Business Policy & Strategy

STRATEGY
A unified, comprehensive and integrated plan designed to assure that the
basic objective of the enterprise is achieved.
A strategy is a unified comprehensive and integrated plan that relates the strategic
advantages of the firm to the challenges of the environment. It is designed to
ensure that the basic objectives of the enterprise are best achieved through proper
execution by the organisation
A companys strategy consists of the combination of competitive moves
and business approaches that managers employ to please customers,
compete successfully and achieve organisational objectives.- Thompson
&Strickland

Derived from Greek word Strategoes (Stratos- Army + Ago- Leading/Guiding)

which means generalship- the actual direction of military force as distinct

from the policy governing the deployment.

A plan or course of action or a set of decision rules forming a pattern or
creating a common thread.
The pattern or common thread is related to the organizations activities which
are derived from its policies, objectives & goals.
It is related to pursuing those activities which move an organisation from its

current position to a desired future state.

Concerned with the resources necessary for implementing a plan or following

a course of action.
Connected to the strategic positioning of a firm, making trade offs between
its different activities.

STRATEGIC MANAGEMENT

Strategic Management is a stream of decisions and actions which leads to the

development of an effective strategy or strategies, which help to achieve
corporate objectives. William F. Glueck
The process which deals with the fundamental organizational renewal and
growth with the development of strategies, structures and systems necessary to
achieve such renewal and growth, and with the organizational systems needed
to effectively manage the strategy formulation & implementation processes.
Hofer & Other

BUSINESS POLICY:
It is the study of the function and responsibilities of senior management, the
crucial problems that affect success in the total enterprise and the decisions that
determine the direction of the organization and shape its future.
Business policy is the term traditionally associated with the course in business
schools devoted to integrating the educational programme of these schools and
understanding what today is called strategic management.
NATURE OF BUSINESS POLICY:
1. It is a study of functions & responsibilities of the senior management related
to those organizational problems which affect the success of the organization.
2. It deals with the determination of future course of action that an organization
has to adopt.
3. It involves choosing the purpose & defining what needs to be done in order to
mould the character & identity of an organization.
4. It is also concerned with the mobilization of resources which will help the
organization to achieve its goals.
IMPORTANCE OF BUSINESS POLICY:
For learning the course: -

Integration of knowledge & experience gained in

various functional
areas of management.

It enables a learner to understand and make sense of

complex interaction that takes place between different
functional areas.

Business

policy

cuts

across

the

narrow

functional

boundaries and draws upon a variety of sources like

economics, sociology, political science, psychology etc. to
develop a theoretical structure of its own.

It makes the study and practice of management more

meaningful as one can view business decision making in
its proper perspective

For understanding the business environment: - It helps to create an

understanding of how policies
are formulated.

Understanding complexities of business environment

Implementation of policies become simpler & easier due

to greater
understanding

of

business

environment,

managers

become more receptive to ideas and suggestions of the

senior management

Its easier to implement changes.

For understanding the organization: - It presents a basic framework for

understanding strategic
Decisions making while a person is at the middle
level of
management.

Brings the benefit of years of distilled experience in

strategic decision making

Leads to an improvement in job performance. This has farreaching

implications

for

managerial

functions

like

coordination and communication and also for avoidance

of interdepartmental conflicts

For Personal development: - It is beneficial for an executive to understand the

impact of policy shifts on
the position one occupies.
- An understanding of business policy enable executives to
avail an opportunity or avoid risk with regard to career

planning and development

It provides an adequate grounding for understanding the

macro factors and their impact at the micro level.

It offers a unique perspective to executive to understand

the senior managements viewpoint.

It provides the organization a theoretical framework in the
form of the strategic management model, which provides
powerful insights for dealing with policy making at the
macro level as well as at an individual level through self
analysis.

NATURE OF STRATEGIC DECISIONS:

1. Strategy may or may not involve explicit formulation of what the organization
intends to do i.e. whether or not an organization formulates a strategy, it is
presumed to have established a relationship with its environment &hence
there is a strategy which can be examined and described even though it is
not spelt out in so many words.
2. While shaping the future, strategic decisions often mould the organizational
identity and character deciding whether the enterprise will continue to be in
the same line of business or combine new lines of activity with the existing
business, enter new market segments or seek to acquire a dominant position
in the same market and so on.
3. Strategic decisions are primarily concerned with external rather than internal
problems and more specifically with the selection of the product mix which
will be produced and the markets to which the products will be sold, thus
establishing, what Ansoff calls an impedance match between the
organization and its environment.
PURPOSE OF BUSINESS POLICY:

A business policy seeks to integrate the knowledge gained in various functional

areas so as to develop a generalist approach in management studies. Such an
approach is helpful in viewing organizational problems in their totality.
It can also create awareness about the repercussions that an action taken in one
area of management can have on other areas individually and on the organization
as a whole.
Three fold purpose of business policy:
1. To integrate the knowledge gained

in

various

functional

areas

of

management.
2. To adopt a generalist approach to problem solving.
3. To understand the complex interlinkages operating within an organization
through the use of a systems approach to decision making and relating these
to the changes taking place in the external environment.
OBJECTIVES OF BUSINESS POLICY
In terms of knowledge:
1. Understand various concepts involved like strategy, plans, policies,
programmes, etc.
2. Understand the environment in which a firm operates
3. Determination of the mission, objectives and strategy of a firm.
4. To visualize how the implementation of strategic management can take
place.
5. To develop a general approach problem solving and decision making.
This makes an organization to deal with a wide variety of situation.
6. To survey literature & researches taking place

In terms of skills:
1. Developing skills & Apply what has been learnt (by analyzing case
studies and their interpretations.
2. To develop analytical ability and use it to understand the situation in a
given case or incident
3. Identifying factors relevant in decision making, identifying SWOT for an
organization
4. Increasing mental ability of learners and making them use this ability
while taking appropriate action.
5. Development of oral as well as written communication skills through
case analysis.

In terms of attitude:
1. To develop a generalist attitude that enables the learners to approach
and assess a situation from all possible angles.
2. To develop a practitioner rather than a perfectionist. This is because
a generalist is able to function under condition of partial ignorance by
using his or her judgment and intuition.
3. To introduce a manager with liberal attitude and be receptive to new
ideas.
4. To develop a creative and innovative attitude is the hallmark of a
general manager who refuses to be bound by precedents and
stereotyped decisions.

EVOLUTION OF THIS COURSE:

Genesis of Business Policy: 1911, Harvard Business School introduced an
integrative course in management capability. The course aimed at improving the
general management capabilities of students. It was intended to tie together and
give proper focus to the first year courses by showing how the functions of business
both internally and as between businesses, were closely interrelated in practice and
how a chief executive had to recognize and deal with those relationships.
Evolution based on Managerial practices:
short term planning tools were the only tools with organization to rely on for future
estimation & decision making.
Around 1930s systematic attempts were made to go deep into future and prepare
the organizations for likely changes in future. Budgets control systems management
by objectives and capital budgeting techniques were pressed into service with a
view to predict future impacts based on current trends. These techniques
unfortunately failed to capture the essence of future conditions in an appropriate
way.
Long range planning was used to remedy the situation.

Corporate plans, prepared by people at various levels based on current practices

and likely changes in future, were often pushed upwards for approval by top
management. Top managements participation in such lopsided exercises was
minimal and there was always the danger of the recommendations not being
followed. This process is called as first generation planning. First generation
planning puts lot of emphasis on picking up an appropriate course of action
(generally a single plan) based on environmental challenges and organizational
strengths and weaknesses. The came the second generation planning in the
form of strategic management which came to occupy the center stage in the
business world ,emphasizing interaction by managers at all levels of the
organizational hierarchy in planning and implementation .
Hofer - et- al called this evolution a paradigm shift. They have summarized the
developments in this regard thus:
First Phase: Paradigm of Adhoc Policy (till mid 1930s): Adhoc policy making
necessitated by the expansion of American firms in terms of product markets and
customers and the consequent need to replace informal controls and coordination
by farming functional policies to guide managers.
Second Phase: Paradigm of planned Policy (1930s 1940s): Replacement of adhoc
policy making by planned policy formulation and shifting attention towards
integration of functional areas, in line with environmental requirements.
Third Phase Strategy Paradigm ( 1960s): Rapid force of environmental changes
and increasing complexity of managerial functions demanding a critical look at the
concept of business in relation to its environment hence the need for strategic
decisions.
Fourth Phase: Paradigm of Strategic Management (1980s): shifting of focus to the
strategic management process and the responsibility of general management in
resolving strategic issues.
POINTERS TO THE FUTURE:

Resolution of strategic issues that affect a business firm has been a continual
endeavor in the subject of business policy.
The general principles undergirding strategic thinking have been the focus of
the efforts of researchers and academicians in the field of business policy
Now there is an emerging trend to have several courses, such as the theory
of strategy, competitive strategy industry dynamics, hyper competition and
global strategy in the curriculum.
INDIAN SCENARIO:
Formal Management education started 1950s
Establishment of IIMs & other institutions- 1960s
AICTE: Regulatory agency for Management education in India, prescribed
Business Policy as a subject in curriculum- 1990s
Association of Indian Management schools included BPSM as a compulsory
course
AIMA includes course on BPSM in its curriculum in all of their management
programmes.
Changes taking place in Indian context:
There is now a professional association, strategic Management Forum of India,
which is exclusively devoted to the development and propagation of the theory &
practice of strategic management.
Indian companies are now acutely aware of the need for strategic management &
have been hiring consultants to advise them on strategic matters.

HOW STRATEGIC MANAGEMENT EVOLVED:

I.

Forecasting: Forecasting is an attempt to foresee the future by

examining the past.

Forecasts: predictions, projections, or estimates of future events or conditions

in the environment in which the organization operates.

Used to try to predict the future

Uses two main methods:

1. Qualitative: seeking opinions on which
to base decision making.
Consumer panels, focus groups, etc
2. Quantitative using statistical data to help inform decision making
1. Identifying trends
2. Moving averages seasonal, cyclical, random
3. Extrapolation simple

II.

Long Range Planning: Forecasting helped organizations a lot, but still

there existed a gap between what organizations needed and what they
were getting out from forecasting. Forecasts are never error free, so
planning in either case is mandatory. So organizations started planning for
long term. Day to day planning techniques were unable to emphasize the
role of future adequately. Looking into the matters with an objective of
dealing through future aspects and taking into consideration the impact of
future on todays position.
Long Range Planning means analyzing the future prospects and threats to
make plans and policies for current use and implementation.

III.

Strategic Planning: Strategic Planning is concerned with the selection of

the product mix which a company may produce and the markets in which
it may sell its products.
Strategic planning is defined as, The process of deciding on objectives,
on the changes in the objectives, on the resources used to attain the

objectives and on the policies that are to govern acquisition, use and
deposition of these resources.
It is the determination of the basic long goals and objectives in an
enterprise and the adoption of courses of action and the allocation of
resources necessary for carrying out these goals.

FORECASTING
Forecasting is the process of making statements about events whose
actual outcomes have not yet been observed. A commonplace example
might be estimation for some variable of interest at some specified future
date.
Forecasting can be described as predicting what the future will look like,
whereas planning predicts what the future should look like.

STRATEGIC PLANNING

10

Strategic Planning is the managerial process of developing and maintaining a

strategic fit between the organization's objectives and resources and its changing
market opportunities.

LEVELS AT WHICH STRATEGY OPERATES

1. Corporate level strategy
2. Business level strategy
3. Functional level strategy
Corporate Level Strategy: Strategic decisions relate to organizations wide
policies and are most useful in the case of multi divisional companies or firms
having wide ranging business interests. The nature of strategic decisions at
the corporate level tend to be value oriented, conceptual and less concrete
than decisions at business or functional level. There is also greater risk, cost
and profit potential as well as greater need for flexibility associated with
corporate level strategic activities.
Business Level Strategy: Decision makers are primarily concerned with
the immediate industry or product- market issues and with policies bearing
on the integration of the functional units. Business level strategic decisions
translate the general statements of direction and intent generated at
corporate level into concrete functional objectives and strategies for
divisions or strategic business units (SBUs).

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Strategic decisions at business level should include policies including new

product development, marketing mix, research & development, personnel,
etc.
Functional level strategy: It involves decision making with respect to
specific functional areas- production, marketing, personnel, finance, etc.
Decisions at functional levels stress on doing things right.
Operating level strategies are concerned with initiatives for managing
frontline operating units (like plants, sales districts, etc.) and for handling
day to day tasks of strategic significance. Although of limited scope,
operating strategies add further detail and completeness to functional
strategies as also to the overall business plan.
STRATEGIC DECISION MAKING
Strategic Decision Making means moulding the organizational identity and
character deciding whether the enterprise will continue to be in the same
line of business or combine new lines of activity with the existing business,
etc.
It means choosing the best strategic alternative from a variety of available
options which would affect the strategic positioning of the firm.
Strategic Decisions: Strategic Decisions are mainly concerned with
external rather than internal problems.
Three types of decisions in a firm:
Strategic decisions: Decisions related to the development of effective
strategies of firm.
Operating decisions: Decisions related to the day to day activities or
current operations
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Administrative decisions: Structuring the firms resources so as to create

a maximum potential of performance.
Decisions concerned with the authority & responsibility relationships, work
flows, communication, developing sources of raw material supply.
DIMENSIONS OF STRATEGIC DECISIONS
1. Top Management Involvement: Strategic decisions are very crucial
for organization, so involvement of top management is mandatory.
Even if top management does not involve in the actual practice &
implementation process but it supports each and every phase of
strategy formulation, implementation & control.
2. Allocation of large amount of resources:

All the strategic

decisions involve a requirement of large amount of resources to be

allocated. A firm may use a large amount of manpower, machinery,
money, materials in the strategic implementation, so organization
needs to allocate a large amount of resources.
3. Impact on long term prosperity of the firm: All the strategic
decisions are crucial for the firm. They affect long term prosperity of
the firm. These decisions either make them worst or better.
4. Future

oriented:

Strategic

decision

making

is

proactive

entrepreneurial approach.
5. Multi functional consequences: One strategy of the organization
effects different functional units & businesses of the firm. So strategic
decisions have multi functional or multi business consequences.
6. Readiness to make non- self generative decisions: Strategic
decisions are non- frequent decisions. These are contingent decisions
to be made any time when required and thus are non- self generative
decisions.
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7. Other

determinants

of

strategy

besides

opportunities

&

capabilities: Values & preferences of managers, managers attitude

towards risk, managerial power relations, and social obligations of
organization also determine the strategic decisions.

Issues in Strategic Decision Making:

1. Criteria: Criteria refers to the long term orientation of organization
towards

objectives

&

achievement

of

objectives.

Different

organizations may have different viewpoints towards the achievement

of their organizational objectives. Some organizations may wish to
achieve their objectives up to a satisfactory level; others may wish to
maximize their achievement of objectives. A few others may look at it
in incremental approach, i.e. movement toward objectives in small,
logical & incremental steps.
This can be briefly listed in three points: A. Maximization
B. Satisfaction
C. Incrementalism
2. Rationality: Rationality refers to the decision making without any
biasness, with the help of complete information of all the alternative
strategies & evaluation techniques. Rationality means exercising a
choice from among various alternative courses of action in such a way
that it may lead to the achievement of the objectives in the best
possible manner. Different firms, on the basis of their approach
towards achievement of objectives may have different rationalities. For

14

example, those who support the maximizing criterion consider a

decision to be rational if it leads to profit maximization.
3. Creativity: To be creative, a decision must be original and different. A
creative strategic decision making process may considerably affect the
search for alternatives where novel and untried means may be
overlooked for and adopted to achieve objectives in exceptional
manner. Develop the ability to go beyond and think and use creativity
in strategic decision making.
4. Variability: Different organizations, managers, persons have different
viewpoint toward same situation. They may handle the same situation
differently and thus may have different solutions to the same problem.
This happens due to variability in decision making. It also suggests that
every situation is unique and there are no set formulas that can be
applied in strategic decision making.
CORPORATE PLANNING
It is described as a formal, systematic managerial process, organized by
responsibility, time and information, to ensure that operational, project
planning and strategic planning are carried out regularly to enable top
management to direct and control the future of enterprise.
Corporate Planning is a comprehensive planning process which involves
continued formulation of objectives and the guidance of affairs towards
the attainment of objectives.
Corporate planning is concerned with determination of objectives
and

developing

means

to

achieve

the

objectives.

It

may

encompass both short as well as long periods. Hence it involves

long range planning as well as short range planning
Constituents of Corporate Planning:

15

1. Project Planning
2. Operational Planning
3. Strategic Planning
Project Planning:
Operational Planning: It includes planning & managing organizations
on going operations effectively. It involves the study of market conditions
for the existing range of products to maintain and improve the position of
the firm in the face of competition.
These are short term exercises, less risk is involved. It is a simpler
decision making than other two components of corporate planning.
Project Planning: It is a forward looking exercise, concerned with new
markets,

new

products,

and

new

facilities.

Any

new

plan,

task

organization is starting with, is to be covered under projects of the

organization. Most of the projects are long term, and are of vital
importance for the organization.
Strategic Planning: Process of deciding on objectives, on changes in
objectives, on resources used to attain these objectives and policies that
are to govern those acquisition, use and disposition of resources.
Formulation of a unified, comprehensive and integrated plan aimed at
relating the strategic advantage of the firm to the challenges of the
environment.
Importance of Strategy Planning:
a. Guidance to entire organization: It provides necessary
guidance to the entire organization about what is expected to be
achieved and how.

16

b. Development of managerial staff & management: It makes

managers more alert to new opportunities & potential threats. It
helps in creating a more proactive management posture.
c. Unifying

organizational

efforts:

It

helps

in

unifying

orgaisational efforts, leading to greater harmony and goal

congruence.
d. Evaluation of organizational affairs: It provides the required
rationale for evaluating competing budget requests for steering
resources into strategy supportive results producing areas.

STRATEGIC MANAGEMENT
The process through which organizations analyze and learn from their
internal & external environments, establish strategic direction, create
strategies that are intended to help achieve established goals and execute
strategies all in an effort to satisfy key organisational stake holders.
The emphasis of the above definition is on:
1. Elements in strategic management process
2. Satisfaction of stakeholders of organization

17

3. General management responsibilities which are essential to relate the

organization to the environment in such a way that its objectives may
be achieved.
Benefits of Strategic Management:
1. Financial benefits: improved financial performance in terms of profit
& growth.
2. Enhanced capability of problem prevention: Encouraged and
rewarded subordinates
3. Improved

quality

of

strategic

decisions

through

group

interaction: Better screening of options due to specialized perspective

of group members.
4. Greater employee motivation: Participation of employees or their
representatives in strategy formulation leads to a better understanding
of

the

priorities

and

operation

of

the

reward

system.

Better

appreciation on employees part of productivity reward linkage

inherent in the strategic plan.
5. Reduction

of

understanding

gaps
of

and

overlaps

responsibilities

of

in

activities:

individuals

and

Better
groups.

Classification of roles & responsibilities and reduction of gaps and

overlapping of activities of groups & individuals.
6. Minimum resistance to change: Acceptability to change, greater
awareness, and elimination of uncertainty associated with resistance.
STRATEGIC MANAGEMENT PROCESS- PHASES IN STRATEGIC
MANAGEMENT

18

Figure 1: Strategic Management Process

19

PERFORMIN

G
STRATEGIC
EVALUATIO
N&
CONTROL

ESTABLISHI
NG
STRATEGIC
INTENT

IMPLEMENT
FORMULATI
ATION
OF
ON OF
ESTABLISHING STRATEGIC INTENT
STRATEGIE
STRATEGIE
SCreating & communicating a vision
S

Designing a mission statement

Defining the business
Setting goals & objectives

Creating Vision,
Mission, Business
definition, Goals &
Objectives

FORMULATION OF STRATEGIES

Performing environmental appraisal

Doing Organisational appraisal
Considering Corporate level, business
level strategies
Undertaking strategic analysis
Exercising strategic choice
Formulating strategies
Preparing strategic plans

SWOT Analysis
Corporate level,
Business level
strategies
Strategic choice,
strategic plan

IMPLEMENTAION OF STRATEGIES

Activating Strategies
Designing Structures & systems
Managing behavioral implementation
Managing functional implementation
Operationalising strategies

PERFORMING STRATEGIC EVALUATION &

CONTROL

Performing strategic Evaluation

Exercising strategic control
Reformulating strategies

Project
Implementation
Procedural
Implementation
Resource Allocation
Structural
Implementation
Behavioral
Implementation
Functional
Evaluation
&
Implementation

reformulation of
strategies

20

Figure 2: Strategic Management Process

WORKING MODEL OF STRATEGIC MANAGEMENT PROCESS

STRATEG
IC
INTENT

SWOT
ANALYSI
S

STRATEGI
C
ALTERNATI
VE

STRATEG
IC
ANALYSI
S&
CHOICE

STRATEG
Y
IMPLEME
NTATION

STRATE
GY
EVALUAT
I--ON

Strategic Control
Figure 3: Working model of Strategic Management Process

I.

ESTABLISHING STRATEGIC INTENT

Vision, Mission, Business definition and objectives are
established
What an organization stands for
Vision serves the purpose of stating what an organization
wishes to achieve in long run
Mission relates an organization to society

21

Business definition explains the business of an organization in

terms of customers needs, customer groups, and alternative
technologies
Objectives state what is to be achieved in a given time period.
They serve as a yardstick/ benchmarks for measuring
performance.

II.

FORMULATION OF STRATEGIES
Find out opportunities and threats operating in the
environment and the strengths & weaknesses of an
organization in order to create a match between them.
Opportunities can be availed and threats impact can be
neutralized.
Strategic alternatives and choices are required for evolving
alternative strategies out of many possible options and
choosing most appropriate strategy in the light of
environmental opportunities and threats and corporate
strengths & weaknesses.
End result of strategic analysis and choice is strategic plan
which can b implemented in the organization

III.

IMPLEMENTATION OF STRATEGY
Putting strategic plan into action through six sub processes:

22

Project Implementation: Setting up of an organization

Procedural Implementation: Regulatory framework of

an organization

Resource Allocation: Procurement & commitment of

resources

Structural Implementation: Designing organization

structure, redesigning, re organizing.

Behavioral Implementation: Leadership styles, culture,

politics

Functional & operational Implementation- Productivity,

processes, people & pace of implementation.

IV.

STRATEGIC EVALUATION & CONTROL

Appraisal of Implementation & measuring organisational
performance
Feedback is generated to control over the strategic management
process
Reformation of strategies due to this feedback

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HIERARCHY OF STRATEGIC INTENT/ STRATEGIC VISION,

CORPORATE MISSION, OBJECTIVES & GOALS
STRATEGIC INTENT:
The purposes the organization strives for.
An intention of an organization to achieve a long term objective. It may be to
achieve leadership, overtake a market- niche or to pioneer a promising discovery,
etc.
Intents normally go out of the present capabilities and market positions. They show
a deep seated commitment to winning even against odds.
This concept entails keeping in mind the idea of winning by virtue of motivating
people, leaving room for team contributions, maintaining their enthusiasm and
guiding resource allocation keeping in view the intent.

VISION:
Direction setting Idea
What an enterprise is going to be
Road map of a companys future
A picture of what a firm is intended to do/ to be in future
To inspire members to work for the ultimate purpose with clarity of purpose,
hope and unity of purpose even with diversity of personal causes. It gives a
sense of direction in which to go on without ever reaching it.
It is rather imaginary or lacking substance. It is more than defining its future
products.
It is the basic principle on which organization will work regardless of what
happens inside the organization and its environment.

24

It is the binding force for different parts of an organization to have shared

values and not to go in different directions even if they may be following
different strategies.
Strategic Vision: A mental perception of the kind of environment that an
organization aspires to create with a broad time frame.

It may be regarded as a dream in the sense of an ideal

It is a description of something (an organization, corporate culture, a

business, a technology, an activity) in future.

Benefits of having a good vision:

Good visions are inspiring and exhilarating
Good visions represent discontinuity, a step function and a jump ahead so
that the company knows what it is to be.
It helps in creating common identity & shared sense of purpose.
A good vision is competitive, original and unique. It makes sense in market
place as it is practical.
It fosters risk taking and experimentation
It fosters long term thinking.
It represents integrity. It is truly genuine and can be used for the benefit of
people.
Two major components of vision
1. Core Ideologies: Core values + Core purpose
2. Envisioned future: Audacious goal + vivid description of future

25

MISSION:
It is the statement which defines the role that an organization plays in a society.
Reason- de- etre Reason of existence of a firm in the society.
Mission may be described as the scope of operation in terms of products and
markets or of service and client.
An organizations mission statement tells what it is, why it exists and the
unique contribution it can make to the society.
It is defined as the fundamental, unique purpose that sets it apart from other firms
of its type. It indicates the nature and scope of business operations in terms of
products, markets & technologies.
Components of Mission:
Basic Product/ service to be offered.
Fundamental concern for survival through sustainable growth and
profitability.
Managerial Philosophy/ Companys philosophy in terms of basic beliefs,
values, aspirations & philosophical priorities (what the company stands for )
Public Image to be sought.
Self concept that people affiliated should have of the firm, which may
include management style and work ethics.
Characteristics of mission statement:
1. Feasible: It should not be impossible. It should be realistic, credible &
achievable.
2. Precise: It should not be so narrow as to restrict the organizations activities,
nor should it be too broad to make itself meaningless.
3. Clear: It should be clear enough to lead to action. Neither should it be a high
sounding set of platitudes meant for publicity purposes.

26

4. Motivating: It should be felt worthwhile working.

5. Distinctive: It should create an important distinction in the public mind.
6. Indicator of strategic components: It should indicate major components
of strategy. What company is likely to follow a combination of stability,
growth, diversification strategies in future.
7. Indicator of objectives: It should indicate how objectives are to be
accomplished, i.e. clues regarding the manner in which the objectives are to
be accomplished. It should deal with the objectives to be achieved within a
given time period.
Difference between Vision & Mission
VISION
1. Vision reflects a desired future

MISSION
1. Mission is reason-de-etre-

& what a firm has to keep

reason of existence of a firm in

striving to reach it.

the society.

2. It relates to the long term view

2. It deals with the firms present

of an image that the company

business scope- products,

will like to have.

services, customers, present

3. It states where we are going?

4. It portrays the future business
scope of the company &
involves the strategic path to
take.
5. It focuses on deciding Which
way are we going?

business capability and

technologies.
3. It states who we are and what
we do?
4. It focuses on the organisations
present capabilities, its
products and services,
customers and business
makeup
5. It answers What business are
we in?

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VISION + MISSION= FURURE ORIENTED MISSION STATEMENT

BUSINESS DEFIINITION:
It is a part of Mission statement
It is a description of the products, activities or functions and markets that the firm
presently pursues.
Products: - Outputs of value created by the system to be sold to customers.
Markets: - Classes/ types of customers or geographic regions where the
product/ service is sold.
Technologies/ Functions: - Technologies/ processes used to create & add
value.
It answers the question- What is our business?
Dimensions of Business definition
1. Customer groups
2. Customer functions
3. Alternative technologies
Features of a good business definition:
1. It should be as precise as possible.
2. It should indicate major components of strategy (product, market, functions).
3. It should indicate how the mission is to be accomplished?

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Importance of business definition:

1. It indicated the choice of objectives
2. It helps in exercising a choice among different strategic alternatives
3. It facilitates policy implementation.
4. It suggests appropriate organizational structure.

Levels at which business could be defined:

Business could either be defined at the corporate level or SBU (Strategic business
unit level) level. A single business firm is active in just one area so its business
definition is simple
A large conglomerate, operating in several businesses, would have a separate
business definition for each of its businesses.
Corporate level: Business definition concerns itself with the functions & alternative
technologies
SBU level: Each division have more accurate business definitions covering all the
three dimensions.

GOALS & OBJECTIVES:

GOALS: goals denote what an organization 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 & non- financial issues are addressed by the goals that a
firm sets for it.
OBJECTIVES: these 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.

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While goals may be qualitative, objectives tend to be mainly quantitative

in specification. In this way, they are measurable & comparable.
Role of objectives & goals in Strategic Management:
1. They define the organisations relationship with its environment. With
employees, customers & society.
2. They help in pursuing an organizations vision & Mission
3. They provide the basis for strategic decision making by directing the
attention of strategists to those areas where strategic decisions need to be
taken. They lead to desired standards & help to coordinate strategic decision
making.
4. They provide the standards for performance appraisal. As objectives to be
achieved in given time, clear definite basis for evaluating its performance.
Characteristics of Goals & Objectives:
1. Understandable
2. Concrete & specific
3. Related to a time frame
4. Measurable & controllable
5. Challenging
6. Correlated with each other
7. Set within constraints
Need of Objectives:
They help define the organization in its environment
They help in coordinating decisions and decision makers
They provide standards for assessing organizational performance

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They provide organization with more tangible targets than mission

statements
Factors Influencing formulation of Objectives, Goals & Mission:
1.

Forces in environment- stakeholders

2. Internal resources & powers

3. Values of top management
4. Past development of the firm

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