ORGANISATIONAL CONTEXT OF DECISIONS

MISSION• Mission is the reason and justification

for the existence of firm and explains purpose of the organisation• Always defined in terms of the

benefits the firm provides to its customers• Always concerned with future. The

mission should be so described that it remains valid for at least some years to come.

• It is the unique character and purpose of the organization which identifies the scope of its activities which distinguishes it from others of this type.

• It indicates the nature and scope of business operations in terms of product/ services, markets, customer and technology.

• It provides information to insider and outsider of what the corporation stands for (nature and scope) in terms of products/services, markets, customers and technology. Purpose (direction/what it should be), image and character.

OBJECTIVES• Objectives are the ends that state

specifically how the goals shall be achieved. It includes all management process. It should be concrete, specific in contrast to goals that are generalized. It should be quantifiable, elaborated and expressed as operational.

• Once the mission and scope of a firm have been defined by the top management, the next step is to translate them into action

• This can be done by breaking down the business mission into smaller, workable objectives for managers down the line.

Necessity of formal objectives- • It defines the organization

relationship with its environment • It helps in pursuing its vision &

mission in long term.• It provides basis for strategic

decision making .• It provides standard for performance

appraisal.

GOALS• Derived from the objectives and are intermediate time-bound targets which are necessary for the achievement of objectives• Goals are time-bound and work-oriented

STRATEGY•The specific path of action chosen by a firm to achieve its objectives is termed as Strategy.

COMPONENTS OF STRATEGY• A product/market scope: The specific products

and markets in which a firm operates and which define its limits of activity.

MKTPDT NEWCURRENT

CURRENT

NEW

• Competitive advantage: Those specific properties of individual product/market that give the firm its unique position its competitors.

• Distinctive competence: The specific

organizational strengths of a firm which help in achieving its objectives.

• Growth Factor: The changes the firm plans to make in its product/market scope for ensuring its future growth.

Steps involved in Strategy Formulation:

1. External- Internal Analysis 2. Generate Strategy Alternatives (Mkt-Pdt/

Current –New Matrix)3. Evaluating the Strategy Alternatives4. Choice of strategy

POLICIES• A ‘Policy’ is a predetermined course of action,

which is established to provide a proper guide toward achieve organizational objectives .

• It should be formulated on facts & past experiences.

• It should be flexible enough.• It should be framed to act as an aid & not as an

obstacle

IMPORTANCE OF POLICIES

• Smooth functioning• Ensures consistency• Operational Success• Minimize Costs• Build a Learning Culture• Motivation

DifferencesMission/Objectives/Strategy Policies/ Prog/ ProceduresMainly concern of top management

Concerned primarily with mioddle & operating management level

Long term and have far reaching consequences affecting the very survival & growth of the firm

Short term, easier to change without much adverse effect on organization’s existence

Formulation is concerned with environment and its concern is with improvement of effectiveness of the firm

Affect the internal structure & operational activities and is concerned with improvement in efficiency of the firm

PROGRAMMES• Meant to organize & schedule repetitive activities

which constitute a complete set/ work assignment in the most efficient manner e.g. Having an annual appraisal

PROCEDURES• Refers to specific method & sequence by which an

activity is performed.e.g. Fire fighting programme• Procedures should:• Be based on past experience& facts• Be as precise as possible• Be understood by people who have to use them• Have accord of people who have to use them