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  • 7/31/2019 BPSM Ch. 1



    Prepared By: Vijay Meghani (B M College)




    CHAPTER : 1

    Conceptual framework for Strategic Management(20%)


    (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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    Prepared By: Vijay Meghani (B M College)

    (A) POLICY :-

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

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

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

    Business policy has been defined as

    "Managements expressed or implied intent to govern action in the

    achievement of company's aims.

    According to Philip Kotler,

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

    customers, suppliers, distributors, and other important group.

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

    A policy is the statement or general understanding which provides guidance

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


    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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    Prepared By: Vijay Meghani (B M College)

    (B) strategy :-

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

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

    resources -necessary for carrying out these goals."

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

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

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

    is to be."

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

    with the environment so as to achieve its objectives.

    Features of strategy

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

    relate itself with environment to develop certain advantages which help in

    achieving its objectives.

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

    condition, to solve certain problems.

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

    depends on environmental variables, an organization may take contradictory

    actions either simultaneously or with a gap of time.

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

    is required in a new situation. No new situations requiring solutions can 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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    Prepared By: Vijay Meghani (B M College)

    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


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    Prepared By: Vijay Meghani (B M College)

    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


    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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    Prepared By: Vijay Meghani (B M College)

    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


    For Example,

    A watch manufacturing company may call itself the timekeepers to the


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    Prepared By: Vijay Meghani (B M College)

    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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    Prepared By: Vijay Meghani (B M College)

    (E) PROGRAMME :-

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

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

    supported by funds allocated for plan implementation.

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

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

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

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

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

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


    (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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    Prepared By: Vijay Meghani (B M College)


    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 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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    Prepared By: Vijay Meghani (B M College)


    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 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.


    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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    Prepared By: Vijay Meghani (B M College)

    (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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    Prepared By: Vijay Meghani (B M College)

    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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    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



    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


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    OCP FACTORS Weakness






    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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    Prepared By: Vijay Meghani (B M College)

    (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.


    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


    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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    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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    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


    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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    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


    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.


    Vision and Mission of TATA International


    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.


    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


    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


    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


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    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