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Mission has external orientation and relates the organization to the society in which it operates. A mission statement helps the organization to link its activities to the needs of the society and legitimize its existence . Purpose is also externally-focused but it relates to that segment of the society to which it serves; it defines the business which the company will undertake.
According to Drucker He says: "The mission of an organization is a general enduring statement of the organization the extent of which embodies the decision maker's philosophy; it implies the image which the organization seeks to project . Mission sets forth principles and conceptual foundation upon which the organization reacts and the nature of the business in which it plans to participate.
Features of a Good Mission Statement:-
1. Mission should be clear, both in terms of intentions and words used;
2. It should be feasible, neither too high to be unachievable, nor too low to demotivate the people for work.
3. It should be precise but self-explanatory, neither too narrow so as to restrict the organization's activities, nor too broad to make itself meaningless.
4. It should be distinctive, both in terms of the organization's contributions to the society and how these contributions can be made.
Characteristics of a Mission Statement
Organizations legitimize themselves by performing some function that is valued by society. A mission statement defines the basic reason for the existence of that organization. In order to be effective , a mission statement should possess the following characteristics:-
It should be feasible. A mission should always aim high but it should not be an impossible statement. It should be realistic and achievable its followers must find it to be credible . But feasibility depends on the resources available to work to wards a mission. In the sixties, the US National Aeronautics and Space Administration (NASA) had a mission to land on the moon. It was a feasible mission that was ultimately realized.
It should be precise. :-A mission statement should not be so narrow as to restrict the organization's activities nor should it be too broad to make itself meaningless. For instance, 'Manufacturing bicycles' is a narrow mission statement since it severely limits the organization's activities, while mobility business' is too broad a term, as it does not define the reasonable contour within which the organization could operate.
It should be clear. A mission should be clear enough to lead to action. It should not be a high sounding set of platitudes meant for publicity purposes. Many organizations do adopt such statements but probably they do so for emphasizing their identity and character. For example, Asian Paints stresses 'leadership through excellence', while India Today see itself as 'the complete news magazine'. The ITC's stated corporate philosophy of aligning its organizational activities with national priorities helps it in choosing areas for diversification like the hotel, paper and agro industry.
It should be motivating. A mission statement should be motivating for members of the organization and of society, and they should feel it worthwhile working for such an organization or being its customers. A bank, which lays great emphasis on customer service, is likely to motivate its employees to serve its customers well and to attract clients. Customer service, therefore is an important purpose for a banking institution.
It should be distinctive. A mission statement, which is indiscriminate, is likely to have little impact. If all scooter manufacturers defined their mission in a similar fashion, there would not be much of a difference among them. But if one defines it as providing scooters that would provide 'value for money, for years' it will create an important distinction in the public mind.
It should indicate major components of strategy. A mission statement along with the organizational purpose should indicate the major components of the strategy to be adopted. The chief executive of Indal expressed his intentions by saying that his company "begins its fifth decade of committed entrepreneurship with the promise of a highly diversified company retaining aluminum as its mainline business, but with an active presence in the chemical, electronics and industrial equipment business".
Vision of an organization has a long-term orientation and is derived from organizational philosophy. Vision represents a challenging portrait of what the organization and its members can be in the future. Therefore, the organization should create projections about where it should go and what major changes lie ahead. Once the vision is established, persistent and enthusiastic communication of it throughout the organization is required so that various subsystems embrace it with commitment.
Features of an effective vision statement include:
Clarity and lack of ambiguity.
Paint a vivid and clear picture, not ambiguous.
Describing a bright future (hope)
Memorable and engaging expression.
Realistic aspirations, achievable.
Alignment with organizational values and culture.
Time bound if it talks of achieving any goal or objective.
When developing a vision statement, it should be seen that the following questions are answered:
What do we want to do going forward?
When do we want to do it?
How do we want to do it?
Porter's Five Forces Model
Porter's five forces model helps in accessing where the power lies in a business situation. Porter's Model is actually a business strategy tool that helps in analyzing the attractiveness in an industry structure. It let you access current strength of your competitive position and the strength of the position that you are planning to attain.
Porters Model is considered an important part of planning tool set. When you're clear about where the power lies, you can take advantage of your strengths and can improve the weaknesses and can compete efficiently and effectively.
Porters model of competitive forces assumes that there are five competitive forces that identifies the competitive power in a business situation. These five competitive forces identified by the Michael Porter are:
Threat of substitute products.
Threat of new entrants.
Intense rivalry among existing players.
Bargaining power of suppliers.
Bargaining power of Buyers.
Threat of substitute products
Threat of substitute products means how easily your customers can switch to your competitors product. Threat of substitute is high when:
There are many substitute products available.
Customer can easily find the product or service that you're offering at the same or less price.
Quality of the competitors' product is better
Substitute product is by a company earning high profits so can reduce prices to the lowest level.
In the above mentioned situations, Customer can easily switch to substitute products. So substitutes are a threat to your company. When there are actual and potential substitute products available then segment is unattractive. Profits and prices are effected by substitutes so, there is need to closely monitor price trends. In substitute industries, if competition rises or technology modernizes then prices and profits decline.
Threat of new entrants
A new entry of a competitor into your market also weakens your power. Threat of new entry depends upon entry and exit barriers. Threat of new entry is high when:
Capital requirements to start the business are less.
Few economies of scale are in place.
Customers can easily switch (low switching cost)
Your key technology is not hard to acquire or isn't protected well.
Your product is not differentiated.
There is variation in attractiveness of segment depending upon entry and exit barriers. That segment is more attractive which has high entry barriers and low exit barriers. Some new firms enter into industry and low performing companies leave the market easily. When both entry and exit barriers are high then profit margin is also high but companies face more risk because poor performance companies stay in and fight it out. When these barriers are low then firms easily enter and exit the industry, profit is low. The worst condition is when entry barriers are low and exit barriers are high then in good times firms enter and it become very difficult to exit in bad times.
Industry rivalry mean the intensity of competition among the existing competitors in the market. Intensity of rivalry depends on the number of competitors and thei r capabilities. Industry rivalry is high when:
There are number of small or equal competitors and less when there's a clear market leader.
Customers have low switching costs
Industry is growing
Exit barriers are high and rivals stay and compete
Fixed cost are high resulting huge production and reduction in prices.
These situations make the reasons for advertising wars, price wars, modifications, ultimately costs increase and it is difficult to compete.
Bargaining power of suppliers
Bargaining Power of supplier means how strong is the position of a seller. How much your supplier have control over increasing the Price of supplies. Suppliers are more powerful when
Suppliers are concentrated and well organized.
A few substitutes available to supplies.
Their product is most effective or unique.
Switching cost, from one suppliers to another, is high.
You are not an important customer to Supplier.
When suppliers have more control over supplies and its prices that segment is less attractive. It is best way to make win-win relation with suppliers. It's good idea to have multi-sources of supply.
Bargaining power of Buyers
Bargaining Power of Buyers means, How much control the buyers have to drive down your products price, Can they work together in ordering large volumes. Buyers have more bargaining power when:
Few buyers chasing too many goods.
Buyer purchases in bulk quantities.
Product is not differentiated.
Buyer's cost of switching to a competitors' product is low.
Shopping cost is low.
Buyers are price sensitive.
Credible Threat of integration.
Strategic Management is all about identification and description of the strategies that managers can carry so as to achieve better performance and a competitive advantage for their organization. An organization is said to have competitive advantage if its profitability is higher than the average profitability for all companies in its industry Strategic management can also be defined as a bundle of decisions and acts which a manager undertakes and which decides the result of the firm's performance. The manager must have a thorough knowledge and analysis of the general and competitive organizational environment so as to take right decisions. They should conduct a SWOT Analysis (Strengths, Weaknesses, Opportunities, and Threats), i.e., they should make best possible utilization of strengths, minimize the organizational weaknesses, make use of arising opportunities from the business environment and shouldn't ignore the threats. Strategic management is nothing but planning for both predictable as well as unfeasible
Contingencies It is applicable to both small as well as large organizations as even the smallest organization face competition and, by formulating and implementing appropriate strategies, they can attain sustainable competitive advantage.
Strategic Management is a way in which strategists set the objectives and proceed about attaining them. It deals with making and implementing decisions about future direction of an organization. It helps us to identify the direction in which an organization is moving.
Strategic management is a continuous process that evaluates and controls the business and the industries in which an organization is involved; evaluates its competitors and sets goals and strategies to meet all existing and potential competitors; and then re evaluates strategies on a regular basis to determine how it has been implemented and whether it was successful or does it needs replacement.
Strategic Management gives a broader perspective to the employees of an organization and they can better understand how their job fits into the entire organizational plan and how it is co-related to other organizational members. It is nothing but the art of managing employees in a manner which maximizes the ability of achieving business objectives. The employees become more trustworthy, more committed and more satisfied as they can co-relate themselves very well with each organizational task. They can understand the reaction of environmental changes on the organization and the probable response of the organization with the help of strategic management. Thus the employees can judge the impact of such changes on their own job and can effectively face the changes. The managers and employees must do appropriate things in appropriate manner. They need to be both effective as well as efficient.
One of the major role of strategic management is to incorporate various functional areas of the organization completely, as well as, to ensure these functional areas harmonize and get together well. Another role of strategic management is to keep a continuous eye on the goals and objectives of the organization.
Identify IBM strengths and weakness and explain how these may have accelerated or halted IBM decline.
Ans - strength of the IBM
-IBM became the first-chioce computer company for many of the world's leading companies.
-It had the remarkable globle market share approaching 60% .
-It offers large fast and reliable machines that undertook takes never before operated by machinery -accounting invoicing and payroll.
-IBM culture was relaxed and supremely confident of its abilities resources.
-The strength were the series of national IBM companies had real autonomy and could response to specific national market conditions.
Weakness of IBM .
-IBM judge that the small PC world never replace the large mainframes, so it posed no significant threat to its main business.
-IBM strategies mistake was to think that its replacement alone would persuade customer to stay with its PC world.
Identify the competitive threats faced by IBM from its rivals. Outline what strategies would you recommend to IBM in response to those threats and explain why would recommend them.
Following competitive faced by IBM and its rivals.
In 1980s IBM recognised the competitive threat from Microsoft and intel.