Monday, April 28, 2008

Concepts of Organizational Strategy

What is our business?
Levels of strategy
Proudct market Opportunity


Objectives specify the results sought through the ongoing, long-run operations of the organization. These outcomes may consist not only of the desired results insofar as the organation's customer is concerned but also of what the organization perceives as the long range results it intends to achieve internally.

To have meaningful impact, objectives must be operational; that is they must be capable of being converted into specific targets and specific actions. They must give direction to the activity of the organization. They must set forth long-run organizational priorities. They must become the basis for work and for achievement. They must serve as standards against which performance is to be measured.

Since the role of objectives is to guide the concentration of resources and effort towards the desired ends, objectives should be selective. Objectives are needed in all areas on which the long-term survival and success of the organization depend. The important areas are:

1. Market
2. Technology
3. Innovation
4. Profitability
5. Efficiency
6. Resources
7. Social responsibility

The objectives of an organization may undergo revision over a period of time to meet changing circumstances.


Strategy and Policy: Concepts and Cases
Thompson and Strickland
Business Publications, Texas, 1978


A business is defined by the want the customer satisfies when he buys a product or a service from a business organization.

To satisfy the customer (means to satisfy a specific want of the customer) is the mission and purpose of every business.

The question "What is our business?" can be answered ony by looking at the business from the outside, from the view point of customer and market.

The purpose of a company has to be one of the wants of customers in the market.

The customer is not attached to any product, service or company. He wants to know wht the product or service will do for him tomorrow. He is interested in his own wants, his values and his desires and world as he sees it. Therefore any serious attempt to define "what our business is" must start with the customer, his wants, his situation, his behavior, his expectations, and his values.

Therefore a searching enquiry needs to carried out to answer questions such as:

Who is our customer and what his needs?
Where is the customer?
What does the customer buy?
Is it status? Comfort? Satisfaction of a physical need? An ego need? Security?

What is value to the customer?
Is it price? Function? Quality? Service? Economy of use? Durability? Styling? Convenience?

These questions plainly need to be posed and answered at the inception of a business and whenever it gets into trouble.

But even when the business is successful, the organization have to examine their business purpose as the definition may become obsolete in the context of changes in the products and markets. The periodical examination of purpose in the light of customer studies and research will help the organization to look ahead and anticipate the impact of changes in the environment.

At any point of time, the purpose stated by the company has to be the answer to the question "What should our business be?" This question is periodically answered by the top management as a part of its setting the strategy for the future period.

Strategy and Policy
Thompson and Strickland,
Business Publications, 1978


The goals of an organization are the intermediate quantitative and qualitative "performance target" which management seeks to attain in moving toward organizational objectives.

Thus whereas objectives are long range in nature, goals are short range. They serve to indicate the speed and momentum which management seeks to maintain in accomplishing the organization's objectives.

They direct the attention of both management and employees toward the desired standards of performance and behavior in the near term.

Illustrations of goals:

1. Our target is to have market share of 15 percent this year and 17.5 percent next year.

2. We seek to gain enough accounts this year to reach our goal of $50 million in assets under management.

Goals become the rallying point for coordinating the activities of subunits as they act as a basis for establising common goalposts.

Acceptance of the objectives of the organization and goals derived therefrom promotes teamwork and a united approach to the working of the organization.

Sunday, April 27, 2008

Organizational Competence and Resources

The strategist has to choose among available product-market opportunities, the opportunity which is viable with the organization's current competencies and resources.

Basic Strategic Alternatives

1. Concentration on a single business

2. Horizonal integration

3. Vertical integration

4. Diversification

5. Joint ventures

6. Innovation

7. Retrenchment

8. Divestiture

9. Liquidation

Basic Strategic Alternatives - -Vertical Integration