Vaehsba M-~-1085 MBA, SEMESTER ~ III According to the new syllabus of (Gujarat Technological University’ nist Ab Tripti Singh Chowdhury MBA, BBA, Ph.D (Purs.) Associate Editor, Thakur Publication Pvt. Ltd. Preeti Singh MFT (Master of Foreign Trade), B.Com (Hons.) Assistant Copy Editor, Thakur Publication Pvt. Ltd. Books are Available for Online Purchase at: tpplorg.in THAKUR PUBLICATION PVT. LTD., AUMEDABAD + Lucknow * Meerut * Hyderabad * Kerala * Jaipur * ‘Chennai * bia * * Jalandhar * Pune * Bengaluru * Bhubaneswar * Bhopal * Nagpurog and Definition of OPjectivy » 10.1. Meant pjectives Module oekin 102. ne bectves y Fhapter 1; Introduction to Strategic at 103. Sr objectives qa. Strategy 2 Be vance of ODjUet¥ES Thy, Messing and Defisition of St=IeEY 4 me pexwee Coal and Objtci 112, Naturt of Suatesy 10 ‘Models ts F138 Lanes of Suazgy_ teres 1! eet Business Models Tid, Significance of Suateay vai ‘ofthe Business Model Lis, Esergent Suategics? “ bi fodel and Statesy @ 116. race bexwezn Sui) an TASS 15 ip betwcen a COMPANY’ To strategie Management \Y 5 ‘Model ney 121. ‘Meaning & Definition of Suategic. Management 5 . 122 i is of Surtegc Management 5 ua Exerebe 123. of Surtege Management vette [2d Basie Model of State ‘Management i Cliapter 2: ‘Aspects of Environmental 4, 125, Significance of Statens ‘Management pO, ‘Business Environment 126. tations of Swale MABAEEDE shh, Meaning ‘and Definition of Bae 150. Difeence between Business Policy and 2 Environment, 5 ‘Suregic Managemed! tie Nae “or Business Environment 1a. Stakebolders in Bosiness? 213. ‘Components of Business Environment a a 215134, Exel Environment 132, tee sehr in Stee Manse! a1 IS neal Ex i arooment 133, Chasiizaon of Subehoe® ya. nporance of Business Environment aah Internal St 3 External Environment Analysis! Ey Bs tesa Sanit ‘Management Baa pole 1A strategic Intent* < - 1. Meaning and Defisition of Ststep- Intent ye 222 Levels “of Extemal Environment Analysis yet nutes of Strategic Intent Fe «223. Procedure of Extemal Environment Analy, (143. Hierarchy of Suategic Intent 35224, Factors: Affecting Enviro, Tsk, Modes for Developing Strategic Intent 5 Analysis . gehe Lad. VO Model of Above Average Recums ® 35 «2:25. ‘Significance of External Environment Anahy {232 Resource Based Model of Above Average 260-226 Methods and Techniques used fo5 En Rerum * Environment Analysis (2 re ors. Vision yr n ETOP Study 151. Meaning and Definition of Vision a QUEST Analysis 132 Peas of Vision a QUEST Anais g/g? 153. Process of Envisioning PESTEL/ PEST Analysis 154 Significance of Vision carers Able rea Limitations of Vision Introduction ve Suds i Dees © Veen Dominant Economic Features T61. Meaning fd Definition of Mission ee eee in Industry Analysis 1.62. Characteristics of Good Mission Stateme 2a Si set. 163. ed om Sacaeal ents Porter's Five Forces Model we 164. Significance of Mission Statement Rivalry inside Industry 165. Guidelines for Effective Mision Statement Stl acid as y 166. Difference between Vision and is Buyer Power a a son and Mision el Purpose supplier Power “ tay rina babe 3 res of Purpose significance of Industry Analysis 73 F: ysis ik lapocacet pe iaecewr 1.75. Mission vs Purpose Gear 13. Busine y acteristics of Strategic Grouy 1 ase ‘yrs of rage Gs ° ee Bere Tees ificance of Strategic G Aa Te espe Motel of Ras 36382 erat hesnaa RaRsSIEa 1.83. Vital Aspeets in Defining Bu Sea ee 19. Goals ing Business 6 Stages in Evaluating Company Ré 19.1. Introduction Sa en y Roars 192, Features of Goals 3284 ced of neal Ansys 193, TyperorGoas 3 28S. Toshniqus Used fr ntl Ans 1.10. Objectives a Ben Peete) ter vAnataie 226, Resources ysis Introdvetiontypes Resources 1 £3322. Lovet Dinesinenion [27g 106, Value Cain Analysis 2 1 "3373. Resonsfor Diversification Statesy E> 107 Laeniying Value Chain Activities T1337. Advantages Diverifiation Strategy 108 Value Chain Analysis and Outsourcing 77-3375. Disadvantages of Diversification Strategy 108 Arnel Cain Ars 79-338. integration Sirategies 10s Disadvantages of Value Chain Atalysis 44 79-339. Glob Strategy 4 VROFramevadk | foun Veet ee" wD Brg rahe sot wor me ere Capabilities F conte of BR 3.9.2. International Corporate-Level Strategies 2113 Invoduction 8 gy $843.93. tnematioua! Boshess- Level Stages, us Chgstona Capiiy Fon 82 A394. Environment Trends Alfecting Iterainal 117 Pre-Requisits for Organisational Capabiiy 83 Strategy 3 tnerece of Organon Cry $4 33.10. Cooperative Strategy # 7 Dyan Capabilities . Bi XSI0. Mergers = 7 ‘Competencies 86 33.102. Acquisition/Takeover Strategies ¢ | 2°°° 19 ae ‘ 10.3. Joint Ventures +") = 1 ore Competencies Suatepc Alianers & Collaborative Pararships 123 Cees of Ce Come Stability Strategy ns ilding Core Competes Invoducioa” 25 Distinctive Competitiveness Competence. ReasoBs 1b Nee Sbilty Sat Dae cree Keema, ‘Methods of Building: Distinctive Competence Retrenchment Strategy.» eng gl 136 ‘Competitive Advantage .#, 89 |. Introduction web. 126 Invoicion Reasons to Adopt Retcichment Say 126 Sources of Competive Advantage Forms of Revenchmen Sategy 7 Generic Building, Blocks of Competitive 90 ‘Combination Strategies rr) Advantage. ult Iavroduction 129 Avoding Files and Suing Compete Reasons o Adopt Combiation Suaegy 19 franagese0° Vc? wie ‘Types of Combination Strategy 129 ‘Durability of Competitive Advantage ‘Corporate Restructurir goth 130 is ing Resour Buel Apres © Orit Taeduetion 160 ysis ¥ st 9? Reasons of Corporate Restucturng 30 Resources Providing. Sustainable Competitive Process of Corporate Restructuring BI Advantage # 3.7.4. Types of Corporate Restructuring 132, Using the Resource-Based Approach in Intemal 98 3.75. BCG Model L* 2:8 /#" 133 Analysis 376 GE9CelI Main 2 1B Importance of Competitive Advantage 94 377. MeKinsey's 75 Model L2~ 2? 135 ey tors 2. 4 38. Exercise, 136 eyCritca Suceess Factors i Cart of Key Sono Feces 7 Chapter 4: Strategy Formulation at Business ‘Sources of Key Success Factors 7 Levels denifiaton of Key Success Factors 97 oka rsiess Level Strategies 1 Implementation of Key Succes Factors 98 75.11, Introduction 11 Exercise 100 4.1.2. Significance of Business Level Suategy BT Limitations of Bisines Level Strategy BB | -'sModule-I ‘Types of Business Level Strategy BB | tea 42. Porter's Generic Strategies 40 | Chapter 3: Strategy Formulation at Corporate {3 Mier GGenane ConpetiveSicpes 0 3 Levels 422. Low Cost Leadership Sintegy® | 2% 0 31, Strategy Formulation 101423, “Differentiation Suategy rs 34.1. Introduction 101 42.4, _, Focus Strategy te 412. Components in the Process of Suategy 101 4.75, ‘Features of Porter's Susegies 146 Formulation 43. Exercise 146 313. Issues in Swategy Fomulaton 102 32. Corporate Level Strategies 102 Module-IIl (9321. Introduction 102 Chapter 5: Nuances of Strategy Implementation | 322 Importance of Corporate Strategies 103 197 f Sa, Strategy Implementation P22 Ueseatonn of Correa Strain 103 S11, Meming and Definition of Strategy 147 |) 324. Vacious Corporate Strategies 108 faptemenain oe 7 1045.13, Strategy Implementation Process 148 easons to Pursue Expansion Stratepies 108 $1". Aspets in Sttepy Implementation 19 Issues Involved in Expansion Strategies 103 $45. Rarer to Strategy Implementation 130 Suitability of Fxpansion Strategies 105 $196 Guidelines fr Overcoming Briers in Suategy 150 ‘Types of Expansion Strategies ws Implementation Soa OS 53, Sirategy Implementation throwgh Structure 1S trategies 106 $2.1. Introduction i ‘Types of Diversiiation Strategy 106 $32° Role of Organisational Structore in Strategy” 1ST2 1a. Td. 712 713. 744, 115. 718. 7A. 718. on 721. 722. 7221 7222 72.23, 7224, 723. 724. 13. 73. Aen against CSR. Arguments 2 ategie Management Inoduction % dae of ussite DEH, Treats to Sustainability ond Business SUEEY ‘Social and Environmental ay aves in Satie Management ‘Triple Bottom Ling (TBL) * ‘eaing of Triple Bottom Line People Planet Profits Griticism of TBL Exercise A Module-IV. Chapter 7: Management of Change Change Manaaement (eaning and Definition of Change Mana; Objectives of Change ee eagerness Manan Paned Change art Lewin's Model of Change Mi . Senegesf Change Managenest Inporance of Change Management Genes in Change Management Gut anaging Change Inroduction Glalengesin VUCA Wold Wolite Deating with he pact of Tech Soce Global Skills Shortage nolony Complex: Increased Regul Ambiguous: Or ion-Wide ganisaton. Ambiguous ton-Wide Leadershi pare ‘ing a VUCA Environs ‘ Sima iment with a Patrereneurahip feaning and Definition of E ion of Entrepreneurship F partic Oakes in En paren Dfistakes in PaNepe Coo eae tion Introd ies of Corporate Eta act ter corporate En ee of Corporate —s ip ance of C one Entcrprencursnl rate eurship eurial Mit ssiratesic © Exe! . Contempo! er 8: ChaP rine Ocean Straten action ‘ modi of Ble Ocean Sten parapies of Blue Ocean SUSIEED Diiference sberween Blue and Rey Suratogies O is Suraegy Cannes and Value Curves f a Four Actions Framework 1 6815. om inate-Reduce-Raise-Create Grid 176 $557 ue Ocean Shift ¢ ie _ Introduction ; fad Inumponents of Blue Ocean Shift He Compare Step Process of Blue Ocean kt " Getting Started 182 The State of Play ' 182 ‘What Could Be 182 ve. A Structure for Blue Ocean Cz 183 ‘Step Five: Making the Move 183 Innovation ; 183 Introduction 184 Essential Ingredients of Innovation | Sources of Innovation ; Innovation Process } Innovation and Entrepreneurship i Gretvity versustonoyation ov ss | 185 ‘Innovation in Developing Nations 1 ne Jugsad innovation * j 185 Introduction 1 ry Characteristics of Ju , | i 's of Jugaad Innov | i Principles of Jugaad Innovation 189 p Raportaee Bt ligand Insocnatee 189 oss. Grassroots of Jugaad Innovations | tor 85.11. pmseots innovation * ior 8.5.1.2. Cha = 193 85.13. Sees Ps ies of Grassroots innovation i 85.1.4. Chalten, mote Grassroots Innovation 193 Gtalenges of Grassroots Innovation 183 Paton of Grass tanovaons tog Case Studi 195 Solved suid a Solved Paect 2015) . 196 Solved rant 2016) 196 Solved Paper (2017) Paper (2018)redaction to Strategg Managernent (Chapter 1) Chapter 1 Introduction to Strategic Management is derived from a Greek word “sirategia", which, means “generalship". The term strategy "entered the business world from mi litary services where it was originally used, Strategy works as a blueprint oa organisation that defines its vision, mission; and also helps in determining the’ futiite course of action. Strategy lps ‘an organisation to minimise the strengths of competitors by maximising its own strengths. Strategy is formulated to achieve current goals of an enterprise by optimum allocation and utilisation of internal resources and by collaborating | different organisational pursuits - q Strategy tries to achieve synergy and balance between objectives, resources and concepts to maximise the possibility (of success and fruitful results. In wider terms, strategy refers to determining the fundamental long-term ‘organisational goals and at the same time developing plans, acquiring, allocating and deploying resources in order to "achieve those goals. The purpose of formulating strategy is to bring consistency and aligriment in the activities of an ‘organisation, which can be accomplished by various endeavours, methods and resources. _ According to George A. Steiner, “Strategy means deciding the basic mission of a company, the objectives which it seeks to achieve and the policies governing the use of resources at the disposal of the firm to achieve its objectives”. According to Alfred D. Chandler, “Strategy is the determination ofthe basic long-term purpose aiid objectives of an "enterprise and the adoption of courses of action and allocation of resources necessary for carrying out these goals”. ned to assure that 4 _ Pecording to William F. Glueck, (Strategy is a unified, comprehensive and integrated plan d ‘the basic objectives of the enterprise are achieved”. 7 According to Igor Ansoff, “Strategy is the common thread among the organisation's activities and product markets | that defines the essential nature of business that the organisation was or planhed to be in future”, "_Swategy is ot as simple as it seems to be. However, a logical understanding of its theofy helps to grasp it and work with "More ease. Theories help in understanding various concepts related to strategy such as definitions, terms, assumptions and _their explanations, propositions and related hypotheses, and the techniques used to test and modify them,’ 1,2. Nature of Strategy ‘The nature of strategy can be understood by following points: 1) Provides Structure: Strategy strives to establish and communicate the image of the organisation with the help of its various goals and objectives. Strategy develops a fundamental roadmap for providing guidance to the enterprise for making rational decisions and achieving organisational goals, Integrated Approach: A good strategy follows an integrative approach for allocating iniernal resources and using them for the benefit of the entire organisation. It directs and supports the enterprise in taking necessary decisions for maximising the strengths and facing the environmental threats with confidence Relates an Organisation with the Environment: With the help of strategy an organisation can iatesact with the factors of external environment so that the management can take necessary steps to achieve the Boals. Hence, formulating strategy is an important activity by which the enterprise catt relate 10 its ¢ Set of Actions: Strategy is an arrangement of different actions that are taken in vi Certain objectives, or to solve some problems, Future Ortented: Strategies are form handled by the organisation, Hence, it nisational ironment, arying situations {0 achieve ed (0 solve problems that are new and have not been previously be said thivel is fuiure-orientedi | 9) Business Strategy: Bu | 10 (Modute-1) MBA Third Semester Stagg, § Combination of Internal and External Factors: Sirategy tres to match the intemal streng portunities and threats. Therefore itis a combination of internal and extemal ths factors of the enn 7) System-Oriented: To work efficiently, strategy operates under a certain system that cons, standards, followed inthe organisation. 8) Involves Contradictory Actions: As strategic ations are influenced by environmental decisions taken on the basis of the suralegy may be contradictory in nature. Th simultaneously or consecutive'y : Factors, 1S ction 1.13. Levels of Strategy y ws J 1 Tis worth stressing that strategy exists at different vel in the organisation. Once mariagers have det ‘business, what will it be and what should'it be?” Then they have a basis for seting challenging Perfomance objectives for formulating sateies to achieve them. The desired outcome is the era objectives spanning the organisation from top to bottom and the formation of a corresponding hie. achieve the objectives at each level inthe organisa ion of archy of jon, There ae three levels of staeay a8 shown in figure Bies are also cal Unit (SBU) level strategies. A St separate market segments catered by segment due to the differences in {Tormilated to satisfy the needs of the Hence fulfilling the demands of cus increasing and sustaining its competitive advantage, For Turnaround strategy that had positive effec ‘lear goal that was, “have a clear wi 3) Functional Strategy: the company. Busi their environmen ‘omiers of different segme tomers belonging to differen hts and also to provide valusi Segments helps the organis ample, Domino's Pizza owes its ss 's due to the organisation-wide efforts of achieving a sis human resources, R&D, etc. Various Strategic decisions at functional le tices and value chain. The Functi ‘gies are focused on expan Aiccnblementng the business level statics Bes manner Fe ites input othe higher level strategies auch vs tar level and comport into action plans for various dep are needed to be cat level for information and comporate level are formule associated with business pract synchronising the resources level of an organisation prov example, marketing strategy can he broken ino u rans fanetional level strategies such as pricing st ‘Hstribation strategies, promotion strategies, sales station eneAriznbcton wo Strategic Management (Chaptet 1) 1.1.4. Significance of St Following points highlight the significa 1) Provides Directio Strategies direct an ryamietion to achieve ts Boas, Organisation lose their purpose in absence of proper guiding strategies. tates Decision-Making: Strategy facilitates 2) Facil tives decision-making as strategy and strateg point of reference for any action, act as Ensures Proper Allocation of Resources: A good 2 strategy helps the organisation in allocating the resources in an efficient manner. While formulating a strategy, the strategists have to keep in mind! the information that they have access to, and appraise all possible outcomes before selecting a particular alternative 4) Synchronises Activities: Organisations can also be benefited by developing a master strategy that encompasses the entire organisation. This comprehensive strategy-helps the organisation in synchronising the strategic initiatives taken at different levels. ‘A companywide strategy also ensures that there are no variations, and all the departments are working towards achieving a single goal with minimum conflicts, soverlaps, and contradictions in the organisation. 5) Improves Communication and Commitment: Strategy helps in configuring companywide ‘actions, communication and level of commitment between different departments of the organisation by giving a clear description of the vision and responsibilities. 6) Enables Comparison of Alternative Actions: Strategies. help in analysing the records of previously-adopted strategic initiative and allow the top level. management to compare the altemative: actions and select the best option among them-for different business units. This ensures that the valuable resources are allocated optimally. 7) Helps Accomplishing Goals: Strategies enable a company to achieve its goals and create a market position by allocating resources, providing proper training to employees, enhancing the capacity of production, etc. 1.1.5, Emergent Strategie: Mintzherg and Waters have defined down five types of strategies in their model (figure 1.2) ~ emergent strategy, intended strategy, deliberate strategy, realised strategy and unrealised strategy: Figure 12: Detberate and Emergent Strateres ‘Some of them are as follows: ie 1) Emergent Strategies: Emergent’ strategies are responses of reactions from the organisation 10 unexpected problems and opportunities that arise in the firm's external environment. These occur typically at the implementation stage of the strategy, ie., at the business unit level rather than the corporate headquarter level. In an organisation, take place with the absence of intentions. 2) Realised Strategy: Realised strategy is the combination of the emergent strategy and the intentions of the organisation. This strategy can be realised with force of reference from the external environment. a juguer >t s 3) Intended Strategy: Intended strategy is a strategy which is framed by the top management of the company. This is often the end result of the process ‘of negotiation, bargaining and compromise involving different interest groups and individuals of an organisation. Mindzberg and Waters say that the realised strategy is the actual strategy implemented by the organisation and only 10-30% of the intended strategy is realised by the organisation. ‘This model is best viewed as a process especially if the factor of time is taken into consideration. The model clearly shows that the realised strategy affects the intended strategy with the passage of time. This implies that the current strategies that the firm employs will impact its future strategies. ST Figure tt: Strategie Learning12 (Modules) 7 Organisations can be classified into two extreme types of strategies. they can cither be deliberate strategy or ‘emergent strategy. Every organisation specifically has one of the two types of strategies involved in their process. For being a deliberate organisation, it should have clear intentions and relative level of details. Whereas, for applying emergent stéategy, the organisations should be Consistent in the actions over time but they do not have any intentions. In the real work, its very difficult to find organisations which belong to these Iwo. types. But according to Mintzberg and Waters, there are many ‘other strategies other than these two strategies that are ‘much common nowadays, Mintzberg and Waters have lasified those strategies in eight types 1) Planned Strategy: Under this strategy, the organisations have clear cut ‘intentions and a formalised control system. \ The strategy is controlled by a leader with clear intentions and it is the duty of the manager’ to’ transform’. those intentions into actions with minimal or no changes. A planned system is created so that the actions are followed in the same mantet as intended: sey igure 14: Planned Strategy For this strategy to be successfil the extemal environment of the organisation needs to be very stable and predictable, in such an environment, the organisation can employ larg number of resources and adopt a rigid command style of work pattem. A good example of a planned strategy is the mining industry, aia 2) Entrepreneurial Strategy: This strategy is very ‘much planned but also has a little scope for emergent strategies. The owner has. direct and, substantial ‘control over the business and its vision ard direction are dominant in nature. This strategy is mainly applied in new ventures and businesses, For example, several new ,slartups in areas like technology ‘and e- commerce. Unlike, a planned strategy the intentions are not so clearly Iaid out in an entrepreneurial strategy. However, the leader isthe superior authority and organisation is responsive due to which strategy Temains deliberate. The strategy evolves from a single person and therefore is liable to sudden changes and transformation, As a result, the entrepreneurial strategy is more adaptable than a planned strategy, ‘The adaptation and emergent strategies. are not possible by definition. In a planned strategy, aniculation ofthe stratepy makes it mote rigid than an entreprencurial strategy. > > oe Figure 1.5: Entrepreneucial Strategy MBA Third Semester (State, / SS SS | Figure 1.6: Entrepreneurial State 3) Ideological Strategy: The ideo, originates from a shared vision in ay where the organisation collect certain goals and objectives. This a, and articulated in nature which pat perceive intentions and the result ae forms a collective vision consinye members of the organisation une entrepreneurial strategy which a, centric and passive in nature. Since strategy has a collective vision; it to make changes in the strategy as it = several changes in the mind- — = —> > — ——— — — Figure 18: Umbrella Strategy Process Strategy: Process strategy is parallel to umbrella strategy. In this type of organisation, the members need considerable autonomy 10 decide on strategies to achieve their common goal. Because of which the environment is Volatile and unpredictable. In this strategy, the leader controls the strategy indirectly by deciding ‘on the process that has to be followed while making the strategy. ‘The elements of the strategy can differ from time to time. Therefore, in such organisations the strategy can be both emergent and deliberate at times. In other words, leadership designs the process or systems from which other patterns of strategies are developed. blidididd —>=— av > —> > ee ee —_—-:~—s > Figure 1.9: Process Strategy Unconnected Strategy: The unconnected strategy is the least complex of all strategies. In this, every part of the organisation which could be a subunit or an individual can develop its own strategy without any relation to what others are doing in the organisation, There is no central decision maker who forces his thoughts over other members of the “organisation, In that way, the intentions are not so well-defined and the strategy is very clearly emergent. However for the sub-units, their strategies can be considered deliberate on emergent while for the organisations 48+ whole, the strategy remains emergent n 8) ——E ~ > az Figure 1.10: Unconnected Strategy — ~ — = Figure 1.11: Unconnected Strategy Consensus Strategy: A consensus strategy is emergent in nature and is characterised by the lack Of intentioris. In this, the various members of the ‘organisation agree upon a common pattern or strategy and this becomes pervasive to the organisation. This does not require any central direction or control. The consensus strategy evolves from a common understanding between the various members of the organisation and this leads to the evolution of a strategy which works for the organisation in its environment. This common strategy occurs through consensus of ail the members of the organisation and not through a process of intentions shared by top management. ‘The essence of this strategy is its collective actions and individual intentions. ™ aN —™, —— BF Figure 1.12: Consensus Strategy — > Imposed Strategy: An imposed strategy emerges from outside the organisation and is imposed on the ‘organisation, In this, the external environment forces the management of the company to adopt a particular strategy. Here, an extemal group can Uirectly impose its decisions and strategies over the organisation, It mainly occurs. when @ company takes over another company. For example, when Parle sold its Thums up brand to Coca Cola and Coca Cola imposed its marketing ‘and sales strategies over Thums Up brand, The make a choice between The environment organisation's organisation has 10 determinism and free choice. builds boundaries aroundME etatute performance just like the tpn Under umbrella strategy. No choices are available for the organisation and the environnient rarely ‘opens up with all the options available. - These eight str Waters theory. ‘Their theory many companies which belong t0 the two ertg 8, Most companies follow one of they re Figure 1.13: Imposed Strategy. Mt yay. 11.6. Difference between Strategy and Tactics ‘Tactics are. the means of implem dealing with momentary issues. o1 planned or unplanned. ‘The strategy of an, organisation, jg jframed. by the bo departmental heads which are relayed, for int between strategy and tactics are as follows: 1 onoy alt i cian Difference between Strategy and Tactles wenting a strategy. They represent, those s moving ahead towards the fulfilient of the grand strategy. T wd of directors whereas the tac plementation at the frontline managerial level. The key dil MINA Tint Semester (StaHeHK Maney, = Pttt Figure 1.14: Imposed Strategy pies form the basis of Minti ays that there a tagerial activities Which are ge Factic an tey cs are decided Basis of Difference Strategy Tactics 1) Level of Conduct ‘They are frained by the top management and are never delegated to lower managerial levels, 2) Nature ‘These are typically framed and imple /Stetegic. problems of an organisation are of Lnstructored nature, 3)_ Time Horizon by the lower strata of management The tactical problems are generally structured in nature, ‘Strategies are developed for long penod of time Tactics are f 4) Importance Strategies are very critical for an organisation : because they chart the furure path thatthe Organisation will take in the pursuit ofits goals. 5) Values «for short period clas ‘Tactics are not much important as Ge more concerned with the local issues The strategic decisions of the organisations are highly influenced by the personal values of the *__| petson(s) framing the strategy, 6) Level of Personnel ‘management needs to tackle ‘Tactics are generally free from the GA of personal values as they are & ‘There is a Separate team of Involved the strategy of the organs ‘managers who frame ion, through strategic decision-making Tactical decisions can be taken level of employees as they invohe® 7%) Level of Certainty | Strategic decisions are inherently mow uncemala and involve, the synthesis of information from ‘many sources. execution of strategic decisions ‘They are generally more certain ax framed keeping the strategic goals int ‘The impact of strat observed across all segment organisation, decisions canbe IS and levels of the | Generally ate less detailed in nature, Formulation takes place fio | viewpoint a _— 1 impacts of strategy ate more long lasting and difficult to change, For example, planning n 10) Formutatio the corporate 11) Impact new distribution system ofa new plant 12) Superiority A stintegy can be considered a superset or a superior action plan, more localised & s being implemen! ‘The impact is department where iy a lop ea lation takes place from the fun The impact of tas tes 16 pot tong Be they are fr amed for vhoxt penal of te ‘tactic can be considered ata steel action for a particutar strategyTnatucton to Strategie Management (Chapter 1) her tetuiy- Wate} ied MANAGEMENT. 1.2.1.° Meaning and Definition” of Strategie Management Te words “strategy” and “management combine to orm “strategic management”. State man cance withthe formulation of ain strategy formulation, strategic implementation and making changes in the strategic intent according to the changing requirements of the organisation. Strategic management begins with the formulation of ‘mission statement and selting of objectives for. the organisation. Then a portfolio of business or business model is prepared, anil ends at conducting functional activites to achieve the’ pre-established objectives and goals, According to. Ansoffs, “Strategic management is a systematic approach to a major and increasingly important responsibility of general management to Position and relate the firm to its environment in a way which will assure its continued success and make it secure from surprises”, According to Glueck, “Strategic management is-a stream of decisions and actions, which leads to the cevelopment of an effective strategy or strategies to help achieve corporate objectives”. According to Lloyd L. Byars,{‘Strategi management. is emed with making _decisions__ about lecisions”. The concepts of strategic management have developed over the years. Stritegic management is not a’one-time Process “but i" re-evaluated and implemented Periodically. It is‘ holistic approach that ensures that there is harmony ‘between the organisation and its environment. Hence, strategic management is concerned with different organisation-wide activities such as analysing the environment, providing direction, developing and implementing strategies, and applying strategic control measures. 1.2.2. Characteris Management Strategic management is a decision-making process that is depicted by the following features: 1) Long-term _Issues: Tmanagement handles arc usually of long-term in nature. These issues not necessarily affect the ics of Strategic organisation immediately but will benefit the The issues which strategic Is Ofganisation in the future. Kor example, if a Company spends in the education ofits employees, AX may not witness increase in productivity in the short-run, but in due course, highly educated emplpyees will deliver better re: ts and will also help in increasing the returns, 2) Competitive Advantage: Strategic management assists the managers in looking for fresh avenues for achieving sustainable competitive advantage When strategie management principles are applied regularly in'the proceedings of the organisation, Managers can increase the number of satisfied Customers, provide goods and services at economical’ prices, and can develop a highly satisfied workforce. 3) Impact. on Operations: An effective strategic management pi affects operational issues Positively. For example, if increase in salary and Performance are correlated then this would increase the operational productivity, as the employees will bbe motivated to put more efforts in their work. Operations decisions are the ones that involve topics like deciding the best way to handle sales with particular segment of customers or making decision regarding ‘selling products on credit. Decisions concerned with operational issues are made by lower level managers. 4) Uncertain and Future-Oriented: Strategic management makes decisions regarding situétions that would occur in the future and are not a part of the day-to-day activities. Managers are ignorant about the aftereffects of their decisions because of the dynamic and uncertain business environment. 5) Complex: Since strategic management is uncertain, “Whecomies complex as well. Managers come across situations related to the business environment that are not easy 10 understand. There is a need for analysing internal and external environment. 6) Organisation-Wide: The implementation of strategic. management affects the entire organisation and not merely the operation on which strategic management principles are applied. It entails strategic choices and is a systematic approach. 7) Long-Term Implications: ‘The implications of Siraiegic management are long-term and donot affect the routine operations of the organisations, The concepts of strategic management are concemed with mission, vision and objectives of the organisation. cilltates. Strategy Implementation: Strategic management makes sure that strategies are effectively executed and implemented with the help of action-oriented plans 8)A Thin Sees Sa 16 (tet “yy f Strategi A. Basic Model of af Strategie 1.24. 12.3. Seope Ny Neuer a | Managemen fae Themes‘ sai nse ee aguchies devin th ste oh sti, i vane iat opadiny ing e Te A Andstt, ice tee Pte sg ‘tthe tat ill hep the orgaistion cea lnaees vchovtarielh performance. tae Nest tie ee r th cons ints tht a "eat mim tcart ie, ane nt ene free a ee ec management also enables. the rai eee hat itis ale to con 1s the fel tht is concermed with monting the reise gols _ hah ea ee Patens. of competes to grinse their and potential comp ‘ongeite statyes hit podacton rcs, ‘management is shown in Figure As; | sey, cer ease — ai age Pert ce. Hace compet in mak, Suez magenta ako fen ying evel oe rears wi he radon wel ser ‘UL "hte ie on tse pe or Madi Sp | 2 ed in ee see 2) Envenmensl Semin: fy | wut oF Me vtec Seatning. isthe monitoring, eal Gouin ives. siege titel rvionments to hey people yg Stina jee by ea Capen. 18 pape i 0 eg feos = tse evel bd intl dag ‘Will determine the future of the simples vat conn! etvineng ‘through SWOT. analysis. SWOT ise Wed 10 descibe tho pariuar Weaineses, Oporuiis, an The Seiad for asp company : i) Extemal Environment xa ne re ance ge + SOUS of ares (Opp Bnei en HE Trae eae oie opie | ete sgircate es eo "ol ypilly within the sheen cat ‘le: ead: enptaseson contingents management. These variables fora meta’ SM ashing ees Wiha which he compton ais inte Hon nd ae eae 8) Inet Environment nei pe fear ites hi sa ot '@ compotion cows. ft filo suiy tht rig concertgoers, (Steigts and Wealaesiy) ha get ac bis pai bat enston ist an ae ot us ‘tehanded fete, run contol of tp mansene 4) Management: eae management stives to ils forthe cont in i achiev the orarsinal goal by comtinoady They inl he comers ncourazing internal capabilities and vllising the Lett an tesoucs. Key strengths ROT in an optimum way so ha he not of oe sharcolder¢ empeencies that the cone an be said. 11 deals with Ses conpei atvnuge soding the ccions me by the op 2) Site Focmulaon frnegeneo| forthe ssl cevopmentc he pea fon tganistion. isthe regenbiliy of ie Statgy ft lon toy Blas ht Management o deny the environmen actos nec pt sel na Senility pod that inure the orgnistion, epi te Sry eration is eset € Opponntes and teas eisig inte ati a ‘veaiton, tn envionment. and formate the steies SListet eed by eating el crim fo ANegastga inte lagcstcton to Suategie Managesoent (Chapter 1 Once the current and the future situations of the corganisatiin have been determined by the ftrategists, SWOT analysis is used to identify the core competencies and strategic capabilities and leo to-set objectives, in the order in which they have'to bé achieved. These objectives ate further used in developing the strotegy. Stratrgies define the course of action an organisation would choose to reach its goals. An organisation's strategy should te formulated in a way that the’ anilySis| of the avironment can be studied, Vision’ ‘of the organisation can be accomplished,’ and the set ‘objectives can be attained. Strategy formulation involves administering the external opportunities'and) threats ‘effectively while keeping in mind the strengths and weaknesses of the organisation by formulating long-term plans., This involves developing the corporate vision, identifying corporate mission, setting realistic objectives, formulating strategies ‘and establishing policy guidelines, which are as follows: 1) Vision of the Organisation: An organisation's vision statement can be explained as a position ‘that the organisation aspires to achieve in the future. A vision statement is developed by the top. management which may include CEO, President, Managing Director, Chairman, etc. ‘A vision statement conveys the future state of being with respect to objectives, scope: and competitive leadership to the individuals that are in some way or the other associated with organisation. It creates an outline for facilitating the growth of mutual relationships between the ofganisation and its stakeholders, i.e. its investors, employees, suppliers, customers and other entities, directly or indirectly associated with the organisation. It helps in forntulating general objectives relating to performance of the organisation aun its expansion in different industries essential for the development of the organisation. The basic idea behind formulating a vision statement is to provide a concentrated view of the organisation, It is a combining statement and also a challenging task for the entire organisation and all the diverse sectors that ‘work on achieving their respective objectives. This statement provides employees with a common goal and stimulates them for conducting their routine operations efficiently. It encourages the employees to perform cthically and morally inline with the organisation’ expectations. 2) Mission of the Organisation: A mission statement describes the reason for existence of the organisation, It specifies the organisational culture and values and also sets the guiding Points for carrying-out the activities of the business organisation, Strategy of the organisation is formulated on the basis of the mission statement. A mission is & unique statement that defines the products, markets ‘and geographical scope of the business, market price, etc. At the business level, this statement becomes exclusive and focuses solely on the details. The facets of the mission statement denote the vision of the organisation towards strategy formulation, aim of the organisation and the perfection required in order to attain market leadership. 3) Objectives: Organisational plans are usually long-term and they craft long-term objectives. These objectives envelop areas like organisation's profitability, competitive position, public image, retum on investment, productivity, growth of employees, ete. These objectives should not be vague, and should be clearly defined and in quantifiable terms. The objectives of the organisation should be challenging yet realistic. Objectives are the results that one expects out of the business activities. The objectives of an organisation symbolise that the management is committed towards achieving the desired results under @ specific time period. They also help in setting performance standards on the basis of which the performance is evaluated. These objectives help in developing strategies by creating harmony ‘between the decisions and decision-makers. 4) Strategies: A strategy of an organisation is detailed plan which helps the organisation in realising its mission and objectives. Strategies are formulated for achieving competitive advantage and minimising the factors that result in lowering the position of the ‘organisation. For example, when Tata Group cof Companies comprehended that itis not able to meet its objectives with its current strategy to diversify, it sold its subsidiary companies like Tomco, Lakme, etc., to Hindustan Lever Limited, It decided to carry on with its more basic businesses like automobiles and steel where it had better prospects for growth and development. 5) Policies: Policies are a set of comprehensive instructions that are used for making decisions tnd for relating. strategy formulation with strategic , implementation, Policies are formulated by companies so that an3) Procedures: 18 (Medule-) organisation's mission, objectives and strategies are kept in mind while making decisions. Policies also focus on achieving corporate goals by ensuring optimum allocation of resources. A business policy is felated to duties and responsibilities of corporate level managers, Long-term! strategic decisions and factors influencing the success of the organisation, 3) Strategy Implementation: Once ‘strategies are formulated and a sound strategic plan has been developed, the next step in the process of strategic management is to ensure effective implementation of formulated strategies. Strategists need to take into account various facets of itaplementation as the selected strategy must’ be effestively put into action for realising corporate objectives of the organisation. Without successful implementation, a well devised strategy is of no use. Thus in short, Strategic implementation is the process that facilitates in successful execution of the selected strategy. Strategies ate implemented with the help of Programmes; budgets and procedures, . This Process may also‘result in iodifying organisation's culture, structure or management system. ‘The Process of strategy implementation is generally conducted by the middle or lower management after being “assessed by the top management. Following plans help in successful implementation of the strategy: 1) Programmes: The actions or steps needed to implement a single-use plan is. called Programme. Programmes help in putting the Strategies into action. Activities like corporate restructuring, changing organisational culture or initiating a new research project, etc., are a few examples of programmes. 2) Budgets: The declaration of organisation's Programme in monetary terms is called a budget. A budget represents in detail the cost entailed in cach programme. Budgets are generally used in the purpose of planning and control. A budget along with providing a comprehensive plan of the selected strategy to be implemented also illustrates the anticipated impact on the organisation's financial future with the help of financial statements. Also known as Standard Operating Procedures or SOP, a procedure is a step-by-step explanation of the order in which a task is to be carried-out, Procedures generally Provide an explanation regan operations that are necessary for programmes, ng number of ompletion of 4) MILA Third Semester (Strategic Mag, Evaluation and Control: After implemented successfully, itis impon,S evaluated on a regular basis. Bvaluaggt incorporated in the process gf management as an essential element ot implementation, as it helps in monitoring ! procedure, Strategic objectives ang measures are used as a base for eva, effectiveness of the implemented stray, « important step for attaining an impani?| between expected and actual results manager's duty to monitor the expectey from the different organisational business units where the strategies ag action, Analysing the market response } significant part of strategic evaluation aq, Various factors such as size of the business activites, number of busines organisational struct2=2, stc., determine to which strategic control is neces should be imposed in a manner that it peg intended remedial action. The amount ¢ that needs to be imposed is based on thea, between expected and actual results. Performance is the final outcome ¢, activities involved in the process of ¢ management. Strategic management prig become widely accepted as it eth Performance of the organisations. Mane: comprehensible, timely and impartial icy from their subordinates in order to sxx carry-out the activities related to strategic et and control. This information enables te 2 to compare the aétwal outcome with the results laid down while formulating the sz Successful evaluation of strategy is ts suitable and prompt feedback. The effect Strategy evaluation depends on. the ist Provided by the subordinates. It plays 353 role in monitoring the soundness of strategy. If evaluation is done contisat would provide a regular feedback ¢ Performance of the strategy that wast formulated. The process of strategic met also has a feedback activity, which ex? Management to attain feedback ese? evaluation of results and for taking the * femedial actions. When an organisatoe Strategies, programmes etc., it should a2 decisions and take corrective actions regs ‘rong decision made in the past. For & Performance below the desired level SX cither strategy formulation or implements fault. Ttis also possible that an important New competitor was overlooked at the environmental scanning and analysis.Inteubtion Stage Management (Chapter 1) 1.25. Significance of Strategic it can. be ‘The importance of strategic manage explained with the help of the following point 1) Fulfiling .the,, Responsibilities of, te Board ‘Members: Ono of the most important reasons for implementing the process of strategic management finan organisation is that it relieves the :board ‘members from their duties. sonia Voges hb ghd 2) “Hetps in Assessing the Objectives: . Strategic management relieves the board” and” senior management from their daily tasks'to soine’extent so that they can focus on securing the future of the organisation. Disciplines. of;strategic management help the organisations;to)gain-avwidet petspestive instead of putting all hehrefforts in meetingishort- term challenges. pasar ste 3). Develops a Decision-Making Framework: With the help of,an,appropriate:strategy, employees are able to make routine decisions within a framework while ensuring that those decisions are contributing, to the progress ofthe organisation in one direction. ‘Strategy helps it Setting the vision, checks reason for existence and values of the organisation, defines its objectives, differentiates between threats and ‘opportunities; identifies techniques to enhance ‘organisation's strengths and minimise the ‘weaknesses. Thus, it defines an outline and specifies the limits within which decisions are made. 4) Helps in Measuring the Progress: By implementing the process of strategic management, the organisation is forced to establish objectives and set measures of organisational sucess. In order to establish success measures it is important that the organisation analyses the factors that are crucial to its current succéss. Then the organisation peeds to revise, re-evaluate or update, and then implement its objectives. It-is also important that the board members’ and corporate level managers are also aware of these perforriance measures. 5) Provides an Organisational Viewpoint: While handing the operational issues, managers generally tend to overlook the interdepartmental issues or the issues related to the organisation as a whole. Strategic management considers the organisation's Viewpoint and also lays stress on the interrelated sectors so that a strategy that is beneficial for the entire organisation is developed. 6) Improves Stability: There are certain strategies that provide strength to the organisation by opening more avenues of growth, For example, if a business deals with only a couple of clients, then in onder to survive, it i notin the position to Jose any 19 ‘one of them. Strategic management aims at helping the organisations in acquiring more customers so that the business is no longer dependent on only few clients. By implementing strategic management, an organisation can enhance its stability by executing strategies like — developing @ new product line. acquiring a new company, catering a new customer segment, etc, 7) Strong Labour Supply: Strategic management helps in conducting hands-on staffing practices so that quality and quantity of labour can be impfoved. ‘A strong workforce can be developed by - preparing organisational charts, providing ‘employees. with comprehensive job description, refining ‘recruitment policies, conducting yearly appraisals, organising training sessions, taking measires "to lower employee tumover rate, preparing’uccession plans, developing competitive compensation plans and abiding by the 1.» and regulations related to central and state government. 8) Strengthens Brand Management: A company’s brand image can be damaged by introducing a new product in the’ product line or by acquiring a company that does not match with the market image of the organisation. Strategic management keeps in mind the objectives of brand management while making organisational decisions. 9). Identifies SWOT: Strategic management scans the organisation's environment for identifying the strengths, weaknesses, opportunities and threats that are faced by the organisation as a whole, as well as by its separate departments. Once these are identified, it becomes easy to find out the issues related to the product line, marketing channels, pricing methods, marketing practices, staffing practices, e-commerce activities, etc. 1.2.6. Limitations of Management Several drawbacks of strategic management are as follow: 1) Time-Consuming: Strategic management process is extremely time-consuming. An organisation has to put immense efforts and resources for implementing the process of strategic management, Strategic 2) Challenging Process: Implementing the process of strategic management is quite difficult. Tt takes a highly skilled and specialised workforce to craft and execute a strategy. A Master's or Doctorate degree in the same discipline is needed to become a strategist. Appointing these strategists or working with an organisation providing strategic assistance is generally quite expensive for an organisation.2 fede. 3) Absence of Short-Term Benefits: Athough the investors are interested in achieving quick foams, the rewan’s for applying strategic anagement prisciples can be realised only in te kenge. AL times, strategic management sacsee. short: ferm hesses for the oeganisation in onder tw deliver Ieog-temm tenets. Thesg: sheet tert tosses can diminish the vale of the Qeganistion tharmay canse ito shutdown. “sel *) respected Outcomes: Many. coacepts of stategic management ane related to making Aay significant political o¢ Suamcal chinge ia the environment may lead to ‘eouls that would be toealy different from those BBESSS swoicted while formelating a ste Nis very challenging to pratict future busines Getomes due to the dynamic nature of the exvircoment, oe UA Mt Set Shae \ Heo, ich ivan managenyent came PVE LW My coxganisiion, 3) Pour Adaptability? SWaloghe oy eteate Mleibility aut Went sxganation an hes aay the fngaisation 80 FEHR He Chay eviews a esl the oa New esate nical ph steer cleat of the thieats, 8) Limited to Set of Rules AI Opa Avi te paves of ae gt {0 sone present noms, pop sels ssn thy th di) situation in prescient ant Tis takes stage tage ty of bates ant manager rather tha aqyoch, This tevwmies 4 hide fenton e ween Business Policy and Steateyic Management (aietbitews | tae Bais Niky Strate Mansgewa 1D Mei |B sites guiktnes fee manage w bbe Th als with state SePRPTAE daisons |> Naure Risa geen defined Rene tits. itis stv ower ic delegated the implementation Rutivies are guidelines ——_} | 10) Overall Goal | ‘ont the manage ation seure of action with no 2 pie W action in amas ef epRtNe ee Policies are thought orienta satvatiates ee Tuticy is in general outed with the coarse of ation to fl he setabect [Pty isan over gue that goveme aa 1 Metsu a Yongsteum ah of at erage emgechctsve jan of atc dnd |sctain ypecitic sous Wis a cans ot patting a pigy yao vith ecttain te himits 1 deals with those decision whch ba Keen covuntenat before i ge these « fe which no pestered and ee ‘ealeweatesjunses exis it the expe hit are inapontant in tes them somite the recent set She nib deckoes are feoltah thee lly deal With rwvial eciwes Sts HEEL ant ingen ty finger egies constant et sterrinkpenaty typ managers Ritsies ae sates oe emgaly fies ae ect Bolom at mae TANS ann atienrtesta Stites te ation wieigd "enone ie empowered to ingle ate Stategies ate means toa end Stategy is conceal with wnt NS Joownpettve siaions, an tisk tel Moly oak 6 HAE a a Ke date State is deployed we ati te esos in he Bea interest th atae © BME BERLE +A stakeholder Renee Udy (elas) 1 tee BUSINESS 13.1. Introduction . defined_as_an entity (a, person, on) which has a in_the roup_of _ofganisa organisation. This stake can be direct or indirect; Some ‘Of the major stakeholders of an organisation ,are_its employees, its directors, creditors, suppliers, the own ae ee Gustomers, the government and the community at large The relationship between the stakeholder and ‘organisation is two-fold_On one Rand, the stakeholder has the power 10 influence the decisions, policies, actions ‘and practises of the organisation, Witife ox the other hand they also get influenced by these’ facigiss ‘The stakeholder can thus be defined as “an individual, a group, or an organisation that gets affected or affécts the actions, policies, or objectives of the organisation.” For example, the product’ rharketing of ‘an’ organisation affects ius customers (better products), employees (greater salaries; incentives), suppliers (orders for raw material, packaging), creditors” (credit for the growth plans ofthe organisation), owners (retiims on equity), the government (inezeased corporate taxation revenve), etc. Various stakeholders of an organisation have differing objectives. The stakeholders are dependent on the top management of the firm for maximising their returns. ‘The management of the firm often has to’ play a balancing role between fulfilling the needs of the firm and maximising retums to stakeholders, For example, the stakeholders are concerned with maximising returns of their investment in the form of dividends, bonuses, salaries, incentives, etc. The leadership on the other hand would want to spend more on research and development department which increases the productivity of the organisation’‘and makes it more future-ready. To, achieve this, the stakeholders need to forego short-term benefits. This balancing act is done by the leadership of the company to meet the short-term benefits of stakeholders and long-term investments of the organisation. According to Bisset, (Stakeholder is a person with an According to R, Edward Freeman, “A stakeholder in an organisation is (by definition) any group or individual who can affect or is affected by the achievement of the organisation’s objectives". According to Post, Preston, and Sachs, “The stakeholders in a firm are individuals and constituencies ‘ht contribute, either voluntarily or involuntarily, to its ‘wealth-creating. capacity and activities, and who are ‘tesefore its potential beneficiaries and for risk bearers". a 13.2, Roles of Stakeholders in Strategic Management ) Votin; g and Decision-Muking: Stakeholders have a'Vbry important role to play through voting. on various issues relating to the organisational strategy. Stakeholders ean be involved inthe decisionmaking process and voting, which i, conducted. annually or during a meeting. ‘The stakeholders can intervene in electing the management of the organisation which is sponsible for designing the strategy of the company and in decision-making. If the organisation is not performi if satisfactorily, then stakeholders such as Board of Directors can intervene to make necessary changes en fornulate appropriate strategies. 2) Managing and Supervising Positions in the Organisation: Stakeholders may also be important members of nianagement who influence the firm's actions and policies through their work. They may beodirectly answerable to the Director, CEO or CFO. of the firm, The managers of different departments can be the stakeholders as they may affect the performance of a particular department in the organisation by their actions. They may also be responsible for recruiting people in. their departments, training them and keeping the department up-to-date with any changes in the organisation's policies. ling_Responsibilities _for_Society _and ‘Environment: Firms exist in a society and hence have a social responsibility. The stakeholders need to ensure that the organisation's strategy, policies and actions are not harmful to thé interests of séciety and the environment. This can take many forms. The stakeholders may decide to switch over to an altemate source of energy, ifthe existing one is depleted. 3) They may also choose to donate money to a cause or a country which is in need. One of the prime motives of any business should be to work for public interest alongwith its personal interest. It is the social responsibility of stakeholders to ensure that all the actions of the firm give priority to the interests of society before their own personal gains. 4) Project__Planning: Stakeholders actively Participate in the planning process of any project. ‘The various activities of project planning are identifying the objectives of project, specifying and allocating the-resources, deciding the methods to carry-out the project, analysing critical events, and finally, evaluating the results. The participation of stakeholders in the project planning ensures transparency in the project and its process.2 (Modste-ty 13.3. Classification of Stakeholders On the basis of relatioaship with the organisation, Stakelfolders can be classified into tivo major ‘Clasitcation of Stakeholders [eens Petia] 1.33.1. Internal Stakeholders ‘The people that ae inside the organisation, or those ‘who work directly with the organisation, are known as internal stakeholders, Some mor internal stakeholders 2 35 follows: on Bea os seen 1) ‘Shiarehotders: Sharehld the, individuals or Companies who hold the shaies ofthe otganisaton, Hence they are called thesowners of the business” Shareholders are teatedssitheitiemibers“f the Organisation. These shareholders vinvest sin the organisation s0° as. tohelp it; in» realising. its bjetives. Thesorganisition's prime responsibility {sso fulflthe inteestsi:of shareholders. ‘The Shareholders get. the share in the profits‘ a return on the investments made by them 2) Workersfmpiojets! Workers by employees are the people who work inthe organisation, and ig Faia ctbeet temuneration, benefits, security, i. The relationship between employees and the Organisation is based on the ‘employment cttena't, Employees, contribute their time and {ons forthe benefit of the organisation, whey onan” , POSES. certain, obligations “on” the onbanisation. It becomes the responsibilty of ihe emrepaion 0 full its duties regarding ‘ne qiPloyees. One of the major respon the oteanisation towards its employees 3) Management: Management of an organisation affects the organisation a well stakeholders, Management is related ‘with the organisation through an implicit or explicit ane, The major “responsibility of ine management is to maintain the operations of an organisation as well as to well-being of the organisation, Management is sponsible for harmonising the differene enutlements of the stakeholders, 13.3.2, _ External Stakeholders ‘The individuals, groups or companies that are ouside the organisation and work indirectly “with the Organisation are known as external stakeholders, External stakeholders can influence and be influenced by the changes inthe organisation, MBA Thiel Semester SIE Ma stakeholders are sof a een or organisations that purchase ‘| Gran orpanisation. Hence, customer tnain soures of revenue for aif busines cams are’ re‘invesied in ‘sig | activites, therefore, customers ae ie involved inditectly iif the new pg’ development proces. They maximise the organisation’ BY purchasing is prog! spreading positive worof-moyg! satisfying customers is one of most i for an organisation to survive inthe Ions pliers: Suppliers, are those ing 7 Sener rat ore bay finished goods to the organisation fa production process. Some ‘suppliers finished goods (0 the customers. distributors. The quality and value of, is defined by the material provided by they Thetefore, business dealings, with te ¢ should be treated wisely by the org ‘ery importa fo the organisation to dea relations with the suppliers. through Production cost call be minimis, Productivity and quality can be maximise, 9) Creditors: The companies that pm ‘materials or semi-finished goods on oxi Organisation are called as creditos. organisation does not pay the due amngi siness is at a risk of by then the bus s 8 the supply of goat Supplying poor quality goods, n Government regutates the! and policies of the Organisations by fit Various laws and Posing restrictions. 0° Prime Fesponsibilit activities, ME strategies consierit © government, Manage alfect and in-tum gets Affected by the tf ‘ed on the business, MY panini the government by practicing # baying taxes timely, and ‘not indulging | tices, Introduction operat edicatin eisuring living 0 134, I Managem Stakeholder managerial separately, i management, and corporate it possible for and also in tr the efficiency ¢ While manag Telationships,¢ te» should be ‘mutual unders ifferent staket the stakeholder in jeopardy by ; in the haste of Some of the ma stakeholders are 1) Relationsh the stakehot need 19 relationships they: interac includes ide organisation, Various stak Managing. important tha the affairs 0 ‘management Maintained advantage for Stakeholders im orEanisational o successful exee Project, — __Intretocton to Strategic Management (Chapter 1) 6) Society/Community: Society or community in ‘which the organisation exists also affect its operations. The “management is responsible for educating and informing the society as well as ceisuring its wellbeing by raising the standard of living of the society at large. The organisations should ‘not adopt measures that can harm the séciety like discharge of hazardous waite and pollotants " 13.4. Issues in Stakeholder Management ‘Stakeholder management seeks to. link - various managerial concems that were previously -executed separately, like strategic management, organisation ‘management, marketing, human resource management, and corporate social responsibility. This linkage makes it possible for the organisation in formulating strategies and also in treating possible conflicts that may lower the efficiency of the stakeholders. ‘While-managing stakeholders, various issues such as relationships, communication, leadership, commitment, etc.."should be recognised and resolved so that there is a mutual understanding and a sense of unity among different stakeholders of the organisation. Otherwise, the stakeholders may put the goals of the organisation in jeopardy by resisting major changes, initiatives, etc., in the haste of realising their individual goals ‘Some of the major issues to be dealt with in managing stakeholders are as follow: 1) Relationships with Stakeholders: To understand ‘Stakeholders and their interests, organisations need to understand the characteristics of relationships between various stakeholders and how they interact within the ‘business system. This includes. identifying the cultuze in which the organisation exists and the power dynamics among various stakeholders of an’ organisation. The managing of stakeholders therefore is more important than just getting them to participate in the affairs of the company and also involves ‘management of complex relationships, which ‘maintained properly can create a competitive advantage for the company over its competitors. ‘The Key lies in building an environment of understanding which fosters an appreciation of cach other's viewpoints and thus removes the scope for creating conflicts. /arranging the stakeholders in the power hierarchy can also give the organisation an idea of how better communication and management of relationships among the Sakeholders impact the successful fulfilment of the “organisational objectives. This in turn will lead to successful execution and implementation of the Project, 3) Leadership _and Commitment; 4) imunication 1s one of THE basic Aipects of any business. It is a process through people exchange their views and ideas with each other. It has different techniques and is important for maintaining the flow of information at difierent levels of the organisation, Stakéhoiders ‘are connected with each other through various methods and also exchange information about various aspects such as products, services, supporting’ the flow of information, giving instructions, et. ‘Communication is absolutely vital for managers not only with compliant stakeholders but also with stakeholders who are hostile and can put major hurdles in the implementation of a project. Having an effective and active communication with the stakeholders can alert the organisation towards the future issues and risks. If the project managers are successful in creating ‘an effective channel of ‘communication with the stakeholders, they can play a vital role in keeping the stakeholders engaged and also averting any major problem from occurring in the organisation. Lack of communication or closed communication systems are a major cause of creating roadblocks in stakeholder management. Having open ‘communication channels not only solves and averts, ‘major. problems but acts as a strategic defence system for the organisation. For an ‘organisation to operate in an efficient way there should be a strong leadership that can guide the cemployees-in’their work. Some important factors such as the mission statement, management of the ‘organisation, its core values and principles etc. lay foundation for effective leadership. Alongwith a strong leadership, there should be commitment among the employees and management towards the achievement of pre-determined organisational goals. Vision statement based on successful short and medium-term goals plays a crucial role in developing a sense of commitment among the employees and stakeholders Influence and Interests of Stakeholders: Different stakeholders have different interests, and stakeholders try to address. their interests by influencing organisational processes. Stakeholders often collaborate with one another to influence and affect the behaviour of the organisation. It is: not possible for the organisation to accommodate the interests of all stakeholders. If the bond between different stakcholders. is strong. then they can influence the organisational activities and decisions.‘re Stetegic intent refers to. 24 (Modulet) ’ keep optimum Hence, an organisation should try to ier of skcoleyas"he-ctalenge of fulfilling their individual interest creases with the inreasing number of stakeholders, 5) Perception and Impact of Stakeholders: The perception of stakeholders bout the organisation has a significant impact on its operations. Persp can ithe be psa negate, While Positive prcepion may lead to wilingness inthe stakeholders to work, negative perception may ‘create conflicts and disagreemenls between the stakeholders andthe management, {n the siilar fashion, the impact of stakeholders am be categorised as postive ayd negative, While 4% Posiive. impact may fad, effective communication “and hight’ living, standards, a negative impact may disrupt, the organisation's ‘working environment and cause, a, group of “skeholders to have an adverse effect on other Stakeholders of the organisation 8) Aligning Valus and Motivation of Stakeholders: One ofthe tos efftve ways of achieving etectve Stakeholder management: is 10. align values and an organisation requires, two fundamental aspects, i, sharing values tnd beliefs, and developing shared vale, trough elfecive and Proper communication, There ae m One of the any Ways to motivate the stakeholders, STRATEGIC INTENT 1.4.1, - Meanin; 1 and Definition of Strategic Intent 10 the pre-defined future state that ‘he organisation is planning to reach within ipa vind Peiod of ime. The tem statgic inte was Fopulaised by Gary Hamel and CK. Prahalad ‘delned stg intent asthe reson of exsence ofan "oxynisation and ihe ends it wan to aching 1 shows the beliefs and values of an organisation, To achieve a certain future st fends the organisation shoul action, These ends can be ether longer or shoe ‘erm. While the longterm ends have broad facut short-term ends are narrow fin nature, For an organisation to become effective, iis very inpotant for every staff member to have an understanding ofthe ‘rategic inten. Hence, the stategic intent should be achievable as well as understandable, sate and t0 achieve certain Md take certain courses of MBA Third Semester Strap According to Burgelman and Gq, dissonance (misalignment between 4 fn inert and sec action), sratye (the chang of one winning satepy in strategic recognition (the capacity of yy ® appreciate, the strategic importance 1% initiatives after they have come abo | unequivocal environmental feedback i the tee inteelated ey concepts avesion of how top management strategic intent in high-technology indus! According Prahalad and Dor, “gg, to describe long-term goals and ain, detached plans. Strategic intent is cruci amor ol for whch one cana pig to separate hat een (aye strategic planing oF strategies. Sua for a firm to build layers of coms Pet, painstakingly, to accomplish long-tem gp According to Lovas and Ghoshal, longterm goals that reflect the refered ERSTE WETRETY I ope: Xt is important to consider that the ‘Should be common for everyone in teat can also be termed as ‘collective. ‘conscious ‘plies common end, shared by al ues Stategic item outlines a path thei followed fr ating th broad munal et 142, Attributes of, Strategici Strategic intent defines the nate of ted ‘rzanisation needs to follow in ordrta see Strategic intent has the following atriboe Sense of Direction: The sense of dirt Where the organisation wan to ois! Why. Every organisation requis 14 ‘esd, and common end. These «08! Yaltable and necessary for the op! ietonment and market for busines frequenly and hence the sates Lie ot be based on these short-term mi® efforts made by the rgaisi® inconsistent and fil achive te $8 Sale Therefore, the organisations 8 Hong-term mutual end, which iso Shared in nature. A proper set 8! PrBanisation to achieve its. ng intent fo 2 3 14, Fallo, strate Ite, Spel The ele ideas a clement foundat the eff intent st to streng ability 144, Strat Suategic the 1980 epacing indus based vieInantction to Strategic Management (Chapter 1) 2) Sense of Discovery: The sense of discovery refers, to the ability of inspiring the employees for innovation and creativity. This is necessary because the employees feel less. enth when the strategic intent is not inspiring. The strategic intent should motivate the employees to perform the challenging {asks and explore new. concepts. It should introduce new dimensions in the organisation and innovate superior ways to achieve them. 3). Sense of Destiny: The sense of density refers to the ability of the strategic intent to provide meaning to the existence of the organisation, It should be able to creale a sense of respect among the organisational members. Strategic intent should be ‘meaningful and significant so that it can direct the organisation and motivate its employees. Thus, strategic intent midst be meaningful for the employees and have the capability to, set proper direction for thet. 1.4.3. Hierarchy of Strategic Intent Following elements are included in the hierarchy of strategic intent: Most Integrative Forest ia Number Bosiness Definition Objectives Most Specie Greatest ia ‘Number ‘igure 1.16: Hlerarchy of Strategie Intent ‘The elements of the strategic intent serve to unify the ideas'and resources towards a certain direction. These elements are not.only beginning points but also the iilestones at, various levels. These elements act as a foundation , for planning and directing activities. ‘Strategic intent also provides a way and assures that all the efforts lead to organisation-wide progress. Strategic intent should be shared effectively with all stakeholders to strengthen their belief in company’s offerings and its ability o lead the particular industry segment. 1.4.4. Models : Strategic Intent Strategic management as a branch started evolving in the 1980s. During this time, many theories and models regarding the discipline were developed. These include industrial organisation (1/0) economics and resource based view. for Developing JAAAL. The Industrial organisation model plays an important role in understanding the activities associated with the market. On the other hand, resource based model helps in understanding capabilities, competencies and effective resource utilisation in @ firm. The firms which are successful try to combine both the models and. thus develop an integrated approach which helps in acquiring information and gaining knowledge. This integrated approach not only Teads to the development of the suitable strategic framework of the firm but also the strategic implementation. Organisations use the following models to acquire the information that is necessary to develop the vision and the mission as well as select the appropriate means strategy implementation: 1) UO model of above average returns 2). Resource based model of above average returns VO Model of Above Average Returns In the period between 1960-and 1980, it was believed that the extemal environment is responsible to determine what kind of strategies iiust be employed by the organisations. The Industrial Organisation (VO) model of above average returns explains how the external environment impacts the strategic actions of the company. The model states that industry specific issues have a greater influence on the strategies of the firm than what individual managers decide within the organisation. In other words, the outside influence on strategy is ‘more than the internal influence. Strategy is determined largely by industry” specific issues, like, scale of production, the entry and exit barriers, the varieties that are being offered in the form of product differentiation and the extent to which firms are concentrated in the industrial market. ‘There are certain assumptions under the VO model. ‘These are described below: fou 1) Certain limits and challenges are imposed by the extemal environment of a firm which forces the firm to employ strategies that will generate above average retums, 1"! /" be Arey 2) Firms that belong to the same industry are more likely to employ similar strategies especially in the context of utilisation of resources 3). Resources are freely transferable across firms and hence no firm enjoys a sustainable advantage. Any advantage of resource is short term in nature, 4) The decision-makers.of the organisation exhibit rational thinking and make decisions that are in the best interests ofthe organisation. deaserar one rh frety| | 26 (MestileD ii industries: ‘The VO model helps firms to decide in eal sist they should operate in. Avis assumed that mos ‘endowed with the same level of Tere MaBty dilferentiating factor is the selection © 1 ey which, determines. the, most, optimum»! ulisation of the resources of the firm an «generate the smasimem prof Figure 1.17 shows how te Fim depos a sitesy afer Beet the industry in which they are operating, and also the strategies that are deployed by Sang ‘in the indastry. It also means that companies which, are able to develop a set of skills and strategies that ‘make maximum utilisation of its resources nes, signal environnient do well whereas those that canno} do s9 end up faiting. The extemal forces iersone. py 18 role in the success of the firm tie internal Deg 1) Sty ob atm: Fearn et enviroment, . ey, |) ih Mbe generdl-enviroameét 28 indy, | | with big vhose, structural iat anceng | hanced tpt tote 3). Wea te seaegy [ Stategy Formation. |) pie let ty oe ot a egy Uke ty “Average returns in & to eam ane [ parry a i 4) Develop or scquie Pergo sc, semuts. | assets and Skis Seca eimplenent |: ASE ands required to ee implemen choven sty. ‘s ‘Strategy Implementation 9 Ue te tems | Seecon of ep aon sropms, 08 | nked “wh efectne eet ca | implementation fe choen ‘kills) to implement |_SUUERY- . the strategy. q Soperor Retna Eaming of above-average rene, Figure 1.17: UO Model of Abore-Average Returns Several researches have been conducted which state that 20 percent of the profitability of organisations is a function of the industry where it operates. Also 36 percent of the profitability variance is attributed to the features of the firm and the actions that it takes. In other ‘words, the success of the firm is a function of the external environsnent and the specific action that it takes in the form of devised strategies. fo id which eguld ~ O44, ) model describes 7 . ey i unique set of ast frm as comprising the uni a saatives which are undertaken keeping jn JJemands of the external environment that it, ‘Therefore, the VO satan: eh ; 2, Resource Based Model ‘| ‘Average Returns (9 (om! a re creurés based model on the other hang. the organisations differ from each other on their unique set of capabilities and resog,. enables them to ew above normal py developing suitable strategies for firm. ‘The resources can be considered inputs 4 converted into outputs by the firm. These inne jn the form of capital equipment, raw materia, sets of managers and employees, patent, ¢ resources, etc. Resources in general are cateza, human, physical, and organisational capital, Individual resources of a firm are not sof gaining an advantage over its rivals. The advantage can be created only when the rene combined effectively so that they lead 1 capability. A capability is defined as the pm resources to carry out an action whea a effectively. These capabilities need to be devel a period of time and must be hamessed prez particular type of capability is a core competes: allows a firm to enjoy an edge over its compesx market. . The resource based model therefore sts t performance of firms differ from each otherto the cistinct resources that firms have and net} the structure of the industry. Resources a7 effectively. to give rise to capabilities. The 4 hamessing of capabilities leads to a core for the otganisation, “Capabilities are o' ~ Wansferable across organisations. In fact, o# can be further enhanced by their contin! Cannot be copied by other onganisations ! ‘competence is a capability that must not be to imitate nor very complicated to challenge &! control and direction, The resource based model therefore «8! strategy employed by the firm should te © makes maximum use of its unique set of res industry All resources of the fim cannot be devel Competitive advantage, This can only be dom Fesources are valued, unique, cannot be st are such that they cannot be copied easil: Fesources are those which help the firm in & challenges in the extemal environment ‘Maximum utitisation of the available opeategic Management (Chapter 1) few organisations own resourves are those where only them. They cannot be copied when at rival cannot i them or cannot have them at the same cost point. omparison between VO and Resorce-tase Views of Competitive Advantage ‘Tablet Bask of i) Resourceased ymparison View Competitive [Relative choice of | Hamessing of the Advantage | industry unigue capabilities of the | The nature, amount, of Profitability and the} and typeof Position enjoyed by | resources of the firm in the | firm, industry: Focus Analysis | External Toterat ‘environment environment ‘Major Concern | Competitive forces | Resources, competencies, and capabilities ‘Strategic Selecting the [Unique resources Choices appropriate industry | and competencies and right position, “Most resources can be copied aind can be substituted. It is therefore difficult to have a sustainable advantage only on the basis of resource endowment. However, capabilities and resources can become core competencies for a firm when the following criteria are fulfilled. wo ete} 1.5.1. Meaning and Definition of Vision ‘A vision statement can be referred as the statement efining compan} rit goals, A vision statement can exceed from one line to a few paragraphs highlighting what the organisation wants to achieve in future. For example, Infosys’ vision is, “To be a globally respected corporation that provides best-of- breed business solutions, leveraging technology, delivered by best-in-class people”. An effective vision statement motivates the employees and provides them a sense of direction for carrying-out day-to-day business activities and also helps in taking strategic decisions. ‘An organisation's vision statement clarifies the significant primary goals to be achieved, but does not highlights the plan to accomplish these goals. It helps the organisational staff in formulating required strategies for carrying-out necessary business operations, Vision statement is common, mutual and for ‘every employee in the organisation. Vision statement is, unique, simple, and competitive in nature. A good vision statement encourages the organisation to take risks and to pursue innovative ideas (o stay competitive in matket n A vision statement is prepared to boost the morale of the employees by painting a picture of the path on which the organisation is h The vision statement of a ofganisation allows the managers to practically monitor’ the organisation’s progress by comparing the stated objectives and operational plans for achieving those objectives. If the operational plans do not lead to the achievement of the ultimate organisational vision, the plans can be modified when necessary. Vision statement integrates the organisation goals from various departments and forms a common mutual goal to be achieved. Good vision statement encourages innovation and fosters a feeling of ownership and belongingness within the employees and the stakeholders. According to Miller and Dess, “Vision is the category of intentions that are broad, all-inclusive, and forward thinking”. _ According to Kotler, [vision is_a_description_of something (an organisation, corporate culture, 2 ‘business, a Technology, an activity) in the future”) ‘According to El-Namaki, “Vision is a mental perception of the kind of environment an individual, or fan organisation, aspires to create within a broad time horizon and the underlying conditions for the actualisation of this perception”. According to Oren Harari, “Vision should describe a set of ideals and priorities, a picture of the future, a sense of what makes the company special and unique, a core set of principles that the company stands for, and a broad set of compelling criteria that will help to define organisational success”, 1.5.2. Features of Vision A vision statement has following features: 1) Reqiires Careful Thinking: Formulating a vision statement not only requires attractive tagline, but also requires strategic thinking regarding the future prospects of an organisation to achieve success. 2) Helps in Selecting Target Market: As a company “cannot serve the needs ‘of each and every type of customer, it has to customise the services for a particular target customer. Vision statement helps the organisation to decide the market segments to which the organisation would cater and make strategic decisions accordingly. In this way, the vision statement creates a strategic path for the organisation. 3) Decides the Long Tem Objectives and Foes: Sirategic vision helps in deciding the direction-of , the organisation and the strategies needed to achieve the set targets28 (Modulte-t) = Vision is future-oriented. Vision condition; it depicts the state in which an organisation wants (0 be within the st pulated period of time. Therefore, in other words, it can be said that the. vision statement highlighis the orgarisation’s future goals and helps in formating necessary plans. It becomes important for an enterprise to formulate the vision while keeping a bright picture of future in mind. 1.5.3. Process of Envisioning Formulating the vision statement requires following steps: ; Understanding the Organi Fo ratp ae ay Condyet an ADM tw "Narrow Down the Vision fee the Context for Vision 1s Stalement (Create New Future Seénarids ft 1 Formulaié’Alternative Vision Statements q See ie inal Vision Sttcncnt |” Figure 1.18: Process of « Enyisioning. 1) Understanding the Organisation: step of formulating a vision sta understand the’s organisation. To organisation in a better way the management must identify following details: i) Nature of the industry, ii) Mission and purpose of the organisation, iti) Kind of value itis providing tothe society, iv) Structure of the organisation, ¥) Critical success factors of the organi vi) Nature and type of stakeholders, and Vii) Interests of the stakeholders, The foremost tement is to understand an tion, 2) Conduct an Audit: Once the understandi T ling of the organisation has been achieved by the strategic leader, the next step is to conduct an audit to assess the current position of the organisation and the pace at which itis progressing. Following aspects are to be analysed at this stage: i) Current direction of the organisation, ii) Mutual agreement by the key strategic managers on the direction of organisation, 3) 4) 5) 6) 2 MBA Third fcitester Cstratey nN iii) Organisational structure iv) Organisational activities, ¥) Employees of he onganiating levels, vi) Compen: la, vil) Information system and conn, within the organisation, tion and rexnuneratinn y, Narrow Down the Vision: After uy, audit, the next thing to do is to name” perspectives of vision statement here implies considering the factors ta to form a vision statement. Some of 4° questions to be answered here ares fy, i) What are the Timitations op, statement? ii) What would be achieved ty statement? What issues are to be considered statement? i tin, Set-up the Context for Vision Sta step, the strategic leaders should future aspects of the organisation. Anis future does not mean to be predicty but assessing the future surrounding. § aspects to be considered are: i) Anticipation and categorisation ¢ developments which may affect ters ii) Enlist the expectations with each ex, iii) Anticipate the probability of f= expectations, and iv) Assigning the probability of occur: expectation, Create New Future Scenarios: As st pated and thes é fulfilment probabilities are understood! Step is to associate those expectation ! new scenario which involves a Possibilities in future anticipated by & leaders. This will highlight the pos? Scenarios that the organisation may ha\t. Formulate Alternative Vision Staten Step the possible future altematives at? and decided, on the basis of which & leaders determine the directions that altemative future courses. In this se vision statements for each direction a! However, these altemative vision 8 Not evaluated in this step. Select the Final Vision Statement: Final stage where the strategic leader ¥ the best among the altemative visi For this, itis necessary to closely anal) Statements. It is important © et acteristics that a good vision st 2 3) 4) 5)ction wo Stew Management (Chapter 1) ‘The essential factors which are equired in order for the vision statement 0 become successful should be considered, Organisational culture and values ate some of the important factors. After analysing the characteristic features of a good, vision statement, the alternative vision statements are compared and analysed against the possible future challenges and opportunities. The comparison is, based on the applicability of the vision'to wide platform of future scenarios. It should be noted that the final vision statement should qualify in the criteria for good vision statement. GSA. Significance of Vision , Strategic vision is important to an organisation for following reasons: 1) Acts as a Measure of Excellence: A strategic vision acts as a measure of excellence. It motivates and inspires the employees to actiieve the level of ‘excellence and skills in their work, It also works as the on-going goal and encourages the employees to ‘improve the quality of work. It also provides the parameters to measure the value of the organisation. 2) Overcomes the Gap: The vision statement is created. for future. A good vision takes. the ‘organisation from its present tothe Future. Hence, it overcomes the gap between the current position of orgenisation and the desired future scenario. It helps the organisation to focus on the issues of fitire and the ways to deal with them. The vision staféinent helps the decision-makers to chalk out strategic plans which can guide an organisation to achieve the desired state of future Helps in Solving Internal and External Issues: A ‘good strategic vision helps the organisation in dealitig with both the internal and extemal issues. On one hand, it inspires and guides the employees towards a certain direction, while on the other hhand, it helps the organisation to capture market and create a distinctive market image among the competitors. 4) Helps in Setting Goals for Future: Vision statement highlights where the organisation is now, ‘and where it wants to be in the future. It helps the employees to set common organisational goals and inspires them to achieve those goals. 3 5) Creates a Sense of Responsibility: Strategic vision creates a sense of responsibility in the ‘employees, which in tur motivates. them to enhance their skills and create interest in working towards achieving the organisational goals. It creates a distinctive image in the minds of the ‘employees by offering personal gains so that they ‘are motivated to perform with zeal and enthusiasm, » ©) Provides a Reason for Existence: A vision statement provides a reason to the organisation for its existence by projecting the ideal image of the future. It helps in integrating the resources for realisation of the desired future scenario. 1.5.5. Limitations of Vision Vision statement suffers from following limitations: 1) Ambiguous and Incomplete: Vision statements are generally not written in detail with specifications regarding the desired future position of the organisation. This makes a vision ambiguous and incomplete 2) Does not Hightight’s the Path: The vision statement only projects an image of what the organisation ‘wishes to achieve, but it does not tell if and how the organisation will realise the desired goals. 3) Wide-Ranging: The vision statements are so wile- ranging thatthe company can move in any direction, can grab any opportunity, can serve any customer at any location. Such kind of broadness in. vision creates a misconception about the target market and specific direction of the organisation's growth. 4). Fails to Motivate and Assure: The vision statement at times fails to motivate the employees to pursue certain goals. It does not assure the shareholders regarding the direction of the organisation. 5) General Siatement: Generally, the vision of an organisation is a common statement, making it applicable to any company. It does not provide a distinct identity to the organisation. 6) Projects a Superlative Image: It exaggerates about the future position of organisation without defining the company’s strategic course. The vision statement projects the image of the organisation as the consumer’s first choice, globally renowned leader, best in class, etc. Hence, it projects a superlative image of the organisation. 1.5.6. Guidelines for Developing a Vision ‘The guidelines for developing a vision statement are as follows: \ 1) Based on Reality: A vision statement should be ‘based on reality and should highlight the purpose of the organisation. For example, if there is a local cosmetic company which has low market share, then creating a vision statement like that of Lakme and Maybelline would be unrealistic. 2). Should be Believable: A vision statement should bee created in such a way that itis believable. The organisational employees should have faith on the vision statement. Ifthe employees do not believe in the vision, then the organisation would not be able to achieve success.30 (ante vision should The main motive bhi de he vison shoud eto matin an eneurge the wert of the ergata at they ae lew ence ‘hills anal use them to improve thei per 2) Sug Te shone sha Fal eah ‘the attention of people inthe organisation, For this, Me sc al ae fig 0 a be = ae i motivated and want to ployee ge ini a sal tema prt fh ergansation na 36 wel exit an Adaptalty The vin statenient Sal be ene and laps pe te changes inthe environment, The vision slatement sould be developed soa o meet the external challenges and opertnite exposed on the organisation, 5) Comprehensive and Understandable: The strategic vision should be comprehensive and ‘understandable to the organisational members. It is essential as it is the foundation for formulating rission, objectives, goals, and strategies. 6) Time-Framé: The vision statement should be based on a time-frame of upto five years or more ‘Until and unless the industry changes rapidly and the market conditions are not stable, the vision statement should not be changed frequently. 7) ' Use of Simple and Precise ‘Terms: Strategic leaders should formulate vision statement that is simple and Precise in its terms. The language should be easy and able to catch attention, It should be able to create an intense image about the organisation in the minds of People and should be capable of inspiring and ‘Stimulating the emotions of the people. 5) Ability to Integrate sna Guide: The suatepe vision should be able to ‘integrate the resources and guide the ‘embers of the organisation ina planned direction, the strategic Teaders' should Motivate and subordinates to participate in the, colleagues formulating the vision statement, the process of 1.6.1. Meaning and Definition of Mission AN mission statement refers to the corporate reasons for the existence of an organisaion. Mission statemems does not outine the outcome. IC has no time-frame oe measurement associated with it. I highlights the current Position and the future scenario of an organisation in terms of product, market, pricing, customer service, ete Mission has a little touch of philosophy init, a& it tatke about the aspects for which an individual is destined to be in wend 1 vie een of fares: het aternent is, “To act ve) company. urpose of reason forthe ore saion SS co aur why itis in existence, the nature of eA “ations. is in, and the customers it seeks to sen 88 ublic : “s ‘identitie According to David F. Harvey, "A ras. ‘beneficl the basis of awareness of a sense af eads te Competive environment: depres to 44:2 of nd ‘mission fits its capabilites andthe cope’ 4) Encow the government offers”, ”s According to Drucker, "Mission fois a} fon action. It defines the specific str Fett oa goal. It creates a disciplined or aniston expe Purpose and business mission a 0 ayy ofle thought,’ is perhaps the most impor roy Fort ‘business failure and business frustration”, of ‘The mission statement outlines the acs, cus by the organisation and communicate, & 9 Ue Society. The values and beliefs held by tes o Play an important role in fulfilling the mon i built on the foundation set by the Ean * ‘The mission statements Provide an inter: t the organisation for its future. It is recog 604 employees to have motivation and ma achieve the goals of the organisation, 162, Characteristics of Mission Statements A good mission ‘statement should have &) characteristic )) Reasibility: A good mission samen be a wide-ranging goal, but it Gut Achievable. It should not be an umes ‘The organisational employees should fati and credible. However feastlity of a ‘pon the availability of ganicaioeal ee For example, it was a mission of US Actonautics and Space Administra {and on the moon during 198d"s, we Accomplished between 19605 nd 107K 2) Rrscise: An effective mission watenss! either too, NATTOW Nor too wide. A Statement will not be able ta convey 8 f Performed by the organisation and 1 Statement will fail to define the st objectives and goats