BUSINESS

STRATEGIES &
CORPORATE
PLANNING
SAR X5602
SYLLABUS
UNIT I BUSINESS AS A SOCIAL SYSTEM/ECONOMIC SYSTEM
 Objective of Business; Business Environment – Socio economic sector. Technology Sector,

Government Sector. The industry Environment – Customer Sector/Supplier Sector/Competitor

Sector. The International Environment – Opportunities for International activities / Threats
from International activities.

UNIT II BUSINESS POLICY IN VARIOUS ECONOMIC SYSTEMS

 Business ethics, Social responsibility of Business / Indian Businessmen, Social Audit, Capitalist
Economy: Economic System of Socialism and mixed Economic system.

UNIT III BUSINESS POLICY AND CORPORATE STRATEGY

 How to make policy corporate strategy: Policies: Strategies and Tactics: Policies and

procedures - Functions and importance, strategy alternatives, considering strategy variations,

Strategic choice, implementation.
POLICY FORMULATION AND IMPLEMENTATION
 Policy Formulation: Objectives, Direction: Consideration of change: Business Policy concepts.
Business Policy – Characteristics importance. Different Types of policies: Classification,
Strategies, programmes, procedures and rules M.B.O./ M.B.E. Major and Minor policies:
Supporting composite and contingency policies: Parameter of policy: Development of Business
Policy: Swot Analysis: Elements of Business Policy: Implementation of Policy.

UNIT IV MAJOR BUSINESS POLICIES

 Man Power planning, Product Policies, Marketing Policies, Production and Purchase Policies,
Financial Policies, Capital Procurement and distribution.
ADMINISTRATION AND CONTROL OF POLICY
 Communication System: Policy Implementation, Rules and procedures: GPI policy: Appended
implied and imposed policy: Oral and written Policies: control and review
UNIT I- BUSINESS AS A SOCIAL
SYSTEM / ECONOMIC SYSTEM
 Objective of Business; Business
Environment
 Socio economic sector.
 Technology Sector,
 Government Sector.
 The industry Environment – Customer
Sector/Supplier Sector/Competitor Sector.
 The International Environment –
Opportunities for International activities /
Threats from International activities.
INTRODUCTION
 Nature, special characteristics and scope,
 History and Evolution,
 Mission and Goals,
 Objective setting,
 policies
 Types
 classifications
 Significance
INTRODUCTION….
 Business policy deals with the top level
decision making.
Thus in this subject one
 has to study both the aspects of business and
policy making both of which are very serious,
extensive and are usually handled by the top
level of the organization.
BUSINESS

Business is considered as
 an enterprise,
 providing goods and services
 community needs and
 are willing to pay the taxes, rent, etc.
Besides these, it should be a
 part of the society,
 work for a certain return (profit)
 and a clear motive (profit, service etc)
OBJECTIVES OF BUSINESS:

Every business that is started / or continues to exist is based

on certain objectives.
 They explain the reason for existence of the business
 Some of the major reasons or objectives for establishing or
continuing a business are listed below;
1. earnings a livelihood
2. earning profit
3. accumulating wealth
4. earning social approval
5. prestige
6. service motive
7. to try out a new technology
8. to become a market leader
9. to finish off competition
POLICY

 Usually or generally policy goes on only for a

particular period of time.
Thus, policy can be defined as
 “focusing attention on the allocation of
crucial and scarce resources”
Prof. Radgen
STRATEGY

 Strategy has been defined by several people

in several ways.
 Strategy is called thus when it is used as long
as it works.
 But some of the other well known definitions
are “A unified, comprehensive and
integrated planning designed approach to
assure that the objectives of the
organization are achieved”
Prof. Glueck
POLICY & STRATEGY….
Another common definition which is used comprehensively
for both policy and strategy is
 “The pattern of an organization response to its internal and
external environment over a period of time”
Another definition is
 “The determination of basic long term goals and objectives
of an enterprise and the adoption of the course of action
and the allocation of resources necessary for carrying out
these goals.
There are three major ideas identified:
 i) determination of long term objectives
 ii) adopting a suitable course of action
 iii) allocation of sufficient resources”

Prof. Chandler
POLICY & STRATEGY….
Yet another definition says
 “Developing and communicating the company’s unique
problem, making Trade-off’s (let go off the loss) and forging fit
(taking up activities that fit) among the other organizational
activities.
This involves
i) planning a course of action
ii) finding a common pattern
iii) relating the activities within the organization to each other
specialization areas or departments
iv) find the resources required for each department and allocate
accordingly
v) connected to each strategic position to eliminate problems
when they arise”
Prof. Micheal Poster
NATURE AND SCOPE OF
BUSINESS POLICY:
The nature and scope of business policy is as
follows;
1. Proactive and not reactive:
 In other works this helps in taking the right
decision before any problem arises, rather
than searching for a cure after the problem
has caused trouble.
 For this purpose, opportunities are to be
properly scanned and then decisions are to
be taken.
 This helps the organization to excel.
2. It is the idea or view of top management about the
organization and the competitors
3. broad perspective and narrow or comprehensive
perspective:
 The company should know i.e., the top level should
have an idea if the company is ready to widen its
market or restrict itself to selected companies.
 Like recruiting people with any degree (broad) or
people with a technical degree (narrow).
4. long range impact:
 Any event which influences the market for a long
period will affect the business.
 Hence organizations are supposed to think long range.
5. Huge resources and large segments:
Every organization involves the use of huge
resources (money, people, etc) and large
segments or departments. Thus, scope is
large and diverse.
6. Multi-disciplinary approach:
All disciplines of employees are employed so
that even if any problem arises, the
organization can overcome by using the skills
of employees in other departments.
7. legal and ethical standards:
 The organization established should meet the
legal and ethical standards set up or
established by the organization, society and
government.

8. clear action and clear direction

 The organization should be focused in
whatever it does and whatever path
it is following. It should not change direction
(business/policies) often.
9. within the principles of management:
 The policies formulated should remain within the
principles formulated by the organization and should
not cross over.

10. relevant to the objectives:

 The actions of the organization should be suitable to
the established objectives of the organization.

11. stable yet dynamic:

 The organization should be stable in growth, profits
earned, etc, but dynamic in meeting challenges and
organizational threats
SIGNIFICANCE OF BS
BS has a certain significance. They are broadly
classified into three, they are;
1. Knowledge uses:
a) Knowledge of concepts, i.e., what concept to use and when to
use.
b) Knowledge about the business environment
c) Real life knowledge about practical (happening) aspects of
business
d) Knowledge about standards and methods of evaluations ( of
whatever is happening in the organization and outside and how
standards are set, modified and work evaluated).
e) Build up business literature: all relevant, important happenings
and related information about what is taking place in the
organization and outside, will help future plans, policies and
decisions.
2. SKILL USES
a) Analytical skills: for developing the organization and its
standards.
b) Empirical skills: for testing any concept which is to be
introduced newly into the organization, the organization
should be capable of testing from positive and negative
angles.
c) Decision making skills: to make the right decision, at the
right time to help increase profit and improve the
organization.
d) Intuitive skills: every business owner should have an idea
to guess what may happen in the future and take suitable
actions or develop policies in advance
e) Communication skills: so as to help inform others and
gather data from others, for overall organizational
development.
 3. ATTITUDE USES:
a) Develop wholesome approach rather than narrow approach; this will
involve the entire business than taking or giving importance to any one part
of the organization. Thus, a whole some approach covering he entire
organization is always better than a narrow approach.

b) Creative and innovative approach: organizations should be creative, i.e.,

adopt new approaches to get better profits or make new product or they can
also be innovative by altering the existing products slightly suit the existing
markets, increase the market share or organization image.

c) Flexibility and dynamism: the organization should be flexible to suit and

change or modify itself to the changing environmental conditions. It should
have dynamism to adopt new technology or changes as per new technology
or changes as per organisation need and requirement.

d) Intuition: the people at the top level in the organization should be capable
to foresee the future of the organization based on very limited data available
at present.
HISTORY AND EVOLUTION OF BS
 1911 saw the introduction of strategic management as a subject in
HARVARD BUSINESS SCHOOL.
 After 1930 too it was yet to gain acceptance among other business
schools.
 In between 1920 and 1940 efforts were being taken to make this subject
organized and systematic to make it suitable to academic purpose.
 In the period of 1940 and 1960 there was rapid industrialization and
forced organizations and businesses to define the scope and interest of
the subject with respect to the society.
 This became even more easy and possible as in 1959; there were two
sponsored studies by Ford and Carnegic Foundations.
 These foundations gave reports that there is need for the subject to be
included in the curriculum of business studies.
 1960 onwards it was accepted as a duty of the top management to
initiate and practice strategies for their survival and growth.
 Thus, it became a compulsory subject in all business schools across the
world.
MISSION

 Mission of any organization identifies with “the scope

of operations of an organization.
 It gives the reason for the existence of an organization
and clearly an organization with a mission finds it
easier to succeed than an organization without one”.
 Thus, mission of any organization is to see the scope of
an organization or the boundary of an organization, or
the limit to which the organization can expand or
reach.
EXAMPLE: IOCL (INDIAN OIL COPORATION LIMITED) has
its mission statement as thus: “Maintaining national
leadership in oil refining, marketing and pipeline
transportation”.
VISION

 These are long term goal projections as to what one is to be.

 What is intended to do over a long period.

 Vision of any organization can be defined as; “the goals that

are the broadest, most general and all inclusive.
 The most effective visions are those that appeal to the
emotions of the employees and the aspirations of the
organization's management”.
 Thus, they reveal what the organization should be like in the
future.
EXAMPLE: IOCL vision states that
 “Indian Oil aims to achieve international standards of
excellence in through all aspects of energy and diversified
businesses with focus on customer delight quality products
and services”.
CURRENT VISION OF WIPRO as given by Azim Premji in
Economic Times dated June 13, 2003 is as follows.
 “BUSINESS LEADERSHIP: Among the top 10 IT
companies (services) globally and the No.1 IT company
in India”.
 “CUSTOMER LEADERSHIP: To be No.1 choice of
customers through innovative solutions and by 6σ (six
sigma) processes”.
 “PEOPLE LEADERSHIP: Among the top 10 most
preferred employers globally, by creating an
environment of empowerment, intellectual challenge
and wealth sharing”.
 “BRAND LEADERSHIP: WIRPO to be among the five
most admired brands in India”.
CHARACTERISTICS OF MISSION
AND VISION STATEMENT
 The following are the chief or important characteristics
of mission and vision statements.
They are;

1. It should be feasible.
2. It should be precise.
3. It should be clear.
4. It should be motivating.
5. It should be distinctive.
6. It should indicate the major components of strategy.
7. It should indicate how objectives are to be
accomplished.
GOALS

 Goals denote what an organization hopes to

accomplish in future period of time.
 They represent a future state or an outcome
of the effort put in now (both financial and
non-financial issues, qualitative) to achieve
objectives.
OBJECTIVES

 “the ends that state specifically what the

goals should achieve.
 They are strong (concrete) and specific, in
contrast (comparative) to goals which can be
generalized (qualitative)”.
EXAMPLE: IOCL’s objectives are to focus on
cost, quality, customer care, value
addition and risk management.
ROLE OF OBJECTIVES:

The following are the role of objectives;

1. Objectives define the organization
relationship with its environment.
2. Objectives help an organization to pursue its
vision and mission.
3. Objectives provide the basis for strategic
decision making.
4. Objectives provide the standards for
performance appraisal.
CHARACTERISTICS OF OBJECTIVES

The objectives have certain characteristics,

they are;
 Understandable (clarity).
 Concrete and specific (specificity)
 Related to a time frame (periodicity)
 Measurable and controllable (verifiability)
 Challenging and good (quality)
 Correlate with other objectives (multi
publicity)
 Set within constraints (reality)
FORMULATION OF OBJECTIVES

The objectives of any organization are

formulated based on certain factors. They
are;
 Forces in the business environment
 Realities of enterprises resources and
internal power relationship
 The value (ethics) system of top executives
 Awareness of management (top level)
CHANGE OF OBJECTIVES

Objectives of an organization can be changed when;

 There is a change in the state of the organization.
 Change in the organizations’ aspirations i.e., goals,
vision, mission, etc
 Change in the management team.
 Demand for change in the objectives by the
interest groups in the organization like
management, shareholders, stakeholders, financial
institutions, etc
 Change in the internal or external business
environment.
 Crisis/ emergencies situation of the organisation.
TYPES OF OBJECTIVES
The different types of objectives are
 Economic objectives: financial aspects, fiscal and other objectives
 Social objectives: objectives, which are societally suitable and
acceptable
 Survival objectives: objectives established or taken up by
companies to survive, or exist in the business
 Growth objectives: established by firms or organizations to grow
and develop.
 Long term objectives: objectives established for a period of more
than an year
 Short term objectives: objectives that are established for a period
of less than a
year.
 Higher level objectives: the objectives that are established for the
strategic level or top level of the organisation
 Lower level objectives: the objectives that are established for
lower level of the organisation or the middle level

TYPES OF OBJECTIVES…
 General objectives: objectives which cover the
overall aspect of the business
 Specific objectives: objectives that are specific
with clear instructions for any business are
termed thus.
 Comprehensive objectives: a concise, brief list
of objectives covering all areas of the
organization
 Functional objectives: a set of objectives
specifically developed for each functional area
in the organisation like HR, R&D, finance, Quality
Control, Marketing, and Production and so on.
CLASSIFICATION OF POLICIES

Similar to objectives,

Policies are also classified. They are as follows;

 According to level of formation
 Functional area policies
 According to expression
 According to nature of origin
 According to scope of organization
 According to the nature of managerial functions
 Situational or contingency policies
I. ACCORDING TO LEVEL OF
FORMULATION
a) Top Management policies:
 These are usually developed by the MD, VC, and GM.
 They are usually about investments, diversification, acquisitions, available
capital, HR requirement, R & D requirements, problems with promotion,
transfer, and achieving organizational goals, etc
b) Middle level Management policies:
 These are developed after talks between middle and upper level executives.

 They usually are about employee selection for a specific job, installation
(fixing) new equipments, resources and their selection, deciding wages and
salaries, and developing incentive plans, getting finance to solve problems, etc
c) Lower Level Management policies:
 These are developed by the people who are usually supervisors.

 They are in-charge of providing tools, raw materials, training, quality,

discipline, improving the morale of employees, motivating them and reducing
absenteeism, etc
d) Operational Level Management policies:
 This is usually written down rules and policies in manuals and work books which
the operational level employees are supposed to follow.
II. ACCORDING TO FUNCTIONAL
AREA
a) Production Policies:
These involve policies regarding product line, type of product, selection of technology,
process, equipment, tools, location of plant, layout, budget, maintenance, inventory
control, quality, cost control, labour relations, etc.
b) Marketing and sales policies:
These are related to market analysis, trend, demand forecasting, total concept of product
mix and market mix. Spotting present and potential market, the size and nature of
customers, competitors, distribution of products, promotion and pricing, selection,
training and developing sales force, division of market area, establishing sales volume and
sales budgets, etc.
c) Financial Policies:
These are required for prosperity and long survival. They include
capital requirement such as working, short, medium, and long term,
methods of fund raising, utilization of funds, profit policy, accounting
policy, allocation policy, finished goods inventory policy, provision for bad
debts, etc
d) Personnel Policies:
These are concerned with recruitments, selection, utilization of
human resources. Sources of HR, training, promotion, transfer, wages,
III. ACCORDING TO EXPRESSION:
a) Expressed Policies:
These policies are stated in clear words, either orally or in writing.
i) Oral policies:
These are word of mouth policies adopted usually, when organizations are small and
face to face communication is desired. Direct communication with better
understanding is desired, for flexibility. However, it suffers from drawbacks like
improper interpretation, easily forgotten when issued less frequently etc.
ii) Written Policies:
These are put in black and white and stated clearly, for the personnel to understand.
Therefore, it is clear, complete, precise, contain legal terms use simple language
and be warm to all those who read. It should be convenient and handy for reference
and application wherever and whenever necessary. However, they too have
disadvantages, as they are at times problem creating if not properly framed.
b) Implied Policies:
These can be understood from the behaviour of executives, they are not
stated or written, they may be included in the philosophy of the business, social
values and even traditions. Best suitable are dress codes, prohibition of smoking
or drinking in working areas. Employing people of certain community, race,
gender, etc can only be an implied policy, but written policies like above can
cause legal problems.
IV. ACCORDING TO NATURE OF
ORIGIN:
a) Originated Policies:
These policies are derived from the company objectives, which are
determined by the top management. Subordinate are supposed to readily accept such
policies.

b) Appealed Policies:
These are also known as “suggested policies”, since these are based on
the suggestions of employees, subordinate or consultant. They are more
effective as they involve employees and the top management.

c) Imposed Policies:
These are not accepted willingly, but are rather forced by external forces
like government, trade unions, legal acts, society, etc. they have to be followed
whether they like it or not.

d) Derivate Policies:
These are derived from the basic or major policies and are operational.
They are guidelines in day-to-day operations and are usually developed by the
respective departments or sections
V. ACCORDING TO THE SCOPE
OF ORGANISATION:
a) Basic Policies:
They form the basis of the organization and are developed
by top management. They give idea about the company,
its activities, its environment, and their influence over
other policies, which is very important to the
organization.
b) General Policies:
They are usually developed by the middle level
management. Such policies are very specific and apply to
large segments of the organizations.
c) Specific or departmental Policies:
It is developed by a specific department, for managing its
routine activities i.e., day-to-day activities of the
department.
VI. ACCORDING TO THE NATURE OF MANAGERIAL
FUNCTIONS:
a) Planning Policies:
These are connected with the path of action, which leads to
company activities, and achieving organizational goals. They include;
 Establishing corporate objectives.
 Collecting and classifying information
 Developing alternate course of action
 Comparison of objectives against feasibility, consequence etc
 Optimum (minimum use of resources) course of action
 Establishing standards, rules, policies, procedures, programs,
budgets, etc
b) Organizing Policies:
These policies include
 Establishing and maintaining a clear and precise organizational
structure
 Determining the role of each level of management
 Deciding authority, responsibility, degree of centralization,
decentralization
 Line and staff relationship and their communication
c) Directional Policies:
They are also called ‘actuating’ policies, they involve
 Providing effective leadership
 Assisting people in achieving their objectives and organizational
goals.
 Integrating people to suitable tasks
 Effective communication with all members of the organization.
 Proper organizational climate for employee development and
Motivation

d) Controlling Policies:
These are established to measure results. They involve measuring
actual results against standards or pre-established results. They involve
 Continuous observation of performance
 Measurement of results
 Finding deviation and taking corrective action
 Best mode of control
 Comparison of actual with standards
 Finding causes for deviations, pin-pointing deviations which are
significant
 Implementing corrective action when there is deviation
VII. SITUATIONAL AND
CONTINGENCY POLICIES:
They involve the following types of policies;
a) Normal Policies:
These policies provide guidelines to the employees in routine dayto- day conduct of
business and its smooth functioning.

b) Contingency Policies:
These policies are made to meet unexpected moments or situations
like
 Sudden floods, earth quakes, fire, famine, market slump
 Change in business cycles, war, labour strike, political problems,
and social sensitivity.
 Situational beyond the control of business unit like economic policy,
fiscal policy changes, monetary policy, trade or industrial policy
being unfavourable.
 Competitors’ strategies in production, R & D, innovations, quality
improvement, new techniques of production.
Most companies which are farsighted prepare contingency policies well in
advance, to help them to meet the situations whenever they arise.
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EFFECTIVE BUSINESS POLICY:
1. It should be related to the original objectives.
2. Simple and easy to understand
3. let it be in black and white
4. policies should be stable but not rigid
5. policies should be comprehensive
6. they should be complementary to one another
7. they should be supplementary to overall corporate
practices
8. they should be consistent with public policy
9. fair, first and reasonable
10. ethical
11. planned development should be possible
12. maintenance of individuality
PROCEDURE OF POLICY MAKING

 Policy can be defined as follows;

 “Business policy is an implied overall guide,
setting up boundaries, that supply the
general limits and direction in which
management action will take place”
Prof. George Terry
 Besides a business policy “is nothing more
than a well developed statement of
individuals and goals”
Prof. Peter and Wotrube
STEPS IN POLICY MAKING
MAKING OF EFFECTIVE
BUSINESS POLICY
Any business policy is considered effective if it has the
following features
 it should be related to the original objectives
 simple and easy to understand
 let every policy be written
 policies should be stable but not rigid
 policies should be comprehensive
 policies should be complementary to one another
 supplementary to overall corporate practices
 consistent with public policy
 fair, just and reasonable
 planned development
 maintenance of individuality
STRATEGY AND ITS PURPOSE

Strategy has its purpose.

Strategy is defined as;
 “Strategy is the grand design or an overall plan
which organizations choose in order to move or
react towards a set of objectives by using its
resources.
The strategy includes;
a) awareness of mission, purpose and objectives
b) unpredictability and uncertainty of events
c) takes into account the probable behaviour of
other in general and rivals in particular” and so on
DIFFERENCE BETWEEN POLICY
AND STRATEGY
DIFFERENCE BETWEEN POLICIES
AND PROGRAMS
DIFFERENCE BETWEEN STRATEGY AND TACTICS

 suggested
by Steiner,
niner and
gray;
STRATEGY MANAGEMENT PROCESS
 The following flow chart shows the strategic
management process;
QUESTIONS
1. Define Business Policy.
2. Write short note on strategy.
3. Explain vision and mission statement.
4. What are the types of objectives?
5. Difference between policy and strategy.
6. What are the objectives of business?
7. Write a short note in goals and objectives.
8. Write short note on policy.
9. Explain the nature of managerial functions in
policies.
10. Difference between policy and procedure.
1. Explain the nature and scope of business policy.
2. Explain the importance of business policy.
3. Write the history and evolution of b business policy.
4. Explain the characteristics of objectives.
5. Explain in detail the classification of policies.
6. What are the characteristics of effective business
policy
7. Steps in policy making – explain.
8. Explain the characteristics of vision and mission
statement.
9. Explain the difference between policy and tactics.
10. What are the features of policy?
CASE STUDY

 Dr. Sukumar inherited his father’s Dey’s Lab in Delhi in 1995.

Till 2002, he owned 4 labs in the National Capital Region
(NCR). His ambition was to turn it into a National chain.
 The number increased to 7 in 2003 across the country,
including the acquisition of Platinum lab in Mumbai. The
number is likely to go to 50 within 2-3 years from 21 at
present. Infusion of Rs. 28 crores for a 26% stake by Pharma
Capital has its growth strategy.
 The lab with a revenue of Rs. 75 crores is among top three
Pathological labs in India with Atlantic (Rs. 77 crores) and
Pacific (Rs. 55 crores).
 Yet its market share is only 2% of Rs. 3,500 crores market.
 The top 3 firms command only 6% as against 40-45% by their
counterparts in the USA.
 There are about 20,000 to 1,00,000 stand alone labs engaged in routine
pathological business in India, with no system of mandatory licensing and
registration.
 That is why Dr. Sukumar has not gone for acquisition or joint ventures. He does
not find many existing laboratories meeting quality standards. His six labs have
been accredited nationally whereon many large hospitals have not thought of
accreditation;
 The College of American pathologists accreditation of Dey’s lab would help it
to reach clients outside India.
 In Dey’s Lab, the bio-chemistry and blood testing equipments are sanitised
every day.
 The bar coding and automated registration of patients do not allow any
identity mix-ups.
 Even routine tests are conducted with highly sophisticated systems. Technical
expertise enables them to carry out 1650 variety of tests.
 Same day reports are available for samples reaching by 3 p.m. and by 7 a.m.
next day for samples from 500 collection centres located across the country.
 Their technicians work round the clock, unlike competitors. Home services for
collection and reporting is also available
 There is a huge unutilised capacity. Now it is
trying to top other segments.
 20% of its total business comes through its
main laboratory which acts as a reference
lab for many leading hospitals.
 New mega labs are being built to Encash
preclinical and multi-centre clinical trials
within India and provide postgraduate
training to the pathologists.
QUESTIONS

I. What do you understand by the term Vision?

What is the difference between ‘Vision’ and
‘Mission’? What vision Dr. Sukumar had at the
time of inheritance of Dey’s Lab? Has it been
achieved?
II. For growth what business strategy has been
adopted by Dr. Sukumar?
III. What is the marketing strategy of Dr.
Sukumar to overtake its competitors?
IV. In your opinion what could be the biggest
weakness in Dr. Sukumar’s business strategy?