify into adhesives to be sold via retailers. The
41/43
technology would be the same but the marketing effort would need to change. It also seems to increase
its market share to launch a new product which helps the particular company to earn profit. However,
there's one more example, Addition of tomato ketchup and sauce to the existing "Maggi" brand
processed items of Food Specialties Ltd. is an example of technological-related concentric
diversification.
Horizontal diversification
The company adds new products or services that are technologically or commercially unrelated (but not
always) to current products, but which may appeal to current customers. In a competitive environment,
this form of diversification is desirable if the present customers are loyal to the current products and if
the new products have a good quality and are well promoted and priced. Moreover, the new products
are marketed to the same economic environment as the existing products, which may lead to rigidity
and instability. In other words, this strategy tends to increase the firm's dependence on certain market
segments. For example company was making note books earlier now they are also entering into pen
market through its new product.
Another interpretation
Horizontal integration occurs when a firm enters a new business (either related or unrelated) at the
same stage of production as its current operations. For example, Avon's move to market jewelry
through its door-to-door sales force involved marketing new products through existing channels of
distribution. An alternative form of that Avon has also undertaken is selling its products by mail order
(e.g., clothing, plastic products) and through retail stores (e.g., Tiffany's). In both cases, Avon is still at
the retail stage of the production process.
Conglomerate diversification (or lateral diversification)

The company markets new products or services that have no technological or commercial synergies with
current products, but which may appeal to new groups of customers. The conglomerate diversification
has very little relationship with the firm's current business. Therefore, the main reasons of adopting
such a strategy are first to improve the profitability and the flexibility of the company, and second to get
a better reception in capital markets as the company gets bigger. Even if this strategy is very risky, it
could also, if successful, provide increased growth and profitability.
Why Diversification?
The two principal objectives of diversification are
1. Improving core process execution, and/or
2. Enhancing a business unit's structural position.
The fundamental role of diversification is for corporate managers to create value for stockholders in
ways stockholders cannot do better for themselves1. The additional value is created through synergetic
integration of a new business into the existing one thereby increasing its competitive advantage.
Forms and Means of Diversification

Diversification typically takes one of three forms:
1. Vertical integration – along your value chain
2. Horizontal diversification – moving into new industry
3. Geographical diversification – open up new markets
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Means of achieving diversification include internal development, acquisitions, strategic alliances, and
joint ventures. As each route has its own set of issues, benefits, and limitations, various forms and
means of diversification can be mixed and matched to create a range of options.
Capitalizing on Core Competencies
Your company's core competencies – things that you can do better than your competitors – can often be
extended to products or markets beyond those in which they were originally developed. Such
extensions represent excellent opportunities for diversification.
Any core competence that meets the following three requirements provides a viable basis for your
corporation to create or strengthen a new strategic business unit (SBU):
1. The core competence must translate into a meaningful competitive advantage.
2. The new business unit must have enough similarity to existing businesses to benefit from your
corporation's core competencies.
3. The bundle of competencies should be difficult for competition to imitate.
Case in Point Philip Morris

When it considered diversification targets, Philip Morris believed that the core competence it had
developed in marketing cigarettes could apply to other, similar markets. Based on this belief, the
company purchased Miller Brewing and then used the Philip Morris marketing skills to move the Miller
brand from seventh place to second in its market.
Case in Point Toyota, Nissan, and Honda

In late 1980s, Toyota, Nissan, and Honda moved into adjacent market segments. They launched luxury
cars Lexus, Infinity, and Acura respectively to compete with BMW and Mercedes. The Japanese cars
were priced about one-third lower and had a superior service network. The value proposition was solid
enough to win over potential and current BMW and Mercedes customers, despite the power of their
brands. Yet the Japanese also expanded this profitable segment as a whole
Case in Point GE
Jack Welch transformed GE from a purely manufacturing company into a more diversified company with
an increasingly important service component. In his 1996 annual report, Welch wrote: "Services is so
great an opportunity for the Company that our vision for the next century is GE that is 'a global service
company that also sells high-quality products.'" When asked if GE was going to become a more product-
oriented or service-oriented company, Welch replied, "It's got to be a big combination... It's an
integrated game." In 1996, GE Capital Services earned US$4 billion. In 2005, GE services agreements
increased to $87 billion, up 15% from 2004. In particular, financial services revenues increased 12% to
$59.3 billion.
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REFERENCES:
o www.ehow.com
o www.totalqualitmanagement.com
o www.piqc.com
o www.google.com
o www.wikipedia.com
o www.officemanagement.com
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Business Policy & Managment (887)

Department of Business Administration

Strategic Management (887)

Q. No. 1: Develop your vision and mission statement for an organization of

NATIONAL PUBLIC RADIO PURPOSES:

The priorities of NPR program development:

Philosophically, time is measured by the intensity of experience. Waiting for a bus

By teaching that the constitutional system of the United States guarantees a

He believes the legalistic curriculum should be "balanced if not replaced by emphasis

Television, commercial or noncommercial, says it can attend a hearing without

3. Acquire and produce cultural programs which can be scheduled individually by

The implementation of this priority will provide needed diversity of programming to

In order to provide minorities access to the medium, it is not only important to

6. Establish liaison with foreign broadcasters for a program exchange service.

Although presently overwhelmed by domestic problems, the individual's role as a

economic interdependence among nations makes this area of programming more

Contact can be established with the Canadian Broadcasting Corporation, British

Vision and Mission: Seven Suggestions Why You Need Both

1. The awareness of mission and vision has three major bases:

What exactly are a mission and a vision?

• A mission is what an organization does, its action; a vision is what an

Do we need both a mission and a vision?

Q: 2 a) As a manager of any service organization, how would you identify

a company (its position in the market, commercial viability, etc)

SWOT assessment and implications.

Swot analysis example

More on the difference and relationship between PEST

The origins of the SWOT analysis model

The seven key research findings

Q. 2) B. Select any firm from manufacturing sector; discuss the general

Competitive and environmental analysis

Determining strategies for growth is a significant component of leadership performance.

STRUCTURAL CAPITAL: GOVERNANCE

In telecommunications, when a telemarketer's employees make bad sales in your name

What HCM Brings to the Table

Where Does HR Fit? The Push and the Pull

HCM is a cross-functional, cross-enterprise leadership discipline with oversight and decision-

INFORMATION AND SERVICES

Why is HRM Strategy needed?

HRM STRATEGIC CHALLENGES

IMPACT OF CORPORATE CULTURE ON HR STRATEGY

The Organizational Climate Paradox

Q. 5: (A) How an International organization develop its different strategies?

International strategy is the continuous and comprehensive management technique designed

Table: 1 Differences between Domestic and International Strategy

Domestic Conditions Global Conditions

Transport Several competitive modes May be inadequate

Source: World Bank

TYPES OF GLOBAL BUSINESS ACTIVITIES

OVERVIEW OF INTERNATIONAL STRATEGY DEVELOPMENT

Stages of International Strategy Development

International Market Evaluation

differences—and a crucial part of developing an international strategy. In order for a company

Table: 2 Differences between Domestic and International Strategy

Country GDP per Capita (2003 Estimate in US$)

Analysis of Two International Strategies

5: (b) Describe the growth of any international business through related

Diversification is a form of corporate strategy for a company. It seeks to increase profitability

The different types of diversification strategies

There are three types of diversification: concentric, horizontal and conglomerate:

Conglomerate diversification (or lateral diversification)

Forms and Means of Diversification