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BUSINESS POLICY
&
STRATEGIC MANAGEMENT
CHAPTER : 1
Conceptual framework for Strategic Management(20%)
Syllabus:-
(a) Concept, Meaning & Definition:
(Strategy, Policy, Tactics, Strategic Management. Program, Procedure, Business,
Stakeholders, SBU, ETOP, OCP, SAP)
(b) Strategic Management Process & its implications
(c) Strategic Intent:
(Organizational Vision, Mission, Goals and Objectives. Their formulation and role
in strategic management.)
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(A) POLICY :-
The policy means the art or manner of governing a nation, the line of conduct which
rulers of a nation adopt on a particular question specially with regard to foreign
countries; the principle on which any measure or course of action is based.
Business policy has been defined as
"Managements expressed or implied intent to govern action in the
achievement of company's aims.
According to Philip Kotler,
Policies define how the company will deal with stakeholders, employees,
customers, suppliers, distributors, and other important group.
Based on the above discussion, policy may be defined as follows:
A policy is the statement or general understanding which provides guidance
in decision making to members of an organization in respect to any course of
action.
Features of Policy
1. Policies provide guidelines to the members in the organization for deciding a
course of action and, thus, restrict their freedom in choosing the course of action.
2. Policies are generally expressed in a qualitative, conditional, and general way.
The verbs most often used in stating policies are to maintain, to continue, to follow,
to adhere, to provide, to assist, to assure, to employ, to make, to produce, and to be.
3. Policy formulation is a function of all managers in an organization because someform of guideline for future course of action is required at every level.
4. A policy is formulated in the context of organizational objectives. Therefore, the
policy tries to contribute towards the achievement of organizational objectives.
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(B) strategy :-
Strategy is the determination of the basic long-term goals and objectives of
an enterprise and the adoption of the courses of action and the allocation of
resources -necessary for carrying out these goals."
"Strategy is the pattern of objectives, purpose or goals and major policies
and plans for achieving these goals, stated in such a way, so as to define
what business the company is in or is to be and the kind of company it is or
is to be."
Strategy is a course of action through which an organization relates itself
with the environment so as to achieve its objectives.
Features of strategy
1. Strategy is a major course of action through which an organization tries to
relate itself with environment to develop certain advantages which help in
achieving its objectives.
2. Strategy is a relative combination of actions aimed at to meet a particular
condition, to solve certain problems.
3. Strategy may even involve contradictory action. Since a strategic action
depends on environmental variables, an organization may take contradictory
actions either simultaneously or with a gap of time.
4. Strategy is forward looking; it has orientation towards future. Strategic action
is required in a new situation. No new situations requiring solutions can existin the past and, therefore, strategy is relevant to future.
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Difference between Policy and Strategy
A distinction between policy and strategy is made on the basis that the former is a
guideline to the thinking and action of those who make decisions while the latter
concerns with the direction in which human and physical resources are deployed and
applied in order to maximize the chances of achieving organizational objectives in
the face of environmental variables.
Policy is contingent decision whereas strategy is a rule for making decision. The
strategic decision is taken under the conditions where all the facts are not known.
Thus, such a decision may be changed when more facts become available.
Another distinction between policy and strategy is made on the basis of delegation
and implementation. Since the policy - provides guidelines for decisions, it can be
delegated downward in the organization. In fact, the policy is prescribed for the
people what they are expected to do in certain cases. Thus, its implementation is
through subordinate managers. Strategy cannot be delegated downward since it
may require last-minute executive decisions.
(C) TACTICS :-
Tactics is another term which creates confusion because in ends-means chain, what
might be a strategy for a lower unit may become tactics for a higher unit. However,
strategy and tactics are quite different connotations which cannot be explained
merely in terms of ends-means chain. Tactics is related to efficient utilization of
various organizational resources committed through strategy. Further understanding
about tactics may be developed by making difference between strategy and tactics.
To be effective strategies must be put into practice detailed programs on the
basis of strategies are to be formulated to put the strategies in the practice.
These detailed programs are known as Tactics.
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Difference between Strategy and Tactics
The major difference between strategy and tactics is that strategy determines what
major plans are to be undertaken and allocates resources to them, while tactics, in
contrast, is means by which previously determined plans are executed.
"Strategy is a system of makeshifts. It is carrying through an originally conceived
plan under a constantly shifting set of circumstances. Strategy furnishes tactics with
the opportunity to strike and with the prospect of success. It does this through its
conduct of the armies and their concentration on the field of battle. On the other
hand, however, strategy concept accepts the results of every single engagement and
builds on them. Strategy retires when a tactical victory is in the making in order later
to exploit the newly created situation."
1. Level of Conduct:
Strategy is developed at the highest level of management. Tactics is
employed at and relates to lower levels of management.
2. Periodicity:
The formulation of strategy is both continuous and irregular. The process is
continuous but the timing of decision is irregular. Tactics is determined on a
periodic basis by various organizations. A fixed time table may be followed for
this purpose, for example, preparation of budgets at regular intervals.
3. Time Horizon:
Strategy has a long-term perspective; specially the successful strategies are
followed for quite long periods. On the other hand, time horizon of tactics is
short-run and definite. The duration is uniform, for example budget
preparation.
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4. Uncertainty:
Element of uncertainty-is higher in the case of strategy formulation and its
implementation. Tactical decisions are more certain as these are taken within
the framework set by the strategy. Thus, evaluation of tactics is easier as
compared to evaluation of a strategy.
5. Type of Personnel Involved in Formulation:
Strategic decisions are never delegated below a certain level in the
managerial hierarchy. Tactical decisions can be taken by personnel at lower
levels because these involve minute implementation of strategic decisions.
6. Importance:
Strategies are most important factor of organization because they decide the
future course of action for the organization as a whole. On the other hand,
tactics are of less importance because they are concerned with specific part
of the organization.
Levels of Strategy
1) Corporate-level Strategy
Corporate-level strategy occupies the highest level of strategic decision-
making and covers actions dealing with the objective of the firm acquisition
and allocation of resources and coordination of strategies of various SBUs for
optimal performance. Such decisions are made by top management of the
organization. The nature of strategic decisions tends to be , value-oriented,
conceptual and less concrete than decisions at the business or functional
level.
2) Business-level Strategy
At such a level, strategy is a comprehensive plan providing objectives for
SBUs, allocation of resources among functional areas and coordination
between them for making optimal contribution to the achievement of
corporate-level objectives. Such strategies operate within the overall
strategies of the organization.
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Difference between corporate-level and business-level strategies:
"In an organization of any size or diversity, corporate strategy usually applies
to the whole enterprise, while business strategy, less comprehensive, defines
the choice of product or service and market of individual businesses within the
firm. In other words, business strategy relates to the 'how' and corporate
strategy to the 'what'. Corporate strategy defines the businesses in which a
company will compete preferably in a way that focuses resources to convert
distinctive competence into competitive advantage."
3) Functional-level Strategy
Functional strategy, as is suggested by the title, relates to a single functional
operation and the activities involved therein. Decisions at this level within the
organization are often described as tactical. Such decisions are guided and
constrained by some overall strategic considerations. Functional strategy
deals with relatively restricted plan providing objectives for specific function,
allocation of resources among different operations within that functional area
and coordination between them for optimal contribution to the achievement of
the SBU and corporate-level objectives.
(D) BUSINESS :-
Understanding business is vital to defining it and answering the question
What is our business? It could also be a pointer to the answers to the
questions: What will it be? and What should it be? Mission statements can
use the ideas generated through the process of understanding and defining
business.
For Example,
A watch manufacturing company may call itself the timekeepers to the
nation.
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Derek Abell suggests defining business along the three is of customer groups,
customer functions, and alternative technologies. Customer groups relate to
`who' is being satisfied, customer needs describe `what' is being satisfied, and
alternative technologies means `how' the need is being satisfied.
Diagrammatic view of these three dimensions.
Customer functions
Customer groups Alternative technologies
Customer groups are created according to the identity of the customers.
Customer functions are based-on what the products or services provide to the
customers. Alternative technologies describe the manner in which a particular
function can be performed for a customer.
Applying Abell's three-dimensional model to the illustration of timekeeping
business could identify the three dimensions as follows:
1. Customers groups are individual customers and industrial users.
2. Customer functions are of finding time, recording time, using watches as a
fashionable accessory, and as a gift item.
3. Alternative technologies are of the mechanical, quartz digital, and quartz
analog types.
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(E) PROGRAMME :-
A programme is a broad term which goals, policies, procedures, rules, and
steps to be taken in putting a plan into action. Programmes are usually
supported by funds allocated for plan implementation.
For example of a programme is an R&D programme for the development product.
Programmes lead to the formulation of projects. A project is a highly specific me for
which the time schedule and costs are predetermined. It requires the allocation of
funds based on capital budgeting by organizations. Thus, R&D pro-may consists of
several projects, each of which is intended to achieve specific and limited objective,
requires separate allocation of funds, and is to be completed within a set time
schedule.
(F) PROCEDURE :-
"A procedure is a series of related steps or tasks expressed in chronological,
order to achieve a specific purpose. Procedures define in step-by-step
fashion, the methods by and through which policies are achieved."
However, allowance is provided for flexibility and deviation. The strategic managers
are expected to know the procedures of the firm and various departments as they
help him in the process of strategy implementation.
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(G) STAKEHOLDERS :-
Stakeholders consist of shareholders, other financiers, employees, customers,
creditors and suppliers, government, and society. Some of them have high stake in
the organisation; some may have low stake. For example, shareholders have high
stake while government may have low stake in the outcomes of organisational
operations. Therefore, the organisation has to identify the expectations of various
stakeholders that they have from the organisation. Though these expectations may
vary from countries to countries owing to social and cultural differences, in Indian
context, these expectations are as follows:
Share holders:
Shareholders expect reasonable return on their investment and safety of their
capital. The interests of the majority shareholders are generally protected through
either participation in management process of the organisation concerned or through
intervention in key decisions, if necessary.
Other Financiers:
Besides shareholders, financial resources are provided by other financiers
particularly financial institutions and banks. In fact, in many cases, their contributions
are much more than that by the shareholders. Such financiers expect that they will
be paid interest and principal as stipulated.
Employees:
Employees are stakeholder in an organisation by virtue of their involvement in
organisational processes. In today's competitive context when every organisation is
trying to develop competitive competence through human resources, their stake has
become vital. Employees expect from their organisation that it will provide them fair
salaries and wages, pleasant and motivating working conditions, secured future interms of employment security and retirement benefits, and above all a partner in
wilding the organisation.
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Customers:
In the present context when every business organisation focuses its attention in
winning and maintaining customers, they have Become important stakeholder. They
expect fair product price with commensurate quality, widespread distribution and
sales network providing ease in procuring the product, honesty in dealing and
treating with them, air advertising devoid of any false, misleading and exaggerated
publicity, good after-sales service, and so on.
Creditors and Suppliers:
Creditors and suppliers affect an organisation in several ways and are affected by it.
They expect from the organisation the creation of healthy and cooperative inter-
business relations, relevant and accurate information, prompt payment of supplies,
and so on.
Government:
Government is very closely related with the business system of the country. It
provides various facilities for the development of business. Though it regulates the
business, it is meant for the development of overall business and healthy competition
among various participants.
Society:
Organizations exist within a social system and get various facilities from it.
Therefore, organisational objectives should be aligned with those of the society.
Parsons, a famous sociologist, has viewed that organisational objectives are an
extension of what the society needs for its survival.
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(H) SBU :-
SBU concept was evolved by General Electric Company (GEC) of USA to manage
its multiproduct business. The fundamental concept in the SBU is to identify the
discrete independent product/market segments served by an organisation. Since
each independent product/market segment has a distinct environment, a SBU should
be created for each such segment.
Features of SBU
1. Each SBU is managed as a portfolio of the organisation with a clearly defined
product/market segment and clearly-defined strategy.
2. Each SBU develops its strategy tailored to its capabilities and needs with overallcorporate capabilities and needs.
3. Each SBU is allocated resources - both physical and human - according to its
needs and contributions to the achievement of organisational objectives.
As against an organisation with multi-SBUs, a single-product/market organisation
has single strategic business unit. Naturally, operation of strategy in these types of
organizations will be different. In a single-product company, ' the corporate-level
strategy serves the whole business. This strategy is implemented at the next lower
level by functional strategies. In multiple-product Company, the business-level
strategies are insertedgenerally a strategy for each SBUbetween corporate
strategy and functional strategy and the strategies of these units are guided by the
corporate strategies.
Corporate Top
strategy management
Functional strategy
Operations Marketing Financial Personnel Middle
strategies strategies strategies strategies management
FIGURE : Corporate and functional strategies in single SBU firm
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Corporate Corporate
Strategy management
SBU 1 SBU 2 SBU 3 SBU top
strategy strategy strategy management
Operations Marketing Financial Personnel Middle
strategies strategies strategies strategies management
FIGURE : Corporate, SBU and functional strategies in multiple-SBU firm
(I) Corporate capability profile (ccp) :-
Organisational capability profile (ocp) :-
Capabilities are most often developed in specific functional areas, such as,
marketing or operations, or in a part of a functional area, such as, distribution
or R&D. It is also feasible to measure and compare capabilities in functional
areas. Thus, a company could be considered as inherently strong in
marketing owing to a competence in distribution skills.
Organisational capability factors (or, simply, capability factors) are the
strategic strengths and weaknesses existing in different functional areas
within an organisation which are of crucial importance to strategy formulation
and implementation.
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EXAMPLE:
Maggie two-minute noodles have been a strong Nestle brand, lending it marketing
capability in the highly competitive fast-food market in India.
Operations Capability Factor
1. Factors related to the production system: Capacity, location, layout, product or
service design, work systems, degree of automation, extent of vertical integration,
and others.
2. Factors related to the operations and control system: Aggregate production
planning, material supply; inventory, cost and quality control; maintenance systems
and procedures, and so on.
3. Factors related to the R&D system: Personnel, facilities, product development,
patent rights, level of technology used, technical collaboration and support, and so
on.
EXAMPLE:
Videocon took over the Uptron colour picture tubes unit in order to develop
operations capability through vertical integration for manufacturing cc televisions.
Personnel Capability Factor
1. Factors related to the personnel system: System for manpower planning lection,
development, compensation, communication, and appraisal; position of the
personnel department within the organisation; procedures and standards and so on.
2. Factors related to organisational and employees' characteristics: Corps image,
quality of managers, staff and workers; perception about and image of the
organisation as an employer; availability of developmental opportunities for
employees; working conditions; and so on.
3. Factors related to industrial relations: Union-management relationship, collective
bargaining, safety, welfare and security; employee satisfaction and morale; among
others.
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OCP MODEL
OCP FACTORS Weakness
(-5)
Normal
(0)
Strength
(+5)
Marketing Capability Factors:
1. Product Related
2. Price Related
3. Promotion Related
4. Integrative & Systematic
Production Capability Factors:
1. Production System
2. Operation & Control System
3. Research & Development
Finance Capability Factors:
1. Sources of Fund
2. Usage of Fund
3. Management of Fund
Personnel Capability Factors:
1. Quality of top Management
2. Quality of other Personnel
3. Industrial Relations
4. Organisation structure
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(J) Strategic advantage profile (sap) :-
Competitive advantage profile (cap) :-
Based on the detailed information presented in the OCP, it is possible to prepare aconcise chart of a strategic advantage profile (SAP). Strategic advantage is the
outcome of organisational capabilities. They are the result of organisational activities
leading to rewards in terms of financial parameters such as profit or shareholders
value and non-financial parameters such as market share or reputation. Once the
corporate capability profile to add and key areas for diagnosis have been analyzed. It
is used to prepare strategic advantage profile provides a picture of the more critical
areas which can have a relationship of the strategic posture of the firm in the future.
SAP MODEL
Capability factor Competitive strengths or weaknesses
1. Finance High cost of capital;
Reserves and surplus position unsatisfactory.
2. Marketing Fierce competition in industry;
Companys position secure at present.
3. Operations Plant and machinery in excellent condition;
Captive sources for parts and components
available.
4. Personnel Quality of managers and workers comparable with
that in competitor companies
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(K) Environmental threats & opportunity profile
(ETOP) :-
The preparation of ETOP involves dividing the environment into different sectors and
then analyzing the impact of each sector on the organisation. A comprehensive
ETOP requires subdividing each environmental sector into sub factors and then the
impact of each sub factor on the organisation is described in the form of a statement.
The preparation of an ETOP provides the strategists with a clear picture of which
sectors (and the different factors in each sector) have a favourable impact on the
organisation. By means of an ETOP, the organisation can see where it stands withrespect to its environment. Obviously, such an understanding can be of great help to
an organisation in formulating appropriate strategies to take advantage of the
opportunities and counter the threats in its environment.
Before the formulation of strategies can be undertaken, strategists have to assess
whether the organisation has the required strengths to succeed, or whether it has
weaknesses which can affect its capability to take advantage of the opportunities.
This assessment is done through an analysis of the strengths and weakness of an
organisation and forms a part of the SWOT analysis.
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(L) Strategic management :-
Strategic management is defined as the set of decisions and actions in
formulation and implementation of strategies designed to achieve the
objectives of an organisation.
Strategic management is primarily concerned with relating the organization to
its environment, formulating strategies to adapt to that environment, and
assuring that implementation of strategies takes place.
Strategic management process:-
1. Organizational Mission & Objectives
2. Environmental Analysis3. Organizational Analysis
4. Identification of Strategic Alternatives
5. Choice of Strategy
6. Implementation of Strategy
7. Evaluation and Control
1. Organizational Mission & Objectives:
Since organizations are deliberate creations, they have some specific mission
towards which all efforts are directed. The mission of an organisation is the
fundamental unique purpose that sets it apart from other organizations and identifies
the scope of its operation in product and market terms. The mission is a general,
enduring statement of organizations intention. It embodies the strategic decision
maker's business philosophy. It implies the image which the organisation seeks to
project. Organisation's mission becomes the cornerstone for strategic management
and around it all functions revolve. Organizational objectives are other factors which
determine the strategy. In fact, the choice of the objectives for an organisation is a
strategic decision because by choosing its objectives, the organisation commits itself
for these. Objectives are different from mission in the sense that the latter prescribes
the basic philosophy of the organisation itself which may be used in determining the
objectives. Objectives are generally the end results which the organization makes an
attempt to achieve.
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2. Environmental Analysis:
The second important aspect of strategic management process is the environmental
analysis. Since an organisation is a social system, it operates within the environment
which consists of many factors, such as, society, competitors, technology, legal
framework, political framework, psychological cultural framework. An organisation
has to interact continuously with these factors. In this interaction process, the
organisation has to relate itself with the environment. Various factors of the
environment have duel effect in interaction process with the organisation; they affect
the working of the organisation and are also affected by its working.
3. Organisational Analysis:
What opportunities or threats are posed by the environment and how the
organisation can take advantages will depend greatly on the organizations strength
and weakness. Organisational analysis brings these strength and weakness.
Through the organisational analysis, the organisation evaluates its strengths and
weakness so that it can relate itself by emphasizing its strength and overcoming its
weaknesses. Organisational strength and weaknesses also help in identifying the
relevant environmental factors taken for detailed analysis.
4. Identification of Strategic Alternatives:
Interaction of organisation with its environment in the light of its strengths and
weaknesses will result into various strategic alternatives. This process may result
into large number of alternatives through which an organisation can relate itself to
the environment. However, all alternatives cannot be chosen even if all of them
produce the same results. Obviously, managers may like to limit themselves to the
serious consideration of some of the strategic alternatives so that they are saved
from unnecessary exercise. Therefore the Strategic alternatives should be identified
in the light of strategic opportunities and threats generated through environmental
analysis, organisational analysis, and organisational mission and objectives.
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5. Choice of Strategy:
The identification of various strategic alternatives leads to the level where managers
can consider some alternatives seriously and may choose one of the most
acceptable. This is the stage of strategic decision process and all factors relevant for
decision making are relevant here. Since the particular strategy attempts to affect the
organisational operation in some predetermined manner, the choice process
systematically considers how each alternative strategy affects the various critical
factors of the organisational functioning. Further, the chosen alternative should be
acceptable in the light of organisational objectives. Thus, it is not necessary that the
chosen alternative is the best one.
6. Implementation of Strategy:
Once the creative and analytical aspect of strategy formulation has been settled, the
organisation tries to convert the strategy into something operationally effective. To
bring the result, the strategy should be put to action because mere choice of even
the soundest strategy will not affect organisational activities and achievement of its
objectives. In strategy implementation, various activities involved are design of
organisation structure to suit the chosen strategy, effective leadership, development
of functional policies, development and allocation of resources, development of
effective information system, etc.
7. Evaluation and control:
Evaluation and control may be treated as the last stage of strategic management
process. However, this is an ongoing process and evaluation and control should be
taken as the process for future course of action. For effective implementation and
consequently achievement of organisational objectives, it is necessary that there is
continuous monitoring of the implementation of the strategy so that suitable action is
taken whenever something goes wrong. Evaluation and control of strategy and itsimplementation may result into various actions that the organisation will have to take
to be successful, depending on the situation.
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STRATEGIC INTENT
Broadly strategic intent could be in the form of a vision and mission statement for the
organisation as corporate whole. As per the Hamel & Prahalad strategic intent
which they believe is an obsession with an organisation an obsession with havingambitions that may even be out of proportion to their resources and capabilities. This
obsession is to win at all levels of the organisation while sustaining that obsession in
the quest for global leadership.
The concept also represents active management process that includes:
(i) Focusing the organization's attention on the essence of winning,
(ii) Motivating people by communicating the value of the target,
(iii) Leaving room for individual and team contributions,
(iv) Sustaining enthusiasm by providing new operational definitions as
circumstances change and using intent consistently to guide resource
allocations "
Overall, strategic intent points to what a firm should set out to achieve. Strategic
intent is expressed through a series of formulations on vision, mission, objectives
and strategies.
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VISION
A vision is more dreamt of than it is articulated. This is the reason why it is difficult to
say what vision an organisation has. Sometimes it is not even evident to the
entrepreneur who usually thinks of the vision. By its nature, it could be as hazy andvague as a dream that one experienced the previous night and is not able to recall
perfectly daylight.
For example:
(i) Henry Ford wished to democratize the automobile when he visualized that
an affordable vehicle could be available for the masses.
(ii) Walt Disney probably wanted to make people happy.
Vision represents the imagination of future events and prepares the
organization for the same. Vision represents the challenging portrait of what
the organization would be in future.
Description of something (an organisation, corporate culture, a business, a
technology, an activity) in the future. -- As per Kotter
Benefits of Vision:
Good visions are inspiring and exhilarating.
Visions represent a discontinuity.
Good visions help in the creation of a common identity and a shared sense of
purpose.
Good visions are competitive, original and unique.
Good visions foster risk-taking and experimentation.
Good visions foster long-term thinking.
Good visions represent integrity; they are truly genuine and can be used for
the benefit of people.
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MISSION
As per Peter F Drucker raised important philosophical questions related to business:
What is our business? What will it be? and What should it be? These three
questions, though simply worded, are in reality the most fundamental questions thatany organisation can put to itself. The answers are based on the analysis of the
underlying needs of the society that any organisation serves to fulfill.
For Example,
A book publisher and a magazine editor are both engaged in satisfying the
information needs of society but they do it through different means. A book publisher
may aim at producing excellent reading material while a magazine editor may strive
to present news analysis in a balanced and unbiased manner. Both have different
objectives but an identical mission.
Thompson (1997) defines mission as the "essential purpose of the organisation,
concerning particularly why it is in existence, the nature of the business it is in, and
the customers it seeks to serve and satisfy".
Hunger and Wheelen (1999) say that mission is the "purpose or reason for the
organization's existence".
Vision & mission are two different connotations. While vision places emphasis on
visionary long term concept of organization with very high level of sense of
achievement, mission deals mostly with how the organisation will interact with
various stakeholders, the products/services it offers, and the way these are offered.
Every company has its mission, either implicitly or explicitly; every company cannot
become a visionary company.
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Role of mission in strategy formulation
Organisational mission helps strategists in formulating their strategies in the
following ways:
A. It helps in deciding the direction in which it proceeds. Therefore, strategic
actions can easily be geared in that direction.
B. It helps the organisation to clarify its aspirations and those of various
stakeholders. The strategic actions can be aligned to these aspirations.
C. It serves as a reference point in dealing with various stakeholders within and
outside the organisation.
D. It helps in integrating the organisation with its relevant environment by taking
suitable actions the way these have been specified in the mission.
E. It helps in integrating the various subsystems of the organisation as these
subsystems look at their objectives and operations in the light of organisational
mission.
F. It conveys clear message about the organisation to those outsiders who come
in contact with it. They develop positive attitudes towards organisation if they
are well aware about its mission.
EXAMPLE:
Vision and Mission of TATA International
OUR VISION
To be the "Leading International Business Company" of the country and International
Arm" of TATA Group, with a significant overseas reach, presence and linkages, and
with focus on facilitating globalization of TATA Group's core businesses.
OUR MISSION
1. Promote the TATA Brand Equity internationally.
2. Promote internationally, products and services from the TATA Group, as also from
other quality conscious Indian and overseas companies.
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3. Source World-class products and services for marketing in India.
4. Promote businesses with strong comparative advantages for the company, and
upgrade the company's strengths in the areas of technology, marketing, and finance.
5. Identify global sources of technology, marketing, and finance and other services to
facilitate strategic alliances.
6. Nurture and develop human resources, to enable us to undertake the challenges
of leadership and innovation, in our areas of activity.
Characteristics of a Mission Statement
1. It should be feasible:
A mission should always aim high but it should not be an iiiiossii1e statement. It
should be realistic and achievable - its followers must find it to be credible. But
feasibility depends on the resources available to work towards a mission.
2. It should be precise:
A mission statement should not be so narrow as to restrict the organizations
activities nor should it be too broad to make itself meaning- less. For instance,
Manufacturing bicycles is a narrow mission statement since it severely limits the
organizations activities, while mobility business is too broad a term as it does not
define the reasonable contour within which the organisation could operate.
3. It should be clear:
A mission should be clear enough to lead to action. It should not be a high-sounding
set of platitudes meant for publicity purposes. Many organisations do adopt such
statements but probably they do so for emphasizing their identity and character. Forexample, Asian Paints stresses leadership through excellence, while India Today
sees itself as the complete news magazine.
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4. It should be motivating:
A mission statement should be motivating for members of the organisation and of
society, and they should feel it worthwhile working for such an organisation or being
its customers. A bank which lays great emphasis on customer service is likely to
motivate its employees to serve its customers well and to attract clients.
5. It should be distinctive:
A mission statement which is indiscriminate is likely to have little impact. If all scooter
manufacturers defined their mission in a similar fashion, there would not be much of
a difference among them. But if one defines it as providing scooters that would
provide value for money, for years it will create an important distinction in the public
mind.
6. It should indicate major components of strategy:
A mission statement, along with the organisational purpose should indicate the major
components of the strategy to be adopted. The chief executive of Indal expressed
his intentions by saying that his company "begins its fifth decade of committed
entrepreneurship with the promise of a highly diversified company retaining
aluminum as its mainline business.
7. It should indicate how objectives are to be accomplished:
Besides indicating the broad strategies to be adopted a mission statement should
also provide clues regarding the manner in which the objectives are to be
accomplished.
Example of Mission Statement
HCL: "To be a world class, competitor"
Marico Industries: "The three P's of Marico: People, Products, and Profits"
Ranbaxy Laboratories: ''To become a research-based international pharmaceuticals
company."
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GOALS & OBJECTIVES
Goals denote what an organisation hopes to accomplish in a future period of time.
They represent a future state or an outcome of the effort put in now.
A broad category of financial and non-financial issues are addressed by the goalsthat a firm sets for itself.
Objectives are the ends that state specifically how the goals shall be achieved. They
are concrete and specific in contrast to goals which are generalized.
In this manner, objectives make the goals operational. While goals may be
qualitative, objectives tend to be mainly quantitative in specification. In this way they
are measurable and comparable.
Role of Objectives
1) Objectives define the organizations relationship with its environment:
By stating its objectives, an organisation commits itself to what it has to achieve for
its employees, customers and society at large.
2) Objectives help an organisation to pursue its vision and mission:
By defining the long-term position that an organisation wishes to attain and the
short-term targets to be achieved, objectives help an organisation in pursuing its
vision and mission.
3) Objectives provide the basis for strategic decision-making:
By directing the attention of strategists to those areas where strategic decisions
need to be taken, objectives lead to desirable standards of behaviour and, in this
manner, help to coordinate strategic decision-making.
4) Objectives provide the standards for performance appraisal:By stating the targets to be achieved in a given time period and the measures to be
adopted to achieve them, objectives lay down the standards against which
organisational as well as individual performance could be judged. In the absence of
objectives, an organisation would have no clear and definite basis for evaluating its
performance.
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