1. What is Business Policy? Describe its importance, scope and functions?

A. INTRODUCTION:-

Business may be defined as the organized effort by individuals to produce goods

and services to sell these goods in a market place and to get some reward for this effort.

Policy does not tell a person exactly what to do but it does point out the direction
in which to go.

Business policy is nothing more than a well developed statement of directions and
goals. Goals involve the definite of precisely (exactly) what the business is or should be,
and the particular kind of company it should be. Direction guides the action of the firm to
accomplish (achieve) these goals.

DEFINITION:-

According to Filpps, “A business policy is a man made or pre-determined course

of action that is established to guide the performance of work towards the organizations
objectives.

EVOLVING OF BUSINESS POLICY & STRATEGIC MANAGEMENT AS A FIELD

OF STUDY:-

An integrated course in Business management was first introduced by Harward

Business School in 1911 to create general management skill and abilities. However the
course of Business policy & Strategic management took a clear shape after the Ford
foundation and the Carnegie Corporation sponsored research, was incorporated into the
curriculum at Business Schools in USA in 1950’s.
 Thus a course on Business Policy & Strategic management, will give students an
opportunity to pull together what they have learned in the separate business fields and
utilize the knowledge in the analysis of complex business problems.

Almost all the business schools in USA included the course on Business Policy in
their curriculum. The course on Business Policy considers the total organization and is
environment as a social system.

Business Schools in India have include the course on Business Policy as a

capstone course in their MBA curriculum. However , different nomenclature I used to
denote this course. They are Business Policy, Strategic Management, Corporate Planning,
Strategic Planning, Management Policy and Strategy, Business Policy and Strategic
Management etc.

CHIEF FEATURES OF BUSINESS POLICY:-

1. Policies are general statement of principles for the attainment of objectives.

2. Policies have an hierarchy.
3. Policies in general are meant for mutual application by subordinates.
4. Policies lend to pre-decide issues avoid repeated analysis and give a unified
structure to other types of plans.
5. Policies serve an extremely useful purpose they avoid confusion and provide clear
cut guidelines at all levels to sub-ordinates.

PURPOSE:-
1. To clarity objectives.
2. Help subordinates in reaching operating decisions
3. Facilitate an overall co-ordination and control.
4. Act as a yardstick for evaluating the quality of executive decision making and
action.
5. Build up employee enthusiasm and loyalty.
IMPORTANCE:-

1. Policies provide stability in the organization.

2. Policies aid in co-ordination.
3. Clear policies encourage definite individual decisions.
4. Policies serve as a standard or measuring yard for evaluating performance.
5. Sound policies help built up employee enthusiasm and loyalty for the
organization.
6. Policies are control guides of delegated decision making.
7. Policies with clarity, relevance and reasonableness enable a firm to make the
optimum utilization of scarce resources.

FUNCTIONS OF BUSINESS POLICY:-

1. Objectives of the company are defined and classified.

2. The planning function is done systematically
3. Business Policy clearly takes the amount of authority that the subordinates have.
4. It also helps the managerial personnel to perform h=the functions of control and
coordination successfully.
5. Policy acts as the main foundation for evaluation and determining.

ESSENTIALS OF AN EFFECTIVE BUSINESS POLICY:-

1. It should be based on organizations objectives.

2. It is capable of relating objectives to functions, physical factors and company
personnel.
3. In conformity with the accepted ethical standard of business.
4. Stated in definite, understandable terms, preferably in writing.
5. Stable and flexible.
6. Sufficiently comprehensive in scope.
7. Supplementary to superior policies.
EFFECTS OF INADEQUATE POLICIES:-

1. They cause unprofitable operation and subsequent failure.

2. It leads to insufficient capital, poor location, overbuying and competition in many
instances actually result from the adoption of improper/faulty policies for a
particular business/situation or due ti lack if definite policy.

SCOPE OF BUSINESS POLICY:-

The policies cover such a wide variety of subjects and are so broad used that
every possible matter that effects the interests of any one is the organization, the
community and the government are included in term. Infact, business policy covers all
the functional areas of business, production, marketing, personnel and finance. These
functional areas are generally covered by what may be terms as major policies & minor
policies.

Major policies are related to the overall objectives, procedure & control which
affect the organization as a whole. They cover minor policies on the other hand cover
relationship in a segment of an organization with considerable emphasis.

CONCLUSION:-

It is through policies that are organizations objectives are achieved better use of
resources is ensured. Social responsibility is fulfilled in an increasing manner, personal
satisfaction is obtained by the employees and the management is enabled to take useful
decisions.
 STRATEGIC MANAGEMENT
STRATEGY:-

It is an unified comprehensive and integrated plan that relates to the strategic

advantages of the firm to the challenges of the environment.

In the above statement

Unified – means it lies all the parts of enterprise together.
Comprehensive – means it covers all major aspects of enterprise.
Integrated – means all the parts of the plan are compatible with each other & fit together
well.

Strategy as “ the determination of the basic long term goals and objectives of an
enterprise and the adoption of the course of action and the allocation of resources
necessary for carrying out these goals”.

DEFINITION:-

According to James Brain Quinn defines strategy as “the pattern of plan that
integrates an organizations major goal, policies and activity sequences into a whole”.

INTRODUCTION:-

Strategic management is a stream/group of decisions and actions which lead to the

development of an effective strategy or strategies to help to achieve corporate objectives.

Strategic management is different from that of management .managers deal with

day to day issues and problems of operational control which include raw materials,
scheduling, production, inventory control, producing goods, getting finance, investing,
creating demand, advertisement, sales promotion etc.
DEFINITIONS OF STRATEGIC MANAGEMENT:-

Strategic management is concerned as “the continuous process of effectively

relating the organizations objectives and resources to the opportunities” in the
environment.

Strategic management as “the continuous process of effectively relating the

organizations objectives and resources to the opportunities” in the environment.

NEED FOR STRATEGIC MANAGEMENT:-

1. Due to change:-
Change makes planning difficult. Strategic management encourages the top
executives to forecast change and provide direction control. It allows the firm to take the
advantage of opportunity provide by change and avoid threat and to reduce the risk.

2. To provide guidelines:-
It provide guidelines to employer about the expectations of organization from
them. It provides incentives for employees and helps to probability of success than those
which don’t have.

3. Probability for better performance:-

It leads to higher performance. Because the business which plan strategically have
a higher probability of success than those which don’t have.

4. Systematic business decisions:-

It provides data and information about different business transactions to managers
and helps them to make decisions systematically.

5. Improves communication:-
It provides effective communication from lower to middle and to top managers.
6. Improves coordination:-
Improves coordination not only among functional areas of management, but also
among individual projects.

7. Improves allocation of resources:-

Strategic planning helps in deciding upon most flexible & viable projects and
improves the allocation of resources the viable projects.

BENEFITS:-

1. It helps organizations to make effective strategies through the use of a more

systematic, logical and rational approach to strategic choice.
2. It encourages the organizations to decentralize the management process involving
lower level managers & employees.
3. Organizations foresee the environment market place & actions of competitors.
4. It encourages favorable attitude towards change.
5. It provides cooperative, integrated and enthusiastic approach to tackle problems
and opportunities.
6. It gives encouragement to forward thinking.
7. It minimizes the effects of adverse conditions and changes.
8. It provides clear objectives and directions for employees.

DISADVANTAGES:-
1. Conditions change is so fast, managers can’t do any planning, especially long-
term planning.
2. Objectives must often be vague and general.
3. Managers play little attention to research and many firms are effective without
formal planning.
4. There are many reasons for success and many firms are effective without formal
planning.
5. Environmental dynamism can’t be assessed.
STRATEGIC MANAGEMENT PROCESS:-

Step1 Step2 Step3 Step4 Step5 Step6

Identifying/ Environme Alternative Alternative Strategy Strategic
Defining ntal Strategic Strategic Implementa Evaluation
Business analysis Choice Choice tion & Control
Mission Revise
Purpose& Orgl
Objectives directions

Step1:- Identifying is the foundation for strategic management. Every organization has a
mission purpose and objectives. These elements relate the organization with the society
and states that it has to achieve for itself and to the society.

Step2:-Environmental factors both internal and external environment are analyzed to

1. Identify changes in the environment.
2. Identify present and future threats and opportunities.
3. Assess critically its own strengths and weakness.

Step3:- A through analysis of organizations environment pinpoints its strengths,

weakness, opportunities and threats. This can often help management to revise its
organization direction.

Step4:- Many alternatives are formulated based on possible option and in the light of
organization analysis and environment appraisal and ranked based on SWOT analysis.
The best strategy out of the alternatives will be chosen.

Step5:- The developed strategy is put into action. If the strategy is effectively
implemented, then the organizations can get the benefit of strategic management. The
managers should have clear vision and ideas about the competitors strategy, organizations
culture, handling change, skills of managers in change of implementation.

Step6:- If focuses on monitoring and evaluating the strategic management process in

order to improve it and ensure that it functions properly. The managers must understand
the process of strategic control and the role.
EVOLUTION OF STRATEGIC MANAGEMENT:-

Introduction:-
The evolution of strategic management has passed through 5 stages. They are
A. Budgeting and financial control
B. Long range planning
C. Business strategic planning
D. Corporate strategic planning or Corporate planning
E. Strategic management

A. Budgeting and financial control:- Budgeting may be classified broadly under two
heads.
1. Capital Budget: - This budget is concerned with the investment in fixed assets and
equipment whether new projects are existing assets. It is the long term investment
designed to achieve the long term goals & objectives of the organization.
2. Operational Budget: - This is concerned with achieving short term goals of the
organization such as sale, production, profit etc.

Classification of Budgets:-
Budgets may be classified according to
I. Functions involved: - Under this head the budgets are sales budget, production
budget, direct Labour budget, overhead budget, administrative expenses
budget.

II. Nature of transactions:-

a) Operating Budgets: - Budgets relating to current operations such as income
and expenses budget, budgeted profit and loss statements, budgeted balance
sheet, monthly cash budget.
b) Capital Budgets: - These are relating ti the capital structure with liquidity of
enterprise. They include working capital budget, annum cash budget,
budgeted equity capital, budgeted investment in fixed assets.
 III. Activity Level: - The budgets here are fixed budgets, flexible budgets,
functional budgets already indicated master budget.

IV. Time interval:- Under this they are classified into

a) Continuous Budgeting: - This budget results in a rolling budget, constantly
causing a time interval of the same length.
Example: - A semi-annual budget is constantly revised by grouping the month just
ended & adding the forth coming one, thus making a period of 6 months.
b) Periodic Budgeting: - It refers to a specified period. The most common is
annual budgeting.

V. Future Operations: - These are again of two types.

a) Project budgeting: - This budget relates to a particular project with regard to
the time factor.
b) Appropriation budgeting: - Appropriate type of budgeting involves allocation
of a certain amount of funds in each budget for a specified activity such as
research, advertising etc.

VI. Others: - Among other budgets we may put comprehensive budgeting

responsibility budgeting, program budgeting and state and flexible budgeting.

B. Long Range Planning:-

The concept of long range planning was introduced in 1950’s as an attempt
towards comprehensive planning. The need for long range planning was felt to
comprehension organizational goals and objectives in the perspective of
environmental changes likely to occur in years to come. Hence long range planning-
that the organization shall define its objectives, goals, programme and budgets in a
spectrum of say two to five years.

Long term planning starts with multi years forecast of sales which is followed
by functional plans pertaining to manufacturing, marketing, personnel etc. These
 forecasts indicate growth commitment of the firm over the years. The final step in this
regard is the presentation of a compact view in the form of the financial plan. It
contains most of the characteristics of budgeting and financial control.

Long range planning is an appropriate strategic process which may be stated

as a first step towards improving managerial competence. No organization can of ford
to stop this exercise because it provides fund of historical data which is necessary in
future.

C. Business Strategic Planning :-

Business strategic planning emerged as the 3rd phase in strategic management
which started with the new wave of conglomeration via “aggregate acquisitions” in
1960’s and completed by 1980’s.

The concept of B strategic planning was preceded by the concept of B

segmentation in 1970. The concept of B segmentation or independent profit centre
was introduced by Fred Borch the chairman of general elective who “the system of
autonomous units in difference to the recommendations made by Mickinsey And Co.”

Components of Formal Business Planning:-

Components of formal B planning may be summarized under the following heads.
Elements:-
1. The mission of the B.
2. Environment scanning and internal scruting.
3. Formation of B strategy & evolution of action programme.
4. Sources allocation and performance measurement for management for
management control.
In addition to the above elements offer important components of B. planning are:-
1. B strategic process
2. Contribution of B strategic planning
3. Limitations of B strategic planning
The Business Strategic Planning Process:-
Process of strategic B planning has the following 6 elements which has been
discussed earlier also
1. The mission of B.
2. Formulation of B strategy and broad action planning.
3. Formulation of evaluation of specific action programme.
4. Resource allocation and definition of performance measurement for management
control.
5. Budgeting at the B level.
6. Budgeting considerations and approval of strategic operational fund.

D. Corporate planning:-

Planning has assumed great importance in all types of organizations – B, non – B,

private, public sector, small or large in developed countries or developing countries. This
interaction can better be maintained through efficient planning. In fact in today’s contest,
the difference between successful and unsuccessful organization is because of planning
activities under taken by these. The organization which thinks much head about what it
can do in future is likely to succeed as compared to one which fails to do so.
Example:- Infosys or Satyam computers has achieved phenomenal growth with a short
period of time because of its ability to plan to take up new projects.

E. Strategic Management:-

Strategic management is a stream/group of decisions and actions which lead to the

development of an effective strategy or strategies to help to achieve corporate objectives.

Strategic management is different from that of management. Managers deal with

day to day issues & problems of operational control which include procuring raw
materials, scheduling production, inventory control, producing goods, getting finance,
investing creating demand, advertisement, sales promotion etc.
 7’s FRAME WORK
Mc Kenseys frame work. He was a consultant.
Introduction:-
This is a framework for strategic management which has received considerable
attain of management consultants and strategist. This frame work has been developed in
the late 70’s by Makensey (Co) considering which has a wide reputation through the
world.
This framework rests on the preposition that effective organizational change is
best understood in terms of complex relationship between the 7’s. They are
1. Strategy 5. Shared value/Super ordinated goals
2. Structure 6. Staff
3. Skills 7. Style
4. System
Stated in general terms the preposition of 7’s framework suggested that they are
multiple factors which influence the organizations ability to change & the proper mode of
change. Since the variables are inter connected. Significant process cannot be developed
in one area unless corresponding developments are made in other areas too.

1. Strategy:-
1. It is organization response to the external environment.
2. It is a long term planning.
3. It means to get organization success.

2. Structure:-
a. It is an additional tool to the organizations kit.
b. It can be comparable with the super structure of an organization which indicates
to what extent the activities are specialized and in the ways in which the
organizations task are integrated and coordinated.
c. This relationship between strategy & structure does not field structural solutions
to the organizations problems the key focus.
d. The structure is to execute the strategy
3. Skills:-
Skill refers to the “distinctive competency” which reflects the dominant skills of
an organization and may have the competency areas such as engineering skill, managerial
skills, customerial skills, quality, commitment, market power, new products development
arranging long term bonds etc.

4. System:-
Rules, regulations, procedures constitute system in the 7’s framework which
complement the organizations structure. The systems may be called the infrastructure and
it includes sub systems relating to (PPC) production, planning and control, cost-
accounting, capital budgeting, recruitment & training, performance evaluation, planning
& budgeting etc.

5. Shared values / Super ordinated goals:-

These are also called as super ordinated goals. In mekinseys Model it refers to a
set of values and aspirations that goes beyond the formal statement of corporate
objectives. This means they are some fundamental ideas around which a business has
been built.

6. Staff:-
Staff is an integral part of a 7’s framework which carries a specific meaning. It
refers to the way in which the organizations indulge new and young recruits into the
organization for the main stream activities. It also relates how to manage the carries of
the young recruits as they were groomed as future managers.

7. Style:-
Style is another variable which may determine the effectiveness of organizations
change.
IMPORTANCE OF 7’s FRAMEWORK IN STRATEGIC PLAN:-

1. It is essentially a multi viride model of organizational change.

2. It is recognized as a powerful tool as it highlights several inter
organizational statements and also connects them.
3. It underlines the critically of action plans in the 7’s are well poised and
there is no difficulty in implementation and execution of strategy.
4. The effective implementation of 7’s framework depends on ability of
management to bring all the ‘s’ into harmony.
5. When the 7’s are in good alignment all the 7,s are well poised and
there is no difficulty in implementation and execution of strategy.
6. During the progress of implementation if the strategy is failed then 7’s
frameworks provide the pitfall of down trend strategy and provides remedies for the
same.
 ROLE OF TOP MANAGEMENT
Introduction:-

The success of accompany depends very largely on the quality caliber,

competence, specialization, attitude and character of BOD’s in large companies. The top
management consists of the BOD’s, the president and everyone reporting directly to the
president.

The role of CEO cannot be considerer in its isolation. He says that in many large
companies BOD is dominated and even controlled by family management, shareholders
who do not claim competence & professional education due to historical circumstances.

Professional managers who don’t own stock capital in the company they manage.
The shareholders don’t control the management. “In theory, the owners are represented
bh a BOD’s which guides the actions of the executives, but in practice the influence of
the salaried executives is very great. Most shareholders are interested only in a fair return
on their investment.

Vice President Vice President Vice President Vice President

Production Marketing Finance Personnel

Role of Top Management:-

Role of Directors:-

BOD,s has authority to manage a company, subject to the limitations imposed by

the memorandum association and articles of association of the company concerned as
well as the provisions of the companies act 1956.
 The board really participate in the major decision making. Total view of the role
of BOD,s may be presented as follows.

1. Trusteeship:-

The relationship between the board and the company is a judiciary one. It is a
relationship of trust and confidence in which the shareholders entrust the welfare of the
company for the long-term gain of the company and not for their own personal benefits.

2. Determination of basic objectives & policies:-

This is a basic and import function of effective board. The board must provide the
long term planning and establish the overall goals of the company within the overall legal
framework and the company’s documents. The policy decisions are the board through
which it can direct.

3. Selection of top executive and determination of organization of structure:-

It is the function of the board to decide the organization structure of the company
and to fill the various key positions, particularly at high level. It appoints the chief
executive and other top level managers.

4. Approval of financial matters:-

The board approves financial matters, particularly the approval of budgets and
distribution of corporate earnings. Approval of corporate budget is an important function
through which the board maintains control over the management of the company.

5. Checks & Control:-

Since, the board is ultimately responsible for the successful affairs of the
company. It is interested in maintaining adequate check and control over the functioning
of the company through the chief executive.
6. Legal functions:-
There are certain legal functions of every board of director as provided in the
companies Act 1956. the companies act prescribes the responsibility of the directions
towards outsiders, towards the company and companies liabilities.

Responsibilities of BOD’s:-

1. Overall control and delegation of authority and responsibility:-

Board of directors control and formulate the objectives, frame the poicy,
predetermination of objective, preparation of budget.

2. Management of corporate income:-

BOD manages the corporate income to gave security to the dividend and
corporate growth is ensure the problem of the future.

3. Organizational structure:-
The structure of the organization is also one of the responsibilities. They decide
the structure and division of work among the workers.

4. Research and Development:-

Research & Development to improve the corporate image, corporate profile.

5. Product line direction & control:-

Improve the company position, profit of the company, creating team spirits.

6. Merger & Acquisition:-

A firm which is running in losers merge with profitability unit.

7. International operation:-
Corporate activities enter into foreign market.
8. Selection & development of executives:-
The major shareholder is the president.

Functions of BOD’s:-
1. He has to approve objectives, policies.
2. Selection of top level executives, promotion of key person.
3. Giving personnel suggestions.
4. Analyze the results.

Role of BOD’s in ‘Long Range Planning”(LRP):-

1. How many people we need.
2. Where the meeting too be conducted.
3. How reliable L.R.P.
4. CEO explains about LRP to the staff.

BOD’s are concerned with:-

• Long range forecasting.
• Social & Political issues.
• It’s present & future needs.
• Overall resources of company.
 VISION

Introduction:-
Strategy formulation policy helps to obtain information from the environment
deciding and re-deciding on organizations vision, mission, objectives and goals.

Vision and mission statements are powerful, shapers of effective corporate

cultures, for many organizations. These statements present the values, philosophies and
aspirations that guide organizations action. They motivate and inspire the current and
future employees of the organization.

Example: - Some of they would like to believe that you will be an entrepreneur in 0-15
years owning your own company dealing with IT services and employing cutting-edge
technology to serve a global climate.

Example: - Witness what TATA Steel says about it’s vision. “TATA Steel enters the new
millennium with the confidence of a learning knowledge based & happy organization, we
will establish ourselves as a supplier of choice by delighting our customers with our
service and our products. In the coming decade we will become the most cost competitive
steel plant and so serve the community and the nations”.

What is organizational vision?

The corporate vision has the potential power to focus the collective energy of
insiders are to give outsiders a better idea of what an organization really is

Defining vision:-
According to Kotler (1980) defines it is a description of something (an
organization, corporate, culture, a business, a technology, an activity) in the future.
Characteristics of vision:-
1. Vision is developed through sharing across an organization:-
Vision has been widely shared across entire organization. An individual leader, a
founder has a powerful impact on the others.

2. Method of convincing the others about vision:-

The leaders by working hard along with others convince the others in the
organization rather than simply by delivering speeches.

3. Change Agents:-
Leaders must recognize the complexity of changing an outmoded vision to reflect
new realities. Organizations must redefine themselves through updates visions of the
future through new objectives and strategies.

Benefits:-
1. Good visions are inspiring.
2. Good visions faster long-term thinking.
3. If fasters risk taking and experimentation.
4. It represents integrity they are truly genuine and can be used for the benefit of the
people.
5. It helps in creation of common identity and a share sense.
6. Good visions are competitive, original& unique.

Importance:-
Vision represents the challenging role of what the organizations would be in
future. It implies that the organization should create positions about where it should go
and what major challenges it has to face. Sometimes vision and mission are used inter
changeably with the result, but importance is not put on organization vision. Vision
represents the imagination of future events & prepares the organization for the same.
 On the basis of six years study by colline & porrs, they have concluded that
companies may be grouped into 2 categories judged on the basis of success of long
lasting high performance. These are:-
1. Visionary companies.
2. Comparison companies.

Features:-
1. Distinctive set of values:-
A visionary company holds a distinctive set of values from which it does not
deviate.

2. Course purpose:-
The company expresses its core purpose in enlightened terms which provides
challenges for action.

3. Clarity:-
The core purpose should not be confused with companies business purpose or
strategy and should not be simply a description of companies product lines.

4. Decides action:-
The company develops a visionary scenario of its future, decides action
accordingly and implement these.

Collins & Porras have provided to develop a visionary company which proceed according
to the following steps.
1. Honesty:-
It pushes with honesty to define what values are truly central.
2. Avoids confusion:-
If company comes with five or six visions then chances are a confusing care value
(which does not change) with operational practices, business strategies and cultural
norms (all open to change).

3. Guides to handle market change:-

If market change, company should not change values to match markets, rather
they should change markets.

MISSION
Introduction:-
Mission is what an organization is and why it exists.

Meaning:-
Mission is a statement which defines the role that an organization plays in a
society. It refers to the particular needs of the society.

Definition:-
According to Thompson mission is “Essential purpose of the organization,
concerning particularly why it is in existence, the nature of business it is in and the
customer it seeks to serve and satisfy”.

According to hunger and wheeler mission is the “purpose pr reasons for the
organizations existence”.

Characteristics:-
A mission should always aim high. It should be feasible. But it should not be an
impossible statement. It should be realistic and achievable, its, followers must find it to
be credible.
Example: - In 1960’s the U.S Natural Aeronautics & Space Administration (NASA) had
a mission to land on moon. It was a feasible mission that was ultimately realized.
2. It should be precise:-
A mission statement should not be so narrow as to restrict the organization
activities nor should it be too broad to make itself meaningless.

3. It should be clear:-
A mission should be clear enough to lead to action.

4. It should be motivating:-
A mission statement should be motivating for members of the organization and of
society any they should feel it worth while working for such an organization or being its
customers.

5. It should be distinctive:-
If all scooter manufactures defined their mission in a similar fashion, there would
not be much of a difference among them. But if one defines it as providing scooters that
would provide value for money for years it will create an important distinction in the
public mind.

6. It should indicate major components of strategy:-

A mission statement along with the organization purpose should indicate the
major components of the strategy to be adopt. This statement indicate that the company is
likely to follow a combination of stability, growth & diversification strategies in future.

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

Recides indicating the broad strategies to be adopted a mission should also
provide clues regarding the manner in which the objectives are to be accomplished.
Key elements in developing a mission statement:-
Three key elements are there
1. History of the organization:-
Every organization manufacturing/service oriented profit or non-profit, large or
small has a history of objectives, policies, accomplishments and mistakes. The capital
characteristics and events of past must be considered in formulating and developing a
mission statement.

2. Distinctive competencies in the organization:-

Through an organization can do many things it should seek to so what it can so do
best. Distinctive competencies are the activities that an organization does effectively so
effectively. The organization must have the competencies to capitalize the opportunities
offered by the markets. An opportunity without the competence is not really an
opportunity and infact is an illusion for that organization.

3. Organizations environment:-
The management should identify the opportunities provided and
threats/challenges posed by the environment before formulating a mission statement.

Elements of a mission statement:-

The elements of the mission statement are –
1. The mission statement should specify the products to be produced/services to be
rendered, market/customer groups to be served.
2. The primary concern for survival & development through profitability.
3. The organization philosophy in terms of basic beliefs, values, attitudes and
aspirations.
4. Management style to be practiced.
 Input oriented Process oriented Goal oriented
measures measures measures

System Inputs Activities & Process Goods & Services

Desired & Produced
(Finance, HR, Machinery, (Automation, Technology, (Profit, Market share,
Material, mgt methods) Reliability, Culture) Price)

Functions of a mission statement:-

1. Should define what the organization is and what the organization wants to be.
2. Should distinguished a given organization from all others.
3. Should serve as frame work for evaluating both current and prospective
activities.
4. It should be stated in clear which should be understood throughout the
organization.

Need for a written mission statement:-

King & Cleand recommended that organization carefully develop a written
mission statement for the fall reasons.
1. To ensure clarity of purpose with in the organization.
2. To provide a basis for motivating the use of organizational resources.
3. To develop a basis or standard for allocating organizational resources.
4. To establish organizational climate.
5. To facilitate the translation of objectives and goals into a work structure
involving the assigment of tasks of responsible elements within the
organization.
6. To specify organizational purpose and the translation of these purposes into
goals in such a way that cost, time and performance parameters can be
assessed and controlled.
Contents of mission statement:-
1. Company product or service: -
It identifies the goods/services produced by the organization – what the company
offers to its customers.

2. Markets:-
Gives information about markets & customers and where they are located.

3. Technology:-
It indicated the techniques and process by which the company produces goals &
services.

4. Organizational objectives:-
Mission statement refers to organizational objectives which include the general
ways for dealing with key shareholders like shareholders customers and employees.

5. Organizational philosophy or core values:-

Organizational philosophy commonly appears as part of the mission statement
which includes the basic beliefs and values that guide organizational members in
concluding organizational business.

6. Organizational self concept:-

Organizational self concept is the company’s own view or impression of itself.
The company arrives at this self concept by assessing its strengths and weaknesses,
competition and ability to survive in the market place.

7. Public image:-
Mission statements normally contain some reference, to the type of impression
that the organization wants to leave with its public. However, public forms the opinion of
the company based on its activities and performance.
Inputs for the company mission:-
Stakeholders can be divided into “insiders” and “outsiders”. These people provide
inputs for the formulation and reformulation of organizational mission.

Outsiders

Insiders Customers
Suppliers
Executive officers Company Government
BOD’s Mission Employee unions
Shareholders Competitors
Employees Local committees
Trade association’s
General public

Steps to define mission statement:-

1. Identification of stakeholders.
2. Understanding stakeholder’s specific demands vis-à-vis the company.
3. Reconciliation and prioritization of the stakeholders.
4. Co-ordination of claims/stakeholders with other elements of the mission.

Conclusion:-
Mission play an important role in every organization without mission we cannot
run an organization because for every organization there is some purpose for its
existence. Mission statement guides the organization in achievement of its objectives and
goals.
 OBJECTIVES
Introduction:-
Objectives are needed in every area where performance and results directly and
vitally affect the survival and prosperity of the business. To manage a business is first
determine the objectives which will focus and guide the activities of the company.

Objectives give purpose and direction to the work of all employees and they
indicate the broad limits within which action is to be taken.
Definition:-
According to Drucker, the objectives should enable us to things.
1. To organize and explain the whole range of business.
2. To list these statements in actual experience.
3. To predict behaviour.
4. To appraise the soundness of decisions.

Criteria for effective objectives:-

1. Top managers who set overall objectives have a responsibility for lower level
objectives.
2. The objectives should be realize in the light of internal and external
environmental problems as well as future trends.
3. The objectives should be reasonable, i.e., with in the reach of the organization
and should represent a challenge to organizational members.
4. Objectives of company’s functional areas should be examined to see if they
are mutually consistent.
5. Management must update and revise objectives once a year.
6. Key objectives should be stated simply.

Guidelines for formulating objectives:-

1. Involve all those employees responsible for carryout:-
The management should identify and involve all those employees responsible for
implementing the objectives.
2. All objectives within an organization should support the overall objective:-
The organization overall objective of different departments like finance, human
resource, marketing, production and research and development.
3. Objectives should be realistic:-
Objectives should provide not only challenging job but also be realistic from the
view point of both internal and external environmental opportunities and threats.

4. Objectives should be contemporary as well as innovative:-

The management should view the organization periodically based on the changes
in the organization priorities and changes in external and make revision if necessary.

5. The no.of objectives for each manager should not be too many:-
Too many factors cause confusion and neglected and too few permit waste &
inefficiency.

Importance of objectives:-

1. Objectives help to define the organization in its environment:-

The organizations justify their existence to their shareholders in the environment
like customers, government creditors and society.

2. Objectives help in coordinating decision and decision makers:-

It coordinates decision making process by different employees.

3. Objectives help in formulating strategies:-

Mission statements are translated into objectives and objectives are the basis for
formulating strategies.

4. Objectives helps to reflect the changes in the environment:-

Objectives are revised to reflect the changes in the internal & external
environment form time to time presents the change in objectives.
Nature of objectives:-
These objectives include profit making, efficiency, employee satisfaction,
employee development, quality of products services for customers, good corporate
citizenship and the like
1. All but the simplest organizations pursue multiple objectives.
2. The objectives perused are given a time weighing by strategist.
3. Strategists should establish priorities for each objective among all the
objectives at corporate and strategic business unit level.
4. There are many ways to measure and define the achievements of each
objective.
5. There may be limits ti the attainment of some goals.
6. Objectives are not strategies.

Hierarchy of objectives
Diagram:-

Long range objectives specify the results that are desired in pursuing the
organizations mission and normally extend beyond the current financial year of the
organization.
Short range objectives are performance targets, normally of less, than one year’s
duration, that are used by management to achieve the organizations long range objectives.
Departmental objectives are formulated based on long and short range objectives
of organizations.
Unit level objectives are generally specific and are drawn from developmental
objectives.