Q1. Bring out in a table format the features of certificate of deposits and commercial papers.

Commercial Papers (CPs)

Commercial Papers (CPs) is a type of instrument in money market and it was introduced in Jan 1990. Commercial paper is a short-term unsecured promissory note issued by large corporations. They are issued in bearer forms on a discount to face value. It issued by the corporations to raise funds for a short-term. The maturity period ranges from 30 days to one year. CPs is negotiable by endorsement and delivery. They are highly liquid as they have buy-back facility.

The CPs is issued in denominations of Rs. 5 lakh or multiples of Rs. 5 lakh. Generally CPs is issued through banks, dealers or brokers. Sometimes they are issued directly to the investors. It is purchased mostly by the commercial banks, Non-Banking Finance Companies (NBFCs) and business organisations. CPs is issued in domestic as well as international financial markets. In international financial markets, they are known as Euro-commercial paper.

Certificate of Deposits (CDs)

Certificate of deposit (CDs) is a short-term instrument issued by commercial banks and financial institutions. It is a document issued for the amount deposited in a bank for a specified period at a specified rate of interest. The concerned bank issues a receipt which is both marketable and transferable in the market. The receipts are in bearer or registered form. CDs are known as negotiable instruments and they are also known as Negotiable Certificates of Deposit. Basically they are a part of bank’s deposit; hence they are riskless in terms of payments and principal amount. CDs are interest-bearing, maturity-dated

Q1. Discuss the guidelines for settlement of claims by Insurance company.

General guidelines for claims’ settlement

There are some guidelines that must be followed while settling the claims. These guidelines are general in nature, and are not compiled to be the same always. Therefore, the claim settling authority uses discretion and records reasons.

Appointment of surveyor

The Insurance Act states that surveyor should survey claims above Rs. 20,000. The surveyor’s appointment should be based on the following points:

· The surveyor should have a valid license.

· The surveyor selected should consider the type of loss and nature of the claims.

· Depending on the situation, if technical expertise is required, a consultant having technical expertise assists the surveyor.

· One surveyor can be used for various jobs, if the surveyor’s competence is good for both.

Appointment of investigator

Depending on circumstances, it is necessary to appoint an investigator for verifying the claim version of loss. The appointing letter of the investigator o mentions all the reference terms to perform.

Guidelines for Settlement of Claims by IRDA

1. Proposal for insurance

The proposals for insurance are:

· In all cases to claim insurance, a proposal for grant of cover should be submitted with proof (a written document). But a written proposal form is not required for marine insurance markets.

· Depending on the circumstances of the claim, forms and documents in the grant of cover can be made available in the languages recognised by the constitution of India.

· The prospect is to fill the form of proposal, under the guidance of the provisions of section 45 of the Insurance Act.

Q1. Give examples of various venture capital funds that are present and examples of some business ventures that have been successful with venture capital financing.

 Indian Venture Capital Scenario

In India, the emergence of venture capital companies is a relatively new phenomenon. Until 1985, individual investors and Development Finance Institutions (DFIs) have played the role of venture capitalists in the absence of an organised venture capital industry. During that time entrepreneurs have largely depended on private placements, public offerings and lending by financial institutions. The venture capital phenomenon has arrived at a take-off stage in India with the easy availability of risk capital in all forms. In the earlier stage, it was easy to raise only growth capital but financing of ideas or seed capital is now available after the introduction of venture capital phenomenon. The number of players offering growth capital and the number of investors is rising rapidly.

In India, the concept of venture capital was initiated by the Industrial Finance Corporation of India (IFCI) when it established the Risk Capital Foundation (RCF) to provide seed capital to small and risky projects. However, the concept of venture capital financing first time got statutory recognition in the fiscal budget for the year 1986 to 1987.

The venture capital companies operating at present in India can be divided into four categories based on their mode of promotion. Let us read about each mode.

Promoted by All-India Development Financial Institution (IDFI)

The ICICI provided the required impetus to venture capital activities in India. In 1986 it started providing venture capital finance. In 1998, it promoted with the Unit Trust of India (UTI) and Technology Development and Information Company of India (TDICI) as the first venture capital company registered under the Companies Act, 1956.

The risk capital foundation established by the IFCI in 1975 was converted to Risk Capital and Technology Finance Company (RCTC). The RCTC was established as a subsidiary company of IFCI to provide assistance in form of conventional loans and to give financial support to high technology projects.

Promoted by state level finance institution

In India, the state level financial institutions in some states like Gujarat, Uttar Pradesh have done an excellent job by providing venture capital finance to small scale enterprises.

Promoted by commercial banks

Venture capital funds have been established by their corresponding commercial banks to undertake venture capital financing activity. Examples of these funds are Canbank venture capital fund, State bank venture capital fund, and Grindlays bank.

Private venture capital funds

In India, several venture capital funds have been established to provide funding to various small scale enterprises. Examples of these funds established in India are 20th Century Venture Capital Corporation and Indus venture capital fund.

Q1. What are the features of ADRs and GDRs?

Q1. What are the features of ADRs and GDRs? ADRs and GDRs A Depository Receipt (DR) is a versatile financial security that is traded on a local stock exchange but it represents a security that is issued by a foreign publicly listed company. Two of the most common types of DRs are the American Depository Receipt (ADR) and Global Depository Receipt (GDR).

Q5. Explain double taxation avoidance agreement in detail

Ans:- Double Taxation Avoidance Agreements

Double Taxation Avoidance Agreements

Double taxation relief

Double taxation means taxation of same income of a person in more than one country. This results due to countries following different rules for income taxation. There are two main rules of income taxation (a) source of income rule and (b) residence rule.

As per source of income rule, the income may be subject to tax in the country where the source of such income exists (i.e. where the business establishment is situated or where the asset/property is located) whether the income earner is a resident in that country or not.

On the other hand, the income earner may be taxed on the basis of his residential status in that country. For example if a person is resident of a country, he may have to pay tax on any income earned outside that country as well.

Further some countries may follow a mixture of the above two rules.

5. Write brief note on Business Process Re-engineering.

Business Process Reengineering

Techniques such as Business Process Reengineering (BPR) and balanced scorecard emerged in the 1990s. These techniques influenced the development of various excellence models. The scorecard being the greater BPR brought in an approach called Green Field to redesign the major business processes by challenging basic assumptions and accepting change. The BPR aims at bringing about a change in performance, cost, quality, and customer satisfaction. The balanced scorecard is a measurement system that enables the conversion of strategy into action by identifying the cause and effect relationships that deliver the desired strategic results.

The BPR attempts to link the people dimensions of learning and growth to the process issues of quality and time, then to the customer dimensions of delivery and loyalty and finally to financial outcomes such as return on capital employed (ROCE). Every excellence framework includes this basic conceptual thinking.

With the decline of TQM programmes in some countries, a subsequent quality concept called Six-Sigma saw a drastic increase in application. The concept of Six-Sigma is not new. It can be traced back to Motorola in the early 1980s.

1. Write a note on the following: a. Pareto chart

Pareto Chart

Vilfredo Pareto (1848-1923) discovered that:

· 80% of the wealth in Italy was held by 20% of the population

· 20% of customers accounted for 80% of sales

· 20% of parts accounted for 80% of cost, etc.

These observations were confirmed by Juran (1960) and resulted in what is known as the Pareto Principle.The Pareto Principle states that:

6. Describe the contribution of Genichi Taguchi towards Quality management.

Genichi Taguchi

Genichi Taguchi is a Japanese Statistician and engineer whose concepts only began to make an impact in the West during the 1980s. Genichi Taguchi is well-known for developing a methodology to improve quality and reduce costs, known as the "Taguchi Methods." In this engineering approach to quality control, Taguchi calls for off-line quality control, on-line quality control, and a system of experimental design to improve quality and reduce costs. His main contributions have been to our understanding of what product specification really means for quality and how such specifications can be translated into cost effective production.

Taguchi has made a very influential contribution to industrial statistics. Key elements of his quality philosophy include the following:

· Taguchi loss function, used to measure financial loss to society resulting from poor quality

· The philosophy of off-line quality control, designing products and processes so that they are insensitive ("robust") to parameters outside the design engineer’s control and

· Innovations in the statistical design of experiments

Features of Taguchi’s Contributions

· Taguchi was well known for developing a methodology to improve quality of manufactured goods and to reduce costs. This methodology referred to as ‘Taguchi’s method’ is used as a mechanism for evaluating and implementing improvements in the desired characteristics of products.

Define the term technology. Write a short note on evolution and growth of technology.

Technology

Technology is derived from the Greek word “technologia” in which "techne" means craft and "logia" means saying. On the whole, technology means having the knowledge of making something.

Evolution and Growth of Technology

The history of technology dates back to the time when humans were able to prepare some simple tools with easily available natural resources. History indicates that the advancement in technology had a major leap with the invention of the wheel. From the invention of the wheel, much usage of the technology has started. The technology in all the fields has grown to a larger extent and now we can see the technology involved in almost all the things we use in our daily life.

We know that there are some advanced technologies at present which include the printing press, telephone and Internet which have helped us to communicate all over the globe.

Till now we have mainly concentrated on technology management in general. Now let us learn about technology management in India.

Elucidate a relationship between strategy and data quality.

Correlation Between Strategy and Data Quality

Organisations are turning to be more dependent on data; nearly every modern organisation depends upon data and creates huge quantities of data. So, to meet the requirements of the organisation, a comprehensive data management program is necessary. But data is distinctive from other resources and requires diverse management techniques.

Organisational framework required to tackle the above concerns often does not exist. Hence, it is necessary to develop a comprehensive data quality strategy that can address many of these issues. For example, as with many organisations, formal data quality strategy was not documented for the New Zealand Ministry of Health. A planned data quality framework was later introduced which informed the overall development of a data quality strategy for the Ministry of Health. All results of the development of the strategy were documented for each collection of data. And it enabled internal members to access all the information about data collection. The documents are:

· Guidelines for the usage of data and original purpose for the collection

· Roles and responsibilities

· Results of assessment of collection using data quality framework

What are the maintenance planning principles? How they contribute to the success of planning?

Planning Principles

There are six principles of planning and these are:

1. Organising planning functions with separate responsibility and identity.

2. Making planners to concentrate on future works as one of their primary tasks.

3. Asking planners to maintain simple base files as part of their work systems.

4. Training planners to expertise their job and dictate the job requirements through their dedicated work plans.

5. Helping planners to recognise the skill of the crafts required and arrange.

6. Organising planners to work sample their tasks while execution and hence measure the planning effectiveness.

Let us look into each of these in detail:

1. Organising planning functions with separate responsibility and identity

In this principle, the planning function is organised as a separate function. Personnel who are most experienced and having expertise as craft maintenance crew are selected and assigned to the planning section. This type of selecting within the department and assigning a separate function will further facilitate specialisation not only in planning processes, but also focuses on the future works to be executed.

It is better that these identified Planners report to a different supervisor who will be responsible to providing direction and has an obligation to complete the assigned work in an expeditious manner, with a minimal interruptions.

The planners should engage in

Q1. What are the objectives that are served to an organisation by having a sound Maintenance management department? Explain with an example.

Organisational objectives of maintenance The objective of maintenance is linked to the overall organisational objectives of maximising the productivity and hence the profitability of the organisation. To achieve this, activities of retaining and improving the equipment to an acceptable working condition thus extending the useful life of the equipment is taken care of. The following objectives will be served by a sound maintenance management: · Reduces the loss of productive time to the minimum.

Q.1 What is WTO? Explain its objectives, functions and structure. [10 marks]

WTO was established on 1st January 1995. In April 1994, the Final Act was signed at a meeting in Marrakesh, Morocco. The Marrakesh Declaration of 15th April 1994 was formed to strengthen the world economy that would lead to better investment, trade, income growth and employment throughout the world. The WTO is the successor to the General Agreement of Tariffs and Trade (GATT). India is one of the founder members of WTO. WTO represents the latest attempts to create an organisational focal point for liberal trade management and to consolidate a global organisational structure to govern world affairs. WTO has attempted to create various organisational attentions for regulation of international trade. WTO created a qualitative change in international trade. It is the only international body that deals with the rules of trades between nations.

Objectives and functions

The key objective of WTO is to promote and ensure international trade in developing countries. The other major functions include:

· Helping trade flows by encouraging nations to adopt discriminatory trade policies.

Q.1 What is globalization? What are its benefits? How does globalization help in international business? Give some instances

Globalisation

Globalisation is a process where businesses are dealt in markets around the world, apart from the local and national markets. According to business terminologies, globalisation is defined as ‘the worldwide trend of businesses expanding beyond their domestic boundaries’. It is advantageous for the economy of countries because it promotes prosperity in the countries that embrace globalisation. In this section, we will understand globalisation, its benefits and challenges.

1. International vs. global business

Most of us assume that international and global business are the same and that any company that deals with another country for its business is an international or global company. In fact, there is a considerable difference between the two terms.

International companies – Companies that deal with foreign companies for their business are considered as international companies. They can be exporters or importers who may not have any investments in any other country, apart from their home country.

Global companies – Companies, which invest in other countries for business and also operate from other countries, are considered as global companies. They have multiple manufacturing plants across the globe, catering to multiple markets.

The transformation of a company from domestic to international is by entering just one market or a few selected foreign markets as an exporter or importer. Competing on a truly global scale comes later, after the company has established operations in several countries across continents and is racing against rivals for global market leadership. Thus, there is a meaningful distinction between a company that operates in few selected foreign countries and a company that operates and markets its products across several countries and continents with manufacturing capabilities in several of these countries.

Companies can also be differentiated by the kind of competitive strategy they adopt while dealing internationally. Multinational strategy and global competitive strategy are the two types of competitive strategy.

Q.1 Explain with respect to policies – steps in framing business policy and stages of policy cycle. Will these help in decision making? (10 marks)

Steps Involved in Framing Business Policies

Policy formulation is the process of designing the policy. The major function of designing the policy relies upon the managers. Policy framing is one of the phases of strategic planning in the organisation. It is based on the underlying objectives of the organisation. Framing and monitoring the policy is one of the critical tasks in the organisation.

The process of framing policies consists of the following steps:

— Definition of purpose – The first step towards framing policies includes the process of identifying the objectives and the philosophy of the organisation. The purpose is to select the guidelines for measuring the performance based on the organisation’s strengths and weaknesses, its available resources and the personnel. The basic concept of the business activities is defined in this phase.

Example – The perception of the garment company is to develop the finest cloth at less cost. Adding to such a conceptual view, the company must define the purpose in terms of guidelines needed for measuring the performance and obtaining the desired targets.

— Preparation of strategic intelligence – This step involves analysing the internal environment of the organisation. The strategic intelligence is the process of detailed description of what the company is and assessing its sphere of operations. The prediction of the future happenings including the opportunities and risks must be known because it lays heavy impact on the company’s position in the market.

— Policy alternatives – Alternating policies must be identified and analysed once the objectives of the organisation are defined. The managers recognise the problems faced by the organisation and discover the alternative policies. This step is the central phase of framing a policy. A list of policy alternatives is generated by considering the probabilities of the problems faced by the organisation.

Example – Inventory systems in Das n Das Company

The Das n Das Company invested on control systems to avoid taking decisions on the routine matter regarding the orders, timings of production, etc. In such a situation, many factors are considered by the top level management to increase the production rate and the size of orders. Hence meetings are held to discuss the implementation of the policy that suits the best.

1. Write a note on evolution of Quality.

Evolution of Quality

Before the concepts and ideas of TQM were formalized, much work had taken place over the centuries to reach this stage. This section charts the evolution, from inspection through to the present day concepts of total quality.

2.2.1 Quality in early days

During the early days of manufacturing, an operative’s work was inspected and a decision made whether to accept or reject it. As businesses became larger, so too did this role and full time inspection jobs were created.

Accompanying the creation of inspection functions, other problems arose:

· More technical problems occurred, requiring specialized skills, often not possessed by production workers

· The inspectors lacked training

· Inspectors were ordered to accept defective goods, to increase output

· Skilled workers were promoted into other roles, leaving less skilled workers to perform the operational jobs, such as manufacturing

These changes led to the birth of the separate inspection department with a “chief inspector”, reporting to either the person in charge of manufacturing or the works manager. With the creation of this new department, there came new services and issues, e.g., standards, training, recording of data and the accuracy of measuring equipment. It became clear that the responsibilities of the “chief inspector” were more than just product acceptance, and a need to address defect prevention emerged.

Hence the quality control department evolved, in charge of which was a “quality control manager”, with responsibility for the inspection services and quality control engineering.

Q.1 What similarities and differences do you find in BCG business portfolio matrix, Ansoff growth matrix and GE growth pyramid. (10 marks)

Strategic Advantage Profile (SAP) shows the strength and weakness of an organisation. Preparation of SAP is very similar to ETOP analysis. The five functional areas in most organisations are production or operation, finance or accounting, marketing or distribution, human resource and corporate planning,

1) “Freedom to contract is a myth or an illusion”. Discuss

Freedom to contract is a myth or an illusion

The freedom of the parties is limited by two factors. There are certain laws for the protection of the employees, and an employer cannot, therefore, induce his employees to enter into any contract favourable to the employer.

 What is a standard form contract?

A standard form contract is a document which is generally printed, containing terms and conditions, with certain blanks to be filled in. It is prepared by the business people. The customer has only to sign it. Therefore, from his standpoint, the freedom to contract is restricted. Many of the contracts now being entered into by consumers are not the result of individual negotiations; rather they are one-sided contracts.

The law of contract in India is contained in the Indian Contract Act, 1872. This Act is based mainly on English common law, which is to a large extent made up of judicial precedents. (there being a separate contract act in England). It extends to the whole of India except the state of Jammu and Kashmir and came into force on the first day of September 1872 (Sec.1 Indian Contract Act, 1872). The act is not exhaustive.

1. “All agreements are not contracts, but all contracts are agreements”. Comment.

Contract

A contract is an agreement, enforceable by law, made between at least two parties by which rights are acquired by one and obligations are created on the part of another. If the party, which had agreed to do something, fails to do that, then the other party has a remedy.

Example: D Airlines sells a ticket on 1 January to X for the journey from Mumbai to Bangalore on 10 January. The Airlines is under an obligation to take X from Mumbai to Bangalore on 10 January. In case the Airlines fails to fulfil its promise, X has a remedy against it.

Thus, X has a right against the Airlines to be taken from Mumbai to Bangalore on 10 January. A corresponding duty is imposed on the Airlines. As there is a breach of promise by the promisor (the Airlines), the other party to the contract (i.e., X) has a legal remedy.

Agreement

Sec.2(e) defines an agreement as “every promise and every set of promises forming consideration for each other”. In this context, the word ‘promise’ is defined by Sec.2(b). In a contract there are at least two parties. One of them makes a proposal (or an offer) to the other, to do something, with a view to obtaining the assent of that other to such act. When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted becomes a promise (Sec.2(b)).

Enforceability by law: The agreement must be such which is enforceable by law so as to become a contract. Thus, there are certain agreements which do not become contracts as this element of enforceability by law is absent.

Essentials of a contract

Sec.10 provides that all agreements are contracts, if they are made by free consent of parties, competent to contract, for a lawful consideration, and with a lawful object, and are not expressly declared by law to be void. To constitute a contract, there must be an agreement between two or more than two parties. No one can enter into a contract with himself. An agreement is composed of two elements – offer or proposal by one party and acceptance thereof by the other party.

Effect of absence of one or more essential elements of a valid contract: If one or more essentials of a valid contract are missing, then the contract may be either voidable, void, illegal or unenforceable.

Classification of contracts

Contracts may be classified as follows:

Classification of contracts according to formation: A contract may be (a) Made in writing (b) By words spoken and (c) Inferred from the conduct of the parties or the circumstances of the case.

For answers contact us at : assignmentssolution@gmail.com

Spring 2012

Master of Business Administration

MB0052 – Strategic Management and Business Policy – 4 Credits

(Book ID: B1314)

Assignment

Set - 1

(60 Marks)

Note: Each Question carries 10 marks. Answer all the questions.

1. What is meant by ‘Strategy’? Differentiate between goals and objectives.

2. Define the term “Strategic Management”. What are the types of strategies?

3. Describe Porter’s five forces Model.

4. What is strategic formulation and what are its processes?