IGNOU MBA ASSIGNMENT ANSWER SHEET

IGNOU MBA ASSIGNMENT ANSWER SHEET

ANSWER SHEET

Course Code : MS-91

Course Title : Advanced Strategic Management

Assignment Code : 91/TMA/SEM-I/2017

Coverage : All Blocks

1.      a) Discuss the nature and process of corporate planning.

Corporate planning is a strategic tool used by companies to set long-term plans to meet certain objectives, such as business growth and sales volumes. Corporate plans are similar to strategic plans, but place greater emphasis on using internal resources and streamlining operations to achieve certain end goals.

Corporate plans are essentially business plans that seek to make improvements and generate profits by making internal operations more effective and productive. Many corporate plans have specific action steps that must be taken to achieve certain objectives. These steps are clearly defined in the corporate plan and can be used as markers to check on a periodic basis to determine whether or not sufficient progress is being made.

Ideally, corporate plans help companies grow during a period of time, typically a year, by expanding their consumer base, improving marketing campaigns and attracting new business partners. Corporate plans are generally structured by first introducing a grand overall vision of growth and development, then laying out a plan of action on a microscopic level to meet the end goal.

Corporate plans can be created and used by businesses of all sizes, but are most commonly used by large organizations. Corporate plans typically consist of a vision statement, mission statement, identifying available resources and then listing business objectives and strategies to be used to meet those objectives.

Process of Corporate Planning:

Major steps involved in corporate planning are as follows:

(i) Environmental Analysis and Diagnosis:

The first steps (which is, in fact, the background step), involved in corporate planning is environmental analysis and diagnosis. (A detailed account of this step is attempted subsequently, in the discussion about corporate planning).

(ii) Determination of Objectives:

All planning starts with a determination of the objectives for the plan; and corporate planning is no exception to this generality. In corporate planning, after environmental analysis and diagnosis, the planners determine objectives for the company as a whole and for each department of it; which become the beginning point of corporate planning.

All objectives of corporate planning must represent an integrated or coordinated system of objectives. In order to make corporate planning a realistic approach to attaining objectives; objective setting for corporate planning is done in the light of environmental analysis and diagnosis.

(iii) Strategy Formulation:

Strategy formulation is the core aspect of corporate planning. Strategy is, in fact, the weapon of the planner devised for attaining objectives of corporate planning. It is easier to set objectives; it is difficult to realize them. Strategies facilitate the attainment of objectives.

There is no doubt about it that success of strategies is the success of corporate planning; and vice-versa. Strategy formulation is also done in the light of environmental analysis and diagnosis.

(iv) Development of Tactical Plans:

Strategies are translated into action plans called tactical plans or operational plans. Tactical plans are necessary for implementation of strategies leading to the attainment of corporate planning objectives. For example, if the strategy of a company is to develop the skills and talents of manpower for realizing objectives; then designing of suitable training programmes would amount to making tactical plans.

Corporate planning and strategy formulation have a long-term perspective; while tactical plans have a short-term perspective, as the latter are to be implemented immediately, in the usual course of organisational life.

(v) Implementation of Tactical Plans:

Mere paper planning is no planning; unless and until it is put into practice. As such, tactical plans are put into a process of implementation, just at the right time, as decided by management. For implementation purposes, necessary communications are made to the operating staffing; who are also provided with necessary facilities to implement the tactical plans.

(vi) Follow-Up-Action:

After the tactical plans have been put into practice; a review of progress is done i.e. an examination of what results are following from the implementation of the plan and what feedback action is necessary, for the betterment of the corporate planning process.

The following chart depicts the corporate planning process:

b) Select a company of your choice and explain the behavioral implementation of corporate plan discussing details of the company.

A behavioral implementation of corporate plan is a strategic plan is of little use to an organization without a means of putting it into place. In fact, implementation is an essential part of the strategic planning process, and organizations that develop strategic plans must expect to include a process for applying the plan. The specific implementation process can vary from organization to organization, dependent largely on the details of the actual strategic plan, but some basic steps can assist in the process and ensure that implementation is successful and the strategic plan is effective.

The behavioral implementation of corporate plan Meril Life Science a pharmaceutical company.

Risk assessment before implementation of corporate plan

1. Evaluate the strategic plan. The first step in the implementation process is to step back and make sure that you know what the strategic plan is. Review it carefully, and highlight any elements of the plan that might be especially challenging. Recognize any parts of the plan that might be unrealistic or excessive in cost, either of time or money. Highlight these, and be sure to keep them in mind as you begin implementing the strategic plan. Keep back-up ideas in mind in case the original plan fails.

2. Create a vision for implementing the strategic plan. This vision might be a series of goals to be reached, step by step, or an outline of items that need to be completed. Be sure to let everyone know what the end result should be and why it is important. Establish a clear image of what the strategic plan is intended to accomplish.

3. Select team members to help you implement the strategic plan. Make sure you have a team that “has your back,” so to speak, and understands the purpose of the plan and the steps involved in implementing it. Establish a team leader, if other than yourself, who can encourage the team and field questions or address problems as they arise.

4. Schedule meetings to discuss progress reports. Present the list of goals or objectives, and let the strategic planning team know what has been accomplished. Whether the implementation is on schedule, ahead of schedule, or behind schedule, assess the current schedule regularly to discuss any changes that need to be made. Establish a rewards system that recognizes success throughout the process of implementation.

5. Involve the upper management where appropriate. Keep the organization’s executives informed on what is happening, and provide progress reports on the implementation of the plan. Letting an organization’s management know about the progress of implementation makes them a part of the process, and, should problems arise, the management will be better able to address concerns or potential changes.

2.      Discuss the issues which result in bad Corporate Governance citing examples. What measures should be taken to correct such failures.

Corporate Governance encompasses practices and procedures to ensure that a company is managed in such a way that it achieves its objectives. In profit oriented enterprises, these objectives would be to maximize the returns to its shareholders. However, differing interest of other stakeholders is recognized. In addition, the organization has to function within its evironmental guidelines and constraints which include behaving in an ethical manner and in compliance with laws and regulations. Boards of directors have responsibility for the governance of their companies. The shareholders’ role in governance is to appoint the directors and the auditors and to satisfy themselves that an appropriate governance structure is in place.

Implication of bad Corporate Governance

Whilst it is not implied that poor corporate governance accounts for all corporate failures, the general implication of poor corporate governance of a company is an inability to achieve the intended purpose of the Company, and its reason for being is defeated. On a macro level, this is amplified.

A study¹on Corporate Governance and Bank Failure in Nigeria was carried out to investigate issues, challenges and opportunities associated with corporate governance and Bank failure in Nigeria, and to ascertain if a significant relationship exists between corporate governance and Banks failure. The result of the study not only revealed that the new code of corporate governance for Banks is adequate to curtail Bank distress but that improper risk management, corruption of Bank officials and over expansion of Banks are the key reasons Banks fail.

According to the former Governor, Central Bank of Nigeria (CBN), Lamido Sanusi, the inability of key personnel in some banks to live up to expectations negatively impacted on the institutions and reiterated that the failure of corporate governance in most financial institutions led to the recent crisis in the banking sector.

Eight chief executives and executive directors of some Nigerian banks were summarily dismissed between August and October, 2009 due to issues related to poor corporate governance practices. This was sequel to the conclusion of audit investigations embarked upon by CBN to determine the soundness of Nigerian banks. The release of these reports led CBN to conclude that the affected banks acted in manners detrimental
to the interest of depositors and creditors. This was at variance with the clean bill of good health earlier given to these banks by regulatory authorities (CBN inclusive) and their so called appointed reputable external auditors . The Regulatory Authorities and Economic and Financial Crimes Commission had reported that their investigations had culminated in the decisions for the summary dismissals and prosecution of the affected
chief executives and that the situation had been handled in the way it was arising from the consciousness of the sensitiveness of such information on the market perception given the fickleness of price.

Example

Volkswagen scandal: Bad governance is often a sign of trouble ahead

It is no coincidence that this figure is similar to the hit BP took for the oil spill in the Gulf of Mexico in 2010. Like Volkswagen, BP works in a highly politicised industry and, at the time of the oil spill, concerns about the company’s corporate governance were raised.

While VW will doubtless become another saga in the demonisation of business, the reality is more complex and one in which the European political establishment must take its share of the blame. For too many years, the European auto industry, in my view, has been saddled with an over-reliance on diesel due to misguided environmental policy.

Because diesel cars are more fuel efficient, CO2 emissions are lower, giving hope to the car industry that it would be able to meet the new emission standards mandated by the political establishment across Europe since the 1990s as part of the policy to combat global warming. A “dash for diesel” ensued, in part prompted by lower duties on the fuel.

Achieving one high-profile environmental target was done, I believe, at the cost of damage elsewhere. Research from Redburn Partners shows that diesel may be better on CO2 emissions than petrol but it does have higher concentrations of harmful Nitrogen Oxides (NOX). Standards in America for NOX emissions are far more stringent. In Europe 180 milligrams of NOX per kilometre were permitted; recently this has come down to 80mg/km but is still higher than the long-standing US standard of 53mg/km.

Having pointed the manufacturers down the wrong track, European governments had to tolerate health damaging high NOX emissions or bust the local car industry. The residue of this interference was an industry employing vast numbers of people with a high cost base and a diesel- based product offering that much of the world did not want. Industries like autos are too economically important for politicians to leave alone; hence, in my view, the higher risk for investors.

Measures should be taken to correct such failures

1.      Recognise that good governance is not just about compliance

Boards need to balance conformance (i.e. compliance with legislation, regulation and codes of practice) with performance aspects of the board’s work (i.e. improving the performance of the organisation through strategy formulation and policy making). As a part of this process, a board needs to elaborate its position and understanding of the major functions it performs as opposed to those performed by management. These specifics will vary from board to board. Knowing the role of the board and who does what in relation to governance goes a long way towards maintaining a good relationship between the board and management.

2.      Clarify the board’s role in strategy

It is generally accepted today that the board has a significant role to play in the formulation and adoption of the organisation’s strategic direction. The extent of the board’s contribution to strategy will range from approval at one end to development at the other. Each board must determine what role is appropriate for it to undertake and clarify this understanding with management.

3.      Monitor organisational performance

Monitoring organisational performance is an essential board function and ensuring legal compliance is a major aspect of the board’s monitoring role. It ensures that corporate decision making is consistent with the strategy of the organisation and with owners’ expectations. This is best done by identifying the organisation’s key performance drivers and establishing appropriate measures for determining success. As a board, the directors should establish an agreed format for the reports they monitor to ensure that all matters that should be reported are in fact reported.

4.      Understand that the board employs the CEO

In most cases, one of the major functions of the board is to appoint, review, work through, and replace (when necessary), the CEO. The board/CEO relationship is crucial to effective corporate governance because it is the link between the board’s role in determining the organisation’s strategic direction and management’s role in achieving corporate objectives.

5.      Recognise that the governance of risk is a board responsibility

Establishing a sound system of risk oversight and management and internal control is another fundamental role of the board. Effective risk management supports better decision making because it develops a deeper insight into the risk-reward trade-offs that all organisations face.

6.      Ensure the directors have the information they need

Better information means better decisions. Regular board papers will provide directors with information that the CEO or management team has decided they need. But directors do not all have the same informational requirements, since they differ in their knowledge, skills, and experience. Briefings, presentations, site visits, individual director development programs, and so on can all provide directors with additional information. Above all, directors need to be able to find answers to the questions they have, so an access to independent professional advice policy is recommended.

7.      Build and maintain an effective governance infrastructure

Since the board is ultimately responsible for all the actions and decisions of an organisation, it will need to have in place specific policies to guide organisational behaviour. To ensure that the line of responsibility between board and management is clearly delineated, it is particularly important for the board to develop policies in relation to delegations. Also, under this topic are processes and procedures. Poor internal processes and procedures can lead to inadequate access to information, poor communication and uninformed decision making, resulting in a high level of dissatisfaction among directors. Enhancements to board meeting processes, meeting agendas, board papers and the board’s committee structure can often make the difference between a mediocre board and a high performing board.

8.      Appoint a competent chairperson

Research has shown that board structure and formal governance regulations are less important in preventing governance breaches and corporate wrongdoing than the culture and trust created by the chairperson. As the “leader” of the board, the chairperson should demonstrate strong and acknowledged leadership ability, the ability to establish a sound relationship with the CEO, and have the capacity to conduct meetings and lead group decision-making processes.

9.      Build a skills-based board

What is important for a board is that it has a good understanding of what skills it has and those skills it requires. Where possible, a board should seek to ensure that its members represent an appropriate balance between directors with experience and knowledge of the organisation and directors with specialist expertise or fresh perspective. Directors should also be considered on the additional qualities they possess, their “behavioural competencies”, as these qualities will influence the relationships around the boardroom table, between the board and management, and between directors and key stakeholders.

10.     Evaluate board and director performance and pursue opportunities for improvement

Boards must be aware of their own strengths and weaknesses, if they are to govern effectively. Board effectiveness can only be gauged if the board regularly assesses its own performance and that of individual directors. Improvements to come from a board and director evaluation can include areas as diverse as board processes, director skills, competencies and motivation, or even boardroom relationships. It is critical that any agreed actions that come out of an evaluation are implemented and monitored. Boards should consider addressing weaknesses uncovered in board evaluations through director development programs and enhancing their governance processes.

3.      Discuss different market structures and their impact on competition.

A market structure comprises a number of interrelated features or characteristics of a market.

These features include number of buyers and sellers in the market, level and type of competition, degree of differentiation in products, and entry and exit of organizations from the market.

Among all these features, competition is the main characteristic of a market. It acts as a guide for organizations to react and take decisions in a particular situation. Therefore, market structures can be classified on the basis of degree of competition in a market.

Figure-1 shows different types of market structures on the basis of competition:

These different types of market structures (as shown in Figure-1).

1. Purely Competitive Market:

A purely competitive market is one in which there are a large number of independent buyers and sellers dealing in standardized products. In pure competition, the products are standardized because they are either identical to each other or homogenous. Moreover, the price of products is same in the entire market.

Therefore, buyers can purchase products from any seller as there is no difference in the price and quality of products of different sellers. Under pure competition, sellers cannot influence the market price of products. This is because if a seller increases the prices of its products, customers may switch to other sellers for getting products at lower price with the same quality.

On the other hand, if a seller decreases the prices of its products, then customers may become doubtful about the quality of products. Therefore, in pure competition, sellers act as price takers. In addition, in a purely competitive market, there are no legal, technological, financial, or other barriers for the entry and exit for organizations.

In pure competition, the average revenue curve or demand curve is represented by a horizontal straight line. This implies the homogeneity of products with fixed market price.

Figure-2 shows the average revenue curve under pure competition curve:

In Figure-2, OP is the price level at which a seller can sell any quantity of products at the fixed market price.

2. Perfectly Competitive Market:

In a purely competitive market, there are a large number of buyers and sellers dealing in homogenous products. A perfectly competitive market is a wider term than a purely competitive market. A perfectly competitive market is characterized by a situation when there is perfect competition in the market.

3. Imperfectly Competitive Market:

In economic terms, imperfect competition is a market situation under which the conditions necessary for perfect competition are not satisfied. In other words, imperfect competition can be defined as a type of market that is free from the stringent rules of perfect competition.

Unlike perfect competition, imperfect competition is characterized by differentiated products. The concept of imperfect competition was firstly explained by an English economist, Joan Robinson.

In addition, under imperfect competition, buyers and sellers do not have any information related to the market as well as prices of goods and services. In imperfect competition, organizations dealing in products or services can influence the market prices of their output.

There are different forms of imperfect competition, which are shown in Figure-3:

The different forms of imperfect competition (as shown in Figure-3).

Monopoly:

The term monopoly has been derived from a Greek word Monopolian, which signifies a single seller. Monopoly refers to a market structure in which there is a single producer or seller that has a control on the entire market. This single seller deals in the products that have no close substitutes.

4.      What are the characteristics of innovative organizations? Giving the example of an organization, explain how creativity contributes to the success of the organization.

Characteristics of innovative organizations are

1. Unique and Relevant Strategy

Arguably, the most defining characteristic of a truly innovative company is having a unique and relevant strategy. We all know what companies like Apple, Facebook and Google do. That’s because they make their strategies clear and relentless follow them. An innovative smaller player may not be recognised globally, but its leaders, employees, business partners and customers all will have a clear idea of the company’s strategy. If a business does not have definable, unique strategy, it will not be innovative. Bland strategies, such as “to be the best”, do not provide a path to innovation in the same way clearer strategies, such as “to be on the cutting edge of mobile communications technology,” “to build the world’s safest cars”or “to deliver anything anywhere” do. If your strategy is vague or fails to differentiate your company from the competition, you should change this situation as quickly as possible!

2. Innovation Is a Means to Achieve Strategic Goals

Highly innovative companies do not see innovation as an end, but rather as a means to achieving strategic goals. Just as a good camera is an essential tool that enables the photographer to take professional images and the saw is an essential tool for the carpenter, innovation is an essential tool for visionary companies intent on achieving their strategic goals. Indeed, if you look at the web sites of the world’s most innovative companies, they tend not to trumpet innovation, but rather corporate vision.

3. Innovators Are Leaders

The one thing innovation provides more than anything else is market leadership. When companies use innovation to achieve strategic goals, they inevitably take the lead in their markets. Unfortunately, this does not always translate to being the most successful or profitable. Amazon has been an innovator from the beginning, setting many of the standards for e-commerce. Nevertheless, it took some years for the company to become profitable. Cord was one of the world’s most innovative car companies, launching cutting edge innovations such as front wheel drive and pop-up headlights – in the 1920s and 30s. However the company was never very successful financially and went out of business in 1938. On the other hand, innovators like Apple and Google have been financially successful as a result of their innovation. In short, innovators are leaders, but not always profitable leaders!

4. Innovators Implement

Most businesses have a lot of creative employees with a lot of ideas. Some of those ideas are even relevant to companies’ needs. However, one thing that differentiates innovators from wannabe innovators is that innovators implement ideas. Less innovative companies talk more about ideas than implementing them!

5. Failure Is an Option

We would argue the most critical element of business culture, for an innovative company, is giving employees freedom and encouragement to fail. If employees know that they can fail without endangering their careers, they are more willing to take on risky, innovative projects that offer huge potential rewards to their companies. On the other hand, if employees believe that being part of a failed project will have professional consequences, they will avoid risk – and hence innovation – like the plague. More importantly, if senior managers reward early failure, employees are far more likely to evaluate projects regularly and kill those projects that are failing — before that failure becomes too expensive. This frees up resources and budget for new innovative endeavours. However, in businesses where failure is not an option, employees will often stick with failing projects, investing ever more resources in hopes that the project will eventually succeed. When it does not, losses are greater and reputations are ruined. As a result, companies that reward failure often fail less than those that discourage it.

6. Environment of Trust

The Innovative company provides its employees with an environment of trust. There is a lot of risk involved in innovation. Highly creative ideas often initially sound stupid. If employees fear ridicule for sharing outrageous ideas, they will not share such ideas. Likewise, if employees fear reprimand for participating in unsuccessful projects, they will not participate (see item 5 above). If employees do not trust each other, they will be watching their backs all the time. If they fear managers will steal their ideas and claim them as their own, employees will not share ideas. On the other hand, if employees know they can take reasonable risks without fear, if they know outrageous ideas are welcome, if they know that their managers will champion their ideas and credit them for those ideas, these employees can be creative, implement ideas and drive the company’s innovation. In short, creativity and innovation thrive when people in an organization trust each other and their organization.

7. Autonomy

Along with trust, individual and team autonomy is a key component of innovation. If you give individuals and teams clear goals together with the freedom to find their own paths for achieving those goals, you create fertile ground for innovation. But, if managers watch over their subordinates’ shoulders, micro-managing their every move, you stifle the creativity and individual thought that is necessary for innovation. Of course giving employees autonomy means they may make mistakes. They may choose inefficient routes to achieving goals. But at worst, they will learn from their mistakes and inefficiencies. At best, they will discover new and better ways of accomplishing objectives. Most importantly, if you hire intelligent, capable, creative people and give them the freedom to solve problems, they will do so. And, in so doing, they well help innovation to thrive throughout the company.

Example

Nike’s creativity contributes to the success

Drive and Ambition

In order to succeed, one must have first the drive to succeed, as well as the ambition to see an effort through. The world is full of entrepreneurs who never make it past the initial stages of their ideas. They have the drive, but when it comes to the ambition part of seeing their idea come to fruition, they come up lacking. Drive and ambition, when paired together, can help a small business owner through the rough periods when starting and running a company. These two key ingredients are vital to success in any industry and quite often, these are the two ingredients that separate innovative and successful companies from the rest of the pack.

Customer Focus

The old adage "the customer is always right" is a key of innovative and successful companies. Not only do these companies do their best to make sure their customers are satisfied -- they also listen to their customers. They find out what they want, what they need, and they innovate to provide their customers with these solutions. In order to be innovative, you have to have ideas and quite often, your customer base will be the source for this inspiration. At the end of the day, the customer and their needs should be the focus of your company, not the sale.

Diversity and the Ability to Spot Trends

Innovative companies are always changing, always trying out new ideas and offering new services and products. Every product may not be a success, but they keep adapting to their marketplace and learning how best to serve it. Trend spotting and diversity are important characteristics of an innovative company. Once again, customer focus comes into play with this characteristic. By understanding their marketplace, listening to what they want, and being confident enough to take that leap to diversify or change, a company can stay on top.

Other Important Characteristics

In addition to the top three characteristics of innovative companies, others should not be forgotten. Having a strong workforce that feels as though it is a true part of the company is an essential part of running a healthy business. In addition, other important characteristics include being confident enough to take risks, knowing when to pull the plug on areas that may not be performing up to expectations and staying informed on all of the latest variables that affect their marketplace.

5.      What are the various types of Social Audit? Illustrate and emphasize the need for social audit.

Various type of social audit are:

External

External audit, also known as financial audit and statutory audit, involves the examination of the truth and fairness of the financial statements of an entity by an external auditor who is independent of the organization in accordance with a reporting framework such as the IFRS. Company law in most jurisdictions requires external audit on annual basis for companies above a certain size.

The need for an external audit primarily stems from the separation of ownership and control in large companies in which shareholders nominate directors to run the affairs of the company on their behalf. As the directors report on the financial performance and position of the company, shareholders need assurance over the accuracy of the financial statements before placing any reliance on them. External audit provides reasonable assurance to the owners of the company that the financial statements, as reported by the directors, are free from material misstatements.

External auditors are required to comply with professional auditing standards such as the International Standards on Auditing and ethical guidelines such as those issued by IFAC in order to maintain a level of quality and trust of all stakeholders in the auditing exercise.

Internal

Internal audit, also referred as operational audit, is a voluntary appraisal activity undertaken by an organization to provide assurance over the effectiveness of internal controls, risk management and governance to facilitate the achievement of organizational objectives. Internal audit is performed by employees of the organization who report to the audit committee of the board of directors as opposed to external audit which is carried out by professionals independent of the organization and who report to the shareholders via audit report.

Unlike external audit, whose scope is primarily restricted to matters that concern the financial statements, the scope of work of an internal audit is very broad and can encompass any matters which can affect the achievement of organizational objectives. Internal audit is typically centered around certain key activities which include:

§  Monitoring the effectiveness of internal controls and proposing improvements

§  Investigating instances of fraud and theft

§  Monitoring compliance with laws and regulations

§  Reviewing and verifying where necessary the financial and operating information

§  Evaluating risk management policies and procedures of the company

§  Examining the effectiveness, efficiency and economy of operations and processes

Forensic

Forensic Audit involves the use of auditing and investigative skills to situations that may involve legal implications. Forensic audits may be required in the following instances:

§  Fraud investigations involving misappropriation of funds, money laundering, tax evasion and insider trading

§  Quantification of loss in case of insurance claims

§  Determination of the profit share of business partners in case of a dispute

§  Determination of claims of professional negligence relating to the accountancy profession

Findings of a forensic audit could be used in the court of law as expert opinion on financial matters.

Public Sector

State owned companies and institutions are required by law in several jurisdictions to have their affairs examined by a public sector auditor. In many countries, public sector audits are conducted under the supervision of the auditor general which is an institute responsible for strengthening public sector accountability and governance and promoting transparency.

Public sector audit involves the scrutiny of the financial affairs of the state owned enterprises to assess whether they have been operated in way which is in the best interest of the public and whether standard procedures have been followed to comply with the requirements in place to promote transparency and good governance (e.g. public sector procurement rules). Public sector audit therefore goes a step further than the financial audit of private organizations which primarily focuses on the reliability of financial statements

Audits of public sector companies are becoming increasingly concerned with the efficiency, effectiveness and economy of resources used in state organizations which has given way for the development of value for money audits.

Tax

Tax audits are conducted to assess the accuracy of the tax returns filed by a company and are therefore used to determine the amount of any over or under assessment of tax liability towards the tax authorities.

In some jurisdictions, companies above a certain size are required to have tax audits after regular intervals while in other jurisdictions random companies are selected for tax audits through the operation of a balloting system.

Information System

Information system audit involves the assessment of the controls relevant to the IT infrastructure within an organization. Information system audits may be performed as part of the internal control assessment during internal or external audit.

Information system audit generally comprises of the evaluation of the following aspects of information system:

§  Design and internal controls of the system

§  Information security and privacy

§  Operational effectiveness and efficiency

§  Information processing and data integrity

§  System development standards

Environmental & Social

Environmental & Social Audits involve the assessment of environmental and social footprints that an organization leaves as a consequence of its economic activities. The need for environmental auditing is increasing due to higher number of companies providing environment and sustainability reports in their annual report describing the impact of their business activities on the environment and society and the initiatives taken by them to reduce any adverse consequences.

Environmental auditing has provided a means for providing assurance on the accuracy of the statements and claims made in such reports. If for example a company discloses the level of CO2 emissions during a period in its sustainability report, an environment auditor would verify the assertion by gathering relevant audit evidence.

Compliance

In many countries, companies are required to conduct specific audit engagements other than the statutory audit to comply with the requirements of particular laws and regulations. Examples of such audits include:

§  Verification of reserves available for distribution to shareholders before the declaration of interim dividend

§  Audit of the statement of assets and liabilities submitted by a company at the time of liquidation

§  Performance of cost audit of manufacturing companies to verify the cost of production in order for a regulator to determine the maximum price to be allowed after allowing a reasonable profit margin to companies operating in a sensitive sector (e.g. pharmaceuticals industry)

Value For Money

Value for money audits involves the assessment of the efficiency, effectiveness and economy of an organization's use of resources.

Value for money audits are increasingly relevant to sectors which do not have profit as their main objective such as the public sector and charities. They are usually performed as part of internal audit or public sector audit.

Need for social Audit

A social audit is an official evaluation of an organization's involvement in social responsibility projects or endeavors. For example, a local family store makes a clothing donation to a local church that has a homeless shelter for women and children. The store makes a similar donation three times a year. This is something that a social audit might uncover. Factors examined by a social audit include records of charitable contributions, volunteer events, efficient utilization of energy, transparency, work environment, and employees' wages.

Social audits have several aims. One is to assess the type of social and environmental influence that the company has in its local community. Another aim is to make a judgment of the material and monetary shortfalls between the needs of the community and the assets that are available for the development of the local society. Another aim of social audits is to make local social service providers and other beneficiaries aware of the needs of the community. Yet another is to provide information needed to improve the effectiveness of programs designed to enhance community development.

6. Write short notes on the following:

a) Product Life Cycle

Product Life Cycle Stages

Product Life Cycle Stages Explained

The product life cycle has 4 very clearly defined stages, each with its own characteristics that mean different things for business that are trying to manage the life cycle of their particular products.

Introduction stage – This stage of the cycle could be the most expensive for a company launching a new product. The size of the market for the product is small, which means sales are low, although they will be increasing. On the other hand, the cost of things like research and development, consumer testing, and the marketing needed to launch the product can be very high, especially if it’s a competitive sector.

Growth stage – The growth stage is typically characterized by a strong growth in sales and profits, and because the company can start to benefit from economies of scale in production, the profit margins, as well as the overall amount of profit, will increase. This makes it possible for businesses to invest more money in the promotional activity to maximize the potential of this growth stage.

Maturity stage – During the maturity stage, the product is established and the aim for the manufacturer is now to maintain the market share they have built up. This is probably the most competitive time for most products and businesses need to invest wisely in any marketing they undertake. They also need to consider any product modifications or improvements to the production process which might give them a competitive advantage.

Decline stage – Eventually, the market for a product will start to shrink, and this is what’s known as the decline stage. This shrinkage could be due to the market becoming saturated (i.e. all the customers who will buy the product have already purchased it), or because the consumers are switching to a different type of product. While this decline may be inevitable, it may still be possible for companies to make some profit by switching to less-expensive production methods and cheaper markets.

b) Knowledge Management

Knowledge management is the systematic management of an organization's knowledge assets for the purpose of creating value and meeting tactical & strategic requirements; it consists of the initiatives, processes, strategies, and systems that sustain and enhance the storage, assessment, sharing, refinement, and creation of knowledge.

Knowledge management (KM) therefore implies a strong tie to organizational goals and strategy, and it involves the management of knowledge that is useful for some purpose and which creates value for the organization.

Expanding upon the previous knowledge management definition, KM involves the understanding of:

Where and in what forms knowledge exists; what the organization needs to know; how to promote a culture conducive to learning, sharing, and knowledge creation; how to make the right knowledge available to the right people at the right time; how to best generate or acquire new relevant knowledge; how to manage all of these factors so as to enhance performance in light of the organization's strategic goals and short term opportunities and threats.

KM must therefore create/provide the right tools, people, knowledge, structures (teams, etc.), culture, etc. so as to enhance learning; it must understand the value and applications of the new knowledge created; it must store this knowledge and make it readily available for the right people at the right time; and it must continuously assess, apply, refine, and remove organizational knowledge in conjunction with concrete long and short term factors.

c) Corporate Philanthropy

Corporate philanthropy refers to the all of the ways in which companies achieve a positive social impact through strategic and generous use of finances, employee time, facilities, or their own products and services, to help others in the community and support beneficial causes.

This makes sense since, in recent years, the explosion of social media and the widespread adoption of its use by businesses and consumers has created a level of transparency that was completely unknown just ten years ago.  With this new atmosphere of openness and dialogue at all levels of the business cycle, consumers have become far more interested in a company’s values and corporate responsibility than ever before.

For that reason, a well-established and strategically executed corporate philanthropy program can have tremendous benefits for a company from a public relations standpoint, and have a direct impact on the bottom line as well.  In some cases where product or service competition is stiff, consumers may make their decision based solely on company reputation or which causes a company supports.

Of course, this kind of corporate philanthropy program is going to do far more than benefit the organization doing the giving, and that’s where the true value of corporate philanthropy becomes clear.

Corporate philanthropy and corporate social responsibility are closely related concepts in that philanthropy is a slice of the bigger corporate social responsibility pie. When integrated into a company’s mission and used to guide a company’s actions, corporate social responsibility can benefit the communities it serves, the company itself and its employees.

Corporate philanthropy is a company’s way of giving back to its community -- local, regional, national or international -- through financial donations and non-cash contributions such as time, expertise and tangible goods like computers, medicine, food and textbooks. Companies can donate to charities and nonprofits by giving directly from the company’s cash or assets, fundraising through its employees and fundraising from others.

A company giving its time or money to charities and nonprofits not only help those the donations serve but also the company through improved employee engagement. As reported by Forbes magazine, research has found that companies who encourage their employees to volunteer had a higher retention rate because employees who enjoyed their workplaces were less likely to leave. This directly affects the company’s bottom line because it will spend less on recruiting, hiring and training new employees.

FOR ALL IGNOU MBA ASSIGNMENT ANSWER SHEET VISIT WWW.CASESTUDYANDPROJECTREPORTS.COM