MANAGERIAL POLICY

NOTES
Managerial policy is a process

 Vision
 Mission
Internal Environment
 Goals
 Objectives External environment
 Strategies
Policies and procedures
 Tactics
 Feedback

Strategic Management
Strategic management is the establishment of objectives and the formulation, evaluation and
selection of the policies, strategies, tactics and actions required to achieve them.

What is management?
 Perform activities in a systematic manner
 Leading, organizing and controlling Need wants consumption production
Why management establish economy
In order to produce goods and services in an organization or within a specified boundries.

What is organization?
Group of people working together to achieve something

Vision statements
What do we want to become
How the world would be
In order to change the world
To make a difference in the world
Organization creates to fulfil the vision
To implement some change

 Clear vision provides the foundation for developing a comprehensive mission statement.
 Vision statement should be established first and foremost
 The vision statement should be short, preferably one sentence
 For many, if not most, corporations, profit rather than mission or vision is the primary
motivator.
 But profit alone is not enough to motivate people. Profit is perceived negatively by many
stakeholders of a firm
 For example, employees may see profit as something that they earn and management then
uses and even gives away to shareholders. although this perception is undesired and
disturbing to management, it clearly indicates that both profit and vision are needed to
motivate a workforce effectively
 At a minimum, a vision statement should reveal the type of business the firm engages
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Mission statement (creed statement)
What is our business?
What you want to do
Path or direction towards vision
An organisation's mission identifies the overriding purpose of the organisation, and what the
organisation is trying to achieve. Mission is sometimes described in relation to the questions of
'What is the organisation for?' or 'What business are we in?'

(a) Purpose. Why does the company exist? Who does it exist for?

 To create wealth for shareholders, who take priority over all other stakeholders?
 To satisfy the needs of all stakeholders, including employees, for example?
 To reach some higher goal such as the advancement of society?

(b) Values are the beliefs and moral principles that underlie the organisation's culture.

(c) Strategy provides the commercial logic for the company (the nature of the organisation's
business), and so addresses the following questions: 'What is our business? Or, what should it be?'
What are our elements of sustainable competitive advantage?

When answering these questions, the mission should look at them from the customer's perspective.

(d) Policies and standards of behaviour provide guidance on how the organisation's business should
be conducted. For example, a service industry that wishes to be the best in its market must aim for
standards of service, in all its operations, which are at least as good as those found in its
competitors.

Benefits of Strategic Management

 Identifies risk
 Forces managers to think
 Forces decision making
 Better control
 Enforces consistency at all level
 Proactive rather than reactive
 Initiate rather than response
 Significant improvement
 Systematic planning

Benefits of Vision and Mission

1. to make sure all employees/managers understand the firm’s purpose or reason for being.
2. to provide a basis for prioritization of key internal and external factors utilized to formulate
feasible strategies.
3. to provide a basis for the allocation of resources.
4. to provide a basis for organizing work, departments, activities, and segments around a common
purpose.
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Ten Benefits of Having a Clear Mission and Vision

 Achieve clarity of purpose among all managers and employees.
 Provide a basis for all other strategic planning activities, including internal and external
assessment, establishing objectives, developing strategies, choosing among alternative
strategies, devising policies, establishing organizational structure, allocating resources, and
evaluating performance.
 Provide direction.
 Provide a focal point for all stakeholders of the firm.
 Resolve divergent views among managers.
 Promote a sense of shared expectations among all managers and employees.
 Project a sense of worth and intent to all stakeholders.
 Project an organized, motivated organization worthy of support.
 Achieve higher organizational performance.
 Achieve synergy among all managers and employees.

Characteristics of a Mission Statement

 Broad in scope; does not include monetary amounts, numbers, percentages, ratios, or
objectives
 Fewer than 150 words in length
 Inspiring
 Identifies the utility of a firm’s products
 Reveals that the firm is socially responsible
 Reveals that the firm is environmentally responsible
 Includes nine components: customers, products or services, markets, technology, concern
for survival/growth/profits, philosophy, self-concept, concern for public image, concern for
employees
 Reconciliatory
 Enduring
 Statement of purpose
 Principles, values and beliefs
 Long term

Components of a Mission Statement

 Customers — Who are the firm’s customers?
 Products or services — What are the firm’s major products or services?
 Markets — geographically, where does the firm compete?
 Technology — is the firm technologically current?
 Survival, growth, and profitability — is the firm committed to growth and financial
soundness?
 Philosophy — What are the basic beliefs, values, aspirations, and ethical priorities of the
firm?
 Self-concept (distinctive competence) — What is the firm’s major competitive advantage?
 Public image — is the firm responsive to social, community, and environmental concerns?
 Employees — are employees a valuable asset of the firm?
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Where does mission / vision come from?

Context

 Strong links (Close family, friends, work colleagues)

 Weak links (Not close people)
Macro Environment
 Government
 Environment
 Culture/customs
 Religion
 Politics
 Social
 Demographic
 Technology
Government
 State has a right to influence the industry
 Make standard
 Run economy
 Regulate market
 Government often influence how you think (E.g., Israel)
 Make framework
 Make Export / import policies
 Force people to behalf in a certain way.
 Development
Religion
 Everyone is free to practice any religion
 In many countries, religion is not an important / influential factor.
Demographic
 The demand of good and services changes with age, demographics’
 Life expectancy increase
 Fertility rate decrease (Pak: 2.4)
 Per Capita Income
 Gender right/ requirements
 Age, gender and income
 Mortality rates
 Death Rate – Other than mortality rates (Major Disaster)
 Birth Rate
 Family Structure
 Male/Female Ratio
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 Demographic is the one feature which can be predicted with high accuracy
Technology
 Globalization
 Competition
 Population density
 More interaction between people
 High degree of idea generation
 Technology is not always up word
 Knowledge Lost
 Technology implication
 Technology causes unemployment
 Technology creates new opportunities
 Technology disrupts old pattern of behaviour
 Form new pattern of behaviour
 Technology obsolescence because of innovation
 Generally older people are uncomfortable with new technology
Political Environment

Global treaties/environment
 Important for businesses as well as government also
 FATF issue
 FECTA Document
 Visa requirement
 European countries banned
 Pakistan export
 Politics
 IMF
 WHO FATF
 UN
 Laws and Regulations
 Export Policies
 International Buyer Standards

Legal Environment

Economy
 Consumer purchasing behaviour
 Consumer buying power
 GDP
 Reserves (Forex)
 Inflation
 Deficit
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 Balance of Trade
 Per Capita Income
 Purchasing power parity
 Import
 Export
 remittances

Social/ Culture
 Believes
 Traditions
 Customs
 Values

GDP-STEEL
 Global
 Demographic
 Political
 Social/culture
 Technology
 Economy
 Environment
 Legal/laws

Market Offerings

 Combination of product and services

Levels of Product

 Core Product
 Basic Product
 Generic Product
 Augmented Product
 Potential Product
Porter’s Five Forces

 Bargaining power of customer

 Bargaining power of supplier
 Threats of new entrants
 Threats of substitute products
 Rivalry among competitors
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Consumer Market
Consumer market are those market where people buy for its own consumption.
Business Market
Buy something to sell further.

Consumer Market Characteristics

Irregular demand
Quantity demanded is small
Capabilities
Ability to transfer inputs into outputs
Core Competency
Ability to do better than your competitor
Competency
Ability to well
Obtaining Competitive Intelligence
 Reverse Engineering rival firms products
 Use surveys, interview of customer, supplier and distributers of rivals firms
 Analyse rival firms closely
 Search online database which is publically available.
 Contact government agencies
 Monitor relevant trade publications, magazines and news paper
 Purchase social media data
 Hire top executive from rival firms
 Monitor rival firms activities very closely
Key Questions to ask about competitors
 SWOT analysis of major competitor
 Unique product services
 Major competitor and its unique product or services
 How major competitor vulnerable to our product
 Mastering social media
 Entry and exit barriers
 Key factors for our competitors
Comparative Intelligence
It is a systematic and ethical process for gathering and analysing information about the
competitor’s activities and general business trends in order to achieve own businesses goals.
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