Unit-I: Strategic management.

(9 hours)

Fundamental elements of strategy- vision, mission, goals and objectives; Forms of strategyintended and realized strategies; views of the strategic management process- Rational planning, incrementalism and organizational learning; Difference between strategic management and other types of management.

STRATEGY. Concept and Meaning: As a starting point for learning about strategic management, it is necessary to consider what a strategy is. Strategy is a term derived from military science. It is a technique of managing the war campaign by the military commanders and their army.

Strategy is a highly complex concept and attempts to define it adequately within the compass of a sentence or two are almost going to miss out some key elements. Note: Among the many definitions in the literature can be found a number of words and pharses that are linked in some way with the notion of strategy: Purpose or mission; Policies; Defining what business the company is in; Defining what kind of company it is; Objectives or goals; strengths and weaknesses; Opportunities and threats; Key success factors; Key decisions; Capabilities or competencies; Planning and scheduling; Implementation; Sustainable competitive advantage. In the simplest terms possible, strategy refers to: Knootz and ODennel1 describe strategy as the grand design or an overall plan which an organization chooses in order to move or react towards the set objectives by using the resources.

Knootz, Herald, Cyril O Dennel and Heinnz Weihrich , Management, Mc Graw Hill Kogakusha Ltd., Tokyo, 7th Edn, P. 163.

Anthony 2 defines strategy as resulting changes from the process of deciding on objectives of the organization on changes in these objectives, on resources used to attain these objectives and the policies that are to govern acquisition, use and disposition of these resources. Strategies most often, denote a general programme of action and an implied deployment of emphasis and resources to attain comprehensive objectives. Thus, from the above it can be summed up that the term strategy stands to refer: Efforts directed toward fulfilling the organizations purpose. Either the plans made or the actions taken, in an effort to help an organization fulfill its intended purposes. The executive behavior for the purposes of achieving success for the company or personal goals in a competitive environment A strategy can be either Intended strategy or Realized strategy. The term intended strategy refers to the plans for the future. On the other hand a realized strategy refers to the strategy as action taken. Definition: According to chandler, Strategy can be defined as the determination of basic long term goals and objectives of an enterprise and the adoption of courses of action and the allocation of resources for carrying out these goals.

Anthony R.N., Planning Control Systems, A frame work for analysis, Haward Business School, 1965.

Types of strategy / Hierarchy of strategy: Business firms usually consider three types of strategies: Corporate, Business and Functional. The hierarchy of strategy can be illustrated as given below:

Corporate strategy

Business strategy. B
Functiona l strategy.

Hierarchy of strategy.

Corporate strategy provides the overall direction of the organization in terms of its general attitude towards growth and management of business. Typically, they fit in three main categories of stability, growth and retrenchment. For example, Infosys Technologies follows a corporate growth strategy of predictability, sustainability, profitability and de-risking (PSPD).

Business strategy is strategy followed at the business unit or product level. It normally aims at improving the competitive position in the market served by that business unit. For example, Infosys Technologies uses a differentiation strategy in its Global Service Delivery model. Functional strategy refers to the approach in a functional area to achieve corporate and business unit objectives. It is concerned with the development of a distinctive competence to provide an organization or a business unit with competitive advantage. For example, Infosys Technologies desires to be a leader in end-to-end services in the global information technology services market.

Glueck has identified the following types of strategies. 1. Stable Growth Strategies. 2. Growth strategy. 3. Retrenchment strategy. 4. Combination strategy.

1. Stable Growth Strategy: Stable growth strategy is followed by the firms which are having a smooth sailing and where environment is neither turbulent nor hostile. Stable growth strategy will be followed where no appreciable deviation from the exiting strategy is needed and no major changes are made in the objectives or goals of the organization. In addition the enterprise will continue to serve the same targeted customers without any major changes in the product line or product services. Also, it should be noted that during this period environment is also calm so that a status quo can be maintained in the marketing policy of the enterprise. The following three sub-strategies are formed for stable growth strategy: a) Incremental growth strategy: In this strategy the firms usually concentrate on one product or service line and grow slowly and incrementally by entering new territories, taking up new product line etc., INCREMENTALISM Incrementalism is a method of working by adding to a project using many small (often unplanned), incremental changes instead of a few (extensively planned) large jumps. Wikipedia, for example, illustrates the concept by building an encyclopedia bit by bit, continually adding to it. Logical incrementalism implies that the steps in the process are sensible.[3] Logical Incrementalism focuses on "the Power-Behavioral Approach to planning rather than to the Formal Systems Planning Approach." In public policy, incrementalism refers to the method of change by which many small policy changes are enacted over time in order to create a larger broad based policy change.

In contrast to other systems of planning such as top down, bottom up and so on, incrementalism states that you should concentrate on dealing with the immediate problems as they arrive and avoid trying to create an overall strategic plan.

The antithesis of incrementalism is that work must be accomplished in one single push rather than through a process of continuous improvement Pros and Cons

The advantages of incrementalism over other formal systems is that no time is wasted planning for outcomes which may not occur. Disadvantages are that time may be wasted dealing with the immediate problems and no overall strategy is developed. b) Profit strategy: This strategy is followed when the objective of the firm is to generate cash immediately for itself or for the stock holder, profit (or harvesting) strategies are followed. The profit strategy is usually called as the end game strategy. c) Pause strategy: if any enterprise feels that higher growth becomes both inefficient and unmanageable, or when a firm requires breathing spell to stabilize itself before taking up a new mission, it may restrict its growth at a certain balanced level. In doing so, it may concentrate on resources utility, better operations etc., to attain higher level of efficiency. 2. Growth strategy: There is an environment dilemma in business circle to say Grow or Die. This has become the motivation factor for growth strategies. Growth is the prime motivating factor for any manager and consequently to any management. The growth can be internal growth by diversification and external growth merger or joint ventures.

3. Retrenchment strategy: In this strategy a curtailment of the existing operations of a business is made to achieve a higher level of efficiency. This sort of strategy is adopted only in exceptional cases. The situations which warrant the deployment of such strategy are: i. The management aiming to write off previous years loss. ii. Its aim to provide certain products / services to the public by retrenching some other products or services. iii. It is statutorily banned from producing certain products / services due to administrative reasons such as causing environmental pollution, against the law of the land etc.,

Liquidation strategy: This strategy is the ultimate strategy after which no strategy need to be planned to see the company alive. It involves the liquidation or winding up of the business by selling it off or by closing down its operations. This unpopular strategy is adopted when bankruptcy is inevitable when a company is continuously running on large losses.

4. Combination strategy: This strategy is involving the blending up of different types of strategies for the company or its sub-units. Naturally the deployment of this strategy is based on the premise that a company should have different strategies for different environments. A small company cannot get advantage of this strategy and only large groups of companies can derive advantage of this strategy.

Strategy & its components. According to Ansoff, strategy consists of four components: 1. Product-market scope 2. Growth vector 3. Competitive advantage, 4. Synergy.

This can be illustrated by taking the example of a software firm which has the following objectives: 1. Return on investment: threshold, 20%; goal, 30%. 2. Sales growth rate: threshold, 25% ; goal, 35 % Under such circumstances the components of strategy for such a firm could be: a) Product-market scope- Knowledge management. b) Growth vector- Branded products and diversification. c) Competitive advantage- Value added services; end-to-end services. d) Synergy- Use of firms knowledge capabilities and marketing for better customer value addition. Strategy has the following components:

Purpose and Mission. Objectives and Goals and Policies and Programme Strategies.

Stimulus for strategy: A strategy in an organization may the result of a triggering event. Such probable events could be the following. 1. A new CEO. He can provide a dynamic leadership, which can boost the spirits of the employees and motivate them to perform better. Basically, the Chief Executive is lifting the veil of complacency and forcing the employees to ask the reasons for the organizations very existence. 2. Outside intervention. This may be in the form of financial intervention by lending agencies deciding to stop further financial assistance or by asking repayment in full of the existing assistance. 3. Impending ownership change. The threat of a takeover b another company in the market. 4. Falling performance levels. When there is a gap between the desired and the projected performance, the organization will be put to hard thinking on strategies to bridge the gap Elements of strategy: Every strategy encompasses two basic elements viz., 1. The most fundamental ends the organization wants to achieve (viz., Strategic intent, Vision, Mission, goals, and objectives). 2. Fundamental means adopted by the organization for achieving fundamental ends ( Plans, policies and specific actions taken)
--- Means ----- Ends
Strategic intent. Vision Mission Goals Objectives.

Plans Policies

Intended strategy.

--- Means ---

--- Ends

Actions Taken

Results observed.

Realized strategy.
Figure: Diagrammatic representation of the most fundamental ends and Means in strategy

Therefore, to have an understanding on strategy, it thus becomes necessary to have a proper understanding on these elements (viz., fundamental ends and fundamental means) of strategy. a) Strategic intent The term strategic intent refers to the purpose(s) the organization strives to achieve. The strategic ends (or) purposes pursued by typical businesses can be very broad or more focused At the broadest level, ones personal intentions may include a vision of a happy, fulfilling life, but may also have a much narrower objective of making A grade in the course studying at present. Typically in order to reach the broader intentions, one must first achieve a series of narrower ones, and therefore it is important that the broad and narrower intensions are aligned. In this, if one is not careful, one may invest time, energy and other resources in reaching narrow objectives that do not move one closer to the broader vision. In the same way it is essential that organizations have a consistent set of narrow intentions that move toward broad ones In this regard one of the most critical responsibilities faced by managers is establishing the parameters that shape the values, motives, and actions of others throughout the organization vis-vis achievement of the organizational goals. Establishment of these parameters is in other words termed as hierarchy of strategic intensions. They range from: 1. 2. 3. 4. A broad vision of what the organization should be, to the organizations mission, to the specific goals that are operationalized as various strategic objectives.

The elements of this hierarchy set forth the ideals and ideas that serve to unify the energy and forces scattered through out an organization. They are the beginning points for any formal planning process, but they also provide the sense of direction necessary to assure that incremental behavior culminates in overall progress.

A- VISION. Meaning: Management author Tom Peters identified a clear vision of the desired future state of the organization as an essential component of high performance. Widely read organizational development author Warren Bennis identified a handful of traits that made great leaders great. Among them is the ability to create a vision. So what is a vision and how to get one? A vision statement is sometimes called a picture of an organization in the future but its so much more than that. The vision statement is the organizations inspiration, the framework for all the strategic planning.

What you are doing when creating a vision statement is articulating your dreams and hopes for your business. It reminds you of what you are trying to build.

Unlike the mission statement, a vision statement is for you and the other members of your company, not for your customers or clients.

In strategic management, a vision refers to: The category of intentions that are broad, all inclusive, and forward thinking. A vision is the description of aspirations of the future, without specifying the means that will be used to achieve those desired ends. A vision is a guiding image of success formed in terms of a contribution to society. If a strategic plan is the blueprint for an organizations work, then vision is the artists rendering of the achievement of that plan. It is a description in words that conjures up a similar picture for each member of the group of the destination of the groups work together.

There is one universal rule in planning: You will never be greater than the vision that guides you. No athlete ever got to the Olympics by mistake; a compelling vision of his or his stellar performance inevitably guides all the sweat and tears for many years.

Importance of Vision: John Bryson, the author of Strategic Planning for Public and Non-Profit Organizations, states that typically, a vision is more important as a guide to implementing strategy than it is formulating it. This is because the development of strategy is driven by what you are trying to accomplish, yours organizations purposes. A vision statement is an answer to the question What will success look like? It is the pursuit of this image of success that really motivates people to work together. In an amazing longitudinal study on goal setting, Yale University surveyed the graduating class of 1953 on commencement day, to determine if they had written goals for what they wanted their to become. Only three percent had such a vision. In 1973, the surviving members of the class of 1953 were surveyed again. The three percent who had a vision for what they wished their lives would become had accumulated greater wealth than the other 97 percent combined Great wealth, a moon on the moon, brother and sisterhood among the races of the globe..they are all about the vision for the concerned.

VISION STATEMENT OF BLUE CROSS / BLUE SHIELD OF TEXAS.

We are dedicated to serving our customers thorough the financing of health care and related services. We will provide products and services of the highest quality and value with a direct focus on meeting the needs of our customers. We will respond to the customer with promptness, sensitivity, respect, and always with integrity. We are committed to providing an enjoyable work environment for our employees, our most important resource. We will continually promote teamwork, and excellence in all phases of business. We will maintain a financially strong, growth-oriented company for the protection of our customers and employees. Through leadership and innovation, we will meet the challenges of the health care delivery system and serve as many Texans as possible.

Impact of Vision:

John F. Kennedy did not live to see the achievement of his vision for NASA, but he set it in motion when he said, By the end of the decade, we will put a man on the moon. That night, when the moon came out, people could all look out the window and imagine And when it came to appropriate the enormous funds necessary to accomplish the vision, congress did not hesitate. Why? Because this vision spoke powerfully to values Americans held dear: America as a pioneer and America as the world leader.

Characteristics of an effective vision: The most effective visions are those that inspire and this inspiration often takes the form of asking for the best, the most, or the greatest. It may be the best service, the most rugged product, or the greatest sense of achievement, but it must be inspirational. It can be rightly said that A vision must have mojo, an appeal to the emotions and aspirations of the troops that goes beyond the usual carrots and sticks.

Process of creating a vision: Like much of strategic planning, creating a vision begins with and relies heavily on intuition and dreaming. As a part of this process, one may brainstorm with ones staff or ones board what they would like to accomplish in the future. Talk about and write down the values that one share in pursuing the vision. Different ideas do not have to be a problem. People can spur each other on to more daring and valuable dreams and visions--- dreams of changing the world that are willing to work hard for. The vision may evolve throughout a strategic planning process. Or, it may form in one persons head in the shower one morning. The important point is that members of an organization without a vision may toil, but they cannot possibly be creative in finding new and better ways to get closer to a vision without that vision formally in place.

While a vision statement doesn't tell you how you're going to get there, it does set the direction for your business planning. That's why it's important when crafting a vision statement to let your

imagination go and dare to dream and why its important that a vision statement captures your passion. Here, it is to be noted that writing sample vision statements is relatively easy what is NOT easy - is to use your Vision as a leadership tool - is to have your Vision promote change in the desired direction - is to align your entire workforces behaviors with your Vision Sample vision statements: A vision statement for a company offering whale watching tours: Within the next five years, ZZZ Tours will become the premier eco-tour company in ________, increasing revenues to 1 million dollars in 2010 by becoming internationally known for the comfort and excitement of the whale-watching tours it offers. Be the global leader in customer value. Caterpillar

Epson is committed to the relentlessness pursuit of innovation in compact, energy-saving, highprecision technologies, and through the formation of group-wide platforms will become a community of robust businesses, creating, producing, and providing products and services that emotionally engage customers worldwide. - Epson. 1970: We will destroy Yamaha Current: To Be a Company that Our Shareholders, Customers and Society Want - Honda Early 1900s: Democratize the automobile Current: To become the world's leading Consumer Company for automotive products and services. - Ford Motors.

Communicating vision: Visions are personal things, often unwritten. Perhaps the ideas and ideals they express are too lofty or ephemeral to look convincing on paper. Yet, whether they are written or not, if they are to have much impact, they must be communicated and often they must be communicated to very large numbers of people- perhaps tens and thousands. Communicating a vision takes place in two ways. The most obvious means of communication is to translate it into more directive texts in the form of a mission statement. A less obvious, but perhaps even more important, means of communicating a vision is through personal selling on the part of the visionary.

B- MISSION. A vision becomes more tangible when it is expressed in the form of a mission statement. Such a statement can verbalize the beliefs and the directions toward which a visionary manager wants to lead the organization. A mission statement usually attempts to answer several of the following questions: 1. What is our reason for being? What is our basic purpose? 2. What is unique or distinctive about our organization? 3. What is likely to be different about our business three to five years in the future? 4. Who are, or who should be, our principal customers, clients, or key market. 5. What are our principal goods and services, present and future? 6. What are, or what should be, our principal economic concerns? 7. What are the basic beliefs, values, aspirations, and philosophical priorities of the firm? Explicitly addressing such of those questions mission statement can be written. Although they apply to entire organizations, mission statements are still personal in that they are not subject to any established rules regarding what they must include. In general mission statements address issues more explicitly and can also serve to identify what is unique about the character of the organization.

Meaning:

A mission statement is a succinct statement that conveys an organizations reason for being.

Purpose / functions of mission statement: The principle function of mission statement is to let people in and out of the organization know what its purpose is and to guide decision making. The purpose of a mission statement is to describe what ones values are, and one has to do and whom one has to serve. A mission statements purpose is to convey the organizations reason for being to its staff, board and members of community. The statement should be clear, powerful and broad enough to guide in the decision making and help explain the organizations efforts to potential funders / stake holders. Thus, it can be said that the time spent on developing or revising the mission statement is well spent.

Benefits of having a formal mission statement: For an organization writing a formal mission statement can have three major benefits. They are: 1. Mission statements establish boundaries to guide strategy formulation. By providing a sense of strategic direction, mission statements focus attention toward certain goals and away from others. Any organization without some degree of such focus, may not be effective. Such an organization may wander form one opportunity to another, and its managers can spend inordinate amounts of time analyzing what it could do without ever actually doing much of anything.

2. Mission statements acknowledge responsibilities to various stakeholders and establish standards for organizational performance along corresponding dimensions. The firms diverse obligation to its various stakeholders has the following dimensions: Responsibility to: Public. Market standing Worker performance and attitudes. Productivity.

 Profitability. Managerial performance and Development. Physical and Financial resources.

3. Mission statements suggest standards of individual behavior: Mission statements help shape behavior in a broad variety of ways, including setting ethical standards of behavior. Ethics are the principles concerning an individuals duty to what to do what is morally right.

Key elements in mission statement.

VIEW OF THE FUTURE The anticipated regulatory, competitive, and economic development in which the company must compete.

FUNDAMENTAL INTENSIONS.
A statement of the role the company will seek to adopt;

COMPETITIVE ARENAS The business and geogaprahic business arenas where the company will compete.

A description of what the company hopes to accomplish; A means to gauge for success.

SOURCES OF COMPETETIVE ADVANTAGE. The skills that the company will develop / leverage to achieve its vision; a description of how the company intends to succeed.

Developing a mission statement:

A mission statement often is a full of sentence. For completeness sake it can also be more than one sentence. . Be wary, however, of a too long mission statement, it should definitely not sound like legalese. It also need not describe the organizations every strategy. One can ( and should) write ones organizations specific goals and objectives separately- but leave the mission statement crisp and digestible.

Step.1: Collaborate.

The first step in developing an effective mission statement is to seek input form staff and board members. This is essential because, a) Large meetings tend to be insufficient, b) Stronger voices may drown out better ideas.

Step.2: Develop a list: At smaller meetings over the course of weeks (or through e-mails, it that work best for your organizations culture), ask people to describe the organizations Note:
There will be a certain amount of variation in responses, particularly if it is to seek input from people who fill diverse rolls in the organization. However, patterns should appear and when sharing the results with the entire staff, the responses should be closer to Thats right! We do do that! Than whats that dong on the list? If your organization cannot come up with cohesive picture of what it stands for and what it does, you probably trying to do too much and / or not effectively in communicating in house.

Values Target audience Core services Unique attributes

Step: 3 Be selective. Once the organizations responses are captured, the next step is to make sense of them. Select a committee of people who represent diverse facets of the organization to go through the list. Weed out ideas that do not describe the organizations core services.

Integrate like concepts (for instance, finding-creative solutions, being innovative, thinking outside the box )

Step: 4 : Be Cohesive. Now it is time to string the core concept together. A straight forward boiler plate for a mission statement is: The mission of [Organizations name] is to [verb] the [population served] of [location] through [core services]. Note:
Think broadly. It is not necessary that the mission statement has to be an exhaustive list of what an organization does, but it has to fit in all the services that the organization is currently do and foresee doing in future. For instance, improve the lives of all domestic animals in the Chennai city is better than provide an animal shelter, spay / neutering services, adoption services, obedience classes and information about pet care in the state of Tamilnadu. In this process options need to be given. For instance, the statement should give answer for the questions such as Is the mission for improvement or enhancement or for empowerment or for provide training etc ( or for all)

Accordingly play around with wording and write one or more than one potential statements. A mission
statement often is a full sentence. For example the mission statement of Blue Cross / Blue Shield of Texas reads as:

To provide quality health benefits at an appropriate cost to as wide a group of Texans as possible. Alternatively the mission statement of Ford Motor Company reads as: Ford motor company is a world wide leader in automotive and automotive-related products and services as well as in newer industries, such as aerospace, communications and financial services. Our mission is to improve continually our products and services to meet our customers needs, allowing us to prosper as a business and to provide a reasonable return for our stakeholders, employees and community. The mission of the American Institute of Philanthropy (AIP), a non-profit charity watchdog and information service is:

To maximize the effectiveness of every dollar contributed to charity by providing donors with the information they need to make more informed giving decisions.
However, for completeness sake a mission statement can also be more than one sentence as the mission statement of American Airlines reads:

We will be the global market leader in air transportation and related information services. The leadership will be attained by: Setting the industry standard for safety and security. Providing world- class customer service. Creating an open and participative work environment which seeks positive changes, rewards innovation and provide growth, security, and opportunity to all employees. Providing consistently superior financial returns for shareholders.
However, it has to be kept in mind that a mission statement is not a slogan. But a slogan can very well be derived from a good mission statement

Step: 5 Vote on it & live by it: Depending on the organizations rules and regulations, the board has final say on what the wording of the mission statement is. Irrespective of that put the mission statement for polling among the staff and let the board know what the employees preference is.

As soon as the mission statement is developed, it has to be advertised and lived. GOALS

As suggested in the discussions relating to mission most of the mission statement sare more specific than anyones visionary thinking, but they are still hardly concrete direction for action. Therefore, just a mission statement tries to make a vision more specific; goals are attempts to make a mission statement more concrete. The strategic goals identified by most organizations share several features: 1. They address both financial and non-financial issues:

Given the diverse interests of the stakeholders mentioned in most mission statements, it should not be surprising that most organizations have goals that are both financial and non-financial in nature. Explicit discussion of non-financial goals often makes it easier for managers to justify efforts aimed at more than just profitability. Examples of financial goals Reynolds Aluminium: To be an industry leader in profitability and growth to achieve an average return on equity of 20%. Boeing: Profitability as measured against our ability to achieve and then maintain a 20% average. Growth over the plan period as measured against a goal to achieve; greater than 5% average annual real sales growth from 1988 base.

Examples of Non-financial goals Boeing: Integrity in the best sense must pervade our action in all relationships, including those with our customers, suppliers and each other. This is a commitment to uncompromising values and conduct. It includes compliance with all laws and regulations. General Electric: We will run only businesses that are number one or number two in their global markets. We will be more contemporary, more accessible, more responsive company, in touch with our customers, firmly in control of our own destiny, driven by more fulfilled people in control of theirs. 2. They facilitate reasoned trade-off: Most businesses will have a range of goals, and it is likely that not all of these will always be perfectly consistent with one another. For instance, a firm may have low-cost leadership and good employee relations as simultaneous goals. If a recession occurs, managers are faced with a dilemma: with orders down, maintaining the workforce will incur a loss that may destroy the

firms cost competitiveness, but laying off workers means that employee relations may suffer. Managements task is to make the trade-offs required in such situations, and carefully established goals help with such difficult situations. 3. They can be reached, with a stretch: The best goals are those that require an organization to stretch in order to reach them. As Edwin Land, founder of Polaroid, described it, the goals that draw greatest strengths of people are those that they feel are manifestly important and nearly impossible. By constantly setting goals that demand more effort, an organization is more likely to reach its fullest potential. However, this is not meant to suggest that goals should be set arbitrarily high. Unrealistically high goals can actually harm an organization; knowing that a goal cannot be attained, the organization ignores it and thus effectively operates without the guidance a goal is meant to offer. 4. They cut-across functional areas: In order to facilitate oversight and administrative efficiency, organizations are broken down into various pieces, usually as departments or functions. However, the goals we are considering apply to the overall organization. Thus, they cut across departments and provide an important integrating force. Without well-understood and accepted organizational goals, individual departments are likely to act independently of one another, severely limiting what the organization as whole is able to accomplish.

While it should be clear that goals are the most specific form of strategic intent we have considered so far, they are still not most the most specific in our hierarchy. The most specific are objectives. OBJECTIVES.

An operational definition is an explanation of a concept that is concrete enough to allow one to take special action. Objectives are the operational definitions of goals. Goals describe in fairly general terms what the organization hopes to accomplish, hut objectives detail, in more precise terms, what will be accomplished in order to reach the goals. As the operational definitions of goals the most helpful objectives have the following characteristics.

They can be measured: Not every objective can easily be measured, but it is still important to monitor and measure progress. Often this will require the use of proxy measures, metrics that offer approximate indicators of goals that cannot be measured directly. For example, for many firms, improved quality is a strategically important goal. Yet quality is very difficult concept to measure. So instead, most forms use proxies, such as warranty claims, defect rates, and customer satisfaction surveys, to measure quality objectives. In considering the usefulness of proxies in quantifying hard-to-measure objectives, many firms use a simple rule of thumb stated in the form of a question: Using this measurement, will we know when we have reached our objective? However, because they are still only proxies for what cannot be directly measured, objectives that pass this simple test can still lead to unintended consequences. They incorporate dimension of time: A business that has set the objective of moving up form number six to number two in market share in two years faces a far greater challenge than a similar firm that allows itself ten years. Measurement is usually next to meaninglessness without some specification of a time frame. They reduce conflict: Clearly stated objectives reduce misunderstandings and rivalry among organizational members. Such a negative behavior is often a manifestation of uncertainty regarding the overall direction of the firm. Objectives form the basis for cooperative managerial behavior. Focusing on overall firm progress, rather than on divisional success, facilitates beneficial intraorganizational relationships such as resource and information sharing. * * *

Having understood the concept of the hierarchy of strategic intent, the next step is to consider the means by which organizations pursue these ends. In this regard both plans and actions are two important means.

II- VISION & MISSION. Many organizations today develop a Vision Mission statements. Definition of vision and mission is an important and difficult task for the top management. This is more due to the fact that the aims of organization are very broad

 The vision statement answer the question What do we want to become? and the mission statement answers the question What is our business? As regard to the origination of the Vision Mission for an organization Vijai Paduke and Manjulika Vas in their book Management Development in Non-profit organizations states that every organizations legitimacy for its existence and survival has reference to its long term goal orientation. But, they also say that it is not the sufficient condition. There is something more is needed to be added to this long term goal orientation as vital ingredient (i.e.,) the shared values, the core convictions with which the organization works. Examples of values are secularism, equality, non-violence or self-reliance. According to them a vision statement comes from the integration of the longest-term statement of purpose (AIM in the figure Hierarchy of goals given above) with the organizational value system.

AIM + VALUES = VISION. The mission statement follows from the vision, and comes from the integration of the next level statement of purpose (GOALS in the hierarchy in the figure) with the organizational value system.

GOALS + VALUES = MISSION.

V- GENERAL FEATRES OF STRATEGY: 1. Strategy relates the firm to the environment in which it functions and more particularly to its external environment. 2. Strategy can be considered as a right combination of factors both internal (strengths and weaknesses of the organization) and external. 3. Strategy can also be considered as a relative and proportionate combination of actions to every change in the environment.

4. It is quite possible that sometimes strategy may involve contradictory actions. That is depending upon the environmental variables a manager can take a decision today and make modifications tomorrow for better results which may look contradictory. 5. Strategy is a forward looking process.

FORMS OF STRATEGY: INTENDED AND REALIZED STRATEGIES: Intended strategy: An intended strategy is the strategy that an organization hopes to execute. Intended strategies are usually described in detail within an organizations strategic plan. When a strategic plan is created for a new venture, it is called a business plan. As an undergraduate student at Yale in 1965, Frederick Smith had to complete a business plan for a proposed company as a class project. His plan described a delivery system that would gain efficiency by routing packages through a central hub and then pass them to their destinations. A few years later, Smith started Federal Express (FedEx), a company whose strategy closely followed the plan laid out in his class project. Today, Frederick Smiths personal wealth has surpassed $2 billion, and FedEx ranks eighth among the Worlds Most Admired Companies according to Fortune magazine. Certainly, Smiths intended strategy has worked out far better than even he could have dreamed.

Realized strategy: A realized strategy is the strategy that an organization actually follows

. Realized strategies are a product of a firms intended strategy (i.e., what the firm planned to do), the firms deliberate strategy (i.e., the parts of the intended strategy that the firm continues to pursue over time), and its emergent strategy (i.e., what the firm did in reaction to unexpected opportunities and challenges). Intended strategy is strategy as conceived by the top management team. Even here, rationality is limited and the intended strategy is the result of a process of negotiation, bargaining, and compromise, involving many individuals and groups within the organization . However, realized strategythe actual strategy that is implementedis only partly related to that which was intended (Mintzberg suggests only 10%30% of intended strategy is realized).

In the case of FedEx, the intended strategy devised by its founder many years agofast package delivery via a centralized hubremains a primary driver of the firms realized strategy. For Southern Bloomers Manufacturing Company, realized strategy has been shaped greatly by both its intended and emergent strategies, which center on underwear and gun-cleaning patches. In other cases, firms original intended strategies are long forgotten. A nonrealized strategy refers to the abandoned parts of the intended strategy. When aspiring author David McConnell was struggling to sell his books, he decided to offer complimentary perfume as a sales gimmick. McConnells books never did escape the stench of failure, but his perfumes soon took on the sweet smell of success. The California Perfume Company was formed to market the perfumes; this firm evolved into the personal care products juggernaut known today as Avon. For

McConnell, his dream to be a successful writer was a nonrealized strategy, but through Avon, a successful realized strategy was driven almost entirely by opportunistically capitalizing on change through emergent strategy. Strategic management Strategic management integrates are a functional management into a whole. It is oriented toward achieving organization wide goals. It considers a broad range of stakeholders. It entails multiply time horizons. It is concerned with both efficiency and effectiveness. The goals of strategic management are usually debatable. Issues of strategic management are abstract deferrable and may be unfamiliar. Evidence of the merit of strategies is often available only after several years. Strategic managers need a corporatepoint of view oriented to the environment. Other types of management Other management deals with functional arena only. It is oriented to achieving a local goal only. It tends to focus on serving individual stakeholders. It tends to focus on short term issues alone. It is concerned with efficiency only. The goals of operational managementare validated through extensive past experiences. Issues of functional management are immediate, concrete and familiar. Evidence of merit of functional management gets promptly. Functional managers need procedural orientation to functions.

RATIONAL PLANNNG MODEL The rational planning model is the process of realizing a problem, establishing and evaluating planning criteria, creating alternatives, implementing alternatives, and monitoring progress of the alternatives.

It is used in designing neighborhoods, cities, and regions. The rational planning model is central in the development of modern urban planning and transportation planning. The very similar rational decision-making model, as it is called in organizational behavior, is a process for making logically sound decisions.[1 ]This multi-step model and aims to be logical and follow the orderly path from problem identification through solution. Rational decision making is a multi-step process for making logically sound decisions that aims to follow the orderly path from problem identification through solution STEPS

Rational decision-making or planning follows a series of steps detailed below: 1.Verify, define, and detail the problem[edit] Verifying, defining & detailing the problem (problem definition, goal definition, information gathering). This step includes recognizing the problem, defining an initial solution, and starting primary analysis. Examples of this are creative devising, creative ideas, inspirations, breakthroughs, and brainstorms. The very first step which is normally overlooked by the top level management is defining the exact problem. Though we think that the problem identification is obvious, many times it is not. The rational decision making model is a group-based decision making process. If the problem is not identified properly then we may face a problem as each and every member of the group might have a different definition of the problem. Hence, it is very important that the definition of the problem is the same among all group members. Only then is it possible for the group members to find alternate sources or problem solving in an effective manner. 2.Generate all possible solutions[edit] This step encloses two to three final solutions to the problem and preliminary implementation to the site. In planning, examples of this are Planned Units of Development and downtown revitalizations. This activity is best done in groups, as different people may contribute different ideas or alternative solutions to the problem. Without alternative solutions, there is a chance of arriving at a non-optimal or a rational decision. For exploring the alternatives it is necessary to gather information. Technology may help with gathering this information. 3.Generate objective assessment criteria[edit] Evaluative criteria are measurements to determine success and failure of alternatives. This step contains secondary and final analysis along with secondary solutions to the problem. Examples of this are site suitability and site sensitivity analysis. After going thoroughly through the process of defining the problem, exploring for all the possible alternatives for that problem and gathering information this step says evaluate the information and the possible options to anticipate the consequences of each and every possible alternative that is thought of. At this point optional criteria for measuring the success or failure of the decision taken needs to be considered.

4.Choose the best solution generated[edit] This step comprises a final solution and secondary implementation to the site. At this point the process has developed into different strategies of how to apply the solutions to the site. Based on the criteria of assessment and the analysis done in previous steps, choose the best solution generated. These four steps form the core of the Rational Decision Making Model. 5.Implement the preferred alternative[edit] This step includes final implementation to the site and preliminary monitoring of the outcome and results of the site. This step is the building/renovations part of the process. 6.Monitor and evaluate outcomes and results[edit] This step contains the secondary and final monitoring of the outcomes and results of the site. This step takes place over a long period of time. 7.Feedback[edit] Modify the decisions and actions taken based on the evaluation. Planner defines the problem (not goal) Planner considers several alternatives and analyzes each Preliminary choices of the alternative for best fit considering feedback and impact of the client group Planner designs and implements course of action in the form of an experiment Evaluation of effects of the course of action. Did it alleviate the problem? Any feedback from course of action? On the basis of the feedback should the project or course of action be continued, changed, etc. If effective institutionalize the course of action.[2] Requirements and limitations[edit] However, there are a lot of assumptions, requirements without which the rational decision model is a failure. Therefore, they all have to be considered. The model assumes that we have or should or can obtain adequate information, both in terms of quality, quantity and accuracy. This applies to the situation as well as the alternative technical situations. It further assumes that you have or should or can obtain substantive knowledge of the cause and effect relationships relevant to the evaluation of the alternatives. In other words, it assumes that you have a thorough knowledge of all the alternatives and the consequences of the alternatives chosen. It further assumes that you can rank the alternatives and choose the best of it. The following are the limitations for the Rational Decision Making Model: requires a great deal of time requires great deal of information assumes rational, measurable criteria are available and agreed upon assumes accurate, stable and complete knowledge of all the alternatives, preferences, goals and consequences assumes a rational, reasonable, non political world Current status[edit]

While the rational planning model was innovative at its conception, the concepts are controversial and questionable processes today. The rational planning model has fallen out of mass use as of the last decade. Rather than conceptualising human agents as rational planners, Lucy Suchman argues, agents can better be understood as engaging in situated action.[3] Going further, Guy Benveniste argued that the rational model could not be implemented without taking the political context into account.[4]

LEARNING ORGANIZATIONS