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Strategic Management Perspective Conglomerate Company

Info: 2996 words (12 pages) Essay
Published: 6th Sep 2021 in Marketing

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Organizations start from scratch, an idea can turn from an intangible thought to a conglomerate. There are so many organizations around us, performing various functions. Even in same market segmentation various companies are competing to provide the same product/ service. Than how come companies can differ? And how we will differentiate them for each other? For that managers always try to bring in different innovations so their company may stand different from others, not only for customers but also for the investors and the society. For that companies make emblem, logos, signs which are pasted over the product/marketing boards. But those all are only a graphical distinction form other companies or the competitors. A company must also have a statement, which may represent them, the company goals and their dreams. Those statements hold a special place as they represent concise goal and objective for a much diversified conglomerates even. Not much of customer can go through detail profiles of conglomerates; providing services in different segments of life. For that a customer can trust and expect by reading a conglomerate mission statement. For that I will discuss mission statement in depth and later I will put light on conglomerates and how mission statements can be evaluated. (John ,1982)

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The person who is considered to be “the father of modern management” Peter Drucker had done a reasonable work on Mission statements. The definition used above by Fred. R. David is used by him in inspiration of Peter for whom; a business is quite an equal to the mission of that business says. Mission statement has a great link with strategic management as then it will answer what our business is? And that answer is to be given by the strategy makers. (Vern,1981)

The strategists actually perform external and internal audit to see the future of the company and what they can offer to their customers. Therefore they can actually give the broadest perspective of the company. Mission statement will explain the company’s purpose of existence. And it holds specific importance for conglomerates as they are associated with various businesses, and by this statement they will inform their customers and society about their diversified goals. For strategists working in parent company developing a mission statement is a critical and difficult job as their statement must represent all of diversified businesses. Most important to mention is that only by monetary benefit we cannot motivate customers. Currently there is special place for ethics and social responsibility, even nature and Government is now considered as stakeholders. So a mission statement must be brief enough to represent the whole conglomerate. (Andrew & Sally ,1991; George,(1979)

In the book Jeffrey Abrahams sheds light on what mission statement is, he has not described a definition of mission statement but it somehow fulfils the purpose of writer, Jeffrey states that mission statement is blue print of company success – and communicating that to employees, customers and the public- gives a company a head start on achieving that success. As the writer has to define the mission statement in descriptive way, that how much scope a mission statement may cover and that is covered by Jeffrey when he stated a quotation of Abraham Lincoln that legs should have to be long enough to reach the ground. It can be enlarged in writer’s context as every company wants a specific mission statement which may fulfil their needs. A conglomerate mission statement should cover more diversified fields/products/ services/ markets, as conglomerates have tall heights and to fulfil their needs long legs will be required. (Jeffrey, 2007)

The author defines that mission statement is an explicit mission statement of the values of an organization. For that author refers to the values as what are the criteria by which company wants to be judged and principles they will follow. Values are the qualities that one follow and value. Therefore mission statement explains the culture of the organization. That helps to work for common goal of organization. If conglomerate understands it then a conglomerate even at corporate level can use one mission statement and can show their common goal. (Marianne, nd)

In the book Jim explains about mission statement as “A business brand isn’t a brand to be built, but a cause to believed in.” here author refers that cause to be the reason that why an organization exist. What they want to achieve and How? That word cause explains the mission, objective and vision of organization. (Jim, 1998)

Here author give a new reflection of mission statement as it is “what solution do I provide, and what I must do to make sure that the solution I provide is consistently provide.” Author defines mission statement especially for commercial organizations. Truly even NGO’s and Non-profit organizations even deliver something to their customer or stakeholders. For new organization it can also help to make up the plan. That, what is there to be achieved in future and how we will achieve it. (Eric & Jim ,2008)

It is a critical task for strategist and practitioner to mention all in one mission statement. Procter & Gamble is also a conglomerate having a mission statement (2007) “P&G will provide branded products and services of superior quality and value that improves the lives of the world’s consumers. As a result, consumers will reward us with industry leadership in sales, profit and value creation, allowing our people, our shareholders, and the communities in which we live and work to prosper”. P&G provide all sort of house hold, cosmetic and health care products but those all are can’t be identified in the above statement. Fred David also comments that it lack major three components like Products/services, technology and philosophy. Conglomerates face this challenge to establish a comprehensive mission statement putting light in their diversified businesses. Mission statement has unique importance for conglomerates as stated by Porsche former CEO Peter Schultz that “three people were at work on a construction site. All were doing the same job, but when each asked what his job was, the answers varied: Breaking rocks, the first replied; earning a living second replied; helping to build a cathedral said the third. Few of us can build cathedrals. But to the extent we can see the cathedral in whatever cause we are following. Good strategists and a clear mission statement help us find those cathedrals in what otherwise could be dismal issues and empty causes.” (Barbar et al., 2000; Robert,1987)

Mission statement helps conglomerate employees, who are spread and provide different services within diverse departments to stay focus toward unique objective. (Peter,1974)

Another example of conglomerate mission statement is from Dell, Dell’s mission statement (2007) is to be “the most successful computer company in the world at delivering the best customer experience in markets we serve. In doing so, Dell will met customer expectation of highest quality; leading technology; competitive pricing; individual and company accountability; best in class service and support; flexible customization capability; superior corporate citizenship; financial stability.”

At corporate level conglomerate can use mission statement as a tool to stand different than all other competitors also from the local small scale competitors. But a small business have very limited scope as compared to conglomerates, as conglomerates development means to develop all the business units under the parent company/ name. The advantage of mission statement is that it gives vision for future, where a company wants to go and where they are heading. A conglomerate even successful at business unit level but not establishing a conglomerate mission statement is like walking in a dark tunnel. Every business entity must know their targets and goals to achieve. A future of conglomerate mission statement will not lead one parent company but all diversified business units. (Johnson, 2008)

A mission statement can lead all the employees to unique purpose and objective. Conglomerate’s division and departments spread in different regions can provide the same level of service and product if we hold the employees and management by mission statement toward that unique goal. Mission statement will also help these conglomerates to give resolution of divergent views. Using it diversified views of managers can be sought out and revealed through the process. All these conglomerates have managers and leaders working in different regions of world, a possible difference can rise because of demography, cultural background, and religious adoptions.

Limitation of advantages for Conglomerates

As a conglomerate is defined to be a:

“Corporation consisting of several companies in different businesses” (Def.)

In major the limitations rise because the conglomerate corporate strategy may differ from business/ divisional unit working under it. If a conglomerate is engaged in educational and investment business at the same time than through mission statement they may not be able to communicate the message to all stakeholders. This will rise because of diversification and diversified portfolio. Every business unit working under the conglomerate may not be able to join themselves with the corporate mission. Mission statement may not be able to integrate various businesses under the corporate head. The mission statement has a limitation that it doesn’t give an idea that how various divisions and functions are working under the corporate head. The corporate strategy may keep all businesses aligned and towards unique goal but mission statement may not explain that how diversified businesses are interrelated with one another. Another limitation which can rise especially for the conglomerates is that they also work at multinational scale. They don’t just serve various nations, but also cultures. Limitation can rise because of translating the mission statement in other languages. Writer also thinks that words can lose their right bite or importance by translating exactly into another language.

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Another limitation rises when a conglomerate review their mission statement at the corporate level. A successful conglomerate will be successful at all business/ divisional levels. When a conglomerate will review or improve their mission statement they have to strategically analyze that all business units are fulfilling the new words (words of mission statement) or not? And after how much time period a company may review their mission statement, if a company may achieve the mission statement objectives then they may review it, but for conglomerate it is possible that corporate objective is achieved but a business unit is still on its way to achieve the goals. The time validity to review the mission statement can act as limitation to achieve the advantage.

It is also important that a corporate mission statement may communicate the message to all functional levels. After developing the mission statement, an effort must be done to communicate the goals & objectives of mission statement at business and functional levels.

A conglomerate may be having few limitations to get the fruitful results from a mission statement. It is difficult for conglomerate to specify a specific market which they are targeting. Conglomerates are known as they have diversified businesses in un-related diversification. Hence in 250 words they cannot specify the product/service they offer. Conglomerate like Unilever use technology research hubs for different products. Therefore they cannot refer what exactly they are using to produce products. Therefore such factor can limit the benefits of mission statements. They can be overcome by integrating the corporate strategy and goals with business/divisional strategy and goals. (Fred, 2004)

Disadvantages of Mission statement

Specifically mission statement really doesn’t have any disadvantage, but how one uses the mission statement. “Become a $125 billion company by the year 2000” as this Wal-Mart’s statement is one of the most influential mission statements but it also holds a lot of criticism for creating disparity and giving only emphasis on monetary elements. Therefore in disadvantages we can talk about high fee if a company hires professionals to write a mission statement. It can be blessing and curse at same time, as whole art is how the strategic analysts use. (Micheal & Peg, 2007)

A mission statement can lock organizational innovations, as if an organization keeps working over the mission statement and may not evolve it by time than they can lock the organizational innovations. In context of conglomerate they are spread in various fields, if being conglomerate they successfully develop one they must evolve all businesses contemporarily. A paradox can also occur if conglomerate corporate mission statement may change but business units may not improve with time. Conglomerate may run corporate as parent department keeping other business units with it. Conglomerate represents a corporate structure which acts as a reflection to all the business units in various industries. The mission statement may represent one part of business unit and may not be able to integrate with other business units.

Disadvantages of Mission statement for conglomerate

Conglomerate works at corporate level having diversified businesses, they may use various mission statements for each business unit but to make one statement for corporate level is a difficult task. General Electric is one example of conglomerate which is not using any corporate level mission statement and each business unit is having their mission statement as required by them. As mentioned earlier by writer that impressive mission statement must have to be concise and brief. Conglomerate umbrella includes various business units. Strategically corporate level must have a mission statement. But due to diversification corporate statement may not be able to include all business units. By that customers may ignore one business unit in a conglomerate umbrella.

It may only act as fantasy. As professional mission statement writers can also be hired. The same innovative writing can be developed internally from the organization. The real essence is of that it may be followed and practically achieved. It is easy to write that we use best technology but every organization of world face complaints and grievances. (Micheal & Peg 2007)

Conglomerate as defined earlier, having a corporate structure with business units in diversified industries. Limitation rise to blend all the business units under one corporate umbrella. As Ford runs business in Automotive and Credit industry at same time. Blend will be difficult, as to ensure the mission in one concise paragraph. Various mission statements can be owe by a company, depending upon various diversified businesses. Even various functional departments within a business can keep their motto; limitation for conglomerate is as they have such diversified services/ products/customers that it is severely difficult to manage all in one. A corporate strategy can also differ from a strategy running in a particular business. BCG Matrix will do its job, same way various mission statements will be required for various businesses that can differ or deviate from corporate level.( Steven & Christiana ,2003)

Differences can rise between actual problem and practices. But it can motivate people to work in one direction. Mission statement may not act as illusion only, as discussed earlier by the writer that the organization may follow the mission statement they have developed. Not only to act as an ornament or attractive writing. It must work and may not only become piece of paper. Mission statement itself have strategic context. It must work as a strategic edge and may lead the organization to new horizons. If not, than its scope is limited to the intangible manner. (Frank , 2008)

Mission statement can act as a strategic tool for a conglomerate, as all organizations belong to one industry or another; there they compete with various organizations. Mission statements give them unique position in the market and in eye of customer. Cases of conglomerate are bit different as they are spread in various industries. There it is difficult to pin point customers and market levels they are targeting. Techniques like BCG Matrix are also used to identify the future of a conglomerate in an industry, but mission statement can also act as a strategic tool to motivate employees and internal stakeholders toward a target. Mission statement explains that why an organization exists, what they want to be in future? But conglomerate may find out a unique objective which all of its businesses units are adopting to be called as mission of the conglomerate. As the word happiness is used by Walt Disney, this can be observed in all of their business units and even at functional level. For conglomerate mission statement holds special importance as it may communicate and integrate the goals and objectives at all business units. Effective mission statements also integrate the corporate level message at business unit level and same to be communicated to the functional level within the business unit. That is how a mission statement can be fruitful for a conglomerate. A clear mission statement can also show future to conglomerate that how it can develop and diversify its business more. In the end a good mission statement will bring all the business units of a conglomerate to a unique goal. 

 

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