Business Strategies and Business Management

T 303

Topics Covered 9 components of

mission statement by
David
Business Policy: features and Vision vs mission
examples
Policy Vs Strategy
Goals and objectives
Strategic Issue
Business environment,
Action Plan importance of business
Top Level Management environment
Role of Top Level Management
Strategic intent, hierarchy of strategic Environmental scanning
intent and analysis
Vision, mission, and their features PESTEL analysis
 Business Policy
Business policy is a set of principles and rules which directs the
decisions of the subordinates. Policies are framed by the top level
management to serve as a road map for operational decision
making. It is helpful in stressing the rules, principles and values of
the organization.

Features of Business Policy

Specific- Policy should be specific/definite. If it is uncertain, then the

implementation will become difficult.
Clear- Policy must be unambiguous. It should avoid use of jargons and
connotations. There should be no misunderstandings in following the policy.
Reliable/Uniform- Policy must be uniform enough so that it can be efficiently
followed by the subordinates.
Aligned with goals- Policy should be appropriate to the present organizational
goal
 Business Policy
Features of Business Policy

Simple- A policy should be simple and easily understood by all in the

organization.

Inclusive/Comprehensive- In order to have a wide scope, a policy must be

comprehensive.

Flexible- Policy should be flexible in operation/application. This does not imply

that a policy should be altered always, but it should be wide in scope so as to
ensure that the line managers use them in repetitive/routine scenarios.

Stable- Policy should be stable else it will lead to indecisiveness and uncertainty
in minds of those who look into it for guidance.
Business Policy
Examples:
Equal opportunity policy Workplace health and safety
Employee code of conduct policy Attendance, time-off policies
Employee disciplinary action policy Employee complaint policies
Work schedule and rest period policies Inclement weather policies
Remote work policy Performance Review Policies
Employee face mask policy (during COVID-19)

https://www.infosys.com/about/esg/policy.html

https://www.tatamotors.com/investors/corporate-governance/policies/
 Policy Vs Strategy
Policy Strategy
blueprint of the organizational activities concerned with those organizational
which are repetitive/routine in nature. decisions which have not been
dealt/faced before in same form.

Policy formulation is responsibility of strategy formulation may involve other

top level management. levels of management.

deals with routine/daily activities deals with long term decisions

essential for effective and efficient
running of an organization

A policy is what is, or what is not done strategy is the methodology used to
achieve a target as prescribed by a
policy
 Strategic Issue
• A Strategic Issue is, an issue - an unresolved question needing a
decision or waiting for some clarifying future event.
• it is strategic and has major impact on the course and direction of
the business.
• It probably relates directly to one or more of the fundamental
“Three Strategic Questions”
What are we going to sell?
To whom are we going to sell it?
How will we beat or avoid our competition?

Strategic Issues lie right at the heart of the business.

Correspondingly, the process step dealing with Strategic Issues lies
right at the heart of Simplified Strategic Planning.
 Action Plan
An action plan is a document that lists what steps must be taken to
achieve a specific goal. It breaks down the goal into actionable steps
that can be easily followed and tracked.

• Creating an action plan requires a thorough understanding of the goal and

objectives, as well as the strategies to reach them
• It is important to consult all stakeholders before creating an action plan so
that it adequately addresses their needs
• An action plan can include deadlines, resources needed to complete the tasks
and key personnel responsible for implementation
• Action plan should also clearly define who handles each task, when tasks
need to be completed and how they will be measured to determine success.
 Top Level Management

• Top management consist of the top-level executives of the

organization who takes the whole responsibility of the
organization.
• The top-level management designs/ formulates various policies
and strategies for the effectiveness of the organization.
• It also defines the mission, vision, goals and objective of the
organization which frames the direction of operation to the
entire enterprise.
• Top level management includes highest ranking executives like
CEO, CFO, VP, MD, COO, President etc.
 Role of Top Level Management

• The top-level management is highly responsible for the success or the failure
of any organization. They are the entity who draws the direction of the
functioning of the business.
• they play majorly a strategic role in the organization. Few of the strategic
roles of top level management include:

Strategic Framework:
• The top-level management frame and design the organization policy mission
vision, goals objectives etc. They need to frame all these things strategically
aligned with the business to run a successful enterprise.

Strategic Direction:
• The top-level management must give a proper direction in the operations of
the business are triggered towards. It should keep in mind all the strategies
aligned with e mission and vision of the business.
Role of Top Level Management

Developing strategies:
• All the strategies to be adopted by the business must be developed with
utmost care by the top-level management. The top-level management must
consider all the dynamics of the market related to the business before
developing a strategy. Proper strategy must be developed for all functional
areas of a business.

Strategic staffing:
• The staffing of key positions in the organization must be done by the top-level
management.

Strategic Decision Making:

• All the major decisions are taken by the top-level management. It is always
advisable that the decisions must be taken strategically to effectively utilize
the available resources and bring the desired outcome.
Strategic Intent

• is the leveraging of a firm’s internal resources, capabilities

and core competencies to accomplish the firm’s vision,
mission, and objectives in a competitive environment.
• It is all about winning competitive battles and gaining
leadership positions by putting organizational resources to
best use.
• When established effectively can cause people to turn out
excellent performance.
•

Hierarchy of Strategic Intent (adopted from Miller, 1998)

Strategic Intent:

Vision:
• long term goal describing what an organization wants to
become in future
• it should have the following feature:
achievable, yet challenging
Brevity
reflects Value system
reflects purpose
Strategic Intent:
Mission:
• Reason for existence of the business
• It defines the present capabilities, activities, customer focus as
well
• Also it helps shareholders and investors to understand the
purpose of company.
• it should have the following feature:
Clarity
Long-term purpose
Reflects firm's Identity and image
Realistic
Reflects values, beliefs, and philosophy
Should be aligned with vision
9-Components of Mission Statements----by David
Following 9 basic components serve as practical framework for evaluating
and writing mission statements---
1. Customers--Who are the firm’s customers?
2. Products or services—what are firm's major products or services?
3. Markets---geographically, where does the firm compete?
4. Technology—is the firm technologically updated?
5. Concern for survival, growth and profitability—is the firm committed to
growth and financial soundness?
6. Philosophy—what are the basic beliefs, values, aspirations and ethical
priorities of a firm?
7. Self-concept—what is the firm’s distinctive competence or major
competitive advantage?
8. Concern for public image—is the firm responsive to social, community
and environmental concerns?
9. Concern for employees—are employees valuable asset to the firm?
 Goals and Objectives
• These terms are used interchangeably to refer the specific targets to
reach in the term
• These are the base of measurement
• Goals may be specific accomplishments, the organisation attempts to
achieve.
• Goals may be considered as set of constraints that organization must
satisfy such as meeting government safety standards, profits for
shareholders
• On the other hand objectives are action oriented i.e. time based
measurable actions, which help in accomplishment of goal.
• Objectives form the basis for work and provide yardstick for measuring
performance
Conclusion
• Vision, Mission and business definition are philosophies of a company which
guide the organisation
• Objectives and Goals try to translate these philosophies into concrete action
plans in the short run
 Environment of Business

Environment of business is the ‘aggregate of conditions, events and

influences that surround and affect it’ (David)
• It is the sum-total of all things that are external and beyond the
control of individual business.
• Environmental forces affect the inception, survival, and growth of
firms
• It has the following features:
Aggregative
Interrelated
Complex
Dynamic
Challenging
 Importance of Awareness about
Business Environment
• Exploit opportunities early
1990

• Contain damage
2010
 Importance of Awareness about
Business Environment
• Serving customers well

• Put resources to best use

• Keep the firm alert, flexible and dynamic

• Learn from mistakes

 Business
Environment

External Internal

General or Macro
PESTEL factors

Task/Micro/Competitive/Operating
Clients, competitors, suppliers,
labour, regulators
 Environmental Analysis or Scanning

• It is the process of monitoring an organizational environment to

identify both present and future threats and opportunities that
may influence the firm’s ability to reach its goals.
• It helps to adjust environmental change at right time
• It helps to improve organizational performance by making
managers and divisional managers aware of issues that arise in
the firm’s environment
• It helps strategists to focus on alternatives that help to achieve
predetermined goals and eliminate those options that are not in
line with anticipated opportunities or threats
 Environmental Analysis or Scanning

Modes of Scanning
Aguilar (1967) identified following four modes of scanning:

1. Undirect Viewing- reading a variety of publications for no

specific purpose other than to be informed
2. Conditioned Viewing- responding to information in terms of
assessing its relevance to the organization
3. Informal searching- actively seeking specific information but in a
relatively unstructured way
4. Formal searching- proactive mode of scanning entailing formal
methodologies for obtaining information
PESTEL Analysis
 PESTEL Analysis

Political Factors:

• These factors are all about how and to what degree a

government intervenes in the economy or a certain industry.

• Basically all the influences that a government has on your

business could be classified here.

• This can include government policy, political stability or

instability, corruption, foreign trade policy, tax policy, labour
law, environmental law and trade restrictions.
 PESTEL Analysis

Economic Factors:

• Economic factors are determinants of a certain economy’s

performance.

• These factors may have a direct or indirect long term impact on

a company, since it affects the purchasing power of consumers
and could possibly change demand/supply models in the economy.

• Factors include economic growth, exchange rates,

inflation rates, interest rates, disposable income of consumers
and unemployment rates.
PESTEL Analysis
Social Factors:

• This dimension of the general environment represents the

demographic characteristics, norms, customs and values of the
population within which the organization operates.

• This includes population trends such as the population growth

rate, age distribution, income distribution, career attitudes,
safety emphasis, health consciousness, lifestyle attitudes and
cultural barriers.
 PESTEL Analysis

Technological Factors:

• These factors pertain to innovations in technology that may

affect the operations of the industry and the market favorably or
unfavorably.

• This refers to technology incentives, the level of innovation,

automation, research and development (R&D) activity,
technological change and the amount of technological
awareness that a market possesses.
 PESTEL Analysis
Environmental Factors:

• Environmental factors have come to the forefront only relatively

recently. They have become important due to the increasing
scarcity of raw materials, pollution targets and carbon footprint
targets set by governments.

• These factors include ecological and environmental aspects

such as weather, climate, environmental offsets and climate
change which may especially affect industries such as tourism,
farming, agriculture and insurance.
 PESTEL Analysis
Legal Factors:

• Although these factors may have some overlap with the political
factors

• they include more specific laws such as: discrimination laws,

antitrust laws, employment laws, consumer protection laws,
copyright and patent laws, and health and safety laws.

• It is clear that companies need to know what is and what is not

legal in order to trade successfully and ethical.