 Corporate Level Strategy:

The company should decide weather it

wants to be in 10 or 15 years hence, in
market standing, innovation,
productivity, physical and financial
resources, profitability, managerial
performance and development, worker
performance and attitudes and social
responsibility.
1. Growth Strategies:
a) Internal Growth
b) Horizontal Integration
c) Horizontal Related Diversification
d) Conglomerate Diversification
e) Vertical Integration Of Related Businesses
f) Vertical Integration Of Unrelated
Businesses
g) Mergers
h) Strategic Alliances
2.Stability Strategy

3.Retrenchment Strategies:
a) Turnaround
b) Divestment
c) Liquidation
Business Unit Level Strategy:
 How should we compete in the chosen
industry or business?
An organizational sub system-has a
market, a set of competitors and a goal
Concept of SBU
Examples include increase market share,
launching new products, focus on exports,
improve in product mix etc
Functional Level Strategy:
Each business unit consists of several
departments namely manufacturing, sales,
finance and HR
Identifies the basic courses of action that
each department must pursue
Different functions are inter-related
A change in one department will invariably
affect the way, other departments operate
Examples include commissioning, re-
launching, installing new machinery,
increase advertising budget to build brand
equity etc
Strategy Implementation:
Strategies formulated need to be
implemented (difficult)
Strategy formulation is positioning forces
before action
Strategy implementation is managing
forces during action
Strategy formulation focuses on efficiency
Strategy formulation is primarily an
intellectual process
Strategy implementation is primarily an
operational process
Strategy formulation requires good
intutions and analytical skills
Strategy implementation requires special
motivation and leadership skills
Strategy formulation requires co-
ordination among few individuals
Strategy implementation requires co-
ordination among many persons
Implementing strategies require actions
such as altering sales territories, adding
new departments, closing facilities, hiring
new employees, changing pricing strategy
etc
Strategy Evaluation:
It helps determine the extent to which the
company’s strategies are successful in
attaining its objectives
Activities include –
 Establishing performance targets,
standards and tolerance limits for
objectives, strategies and implementation
plans
 Measuring the performance in relation to
the targets at a given time. If outcomes
are outside the limits, inform managers to
take action
 Analyze deviations from acceptable
tolerance limits
 Execute modifications where necessary
and/or feasible
 Strategy evaluation can be a complex and
sensitive task
Too much emphasis may be expensive and
even counter productive
No manager wants to be evaluated too
closely
Little or no evaluation can create even
worse problems
Michael Porter: Strategy and
Competitive Advantage
He has introduced generic strategies like
focus, cost leadership, cost differentiation
to reduce the uncertainties
Suggested five forces theory
Books by porter “competitive strategy” and
“competitive advantage of nations”
Porters contributions to SM include the
“Five forces model”, “The value chain” and
the concept of “Generic strategies”
The nature and degree of competition in
an industry depends on five forces –
 The threat of new entrants
 The bargaining power of customers
 The bargaining power of suppliers
 The threat of substitute products
 The rivalry between existing players
The organization must understand how
these forces operate in the industry and
affect the company’s specific situations
Proposed measuring every activity of the
company in terms of its overall
competitiveness
Proposed the use of value chain analysis
for its internal processes, the interactions
between different functions, to determine
how and where the value could be added
Advocated three generic strategies namely
cost, differentiation and focus – to
compete effectively
Porters work in three words – “vigorous
domestic rivalry” means firms that engage
in intense competition tend to survive and
prosper
Strategic Decision Making:
As organizations grow larger and
environments grow uncertain, decisions
become increasingly complex and difficult
to make
Characteristics –
 It deals with long-run future of the entire
organization
 It commits substantial resources and
demands a great deal of commitment from
people at all levels
 It acts as a directive, it sets a precedent
for lower level decisions and future actions
and has implications for entire organization
Methods Of Strategic Decision Making:
 Entrepreneurial mode
 Adaptive mode
 Planning mode

Entrepreneurial mode:
 Strategies are framed by one powerful
individual
Focuses on organizational opportunities
Exemplified by bold decisions- founder’s
own vision of direction
Dominant goal is the growth of the
organization
Adaptive mode:
Characterized by reactive solutions to
existing problems
Results in a fragmented strategy with
incremental improvement

Planning mode:
Appropriate information for situation
analysis is gathered systematically
Few alternatives are developed and the
best is selected
Encompasses both the proactive search for
opportunities and a reactive solution to
existing problems
Company Mission:
Organizational direction

VISION
MISSION
OBJECTIVES
PLANS
POLICIES
GOALS
STRATEGIES
AND
TACTICS
 Determined By
VISION-Stakeholders/Founders
MISSION-Top Management
OBJECTIVES-Unit together with Top
Management
PLANS-Unit Manager with Approval of Superior
POLICIES-Each Organizational Level, In
Conformity with Other Unit Policies
GOALS-Individual managers, In Conformity
with Unit Policies
STRATEGIES AND TACTICS-Individual
managers, In Conformity with Unit Goals
The vision of a company provides
managers with unity of direction
A vision becomes tangible when it is
expressed in the form of a mission
statement
This statement verbalizes the beliefs of the
manager and directions in which the
manager seeks to lead the organization
Company’s mission embodies the business
philosophy of strategic decision makers,
reflects the firms self-concept (how the
firm perceives itself), indicates the
principal product or service areas and
identifies the primary customer needs that
the company attempts to satisfy
It describes the market, product and
technological areas of the business-reflects
the values and priorities of strategic
decision makers and guides future
executive action
A well designed machine statement talks
about customer needs, customer groups,
the company’s activities, technologies and
competencies
What needs of the customer are satisfied?
Who is served?
How does the enterprise create and
deliver value?
 Vision Statement of Cargill
Our purpose is to be the global leader in
nourishing people
We will harness our knowledge and energy to
provide goods and services that are
necessary for life, health and growth

Our mission is to create distinct value

We will succeed in business only by creating
value for our customers, our suppliers,
employees, shareholders and neighbors. We
will build stronger customer relations and
create solutions: Explore, Discover, Create
and Deliver
Our approach is trustworthy, creative and
enterprising
We build customer relationships on integrity.
We develop solutions that our customer
need. We are forward-thinking and action-
oriented

Our performance measures are: engaged

employees, satisfied customers,
enriched communities and profitable
growth
Engaged employees focus on satisfying
customers and committed to livable,
sustainable communities.
VISION:
A well conceived vision comprises two
main components namely-core ideology
and envisioned future
A good vision build upon the play between
these two complimentary forces
Core ideology- “what we stand for, and
why we exist?”
Envisioned future- “what we aspire to
become, to achieve, to create?”, that
demands significant change and progress
The vision needs to communicated
effectively
The vision of an organization is what
insiders of the organization create or
perceive
Vision should also reflect the concerns of
other stake holders such as shareholders,
customers, local community and society
The vision of the company should try to
stream line and correlate the personal
goals of the employees with organizational
goals
MISSION STATEMENTS
It plays a crucial role in its survival
Firms without a operation identify the
scope of operations in product and market
terms only
The fundamental and enduring purpose of
an organization that sets it apart from
other organizations of a similar nature
It refers to the philosophy of the business
and serves to build the image of the
company in terms of activities currently
pursued by the organization, and its future
plans
Most effective are those that are direct,
precise and memorable
 History of organization
 Distinct competencies of the organization
 The environment of the organization
The characteristics of good mission
statement are:
It differentiates the company from its
competitors
It is inspiring
It is relevant to all stake holders in the
firm, not just shareholders and managers
It seeks to clarify the purpose of
organization –why it exists
A mission statement usually attempts to
answer the following questions:
What is our reason for being? What is our
basic purpose?
What is unique or distinctive about our
organization?
Who are, or should be, our principal
customers, clients?
What are our principal products at present
and what will they be in the future?
What are the basic beliefs, values,
aspirations and philosophical priorities of
the firm?
FORMULATING A MISSION STATEMENT
The product or service can provide benefits
at least equal to price
The technology to be used in production
will provide a product/service that is
competitive in cost and quality
The product or service can satisfy a
customer need currently felt by specific
market segments
KEY ELEMENTS OF A MISSION
STATEMENT
Mission statement of Pfizer Inc.
We will become the world’s most valued
company to patients, customers, colleagues,
inventors, business partners, and the
communities where we work and live
The management philosophy of the
business will result in a favorable public
image
The business will provide financial rewards
for those willing to invest their labor and
money in the firm
With hard work and the support of others,
the business can grow and be profitable in
the long run
As the business grows, the company may
redefine its mission statement. The revised
mission statement generally reflects the
same set of elements as the original. It will
state:
The basic type of product or service will be
offered
The primary markets or customer groups
to be served
The technology to be used in production or
delivery
The public image sought
The managerial philosophy of the firm
The firm’s self-concept
Basic product, primary market and
principal technology:
“The three indispensable components of a
mission statement are the basic product, the
primary market and the principal technology
used in production or delivery”
Company Goals
A mission statement has to be more
specific than the company’s vision
Just as the mission statement tries to
make a company’s vision more specific,
company goals attempt to make a mission
statement more concrete

Goals indicate a desired future state that a

company attempts to realize. To be
meaningful, goals should have three main
characteristics
They should be precise and
measurable: If a goal cannot be stated
precisely and, measured accurately, the
company will face difficulties in assessing
its progress in attaining that goal.
They should address important issues:
To maintain its focus, an organization
should operate with a limited number of
major goals. This implies that only goals
should be selected.
They should specify a time period in
which they should be achieved:
Deadlines can inject a sense of urgency into
goal attainment and act as motivators.
The features of the strategic goals of an
organization are:
They address both financial and non
financial issues
They facilitate reasonable trade-offs
They can be reached through “stretch”
They cut across financial areas
Company Philosophy
Company philosophy and values give a
framework/boundary for individual actions
aimed at achieving corporate goals
A company’s philosophy is also known as
its creed, and usually forms a part of the
company's mission
It reflects or states the basic beliefs,
values, aspirations, guiding principles and
philosophical priorities that the strategic
decision-makers are committed to
emphasize in their management of the
firm
The Company Philosophy of Sun
Microsystems:
“We believe human development to be
the worthiest of the goals of civilization
for nurturing growth in the capabilities
of people”
Public Image:
Public agitation often stimulates a heightened
corporate response, but an organization is
generally concerned about its image even in
the absence of expressed public concern

Company Self Concept:

A major determinant of any company’s
continued success is its continuous
interaction with the external environment
Social Responsibility
Corporate social responsibility is a public
movement that has gained momentum
over the past few decades
Citizens have started demanding that
corporations be accountable for their
actions
This movement has resulted in business
managers becoming more transparent and
socially responsible in their actions
Organizations are being pressurized to
improve their performance not only in
financial but also in non financial areas
As a result, organizations have started
building social criteria into their strategic
decision-making.

Human rights issues and healthy

environmental practices are no longer seen
as compromising on profitability.

The firms with a good reputation in these

areas are regarded highly by the public
and are often able to sustain profits even
under adverse circumstances.
Managers of business organizations have four
social responsibilities
 Economic
 Legal
 Ethical
 Discretionary
Responsibilities of Business
Shareholders

Employees

Customers

Local Community

Society
 STAKEHOLDER APPROACH TO
SOCIAL RESPONSIBILITY
Claimants to a Company Mission
The stockholders claim to appropriate
returns on their investments
The employees claims for job satisfaction
and compensation leading to a certain
standard of living
The customers desire for value for their
money
The suppliers requirement of dependable
buyers
The governments desire for adherence to
legislated rules, regulatory rules,
regulations, laws and taxes
Competitors unwillingness to face unfair
competition
The unions wish for benefits for members
in proportion to their contribution to
company’s success

The claim of local communities, which

expect companies to be responsible
“citizens”

The assurance sought by general public

that the quality of life will be improved as
a result of firm’s existence
When an organization attempts to define its
mission, it incorporates the interests of
various claimant groups. This process
involves four steps
 Identification of Claimants
Understanding Claimant’s Demands vice-
versa the company
Recognition the Prioritization of Claims
Coordination of Claims and Mission
Components
 GUIDELINES FOR A SOCIALLY
RESPONSIBLE FIRM
The main purpose of a business is to make
profit
Strategic managers should strive for the
optimal profit that can be achieved over
the long run
Profits cannot be claimed until business
costs are paid
These costs include all the costs
determined by a detailed analysis of social
balance between the firm and society
If there are social costs in areas where no
objective standards for correction exist,
managers should generate a corrective
standard
When competitive pressure precludes
socially responsible action, the business
should recognize that its operation in
depleting social capital represents a loss
It should attempt to restore profitable
operation through either better
management (if the problem is internal) or
corrective legislation (if society is suffering
as a result of the way that the rules of
competition have been made)
Strategy and business ethics
Ethical decision making
A Model of Ethical Decision Making