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Quaid-E-Azam University Islamabad Deptt. Admin Sciences Assignment # 01 Business Policy
Quaid-E-Azam University Islamabad Deptt. Admin Sciences Assignment # 01 Business Policy
Environmental Scanning
Strategy Formulation
Strategy Implementation
Evaluation & Control The image of Strategic Planning Process (Strategic Planning Process, n.d.)
What is a vision?
Visualization or mental picture is the literal meaning of vision. A vision describes how an organization views itself and where it will be in next 3 or 5 or 10 years and so on. A vision statement indirectly describes the futuristic view of an organization e.g. vision of Mobilink as described in (Mobilink GSM, n.d.) is To be the leading telecommunication services provider in Pakistan by offering innovative communication solutions for the customers while exceeding shareholder value and employee expectations. It is a broad view of a companys futuristic views.
of communications in Pakistan. It provides the best value to its customers, employees, business partners and shareholders. A well defined mission statement speaks a lot about the company and bestows it with honor by separating it from other companies of its own type. It also identifies the scope of companys operations by defining the products and targeted market.
What is a budget?
As the name indicates, a budget is a financial or monetary plan. It lists down the resources available and cost of each program. Wheelen and Hunger (2002, p.15) says that a budget lists the detailed cost of each program. The budget thus helps the management in planning for its expenses and setting cost limits using the available resources.
What is program?
A program means agenda, plan, curriculum or syllabus. It defines and describes the work flow of an action or a task. Wheelen and Hunger (2002, p.15) defines a program in the following words A program is a statement of activities or steps needed to accomplish a single use plan. It may involve restructuring of organization, changing the companys internal culture or beginning a new research effort. Hence we may conclude that it is a component of a project which describes the workflow throughout.
What is a policy?
Policy means guiding principle or course of action. Wheelen and Hunger (2002, p.14) defines a policy in the following words A policy is a broad guideline for decision making that links the formulation of strategy with its implementation. Companies use policies to make sure that employees throughout the company make decisions and take actions that support the companys mission, objectives and strategies. Hence a policy in collaboration with companys objectives and mission is a guiding principle for employees which define them their limits of action. It has lesser scope than a strategy.
No time period
What is a strategy?
Literally, strategy means a plan or policy but in terms of strategic management it has slightly different meanings. It means a comprehensive and long term plan. Wheelen and Hunger (2002, p.13) defines a strategy in the following words a strategy of a corporation forms a comprehensive master plan stating how the corporation will achieve its mission and objectives There are three types of strategies i.e. Corporate Strategy Business Strategy Functional Strategy
What is a procedure?
Procedure means mode of operation or course of action. Wheelen and Hunger (2002, p.15) defines a procedure in the following words system of sequential steps or techniques that describe in detail how a particular task or job is to be done. They typically detail the various activities that must be carried out in order to complete the corporations programs Often the companies name their standard procedures as Standard Operating Procedure or SOP. These procedures are combined, compiled and published within the company for taking guideline through this manual. An example is the SOP of Mobilink offices.
Karger and Malikstudied studied 273 firms in the chemicals and drugs, electronics, and machinery industries. All were $ 50 to 500 million corporations. Those practicing strategic management were contrasted with those who didnt (planners with no planners). Very significantly differences were found in the machinery and chemical industries and some positive findings in the drug and electronics group Glueck (1980, p.17). Hegarty studied 46 firms in Fortunes second 500 companies from 1970 to 1973. he found that the more directly the firm linked its objectives to its strategies and thus formalized its strategic management process, the more the firm prospered. Glueck (1980, p.19). Hence there is a difference between the firms that apply strategic management and those who do not. As described by Glueck (1980, pp.16-17) there are the following advantages of strategic management: Strategic management helps analyze and scan the environment therefore future problems and opportunities could be well anticipated It allows a firms top management to anticipate changes and provide track and control for the enterprise It provides clear cut mission, vision and objectives of enterprise to all the employees It allows a firm to take decisions on the basis of long range forecast It is widely practiced in industry Businesses where strategic management is applied are better performers and their employees According to Wheelen and Hunger (2002, p.4) strategic management has the following advantages: The followers of strategic management are the outperformers It provides clearer sense of companys strategic vision It helps understanding the rapidly changing environment
Economic Forces
Economic forces include the following; GDP trends. Interest rates. Money supply in the economy. Inflation rate. Unemployment level. Wage/price control. Devaluation /revaluation. Energy availability and cost. Disposable income.
Technological forces
Technological forces include the following; New product development. Availability and cost of raw material. Availability and cost of money. Availability and cost of labor. Technological changes.
Market Forces
Market forces include the following; Changes in population. Age shifts. Income distributions. Product/service life cycle. Entry and exit of competitors. Availability of substitutes. Strategic changes by competitors.
Corporate policy
Corporate policy describes a companies overall direction in terms of its general attitude towards growth and the management of its various businesses and product lines. It typical fit within the three main categories of stability, growth and retrenchment.
Business policy
Business policy usually occurs at the business unit or product level and it emphasizes improvement of the competitive position of a corporation products or services in the specific industry or market segment served by that business unit. Business strategies may fit within the two overall categories of competitive or cooperative strategies.
Functional policy
Functional policy is the approach taken by a functional area to achieve corporate and business unit objectives and strategies by maximizing resources productivity. It is concerned with developing and nurturing a distinctive competence to provide a company or business unit with a competitive advantage.
Environmental Scanning
In the Environmental scanning we monitor, evaluate and disseminate information from the external and internal environment to the corporation. The external environment consists of forces such as economic forces, technological forces, political forces, socio cultural forces and demographical forces. The internal environment consists of variables that are within the organization. They include the corporation culture, people and resources. The simplest way of scanning the environment is through SWOT analysis in which the strengths, weakness, opportunities and threats or an organization are analyzed because they are the strategic factors of a company.
Strategy Formulation
Strategy formulation is the development of long range plans of a company in order to gain effective and efficient business procedure. Strategies are formulated by keeping in view the long term prospective of a firm. It includes the following steps:
Mission Objectives
Strategies
Programs
A program is a subset of a big project. It determines the set of activities that are undertaken while accomplishing a plan.
Budget
A budget is a financial plan of an organization which is formed on the basis of funds available.
Procedures
A procedure is a set of instructions which are required to do a job. Mostly, the companies make their standard operating procedures for the sake of convenience of their employees.
The image of the five forces model (Five Forces Analysis, n.d.) (Marketing Teacher, n.d.) The five forces model is also known as Porters model. It was developed by Michael E. Porter of Harvard Business. It is a model for the industry analysis and business strategy development. Wheelen and Hunger (2002, pp. 60-63) It highlights five key forces namely: 1. 2. 3. 4. 5. Threats of Entry The power of buyers The power of suppliers The threat of substitutes Competitive rivalry
Threats of Entry
New industry entrants usually bring new threats to the existing companies because they may have such a competitive advantage that they may capture the market share of existing companies therefore they are a big threat. The entry barriers or obstructions may provide a safe side to the existing companies. The possible barriers may be:
Economies of scale The cost of entry Distribution channels Cost advantages not related to the size of the company Government action Product differentiation
Where there is product-for-product substitution e.g. email for fax Where there is substitution of need e.g. better toothpaste reduces the need for dentists Where there is generic substitution (competing for the currency in your pocket)
Competitive Rivalry
Wheelen and Hunger (2002, p.62) state that according to Porter rivalry is related to presence of several factors such as Number of competitors Role of industry growth Product or service characteristics Amount of fixed costs Capacity Exit barriers Diversity of rivals
There is the threat of substitute where entry is easy. This is why it is always seen in the center of the diagram.
References
Five Forces Analysis [Image] (n.d.). Retrieved September 13, 2008, from http://www.marketingteacher.com/Lessons/lessonfivefoces.htm Glueck, F., William. (1980). Environmental Analysis and Diagnosis. In Business Policy and Strategic Management(3rd Ed.). (pp. 88-102). USA: McGraw Hill. Glueck, F., William. (1980). Why Strategic Management. In Business Policy and Strategic Management(3rd Ed.). (pp. 16-19). USA: McGraw Hill. Mobilink GSM (n.d.) Mobilink Mission. Retrieved September 13, 2008, from http://www.mobilinkgsm.com/mission Mobilink GSM (n.d.) Mobilink Vision. Retrieved September 13, 2008, from http://www.mobilinkgsm.com/vision Quick MBA Knowledge to Power Your Business (n.d.). The Strategic Planning Process. Retrieved September 13, 2008, from http://www.quickmba.com/strategy/strategic planning The Strategic Planning Process [Image] (n.d.). Retrieved http://www.quickmba.com/strategy/strategic planning September 13, 2008, from
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