BPSM Ch. 1

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Prepared By: Vijay Meghani (B M College)

BUSINESS POLICY

&

STRATEGIC MANAGEMENT

CHAPTER : 1

Conceptual framework for Strategic Management(20%)

Syllabus:-

(a) Concept, Meaning & Definition:

(Strategy, Policy, Tactics, Strategic Management. Program, Procedure, Business,

Stakeholders, SBU, ETOP, OCP, SAP)

(b) Strategic Management Process & its implications

(c) Strategic Intent:

(Organizational Vision, Mission, Goals and Objectives. Their formulation and role

in strategic management.)

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(A) POLICY :-

The policy means the art or manner of governing a nation, the line of conduct which

rulers of a nation adopt on a particular question specially with regard to foreign

countries; the principle on which any measure or course of action is based.

Business policy has been defined as

"Managements expressed or implied intent to govern action in the

achievement of company's aims.

According to Philip Kotler,

Policies define how the company will deal with stakeholders, employees,

customers, suppliers, distributors, and other important group.

Based on the above discussion, policy may be defined as follows:

A policy is the statement or general understanding which provides guidance

in decision making to members of an organization in respect to any course of

action.

Features of Policy

1. Policies provide guidelines to the members in the organization for deciding a

course of action and, thus, restrict their freedom in choosing the course of action.

2. Policies are generally expressed in a qualitative, conditional, and general way.

The verbs most often used in stating policies are to maintain, to continue, to follow,

to adhere, to provide, to assist, to assure, to employ, to make, to produce, and to be.

3. Policy formulation is a function of all managers in an organization because someform of guideline for future course of action is required at every level.

4. A policy is formulated in the context of organizational objectives. Therefore, the

policy tries to contribute towards the achievement of organizational objectives.

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(B) strategy :-

Strategy is the determination of the basic long-term goals and objectives of

an enterprise and the adoption of the courses of action and the allocation of

resources -necessary for carrying out these goals."

"Strategy is the pattern of objectives, purpose or goals and major policies

and plans for achieving these goals, stated in such a way, so as to define

what business the company is in or is to be and the kind of company it is or

is to be."

Strategy is a course of action through which an organization relates itself

with the environment so as to achieve its objectives.

Features of strategy

1. Strategy is a major course of action through which an organization tries to

relate itself with environment to develop certain advantages which help in

achieving its objectives.

2. Strategy is a relative combination of actions aimed at to meet a particular

condition, to solve certain problems.

3. Strategy may even involve contradictory action. Since a strategic action

depends on environmental variables, an organization may take contradictory

actions either simultaneously or with a gap of time.

4. Strategy is forward looking; it has orientation towards future. Strategic action

is required in a new situation. No new situations requiring solutions can existin the past and, therefore, strategy is relevant to future.

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Difference between Policy and Strategy

A distinction between policy and strategy is made on the basis that the former is a

guideline to the thinking and action of those who make decisions while the latter

concerns with the direction in which human and physical resources are deployed and

applied in order to maximize the chances of achieving organizational objectives in

the face of environmental variables.

Policy is contingent decision whereas strategy is a rule for making decision. The

strategic decision is taken under the conditions where all the facts are not known.

Thus, such a decision may be changed when more facts become available.

Another distinction between policy and strategy is made on the basis of delegation

and implementation. Since the policy - provides guidelines for decisions, it can be

delegated downward in the organization. In fact, the policy is prescribed for the

people what they are expected to do in certain cases. Thus, its implementation is

through subordinate managers. Strategy cannot be delegated downward since it

may require last-minute executive decisions.

(C) TACTICS :-

Tactics is another term which creates confusion because in ends-means chain, what

might be a strategy for a lower unit may become tactics for a higher unit. However,

strategy and tactics are quite different connotations which cannot be explained

merely in terms of ends-means chain. Tactics is related to efficient utilization of

various organizational resources committed through strategy. Further understanding

about tactics may be developed by making difference between strategy and tactics.

To be effective strategies must be put into practice detailed programs on the

basis of strategies are to be formulated to put the strategies in the practice.

These detailed programs are known as Tactics.

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Difference between Strategy and Tactics

The major difference between strategy and tactics is that strategy determines what

major plans are to be undertaken and allocates resources to them, while tactics, in

contrast, is means by which previously determined plans are executed.

"Strategy is a system of makeshifts. It is carrying through an originally conceived

plan under a constantly shifting set of circumstances. Strategy furnishes tactics with

the opportunity to strike and with the prospect of success. It does this through its

conduct of the armies and their concentration on the field of battle. On the other

hand, however, strategy concept accepts the results of every single engagement and

builds on them. Strategy retires when a tactical victory is in the making in order later

to exploit the newly created situation."

1. Level of Conduct:

Strategy is developed at the highest level of management. Tactics is

employed at and relates to lower levels of management.

2. Periodicity:

The formulation of strategy is both continuous and irregular. The process is

continuous but the timing of decision is irregular. Tactics is determined on a

periodic basis by various organizations. A fixed time table may be followed for

this purpose, for example, preparation of budgets at regular intervals.

3. Time Horizon:

Strategy has a long-term perspective; specially the successful strategies are

followed for quite long periods. On the other hand, time horizon of tactics is

short-run and definite. The duration is uniform, for example budget

preparation.

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4. Uncertainty:

Element of uncertainty-is higher in the case of strategy formulation and its

implementation. Tactical decisions are more certain as these are taken within

the framework set by the strategy. Thus, evaluation of tactics is easier as

compared to evaluation of a strategy.

5. Type of Personnel Involved in Formulation:

Strategic decisions are never delegated below a certain level in the

managerial hierarchy. Tactical decisions can be taken by personnel at lower

levels because these involve minute implementation of strategic decisions.

6. Importance:

Strategies are most important factor of organization because they decide the

future course of action for the organization as a whole. On the other hand,

tactics are of less importance because they are concerned with specific part

of the organization.

Levels of Strategy

1) Corporate-level Strategy

Corporate-level strategy occupies the highest level of strategic decision-

making and covers actions dealing with the objective of the firm acquisition

and allocation of resources and coordination of strategies of various SBUs for

optimal performance. Such decisions are made by top management of the

organization. The nature of strategic decisions tends to be , value-oriented,

conceptual and less concrete than decisions at the business or functional

level.

2) Business-level Strategy

At such a level, strategy is a comprehensive plan providing objectives for

SBUs, allocation of resources among functional areas and coordination

between them for making optimal contribution to the achievement of

corporate-level objectives. Such strategies operate within the overall

strategies of the organization.

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Difference between corporate-level and business-level strategies:

"In an organization of any size or diversity, corporate strategy usually applies

to the whole enterprise, while business strategy, less comprehensive, defines

the choice of product or service and market of individual businesses within the

firm. In other words, business strategy relates to the 'how' and corporate

strategy to the 'what'. Corporate strategy defines the businesses in which a

company will compete preferably in a way that focuses resources to convert

distinctive competence into competitive advantage."

3) Functional-level Strategy

Functional strategy, as is suggested by the title, relates to a single functional

operation and the activities involved therein. Decisions at this level within the

organization are often described as tactical. Such decisions are guided and

constrained by some overall strategic considerations. Functional strategy

deals with relatively restricted plan providing objectives for specific function,

allocation of resources among different operations within that functional area

and coordination between them for optimal contribution to the achievement of

the SBU and corporate-level objectives.

(D) BUSINESS :-

Understanding business is vital to defining it and answering the question

What is our business? It could also be a pointer to the answers to the

questions: What will it be? and What should it be? Mission statements can

use the ideas generated through the process of understanding and defining

business.

For Example,

A watch manufacturing company may call itself the timekeepers to the

nation.

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Derek Abell suggests defining business along the three is of customer groups,

customer functions, and alternative technologies. Customer groups relate to

`who' is being satisfied, customer needs describe `what' is being satisfied, and

alternative technologies means `how' the need is being satisfied.

Diagrammatic view of these three dimensions.

Customer functions

Customer groups Alternative technologies

Customer groups are created according to the identity of the customers.

Customer functions are based-on what the products or services provide to the

customers. Alternative technologies describe the manner in which a particular

function can be performed for a customer.

Applying Abell's three-dimensional model to the illustration of timekeeping

business could identify the three dimensions as follows:

1. Customers groups are individual customers and industrial users.

2. Customer functions are of finding time, recording time, using watches as a

fashionable accessory, and as a gift item.

3. Alternative technologies are of the mechanical, quartz digital, and quartz

analog types.

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(E) PROGRAMME :-

A programme is a broad term which goals, policies, procedures, rules, and

steps to be taken in putting a plan into action. Programmes are usually

supported by funds allocated for plan implementation.

For example of a programme is an R&D programme for the development product.

Programmes lead to the formulation of projects. A project is a highly specific me for

which the time schedule and costs are predetermined. It requires the allocation of

funds based on capital budgeting by organizations. Thus, R&D pro-may consists of

several projects, each of which is intended to achieve specific and limited objective,

requires separate allocation of funds, and is to be completed within a set time

schedule.

(F) PROCEDURE :-

"A procedure is a series of related steps or tasks expressed in chronological,

order to achieve a specific purpose. Procedures define in step-by-step

fashion, the methods by and through which policies are achieved."

However, allowance is provided for flexibility and deviation. The strategic managers

are expected to know the procedures of the firm and various departments as they

help him in the process of strategy implementation.

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(G) STAKEHOLDERS :-

Stakeholders consist of shareholders, other financiers, employees, customers,

creditors and suppliers, government, and society. Some of them have high stake in

the organisation; some may have low stake. For example, shareholders have high

stake while government may have low stake in the outcomes of organisational

operations. Therefore, the organisation has to identify the expectations of various

stakeholders that they have from the organisation. Though these expectations may

vary from countries to countries owing to social and cultural differences, in Indian

context, these expectations are as follows:

Share holders:

Shareholders expect reasonable return on their investment and safety of their

capital. The interests of the majority shareholders are generally protected through

either participation in management process of the organisation concerned or through

intervention in key decisions, if necessary.

Other Financiers:

Besides shareholders, financial resources are provided by other financiers

particularly financial institutions and banks. In fact, in many cases, their contributions

are much more than that by the shareholders. Such financiers expect that they will

be paid interest and principal as stipulated.

Employees:

Employees are stakeholder in an organisation by virtue of their involvement in

organisational processes. In today's competitive context when every organisation is

trying to develop competitive competence through human resources, their stake has

become vital. Employees expect from their organisation that it will provide them fair

salaries and wages, pleasant and motivating working conditions, secured future interms of employment security and retirement benefits, and above all a partner in

wilding the organisation.

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Customers:

In the present context when every business organisation focuses its attention in

winning and maintaining customers, they have Become important stakeholder. They

expect fair product price with commensurate quality, widespread distribution and

sales network providing ease in procuring the product, honesty in dealing and

treating with them, air advertising devoid of any false, misleading and exaggerated

publicity, good after-sales service, and so on.

Creditors and Suppliers:

Creditors and suppliers affect an organisation in several ways and are affected by it.

They expect from the organisation the creation of healthy and cooperative inter-

business relations, relevant and accurate information, prompt payment of supplies,

and so on.

Government:

Government is very closely related with the business system of the country. It

provides various facilities for the development of business. Though it regulates the

business, it is meant for the development of overall business and healthy competition

among various participants.

Society:

Organizations exist within a social system and get various facilities from it.

Therefore, organisational objectives should be aligned with those of the society.

Parsons, a famous sociologist, has viewed that organisational objectives are an

extension of what the society needs for its survival.

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(H) SBU :-

SBU concept was evolved by General Electric Company (GEC) of USA to manage

its multiproduct business. The fundamental concept in the SBU is to identify the

discrete independent product/market segments served by an organisation. Since

each independent product/market segment has a distinct environment, a SBU should

be created for each such segment.

Features of SBU

1. Each SBU is managed as a portfolio of the organisation with a clearly defined

product/market segment and clearly-defined strategy.

2. Each SBU develops its strategy tailored to its capabilities and needs with overallcorporate capabilities and needs.

3. Each SBU is allocated resources - both physical and human - according to its

needs and contributions to the achievement of organisational objectives.

As against an organisation with multi-SBUs, a single-product/market organisation

has single strategic business unit. Naturally, operation of strategy in these types of

organizations will be different. In a single-product company, ' the corporate-level

strategy serves the whole business. This strategy is implemented at the next lower

level by functional strategies. In multiple-product Company, the business-level

strategies are insertedgenerally a strategy for each SBUbetween corporate

strategy and functional strategy and the strategies of these units are guided by the

corporate strategies.

Corporate Top

strategy management

Functional strategy

Operations Marketing Financial Personnel Middle

strategies strategies strategies strategies management

FIGURE : Corporate and functional strategies in single SBU firm

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Corporate Corporate

Strategy management

SBU 1 SBU 2 SBU 3 SBU top

strategy strategy strategy management

Operations Marketing Financial Personnel Middle

strategies strategies strategies strategies management

FIGURE : Corporate, SBU and functional strategies in multiple-SBU firm

(I) Corporate capability profile (ccp) :-

Organisational capability profile (ocp) :-

Capabilities are most often developed in specific functional areas, such as,

marketing or operations, or in a part of a functional area, such as, distribution

or R&D. It is also feasible to measure and compare capabilities in functional

areas. Thus, a company could be considered as inherently strong in

marketing owing to a competence in distribution skills.

Organisational capability factors (or, simply, capability factors) are the

strategic strengths and weaknesses existing in different functional areas

within an organisation which are of crucial importance to strategy formulation

and implementation.

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EXAMPLE:

Maggie two-minute noodles have been a strong Nestle brand, lending it marketing

capability in the highly competitive fast-food market in India.

Operations Capability Factor

1. Factors related to the production system: Capacity, location, layout, product or

service design, work systems, degree of automation, extent of vertical integration,

and others.

2. Factors related to the operations and control system: Aggregate production

planning, material supply; inventory, cost and quality control; maintenance systems

and procedures, and so on.

3. Factors related to the R&D system: Personnel, facilities, product development,

patent rights, level of technology used, technical collaboration and support, and so

on.

EXAMPLE:

Videocon took over the Uptron colour picture tubes unit in order to develop

operations capability through vertical integration for manufacturing cc televisions.

Personnel Capability Factor

1. Factors related to the personnel system: System for manpower planning lection,

development, compensation, communication, and appraisal; position of the

personnel department within the organisation; procedures and standards and so on.

2. Factors related to organisational and employees' characteristics: Corps image,

quality of managers, staff and workers; perception about and image of the

organisation as an employer; availability of developmental opportunities for

employees; working conditions; and so on.

3. Factors related to industrial relations: Union-management relationship, collective

bargaining, safety, welfare and security; employee satisfaction and morale; among

others.

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OCP MODEL

OCP FACTORS Weakness

(-5)

Normal

(0)

Strength

(+5)

Marketing Capability Factors:

1. Product Related

2. Price Related

3. Promotion Related

4. Integrative & Systematic

Production Capability Factors:

1. Production System

2. Operation & Control System

3. Research & Development

Finance Capability Factors:

1. Sources of Fund

2. Usage of Fund

3. Management of Fund

Personnel Capability Factors:

1. Quality of top Management

2. Quality of other Personnel

3. Industrial Relations

4. Organisation structure

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(J) Strategic advantage profile (sap) :-

Competitive advantage profile (cap) :-

Based on the detailed information presented in the OCP, it is possible to prepare aconcise chart of a strategic advantage profile (SAP). Strategic advantage is the

outcome of organisational capabilities. They are the result of organisational activities

leading to rewards in terms of financial parameters such as profit or shareholders

value and non-financial parameters such as market share or reputation. Once the

corporate capability profile to add and key areas for diagnosis have been analyzed. It

is used to prepare strategic advantage profile provides a picture of the more critical

areas which can have a relationship of the strategic posture of the firm in the future.

SAP MODEL

Capability factor Competitive strengths or weaknesses

1. Finance High cost of capital;

Reserves and surplus position unsatisfactory.

2. Marketing Fierce competition in industry;

Companys position secure at present.

3. Operations Plant and machinery in excellent condition;

Captive sources for parts and components

available.

4. Personnel Quality of managers and workers comparable with

that in competitor companies

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(K) Environmental threats & opportunity profile

(ETOP) :-

The preparation of ETOP involves dividing the environment into different sectors and

then analyzing the impact of each sector on the organisation. A comprehensive

ETOP requires subdividing each environmental sector into sub factors and then the

impact of each sub factor on the organisation is described in the form of a statement.

The preparation of an ETOP provides the strategists with a clear picture of which

sectors (and the different factors in each sector) have a favourable impact on the

organisation. By means of an ETOP, the organisation can see where it stands withrespect to its environment. Obviously, such an understanding can be of great help to

an organisation in formulating appropriate strategies to take advantage of the

opportunities and counter the threats in its environment.

Before the formulation of strategies can be undertaken, strategists have to assess

whether the organisation has the required strengths to succeed, or whether it has

weaknesses which can affect its capability to take advantage of the opportunities.

This assessment is done through an analysis of the strengths and weakness of an

organisation and forms a part of the SWOT analysis.

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(L) Strategic management :-

Strategic management is defined as the set of decisions and actions in

formulation and implementation of strategies designed to achieve the

objectives of an organisation.

Strategic management is primarily concerned with relating the organization to

its environment, formulating strategies to adapt to that environment, and

assuring that implementation of strategies takes place.

Strategic management process:-

1. Organizational Mission & Objectives

2. Environmental Analysis3. Organizational Analysis

4. Identification of Strategic Alternatives

5. Choice of Strategy

6. Implementation of Strategy

7. Evaluation and Control

1. Organizational Mission & Objectives:

Since organizations are deliberate creations, they have some specific mission

towards which all efforts are directed. The mission of an organisation is the

fundamental unique purpose that sets it apart from other organizations and identifies

the scope of its operation in product and market terms. The mission is a general,

enduring statement of organizations intention. It embodies the strategic decision

maker's business philosophy. It implies the image which the organisation seeks to

project. Organisation's mission becomes the cornerstone for strategic management

and around it all functions revolve. Organizational objectives are other factors which

determine the strategy. In fact, the choice of the objectives for an organisation is a

strategic decision because by choosing its objectives, the organisation commits itself

for these. Objectives are different from mission in the sense that the latter prescribes

the basic philosophy of the organisation itself which may be used in determining the

objectives. Objectives are generally the end results which the organization makes an

attempt to achieve.

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2. Environmental Analysis:

The second important aspect of strategic management process is the environmental

analysis. Since an organisation is a social system, it operates within the environment

which consists of many factors, such as, society, competitors, technology, legal

framework, political framework, psychological cultural framework. An organisation

has to interact continuously with these factors. In this interaction process, the

organisation has to relate itself with the environment. Various factors of the

environment have duel effect in interaction process with the organisation; they affect

the working of the organisation and are also affected by its working.

3. Organisational Analysis:

What opportunities or threats are posed by the environment and how the

organisation can take advantages will depend greatly on the organizations strength

and weakness. Organisational analysis brings these strength and weakness.

Through the organisational analysis, the organisation evaluates its strengths and

weakness so that it can relate itself by emphasizing its strength and overcoming its

weaknesses. Organisational strength and weaknesses also help in identifying the

relevant environmental factors taken for detailed analysis.

4. Identification of Strategic Alternatives:

Interaction of organisation with its environment in the light of its strengths and

weaknesses will result into various strategic alternatives. This process may result

into large number of alternatives through which an organisation can relate itself to

the environment. However, all alternatives cannot be chosen even if all of them

produce the same results. Obviously, managers may like to limit themselves to the

serious consideration of some of the strategic alternatives so that they are saved

from unnecessary exercise. Therefore the Strategic alternatives should be identified

in the light of strategic opportunities and threats generated through environmental

analysis, organisational analysis, and organisational mission and objectives.

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5. Choice of Strategy:

The identification of various strategic alternatives leads to the level where managers

can consider some alternatives seriously and may choose one of the most

acceptable. This is the stage of strategic decision process and all factors relevant for

decision making are relevant here. Since the particular strategy attempts to affect the

organisational operation in some predetermined manner, the choice process

systematically considers how each alternative strategy affects the various critical

factors of the organisational functioning. Further, the chosen alternative should be

acceptable in the light of organisational objectives. Thus, it is not necessary that the

chosen alternative is the best one.

6. Implementation of Strategy:

Once the creative and analytical aspect of strategy formulation has been settled, the

organisation tries to convert the strategy into something operationally effective. To

bring the result, the strategy should be put to action because mere choice of even

the soundest strategy will not affect organisational activities and achievement of its

objectives. In strategy implementation, various activities involved are design of

organisation structure to suit the chosen strategy, effective leadership, development

of functional policies, development and allocation of resources, development of

effective information system, etc.

7. Evaluation and control:

Evaluation and control may be treated as the last stage of strategic management

process. However, this is an ongoing process and evaluation and control should be

taken as the process for future course of action. For effective implementation and

consequently achievement of organisational objectives, it is necessary that there is

continuous monitoring of the implementation of the strategy so that suitable action is

taken whenever something goes wrong. Evaluation and control of strategy and itsimplementation may result into various actions that the organisation will have to take

to be successful, depending on the situation.

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STRATEGIC INTENT

Broadly strategic intent could be in the form of a vision and mission statement for the

organisation as corporate whole. As per the Hamel & Prahalad strategic intent

which they believe is an obsession with an organisation an obsession with havingambitions that may even be out of proportion to their resources and capabilities. This

obsession is to win at all levels of the organisation while sustaining that obsession in

the quest for global leadership.

The concept also represents active management process that includes:

(i) Focusing the organization's attention on the essence of winning,

(ii) Motivating people by communicating the value of the target,

(iii) Leaving room for individual and team contributions,

(iv) Sustaining enthusiasm by providing new operational definitions as

circumstances change and using intent consistently to guide resource

allocations "

Overall, strategic intent points to what a firm should set out to achieve. Strategic

intent is expressed through a series of formulations on vision, mission, objectives

and strategies.

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VISION

A vision is more dreamt of than it is articulated. This is the reason why it is difficult to

say what vision an organisation has. Sometimes it is not even evident to the

entrepreneur who usually thinks of the vision. By its nature, it could be as hazy andvague as a dream that one experienced the previous night and is not able to recall

perfectly daylight.

For example:

(i) Henry Ford wished to democratize the automobile when he visualized that

an affordable vehicle could be available for the masses.

(ii) Walt Disney probably wanted to make people happy.

Vision represents the imagination of future events and prepares the

organization for the same. Vision represents the challenging portrait of what

the organization would be in future.

Description of something (an organisation, corporate culture, a business, a

technology, an activity) in the future. -- As per Kotter

Benefits of Vision:

Good visions are inspiring and exhilarating.

Visions represent a discontinuity.

Good visions help in the creation of a common identity and a shared sense of

purpose.

Good visions are competitive, original and unique.

Good visions foster risk-taking and experimentation.

Good visions foster long-term thinking.

Good visions represent integrity; they are truly genuine and can be used for

the benefit of people.

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MISSION

As per Peter F Drucker raised important philosophical questions related to business:

What is our business? What will it be? and What should it be? These three

questions, though simply worded, are in reality the most fundamental questions thatany organisation can put to itself. The answers are based on the analysis of the

underlying needs of the society that any organisation serves to fulfill.

For Example,

A book publisher and a magazine editor are both engaged in satisfying the

information needs of society but they do it through different means. A book publisher

may aim at producing excellent reading material while a magazine editor may strive

to present news analysis in a balanced and unbiased manner. Both have different

objectives but an identical mission.

Thompson (1997) defines mission as the "essential purpose of the organisation,

concerning particularly why it is in existence, the nature of the business it is in, and

the customers it seeks to serve and satisfy".

Hunger and Wheelen (1999) say that mission is the "purpose or reason for the

organization's existence".

Vision & mission are two different connotations. While vision places emphasis on

visionary long term concept of organization with very high level of sense of

achievement, mission deals mostly with how the organisation will interact with

various stakeholders, the products/services it offers, and the way these are offered.

Every company has its mission, either implicitly or explicitly; every company cannot

become a visionary company.

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Role of mission in strategy formulation

Organisational mission helps strategists in formulating their strategies in the

following ways:

A. It helps in deciding the direction in which it proceeds. Therefore, strategic

actions can easily be geared in that direction.

B. It helps the organisation to clarify its aspirations and those of various

stakeholders. The strategic actions can be aligned to these aspirations.

C. It serves as a reference point in dealing with various stakeholders within and

outside the organisation.

D. It helps in integrating the organisation with its relevant environment by taking

suitable actions the way these have been specified in the mission.

E. It helps in integrating the various subsystems of the organisation as these

subsystems look at their objectives and operations in the light of organisational

mission.

F. It conveys clear message about the organisation to those outsiders who come

in contact with it. They develop positive attitudes towards organisation if they

are well aware about its mission.

EXAMPLE:

Vision and Mission of TATA International

OUR VISION

To be the "Leading International Business Company" of the country and International

Arm" of TATA Group, with a significant overseas reach, presence and linkages, and

with focus on facilitating globalization of TATA Group's core businesses.

OUR MISSION

1. Promote the TATA Brand Equity internationally.

2. Promote internationally, products and services from the TATA Group, as also from

other quality conscious Indian and overseas companies.

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3. Source World-class products and services for marketing in India.

4. Promote businesses with strong comparative advantages for the company, and

upgrade the company's strengths in the areas of technology, marketing, and finance.

5. Identify global sources of technology, marketing, and finance and other services to

facilitate strategic alliances.

6. Nurture and develop human resources, to enable us to undertake the challenges

of leadership and innovation, in our areas of activity.

Characteristics of a Mission Statement

1. It should be feasible:

A mission should always aim high but it should not be an iiiiossii1e statement. It

should be realistic and achievable - its followers must find it to be credible. But

feasibility depends on the resources available to work towards a mission.

2. It should be precise:

A mission statement should not be so narrow as to restrict the organizations

activities nor should it be too broad to make itself meaning- less. For instance,

Manufacturing bicycles is a narrow mission statement since it severely limits the

organizations activities, while mobility business is too broad a term as it does not

define the reasonable contour within which the organisation could operate.

3. It should be clear:

A mission should be clear enough to lead to action. It should not be a high-sounding

set of platitudes meant for publicity purposes. Many organisations do adopt such

statements but probably they do so for emphasizing their identity and character. Forexample, Asian Paints stresses leadership through excellence, while India Today

sees itself as the complete news magazine.

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4. It should be motivating:

A mission statement should be motivating for members of the organisation and of

society, and they should feel it worthwhile working for such an organisation or being

its customers. A bank which lays great emphasis on customer service is likely to

motivate its employees to serve its customers well and to attract clients.

5. It should be distinctive:

A mission statement which is indiscriminate is likely to have little impact. If all scooter

manufacturers defined their mission in a similar fashion, there would not be much of

a difference among them. But if one defines it as providing scooters that would

provide value for money, for years it will create an important distinction in the public

mind.

6. It should indicate major components of strategy:

A mission statement, along with the organisational purpose should indicate the major

components of the strategy to be adopted. The chief executive of Indal expressed

his intentions by saying that his company "begins its fifth decade of committed

entrepreneurship with the promise of a highly diversified company retaining

aluminum as its mainline business.

7. It should indicate how objectives are to be accomplished:

Besides indicating the broad strategies to be adopted a mission statement should

also provide clues regarding the manner in which the objectives are to be

accomplished.

Example of Mission Statement

HCL: "To be a world class, competitor"

Marico Industries: "The three P's of Marico: People, Products, and Profits"

Ranbaxy Laboratories: ''To become a research-based international pharmaceuticals

company."

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GOALS & OBJECTIVES

Goals denote what an organisation hopes to accomplish in a future period of time.

They represent a future state or an outcome of the effort put in now.

A broad category of financial and non-financial issues are addressed by the goalsthat a firm sets for itself.

Objectives are the ends that state specifically how the goals shall be achieved. They

are concrete and specific in contrast to goals which are generalized.

In this manner, objectives make the goals operational. While goals may be

qualitative, objectives tend to be mainly quantitative in specification. In this way they

are measurable and comparable.

Role of Objectives

1) Objectives define the organizations relationship with its environment:

By stating its objectives, an organisation commits itself to what it has to achieve for

its employees, customers and society at large.

2) Objectives help an organisation to pursue its vision and mission:

By defining the long-term position that an organisation wishes to attain and the

short-term targets to be achieved, objectives help an organisation in pursuing its

vision and mission.

3) Objectives provide the basis for strategic decision-making:

By directing the attention of strategists to those areas where strategic decisions

need to be taken, objectives lead to desirable standards of behaviour and, in this

manner, help to coordinate strategic decision-making.

4) Objectives provide the standards for performance appraisal:By stating the targets to be achieved in a given time period and the measures to be

adopted to achieve them, objectives lay down the standards against which

organisational as well as individual performance could be judged. In the absence of

objectives, an organisation would have no clear and definite basis for evaluating its

performance.

Date post:	05-Apr-2018
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BPSM Ch. 1

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