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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.)

Prepared By: Vijay Meghani (B M College)

(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 some form 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.

Prepared By: Vijay Meghani (B M College)

(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 exist in the past and, therefore, strategy is relevant to future.

Prepared By: Vijay Meghani (B M College)

4 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.

Prepared By: Vijay Meghani (B M College)

5 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.

Prepared By: Vijay Meghani (B M College)

6 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 decisionmaking 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.
Prepared By: Vijay Meghani (B M College)

7 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.

Prepared By: Vijay Meghani (B M College)

8 Abells Three-dimentional model: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.

Prepared By: Vijay Meghani (B M College)

(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.

Prepared By: Vijay Meghani (B M College)

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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 in terms of employment security and retirement benefits, and above all a partner in wilding the organisation.

Prepared By: Vijay Meghani (B M College)

11 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 interbusiness 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.

Prepared By: Vijay Meghani (B M College)

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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 overall corporate 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 strategy Functional Operations strategies Marketing strategies strategy Financial strategies Personnel strategies Middle management Top management

FIGURE : Corporate and functional strategies in single SBU firm Prepared By: Vijay Meghani (B M College)

13 Corporate Strategy Corporate management

SBU 1 strategy

SBU 2 strategy

SBU 3 strategy

SBU top management

Operations strategies

Marketing strategies

Financial strategies

Personnel strategies

Middle 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.

Prepared By: Vijay Meghani (B M College)

14 Financial Capability Factor 1. Factors related to sources of funds: Capital structure, procurement of capital, controllership, financing pattern, working capital availability, borrowings, capital and credit availability, reserves and surplus, and relationship with lenders, bank and financial institutions. 2. Factors related to the usage of funds: Capital investment, fixed asset acquisition, current assets, loans and advances, dividend distribution, and relationship with shareholders. 3. Factors related to the management of funds: Financial, accounting, and budgeting systems; management control systems; state of financial health, cash, inflation, credit, return and risk management; cost reduction and control; and tax planning and advantages. EXAMPLE : High profitability and the availability of surplus working capital with a comfortable cash flow, in large measure, has provided Bajaj Auto Ltd with the financial capability to become the largest two-wheeler manufacturer in India. Marketing Capability Factor 1. Product related factors: Variety, differentiation, mix quality, positioning, packaging and others. 2. Price-related factors: Pricing objectives, policies, changes, protection, advantages, among others. 3. Place-related factors: Distribution, transportation and logistics, marketing channels, marketing intermediaries, and so on. 4. Promotion-related factors: Promotional tools, sales promotion, advertising, public relations, and so on. 5. Integrative and systemic factors: Marketing mix, market standing, company image, marketing organisation, marketing system, marketing management information system, and so on.

Prepared By: Vijay Meghani (B M College)

15 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.
Prepared By: Vijay Meghani (B M College)

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OCP MODEL
OCP FACTORS 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 Weakness (-5) Normal (0) Strength (+5)

Prepared By: Vijay Meghani (B M College)

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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 a concise 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

1. Finance

Competitive strengths or weaknesses

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

Prepared By: Vijay Meghani (B M College)

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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 with respect 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.

Prepared By: Vijay Meghani (B M College)

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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 Analysis 3. 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.
Prepared By: Vijay Meghani (B M College)

20 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.

Prepared By: Vijay Meghani (B M College)

21 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 its implementation may result into various actions that the organisation will have to take to be successful, depending on the situation.

Prepared By: Vijay Meghani (B M College)

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1.

Implications

of Strategic management:-

All the element of the process can be thought of in sequential nature. It implies

that each step must be undertaken in a sequence, at least for a new strategic action. In the case of an existing organisation an existing strategic action, these elements may not be put in a very strict sequence because the action may be repetitive. For example, formulation of strategy, its implementation and review may go in continuity. Thus, this becomes a continuous process. 2. The various elements of the process are interrelated. This interrelatedness

suggests effect of each factor on others. Thus, there may be a two-way impact of a factor; each affecting others and in turn, being affected by others. However, the relative force of this impact may differ for various elements. It may be major in some cases but minor in other cases depending on the nature of various external and internal factors. Further, many such relationships may not be direct but may be indirect. 3. Feedback is necessary to relate the implementation of the strategy with the

early stage elements of the process. Feedback can be defined as the postimplementation results of a strategy which are collected as inputs for the enhancement of future decision making through strategic management process. Thus, feedback, strictly speaking not an element of strategic management process, is as essential as any other element. 4. Strategic management can be termed as a dynamic system. The term dynamic

is used to describe the constantly changing nature of conditions which affect interrelatedness and interdependent strategic activities. Since the organisation has to function in an environment which is dynamic and constantly changing, the various elements and activities of the strategic management have to be adjusted accordingly.

Prepared By: Vijay Meghani (B M College)

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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 having ambitions 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) (ii) (iii) (iv) Focusing the organization's attention on the essence of winning, Motivating people by communicating the value of the target, Leaving room for individual and team contributions, 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.

Prepared By: Vijay Meghani (B M College)

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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 and vague as a dream that one experienced the previous night and is not able to recall perfectly daylight. For example: (i) (ii) Henry Ford wished to democratize the automobile when he visualized that an affordable vehicle could be available for the masses. 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.

Prepared By: Vijay Meghani (B M College)

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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 that any 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.

Prepared By: Vijay Meghani (B M College)

26 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.

Prepared By: Vijay Meghani (B M College)

27 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. For example, Asian Paints stresses leadership through excellence, while India Today sees itself as the complete news magazine.

Prepared By: Vijay Meghani (B M College)

28 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."

Prepared By: Vijay Meghani (B M College)

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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 goals that 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.

Prepared By: Vijay Meghani (B M College)