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Andrews
The importance of being general:
Business policy is the study of the functions and responsibilities of those charged with
running a successful business or a multifunctional entity within it. Business policy is
an intermixture of goals and purposes, impediments and obstacles, threats and
opportunities, resources and applications, environmental information and
misinformation which serves as the context of the strategic decision in a tumult of
competition. The successful resolution of disorder in the jumble of environmental
forces, goals and resources is what policy formulation is all about.
Business policy should provide direct preparation for performance as general manager
and result in certain knowledge, attitudes and skills relevant to these benefits.
Knowledge is the use of the concept of strategy
Attitudes are the ability to accept the associated frustrations and satisfactions.
Skills are both analytic and administrative. Business schools teach analytical skills
while experience gives administrative schools.
Management may be regarded as leadership in the informed, planned purposeful
conduct of complex organized activity. General management is the management of a
total enterprise or an autonomous subunit. The general manager has four sets of
responsibilities:
1. supervise current operations
2. plan future operations
3. coordinate the functions and human capabilities of his organization
4. make a distinctive personal contribution
The problem of previous preparation and systemic development of general
management potential goes beyond the business schools as it extends into the
business itself. However general management has no established system of
recruitment, education or on the job training appropriate to its dimensions.
To reduce the job of the general manager to more reasonable proportions, and subject
it to objective research and evaluation, a practioners theory is proposed. The theory
has a simple proposition that every business organization, every subunit of it and
every individual should have a clearly defined set of purposes or goals which keep it
moving in a deliberately chosen direction and prevents its drifting. The primary
function of the general manager is supervision of a continuous process of determining
the nature of the enterprise and setting of its goals.
The concept of corporate strategy
Corporate strategy is the pattern of major objectives , purposes or goals and essential
policies and plans for achieving these goals , stated in such a way as to define what
business the company is in or is to be in and the kind of company it is or is to be.
Stanford research institute definition is strategy is the ways in which the firm,
reacting to its environment, deploys its principal resources and marshals its main
efforts in pursuit of its purpose.
The strategic decision is concerned with the long-term development of the enterprise.
It necessarily projects continuously into the future. Therefore the central character and
its individuality of a business organization must be determined with clarity.
Corporate strategy has two equally important aspectsformulation and
implementation.
From the point of view of implementation, the most important function of strategy
is to serve as the focus of the organizational effort, as the object of commitment,
and as the source of constructive motivation and self control in the organization
itself.
The limitations of strategy:
1. With increasing complexity and fast changing environment accuracy in
detailed planning and forecasting is difficult.
2. Over dedication to planning may result in lost opportunities.
3. The inevitability of conflict between corporate goals and departmental goals.
4. the trouble faced in communicating the strategy
Dealing with these limitations effectively means learning to use it with reasonable
perspective on what is possible.
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The simplest impact of all these is the increase of competition and therefore risk.
Therefore there is a requirement for organization to engage in technical development
or maintain technical intelligence capability to follow what is happening.
Changes threaten all established strategies. Change also brings new opportunities. No
matter how secure a companys position is, obsolescence of a strategy is a continuous
threat. Hence forecasting and anticipation of these changes are essential for intelligent
planning.
The identification of new opportunity or of impending threat depends upon what kind
of information is relevant. Surveillance of developments becomes more practical once
the critical elements to look for have been determined.
Therefore there must be a mechanism to organize the systemic intelligence gathering
about the changing nature of the environment.
Ecological approach to the environment of the organization:
Environment is composed of four subsystems changing and evolving in orderly
relationships. They are:
1. Communitythe total population of all the individuals and institutions
making up the immediate and intermediate context of companys activities.
2. Culture a combination of values, attitudes, beliefs, concepts, customs and
laws that condition the way people and organizations behave in relation to one
another and the physical universe.
3. Habitat: the natural manmade physical setting in which the other components
of the total ecological system move and exist.
4. Product: the stream of goods and services flowing from the firm through its
environment towards being consumed or converted.
The complexity of the environment becomes manageable as relationships to other
organizations and individuals are sorted out.
The process of scanning the environment can have four modes:
1. undirected viewing exposure without purpose
2. conditioned viewingdirect exposure not involving active search, limited to
an identified area, sensitivity to data and readiness to assess importance
3. informal searchlimited and unstructured, specific information for specific
purpose
4. formal searchdeliberate, follow pre-established method to get specific
information
it is possible to organize the gathering of data by assigning responsibility for
these activitiescollection, storage and communication. The completeness of a
companys information needs depends on the strategy and the strategic
alternatives have been decided and are under consideration.
A systematic and dynamic and reasonable updating of current expectations of
what the future will be like can become a routine job in the future.
Identification of opportunities and risks:
For people who cannot know everything firms not into continuous surveillance of
the environment some questions will allow him to keep in mind changing
opportunity and risk:
--essential economic and technical characteristics of the industry of the firm
--apparent trends in these factors visible of the future
-- Nature of competition both within the industry and across industries
--requirements for success in competition in the companys industry
--Based on the answers to above questions, what is the range of strategy available
Opportunity as determinant of strategy:
For informed choice, awareness of environment is a continuous requirement.
Planned exploitation of changing opportunity follows an orderly course. Start with
an initial strategy, extend it other markets when it is successful there, after markets
are exhausted, go for forward (towards consumer) or backward (towards sources
of supply) integration. Vertical integration is due to the fact that a firm tries to
expand in areas in which it has continuity with its original activities. This can
involve mergers and acquisitions of firms.
After this it may look at product diversification horizontally which requires
knowledge in areas where the company may not have knowledge.
The identification of opportunity is the simplest for a uni product firm and goes on
increasing in difficulty as the firm grows both in markets and activities. The
corporate management would wish to invest profits in areas which will maximize
returns but it will not be in a position to evaluate all proposals or will it be able to
invest in all opportunities.
To decide which is the best of the opportunities, some criterion, apart from the
economic criterion must be in place. The first step in validating a tentative choice
is to determine whether the organization has the capacity to execute it
successfully. This is dependent on the companys strengths and weaknesses. The
strengths of a company accrue primarily through experience in making and
marketing a product line. The distinctive competence of an organization is what it
can do particularly well. To identify the less obvious strengths one can examine
the current product line and define the functions it serves in the markets. The
diversifier must also look at the skills that underlie the success achieved by him.
The enumeration of the strengths requires analysis. The effort to find or create a
competence that is truly distinctive holds the key to the future development.
To narrow down the alternatives is to match the competence with opportunity,
once these have been identified and its future significance established. It is the
matching of the opportunity with the competence which establishes a companys
economic mission and its relationship with the environment. While assessing
strengths look at the managerial capacity also. All these are subservient to the
identification of the nature of business and the kind of the company the
management desires which is a product of values.
Hence the combination of distinctive competences, organizational resources and
organizational values make a company unique. The matching of opportunity,
resources and competences leads to an economic strategy.
The company and its strategists: relating economic strategy and personal
values: