Module 1 - Introduction to

Business Policy & Strategy

 Business Policy
• Business : "Business means exchange of commodities and services for
increasing utilities."
• Policy : “Policies are strategic guidelines for action. They spell out
what can and what cannot be done in all areas of a company’s
operations”. – Robert J. Mockler
• General statements of principles which guide the thinking, decision-
making and actions in an organization
• Business policy - is a set of principles and rules, along with their
consequent rules of action that provide for the successful
achievement of specific / business objectives.

• Accordingly, a policy contains both a "principle" and a "rule of action."

Both should be there for the maximum effectiveness of a policy.
Purpose of business policy
Objectives of business policy
To manage a business is to balance a variety of needs and goals.
This requires multiple objectives to cover all functional areas viz

1. Knowledge generation
2. Skill Creation
3. Attitudinal changes to cope with Business Situation
 Objectives of business policy

Three Different Types Of Skills

TECHNICAL SKILLS
HUMAN SKILLS

CONCEPTUAL SKILLS
Walmart's mission can be summarized as “helping people around the world save money and live better –
anytime and anywhere – in retail stores and through eCommerce.”

While its vision is to “make every day easier for busy families.”
Walmart defines “busy families” as the bull's eye of its business strategy.

Google Mission Statement

Organize the world's information and make it universally accessible and useful
Google Vision Statement
To provide access to the world’s information in one click

Apple’s Vision Statement

“To make the best products on earth and to leave the world better than we found it.“
Apple’s Mission Statement
“To bringing the best user experience to customers through innovative hardware, software, and services.”
MISSION
• Mission statement drives the company. It is what you do/the core of the business, and
from it come the objectives and finally, what it takes to reach those objectives. It also
shapes your company’s culture.
Mission statement questions look like:
• What we do?
• Whom do we serve?
• How do we serve them?
Mission Statement of FedEx
"FedEx is committed to our People-Service-Profit Philosophy. We will produce outstanding
financial returns by providing totally reliable, competitively superior, global, air-ground
transportation of high-priority goods and documents that require rapid, time-certain
delivery."
VISION
• Vision statement gives the company direction. It is the future of the business,
which then provides the purpose.
• The vision statement is about what you want to become. Aspiration.
Vision statement questions look like:
• What are our hopes and dreams?
• What problem are we solving for the greater good?
• Who and what are we inspiring to change?
Need for a mission statement
 Ensure unanimity of purpose within the organisation.
 Basis for allocating organisational resources.
 Establishes organisational climate.
 It serves as a focal point for individuals to identify with the
organisation’s purpose and direction.
 Facilitates the translation of objectives into tasks
 It specifies organisational purpose - helps to translate this purpose
into objectives - in such a way that cost, time and performance
parameters can be assessed and controlled
Key elements in developing Mission
statements
1. History of the organisation
2. Distinctive competencies of the organisation
3. Organisation’s Environment
Goal, Process & Input formulation of the
mission statement
Formulation of Mission Statements
 In many cases, the mission is inherited
 In some cases, the mission statement is drawn up by the CEO and board of
directors or a committee of strategists constituted for the purpose.
 Engaging consultants for drawing up the mission statement is also common.
 Many companies hold brainstorming sessions of senior executives to
develop a mission statement. Soliciting employee’s views is also common.
 Decision on how best to communicate the mission to all managers,
employees and external constituencies of an organisation are needed when
the document is in its final form.
 The practice in Indian companies appears to be a consultative-participative
route.
 According to Fred R. David, an ideal approach for developing a
mission statement would be to
 select several articles about mission statements
 ask all managers to read these as background information.
 Then ask managers to prepare a draft mission statement for the organisation.
 A facilitator or a committee of top managers, merge these statements into a single
document and distribute this draft mission statement to all managers.
 Then the mission statement is finalized after taking inputs from all the managers in a
meeting. Thus, the process of developing a mission statement represents a great
opportunity for strategists to obtain needed support from all managers in the firm.
Criteria for evaluating a mission statement
• Clear and understandable to all parties involved.
• Brief enough for most people to remember.
• Clearly specifies the purpose of the organization.
• Primary focus on a single strategic thrust.
• Reflect the distinctive competence of the organisation
• (e.g., what can it do best? What is its unique advantage?)
• Broad enough to allow flexibility in implementation, but not so broad as to permit lack of focus.
• Serve as a template and be the same means by which the organisation can make decisions.
• Must reflect the values, beliefs and philosophy of operations of the organisation.
• Reflect attainable goals.
• Serve as an energy source and rallying point for the organisation (i.e., it should reflect commitment to the
vision).
• https://www.youtube.com/watch?v=nobyDer-jeA
 Key Performance Area /
Drucker‘s Performance Area
1. Market standing
2. Innovation
3. Productivity
4. Resource levels
5. Profitability
6. Manager performance and development
7. Worker performance and attitude
8. Social responsibility 
Strategy and Strategic Management

• Strategy- “ A unified, comprehensive and integrated plan designed to

assure that the basic objectives of the enterprise are achieved.”
William F. Glueck
• Strategic Management-“Strategic management is a process of
formulating, implementing and evaluating cross-functional decisions
that enable an organisation to achieve its objective”.
Fed R David
Evolution of Strategic Planning
• derived from Greek ‘Strategos’ which means generalship
• the art of the general
• used in military sense
• military strategy is the art of so moving or disposing the instruments
of warfare (troops, ships, aircrafts, missiles, etc.) as to impose upon
the enemy, the place, time and conditions for fighting by oneself
 Need for strategic management
Forecast Change Competitive Advantage

Provide Guidelines Provides Holistic Approach

Better Performance Improved Integration

Improved Allocation Of Resources Systematize Business Decisions

Process of strategic management
Stages
1. Strategy Formulation
2. Strategy Implementation
3. Strategy Evaluation
Process
4. Develop vision and mission
5. Environment Scanning-External environment analysis- Internal environment
analysis
6. Establish long-term objectives
7. Generate, evaluate and choose strategies
8. Implement strategies
9. Measure and evaluate performance
Evolution of Strategic Planning
Strategy v/s. Policy
BASIS FOR COMPARISON STRATEGY POLICY

Meaning Strategy is a comprehensive plan, made to Policy is the guiding principle, that helps the
accomplish the organizational goals. organization to take logical decisions.

What is it? Action plan Action principle

Nature Flexible Fixed, but they allow exceptional situations

Orientation Action Decision

Formulation Top Level Management and Middle Level Top Level Management
Management

Approach Extroverted Introverted

Role of Strategists
• Strategists are individuals or groups who are primarily involved in the
formulation, implementation, and evaluation of strategy.
1. Board of Directors
2. Chief Executive Officer
3. Senior management
4. Corporate planning staff
5. Strategic business unit (SBU) level executives
6. Middle level managers
7. Executive Assistant
8. Consultants
9. Entrepreneurs - “the entrepreneur always searches for change, responds to it
and exploits it as an opportunity”
Characteristics of strategic management decisions at different levels
 Schools of Thought on Strategy Formulation & decision
making

1. The Intuitive- Emotional Approach

2. The Rational-Analytical Approach

3. A satisfying Approach

4. Political- Behavioral approach

 Reasons for failure of strategic management–
Issues Faced in Strategic Planning
• SM based on certain premises
• If the SWOT analysis is not right - lead to formulation of wrong or
ineffective strategies.
• Lack of realism of the mission/objectives would naturally get reflected in
the strategy.
• SM might make the organisation over-ambitious - Unrealistic strategies
may land companies in severe problems.
• Rigid -a good strategic management system provides for required flexibility
• If the implementation of the strategy is not effective, even an excellent
strategy would not produce expected results.
• Lack of commitment.
• Internal resistance
• Strategic planning is a complex and difficult task which requires
people with vision, expertise and commitment and an appropriate
system.
• Strategic management is a costly exercise.
• Utility or need for strategic management ? pointing out the failure of
many firms which adopted strategic management and the success of
many firms which did not have it.
• Misunderstanding strategic planning.
• Drucker - what strategic planning is not?
• It is not a box of tricks, a bundle of techniques. It is analytical thinking and
commitment of resources to action.
• Strategic planning does not deal with future decisions. It deals with the
futurity of present decisions.
• Biggest mistake- is the attempt to apply a universal strategy.
Case study
• When Roberto Goizueta took over as CEO of Coca-Cola in 1980s, he
was faced with intense competition from Pepsi that was eating into
Coke’s growth
• His executives were Pepsi focussed and goal was for increasing market
share 0.1 percent at a time
• Goizueta decided to stop competing against Pepsi and instead
compete against the situation 0.1 percent growth
• He asked executives what was the average fluid intake of an American
per day?
• The answer was 14 ounces.
• What was Coke’s share of that? Two ounces
• Goizueta said Coke needed larger share of this
• The competition wasn’t Pepsi. It was water, tea, coffee, milk and fruit
juices for remaining 12 ounces
• The public should reach for a Coke whenever they felt like drinking
something
• Coke put up vending machines at every street corner. Sales took a
quantum jump and Pepsi has never quite caught up since.

BE STRATEGIC !