CHP 5 Strategic Alliance and Corporate Governance

 STRATEGIC ALLIANCE

A strategic alliance is an agreement between two or more parties or firms to work together to
achieve certain objectives. Generally , the alliance agreement is for a certain specific period .
When the Objectives are achieved , partners terminate the alliance . The firms remain
independent organisations and work together without forming new entity .The alliance
usually allows transfer of technology , share expense and risks.

An alliance can be defined as a collaborative relationship between two or more entities that
share complementary assets and strength and strength to create greater value for their
customer and their own organization which otherwise could not be accomplished
independently.

It is to be noted that some authors make a difference between strategic alliance and a joint
venture . they state that partners to be a joint venture contribute towards the equity , whereas ,
in a strategic alliance , they don’t . secondly , a joint venture is a long term alliance with a
distinct identity , whereas , a strategic alliance is of temporary nature for a specific purpose .
however , in reality this distinction does not hold valid .

 Reason for strategic alliance

The emerging globalization due to liberalization is opening up yet another major dimension
in the field of strategic management –the strategic alliance . The concept of strategic alliance
is causing far more impact than that of mere business management practice.

According to Ratan Tata, very few Indian businessmen have the capability of competing on
their own in the emerging environment of globalization . The businessmen are concerned
about their individual soverignty whereas they should be looking at alliances and aggregation
of companies as it so often happens abroad .

Strategies alliance are formed because of the following reasons:

1. Synergetic Advantage- Strategic alliance brings different competences of

partners together . This combined effect of competencies generates synergetic
effect , the alliance helps to produce greater results as compared to the sum of
their individual results. For instance , nowadays, it is difficult to match all the
competencies due to various constraints , and therefore, a strategic alliance

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 permits the partner to complement their competencies , which in turn
generates synergetic advantage .

2. Development Of New Products: New product development cost are quite

high , especially in the field of pharmaceutical , electronic, etc. For instance, in
the field of pharma , it cost even billion of dollar to develop breakthrough
drugs. Therefore, in order to bear cost, organisations may form, an alliance to
share cost and result of new product outcomes.

3. Global market: At times , global alliances are formed with organisation of

other countries to ease entry barriers as local organisation may be well aware
about the local business conditions. For instance a foreign firm may not be
fully aware of nature of customers in other countries, and therefore, such a
firm may collaborate with a local firm in another country to expand its market
.
4. Advantage Of Goodwill : At times, a foreign firm may collaborate with a
firm in another country in order to gain advantage of the goodwill enjoyed by
latter. For instance , a foreign firm may enter into alliance with Tata group in
India because Tata group enjoys name and goodwill in Indian market .The
reverse is equally true ie, a Tata group firm may have an alliance with a
foreign firm in a foreign market .

5) Sharing of risk: Strategic alliance is a method of sharing high business risk

among parties to the alliance . This enables at alliance to undertake larger risk
projects such as R&D projects, where costs and risks are involved .

 Problem With Indian Strategic Alliance

Co operative spirit between alliance partners is vital for its success and survival.
However, in several cases of alliance in India, there is untimely split which at times
may adversely affect the alliance partners, at least in the short run .

The following are some of the problems with Indian strategic alliance or joint venture.

1) Lack of planning A more serious reason for the mismatch , however, is that there is
very little planning that goes into setting up an alliance ,determining the interest of
each partner, analysing their respective contribution and accordingly structuring the
alliance . Some alliance fail due to lack of planning .

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For instance , Godrej soaps entered into a joint venture with P7G to manufacture and market
soap brands. Godrej reserved its soap making capacity at Mumbai , to manufactureits own
and P&G brands. However, it appear that no attempt was made to examine the working
relationship closely . Mr Press and Godrej more Intuitive or gut feel approach to marketing
was in sharp contrast to P&G’s approach based on extensive market research to build lasting
brands. When the sales of the JV ‘s brands fell short of projections, relations between the
partners began to sour.

2 ) Difference of opinion :

Most JV’s get derailed due to difference in aspirations and approaches. The mismatch of
aspiration and approaches become a bone of contention between the alliance partner. A case
in point is HDFC –Chubb General Insurance – non life insurance alliance which came into
existence in 2002. In 2007 , the Indian company called off its JV with Chubb Corporation,
the world’s largest non-life insurance company, after 5 yrs due to differences on pace of
growth . Obviously , there was a clash of ideologies and culture. This became a bone of
contention between the partners . It became a barrier for the Jv’s rapid roll out, especially in
the commercial segment. .

3) Continuous Disagreements:

There are cases , where there are constant disagreement between the alliance partners that
lead to the collapse of the alliance . For instance , Kinectic India and Honda entered into a
join venture with the objective of manufacturing scooter and mopeds in 1984. As Honda had
another joint venture with Hero to produce motorcycles the joint venture between Kinectic
and Honda was confined to mopeds and scooters.

During the operational phase of the joint venture, several sources of disagreements emerged
among the partners. Kinetic felt that Honda was not sufficiently committed to the venture
.For Eg , Kinectic wanted the company to spend more on advertising but Honda was
reluctant to do so. Kinectic also felt That Honda was more focused on markets such as
Indonesia and Thailand , which were growing rather rapidly. The continuing difficulties led
to the split between Honda and Kinectic in 1998.

4)Violation Of Agreement Clauses:Violation of agreement clauses may lead to the collapse

of an alliance . For instance , Titan Industries and Timex Watches entered into a joint venture
in India in 1990.The game plan was that Titan would focus on the price range of RS 1000/-
and above, while Timex would concentrate on the range below Rs 1000/-. Timex benefited

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from Timex ‘s technological expertise. The strategy worked well for some time but long term
problems gradually cropped up.

Problems began to emerge between the partners from 1996 onwards. Timex wanted to gain a
controlling share in the joint venture , to which titan was opposed . At the time , Titan began
to compete in lower markets segments, which violated the non compete clause in the
agreement . To counteract this, Timex began its entry in the up scale market segment.
On march 1998 they announced the break up of the venture.

5 )Problem Of Independent Plans:-

Alliance agreement may be signed for a certain specific period. After the specific period ,
The parties to the alliance may renegotiate terms and condition. Parties may try to dictate
terms at the time of renegotiation, and may adopt independent plans which may sour the
relation between the alliance partners.

A joint venture between Hero cycles of India and Honda of Japan came into existence in
1984 as motorcycle and scooter manufacture in india . In 2007 , hero Honda became the
largest two wheeler manufacturing company in India over a million units produced as well as
the “World Number One” in terms of terms of the unit volumes sales for the calendar year
.The technology for manufacturing the bikes was provided by Honda whereas Hero was
strong in its distribution and service network spread across the country.

In 1999, Honda announced that it would set up a subsidiary Honda whereas Hero was strong
in its distribution and service network spread across the country .At the same time , Honda
allowed Hero to have a minority stake in hmsi , and allowed Hero to examine the mororcycle
that Hmsi would release in the market .Thus, Hero Honda was unable to bring out new bikes
with better technology while competitor came out with better versions, as innovation was
solely in the hands of Honda. .In December 2010, both the companies decide to part ways in
a phased manner because of unresolved differences and independent plans. Honda decided to
sell its stake of 26%to the Munjal family and to exit from the venture.

6) Problem of Resource : At times , lack of resource or funds either with one of the parties
or with both the parties to the alliance lead to break up of the alliance .Matters came to a head
in 1994, when Maruti Udyog Limited felt an urgent need to increase capacity .With its
internal resource generations not being adequate , Suzuki proposed a combination of
additional debt and equity .Due to financial constraints, Govt of india finally had to reduce its
shareholding from 76% in 1982 to 50%in 1992 and less than 20% in the subsequent years. As

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of December 2013, Suzuki motors hold over 56 % of the total equity , and the remaining by
FII’s, DFi and others.

7)Lack of Trust :

Quite often, the lack of trust between the alliance partners is responsible for the break up.
The alliance partners are reluctant to share ideas and support due to lack of trust.This is
possible , when strangers are brought together to form an alliance, and therefore , there is no
mutual connection. In many cases, one party to the alliance blames the other for the failure.
Shifting the blame does not solve the problem, but increase the tension between the alliance
partners. Several alliance in India and overseas have failed due to lack of trust causing
unsolved problems, lack of understanding and despondent relationships.

Building trust is the most important and yet most difficult aspect of a successful alliance.
Only people can trust each other and not the firms. The alliance must form the three forms of
trust equality , reliability and responsibility . Developing trust in each other will move
towards a mutual win/win situation

8) Cultural Clashes:

Clash of cultures is probably a major problem that alliance face today worldwide. The
cultural problems include language barriers, egos, and different philosphies towards business,
which can create problems in the functioning of an alliance.

Language barriers can affect the parties working together. Also, alliance partners may have
different philosophies and priorities. At times there are ego clashes between the alliance
partners. Thus a good number of strategic alliances have broken up within a few years of
operation.

9) Government Regulations:At times , Govt regulations may not favour certain types of
alliance , the alliance are called off. The two companies have reached an agreement to
independently own and operate separate business formats in India. Bharti retail will continue
to operate “easyday” retail stores across all formats and invest to expand the business.
Walmart on its part will continue its investment in India , including cash –and –carry
business, supply chain infrastructure, direct farm programme and supplier development.

Also, at the state level, a change in government may reverse the stand taken by the earlier
State Govt .With this, Delhi has become the first state to withdraw permission for FDI
funded retail stores. The previous delhi government under Sheila dikshit had allowed FDI in

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multi brand retail in delhi . The DIPP is now examing the letter sent by the delhi government
on withdrawing permission for FDI in multi brand retail. States have to imitate DIPP about
allowing FDI funded stores . The states that allow FDI funded stores include Maharashtra ,
Karnataka and Andhra Pradesh .

Doing away with FDI was one of the steps AAP had mentioned in its manifesto before
elections in Delhi in December 2013. With this , Delhi has become the first state to
withdraw permission for FDI funded retail stores.

 FOREIGN DIRECT INVESTMENT

Foreign Direct Investment (FDI) is a long term direct investment in business in a foreign
country by an individual or a company of another country, either by buying a company or
trough equity participation or by expanding operations of an existing business in a foreign
country. FDI differs from portfolio investment, in that portfolio investment is generally short
term passive investment in the securities of firms in foreign country.FDI brings certain
benefits to the host country such as :

 Capital inflows which improve capital account balance and if there is a tie up with
local firms, the local firms can use the capital for expansion and modernisation.
 Skills development through training and development by the foreign firm.
 Transfer of technology by the foreign investing firm

Strategies for FDI in India

1) Greenfield Investment -A foreign firm may invest fresh equity capital investment
by setting up a new firm in a foreign country . This may be in response to the
initiative taken by the governments of the country where FDI is invested . The govt
may provide special incentives to attract FDI.
For instance, the GOVT may encourage FDI by increasing the FDI limits. At present
100% FDI is allowed in sectors like hotels and tourism industry, export sector,
pharmaceutical sector, telecom sector, etc. some countries such as china encourage
FDI through various incentives such as lower corporate rates for foreign firms. This
mode , a development perspective is usually the most desirable.

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 2) Reinvestment of earning – Several countries encourage reinvestment of earnings by
foreign firms by providing special incentives such as tax benefits. This strategy Does
not result in outflow of foreign exchange by way of dividend or transfer of profits
.This strategy adds to the host-country’s capital stock and as such the productive
capacity increases. The host country may also benefits by way of transfer of
technology by the investing firm from abroad.

3) Intra company loans – Usually this strategy is followed by parent company when it
provides additional funds to its subsidiary by way of loans. Initially this strategy may
lead to foreign capital inflows which can be used by the subsidiary for expansion and
modernisation . However, This strategy may require larger outflow of capital by way
of interest payments and repayment of loans by the subsidiary to the parent firm.
Generally ,countries may not prefer this type of investment as compared to equity
participation by foreign firms, because in equity participation there is no obligatiob to
pay dividends or profits to the investing firm and secondly equity participation
involves long term commitment of capital flows.

4) Mergers and acquisition- At times , the govt of the host ountry may attract FDI
through merger and acquisition route. Generally, it is not most desirable mode of FDI
unless FDI is crucial to the success of the privitization of a loss making public
enterprise , or in the case where the merger of a domestic company with a foreign
company takes place on equal terms . Where a domestic firm becomes sick
,acquisition by a foreign firm may be deemed desirable.
Merger by parent companies of leading global MNC’S are outside the control of the
host country where subsidiaries of both MNC’S where operating before the merger .
Such a merger may lead to suppression of competition in the host country.

5) Non Equity forms of FDI – These may involve arrangements in the form of
subcontracting , licensing, franchising , etc. Such arrangements may not involve capital flows
from abroad . However, such arrangement contribute to the development of the host country
economic growth and development.

a) Franchising- Certain firm may adopt franchising route to enter in foreign market .
Franchising is a contract between two parties , especially in different countries involving
transfer of right and resource . The franchisor enters into a contract with thefranchisee ,

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whereby the franchisor agrees to transfer to the franchisee a package of rights and resources ,
such as :

 Production processes
 Patents, trade marks and brand names
 Loans and equity participation.
 Product ingredients, etc.

b) Licensing - Licensing makes sense when a firm with valuable technical know-how or an
unique patented product has neither the organisation capability nor the funds to enter foreign
markets. This strategy also becomes important if the host country makes entry difficult
through investment. However , there is a danger that the licensee might develop its
competence to a point that it becomes a competitor to the licensing firm.

Under a licensing agreement, the licensing firm grants rights to another firm in the host
country to produce and/or to sell a product . The licensee pays compensation to the licensing
firm in return for the rights to use technology or patent.

 Corporate Governance

Corporation pool capital from a large investor base both in the domestic and in the
international capital markets. In this content , investment is ultimately an act of faith in the
ability of a corporation management. In this regards, investor expect management to act in
their best interest at all times and adopt good corporate governance practices.

Meaning of Corporate Governance

Corporate Governance may be defined as a set of rules, regulations procedures and

practices to be adopted by a firm’s management to manage its affairs in the best interest
of its stakeholders , especially the shareholder.

It is about commitment to values , abaout ethical business conduct and about making a
distinct between personal & corporate funds in the management of a company .

Feature of Corporate Governance:

The main features of corporate governance are as follows:

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1) Major Stakeholders: The management needs to manage its affairs of the firm in the best
interest of its stakeholders. The major stakeholder in the area of corporate governance are:

a) Within the Firm: The stakeholders within the organisation include management ,
shareholders , and employees.

b) Outside the Firm : The stakeholder outside the organisation include lenders such as banks
, and other investors such as Debenture holders . It also include customer , suppliers and
society.

2) Corporate Governance Factors:

The corporate Governance depends upon 2 main factors:

a) The first is the commitment of the board of directors and management towards integrity
and transparency in business operations.

b) The second is the legal and administrative framework of the government . If public
governance is weak , we cannot have good corporate governance.

3) Corporate Governance – The objective :

The main objective of corporate governance is the “ enhancement of shareholder value,

keeping in view the interest of other stakeholder.” Therefore , a company needs to strike a
balance at all times between the need to enchance shareholders wealth and the need to protect
the interest of other stakeholders.

4) Aspect of Corporate Governance :

The 3 main aspects of corporate governance are as under :

 First, there is no unique structure of corporate governance in the developed world.The

corporate governance code of each country has to be designed keeping in view the
peculiarities of the country.
 Second, Indian companies , banks and financial institution, can no longer afford to
ignore better corporate practices. With integration of india into the world market ,
companies will have to give greater disclosures , more transparent explanation for
major decision and better corporate value.
 Third corporate governance extends beyond corporate law.

5) Reasons for Corporate Governance:

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The reason for growing interest in corporate governance are as under:

 The assertion of rights by the shareholders.

 The new growth opportunities brought about by changes in the business environment
resulting from globalisation.
 The significant presence of foreign financial investors, who have high expectation
about the quality of management .
 The greater accountability on the part of the financial institution.
 The international standards of disclosure and practices.
 The strategic alliance with global players to become more market driven.
 The need to comply with the statutory authorities such as sebi in india.

6) Reasons governance Report:

As per clause 49 of the listing agreement , all listed companies must submit a report on
corporate governance along with their annual report . the items to be included in corporate
governance reports are:

 A brief statement on company’s philosophy on code of governance .

 Composition and category of board of directors.
 Role of audit committee.
 Role of shareholders committee
 Details of general body meeting .
 Disclosure relating to promoters and directors interest that may conflict with the
interest of the company at large.
 General shareholders information such as pattern of shareholding, registar and
transfer agent, book closure data dividend payment date, etc.

 Principle of Corporate Governance

Capital market regular securities and exchange Board of india stated in December 2013
and in January 2014 that it would soon come out with new corporate governance norms.
As several companies have operation outside India and many more would be
venturing in foreign territorities, there is a need to align rules with the best in the
world, SEBI Chairman Mr . U.K.Sinha stated.SEBI has also proposed to introduce a
new concept of “corporate Governance Rating” by independent agencies to monitor the

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 level of compliance by the listed companies, in addition to regular inspection by SEBI
and stock exchanges.

Therefore , the new set of corporate Governance principles could be based on the OECD
Principles of corporate Governance .The principles were revised in 2004 as mentioned below.
The principles are further likely to be revised in 2014.

The principles Of corporate governance are as follows:

1) Ensuring the basis for an effective corporate governance Framework:

The corporate governance framework should promote transparent and efficient markets, be
consistent with the rule of law and clearly articulate the division of responsibility among
different supervisory , regulating and enforcement authorities

1) The corporate governance framework should be developed with a view to its impact on
overall economic performance, market integrity and the incentive it creates for market
participants and the promotion of transparent and efficient markets.

2)The legal and regulatory requirement that effect corporate governance practices in a
jurisdiction should be consistent with the rule of law , transparent and enforceable.

3)The division of responsibilities among the different authorities in a jurisdiction should be

clearly articulated should be clearly articulated and ensure that the public interest is served.

2) The rights of shareholders and key Ownership Functions

The corporate governance framework should protect and facilitate the exercise of
shareholders’s rights.

 Basic shareholder rights should include the right to:

a) Secure the methods of ownership registration.

b) Convey or transfer shares,

c) Obtain relevant and material information on the corporation on atimely and regular basis.

d) Participate and vote in general shareholder meetings

e) Elect and remove members of the board

f) Share in the profits of the corporation.

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  Shareholders should have the right to participate in, and to be sufficiently
informed on, decision concerning fundamental corporate changes such as

a) amendment to the statutes or articles of incorporation or similar governing documents of

the company

b) The authorisation of additional shares,

c) Extraordinary transactions including the transfer of all or substantially all assets, that in
effect result in the sale of the company.

 Shareholders should have the opportunity to participate effectively and vote in

general shareholders meeting and should be informed of the rules, including voting
procedure , that govern general shareholder meeting.

a) Effective Shareholders participation in key corporate governance decision such as the

nomination and election of board members should be facilitated. Shareholders should be able
to make their view known on the remuneration policy for board members and key executives.
The equity component of compensation schemes for board members and employees shoukd
be subject to shareholders approval.

b) Shareholders should be able to vote in person or in absentia and equal effect should be
given to votes whether cast in person or in absentia.

c) Capital structures and arrangement that enables certain shareholders to obtain a degree of
control disproportionate to their equity ownership should be disclosed.

 Market for corporate should be allowed to function in an efficient and

transparent manner:

a) Transaction should occur at transparent prices and under fair condition that protects the
rights of all shareholders.

b) Anti take over devices should not be used to shield management and the board from
accountability.

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  The exercise of ownership rights by all shareholders , including institutional
investors, should be facilitated .

a) Institutional investors acting in a fiduciary capacity should disclose their corporate

governance and voting policies with respect to their investment, including the procedure that
they have in place for deciding on the use of their voting rights.

b) Shareholders , including institutional shareholders, should be allowed to consult with each

other on issues concerning their basic shareholders rights as defined in the Principles, subject
to exceptions to prevent abuse.

 The Equitable Treatment of Shareholders

All Shareholders should have the opportunity to obtain effective redress for violation of
their rights.

a) Any changes in voting rights should be subject to approval by those classes of share which
are negatively affected.

b)Votes should be cast by custodian or nominee in a manner agreed upon with the beneficial
owner of the shares.

c) Impediment to cross border voting should be eliminated .

d) Company procedures should not make it unduly difficult or expensive to cast votes.

Insider Training and abusive self dealing should be prohibited.

The role of stakeholders in corporate governance.The corporate governance framework

should recognise the rights of stakeholders established by law or through mutual
agreement and encourage active co operation between corporation and stakeholder in
creating wealth, jobs

1) The rights of stakeholders that are established by law or through mutual agreement are to
be respected.

2) Where stakeholders interest are protected by law, stakeholders should have the opportunity
to obtain effective redress for violation of their rights.

3)Performance –enchancing mechanism for employee participation should be permitted to

develop.

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4)Where stakeholders participate in the corporate governance process, they should have
access to relevant , sufficient and reliable information on a timely and regular basis.

5)The corporate governance framework should be complemented by an effective , efficient

insolvency framework and by effective enforcement of creditor rights.

 Disclosure and transparency

The corporate governance framework should ensure that timely and accurate
disclosure is made on all material matter regarding the corporation including the
financial situation, performance ,ownership and governance of the company.

1) Disclosure should include, but not be limited to , material information on:

a)The financial and operating result of the company .
b) Company objectives.
c) Major share ownership and voting rights.
d) Related party transaction.
e) Foreseeable risk factor .
f) Issues regarding employees and other stakeholder.

2) Information should be prepared and disclosed in accordance with high

quality standards of accounting and financial and non financial disclosure.

3) External auditor should be accountable to the shareholders and owe a duty to

the company exercise due professional care in the conduct of the audit.

4)Channels for disseminating information should provide for equal,timely and cost
effective acess to relevant information by users.

 The responsibilities of the Board.

The corporate governance framework should ensure the strategic guidance of the
company , the effective monitoring of management by the board , and the board
accountability to the company and the shareholders.

1) Board members should act on a fully informed basis , in good faith with the diligence and
care , and in the best interest of the company and the shareholders

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2)Where board decision may effect different shareholders groups differently , the board
should treat all shareholders fairly.

3)The board should apply high ethical standards . it should take into account the interest of
stakeholders.

4The board should fulfil certain key functions, including:

a) Monitoring the effectiveness of the company’s governance practices and making changes
as needed.

b)Selecting , compensating , monitoring and, when necessary , replacing key executives

and overseeing succession planning .

c)Aligning key executive and board remuneration with the longer term interest of the
company and its shareholders.

d) Ensuring a formal and transparent board nomination and election process.

e) Overseeing the process of disclosure and communication.

5) The board should be able to exercise objective independent judgement on corporate

affairs:

a) When committee of the board are established , their mandate composition and working
procedures should be well defined and disclosed by the board . b)Board should be able to
commit themselves effectively to their responbsibilities

6) In order to fullfill their responsibilities , board members should have access to

accurate , relevant and timely information.

 Corporate Governance Practices in India

Companies act,1956 provides for basic framework for regulation of all the companies.
Certain provision were incorporated in the act itself to provide for checksand balances over
the powers of board viz:

 Loan to directors or relatives or associated entities need Central Govt .permission

 Interested contract needs Board resolution and to be entered in register.
 Interested directors not to participate or vote.

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  Appointment of directors or relatives for office or place of profit needs approval by
shareholders. If the remuneration exceeds prescribed limit, Central Govt approval
required.
 Audit committee for public companies having paid up capital of RS 5 crore.
 Shareholders holding 10% can appeal to court in case of oppression or
mismanagement .

The revised clause 49 superseded all the earlier circulars on the subject and became effective
for listed companies from January 01,2006.It is applicable to the entities seeking listing for
the first time and for existing listed entities having a paid up share capital of RS 3 crore and
above or net worth of RS 25 crore or more at any time in the history of the company.

Clause 49 of the equity listing agreement consists of mandatory as well as non-mandatory

provision. Those which are absolutely essential for corporate governance can be defined with
precision and which can be enforced without any legislative amendments are classified as
mandatory. Others, which are either desirable or which may require change of laws are
classified as non mandatory. The non mandatory requirement may be implemented at the
discretion of the company.

Mandatory Provision comprises of the following:

 Audit committee, its comparision , and role,

 Provision relating to subsidiary companies .
 CEO/CFO certification
 Disclosure to audit committee , Board and the shareholders.
 Quarterly report on corporate governance
 Annual compliance certificate.

Non mandatory Provision consist of

 Constitution of remuneration committee

 Despatch of half yearly result.
 Training of Board members.
 Peer evaluation of Board members
 Whistles blower policy

The companies should also submit a quarterly compliance report to the stock exchanges
within 15 days from thr close of quarter as per the prescribed format. The report shall be
signed either by the compliance officer oe the CEO of the company. Apart from clause 49
of the equity listing agreement , there are certain other clause in the listing agreement,
which are protecting the minority shareholders and ensuring proper disclosures:

 Disclosure of shareholders pattern

 Maintenance of minimum public shareholding
 Disclosure and publication of periodical result.

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  Disclosure of price sensitive information.
 Disclosure and open offer requirement.

Role of the Board – areas of Monitoring

The board should focus on activities connected to its monitoring role. The areas to be
mentioned by the Board may be divided into 4 main segment:

 Strategic planning
 Capital allocation
 Manpower planning
 Performance appraisal

The eminent management expert Bernard Taylor is of the opinion that the board should
perform the following strategies tasks:

a) to improve the performance of the business of the business for the benefits of the
shareholders, the managers , the employees and others having stake in the company
like supplies , customers , local community, etc.

b) To develop a philosophy and a set of principles , which will guide the action of the
people involved in the enterprise .

c) To set the strategy and direction of the business usually for the growth in products
and markets, divestments and acquisition.

d) To provide a set of policies which can be presented publicly in discussion with

government and other external bodies.

Role of Audit committee

The audit committee needs to be meet at least thrice in a year. One meeting needs to be held
before finalization of annual account and one in every six months.

The powers of audit committee include:

 To investigate any activity within its term of reference

 To seek information from any employee.
 To obtain outside legal or other professional advice,
 To secure attendance of outsiders with relevant expertise , if necessary.

The role of audit committee include the following:

a) Oversee the company’s financial reporting process and the disclosure of its financial
information to ensure that the financial statement is correct, sufficient and credible.

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b) Recommending the appointment and removal of external auditor, Fixation of audit fee and
also approval for payment for any other service .

c)Reviewing with management the annual financial statements before submission to the
board, focusing primarily on:

 Any changes in accounting policies and practices

 Major accounting entries based on exercise of judgement by management
 Qualification in draft audit report
 Significant adjustment arising out of audit
 The going concern assumption
 Compliance with accounting standards
 Compliance with stock exchange and legal requirement concerning financial
statements.
 Any related party transactions ie , transactions of the company of material nature,
with promoters or the management , their subsidiaries or relatives etc. that may have
potential conflict with the interest of company at large .

d) Reviewing with the management , external and internal auditor, regarding the adequacy of
internal control system.

e)Discussion with internal auditor, any significant findings and follow up there on.

f) Discussion with external auditor before the audit commences , nature and scope of audit as
well as post audit discussion to ascertain any area of concern.

g) Reviewing the company’s financial and risk management policies

h) To look into the reason for substantial defaults in the payment to the depositors, debenture
holders, shareholders and creditors.

 Strategic Change

Meaning and Nature of Organisation change

Changes are introduced in strategies , procedure ,objectives , technology , structure , job

designs, and people.

The following are the features of organisational change :

1) Pervasive in nature: Changes are required in all organisations. No organisation can

succeed without a change. Some parts of the organisation may b e affected more than others.
Some parts may have a direct impact, whereas , others may have an indirect impact. For
instance, the production department may introduce latest machinery to manufacture the
products. The marketing department would also require adjustment to market the improved or
better quality of product , if any.

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2)Necessitates new equilibrium :When a change takes place in any part of the organisation ,
it disturb the existing equilibrium in the organisation . A change require the need for new
equilibrium in the organisation. The new equilibrium depends on the degree of change and its
overall impact on the various parts of the organisation.

3) Continuous in nature: Organisation change is continuous in nature . As long as the

organisation exists, there would be changes.

4)Reactive and Proactive: A change may be reactive or proactive . A reactive change is

unplanned and it takes place due to changes in the environment. This would require a reaction
from the organisation , ie, it may resort to changes in its marketing strategy. Proactive change
is the deliberate attempt on the part of the organisation.

5)Changes is different from innovation: Change and innovation are 2 different concept.
All innovation is change , but not every change is innovation. . However, changes involves
any alteration or modification is an organisation established way of doing things.

6)Internal and External Forces: An organisational change can take place due to variety of
factors or forces. The forces can be internal or external. The external forces relate to
competition , government , customer , supplier , dealers, etc.

7)Degree of Change : Changes may differ in terms of degree . Certain changes may be
minor, which may not require changes in organisation structure. For instance , changes in
credit policy of the firm .

8)Risks and Rewards: Changes are subject to risk and rewards . At times , change may
result in negative outcomes due to the risk involved in respect of certain changes . For
instance , launch of new product may turn out to be a big disappointment

 Reasons for strategic change

The main reason or cause for strategic change are as follows:

1) Technological and organisational change: Technology is the most important factor

responsible for a change in the organisation. Technological development requires change in
organisational objectives, policies, procedure , strategies, etc.

2)Shift in management philosophy: The management philosophy may shift from traditional
management philosophy to professional management philosophy This in turn may require
changes in various aspect and in functional areas of the organisation Therefore , there will be
changes in the organisation due to a shift in management philosophy.

3) Changes in top management: There may be change in managerial personnel. For

instance , the ceo may be changed , and a new person may take over the chief executive
position.

4)Product Life cycle: Every product passes through a life cycle with consists of phases
growth phase, maturity phase, and decline stage. The product life cycle requires changes in
the product and marketing mix.

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5)Environment Forces: There may be changes in the environmental forces such as,

 Changes in competitors strategies

 Changes in consumer tastes and preferences ,
 Changes in government policies, etc.
 The changes in the environmental forces require a change in the business
organisation. Also there may be changes in government policies, which in turn may
necessitate changes in the organisation in order to adopt and to adjust to the changes
in the government policies.

6)Problems in the Existing Practices: There may be problems relating to the present
practices of the organisation. For instance , the present methods and procedure in respect of
production activities may be obsolete.In order to face competition effectively in the market,
changes need to be made in the organisation.

7) Changes in employee expectation: Employee expectations do change over a period of

time . If employee expectation are not fulfilled then there may be non cooperation on the part
of employee and such as the organisation may suffer

8)Changes in Union leadership : There may be changes in the union leadership This would
hesitate changes in the organisation. Management has to deal with new union leadership in a
different manner . Therefore management may have to introduce certain change in the
organisation.

9)Growth and Expansion plans: The organisation may plan for growth and expansion of
the business. Without effective changes it would not be possible to achieve growth and
expansion of the organisation.

 Process of management of change

The following are the various steps involved in the planned process of management of change

1) Identifying need for a change: The first step in the process of management is to identify
the need for a change. Internal factors may require a change in the organisation. Therefore ,
such factors may force the management to introduce a change in the organisation.

2)Decision on element of change: After identifying the need for a change, the management
must decide on the element , which require a change. For instance, a company’s sales may
decline due to:

 Faulty promotion – Inadequate or improper advertising , inadequate or faulty sales

promotion , etc.
 Defective pricing policies – the price may be too high as compared to that of the
competitors , or it may be too low and buyers may equate too low price to low
quality.
 Problem in distribution – poor dealers relationship , delay in distributing the
products , wrong channels of distribution etc.

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  Problems in the product – the product may be outdated , it may not meet the
expectation of the customers , wrong channels of distribution ,etc.

After conducting a proper analysis of the problem , the management should identify
those factors or elements that require a change.

3) Planning for change: After identifying the element that require a change the
management should plan for a change . Planning for a change need to answer the
following question.

 Who should introduce a change

 When to introduce a change
 How to introduce a change

As far as the first question is concerned , the change are to be introduced by the manager who
is responsible for the tasks where changes are required. For instance , if a change is required
in the pricing strategy, then the marketing manager is responsible for such changes. As far as
the second question is concerned , a proper decision is required regarding the timing of the
changes . For instance , if sales are falling down as a result of change in competitors pricing ,
or sales promotion activities , then it makes sense to introduce such changes immediately .

All these activities would require a good amount of time . This does not mean that the
management should delay in taking decision .The 3rd question relates to the procedure of
introducing a change in the organisation .The management should decide on the sequence of
activities and the manner in which the activities to be undertaken .

4) Assessing Possible Impact: The management should also assess the impact of the change
on the stakeholders such as employees , customer , etc. For instance introduction of new
technology may have to direct impact on the workforce :

 Reduction in workforce
 Problem of social networking
 Need for additional training

5) Communicating the change: The management must communicate the change to the
various stakeholders. Wherever required , reasons must be provided for introducing the
change .

6) Overcoming the resistance to change: At times there may be resistance to change . For
instance , employees may resist automation for the fear of retrenchment problem of
adjustment to new technology etc. Therefore , in such situation , employees need to be
counselled and trained to adjust to the new environment in the organisation .

7) Review: There must be a review to ensure that the changes is progressing in the right
direction. The change should bring the desired results. For the Purpose , the management
should constantly monitor the performance of the change process. If there are any problems
due to change , then such problems should be handled immediately .The timely identification
problems and appropriate solutions to such problems will enable the change to bring the
desired result in the organisation.

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  Causes of resistance to change

In any organisation , there is resistance to change . The resistance to change can be at

individual level, group level and even at the organisational level. The factors or causes of
resistance to organisational change can be broadly classified as follows.

1) Individual Factors

There are several factors operating at individual level , which are responsible for resistance to
change in the organisation . some of the individual factors responsible for resistance to
change are briefly stated as follows:

1)Psychological Factors: The psychological factors are based on individual feelings ,

emotions and attitudes towards change . The major psychological factors responsible for
resistance to change are as follows:

a) Fear of Unknown: Individual may resent change for the fear of unknown . He/ she may
feel that the new technology may be difficult to handle and as such he /she may avoid
accepting the new technology.

b) Status quo: Most individual are satisfied with their present routine of work environment
.They feel that changes would disturb Their present pattern of work and life. A change would
require certain adjustment in the current pattern of life and work and therefore , individuals
resist change .

c)Problems of ego: Some individual enjoy present status in the organisation They satisfy
their ego needs with the present position or status in the organisation . as such , individuals
may resist change in the organisation .

d) Inconvenience: Individuals may resist change , which is likely to cause inconvenience ,

make life more difficult, reduce freedom of action or result in increased workload.

2) Economic factors: Individuals may feel the economic loss due to the proposed change in
the organisation . The economic causes for resistance to change can be stated as follows:

a)Redundancy of Jobs : For instance when computers were first introduced in between
1970s and 1990s in several organisation in india , employees including managers resisted
the change for the fear of losing jobs and consequently their economic security.

b)Problems of incentives: At times , a change would reduce incentive of employees such as

over time pay as such they may resist change . For instance , automation in the industry
reduces the need for over – time pay and as such they may resist change . For instance ,
automation in the industry reduces the need for over time of the employees , and therefore. ,
they may resist introduction of labour saving devices in the organisation .

2) Group Factors: Individual as members of a group may jointly resist a change in the
organisation . The group resistance to change can be explained from the viewpoint of nature
of group dynamics and vested interests.

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a) Group dynamics: It refers to the interaction among the group members, which in turn
affects the group behaviour. The members of a group may jointly oppose a change in the
organisation, as it may affect the group interaction .

b) Vested Interest : Normally , every group has its own leader , whether elected or accepted
by the group members. The leader may use the group as a mean of satisfying his personal
interest . Therefore , the normal leader may influence the group members to resist such a
change .

3) Organisational and management factors :At times , the organisational factors are
responsible to resist changes in the organisation . Organisation resist change due to the
following factors:

a)Resource Limitation :Every organisation needs to adopt to changes in the external

environment. In other words, an organisation may not have adequate funds and manpower to
introduce the technological changes .

b)Stability of systems: Organisation tend to develop certain system which brings benefits to
the organisation .For instance , most educational institution are comfortable with the present
system of education , where the student are passive receivers of knowledge from the
teachers , and as such emphasis is not placed on interactive learning systems.

c)Traditional management philosophy: Traditional managers o not like to introduce

changes in the organisation . They are content with the present performance of the
organisation .

d)Problem of Responsibilities : managers are held responsible for the outcome of changes,
if introduced. Every change is associated with some degree of risks. There is no guarantee
that change introduction would bring positive result .

 Overcoming Resistance to change

Management has to overcome resistance to organisational change. It is a real challenge to

overcome resistance to change in the organisation. Employees may be forced to accept the
change imposed on them as a result of formal authority of management .However , they may
not give their willing support, and commitment in implementing the change in the
organisation .

1) Employees Participation: The management should secure involvement of the employees

who would be affected by the change through continuous interaction .This would involve
explanation and then discussion on the proposed changes .Such Interaction is a trust building
exercise . as the interaction continues , the level of resistance to change may decline , and
personal involvement in the change process increases. It is generally observed that as the
participation increases, resistance to decrease. Since the needs of employees are considered ,
they feel secure in a changing situation . Employees need to participate in the change before
it occurs , and not afterwards. When the employees are involved right from the beginning ,
they feel protected and that their ideas are required.
2) Group dynamics : A change not only affects individual members, but also the group in
the organisation . Therefore the management should understand the impact of group

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dynamics. The influencing members of the group, the so called group representatives can
exert strong pressure on the group members to accept the change .

3)Competent Leadership: An effective leader presents change on the basis of impersonal

requirement rather than on personal grounds. A leader must provide performance related
reasons for the change . If proper reason cannot be given for the introduction of change , then
it should not be introduced. Also employees expectations of the change must be considered.
The expectations lead to better efforts on the part of the leader and his subordinates in
implementing the change in the organisation .

4) Sharing of rewards: Management should promise sharing of rewards arising out of the
proposed change. When employees are assured of rewards they would be wiling to accept
and implement the change in the organisation . Employees are assured of rewards they would
be willing to accept and implement the change in the organisation .Employee need to be
provided both with monetary and non monetary incentives. The management may introduce
group rewards as well as individual rewards so as to implement the change effectively .

5) Employees Security: Existing employees security must be protected . Management must

guarantee workers protection from reduction in earnings when new technology is introduced
in the organisation. A Guarantee of employee security would result in overcoming the
resistance to change on the part of employees.

6)Education and communication : Management can introduce a change successfully in the

organisation through education and communication . Effective communication is required
for gaining support for change . Even if the proposed change affects one or few person in the
group , all the members of the group must be informed os such changes , so as to gain group
support if need arises. Management should educate the employees regarding the benefits of
the proposed change. This would facilitate easy acceptance and implementation of change in
the organisation.

7) Training and counselling: Management can introduce training programmes so as to

upgrade knowledge, skills and attitudes of the employees. Employees should be trained to
become familiar with change , and its working. At times, management may provide
psychological counselling to develop a positive attitude towards change.

8)Union consultations: Management should consult the workers union in introducing the
change in the organisation . Union representatives should be involved before the change is
introduced in the organisation.

9)Use of authority: However, This technique amounts to coercion on the part of

management to introduce change in the organisation . The employees may be compelled to
accept such change , but they may not work with commitment and dedication to implement
the change .

10)Organisational development: OD approach uses various techniques to bring about a

planned change in the organisation. For instance , there can be structural changes such as
decentralisation of authority, so as to improve the organisational effectiveness. There can be
restructuring of departments so as to enable proper flow of work in the organisation.

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 CHP 4 Disaster Management – Perspectives and Issues
 Disaster management
 Concept
The Webster dictionary defines a disaster as “ a grave occurrence having ruinous
results”. The world health organisation defines disaster as “any event
concentrated in time and space in which a society or a relatively self sufficient
sub division of a society , undergoes severe danger and incurs such losses to its
member and physical appurtenances that the social structure is disrupted and
the fulfilment of all or some of the essential functions of the society is prevented”

Disaster can be classified into 2 groups – manmade disaster and natural disasters:

a) Manmade disaster: Include vechicles related accident , forest fires, wars and civil
disturbance , ecological disaster due to deforestation , air , water ans soil pollution ,
industrial accident such as gas leaks and fires, etc

b) Natural disaster : which include

 Wind related such as storms , cyclones , Tsunami , hurricanes , tidal waves ,
etc.
 Water related such as floods and droughts.
 Land related – earthquakes , avalanches , landslides , volcanic eruption , etc.

 Characteristics of disaster

Generally , the following are the characteristics of most of the disaster :

1) Borderless: Certain natural disaster are not bound by borders of a nation or state . The
disaster affect humans and other living being across the globe . For instance , earthquakes ,
cyclones , floods , drought, etc, can take place in any country irrespective of social and
economic development. At times, a single disaster may affect several countries at a time.

2) Loss: Certain disaster result in death of several people . For instance , the Gujarat
earthquake in 2001 resulted in deaths of over 20,000 people. The Orissa cyclone in 1999
killed 10,000 people. Apart from loss of human lives, the disaster result in loss of livestocks ,
destruction of houses , offices , factories , and other valuable assets.

3)Unusual Event : Disaster by their nature , are distinct from emergencies because they do
not happen all the time . Unusual , but not unexpected.

4)Communications Failure: This is one of the defining characteristics that separate an

emergency and a disaster. The problem is that there are different ways that communication
fail. The communication failure may be due to :

 Frequency overuse- Listening to dozens of firemen calling Mayday! Mayday!

Mayday! ALL AT ONCE DURING 9/11/2001 Clearly illustrates that nobody’s
Mayday was being understood . Very little information aside from Mayday got over
the radios.
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  Battery Failure – batteries get used up at an incredibly fast rate during disaster.
 Incorrect information- passing of incorrect or partially correct information
 Misunderstanding: the information presented or not acting properly upon it.

5)The extent is uncertain: With unusual events occurring compounded by communication

failure, it is no surprise that disaster invariably result in nobody knowing the full extent of
how bad things are The worst areas are the last to be responded to . Areas slightly affected
scream the loudest because they still have phones working or alternate form of
communication .The worst hit areas lose all forms of communication and are simply
forgotten due to the noise from elsewhere.

6) Lack of information: Due to the widespread scope of a disaster , everthing is affected.

As a result , there is a tremendous need to find out what roads are out and what roads are
intact , what vital service are destroyed and which one can easily be repaired , where the
greatest number of casualties and evacuees are to be found and what buildings are intact for
recovery use or have been destroyed.

7)Misinformation: It is very easy for information to be misconstruced and rumours to be

stated as facts when dealing with a disaster . When massive amounts of information are
required , it is easy for wrong information to slip in . Disaster are full of example of “Wrong
information”

8) Emergency service are affected : Fire halls are destroyed by tornados . City halls are
flooded out. When the fire truck is crushed and the water mains are broken , the arrival of the
fire-fighters has no effect on the disaster and the situation continues to deteriorate. Hospital
are equally affected by the disaster. Whether the disaster damages the building itself , the
content of the buildings are disrupted , or staff is unable to get to orr from the hospital , the
hospital are the first to feel the effects.

9) Things get better or they get worse: Disaster never stay exactly the same . This means
your response environment will constantly be changing and the situation an hour ago may be
completely different from the latest one . Situation may deteriorate for the worst or it may be
improved for the better.

10)Things will last much longer : Things may last much longer than one expect . There is a
tendency for everyone to think that after an earthquake or a hurricane or any disaster that
things will be cleared up in a week or two . Months later, as a society continues to struggle
with rebuilding , they realize that the recovery may take months or even years

 Problems/ Challenges of Disaster Management

In the past 2 decades , India public policy on disaster management has shifted from a
focus on relief and rehabilitation efforts to holistic management of disaster. This new
policy approach incorporates pre –disaster issues of prevention , mitigation and
preparedness , as well as post –disaster issues of response , recovery and
reconstruction.
Some of the following of disaster management in India are as follows:

26
1)Challenges of Training: Training programme has to be practical oriented with
emphasis on different scenarios and problem solving exercises. This makes the
functionaries aware of the specific responsibilities , and to discharge the task effective
before, during and after the disaster. The specialised trainers can provide training to a
group of community trainers, who in turn can provide training to the local volunteers.
Good efforts are made by central and state government to impart training to specific
groups on disaster management . However, the effectiveness of trainers is one of the
major challenges in India and several other countries , especially in developing
countries.

2) Challenges of Creating awareness and Education :While training is directed to

specific groups according to their training needs, awareness creation is more general
in nature and sensitizes common masses. Electronic , print , and local media can be
used to create awareness among the masses especially in disaster prone areas. Disaster
education is more formalised curriculum within the education system at various
levels. Engineering and architectural courses can include modules on disaster resistant
housing and infrastructure. The disaster management curriculum has been introduced
in schools and colleges in several countries including India . But the greatest
challenge is its effective implementation. The government authorities , NGO’sand
other are making good efforts in this direction. One positive long term outcome of the
2004 tsunami that ravaged parts of India was heightened awareness of disaster
preparedness and mitigation.

3) Challenge of unsafe building practices: Unsafe building practices in rapidly

growing urban settlement constitute one of India greatest challenges for disaster
management. A major earthquake in any of India’s densely and heavily populated
cities in seismic zones would be catastrophic in term of loss of lives and destruction
of property. The central and state government should take frame stringent laws and
take strict action on defaulting builders and contractors for poor quality of building
constructions. For instance, those contractors responsible for collapsed buildings need
to be arrested and prosecuted. Government has responsibility to prevent disaster by
doing the needful on time. There is no need to wait till a building collapse when such
buildings could be pulled down once a structural defect is noticed. The public on their
part must be law abiding and should pay adequate attention to safety regulation.

4) Challenge of climate change: Climate change has far-reaching implication for

managing disaster risk in indias , as the frequency and intensity of flash floods,
landslide, drought , cyclones and storm surges are expected to increase in upcoming
decade. While significant achievement have been made in post disaster response and
reconstruction , there are still formidable challenges to reducing the risk of future
disaster.

5) Challenges of regional cooperation: Generally , disaster take place within a

particular state or a group of states given that natural disaster do not always follow

27
national; boundaries , cross boundary issues of disaster management should be
addressed through enhanced regional co operation. Furthermore, an effective regional
response system should be developed to pool capacity for mutual benefits.

6) Challenge during the rescue Phase: The most immediate need during the
destructive event and in its immediate aftermath is to rescue those who can be saved
. for instance , during a tsunami some volunteers may reach out and provide
assistance to other in need. The task force , specifically deployed at the affected area
may have to provide first aid to the victims, and also provide emotional support.

7)Challenge of Recovery and reconstruction: Among things, the government

authorities need to identify and exchange information about displaced survivors. It is
a big challenge to restore vital service such as electricity , drinking water,
communication . etc. Also there is a need to reconstruct infrastructure for livelihood
and social institution like schools , religious places, hospital, etc. The reconstruction
efforts may take several months or even years.

8)Challenge of Jurisdiction: Each of these has some basis for discretion and
authority , and each is likely to be wary of instruction issued by others. Together ,
they form a tangled web of chains of command , with ample opportunity for
confusion, resentment , and conflict .

9) Challenge of unplanned development: In several parts of india , unplanned

development goes unchecked. Unplanned development is a growing environmental
concern , which can cause and aggravate disaster situation. Rescue and relief
operation get hampered on account of unplanned development. In june 2013 , disaster
struck Uttarakhand due to heavy rainfall that caused flooding. Thousands of lives
were lost and there was heavy destruction of infrastructure. The disaster in
Uttarakhand was also a result of indiscriminate , unchecked development. Expert sat
that the disaster was expected as dozens of dams and hundreds of kilometre of
diverted river flows in the area. Despite a ban since 2002n on building within 100
meter of a river , construction along river banks continued to take place. Ironically ,
the road that were built ignoring environmental concern are now been washed away.
This disaster has been caused by unplanned development. It is a result of mindless
misuse of the state natural resource. She also demanded that the valley where the
ganga , Bhagirathi and allaknanda rivers flow should be declared an eco sensitive
zone.

10) Challenge for nuclear power plants: There are challenges for nuclear power
plants to improve security against disaster. There are often protest by locals protesting
the safety concerns of such plants. The protest were triggered on account of the
meltdown of fukushima daiichi power plant of japan in march 2011.The nuclear fuel
at the stricken fukushima Daiichi power plant began melting just a few hours after the
intial earthquake. On may 1oth 2013 , Prime minister of japan mr Kan announced the
Japan is Abandoming its plan to build 14 new nuclear reactors by 2030. Additionally ,

28
Chancellor Angela Merkel of Germany temporarily closed seven nuclear plants built
before 1980.

11) Challenge of damage assessments: Damage assessments at the post disaster

stage is usually conducted by ateam of experts. The damage assessment is required of
assess the economic losses such as damage to crops , infrastructure , livestock’s and
so on . At times, certain affected person in disaster affected areas give a faulty of
exact damage to their property or asset. Even relief and compensation distribution is a
big challenge to government authorities.

 Disaster management strategies

Strategies to cope with disaster

Natural disaster can bring about high levels of stress, anxiety and anger. Despite the
far reaching effects of natural disaster , there are steps can take to cope. It is
important for the affected person to focus on taking good care of them – physically
mentally and emotionally . One can make The choice to act constructively rather than
reacting to what happened .The strategies for coping with disaster are explained from
individuals affected by disaster . An individual may be able to cope up with the
disaster with the help of the following strategies.

1) Physical coping strategies

A natural disaster can deplete affected person physically . It is very important that
one sets aside time for self care. Make sure you eat well , get enough sleep , and
exercise. Self care is incredible important to our emotional health. By taking care of
oneself physically , one may increase the extent to which one can cope with the stress
and other effects of a natural disaster.

a)Rest : One needs to get adequate rest to over the problem of stress arising on
account of a disaster. Adequate rest is the foundation of stress management . One
needs to establish a routine and gets to bed at a reasonable hour.

b)Exercise: One needs to exercise to overcome the problem by stress .Exercise can
be done either early in the morning or in the evening. One may consult a doctor
before starting any exercise routine.
c)Eat: One needs to eat a well balanced diet and at regular intervals, especially when
adequate food is available. At times , after a natural , there may be shortage bof food
and whatever food is available may not be adequate.

d)Relax: Whenever possible, schedule extra time for relaxing. Choose the activities
that one enjoys or that one finds relaxing . The relaxing activities may include –
reading listening to music , gardening , painting cartooning – whatever one likes to
do.

29
e)Avoid alcohol and drugs: One should avoid overdose of alcohol as a mean to cope
up with stress arising out of disaster. Also , one should not indulge in drugs , unless a
doctors prescribes certain medicine to deal with the stress or trauma.

2)Mental coping strategies

a)Get the Facts: One should get information about the effect of the disaster from
reliable sources, rather than replying on the rumor mill to provide the information .
Also, relevant information must be obtained from authentic sources regarding the
venue , the dates and timing of relief distribution by government and NGO’s

b) Prepare a schedule : Try to establish a schedule . Set regular times for meals ,
waking up in the morning , or talking with family and friends. Coming up with a daily
, structural schedule can help you establish a sense of predictability and control.

c)Develop an action plan: One needs to decide who’s going to do what and when .
Also one needs to assess one financial situation and discuss the option with financial
advisor to alleviate stress relating to financial concerns.

d)Focus on your strength.: One needs to focus on one’s strength to cope up with the
effects of disaster . One needs to be mentally strong to handle the situation and also to
help others in the area to cope up with the post traumatic stress disorder.

e) Rely on your Spirituality: Turn the problem over to your spiritual power for
guidance and strength. It is a known fact that the humans spirit is very strong .Some
of the books that make us spiritually strong include

3) Emotional Coping Strategies

After a natural disaster you will experience a number of intense negative emotions .
Therefore , it is very important to identify healthy ways of managing these emotions:

a) Connect with social support: Getting social support from others can be a major
factor in helping people overcome the negative effects of a traumatic event and post
traumatic stress disorder . Given that a natural disaster can impact an entire
community , your support system may be weakened by a natural disaster. However ,
even connecting with one person can have a larger impact. Identify local support
groups or available crisis counsellors to talk to. Take advantage of these
opportunities.

b)Release emotions and tension: One needs to talk about the disaster effects or
problems so to release emotions and tension . It is likely that other in the community
are experiencing similar feelings so this gives everyone an opportunity to release
negative feelings and discuss practical ways to deal with the situation.

30
 c) Spend time with friends and family: One needs to spend time in enjoyable
activities with friends and family members. This may involve watching some videos ,
story telling or listening , playing some games, preferably indoor games so on.

d) Recognize anger as a secondary emotions: Anger is often a surface emotions that

covers up a deeper emotion, such as fear, hurt , or feeling of powerlessness. When one
finds self with a feeling of anger , search for the deeper emotion, and work with it
instead. Write about it and talk about it with Other who care and trust you.

e) Do not take out anger on relative and friends: One needs to avoid spilling one’s
anger on relative and friends . It would be difficult for them to be emotionally
supportive, if their feelings are affected by you. Get cooperation and support from
your relative and friends to overcome the feelings of anger rather than attacking them
by spilling one’s anger on to them .

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