CA-IPCC
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Summary Notes
YOGESH GUPTA
SHORTEST TRICK FOR GETTING GOOD MARKS IN IT-SM
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CHAPTER-1 (Business Environment) OBJECTIVE OF BUSINESS [PGSES]
RELATIONSHIP BETWEEN ORGANISATION & ENVIRONMENT
a. b. c. d. e.
Profitability, Growth, Stability, Efficiency, Survival
a. Exchange of Information b. Exchange of resources c. Exchange of Power & influence
a. b. c. d. e. f.
ELEMENT OF BUSINESS ENVIRONMENT MICRO MACRO Customer 1. Government Suppliers 2. Economic conditions Organizational employees 3. Legal setup Competitors 4. Political setups Market 5. Technological changes Intermediaries 6. Social 7. Culture 8. Global
COOPERATION IN COMPETITIVE ENVIRONMENT a. Cartelization, b. Kieretsu, c. Internal cooperation/Family owned competition
PORTER’S MODEL OF COMPETITION a. Threatness of new entrance, b. Threatness of new substitute, c. Bargaining power of Buyers, d. bargaining power of Suppliers, Rivalry among current players
CHAPTER-2 (Business Policy & SM) STRATEGY An analysis of situation & then planning and implementation of activities to achieve desired goals or objectives.
VISION
MISSION
Road map to future, indicate the kind of company management, also specify the company intentions and capabilities.
Include Mission Statement; define who we are and where are we now? (DEFINE PRESENTLY)
PROCESS & FRAMEWORK OF SM a. Forming vision & setting objectives b. Development strategy to achieve vision & objectives. c. Implement & execution of strategy d. Feedback/making adjustments overtime.
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STRATEGIC LEVELS IN ORGANIZATION a. Corporate level b. Business level c. Function level
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Element of company vision and future position & growth ambition, provide foundation to the future aim of Organization. (WHERE COMPANY WANT TO BE IN FUTURE)
GENERAL STRATEGIC ALTERNATIVES a. b. c. d.
Stability Expansion Retrenchment Combination
1. 2. 3. 4. 5. 6.
GSA DECISION MAKING Top mgmt involvement Allocation of large resources Impact on long run Future oriented Multifunctional Internal & External
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SUPER NOTES FOR IPCC CHAPTER-3 (Strategic Analysis) ISSUES SHOULD BE CONSIDERS STRATEGIC ANALYSIS Timeline (Result of small decisions) Balance (between internal potentials& opportunities) Risk (which is included in business i.e. Short term or long term and Internal or external)
STRATEGIC ANALYSIS After formulating vision, mission & objectives of the org., it is necessary to dissect the external and internal environment of the org. to formulate a long term strategy to achieve these mission & objectives. This is not
only a talking event of managers, where managers can get some creative & innovative thinking & opinions only, but also takes decisions about the pursuing of strategy in external & internal environment. Two most important analysis of external & internal environment are: Industry and competitive analysis Analysis of org. SWOT, capabilities, internal resources.
SITUATION ANALYSIS MEANING Situation analysis tries to identify the risk & access their consequences.
ELEMENTS IN SA Product Analysis Competition Analysis Distribution Analysis Environment Analysis Opportunities & Issues
ANALYSIS OF EXTERNAL & INTERNAL ENVIRONMENT SWOT ANANLYSIS Strength-Inherent Capabilities Weakness-Inherent weakness Opportunities-favorable situation Threats- unfavorable situation Significant of SWOT Analysis:
Logical framework Relationship/comparative analysis Strategy Identification.
TOWS Matrix
PORTFOLIO ANALYSIS
Developed by: Heinz Weihrich It’s a comparison of SW of an org. with T.O. of org.
Internal Strength (S) Internal Weakness (W)
External
External Threats
Opportunities (O)
(T)
SO
Maxi-maxi strategy
WO
Mini-maxi strategy
INDUSTRY AND COMPETITIVE ANALYSIS FACTORS: Dominant economic feature of industry. Nature & strength of competition Trigger of change Identifying strongest & weakest positioned co’s Likely strategic moves of rivals. Key factors for competitive success. Financial attractiveness of industry
Meaning: Manage set of product, business units & companies. Concepts: a. Strategic Business Unit- (SBU is a unit of the company that has a separate
ST
b.
WT
c.
Maxi- Mini strategy Mini- Mini strategy
TOWS Matrix
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mission & objectives, which can be planned independently from other co’s business) Experience cycle- (EC also known learning curve is based on the commonly observed phenomenon that avg. cost per unit decrease at the cumulative production) Product life cycle-(every product passes through a life cycle from ‘Introduction’ to ‘Decline’ stage. PLZ is an ‘S’ shaped curve.)These are:
i) Introduction iii) Maturity
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ii) Growth iv) Decline
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SUPER SUMMARY NOTES PORTFOLIO ANALYSIS MODEL
---> (cash generation) Market Growth
High
Low
High
Star
Question mark
Low
Cash Cows
Dogs
(^cash usage)
Existing Product
New Product
Existing market
Market Penetration
Product Development
New market
Market Development
Diversification
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GE/McKinsey Model
Developed by Arthur D. Little. ADL analyzes portfolio on two dimensions first on industry measurement is an identification of PLC of industry. Industry VS FIRM
FIRM Introduction Growth Maturity Decline
INDUSTRY Dominant Strong Favorable Tenable Weak
High
Medium
Low
High
Relative Market Share
Attempt to growth matrix suggest a business’s attempts to grow depend on whether it market new or existing with as well new or existing product.
ADL Matrix
Invest
Invest
Protect
Medium
Display the various business units on a graph of the market growth rate vs. market share relative to competitors.
Ansoff’s Product market Growth Matrix
Invest
Protect
Harves t
Low
Boston Growth Share Matrix- BCG Matrix
Protect
Harvest
Divest
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SUPER NOTES FOR IPCC CHAPTER-4 (Testing-General & Automated control) CORPORATE STRATEGY (CS) Every company/ corporate form a strategy known as CS. It is a consist of competitive moves and approaches to achieve successful performance of co. (Choice of business, product)
market,
Mix of pro-active and re-active strategy.
STAGES OF CORPORATE STRATEGY FORMULATIONIMPLEMENTATION PROCESS 1. Developing strategic vision. 2. Setting objective: Used balance card approach. 3. Crafting & Designing a strategy: Firstly check SW of org, secondly competitors, thirdly determine the customer needs. 4. Strategy Implementation & Execution: It’s like a management process. 5. Monitoring Evaluation review.
STRATEGIC ALTERNATIVES
A. Cost Leadership- Produce at low cost for consumers, who is price sensitive. Implement then, when consumers do not care brand to brand or large number of buyers with bargaining power. B. DifferentiationProvide unique and different goods from competitors. Charge from customers for differentiation and gain customers’ loyalty. C. Focus- Focus on the special group of customers or geographical market or product line segment.
REASON FOR ADOPTING GRAND STRATEGY 1) Stability-Less Risky, people feel comfortable, environment faced is relatively stable & expansion may be being threatening. 2) Expansion- when environment demands increasing in pace of activity, psychology & strategist feels that in expansion is more growth, control over the market. 3) Retrenchment-Environment threatening, management has no longer wishes to remain in business, either partly or wholly due to continuous losses.
Grand Strategy Stability
Expansion
Retrenchment
Intensification Market Penetration
Market Development
Diversification Product Development
Verticle Integration
Forward
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Combination
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Concentric Diversification
Conglomerate Diversification
Backward
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SUPER SUMMARY NOTES CHAPTER-5 (Formulation Of Functional Strategy) KEY FUNCTION STRATEGY MARKETING This function satisfies the need of org. for which org. is formed i.e. serving customer. Mktg. always looks for long term profits and growth rather than immediate profit. Key Marketing Strategic Elements: Expanded Marketing MixAddition to traditional 4P’s new are: people, physical evidence, process Marketing Analysis-Identify environment O&T, analyze co. SW to determine the best opportunities. Market Planninginvolve deciding that will help the co. attains its strategic obj. Dealing with marketing environment-must carefully analysis for avoiding the threats and gain opportunities.
FINANCE
PRODUCTION
LOGISTIC
Acquiring capital or source of funds, projected financial statement and Budget, mgmt & uses of funds, evaluate worth of business.
Production system concerned with capacity, location, design, and sequence of working. Production What to produce? How to produce? For whom to produce?
Flow of goods & material from source to destination i.e. suppliers to customer. Right materials are available at right place at a right time at right quality at right cost to the customers.
Developing new products Improve old products Designing technology Proper technique to use Raw Material.
Production Strategy related to operation planning and controls are concerned with aggregate production planning, material supply, inventory, cost & quality management and maintenance of plant & equipment.
Logistic Strategy helps in saving the cost. Effective logistic strategy can help business in: Cost saving Reduced inventory holding time Improve delivery time Customer satisfaction Competitive advantage
Three approaches to applying R&D strategy:
Three approaches for Evaluation of Net Worth of Business: Determine Net worth/ Stockholder equity, after that, add/less the value of goodwill and overvalued & undervalued of assets. Future Benefits, (Rule of Thumb)5to 10 times of firm’s current year profits. Based on 3 methods1. Base selling price of similar co. per unit of its capacity. 2. price earning ratio method: X5 3. Outstanding Share method: No of share O/S X MP per share + Premium.
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R&D
First firm to market new technology products Innovative imitator of successful products. Low cost produced by mass producing products.
HUMAN RESOURCES
Biggest challenge is to control Human alteration. The approx quarter of the profit consume for employee satisfaction and assurance or motivating them. HR Strategy can’t be executed if there: Social & analytical problems, Attitude problem, Non-supportive approach of top mgmt. Following points are to be considered : Selection & recruitment, training, appraisal of performance, compensation Strategic role of HR Manager: Providing purposed directions, creating competitive atmosphere, facilitation of change, diversification of workforce, building core competency, development of work culture & ethics.
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SUPER NOTES FOR IPCC CHAPTER-6 (Strategic Implementation & Control) INTER RELATIONSHIP BETWEEN STRATEGY FORMULATION & IMPLEMENTATION
FORWARD & BACKWARD LINKAGE
PRINCIPAL COMBINATION OF EFFICIENCY AND EFFECTIVENESS
A
B
Flawed
C
D
Weak
Excellent
OPERATION MANAGEMENT
FORMULATION
Sound
IMPLEMENTATION
Efficient
1
2
Inefficient
3
4
Effective
Ineffective
Strategy formulation changes in the org. for implementation in form of: org. structure style of leadership flexibility to adapt new tech. etc.
STRATEGIC MANAGEMENT
A: lack of experience, lack of leadership B: Best C: Business Model redesigning and implement readjustment D: have to do redesign their strategy before readjusting their implementation skills.
A: Thrives and succeed B: Die Slowly C: Survive D: Die Quickly.
STRATEGIC BUSINESS UNIT ( SBU) Grouping of businesses which are related. Purpose is to provide effective strategic planning treatment to each one of its product/services. Concept is relevant to multi-product, multi-business enterprises. Characteristics: Single business or collection of related business which offer scope for independent planning & which might feasibility stand alone from the rest of org. He has own set of competition. Has a manager who is responsible for strategic planning & profit performance. Resource allocation
THE VALUE CHAIN ANALYSIS (VCA) The company can gain competitive advantages not just beating its competitors, but discovering what the customers want and exceeding customer expectations. This is done by VCA.
Orgnaisational Structure Functional Structure
Multi divisonal
SBU
CEO
President
CEO General Manger Accounts General MangerMarketing
Division-2
Division-1 Manager Manager
General Manger- HR
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Corporate R&D
Corporate HR
SBU 1
SBU 2
SBU 3
D1 D2
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SUPER SUMMARY NOTES CHAPTER-7 (Reaching Strategic Edge) BUSINESS PROCESSING REENGINEERING (BPR) BPR is redesigning of business process to achieve dramatic changes in the processes, in term of cost, time, performance quality and responsiveness to customers. Principle of BPR: Single point responsibility If work is paralleled then, there should be perfect co-ordination & common database. Need of BPR:
Because of
Outdated process Time & cost Need of IT Sub System view
BENCHMARKING Benchmarking is an approach of setting goal & measuring productivity based on the best industry practice. Its provides standards against which performance can be measured. Process/Steps: 1. Planning 2. Data compilation 3. Analysis 4. Comparison 5. Reporting 6. Review
Process/Steps in BPR: 1. Determine Obj. 2. Identifying customer’s need 3. Study the existing process 4. Formulate & redesign of process 5. Implement to redesigned process.
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TOTAL QUALITY MANAGEMENT (TQM) Include three terms: Total, Quality & Management TQM is mgmt approach for the org., centered on quality, based on the participation of all its members and aiming at long-term success through customer-satisfaction, and benefits to all members of org. and to society. Principle in TQM: 1. Commitment 2. Culture 3. Continuous Improvement 4. Co-Operation 5. Customer-focus 6. Control 7. Cross-functional 8. Cause analysis 9. Change 10. Concept of team.
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SIX SIGMA Six Sigma provides the highest standard for the quality control of products and processes. Six sigma is a thorough and disciplined methodology that uses data & statistical analysis to measure & improve a company’s products quality by identifying & eliminating DEFECTS in mfg. & service related process. Commonly defined six sigma standard 3.4 defects per million parts or 99.99966% of products manufactured are defect free. SS efforts target 3 main areas: 1. Improve Customer satisfaction 2. Reducing process cycle time 3. Reducing defects. Two methodology of Six sigma: 1. DMAIC (for existing products) Define, Measure, Analyze, Improve, Control 2. DMADV (for new products) Define, Measure, Analyze, Design, Verify.
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About the Author: Hey friends, myself Yogesh Gupta, pursuing Chartered Accountancy and company secretary Course. I’m not so much minded as some other people; I just share my notes which help me in cracking my exams. I passed senior secondary in 2008 in first division, after I passed Graduation Degree in Business Administration (BBA) in June 2011. There are some difficulties in my life that’s why I CA after senior secondary. But ‘Jo bhi hota hai, ache ke liye hi hota hai, to mujhe is baat ki koi tensions nahi hai’. In December, 2010 in passed CA-CPT & CSFoundation in first attempt, In November 2011; I gave both groups for CAIPCC, but only one group was cleared. So, I wrote papers in May 2012 for Group-2, and cleared also second group. In December 2012, also clear the CSExecutive in first sitting. Now, turn of crack inter stage of CS…hope for the best. I also feel happy in preparing notes for my friends & studymates. I’m always working on my motto ‘sirf apne liye hi to sab jeete h…m different so, kuch dusro ke liye b kru…!’ I’m also a student, and I’m always waiting for yours reviews. If you have any complaint or suggestion about it, so please feel free to write me.
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