Strategic Management

31 August 2010(3rd hour)

M.Karunakaran – Lecturer

MBA 0941 1.Business definition_Objectives 1

and Goals
 Overview of Last Class

Stakeholders in Business – Vision, Mission and Purpose

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and Goals
 Today's topic

Business definition – Objectives and goals

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and Goals
 Today's News

Recession hits Bollywood stars' pay

http://www.thehindubusinessline.com/2010/08/29/stories/2010082951340100.htm

• Grim picture:Film costs have gone up and some of the overpriced films bombed at the box office. The industry also made
mammoth losses due to the two-month multiplex-producers stand-off, forcing producers to prune budgets.

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and Goals
 Business definition – Objectives and goals
Strategic Management Text and cases – VSP Rao, V Harikrishna

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 Business Definition

• A Business definition is a clear statement of the business the firm is engaged in or

is planning to enter.

• It answers the question: What is our business in a precise way.

• Examples:
“We are in the beauty-enriching business” – Helen and Curtis
“We are in the business of computer technology” – Intel
“We are watch makers to the nation” –HMT
“ We are in the transportation business” – TELCO

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 D.F Abell suggested business along three dimensions

1. Customer groups – who is being satisfied

2. Customer needs – what is being satisfied

3. Alternative technologies – how the need is being satisfied

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 Business definition orientation

1. Product definition
2. Market definition

Company Product definition Market definition

Railways We run railways We are a people and
goods mover
Film producing company We make movies We market entertainment

Copying company We make copying We help improve office

equipment productivity
Oil company We sell gasoline We supply energy

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 As Peter Drucker Pointed out

Products may come and go but basic needs and customer groups endure forever.

According to him business definition should cover three vital aspects.

1. Product/ Service concept

2. Customer segment

3. Value creation

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and Goals
 1.The Product / Service concept

Firm likes to position its products/service in the market, in terms of product features,
quality, price, service, distribution, differentiating elements etc.

Coca cola focused on its soft drink business, missed seeing the market for coffee bars
and fresh juices that eventually impinged on its soft drink business

A firm therefore, needs to define its business in a way that allows it to focus on its
strength in a pin pointed way and march ahead of its rivals with confidence

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 2.Customer Segment

Target marketing basically involves three steps

1. Market segmentation – dividing a market in to distinct groups

2. Market targeting – evaluating the market and entering in to it

Once the firm decides which market to enter it should decide on positioning strategy

3. Market positioning
 Identifying the competitive advantage
 Picking up the right competitive advantage
 Effectively communicating and delivering the chosen position to the market

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and Goals
 3. Value creation

Value is the ratio between the customer gets (both functional and emotional benefits)
and what he gives(in terms of money paid, energy extended, time spend and
opportunity sacrificed)

Should satisfy the customers importance(value)

- Low price
- High quality
- Fast delivery
- After sales service

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 Objectives and Goals
-Strategic Management –M.Jeyarathnam

Objectives:
Objectives is the ends, which the organization tries to achieve through its operations.

Example:
Increase growth by 10% in terms of market share and sales over last year.

Canara Bank: “The bank's stated objectives are ‘growth, innovativeness, high profits as a
barometer of efficiency, highly involved employess distinctively charged with pride”

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 Areas where objectives are set

• Growth
• Profitability
• Market share
• Productivity
• Technology
• R&D Innovation
• Corporate Social Responsibility
• Image
• Employee Satisfaction

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and Goals
 Objectives at different levels

• Strategic Objectives

• Business Process Objectives

• Individual Objectives

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 The SMART Formula
- useful method of examining objectives

 Specific

 Measurable

 Achievable

 Realistic

 Timely

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and Goals
 Goals

Goals:
Goals is an open ended statement, which does not quantify what needs to be
achieved and the time frame for completion.

Example:
“Growth” is our goal.

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and Goals
 Goal - Types

• Stated Goals
– Simply statements about desired results.
– They reflect what the organization should be doing
– Expressed in writing and communicated to all employees
– Eg: Sufficient profits, Market leadership

• Operational Goals
– Real goals of the organization
– Tell us what the organization is trying to do, irrespective of what the official goal is
– Eg: Quality, Employee morale

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and Goals
 According to Charles Perrow Operational Goal - Types

 Environmental Goals

 Output Goals

 System Goals

 Product Goals

 Derived Goals

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 Overview of today's class

Business definition – Objectives and goals

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and Goals
 Questions

• Business Definition?
• Why Objectives is important in a business?
• Define objectives?
• Define Goals?
• Explain types of objectives?
• Explain types of Goals?

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and Goals
 Things to Remember

• Assignment & Seminar topics given start preparing

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and Goals