Business Strategy Word

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Subject: BUSINESS STRATEGY Credits: 4

SYLLABUS

Defining Strategic anage!ent

Characteristics of Strategic Management Types and Hierarchy, Formulation of Strategy: Various Stages and

Components of Strategic Management, Determination of various obectives li!e corporate, divisions anddepartmental obectives: Vision, Mission and "urpose, #nvironmental Scanning: $nternal % #&ternal

environment, Types of Strategies, 'uidelines for crafting strategies, Tailoring strategies to fit specific $ndustry(

Strategic Ana"#sis and C$%ice:

#nvironmental Threat and )pportunity "rofile *#T)"+, )rganiational Capability "rofile - Strategic .dvantage

"rofile, Corporate "ortfolio .nalysis - S/)T .nalysis, Synergy and Dysergy - '." .nalysis, "orter0s FiveForces Model of Competition, Mc 1insey0s 2s Frame3or!, '# 4 Cell Model, Distinctive competitiveness -

Selection of matri& 3hile considering all models discussed above, $mplementation of strategy: .nalysis and

development of organiational policies mar!eting, production, financial, personnel and managementinformation system, Strategy implementation: $ssues in implementation - "roect implementation -"rocedural

implementation(

Res%urce A""%cati%n &Tec$n%"%gica" and de!and f%recasting'

5udgets - )rganiation, Structure - Matching structure and strategy, 5ehavioural issues - 6eadership style -

Corporate culture - Values - "o3er - Social responsibilities - #thics7 5uilding a capable organiation,

Functional issues - Functional plans and policies - Financial, Mar!eting, )perations and "ersonnel plans andpolicies, Strategy #valuation - $mportance(

S#!(t%!s %f !a"functi%ning %f strateg#)rganiation anarchies, )perations Control and Strategic Control7 Measurement of performance - .nalying

variances - 8ole of organiational systems in evaluation, 8escheduling of resources7Techni9ues for improvingorganiation effectiveness(

Suggested Readings:

1. 6a3rence 8( auch, /illiam F( 'luec!, 5usiness "olicy and Strategic Management, Mc'ra37 Hill, ;th

#dition(

2. ohn .( "earce $$, 8(5( 8obinson, r(, Strategic Management, th #dition


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BUSINESS

STRA

TEGY

iv

BUSINESS STRATEGY

C)NTENT

. Lesson No. Topic Page No.

BUSINESS STRATEGY

C)NTENT

. Lesson No. Topic Page No.

Lesson 1: Introduction to Business 1

Lesson 2 Introduction to Strategic Management 5

Lesson 3 Diference between Polic! Strateg and "actic 1#

Lesson $ Long %ange Planning &nd Strategic Planning 1'

Lesson 5 ()aracteristics *+ Strategic Decisions 1,

Lesson ' Le-els *+ Strateg 1

Lesson , ()aracteristics o+ Strategic Decisions at 3

Le-els

2#

Lesson %ole *+ Strategic Management 2$

Lesson / (once0t o+ *becti-e! Mission and ision 2

Lesson 1# (om0arati-e &nalsis o+ *becti-e! Mission andision o+ arious com0anies

3'

Lesson 11 nderstanding *becti-e! Mission and ision $#

Lesson 12 Strategic Intent $5

Lesson 13 &00roac)es to Strateg $/

Lesson 1$ &00roac)es to Strateg 4 (ontinued 5$

Lesson 15 Planning Process 5/

Lesson 1' Strategic Planning Process '2

Lesson 1, Strategic Planning in t)e ne6t millennium '$

Lesson 1 7n-ironmental &nalsis ,#

Lesson 1/ Pestle &nalsis ,$

Lesson 2# Porter8s 5 9orce &nalsis 1

Lesson 21 nderstanding Business '

Lesson 22 (om0etitor &nalsis /

Lesson 23 (om0etitor &nalsis /$

Lesson 2$ Boston Matri6 /,

Lesson 25 ")e International Dimensions o+ Strateg /

Lesson 2' (ore (om0etence 1#2

Lesson 2, Benc)maring 1#,

Lesson 2 Mc ;inse8s ,S 9ramewor 1#


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BUSINESS

STRA

T

EGY

Lesson 2/ Swot &nalsis and alue ()ain 111

Lesson 3# introduction to Strateg Im0lementation 115

Lesson 31 Structural Im0lementation 12#

Lesson 32 9unctional Im0lementation 123

Lesson 33 9unctional Im0lementation 4contd.... 12,

Lesson 3$ Be)a-ioural Im0lementation 133

Lesson 35 %esource Mobilisation and &llocation 13'

Lesson 3' (once0t o+ Strategic 7-aluation and (ontro 1$#

Lesson 3, (ontrol Process 1$5

Lesson 3 "ec)nits and terminolog o+ t)e 0rocesses +or0roducing and im0lementing maor 0lans directing business acti-it.

? =ou will come to now about t)e nature and -alue o+ strategic management! em0)asi?es t)e 0ractical-alue o+ a strategic management a00roac) +or a business organi?ation.

? =ou will understand t)at strategic management acti-ities are undertaen at t)ree le-els: cor0orate!business and +unctional.

? =ou will understand t)at business strateg is a set o+ decisions and actions resulting in t)e +ormulationand im0lementation o+ strategies designed to ac)ie-e t)e obecti-es o+ an organi?ation.

Dear Students,

Definiti%n %f Strateg#")ere is considerable con+usion in management literature regarding t)e -ariousterms used in strategic management. & recent sur-e b t)e &merican Management&ssociation re-ealed t)at res0ondents +ound it dificult to de>ne 0olic! anddiferentiate between strateg! 0olic and obecti-es! +urt)er com0ounding t)e


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dificult. &ccording to &ndrews! strateg! 0olic and obecti-es embrace a range o+statements +rom t)e @broadA and @im0ortantA to @narrowA and @unim0ortantA.

Policies get merged into 0rocedures and 0rocedures into rules. Strategies getblended into tactics! resulting in an @endmeans continuumA. ")is can be illustratedb t)e +ollowing e6am0le. Su00ose a com0an decides u0on a sales growt) o+ 35 0ercent and desires to ac)ie-e t)is b aceld o+ management more recentl. &t >rst! t)e word was used in termso+ Militar Science to mean w)at a manager does to ofset actual or 0otential actions o+ com0etitors. ")eword is still being used in t)e same sense! t)oug) b +ew onl. *riginall! t)e word strateg )as beenderi-ed +rom Cree 8Strategos! w)ic) means generals)i0. ")e word strateg! t)ere+ore! means t)e art o+t)e general.

E)en t)e term strateg is used in militar sense! it re+ers to action t)at can be taen in t)e lig)t o+ actiontaen b o00osite 0art. &ccording to *6+ord Dictionar! 8militar strateg is t)e art o+ so mo-ing ordis0osing t)e instruments o+ war+are 4 troo0s! s)i0s! aircra+ts! missiles! etc. as to im0ose u0on t)e enem!

t)e 0lace! time and conditions +or >g)ting b onesel+. Strateg ends! or ields to tactics w)en actualcontact wit) enem is made.

In management! t)e conce0t o+ strateg is taen in slig)tl diferent +orm as com0ared to its usage in militar+ormF it is taen more broadl. Gowe-er! in t)is +orm! -arious e60erts do not agree about t)e 0recise sco0e o+strateg. Lac o+ unanimit )as resulted into two broad categories o+ de>nitions: strateg as action inclusi-e o+obecti-e setting and strateg as action e6clusi-e o+ obecti-e setting. Let us see some de>nitions in t)ese twocategories in order to conce0tuali?e strateg 0ro0erl. =ou must )a-e )eard about t)e term strateg! let usdiscuss w)at does it mean:

9irst o+ all ou need to loo at t)e diferent -iews and o0inions e60ressed b leading t)iners in t)e >eld o+business strateg. "omorrow alwas arri-es. It is alwas diferent. &nd e-en t)e mig)tiest com0an is introuble i+ it )as not wored on t)e +uture. Being sur0rised b w)at )a00ens is a ris t)at e-en t)e largest andric)est com0an cannot aford! and e-en t)e smallest business need not run.

- Peter Drucker I+ ou dont in-est o+ t)e long term! t)ere is no s)ort

term.

- George David

I+ we now w)ere we are and somet)ing about )ow we got t)ere! we mig)t see w)ere we are treading and i+t)e outcomes w)ic) lie naturall in our course are unacce0table! to mae timel c)ange.

- Abraham Lincoln

Eit)out a strateg! a com0an is lie a s)i0 wit)out a rudder! going around in circles. Its lie a tram0F it )asno 0lace to go.

Goel %oss H Mic)ael ;ami

I+ a man taes no t)oug)t about w)at is distant! )e will >nd sorrow near at )and. Ge w)o will not worrabout w)at is +ar of will soon >nd somet)ing worse t)at worr.

- Confucius

It is )uman nature to mae decisions based on emotion! rat)er t)an +act. But not)ing could be more illogical.- Toshiba Corporation

o business can do e-ert)ing. 7-en i+ it )as t)e mone! it will ne-er )a-e enoug) good 0eo0le. It )as to set0riorities. ")e worse t)ing to do is a little bit o+ e-ert)ing. ")is maes sure t)at not)ing is beingaccom0lis)ed. It is better to 0ic t)e wrong 0riorit t)an none at all.

Peter Drucker

So! "ell me w)at do ou mean b strategJ

Based on -arious t)iners 0oint o+ -iew we need to de>ne strateg:


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Further,

Management is an art as well as science. Man o+ t)e conce0ts used in building management t)eor )a-e beenderi-ed +rom 0ractice. nlie t)e 0ure sciences! w)ic) )a-e t)eir +oundation in e60erimental researc)!management studies draw u0on t)e 0ractical e60eriences o+ managers in de>ning conce0ts. Business 0olic isrooted in t)e 0ractice o+ management and )as 0assed t)roug) diferent 0)ases be+ore taing its s)a0e in t)e0resent +orm o+ strategic management. *ne o+ t)e earliest contributors to t)is oung subect was &l+red D()andler.

&l+red D ()andler 41/'2

()andler made a com0re)ensi-e analsis o+ interrelations)i0s among en-ironment! strateg! and

organi?ational structure. Ge anal?ed t)e )istor o+ organi?ational c)ange in ,# manu+acturing >rms in t)eS. E)ile doing so! ()andler de>ned strateg as: @")e determination o+ t)e basic longterm goals andobecti-es o+ an enter0rise and t)e ado0tion o+ t)e courses o+ action and t)e allocation o+ resources necessar+or carring out t)ese goals.A ote t)at ()andler re+ers to t)ree as0ects: Determination o+ basic longtermgoals and obecti-es!

&do0tion o+ courses o+ action to ac)ie-e t)ese obecti-es! and

&llocation o+ resources necessar +or ado0ting t)e courses o+ action.

;ennet) &ndrews 41/'5

&ndrews belongs to t)e grou0 o+ 0ro+essors at Gar-ard Business Sc)ool w)o were res0onsible +or de-elo0ingt)e subect o+ business 0olic and its dissemination t)roug) t)e case stud met)od. &ndrew de>nes strategas: @")e 0attern o+ obecti-es! 0ur0ose! goals! and t)e maor 0olicies and 0lans +or ac)ie-ing t)ese goals statedin suc) a wa so as to de>ne w)at business t)e com0an is in or is to be and t)e ind o+ com0an it is or is to

beA. ")is de>nition re+ers to t)e 8business de>nition! w)ic) is a wa o+ stating t)e current and desired +uture0osition o+ com0an! and t)e obecti-es! 0ur0oses! goals! maor 0olicies and 0lans renes t)e essential nature o+ business t)at t)e organi?ation was or 0lanned tobe in +utureA.

&nsof )as stressed on t)e commonalit o+ a00roac) t)at e6ists in di-erse organi?ational acti-itiesincluding t)e 0roducts and marets t)at de>ne t)e current and 0lanned nature o+ business.

Eilliam 9 Cluec 41/,2

&not)er wellnown aut)or in t)e area o+ strategic management was Cluec! w)o was a Distinguis)edPro+essor o+ Management at t)e ni-ersit o+ Ceorgia till )is deat) in 1/#. Ge de>ned strateg 0reciselas:A& uni>ed! com0re)ensi-e and integrated 0lan designed to assure t)at t)e basic obecti-es o+ t)eenter0rise are ac)ie-edA. ")e t)ree adecti-es! w)ic) Cluec )as used to de>ne a 0lan! mae t)e de>nitionc writer on strateg. Gead-ocates t)e idea t)at strategies are not alwas t)e outcome o+ rational 0lanning. ")e can emerge +romw)at an organi?ation does wit)out an +ormal 0lan. Ge de>nes strateg as: @a 0attern in a stream o+decisions and actionsA. Mint?berg distinguis)es between intended strategies and emergent strategies.Intended strategies re+er to t)e 0lans t)at managers de-elo0! w)ile emergent strategies are t)e actionst)at actuall tae 0lace o-er a 0eriod o+ time. In t)is manner! an organi?ation ma start wit) a deliberatedesign o+ strateg and end u0 wit) anot)er +orm o+ strateg t)at is actuall reali?ed.

Mic)ael 7 Porter 41//'

Mic)ael Porter o+ t)e Gar-ard Business Sc)ool )as made in-aluable contributions to t)e de-elo0ment o+t)e conce0t o+ strateg. Gis ideas on com0etiti-e ad-antage! t)e >-e+orces model! generic strategies! and

-alue c)ain 4ou will get to learn about all t)ese later at a00ro0riate 0laces in t)is boo are -e names associated wit) business strateg and t)eir area o+ contributionJ


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Igor &nsof 41/'5

Pro+essor &nsof is a wellnown aut)orit in

t)e >eld o+ strategic management and )as been

a 0roli>c writer +or t)e last t)ree decades. I n

one o+ )is earlier boos! (or0orate Strateg

41/'5! )e e60lained t)e conce0t o+ strateg as:

@")e common t)read among t)e organi?ations

acti-ities and 0roduct

So w)at e6actl business strateg is all about:

Strategic 0osition is based on customers needs!

customers accessibilit! or t)e -ariet o+ a

com0ans 0roducts and ser-ices. & com0ans

unitamong t)e diferent acti-ities is done to ensure t)at t)e relate to eac) ot)er.

It must be noted t)at t)e diferent a00roac)es re+erred to abo-e to de>ne strateg co-er nearl a nitions as t)ere are e60erts. ")esame aut)ors ma c)ange t)e a00roac) t)e )a-e earlier ado0ted. Eitness w)at &nsof said 1/ ears laterin 1/$ 4)is earlier de>nition is o+ 1/'5: @Basicall! a strateg is a set o+ decisionmaing rules +or t)eguidance o+ organi?ational be)a-iorA.

I )a-e tried to gi-e ou an assortment o+ de>nitions out o+ t)e man a-ailable. %at)er t)an an assortment!it ma be more a00ro0riate to call t)is section a bounitions and e60lanations o+ strateg. 7ac)ower 4de>nition is res0lendent b itsel+ et contributes snergisticall to t)e o-erall beaut o+ t)e

bounitions o+ strateg! in t)is section.

Lets tae an e6am0le to +ocus more on strateg:

Strateg de>nes a +ramewor +or guiding t)e c)oice o+ action. Some time we ma as! @E)at is (oca(olas strateg to go on to become a maret leaderJ Is Strateg static in nature or dnamicJ

Because t)e >rms internal and e6ternal en-ironment c)ange Strateg )as +our com0onents.

9irstl! strateg s)ould include a clear set o+ long term goals.

Second com0onents are t)at it s)ould de>ne t)e sco0e o+ t)e >rm i.e. t)e t0es o+ 0roducts t)e >rm will ser-eetc.

")irdl! a strateg s)ould )a-e a clear statement o+ w)at com0etiti-e ad-antage it will ac)ie-e and sustain.9inall! t)e strateg must re0resent t)e >rms internal contest t)at will allow it to ac)ie-e a com0etiti-ead-antage in t)e en-ironment in w)ic) it )as c)osen to com0ete.

")us! ou ma sa!

o-er time! t)e Strateg also c)anges

conse


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strategic management approach? Justify your answer

If you recall what various thinkers contributed to the study:

Step ! Identify what you consider to be threats, strengths,weaknesses " opportunities for the company identi#ed!

Step $! %hrough discussion, compare your number of factor

to those developed by other team mates! Further add somefactors to your list from the discussion! &eep this informatiofor use in later activities!

8Coals are 8E)at o+ t)e strateg

8(om0etiti-e &d-antageF is )ow o+ t)e strateg and t)eF logic is t)e 8Ea o+ t)e strateg.

76am0les

Coals! E)ere

E)ere does t)e management o+ t)e >rm want it to beJ

Sco0e!E)at

E)at inds o+ 0roducts will t)e >rm 0roduceJ *r E)at marets will t)e >rm targetJ

(om0etiti-e &d-antage!Gow!Gow t)e >rm intends to )a-e t)e cost leaders)i0J Gow t)e >rmintends to ac)ie-e its longterm goalsJ

Logic!E)!Sree Leat)ers! t)e s)oe manu+actures strateg is to attract more and moreo+ middle class and lower middle class customers b ofering low 0riced durable leat)er s)oes.

Similarl! ou tae an e6am0le and tr to e60lain )ow com0an & or com0an B

+ocuses on its business strategJ

So after seeing the w ay thinkers look at strategy w e need to dene w hat is strategic management.

")e strategic management or strategic 0lanning encom0asses longrange 0lans! new -enture management!0lanning! 0rogramming! budgeting! business 0olic! etc. wit) greater em0)asis on en-ironmental scanningand +orecasting and taing into account e6ternal and internal +actors in +ormulating and im0lementing t)e0lans.

")e word strateg is deri-ed +rom t)e Cree word @strategiaA t)at was e-ol-ed during $## B(. ")e wordstrategia meant science o+ guiding and directing militar +orces.

Lets com0are business strateg and militar strategJ

ti-es +or reac)ing a goal. ")e obecti-e can be in t)e +orm o+ a mission statement or ma be clearl de>ned int)e +orm o+ 0ostulates.

Strategic management is a science o+ c)oosing t)e alternati-es +rom t)e designed and a-ailable courses. ")emanagers )a-e to decide on a 0rocess t)at will be most suitable to t)eir conditions and t)at would enable

t)em to ac)ie-e a desired 0osition +or t)eir organisation.

")us! strategic management can be de>ned as +ollows:

Strategic management is t)e 0rocess o+ sstematicall anal?ing -arious o00ortunities and t)reats -isN-isorganisational strengt)s and weanesses! +ormulating! and arri-ing at strategic c)oices t)roug) criticale-aluation o+ alternati-es and im0lementing t)em to meet t)e set obecti-es o+ t)e organisation. So! in ouro0inion! w)at is t)e single maor bene>t o+ using a

It )as been de>ned b Llod L. Bars asStrategic management is concerned wit) maing decisions about anorganisations +uture direction and im0lementing t)ose decisions. &l+red D.()andler 41/'2 made a detailedanalsis o+ -arious interrelations)i0s among en-ironment! strateg! and organisation structure in ,#manu+acturing >rms in t)e S and de>ned strateg as! 8")e determination o+ t)e basic long term goals and


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obecti-es o+ an enter0rise and t)e ado0tion o+ t)e courses o+ action and t)e allocation o+ resources necessar+or carring out t)ese goals.

It is 0ertinent to note )ere w)at &l+red D. ()andler )as made re+erence to t)ree basic as0ects o+ strategic0rocessF

1. Determination o+ basic longterm goals!

2.. &do0tion o+ course o+ actions to ac)ie-e t)ese goals! and 3. &llocation o+ necessar resources +or carringout t)ese goals. ;ennet) &ndrews 41/'5 outlines business strateg de>nition as a met)od o+ describing t)e+uture 0osition o+ a com0an! its obecti-es! 0ur0oses! goals! 0olicies! and 0lans t)at ma be renes strateg as! 8")e 0attern o+ obecti-es +or ac)ie-ing t)ese goals and t)e maor 0olicies and0lans +or ac)ie-ing t)ese goals stated in suc) a wa so as to de>ne w)at

business t)e com0an is in or is to be and t)e ind o+ com0an it is or is to be.A

Igor &nsof 41/'5 in )is boo (or0orate Strateg )as de>ned strateg as! 8")e common t)read among t)eorganisations acti-ities and 0roduct marets t)at de>nes t)e essential nature o+ business t)at anorganisation was or 0lans to be in +uture.

Pro+essor Eilliam 9. Cluec 41/,2 de>nes strateg as! 8& uni>ed! com0re)ensi-e! and integrated 0lan!designed to assure t)at t)e basic obecti-es o+ t)e enter0rise are ac)ie-ed. So! b now ou )a-eunderstood )ow t)e old rules o+ business )a-e become obsolete and t)ere is a 0aradigm s)i+t ina00roac)es to business.

")us! ou >nd t)at Strategic Management is a set o+ rules aimed at taing decisions +or sustenance

and growt) o+ an organisation in a gi-en en-ironment.Acti,it# *ow ou tr to do an acti-it w)ic) is aimed at gi-ing 0ractical e60osure about )ow com0anies +ocuses onstrategic management.

Ste01. ()oose an com0an t)at is listed on t)e stoc e6c)ange and w)ose in+ormation is +reel a-ailable e.g%eliance industries.

")us ou see! strateg co-ers t)e +ollowing as0ects.

1. 760loring and determining t)e -ision o+ t)e com0an in t)e +orm o+ a -ision statement.

2. De-elo0ing a mission statement o+ t)e com0an t)at s)ould include statement o+ met)odolog +orac)ie-ing t)e obecti-es! 0ur0oses! and t)e 0)iloso0) o+ t)e organisation adening t)e com0an 0ro>le t)at includes t)e internal culture! strengt)s and ca0abilities o+ anorganisation.

$. (ritical stud o+ e6ternal en-ironmental +actors! t)reats! o00ortunities etc.

5. 9inding out was b w)ic) a com0an 0ro>le can bematc)ed wit) its en-ironment to be able toaccom0lis) mission statement.

'. Deciding on t)e most desirable courses o+ actions +or accom0lis)ing t)e mission o+ an organisation.

,. Selecting a set o+ longterm obecti-es and also t)e corres0onding strategies to be ado0ted in line wit)-ision statement.

. 7-ol-ing s)ortterm and annual obecti-es and de>ning t)e corres0onding strategies t)at would becom0atible wit) t)e mission and -ision statements.

/. Im0lementing t)e c)osen strategies in a 0lanned wa based on budgets and allocation o+ resource!outlining t)e action 0rograms and tass.

1#.Installation o+ a continuous com0atible re-iew sstem to create a controlling mec)anism and alsogenerate data +or selecting +uture course o+ action

S*! in w)at was ou as a learner e60ect to bene>t in our 0ersonal li+e b studing business strategJ


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Le

arning )bje cti,e s*n t)e com0letion o+ t)is c)a0ter ou s)ould be able to:

=ou s)ould be able to understand t)e model o+ strategic management 0rocess.

=ou will understand t)at t)e model is re0resentati-e o+ +urt)er subsele reects internal conditions and ca0abilities.

=ou will understand )ow to assess t)e com0ans e6ternal en-iroment! in terms o+ bot) com0etiti-e andconte6tual +actors.

=ou will understand )ow to c)oose t)e strateg w)ic) is needed to ac)ie-e t)e desired o0tions

=ou will understand t)at )ow strategic c)oice decisions are im0lemented based on budgeted resourceallocation

=ou will understand t)e re-iew and e-aluation o+ t)e success o+ t)e strategic 0rocess to ser-e as a basis +orcontrol and as an in0ut +or +uture decision maing.

")us! ou will understand a strateg reects a com0ans awareness o+ )ow to com0ete against w)om!w)en! w)ere and +or w)at.

Strate g ic anag e ! e nt +r% ce sse sI )ad alread e60lained and described t)e )istorical e-olution o+ business strateg and said t)at strategicmanagement is carried out t)roug) a 0rocess o+ strategic management.

So! ou will >nd organisations de-ise -arious met)ods +or strateg +ormulation. ")e strategic management+ormulation and im0lementation met)ods -ar wit) 0roduct 0ro>le! com0an 0ro>le! en-ironment wit)inand outside t)e organisation! and -arious ot)er +actors. Large organisations w)ic) use so0)isticated0lanning use detailed strategic management models w)ereas smaller organisations w)ere +ormalit is lowuse sim0ler models. Small businesses concentrate on 0lanning ste0s com0ared to larger com0anies in t)esame industr. Large >rms )a-e di-erse 0roducts! o0erations! marets! and tec)nologies and )ence t)e)a-e to essentiall use com0le6 sstems. Ins0ite o+ t)e +act t)at com0anies )a-e diferent structures!sstems! 0roduct 0ro>les! etc! -arious com0onents o+ models used +or analsis o+ strategic managementare ned business strateg diferentl! et t)ere are

some common elements in t)e wa it is de>ned and understood.")e strategic management consists o+ diferent 0)ases! w)ic) are se


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1. ")e Strategic Planner )as to de>ne w)at is intended to be accom0lis)ed 4not ust desired. ")is will )el0 inde>ning t)e obecti-es! strategies and 0olicies.

2. In t)e lig)t o+ stage I! t)e result o+ t)e current 0er+ormance o+ t)e organisation are documented.

3.")e Board o+ Directors and t)e to0 management will )a-e to re-iew t)e current 0er+ormance o+ t)edocumented.

$. In -iew o+ t)e re-iew! t)e organi?ation will )a-e to scan t)e internal en-ironment +or strengt)s and weanessesand t)e e6ternal en-ironment +or o00ortunities and t)reats.

5. ")e internal and e6ternal scan )el0s in selecting t)e strategic +actors.

,. ")ese )a-e to be re-iewed and rede>ned in relation to t)e Mission and *becti-es.

. &t t)is stage a set o+ strategic alternati-es and generated.

/. ")e best strategic alternati-e is selected and im0lemented t)roug) 0rogramme budgets and 0rocedures.

1#.Monitoring! e-aluation and re-iew o+ t)e strategic alternati-e c)osen is undertaen in t)is mode. ")is can0ro-ide a +eedbac on t)e c)anges in t)e im0lementation i+ re


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en-ironments o+ organisations are now dri-en b multitudes o+ +orces t)at were )it)erto none6istent.7arlier t)e c)anges in tec)nolog were not so ra0id but toda t)e in+ormation +rom all o-er t)e globe is0ouring in t)roug) t)e com0uters. ")e world in +act )as s)run. ")is )as created >erce com0etition as t)ecustomers and stae)olders )a-e become more aware o+ t)eir rig)ts.

")in o+ oursel+ as a consumer w)o )as got se-eral alternati-es to c)oose +rom J =ou as a customer loos+or real -alue +or our mone. =ou )a-e become aware o+ rmsJ Ci-e an e6am0le.

")e need is now to distinguis) between longrange 0lanning and strategic 0lanning. ")e im0ortance o+strategic management in setting t)e directions +or growt) o+ organisations is being increasingl realised

t)ese das. ")e e-olution o+ obecti-es a+ter setting directions +or growt) o+ organisations )as becomenecessar. ")e tec)nirm! stating o+ cor0orate obecti-es! and strategic t)rust areas! de>ning acom0re)ensi-e cor0orate 0)iloso0) and -alues! identi+ing t)e domains in w)ic) an organisation wouldo0erate! learning and recognising worldwide business trends! and allocation o+ resources in line wit)cor0orate 0riorities! are some o+ t)e e areas w)erein to0 management o+ organisations tae decisions.Let us now loo at t)e domain o+ to0 managementJ

Strategic Issues +or S)aring o+ (oncern and %esources

"o meet certain s0eci>c needs o+ certain customers! use o+ common u0graded tec)nologies b certainbusiness units! de0loment o+ 0eo0le! 0)sical assets or mone +rom internal or e6ternal sources and toac)ie-e economics o+ scale in de0loment! certain decisions ma be taen b t)e management.

Strategic Issues Li/e"# t% 0a,e L%ng Ter!I! (actStrategic decisions +or im0lementing a course o+ action )a-e broad im0lications and long termrami>cations and t)e 0eo0le o+ an organisation )a-e to commit t)emsel-es to t)e decisions and 0lans +or along 0eriod o+ time. *nce a >rm taes strategic decisions and im0lements t)e action 0rograms! t)e im0actis seen slowl on its com0etiti-e image and t)e ad-antage tied to t)e 0articular strateg start 0ouring in.")e com0anies become nown in certain marets! 0roducts! or tec)nologies or t)e decisions maad-ersel afect t)e 0re-ious 0rogress.

In todas business world! w)ere c)anges are b lea0s and bounds! some organisations ma decide +orradical c)anges t)roug) reengineering o+ t)eir business 0rocesses to gain strategicall better 0osition

Strate g ic Dire cti% ns are 1uturisticStrategies are essentiall +or t)e +uture. Strategic decisions are taen based o +orecasts t)at are in turnbased on a-ailable data on trends. ")e managers in-ol-ed in strategic 0lanning concentrate onde-elo0ing 0roections t)at would tae t)e com0an to better strategic 0osition. ")e com0anies t)usbecome 0roacti-e rat)er t)an being reacti-e to business situations.

Strategies )a-e Multi 9unctional and MultiBusiness 7fects

7-er com0an )as se-eral business units. Strategic decisions are coordinati-e in nature among all t)ebusiness units o+ t)e com0an. Man strategic decisions on 0roduct mi6! com0etiti-e edge! organisationalstructure etc. afect -arious de0artments and +unctions t)at ma be classi>ed as strategic business units4SBs. 7ac) o+ t)ese units get afected b t)e decision taen at t)e to0 le-el! regarding allocation o+resources and de0loment o+ 0ersonnel etc.


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So! Business Strateg as a disci0line +ocuses at t)e organi?ation as one single unit.

Strategies are De>ned Based on Stud o+ 7n-ironment

")e organisation culture internal to t)e organisation and also t)e e6ternal en-ironment must bet)oroug)l scanned and studied to decide on strategies. ")e interaction between t)e organisations andt)e e6ternal en-ironment afects bot) o+ t)em. ")e organisation tends to c)ange t)e en-ironment and t)esame en-ironment maes an im0act on t)e organisation. ")e >rms )a-e to de>ne t)eir strategic 0ositionwit) regard to t)e en-ironment and decide strategies t)at will tae it to t)e desired 0osition. ")e >rmsare 0art o+ t)e sstem! w)ere customers! stae )olders! com0etitors etc. e6ist and t)e >rm cannot remain

insulated +rom t)ese determinants o+ t)e e6ternal en-ironment

Strategic +"anning %de"

E"e!ents In Strategic anage!ent+r% ce ss7ac) 0)ase o+ strategic management 0rocess can be -iewed to be consisting o+ a number o+ elements! w)ic)can be clearl de>ned wit) in0ut and out0ut relations)i0s. ")e ste0s )a-e logical connecti-it and )encet)ese are sening t)e -ision o+ t)e com0an

2. De>ning t)e mission o+ t)e com0an

3. Determining t)e 0ur0oses or goals

$. De>ning t)e obecti-es

5. 7n-ironment scanning'. (arring out cor0orate a00raisal

,. De-elo0ing strategic alternati-es

. Selecting a strateg

/. 9ormulating detailed strateg

1#.Pre0aring a 0lan

11. Im0lementing a strateg

12.7-aluating a strateg

Strategic anage!ent %de"s9irstl )a-e a loo at t)e -arious model w)ic) )as got rele-ance to t)e strategic 0rocess.

ow t)in o+ a >rm w)ic) in our o0inion )as been success+ul o-er t)e 0ast 15 ears and list down t)e t)ings

ou t)in )a-e attributed to its success: Some o+ t)e strategic management models are s)own . ow! I willdiscuss eac) o+ t)e elements o+ strategic management model.

E2$ibit Strategic anage!ent %de"

3 (om0an -ision statement

3 (om0an mission statement

3 (om0an 0ro>le

3 76ternal en-ironment and internal en-ironment

3 7-olutionstrategic c)oices and selection

3 Longterm obecti-es


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3 Crand strateg

3 &nnual obecti-e

3 9unctional strateg

3 *0erating 0olicies

3 Institutionising Strateg

3 (ontrol and e-aluation

C%!(re$ensi,e %de" %f Strategic anag e ! e nt

-%r/ing %de" %f Strategic anage!ent

&+ter looing at t)e abo-e gi-en ow c)arts I will now discuss eac) 0)ase in detail.

Let us! now discuss in details t)e model o+ strategic management

isi%n %f T$e C%!(an#ision o+ a com0an is rat)er a 0ermanent statement articulated b t)e (7* o+ t)e com0an w)o ma beManaging Director! President! ()airman! etc. ")e 0ur0ose o+ a -ision statement is to:

1. (ommunicate wit) t)e 0eo0le o+ t)e organisation and to t)ose w)o are in some wa connected orconcerned wit) t)e organisation about its -er e6istence in terms o+ cor0orate 0ur0ose! business sco0e! andt)e com0etiti-e leaders)i0.

2. (ast a +ramewor t)at would lead to de-elo0ment o+ interrelations)i0s between >rm and stae)olders -i?.em0loees! s)are)olders! su00liers! customers! and -arious communities t)at ma be directl or indirectlin-ol-ed wit) t)e >rm.

3. De>ne broad obecti-e regarding 0er+ormance o+ t)e >rm and its growt) in -arious >elds -ital to t)e >rm.

So! lets tal about our own uni-ersit! >nd out w)at is t)e -ision statement and list down -arious 0ur0oseso+ our -ision statement.

ision is a t)eme w)ic) gi-es a +ocused -iew o+ a com0an.It is a uni+ing statement and a -ital c)allengeto all diferent units o+ an organisation t)at ma be bus 0ursuing t)eir inde0endent obecti-es. It consistso+ a sense o+ ac)ie-able ideals and is a +ountain o+ ins0iration +or 0er+orming t)e dail acti-ities. Itmoti-ates 0eo0le o+ an organisation to be)a-e in a wa w)ic) would be congruent wit) t)e cor0orateet)ics and -alues.


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Man >rms do not )a-e clear -ision statements. &n indirect met)od o+ nowing w)et)er a >rm )as reac)edt)e stage o+ cor0orate strategic management is emergence o+ a -ision statement. ision o+ a >rm cannot be)ig) aced +rom a com0an! )owe-er! a >rm ma de>nitel get ins0ired b t)e -ision statement o+ anot)er>rm. It )as to be e-ol-ed a+ter a lot o+ deliberations! brain storming! and t)ining.

It is 0ertinent t)at ou as an indi-idual woring in a >rm s)ould become an acti-e 0artici0ant andcollaborator in accom0lis)ing cor0orate obecti-es. =ou must understand and s)are t)e -ision o+ t)e >rmbecause ou would )a-e to contribute in trans+ormation o+ -ision into a realit t)roug) )is or )er actions."otal be)a-iour o+ 0eo0le o+ an organisation s)ould get conditioned b t)e basic +ramewor o+ -ision.

Personal obecti-es o+ indi-iduals are -er im0ortant to t)em and onl to +ul>ll t)ese obecti-es 0eo0le oinorganisations. ision o+ a com0an w)en translated into action 0rogramme must be able to meet 0ersonalneeds o+ 0eo0le. ")is includes t)e need o+ ac)ie-ement also. ision o+ a >rm t)us encom0asses 0ersonalobecti-es o+ 0eo0le w)ic) t)e tr to ac)ie-e.

Ste0 1. ame o+ t)e com0an

Ste0 2. Practices t)at )a-e made t)e com0an success+ul

")e 0rimar 0ur0ose o+ t)e strategic management 0rocess is to enable com0anies to ac)ie-e strategiccom0etiti-eness and earn abo-ea-erage returns. %esearc) )a-e indicated t)at com0anies t)at engage instrategic management generall out 0er+orm t)ose t)at do not. ")e attainment o+ an a00ro0riate matc) or>t between a com0ans en-ironment and its strateg! structure! and 0rocesses )as 0ositi-e efects on t)ecom0ans 0er+ormance. Bruce Genderson! +ounder o+ t)e Boston (onsulting Crou0! 0ointed out t)at acom0an cannot aford to +ollow intuiti-e strategies once it becomes large! )as laers o+ management! orits en-ironment c)anges substantiall. &s t)e worlds en-ironment becomes increasingl com0le6 and

c)anging! todas com0anies! as one wa to mae t)e en-ironment more manageable! use strategicmanagement.

Strategic com0etiti-eness is ac)ie-ed w)en a com0an success+ull +ormulates and im0lements a-aluecreating strateg. B im0lementing a -aluecreating strateg t)at current and 0otential com0etitorsare not simultaneousl im0lementing and t)at com0etitors are unable to du0licate! a com0an ac)ie-es asustained or sustainable com0etiti-e ad-antage. So long as a com0an can sustain 4or maintain acom0etiti-e ad-antage! in-estors will earn abo-ea-erage returns. &bo-ea-erage returns re0resent returnst)at e6ceed returns t)at in-estors e60ect to earn +rom ot)er in-estments wit) similar le-els o+ ris4in-estor uncertaint about t)e economic gains or losses t)at will result +rom a 0articular in-estment. Inot)er words! abo-e a-eragereturns e6ceed in-estors e60ected le-els o+ return +or gi-en le-els o+ ris.

In t)e long run! com0anies must earn at least a-erage returns and 0ro-ide in-estors wit) a-erage returnsi+ t)e are to sur-i-e. I+ a com0an earns below a-erage returns and 0ro-ides in-estors wit) belowa-eragereturns! in-estors will wit)draw t)eir +unds and 0lace t)em in in-estments t)at earn at least a-erage

returns. Internationall t)ese t0es o+ com0anies are 0rime tae o-er targets! a conce0t t)at is 0icing u0in India. & +ramewor t)at can assist com0anies in t)eir


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9rom t)e abo-e >gure ou will see t)e dnamic! interrelated nature o+ t)e elements o+ t)e strategicmanagement 0rocess and 0ro-ides an outline o+ w)ere t)e diferent elements o+ t)e 0rocess are co-ered isgi-en below:

9eedbac linages among t)e t)ree 0rimar elements indicate t)e dnamic nature o+ t)e strategicmanagement 0rocess: Situation &nalsis! Strateg 9ormulation and Strateg Im0lementation.

O Situation &nalsis: in t)e +orm o+ in+ormation gained b scrutinising t)e internal en-ironment andscanning t)e e6ternal en-ironment! is used to de-elo0 t)e com0ans strategic intent and strategicmission.

O Strategy Formulation: is guided b t)e com0ans strategic intent and strategic mission! and isre0resented b strategies t)at are +ormulated or de-elo0ed and subse


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"wo a00roac)es o+ de>ning strateg! 0articularl in terms o+ t)e actions included in strateg! are diferentwit) +ormer a00roac) including obecti-e setting as 0art o+ t)e strateg w)ile latter e6cluding it. ")isdiference is liel to continue unless we arri-e at uni-ersall acce0table conce0t o+ strateg. 9or t)e0ur0ose o+ t)is te6t! strateg is de>ned as +ollows:

Strateg is course o+ action t)roug) w)ic) an organisation relates itsel+ wit) en-ironment so as to ac)ie-eits obecti-es.

1eatures %f Strateg#1. Strateg relates t)e >rm to its en-ironment! 0articularl t)e e6ternal en-ironment in all actions

w)et)er obecti-e setting! or actions and resources reg)t!occu0 )is territor! destro or obtain control o+ )is resources or ot)erwise mae )im submit. ")e goal o+tactics is success in a gi-en action w)ic) is onl one 0art in a grou0 o+ related militar actions.

& +urt)er distinction between strateg and tactics as used in Militar Science is made on t)e basis o+

delegation o+ decision maing aut)orit. Strategic decisions are not delegated too low in t)e organisation.ormall t)e aut)orit is not delegated below t)e le-els t)an t)ose w)ic) 0ossess t)e 0ers0ecti-ere


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%.Level o& #onduct. &s discussed earlier! strateg is de-elo0ed at t)e )ig)est le-el o+ management eit)er at t)e)ead6ed timetable ma be +ollowed +or t)is 0ur0ose! +or e6am0le! 0re0aration o+ budgets at regular inter-als.

(.Time )ori*on.Strateg )as a longterm 0ers0ecti-eF s0eciall t)e success+ul strategies are +ollowed +or c

0art o+ t)e organisation. ")is diference! t)oug) seems to be sim0le! becomes im0ortant +rom managerialaction 0oint o+ -iew.

1.Type o& Personnel nvolved in Formulation.Cenerall se0arate grou0 o+ managerial 0ersonnel are in-ol-edm strateg and tactics +ormulation and t)eir im0lementation. &s discussed earlier! strategic decisions arene-er delegated below a certain le-el m t)e managerial )ierarc). ")e basic 0rinci0le m t)is conte6t is not to

delegate below t)e le-els t)an t)ose 0ossess t)e 0ers0ecti-e re


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distinct en-ironment! a SB is created +or eac) suc) segment. 9or e6am0le! %eliance Industries Limitedo0erates in te6tile +abrics! arns! >bres! and a -ariet o+ 0etroc)emical 0roducts. 9or eac) 0roduct grou0! t)enature o+ maret in terms o+ customers! com0etition! and mareting c)annel difers. ")ere+ore! it rerm and t)e broad constraints and 0olicies wit)inw)ic) a SB o0erates. ")e cor0orate le-el will )el0 t)e SB de>ne its sco0e o+ o0erations and also limit oren)ance t)e SBs o0erations b t)e resources t)e cor0orate le-el assigns to it.")ere is a diference betweencor0oratele-el and businessle-el strategies.

9or e6am0le! &ndrews sas t)at in an organisation o+ an si?e or di-ersit! cor0orate strateg usualla00lies to t)e w)ole enter0rise! w)ile business strateg! less com0re)ensi-e! de>nes t)e c)oice o+ 0roductor ser-ice and maret o+ indi-idual business wit)in t)e >rm. In ot)er words! business strateg relates tot)e 8)ow and cor0orate strateg to t)e 8w)at. (or0orate strateg de>nes t)e business in w)ic) a com0anwill com0ete 0re+erabl in a wa t)at +ocuses resources to con-ert distincti-e com0etence into com0etiti-ead-antage.!

(or0orate strateg is not t)e sumtotal o+ business strategies o+ t)e cor0oration but it deals wit) diferentsubectmatter. E)ile t)e cor0oration is concerned wit) and )as im0act on business strateg! t)e +ormer isconcerned wit) t)e s)a0e and balancing o+ growt) and renewal rat)er t)an in maret e6ecution.

1uncti% na"8"e ,e " Strate g #9unctional strateg! as is suggested b t)e title! relates to a single +unctional o0eration and t)e acti-itiesin-ol-ed t)erein. Decisions at t)is le-el wit)in t)e organisation are o+ten described as tactical. Suc)decisions are guided and constrained b some o-erall strategic considerations. 9unctional strateg dealswit) relati-el restricted 0lan 0ro-iding obecti-es +or s0eci>c +unction!allocation o+ resources amongdiferent o0erations wit)in t)at +unctional area and coordination between t)em +or o0timal contribution tot)e ac)ie-ement o+ t)e SB and cor0oratele-el obecti-es. Below t)e +unctionalle-el strateg! t)ere mabe o0erationsle-el strategies as eac) +unction ma be di-idend into se-eral sub+unctions. 9or e6am0le!mareting strateg! a +unctional strateg! can be subdi-ided into 0romotion! sales! distribution! 0ricingstrategies wit) eac) sub +unction strateg contributing to +unctional strateg.

Strategies at all t)e t)ree le-els are interlined in w)ic) a )ig)erle-el strateg generates a lowerle-elstrateg and a lowerle-el strateg contributes to t)e ac)ie-ement o+ t)e obecti-es o+ )ig)erle-elstrateg.

1%r!u"ati%n )f Strateg#9ormulation o+ strategies is a creati-e and analtical 0rocess. It is a 0rocess because 0articular +unctionsare 0er+ormed in a se


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negati-e as0ectsare ofered b t)e en-ironment. ")e en-ironmental in+ormation can be collected +rom -arioussources lie -arious 0ublications! -erbal in+ormation +rom -arious 0eo0le! s0ing! and +orecasting. ")e 0rocess o+ en-ironmental analsis wors better i+ it is undertaen on continuous basis and is made an intrinsic0art o+ t)e strateg +ormulation.

(.#orporate 4nalysis.E)ile en-ironmental analsis is t)e analsis o+ e6ternal +actors! cor0orate analsis taesinto account t)e internal +actors. ")ese toget)er are nown as SE*" 4strengt)s! weanesses! o00ortunitiesand t)reats analsis. It is not merel enoug) to locate w)at o00ortunities and t)reats are ofered b t)een-ironment but enancial resources! t)ese can be used in man was! taing se-eral 0roects. Gowe-er! all t)e was or 0roects cannot be selected. ")ere+ore! some criteria s)ould be set u0 to e-aluate eac)alternati-e. ormall t)e criteria are set in t)e lig)t o+ organisational mission and obecti-es.

-.#hoice o& Strategy.")e identi>cation and e-aluation o+ -arious alternati-es will narrow down t)e range o+strategies w)ic) can seriousl be considered +or c)oice. ()oice is deciding t)e acce0table alternati-e amongt)e se-eral w)ic) >ts wit) t)e organisational obecti-es. ormall at t)is stage! 0ersonal -alues and

e60ectations o+ decisionmaer 0la an im0ortant role in strateg because )e will decide t)e course o+ actionde0ending on )is own liings and disliings. ")is )a00ens because in one wa t)e organisational obecti-esreect t)e 0ersonal 0)iloso0) o+ indi-iduals 0articularl at t)e to0 management le-el.

.mplementation.&+ter t)e strateg )as been c)osen! it is 0ut to im0lementation! t)at is! it is 0ut into action.()oice o+ strateg is mostl analtical and conce0tual w)ile im0lementation is o0erational or 0utting intoaction. arious +actors w)ic) are necessar +or im0lementation are design o+ suitable organisation structure!de-elo0ing and moti-ating 0eo0le to tae u0 wor! designing efecti-e control and in+ormation sstem!allocation o+ resources! etc. E)en t)ese are undertaen! t)ese ma 0roduce results w)ic) can be com0ared int)e lig)t o+ obecti-es set and control 0rocess comes into o0eration. I+ t)e results and obecti-es difer! a+urt)er analsis is rend out t)e reasons +or t)e ga0 and taing suitable actions to o-ercome t)e0roblems because o+ w)ic) t)e ga0 e6ists. ")is ma also renedas +ollows:

Im0lementation o+ strateg is t)e 0rocess t)roug) w)ic) a c)osen strateg is 0ut into action. It in-ol-es t)edesign and management o+ sstems to ac)ie-e t)e best integration o+ 0eo0le! structure! 0rocesses andresources in ac)ie-ing organisational obecti-es.

udging +rom t)is de>nition! it can be obser-ed t)at t)e sco0e o+ managerial acti-ities associated wit) strategim0lementation is -irtuall coe6istensi-e wit) t)e entire management 0rocess. ")is is because t)e entiremanagement 0rocess is geared u0 according to t)e needs o+ t)e strateg. In 0articular! +ollowing +actors areim0ortant in strateg im0lementation

1. nstitutionalisation o& Strategy")e >rst basic action t)at is re


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0ut organisational 0eo0le to +eel t)at it is t)eir own strateg rat)er t)an t)e strateg im0osed on t)em. Suc) a+eeling creates commitment so essential +or maing strateg success+ul.

2. Setting Proper 2rganisational #limateSetting organisational climate rel-ant +or strateg im0lementationis im0ortant +or maing strateg to wor. *rganisational climate re+ers to t)e c)aracteristics o+ internalen-ironment w)ic) conditions t)e coo0eration! t)e de-elo0ment o+ t)e indi-iduals! t)e e6tent o+ commitmentand dedication o+ 0eo0le in t)e organisation! and t)e eficienc wit) w)ic) t)e 0ur0ose is translated intoresults. *rganisanons w)ose strateg is im0lemented wit) conduci-e climate are more efecti-e t)an t)osew)ose are not. Peo0le are t)e instruments in im0lementing a 0articular strateg and organisational climate is

basicall a 0eo0leoriented attem0t. & to0 manager can 0la an im0ortant role in s)a0ing t)e organisationalclimate not onl b 0ro-iding standards +or w)at ot)ers do but also w)at )e does because organisationalclimate is a matter o+ 0ractice rat)er t)an t)e 0rece0t.

3. Developing 4ppropriate 2perating Plans*0erating 0lans are t)e action 0lans! o0erational 0rogrammesand decisions t)at tae 0lace in -arious 0arts o+ t)e organisation. I+ t)e are made to reect desired strategicresults! t)e contribute to t)e ac)ie-ement! o+ organisational obecti-es b +ocusing attention on t)ose +actorsw)ic) are im0ortant. 9or e6am0le! in budgeting! more resources will be allocated on t)ose +actors w)ic) arecritical to t)e success o+ t)e organisation as s0elled out during t)e strateg +ormulation 0rocess. ")ere are-arious was o+ maing sure t)at o0erating 0lans contribute. I+ e-er manager understands strateg! )e cancertainl re-iew t)e 0rogramme recommendations o+ staf ad-isers and line subordinates to see t)at t)e areconsistent wit) t)e ret t)e strateg in-ol-es t)e answers o+ +ollowing


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1. & 0olic 0ro-ides guidelines to t)e members o+ t)e organisation +or deciding a course o+ action and! t)us!restricts t)eir +reedom o+ action. Polic 0ro-ides and e60lains w)at a member s)ould do rat)er t)an w)at )e isdoing. Policies! w)en en+orced! 0ermit 0rediction o+ roles wit) certaint. Since a 0olic 0ro-ides guidelines tot)ining in decision maing! it +ollows t)at it must allow some discretion! ot)erwise it will become a rule.

2. Polic limits an area wit)in w)ic) a decision is to be made and assures t)at t)e decision will be consistent wit)and contributi-e to obecti-es. & 0olic tends to 0redecide issues! a-oid rt:F0eated analsis! and gi-e a uni>edstructure to ot)er t0es o+ 0lans! t)us 0ermitting managers to delegate aut)orit and still retaining control o+action. 9or e6am0le! i+ t)e organisation )as +ramed a 0olic t)at )ig)er 0ositions in t)e organisation will be

>lled b internal 0romotion! t)e managers concerned can deal wit) t)e situation in t)is lig)t w)ene-er a-acanc at )ig)er le-el arises. ")us! organisation gets assurance t)at )ig)er 0ositions are >lled b internalmembers wit)out +urt)er control.

3. Policies are generall e60ressed in ed.

& distinction between 0olic and strateg is made on t)e basis t)at +ormer is a guideline to t)e t)ining andaction o+ t)ose w)o mae decisions w)ile t)e latter is concerned wit) t)e direction in w)ic) )uman and0)sical resources are de0loed in order to ma6imise t)e c)ances o+ ac)ie-ing organisational obecti-es in t)e+ace o+ en-ironmental -ariables. &nsof maes diference between 0olic and strateg b 0utting t)at @0olic is

a contingent decision w)ereas strateg is a rule +or maing decision. & contingent e-ent is recognised becauseit is re0etiti-e but t)e s0eci>c occurrence cannot be s0eci>ed. 9or suc) re0etiti-e e-ents! it is not wort) w)ileto decide e-er time w)at to do w)en suc) a contingenc arises. It is better to decide in ad-ance w)at ill bedone in suc) a case.


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LESS)N 4:

L)NG RANGE +LANNING AND STRATEGIC +LANNING

Difference bet7 een L%ngrange

+"anning and Strategic +"anning

L%ng8Range +"anning Strate g ic +"anning

9ocus Present Crowt)

*becti-e &nnual Pro>ts 9uture Pro>ts and s)are

(onstraints Present %esources

7n-ironment

9uture %esources 7n-ironment


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%ewards 7ficienc! Stabilit De-elo0ment o+ 9uture Potential

%iss o growt) Slow Process! %e


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BUSINESS

STRA

TEGY

Levelsof Strategies

CorporateLevel

UNIT I

STRATEGIC +LANNINGLESS)N =:

C0A+TER . STRATEGY ARC0ITECTURE

LEELS )1 STRATEGYLe arning )bje cti,e*n com0letion o+ t)is c)a0ter ou s)ould be able to:

? =ou s)ould be able to understand t)e -arious le-els o+ business strateg

? =ou s)ould be able to understand t)at strategic management is not a single! sim0le action but a series o+related decisions and actions.

? =ou s)ould be able to understand strategies at t)e o0erational le-el

? =ou s)ould be able to understand t)e c)aracteristics o+ strategic decision

? 9inall ou s)ould be able to t)e role 0laed b strategic management

Le,e"s %f Strategies=ou can see t)e -arious le-els o+ strategies at t)e (or0orate! SB and 9unctional le-el. ")e le-els o+ strategofers ou a glim0se o+ t)e com0le6it about diferent le-els at w)ic) strateg is +ormulated. ")e businessstrateg must contain wellcoordinated action 0rograms aimed at securing a longterm com0etiti-e edge andw)ic) s)ould be sustained b t)e com0an.

Lets tae an e6am0le o+ Gindustan Le-ers!a multinational subsidiar! is in se-eral businesses suc) as animalseeds! be-erages!oils and dair +at ! soa0s and detergents. Similarl Sundaram (laton and its associatecom0anies o0erate in tec)nolog areas as di-erse as brae and signal sstems +or railwas! two w)eelers andelectrical a00liance ")ree t0es o+ le-el are de0icted in t)e e6)ibit. ")e >rst le-el is t)e cor0orate strategw)ic) is an o-erarc)ing 0lan o+ action co-ering t)e -arious +unctions 0er+ormed b diferent

"ae an e6am0le o+ an organisation! t)ere are basicall t)ree le-els. ")e to0 le-el o+ t)e organisationconsists o+ c)ie+ e6ecuti-e ofice o+ t)e com0an! t)e board o+ directors! and administrati-e oficers. ")eres0onsibilit o+ t)e to0 management is to ee0 t)e organisation )ealt). =ou see t)at t)eir res0onsibilit isto ac)ie-e t)e 0lanned >nancial 0er+ormance o+ t)e com0an in addition to meeting t)e non>nancial goals-i?. social res0onsibilit and t)e organisational image. ")e issues 0ertaining to business et)ics! integrit!and social commitment are dealt wit)! at t)is le-el o+ strategic decisions. ")e cor0orate le-el strategiestranslates t)e orientation o+ t)e stae)olders and t)e societ into t)e +orms o+ strategies +or +unctional orbusiness le-els.

In t)e gi-en e6)ibit ou will >nd t)at business strateg is a com0re)ensi-e 0lan 0ro-iding obecti-es +orSBS! allocation o+ resources among +unctional areas! coordination between t)em +or o0timal contributionto t)e ac)ie-ement to t)e ac)ie-ement o+ cor0orate le-el obecti-es.

C%r(%rate Le,e" Strategies


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%his is the level where vision statement of the companies

emerges! '(hibit shows typical levels of strategymaking in anorgani?ation.

In t)e gi-en e6)ibit ou will see t)at -arious com0anies are organi?ed on t)e basis o+ o0erating di-isions.")ese di-isions are nown as 0ro>t centers or strategic business units. Cenerall SBs are in-ol-ed in asingle line o+ business

Le,e"s %f Strateg# a/ing

Busine ss Le ,e "")is le-el consists o+ 0rimaril t)e business managers or managers o+ Strategic Business units. Gere strategiesare about )ow to meet t)e com0etition in a 0articular 0roduct maret and strategies )a-e to be related to aunit wit)in an organisation. ")e managers at t)is le-el translate t)e general statements o+ direction and intentc)urned out at cor0orate le-el. ")e managers identi+ t)e most 0ro>table maret segment! w)ere t)e cane6cel! ee0ing in +ocus t)e -ision o+ t)e com0an. ")e cor0orate -alues! managerial ca0abilities! organisational

res0onsibilities! and administrati-e sstems t)at lin strategic and o0erational decision maing le-el at all t)ele-els o+ )ierarc)! encom0assing all business and +unctional lines o+ aut)orit in a com0an are dealt wit) att)is le-el o+ strateg +ormulation. ")e managerial stle! belie+s! -alues! et)ics! and acce0ted +orms o+be)a-iour must be congruent wit) t)e organisational culture


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and at this level, these aspects are diligently taken care of bystrategic managers!

Just think for a while how does business strategy make thestudy and practice of management more meaningful?

LevelOperational

)lanning alone cannot create massive mobilisation of resourcesand people and can never generate high *uality of strategicthinking re*uired in comple( organisational conte(t! For this to

happen, the planning should be carefully dovetailed andintegrated with signi#cant administrative systems vi+! management control, communication, information management,

motivation, rewards etc! It is also vital that all these systems aresupported by organisational structure that de#ne variousauthority and responsibility relationships, among various

members of the company and speci#cally at operational level!%he culture of the organisation should be accounted for, andthese systems should #nd adaptability with the culture of the

organisation!

Further, put down atleast #ve reasons how business strategyserves the need of

a!anagement students

b!iddle-level e(ecutives!

.ow look at this diagram and see how various function areinterrelated

ofInteraction Functionsarious

%he managers at this level of product, geographic, and functional areas develop annual ob/ective and shortterm strategies!%he strategies are designed in each area of research and development, #nance and accounting, marketing and human relationsetc! %he responsibilities also include integrating among

administrative systems and organisational structure and strategicand operational modes and seek for congruency between

managerial infrastructure and the corporate culture! %hus'(hibi% shows the interaction of various functions fordeciding strategies at the operational level!


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Wipro Ltd.is a 55earold com0an! engaged in a wide range o+ businesses including t)e de-elo0mentand e60ort o+ so+tware! manu+acture o+ electric bulbs and tube lig)ts. It )as registered its trademarEi0ro. In 1///! it ado0ted a distincti-e 0acaging +or electric bulbs wit) t)e 0icture o+ distincti-e0acaging +or electric bulbs wit) t)e 0icture o+ a rainbow ower! t)e slogan 8&00ling t)oug)t! claim 8lasts3# 0ercent longer! trademars 8longlite! Eatts suc) as '# written in ellow colour and a red colourbacground. ")e com0an introduced electric bulbs in 1//$.")e learnt t)at com0an introduced electricbulbs in a dece0ti-el similar S)i-am Lam0s was selling electric bulbs in a dece0ti-el similar 0acing ast)at o+ Ei0ros Longlite electric bulbs 0acing. ")e went to court. Ei0ro claimed t)at S)i-am )ad co0iedt)e rainbow owers 0icture! t)e slogan 8&00ling t)oug)t trademar Longlite! claim 8lasts 3# 0er centlonger! t)e colour combination! laout and get u0 o+ t)eir 0acing. ")e onl noticeable diference was int)e trademar! Coul.

")e Del)i Gig) (ourt granted an e6 0ate ad interim inunction against S)i-am lam0 Industries 8as t)eobect o+ granting inunction ma be de+eated b dela. S)i-am was restrained +rom manu+acturing! sellingand ofering +or sale! ad-ertising! directl or indirectl dealing in electric bulbs! tube lig)ts and electrical>ttings and a00aratus w)ic) were substantial re0roduction o+ t)e 0laintifs 4Ei0ro Ltd. co0rig)t in t)eartistic wor Ei0ro Longlite electric bulb 0acingK were +urt)er restrained +rom using t)e trade mar%ainbow ower de-ice. ")e court also a00ointed t)e local commissioner to -isit t)e 0remises o+ S)i-amLam0 Industries! w)ere t)e in+ringing goods were alleged to be stored and tae t)e same into custod.

Creating A +%7 erfu" C%r(%rate Brand

ot)ing touc)es t)e customer more t)an )ow )e or s)e 0ercei-es our cor0orate image. ")is+undamental 0erce0tion not onl determines w)et)er t)e customer will conduct business wit) ou! italso 0ro-ides com0etiti-e ad-antages! increase em0loee morale and loalt! and a +uture direction +ort)e organisation.

De-elo0ing a 0ower+ul cor0orate brand is a circular! continuous! >-e0)ase 0rocess t)at can be a00lied at an

stage o+ an organisations de-elo0ment. ")e >-e 0)ases are: ? Preliminar &udit! %esearc) and 7-aluation

? &nalsis! Strateg! Planning and De-elo0ment

? (reati-e 760loration

? %e>nement and Im0lementation


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? Monitoring! Managing and Mareting o+ t)e (or0orate Image A ?ua"itati,e +r% ce ss

Part o+ t)e initial 0rocess com0rises ned cor0orate brand0ositioning 0lat+orm t)at is su00orted b t)e core attributes o+ t)e organisation and a series o+ strategic imagemareting obecti-es t)at will )el0 to guide +uture business directions and brand de-elo0ment.

=our cor0orate brand image needs to be t)oroug)l t)oug)t out! 0lanned! nurtured! e6ecuted! monitored and!w)en necessar! modi>ed. Its t)e organisations most -aluable commodit and deser-es to alwas be treatedas suc).

Artic"e 8 5Let us )a-e a loo at t)is article about 7nron as a (or0orate in India w)ic) could not be success+ul.

C%r(%rate Et$ics6 C%r(%rate Cu"ture andC% r(% rate I! ag e7nron. GIG Insurance. *ne"el. Eorld(om. &ggressi-e accounting 0rocedures. (or0orate go-ernance.

Business )onest. (or0orate re0utations being destroed. S)are 0rices dro00ing at t)e >rst )int o+ an>nancial s)enanigans. ")ese are t)e )eadlines and t)e e business stories o+ toda. &nd t)e all relate toone critical management subect the

#orporate mage.

7-er organi?ation )as a cor0orate image! w)et)er it wants one or not.

E)en 0ro0erl designed and managed! t)e cor0orate image will accuratel reect t)e organi?ationscommitment to


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and clearer re0orting o+ >nancial transactions will merel treat t)e sm0toms o+ t)is current managerialcrises but will do little to remed t)e underling condition.

")e true wa to >6 t)is 0roblem is to understand )ow to create t)e rig)t cor0orate culture t)roug) t)ecor0orate image management 0rocess.

&s I wrote in +our ears ago COPOAT! "#AG! #A$AG!#!$T% A #arketing

Discipline for the &'st Centur()*cor0orate image management will )el0 senior e6ecuti-es to deal wit)anot)er o+ t)e critical issue +acing management toda: cor0orate et)ics.

&s ")e 7conomist ased in 1//5! @)ow can a com0an ensure t)at its code o+ et)ics is bot) +ollowed and

en+orcedJA ")e sure>re wa is to de-elo0 a cor0orate culture t)at not onl em0)asi?es et)ical be)a-ior!but a so 0unis)es and ostraci?es t)ose w)o do not li-e u0 to t)e desired standards. er rarel can asingle em0loee engage in unet)ical be)a-ior wit)out ot)er em0loees being @in t)e now!A or at leastsus0icious.

& cor0orate culture! communicated and s0read t)roug)out t)e organi?ation! t)at e6)ibits ?ero tolerance+or unet)ical be)a-ior and t)at is intricatel tied to t)e cor0orate image is managements best +orm o+assurance against t)is deadl disease.

")is wors a w)ole lot better t)an )a-ing internal 0olic 0olice and a bundle o+


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&s Dr. Martin Lut)er ;ing wrote:

@(owardice ass t)e rml lined. =ou cannot )a-e one wit)out t)e ot)er. &t least not +or -er long.Because! at t)e end o+ t)e da! our com0etitors can mimic and better our 0roduct ofer. ")e can createstronger distribution sstems t)an ours. ")e can outs0end ou in ad-ertising and 0romotions. &nd! o+course! t)e can alwas beat ou u0 on 0rice.

But t)e one t)ing a com0etitor cannot mimic or co0 is a wellde>ned cor0orate 0ersonalit.

&s I alwas ad-ise m clients! @if it touches the customer) it+s a marketing issue,A &nd not)ing! not)ingtouc)es our customers more t)an )ow )e or s)e 0ercei-es our cor0orate image.

")is maes t)e management o+ our cor0orate image one o+ t)e most 0otent mareting and management toolsa-ailable +or senior e6ecuti-es to use in ensuring t)e -iable e6ecution o+ our cor0orate -ision

Source 79rom t)e boo @(or0orate Image Management: & Mareting Disci0line +or t)e 21st (enturA bSte-en Goward. #ontributor 7Ste-en Goward


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Similarly, the team consists of managers from all the levels vi+!

-e 7 i"" n%7 !%,e t% t$e r%"e ("a#ed b# strate g ic ! anag e ! e nt:Strategies are de-elo0ed b strategic management teams. ")e 0rocess +or large organisations is -er com0le6and it cannot efecti-el tae 0lace unless 0eo0le at -arious le-els are made to 0artici0ate to arri-e atmeaning+ul conclusions.

Lets (ut fi,e benefits %f 7 %r/ing in a te a! :

cor0orate! business! and +unctional le-el. In addition to t)e data +rom e6ternal sources! t)e data +rom wit)int)e organisation is generated t)roug) 0artici0ation o+ com0an0lanning staf and lower le-els -i?. uniormanagers! su0er-isors! and worers as t)e data generated +or im0lementation o+ strategies is -er -ital +or ancom0an. ")e (7* o+ t)e com0an )as to be essentiall 0resent including )is team o+ ot)er directors! businessunit )eads and )eads! o+ +unctional grou0s.

")e strategic decisions taen b t)e com0an are e to its sur-i-al and 0rogress! and mae a tremendousim0act on t)e com0an and need wides0read and large commitments o+ resources o+ t)e com0an! )ence t)e

0resence o+ to0 managers in t)ese teams is necessar.")ese 0ersons are o+ten designated as Ceneral Manager!

Managing Directors! Presidents! icePresidents! 76ecuti-e icePresident etc. ")e traditional -iew o+ t)eCeneral Manager is t)at )e is a reecti-e t)iner w)o ma0s strateg! creates design o+ an organisation androles +or 0eo0le t)roug) t)e tactical 0lans to ac)ie-e t)e goals! using )is -ast e60erience! nowledge andinsig)t! and sets goals. Ge is considered to be a strategist! 0lanner! leader! and is aware o+ -arious )uman!tec)nical! economic! and 0olitical needs o+ t)e en-ironment o+ t)e organisation. Ge )as to >t -arious units intoa igsaw 0u??le t)roug) e-erc)anging circumstances. ")e e60erience s)ows t)at (7*s )a-e to simultaneousl)andle se-eral +actors! acti-ities etc. !on a sc)edule t)at rarel gi-e )im time to contem0late. ow 0ut down atleast >-e roles w)ic) t)e (7* o+ t)e com0an 0er+orms:

")e 0rocess o+ intuition and udgement! de0ending on )is 0erce0tion! becomes t)e maor and 0re+erreddecision maing mode.

Mint?bergs list o+ roles gi-es us an e6am0le o+ diferent roles t)at t)e (7* 0las in an organisation and

t)ese are termed as inter0ersonal! in+ormational! and decisional roles. &s t)e )ead o+ t)e organisation t)e(7* )as to 0er+orm numerous +unctions t)at are legal and social in nature. E)ile 0er+orming t)ese+unctions t)e (7* )as to ee0 t)e strategies o+ )is organisation in mind. E)ile stafing! training!

moti-ating! directing! and 0er+orming se-eral ot)er +unctions! )e )as to ee0 t)e strategic directions o+t)e com0an in +ocus.

")e (7* )as to essentiall ee0 )imsel+ wellin+ormed about t)e internal and t)e e6ternal en-ironment andt)ere+ore )as to create c)annels w)ere +rom in+ormation will come to )im. 9or t)is! )e ma )a-e to tra-el!read 0eriodicals! business maga?ines! conduct meetings wit)in and outside t)e organisation! and alsoe6c)ange in+ormation t)roug) writing letters! 0)one callsF +a6es etc. ")e (7* )as to ensure 0rocessingand classi>cation o+ in+ormation suc) t)at it ma be use+ul as and w)en re


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")e decisional roles t)at t)e (7* )as to 0er+orm are -ital +or t)e com0an. ")e (7* 0ercei-es andinter0rets t)e in+ormation to draw conclusions based on w)ic) strategic directions are e-ol-ed. Ge )as totae im0ortant decisions on resource allocation! lie man0ower and +unds etc. and e6ercise control so t)att)e resources are most o0timall used +or t)e growt) o+ t)e organisation.

Y%u t$in/ f%r a 7 $i"eE) it is im0ortant to integrate intuition and analsis in decision maing roles o+ a (7*J

")e (7* o+ a com0an )as to 0la 0i-otal role in negotiating wit) unions! maor su00liers! and customersetc. wit) strategic directions o+ growt) in +ocus. Ge )as to communicate wit) stae )olders! outside andwit)in com0an. ")e +ormulation o+ strategies! 0lans! and t)eir im0lementations are an im0ortant realm o+(7*s. (7*s are o+ten )el0ed b t)e 0lanning staf in +ormulating t)e strategies. 7-en tas grou0s arecreated t)at ma -isit -arious ot)er com0anies and gat)er in+ormation! 0rocess it! and 0resent it to (7*st)at ma )el0 t)em to decide on t)e strategies. In t)e >eld o+ 0ower end better use. Strategies de>ne t)e business area bot) interms o+ customers and geogra0)ical areas ser-ed. Better t)e de>nition o+ t)ese areas! better will be t)e


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de0loment o+ resources. 9or e6am0le! i+ an organisation )as set t)at it will introduce new 0roducts in t)emaret! it will allocate more resources to researc) and de-elo0ment acti-ities w)ic) is reected in budget0re0aration.

2. (larit in Direction o+ &cti-ities.

Strategies +ocus on direction o+ acti-ities b s0eci+ing w)at acti-ities are to be undertaen +or ac)ie-ingorganisational obecti-es. ")e mae t)e organisational obecti-es more clear and s0eci>c. 9or e6am0le! abusiness organisation ma de>ne its obecti-e as 0ro>t earning or a nonbusiness organisation ma de>ne itsobecti-e as social obecti-e. But t)ese de>nitions are too broad and e-en -ague +or 0utting t)em into

o0eration. ")e are better s0elled b strategies! w)ic) +ocus on o0erational obecti-es and mae t)em more0ractical. 9or e6am0le! strategies will 0ro-ide )ow 0ro>t obecti-e can be s)ar0l de>ned in terms o+ )owmuc) 0ro>ts is to be earned and w)at resources *+ )ow muc) 0ro>t is to be earned and w)at resources will bereed. I+ t)is is done! organisation will ac)ie-eefecti-eness $. Personnel Satis+action.

Strategies contribute towards organisation efecti-eness b 0ro-iding satis+action to t)e 0ersonnel o+ t)eorganisation. In organisation w)ere +ormal strategic management 0rocess is +ollowed! 0eo0le are moresatis>ed b de>nite 0rescri0tion o+ t)eir roles t)ereb reducing role conict and role ambiguit. I+ t)e

decisions are sstemati?ed in t)e organisation! e-erone a-ailable! w)o can mae decisions! and so on. Suc)clarit will bring efecti-eness at t)e indi-idual le-el and conseted +rom c)anging customer attitudes! +rom status and designerlabels to +unctionalit! encouraged b an economic recession. It also de-elo0ed a number o+ uni


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w)ic) came to mae u0 I;7&s winning business +ormula: sim0le! )ig)


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also developing new sources of supply, entering into anagreement with a timber company to develop new woodmaterial for furniture! 0owever, the company was also facing

problems! I&'1 was e(periencing growing competition on aninternational front! It had decided to implement a programmeof cost savings, rationali+ing its supply chain and product range

in order to cut purchasing costs by an overall average of 23 percent! %he company had stated the intention of cutting what hadbecome ,433 suppliers by one-*uarter and focusing on

increased volumes with a smaller range of products and fewersuppliers!

In 2556, Ingvar &amprad announced that I&'1 would be splitinto three, comprising the retailing operations, an organi+ationholding the franchise and trademarks, and a third arm involvedmainly in #nance and banking! %he #rst two would form the

core ofthe group, controlled at arm7s length by trust-likeorganisations8 the latter7s shares would be /ointly owned by&amprad7s three sons! %he structure was devised in an e9ort toensure that the privately held organi+ation should not bebroken up or sold o9 in a succession battle after Ingvar&amprad retired! 0e also wanted to ensure that it would not beput under the sorts of e(ternal pressures for continual growth

often faced by publicly *uoted companies! Internally, I&'17sstrategy was managed at di9erent levels! 1 committee of seniore(ecutive at head*uarters in enmark was responsible foroverseeing investment in new market and stores8 responsibility

for product development and purchasing lay with I&'1 ofSweden8 and country managers tailored the presentation and

marketing of products to home territories!

!ue nsstio

2!;sing the characteristics discussed in the case write out astatement of strategy for I&'1!

!


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B

USINESS

STRA

TEGY

UNIT *

LESS)N : STRATEGIC +LANNING

C)NCE+T )1 )BECTIE6C0A+TER 5 : )BECTIE F ISSI)N F

ISSI)N AND ISI)N ISI)NSetting o+ organisational obecti-es is t)e starting 0oint o+ managerial actions. Since organi?ations aredeliberate and 0ur0osi-e creations! t)e )a-e some obecti-esF t)e end results +or w)ic) t)e stri-e. ")ese endresults are re+erred to as 8mission! 80ur0ose!obecti-e! 8goal! 8target! etc. Man times! t)ese terms are usedinterc)angeabl as .all t)ese denote end results. Gowe-er! t)ere are diferences in t)e conte6t in w)ic) t)eseterms are used. &s we s)all see later in t)is c)a0ter! t)e end results are arranged in a )ierarc). *n t)e onee6treme end! t)ere ma be enduring reasons w) an organisation e6istsF on t)e ot)er e6treme end! t)ere mabe s0eci>c results t)at an indi-idual in t)e organisation ac)ie-es in a s0eci>ed 0eriod. ")ere+ore! t)e endresults )a-e to be s0eci>ed b diferent terms in t)e conte6t o+ t)ese two e6treme ends and! in between. ")isconte6tual diference among -arious terms is im0ortant in understanding t)eir nature rele-ent +or managerialactions. 9rom 0lanning 0oint o+ -iew! an organisation must de>ne w) it e6ists! )ow. it usti>es t)at e6istence!and w)en it usti>es t)e reasons +or t)at e6istence. ")e answers o+ t)ese nes t)e business w)ic) t)e com0an will undertae. Ee ma consider t)e mission and t)e 0ur0ose o+Gindustan Le-er Limited to -isualise t)is diference. &bout its mission! t)e com0an states t)at:

Gindustan Le-ers commitment to national 0riorities )as ensured t)at t)e com0an is a 80art o+ 0eo0les li-esat t)e grass roots le-el! maing a diference to India and to Indiansin de0t)! in widt) and in si?e. GindustanLe-er )as alwas identi>ed itsel+ wit) t)e nations 0riorities: em0loment generation! de-elo0ment o+bacward area! agricultural linages! e60orts! contribution to t)e e6c)ec about w)at ind o+organisation it is and is to become. It de0icts t)e organisations business c)aracter and does so in was t)attend to distinguis) t)e organisation +rom ot)er organisations. Mission sets +ort) 0rinci0les and conce0tual

+oundation u0on w)ic) t)e organisation reacts and t)e nature o+ t)e business in w)ic) it 0lans to 0artici0ate.*rganisational mission! de>ned 0ro0erl! ofers guidance to managers in de-elo0ing s)ar0l +ocused! resultoriented obecti-es! strategies! and 0olicies. ")ere+ore! a detailed understanding o+ organisational mission ist)e starting 0oint +or rational managerial action and +or t)e design o+ its strategies. Managerial efecti-enesstends to begin wit) clarit o+ mission wit) an accurate! care+ull delineated conce0t o+ ust w)at t)eorganisation is tring to do and w).

& e +eature o+ organisations mission is t)at its +ocus must be e6ternal rat)er t)an internal. 9or e6am0le!Drucer )as t)e +ollowing suggestion:

@"o now w)at a business we )a-e to start wit) is its 0ur0ose. Its 0ur0ose must lie outside t)e business itsel+.In +act! it must lie in societ since business enter0rise is an organ o+ societ. ")ere is onl one -alid de>nitiono+ business 0ur0ose: to create a customerA


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&ey decision-

maker@s philosophy

Aisionary long-term concept of

Brganisationalmission

1% r!u"ati% n % f issi% n*rganisational mission encom0asses t)e broad aims o+ t)e organisationF it de>nes w)at +or t)e organisationstri-es. ")ere+ore! t)e 0rocess o+ de>ning mission +or an organisation can be best understood b t)iningabout it at its ince0tion. "rul s0eaing! an organisations mission lies in t)e basic 0)iloso0) o+ t)ose w)ocreate and manage t)e organisation as s)own in >gure

Mission +ormulation

P)iloso0). P)iloso0)! in t)e conte6t o+ management o+ an organisation! consists o+ an integrated set o+assum0tions and belie+s about t)e. wa t)e t)ings are! t)e 0ur0ose o+ t)e acti-ities! and t)e wa t)ese s)ouldbe. ")ese assum0tions and belie+s o+ t)ose w)o create an organisation 4owners and t)ose w)o manage it4managers! s0eciall t)e decision maers become base +or de>ning -ision o+ t)e organisation. ")eseassum0tions and belie+s are sometimes e60licit! and occasionall im0licit! in t)e minds o+ t)e decision maers.")e 0)iloso0) o+ a 0erson )as its origin in two 0remises+act 0remises and -alue 0remises. 9act 0remisesre0resent our descri0ti-e -iew o+ )ow t)e world be)a-es. ")e are drawn +rom researc) >ndings and oure60eriences. alue 0remises re0resent our -iew o+ t)e desirabilit o+ certain goals and acti-ities.

ision. ision o+ an organisation )as a longterm orientation and is deri-ed +rom organisational 0)iloso0).ision re0resents a c)allenging 0ortrait o+ w)at t)e organisation and its members can be in t)e +uture.")ere+ore! t)e organi?ation s)ould create 0roections about w)ere it s)ould go and w)at maor c)anges liea)ead. *nce t)e -ision is establis)ed! 0ersistent and ent)usiastic communication o+ it t)roug)out t)eorganisation is rene organisati0ns mission in t)e +orm o+ desires! belie+s and assum0tions in t)e +ollowing +orm:

1. ")e 0roduct and ser-ice ofered b t)e organisation can 0ro-ide bene>ts at least e


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1. (oncern +or t)e ultimate customersmillions o+ customers.

2. (oncern +or t)e intermediate customerst)e trade.

3. (oncern +or t)e su00lierst)e s0urces o+ raw materials and ancillaries.

$. (oncern +or t)e em0loeest)e most -alued asset.

5. (oncern +or t)e com0etitorswis)ing t)em well as )ealt) com0etition ultimatel bene>ts t)e customers.

'. (oncern +or t)e s)are)olderst)e in-esting 0ublic.

,. (oncern +or t)e national as0irationIndias +uture.

)bje cti,e s*becti-es are more 0recise as com0ared to mission and used to s0eci+ t)e end results w)ic) an organisationwants to ac)ie-e. Gowe-er! t)ere are two 0roblems in gi-ing t)e 0recise de>nition o+ obecti-es. 9irst! goalsand obecti-es are used interc)angeabl! t)oug) t)ere are some diferences between t)e two. Second! t)e endresults! e60ressed as obecti-es! ma be times0eci>c or wit)out t)is s0eci>cation. ")ere+ore! obecti-es arede>ned in diferent was. 9or e6am0le! Mc9arland )as de>ned obecti-es in nite sco0e and suggests direction to t)e0lanning eforts o+ a manager.

Ee can de>ne obecti-e as t)e intended end result t)at an organisation desires to ac)ie-e o-er -aring

0eriods o+ +ume. Because o+ time -ariation! obecti-es ma be s0eci>ed in diferent was in w)ic) longtermobecti-es are su00orted b s)ortterm obecti-es.

1eatures % f )bjecti,es1. 7ac) organisation! or grou0 o+ indi-iduals! )as some obecti-es. In +act! organisations or grou0s are created

basicall +or certain obecti-es. Members in t)e organisation or grou0 tr to ac)ie-e t)ese obecti-es.

2. *becti-es ma be broad or t)e ma be s0eci>call mentioned. ")e ma 0ertain to a wide or narrow 0art o+t)e organisation. ")e ma be set eit)er +or t)e long term or +or t)e s)ort term. 9or e6am0le! t)e basicobecti-e o+ a business organisation ma be to earn 0ro>t. ")is ma be c obecti-e ma be set! +or e6am0le! )ow muc) 0ro>t and in w)ic)0eriod. ")us! general obecti-es ma be translated into o0erati-e obecti-es to 0ro-ide de>nite action.

3. *becti-es ma be clearl de>ned or t)ese ma not be clear and )a-e to be inter0reted b t)e be)a-iour o+organisational members! 0articularl t)ose at to0 le-el. Gowe-er! clearl de>ned obecti-es 0ro-ide cleardirection +or managerial action.

$. *becti-es )a-e )ierarc). &t t)e to0 le-el! it ma be broad organisational 0ur0ose w)ic) can be broen intos0eci>c obecti-es at t)e de0artmental le-el. 9rom de0artmental obecti-es! units o+ t)e de0artment maderi-e t)eir own obecti-es. ")is is 0ossible because organisation is created b combining 0eo0le intosections! de0artments! di-isions! etc. &ll o+ t)em tr to ac)ie-e organisational obecti-es and! at eac) le-el aunit ma contribute to t)e +ul>llment o+ tass assigned to it. ")us! a )ierarc) o+ obecti-es is created.

5.*rganisational obecti-es )a-e social sanction! t)at is! t)e are created wit)in t)e social norms. Sinceorganisations are social units! t)eir obecti-es must con+orm to t)e general needs o+ t)e societ. ariousrestrictions on organisational obecti-es are 0ut t)roug) social norms! rules and customs.

'. &n organisation ma )a-e multi0le obecti-es. 9or e6am0le! Gindustan Le-er Limited! under t)e c)airmans)i0o+ ". ")omas 4during 1/,3# +ormulated t)e +ollowing obecti-es:

i to e60and and di-ersi+ in t)e area o+ c)emicalsF

ii to continue to control costs and im0ro-e 0roducti-it -er rigorouslF

iii to build u0 management sills +or +uture growt)F

i- to utili?e % H D more efecti-el in creating newbusiness o00ortunitiesF

- to build a strong Board balancing t)e ad-antages o+ decentralising 0ro>t res0onsibilit against t)e ad-antageso+ centralised controls on 0ersonnel! >nance! and tec)nologF

-i to communicate more o0enl and 0ur0ose+ull! internall as well as e6ternallF and

-ii to de-elo0 succession to t)e Board and to ()airmans)i0.

It can be em0)asi?ed t)at man o+ t)ese obecti-es are +unctional obecti-esF

man o+ t)ese obecti-es are intertwined and interrelated. Sometimes! man o+ t)e obecti-es ma be e-enincom0atible. ")is )a00ens because o-er a 0eriod o+ time! man interest grou0s e6ert t)eir 0ressure onorganisational obecti-es. 9or e6am0le! economic and social obecti-es o+ an organisation ma be incom0ati


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bleF t)e ac)ie-ement o+ one ma be at t)e cost o+ t)e ot)er at one 0oint o+ time! w)ile at ot)er time! bot) canbe integrated.

,. *rganisational obecti-es can be c)angedF old obecti-es ma be re0laced b new ones. It is 0ossiblebecause organisations are +ree to set t)eir obecti-es wit)in t)e o-erall social norms. Since obecti-es are+ormulated ee0ing in -iew t)e en-ironmental +actors and internal conditions! an c)ange in t)ese maresult into c)ange in obecti-es. 9or e6am0le! in res0onse to -arious c)anges in t)e social en-ironment! t)eobecti-es o+ =M(& )a-e been trans+ormed +rom religion

and s0iritualit to recreation and 0)sical e6ercise. Similarl! t)e %ed

(ross w)ic) was originall +ormed to )old itsel+ in readiness in t)e war or an calamit to )el0 t)e 0eo0le+ound itsel+ underem0loed a+ter Eord Ear I and lost members contributions! and 0ublic esteem. ")e %eg.(ross subse6es are usedeit)er wit) obecti-es or goals. Second! some aut)ors use goals as t)e longterm results w)ic) an organisationsees to ac)ie-e and obecti-es as t)e s)ortterm results. ")ird! some writers re-erse t)e usage re+erring toobecti-es as t)e desired longterm results and goals as t)e desired s)ortterm results. ")is latter -iew is!)owe-er! more 0re-alent and we will tae t)is -iew in our discussion. 9rom t)is 0oint o+ -iew! &cof )asde>ned bot) t)e terms as +ollows:

@Desired states or outcomes are obecti-es. Coals are obecti-es t)at are sc)eduled

+or attainment during 0lanned 0eriod.!!

")us! obecti-es and goals de>ned in t)is wa con-e two diferent conce0ts. ")e distinction between t)esetwo conce0ts is im0ortant because management needs bot). ")e diference between *becti-es and Coalsma be drawn in terms o+ t)e +ollowing +our dimensions.

%.Time Frame. *becti-es are timeless! enduring! and unendingF goals are tem0oral! time0)ased! and intendedto be su0erceded b subse


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%op

down approach

Cottom

upapproach

contribute to t)e obecti-es o+ t)e larger unit o+ w)ic) it is a 0art. In +act! t)e organisation itsel+ can bet)oug)t o+ as a social unit and! as suc)! its obecti-es are t)e e6tension o+ t)e obecti-es o+ t)e societ. ")iscan be e60lained in terms o+ endmeans c)ain w)ic) suggests t)at w)at is a means +or one unit ma be an end+or anot)er unit. 9or e6am0le! i+ accom0lis)ment o+ t)e o-erall obecti-es is t)e res0onsibilit o+ to0management in t)e organisation! ac


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7-er organisation )as some obecti-es! eit)er s0eci>ed or uns0eci>ed. (learl de>ned obecti-es go-ernbe)a-iour o+ organi?ation members! and as suc)! e-er organisation s)ould s0eci+ its obecti-es clearl.Gowe-er! contingenc a00roac) recognises t)at in some situations! eit)er it ma not be 0ossible to set s0eci>cobecti-es or it is not desirable to set obecti-es. 9or e6am0le! contingenc a00roac) suggests t)at:

@In some situations! it is dificult or im0ossible to set goals. In +act! man managers realise t)at some o+ t)eirmost im0ortant 0lanning taes 0lace wit)out e-en e60licitl considering s0eci>c goals.

Suc) situations rees 0re+erred stle o+ action +or t)eorganisation or indi-idual and an arena +or acti-ities. ")e em0)asis switc)es +rom care+ull +ormulating w)at

obecti-e is to be accom0lis)ed to consideration o+ a managers t)rust. ")is a00roac) is more e6ible t)antraditional obecti-esetting a00roac) and suggests t)at under t)ree conditions! it is not desirable or 0ossibleto set obecti-es: 4i in t)e +ormati-e 0eriod o+ an organisations de-elo0ment w)en it is too earl to setobecti-esF 4ii w)en t)e en-ironment in w)ic) t)e .organisation o0erates is unstable or uncertain owing to +astsocial! economic! tec)nological! legal! or ot)er c)angesF and 4iii w)en members cannot build enoug) trust oragreement to decide u0on a common obecti-e.

o doubt! in t)ese situations! it ma not be -er desirable or 0ossible to set obecti-es! but not all situationsare lie t)is. S0eci>c obecti-es are a00ro0riate in cases mared b t)e +ollowing conditions:

1. managers want to narrow t)e +ocus and eforts o+ organisational membersF

2. t)e en-ironment is relati-el stable and certainF

3. t)ere are se-ere time and resource limitationsF and

$. organisational members rec conditions as a result o+ low tolerance +or ambiguit and

uncertaint.*becti-es s)ould be s0eci>ed because t)e 0er+orm a number o+ +unctions. 9or

e6am0le! Drucer maintains t)at obecti-es are essential in all e areas w)ere 0er+ormance and resultsdirectl contribute to t)e growt) and sur-i-al o+ business +or enabling managers to: 4i organise and e60laint)e w)ole range o+ business 0)enomena b suc) obecti-esF 4ii -eri+ t)e obecti-e in actual businesso0erationF 4iii 0redict em0loee be)a-iourF 4i- -ouc)sa+e t)e soundness o+ decisionsF and 4- im0ro-e t)eir0er+ormance.

T$e aj%r 1uncti%ns and C%ntributi%ns %f )bjecti,es are as 1%""%7 s%. Defning an 2rganisation. 7-er organisation wors in an en-ironment consisting o+ se-eral +orces.

")ese +orces 0ro-ide bot) o00ortunities and t)reats. In order to tae t)e best 0ossible +rom t)een-ironment! it must de>ne itsel+! t)at is! w)at ind o+ com0an it is! or w)at ind o+ business it is in. ")isrelates t)e organisation wit) its en-ironment. 9or e6am0le! t)e +ollowing descri0tions 0ro-ide t)e ind o+com0an eac) is or t)e business it is in.

Modern 89ood Industries Limited: manu+acturing and mareting o+ nutritional +oods to t)e 0ublic.

India P)otogra0)ic (om0an Limited: a nition o+ obecti-es encourages uni>ed 0lanning. *becti-es embod t)e basic idea and +undamental

t)eories as to w)at t)e organisation is tring to ac)ie-e. ")is is necessar to gi-e t)e meaning and directionto t)e wor o+ t)e 0eo0le associated wit) t)e organisation. Suc) obecti-es are t)e +ocus +or diferentindi-iduals! and uni+ing efect arises w)en -arious 0lans 0re0ared b se-eral 0eo0le are adusted to acommon obecti-e.

? *becti-es wor as a moti-ating +orce b 0ro-iding direction to organisational members. Indi-iduals )a-e+ramewor to >t t)eir 0ersonal needs wit) organisational obecti-es. & sense o+ accom0lis)ment o+ meetingobecti-es is desired b all indi-iduals. ")us! +ul>lling o+ obecti-es itsel+ is a source o+ moti-ation +or t)e0eo0le in t)e organi?ation


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?oluntar coordination! an essential +eature o+ t)e organisational obecti-es! is ac)ie-ed easil i+ t)e obecti-esare clearl s0eci>ed and mutuall agreed u0on. Peo0le tend to wor wit)in t)eir own areas o+ discretionand adust according to t)e needs o+! ot)ers i+ t)e now t)eir own and ot)ers obecti-es.

(.Per&ormance Standards. *becti-es 0ro-ide standards against w)ic) 0er+ormance o+ t)e organisation! itsunits! subunits and indi-iduals can be. measured. Eit)out 0er+ormance standards w)ic) are deri-ed +rom t)eobecti-es! t)ere cannot be an meaning+ul control acti-ities in t)e organisation. Suc) control measures notonl ensure t)e ac)ie-ement o+ organisational obecti-es b taing correcti-e actions! i+ needed! but also 0ut a0sc)ological 0ressure on t)ose w)o are res0onsible +or ac)ie-ing t)e organisational obecti-es.

+.9asis &or Decentrali*ation. Decentrali?ation includes assigning decisionmaing aut)orit to lowerle-el0eo0le! t)ereb a subordinate is gi-en considerable leewa in deciding to 0er+orm )is wor. Decentralisation isnecessar +or largesi?e organisations. Gowe-er! inde0endent decisionmaing aut)orit to subordinates malead to disintegration o+ t)e organisation unless t)ere is a clear indication o+ t)e contributions o+ eac) unittowards t)e realisation o+ common obecti-es. *becti-es indicate t)e contributions to be made b eac) unit+or ting t)em efecti-el and allowing t)e managers concerned to e6ercise t)eir indi-idual sills and initiati-e.

%. ntegrating. *rganisation! Crou0 and Indi-idual. (learl s0eci>ed obecti-es ma 0ro-ide integration o+organisation and its -arious grou0s and indi-iduals. &n organisation cannot e6ist a0art +rom its indi-iduals!and -arious grou0s associated wit) it! suc) as creditors! customers! etc. I+ t)e obecti-es are clear! t)esewill communicate t)e relations)i0 between t)e organisation and -arious grou0s and indi-iduals. ")ere+ore!t)e indi-iduals and grou0s can better be integrated because t)e )a-e clear basis +or dealing wit) t)eorganisation.

)bje cti,e Se ttingirtuall all organisations )a-e a +ormal! e60licitl recognised! legall s0eci>ed organ +or setting t)e initialobecti-es or t)eir amendments. Cenerall to0 management determines t)e o-erall obecti-es w)ic) t)emembers o+ t)e organisation unite to ac)ie-e. In some organisations! t)e obecti-es ma be set b t)e -ote o+t)e s)are)oldersF in

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