CHAPTER-1

INTRODUCTION TO STRATEGIC MANAGEMENT

QUESTION 7.
What is Vision Statement? State the essentials of it.

ANSWER.
Vision implies the blueprint of the company’s future position. It describes where the
organisation wants to land. It depicts the organisation’s aspirations and provides a glimpse of
what the organisation would like to become in future. Every sub system of the organisation
is required to follow its vision.

Essentials of a strategic vision are following:-

 The entrepreneurial challenge in developing a strategic vision is to think creatively

about how to prepare a company for the future.
 Forming a strategic vision is an exercise in intelligent entrepreneurship.
 A well-articulated strategic vision creates enthusiasm among the members of the
organisation.
 The best-worded vision statement clearly illuminates the direction in which organisation is
headed.

QUESTION 7.
What is Mission Statement? Why should an organisation have a mission?

ANSWER.
Mission delineates the firm’s business, its goals and ways to reach the goals. It explains the
reason for the existence of the firm in the society. It is designed to help potential
shareholders and investors understand the purpose of the firm. A mission statement helps to
identify, ‘what business the firm undertakes.’ It defines the present capabilities, activities,
customer focus and role in society.

An organisation should have an mission statement for the following reason:-

 To ensure unanimity of purpose within the organisation.

 To develop a basis, or standard, for allocating organisational resources.
 To provide a basis for motivating the use of the organisation’s resources.
 To establish a general tone or organisational climate, to suggest a business- like operation.
 To serve as a focal point for those who can identify with the organisation’ purpose and
direction.
 To facilitate the translation of objective and goals into a work structure involving the
assignment of tasks to responsible elements within the organisation.
 To specify organisational purposes and the translation of these purposes into goals in such
a way that cost, time, and performance parameters can be assessed and controlled.

Note:-
1. A company’s mission statement is typically focused on its present business scope –
“who we are and what we do”. Mission statements broadly describe an
organisations present capability, customer focus, activities, and business makeup.

2. A good mission statement should be precise, clear, feasible, distinctive and

motivating.

QUESTION 8.
Which ponts are considered helpful while writing a mission statement?

ANSWER.
following points are useful while writing a mission of a company:-

 One of the roles of a mission statement is to give the organisation its own special identity,
business emphasis and path for development – one that typically sets it apart from
other similarly positioned companies.
 A company’s business is defined by what needs it is trying to satisfy, which customer
groups it is targeting and the technologies and competencies it uses and the activities
it performs.
 Good mission statements are – unique to the organisation for which they are developed.

QUESTION 9.
Describe goals and Objective of a company? What are the characteristics required in Objectives
to be it meaningful?

ANSWER.
These are the base of measurement. Goals are the end results, that the organisation
attempts to achieve. On the other hand, objectives are time-based measurable
targets, which help in the accomplishment of goals. These are the end results which are
to be attained with the help of an overall plan, over the particular period. However, in
practice, no distinction is made between goals and objectives and both the terms are used
interchangeably.
The vision, mission, business definition, and business model explain the philosophy of the
organisation but the goals and objectives represent the results to be achieved in multiple
areas of business.

Objectives, to be meaningful to serve the intended role, must possess the following
characteristics:

 Objectives should define the organisation’s relationship with its environment.

 They should be facilitative towards achievement of mission and purpose.
 They should provide the basis for strategic decision-making.
 They should provide standards for performance appraisal.
 They should be concrete and specific.
 They should be related to a time frame.
 They should be measurable and controllable.
 They should be challenging.
 Different objectives should correlate with each other.
 Objectives should be set within the constraints of organisational resources and external
environment.

NOTE:- Long-term objectives: To achieve long-term prosperity, strategic planners

commonly establish long-term objectives in seven areas.

 Profitability
 Productivity
 Competitive Position
 Employee Development
 Employee Relations
 Technological Leadership
 Public Responsibility

Long-term objectives represent the results expected from pursuing certain strategies.
Strategies represent the actions to be taken to accomplish long-term objectives. The time
frame for objectives and strategies should be consistent, usually from two to five years.

Short-range objectives can be identical to long-range objectives if an organisation is already

performing at the targeted long-term level. For instance, if a company has an ongoing objective
of 15 percent profit growth every year and is currently achieving this objective, then the
company’s long-range and short-range objectives for increasing profits coincide. The most
important situation in which short-range objectives differ from long-range objectives occurs
when managers are trying to elevate organisational performance and cannot reach the long-
range target in just one year. Short-range objectives then serve as steps toward achieving long
term objective.

Clearly established objectives offer many benefits. They provide direction, allow synergy,
aid in evaluation, establish priorities, reduce uncertainty, minimize conflicts, stimulate
exertion, and aid in both the allocation of resources and the design of jobs.

QUESTION 10.
Define Value.

ANSWER.
Values are the deep-rooted principles which guide an organisation’s decisions and actions.
Collins and Porras succinctly define core values as being inherent and sacrosanct; they can
never be compromised, either for convenience or short-term economic gain. Values often
reflect the values of the company’s founders—Hewlett-Packard’s celebrated “HP Way” is an
example. They are the source of a company’s distinctiveness and must be maintained at all
costs.

QUESTION. Sandeep, a human resource manager thinks that Intent is a bigger concept than
Values. Is he right?
ANSWER. Sandeep is not right, as Values and Intent are two different concepts. Intent is the
purpose of doing business while values are the principles that guide decision making of
business. They both go hand in hand, while the intent is sometimes driven by values. So values
more or so is wider than Intent.

QUESTION 11.
Explain the difference between three levels of strategy formulation.

ANSWER.
A typical large organization is a multidivisional organisation that competes in several different
businesses. It has separate self-contained divisions to manage each of these. There are
three levels of strategy in management of business - corporate, business, and functional.

The corporate level of management consists of the chief executive officer and other top-level
executives. These individuals occupy the apex of decision making within the organization.
The role of corporate-level managers is to oversee the development of strategies for the
whole organization. This role includes defining the mission and goals of the organization,
determining what businesses it should be in, allocating resources among the different
businesses and so on rests at the Corporate Level.
The development of strategies for individual business areas is the responsibility of
the general managers in these different businesses or business level managers. A business
unit is a self-contained division with its own functions - For example, finance, production,
and marketing. The strategic role of business-level manager, head of the division, is to
translate the general statements of direction and intent that come from the corporate level
into concrete strategies for individual businesses.

Functional-level managers are responsible for the specific business functions or operations
such as human resources, purchasing, product development, customer service, and so
on. Thus, a functional manager’s sphere of responsibility is generally confined to one
organizational activity, whereas general managers oversee the operation of a whole company
or division.

QUESTION 11.
Explain the role of chief Executive officer.

ANSWER.
The role of Chief Executive Officer pertains to corporate level.

The corporate level of management consists of the Chief Executive Officer (CEO) and
other top-level executives. These individuals occupy the apex of decision making within the
organization.

The role of Chief Executive Officer (Top Management/Corporate Level Managers) is to:

1. oversee the development of strategies for the whole organization;

2. defining the mission and goals of the organization;
3. determining what businesses it should be in;
4. allocating resources among the different businesses;
5. formulating, and implementing strategies that span individual businesses;
6. providing leadership for the organization;