An organisation exists to accomplish something. When management senses that the
organisation is drifting, it is time to renew its search for purpose by asking:
What is our business?
Who is our customer?
What do customers value?
What should our business be?
According to Peter Drucker, every organisation must ask an important question "What business are we in?" and get the correct and meaningful answer. For example, Indian Railways will make a big mistake if they think they are in the business of moving trains and wagons; whereas they are actually in the business of transportation and material handling system.
The first step in the strategic planning process is defining the company mission.
Mission statement is a statement of the organisation's purpose - what it wants to
accomplish in the larger environment.
A clear mission statement acts as an "invisible hand" that guides people in the
Market definitions of a business are better than product or technological definitions.
Products and technologies can become outdated, but basic market needs may last
A market-oriented mission statement defines the business in terms of satisfying
basic customer needs.
The mission statement must avoid being too narrow or too broad. Mission statements
Be realistic
Be specific
Fit the market environment
Indicate distinctive competencies
Be motivating
A strategic vision is a road map of the company's future - providing specifics about technology and customer focus, the geographic and product markets to be pursued, the capabilities it plans to develop, and the kind of company that management is trying to create.
An organisation's Mission states what customers it serves, what needs it satisfies, and what type of product it offers.
A company's mission statement is typically focused on its present business scope – "who we are and what we do"; mission statements boldly describe an organisation's present capabilities, customer focus, activities and business makeup.
The company's mission needs to be turned into detailed supporting objectives for each
level of management. This second step in the strategic planning process requires the
manager to set company goals and objectives and be responsible for achieving them.
The mission leads to a hierarchy of objectives including business and marketing
Objectives should be as specific as possible.
Objectives are an organisation's performance targets - the results and outcomes it wants to
achieve. They function as yardsticks for tracking an organisation's performance and progress.
Strategic objectives relate to outcomes that strengthen an organisation's overall business
position and competitive vitality; financial objectives relate to the financial performance
targets management has established for the organisation to achieve.
Objectives are open-ended attributes that denote the future state or outcomes, whereas
goals are close-ended attributes, which are precise and expressed in specific terms.
Role of Objectives
Objectives define the organisation's relationship with its environment.
Objectives help an organisation pursue its mission and purpose.
Objectives provide the basis for strategic decision making.
Objectives provide the standards for performance appraisal.
Characteristics of Objectives
1. Objectives should be understandable
2. Objectives should be concrete and specific
3. Objectives should be related to a time frame
4. Objectives should be measurable and controllable
5. Objectives should be challenging
6. Different objectives should correlate with each other
7. Objectives should be set within constraints
In order to analyse the current business portfolio, the company must conduct portfolio
analysis (a tool by which management identifies and evaluates the various businesses
that make up the company). Two steps are important in this analysis:
The First Step is to identify the key businesses (SBUs). The Strategic Business
Unit (SBU) is a unit of the company that has a separate mission and objectives and
which can be planned independently from other company businesses. The SBU
can be a company division, a product line within a division, or even a single product
or brand.
Three characteristics of an SBU
Single business or collection of related businesses that can be planned for
Has its own set of competitors.
Has a manager who is responsible for strategic planning and profit.
The Second Step is to assess the attractiveness of its various SBUs and decide
how much support each deserves.
The best-known portfolio planning method is the Boston Consulting Group (BCG) matrix:
Using the BCG approach, where a company classifies all its SBUs according to
the growth-share matrix.
The vertical axis, market growth rate, provides a measure of market attractiveness.
The horizontal axis, relative market share, serves as a measure of company strength
in the market.

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