Definition of Business
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The document discusses key concepts related to business strategy including vision, mission, objectives, critical success factors, and analysis. It provides definitions and examples of vision as the desired future destination, mission as the organization's role in society, and objectives as precise goals. Critical success factors are identified as essential areas for competitive success. Different levels of analysis are also summarized, including internal analysis of the company, customer, and competitor, as well as external analysis of context.
Definition of Business
- 1. Definition of Business Dr. Prabir Kumar Dash By creating new products, spreading technology and raising productivity, enhancing quality and improving service, business has always been the active agent of progress. It helps make the good things of life available and affordable to ever more people. This process is driven by competition and spurred on by the need to provide adequate returns to those who risk their money and their careers, but is, in itself, a noble cause. We should make more of it. We should, as charitable organizations do, measure success in terms of outcomes for others as well as for ourselves. Charles Handy What’s Business For ? 1
- 2. Business Definitions Business Definition Derek F. Abell Customer functions - What? Time pieces: record time, fashionable, giftitem Customer groups - Who? To serve individuals or for Industrial use Alternate technologies - How? Mechanical, Quartz digital, Quartz analog 2
- 3. Xerox India Ltd. (erstwhile Modi Xerox) Strategy of pitching itself as a service organization rather than a vendor of machines (of which there are plenty in India). Customer groups - individual organization, government departments, export market Customer functions - provide communication with ease of reproduction Technology - high quality, latest available from Xerox Corp., USA. Xerox India: Action taken.... 3 Customer Group : efficient high priced & appropriate & low priced model; Marketing - full service maintenance agreement, renting of machines. Customer functions : high & medium quality photocopier- spares (drums), consumable items (toner, developer) – after-sales service support. Technology : heavy investments in high-tech manufacturing facilities, high quality manpower, customer services staff.
- 4. Dictionary Definition: Vision is an “image of the future we seek to create.” A vision statement describes in graphic terms where the goal- setters want to see themselves in the future. It may describe how they see events unfolding over 5 or 10 years if everything goes exactly as hoped. Vision Vision Statements Indian Oil Corporation A major diversified, transnational, integrated energy company, with national leadership and a strong environment conscience, playing a national role in oil security& public distribution. 4
- 5. Dictionary Definition: Mission is a “purpose, reason for being; also, an inner calling to pursue an activity or perform a service.” Mission statement defines the purpose or broader goal for being in existence or in the business. It serves as an ongoing guide without time frame. Mission Mission What is our business? What will it be? What should it be? - Underlying need of the society that any organization serves to fulfill Mission: To satisfy information needsof the society 5 Book Publisher: To provide excellent reading material Magazine Editor: To present news analysis in balanced and unbiased manner
- 6. Feasible Precise Clear Motivating Distinctive Indicate major components of strategy Indicate how objectives are achieved Characteristics of Mission Mission, Purpose, Aim, Goal, General Objective, Grand Strategy, Corporate Objective, Corporate Philosophy – related terms Mission Statement Criteria for evaluation 6 Is our mission statement is focused on satisfying customer needs ratherthan being focused on the product? Does our mission statement tells who our customersare? Does our mission statement explains what customer needs our company is trying to satisfy? Does our mission statement explains how our company will serve its customers? Does our mission statement fits the current marketenvironment? Is our mission statement based on our corecompetencies? Is our mission statement motivating and does it inspire employeecommitment? Is our mission statement realistic? Is our mission statement specific, short, sharply focused and memorable. Is our mission statement is clear and easilyunderstood? Does our mission statement says what we want to be rememberedfor?
- 7. Mission & Vision Statements Our mission is: To bring inspiration and innovation to every athlete* in the world. *If you have a body, you are an athlete. The Coca-Cola Company Our Mission: To refresh the world - in mind, body and spirit To inspire moments of optimism - through our brands and actions To create value and make a difference everywhere we engage Vision of the Coca-Cola Company: To achieve our mission, we have developed a set of goals, which we will work with our bottlers to deliver: Profit: Maximising return to shareholders, while being mindful of our overall responsibilities People: Being a great place to work, where people are inspired to be the best they can be Portfolio: Bringing to the world a portfolio of beverage brands that anticipate and satisfy people's desires and needs Partners: Nurturing a winning network of partners and building mutual loyalty Planet: Being a responsible global citizen that makes a difference Productivity: Be a highly effective, lean and fast-moving organisation Vision: "To be a globally respected corporation that provides best-of- breed business solutions, leveraging technology, delivered by best-in-class people." Mission Statement: "To achieve our objectives in an environment of fairness, honesty, and courtesy towards our clients, employees, vendors and society at large." Values: We believe that the softest pillow is aclear conscience. The values that drive us underscore our commitment to: Customer Delight To surpass customer expectations consistently Leadership by Example To set standards in our business and transactions and be an exemplar for the industry and ourselves Integrity and Transparency To be ethical, sincere and open in all our transactions Fairness To be objective and transaction-oriented, and thereby earn trust and respect Pursuit of Excellence To strive relentlessly, constantly improve ourselves, our teams, our services and products to become the best 7
- 8. Vision: "To be among the global top 10 by 2010 ." Mission Statement: "To help customers achieve their business objectives by providing innovative, best-in-class consulting, IT solutions and services. Make it a joy for all stakeholders to work with us." Q: TCS had a target to be a $10-billion firm. Have you given any target to yourself in terms of the company’s growth? A: In a few days time, we will have a vision statement but it will not be about numbers. -N.Chandrasekharan, CEO (Oct.07, 2009: Business Standard) “TCS has become the world's 9th largest s/w services company in terms of revenues.” For the $6.3 billion-TCS, the focus now"would be to climb the value chain in a bid to differentiate its services from competition," - Ratan Tata, Chairman (July 03, 2010: The Times of India) Objectives 8 Define organization’s relationship with its environment Help pursue organization’s mission Basis for strategic decision making Standards for performance appraisal Translated to goals - attainable - specific
- 9. Setting Objectives: 5 rules S pecific M easurable A ttainable R elevant T imely 9
- 10. Hierarchy of objectives Divisional Departmental Functional Operational What objectives are set? Peter Drucker 10 1. Market standing 2. Innovation 3. Productivity 4. Physical & financial resources 5. Profitability 6. Manager performance & development 7. Worker performance & attitudes 8. Public responsibility
- 11. How objectives are formulated? Glueck Forces in environment Realities of enterprise’s resources & internal power relationships Value system of the top executives Awareness by the management Critical Success Factors 11 What to we need to do in order to be successful? e.g. : Courier - reliability & speed CSFs have an impact on profitability Product attributes, competitive capabilities and market achievements Scientific research, low cost efficiency, strong distribution network, fast technical assistance, design expertise, image, managerial experience, superior workforce talent. ORIGIN: The term 'critical success factor' was first coined by Rockart (HBR, 1979). He defined it as: “the limited number of areas in which results, if they are satisfactory, will ensure successful competitive performance for the organization.’”
- 12. Critical Success Factors ELGI is based in Coimbatore TN (since 1960s) Humble beginnings - Bus body building Wood-working machinery Reclaiming rubber from used tyres Automotive chains – Capturing OEM market with quality & reliability in delivery Garage Equipment – Customer service thru efficient after-sales service "ELGI aims to get a sizeable share of the world market for its compressors and automotive equipment business by 2015 " Vision Rotary Compressor Division Reciprocating, Railways and Original Equipment Division Automotive Equipment Division Engines Division Manufacturing and Engineering Services 5 Divisions Identifying Critical Success Factors 12 Basis on which customers choose brands or sellers - What product attributes are crucial? Resources & competitive capabilities a seller needs to have to remain competitive What enables sellers to sustain competitive advantage? A critical success factor (CSF) is not a “key performance indicator” (KPI). Critical Success Factors are elements that are vital for a strategy to be successful. KPIs are measures that quantify objectives and enable the measurement of strategic performance. For example: KPI = number of new customers; CSF = installation of a call centre for providingquotations
- 13. Summary Vision: Destination of business Mission: Role they wish to play in society Values: Beliefs that are shared among the stakeholders of anorganization. Purpose: Purpose(s) organization should strive for Policy: Guidelines for action Procedures: Series of related steps or tasks Rules: Prescribed course of action Strategy: Course of action or a plan - unified comprehensive and integrated - to assure that the objectives of the organization are achieved. Goal: Open-ended attributes denoting a future state or outcome of an effort put innow. Objective: Close-ended attribute which is precise and is expressed in specificterms. Objectives are often used to refer to end-situations whereas goals are about stages in the process of reaching the objective. Analysis FACET FOCUS MOULDS MECHANISMS MANIFESTATIONS SWOT InternalAnalysis COMPANY • Vision, Mission,Values • TOWS / SPACEmatrix • Biz Portfolios • Structure • Processes • Systems • Excellence • Innovation Strengths& Weaknesses CUSTOMER • Pricing Models • Service-Profit Chain • Co-Creation • ActivityBased Management • Balanced Scorecard • Value Proposition ExternalAnalysis COMPETITOR • VRIO • Value Net • Hyper-Competition • Competitive Intelligence • Competitive Advantage Opportunities& Threats CONTEXT • PESTEL • Five Forces • Scenarios • Foresight • Knowledge Management • Early WarningSignals • Blind spots STRATEGY FORMULATION EXECUTION & IMPLEMENTATION 13