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UNIT -3

Strategic Management: Corporate Planning- Vision, Mission, Goals, Objectives, programmes,

Policies, SWOT anlysis- Stategy Formulation and Implementation.
Marketing Management: Functions of Marketing, Marketing Mix – Marketing Strategies based on
Product life cycle – Channels of Distribution.

STRATEGIC MANAGEMENT

Strategic management provides better guide lines to entire organization on the crucial point of “what
is it we are trying to do and to achieve”?
Strategic management is what managers do to develop the organization’s strategies. Strategic
management involves all four of the basic, management functions – planning, organizing, leading, and
controlling. Strategic management is important for organizations as it has a significant impact on how
well an organization performs. Strategic management is an ongoing process that evaluates and controls
the business and the industries in which the company is involved assesses its competitors and sets goals
and strategies to meet all its existing potential competitors.
STRATEGY:
The strategy is the central to understanding the strategic management. The word strategy is originated
from the Greek word, “strategic” which means to lead; “generalship” and which described the role
of general in the command of the army. This word is mainly drawn from armed forces.
Meaning of Strategy
Strategy is the determination of basic long term goals and objectives of an organization. It is the central
understanding of the strategic management process. Strategy allocates the necessary resources for
implementing course of action. It develops the company from its present position to the desired future
position. Enterprise knows its strengths and weaknesses compared those of its competitors.
Definition:
According to Alfred D. Chandler defines strategy as, "the determination of the basic long-term goals
and objectives of an enterprise and the adoption of the Courses of action and the allocation of resources
necessary for carrying out these goals."
According to Arthur Sharplin, "strategy is a plan or course of action which is of vital pervasive or
continuing importance to the organization as a whole."
CRITERIA FOR EFFECTIVE STRATEGY:
Although each strategic situation is unique, there are some common criteria that tend to explain an
effective strategy. Criteria for effective strategy include:
Clear, decisive objectives: All efforts should be directed towards clearly understood, decisive and
attainable overall goals. All goals need not be written Down or numerically precise but they must be
understood and be decisive.
Maintaining the initiative: The strategy preserves freedom of action and enhances commitment. It
sets the pace and determines the course of events rather than reaching to them.
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Concentration: The strategy concentrates superior power at the place and time likely to be decisive.
The strategy must define precisely what will make the enterprise superior in power, best in critical
dimensions in relation to its competitors. A distinctive competency yields greater success with fewer
resources.
Flexibility: The strategy must be purposefully being built in resources, buffers and dimensions for
flexibility. Reserved capabilities, planned maneuverability and repositioning allow one to use
minimum resource while keeping competitors at a relative disadvantage.
Coordinated and committed leadership: The strategy should provide responsible, committed
leadership for each of its major goals. Care should be taken in selecting the leaders in such a way that
their own interest and values match with the requirements of their roles. Commitment but not
acceptance is the basic requirement.
Surprise: The strategy should make use of speed, secrecy and intelligence to attack exposed or
unprepared competitors at an unexpected time. Thus surprise and correct time are important.
Security: The organization should secure or develop resources required, securely maintain all vital
operating points for the enterprise, an effective intelligence system to prevent the effects of surprises
by the competitors.
Need for strategy:

→ To have rules to guide the search for new opportunities both inside and outside the firm.
→ To take high quality project decisions.
→ To have and develop internal ability to anticipate change.
→ To develop measures to judge whether a particular opportunity is a rare one (or) whether much
better ones are likely to develop in future.
Elements / components of strategy:
Strategy mainly considers four components.
Objective (what an organization wants to achieve at end)
Goals (what an organization wants to achieve with in a given period.)
Mission (fundamental existence / purpose of an organization)
Vision (ways to achieve organization objectives)
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MISSION
The mission statement is an explicit written statement of what an organization whishes to achieve in
the employees at levels to put forth their best in their individuals and collective efforts in the
organization.

Company mission:
The mission of a company is having fundamental, unique purpose that is setting it apart from other
companies of its type and identifies the scope of its operations in product and market terms.
Mission statement defines the aspirations, values, roles, growth, goals, survival and profitability
of a company.
Definition:
“Mission is the purpose (or) fundamental reason for the organization organization’s purpose of
existence. When strategies raise certain fundamental questions related to business such as:

→ What is our business?

→ Why are we in the business?
→ What will it be after five years?
Then, the need of the mission statements arises. The survival of an organization mainly depends on its
needs, for satisfying the needs of the society.
Elements of a mission statement: A mission statement contains following elements.
i) purpose ii) strategic scope iii) standards and behaviours iv) strategy and values.

PURPOSE

What business exists?

STRATEGY & SCOPE

VALUE
What management
What business and believes in?
STANDARDS AND BEHAVIOURS
how?
The Rules that guide how the business operates?
Characteristics of an effective mission statement:
A mission statement should incorporate the basic business purpose and the reason for its existence by
rendering some valuable functions for the society. An effective mission statement should posses the
following characteristics.
➢ It should be clear enough to trigger action:
A clear statement mission facilities understanding among the employees. This in turn leads to action.
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Ex: NASA’s mission in 21st century is to know more about mars.

➢ It should be flexible:
No mission statement can ever be rigid & hard. It should be flexible. If the company finds that the
mission is achieved (or) the present mission does not hold relevance any more, (or) it is not
economical to pursue the mission, further it is freely to modify its mission.
➢ It should be measurable in terms of specific targets:
Organisations must establish specific targets so that the performance can be exactly measured.
➢ It should be motivating:
By determing a clear mission statement which is easily understand by each and every employee that
means that mission statement perfectly pinpoints the what they have to do in the organisation without
getting any confusion it deals to employee motivation.
➢ It should be precise:
The mission statement has to detail address about the organisation’s activities, vision, goals, and
objectives.
➢ Mission should be distinctive: A mission statement made the distinct than the other
companies.
➢ Mission focuses on customer needs and utilities, not products:
A mission statement should define the broad scope of activities with in which the company will
operate competitively. It may specify the details of the range industries, products, and their markets.
However, all these must build around the customer needs and utilities.
➢ It should be focus limited number of goals:
The mission statement has to priorities its preferences and put forward what it wants to achieve in the
year to come.
Mission statements of some Indian companies:
Reliance industries – “speed and innovation is a way of life”
Hero Honda motors – “we hero Honda constantly innovative products and processes”.
L&T – “L&T shall be innovative and attaining global benchmarks”.

VISION
Vision is the starting point of articulating organizations hierarchy of goals and objectives. A vision
statement is a vivid idealized of a desired outcome that inspires, energizes and helps firm to create a
mental picture of its target.
The vision statement seeks to answer the basic question, “What do we want to become”?
Definition:
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A company vision is sinuous with the company’s mission. This means that alternetive name for the
company’s mission is vision. – Robinson.
Vision is the art f seeing things invisible.
Examples of vision statement: Motorola – “Total customer satisfaction”. Mc Donald’s – “To be
world’s best quick service restaurant”. The canon – “Beat Xerox” Disneyland – “To be the happiest
place on earth”.
Vision statement may also contain slogan a diagram, or a picture – whatever grabs attention.
Characteristics of an effective vision:
Strategic vision must convey something definite about how the organisations leaders intend to beyond
where it is today. A good vision always needs to beyond a company reach. The following are the
characteristics of effective vision statement.
Focused: Is specific enough to provide managers with guidance in making decisions and allocating
resources.
Graphic: paints a picture of the kind of company that management is trying to create and the market
position the company is striving to carve itself.
Directional: says something about the company’s journey or destination and signals the kind of
business and strategic changes that will be forthcoming.
Flexible: vision is a path it should change according to the situations.
Feasible: what the company can reasonably expect to achieve in due time.
Desirable: appeals to the long term interest to the shareholders, employees and customers.
Easy to communicate: it is able to explain in short time and it is a simple memorable slogan.

Differences between mission and vision

MISSION VISION

Mission is defined as a “purpose or reason for the Vision is defined as a, “description of something
organizations existence” can organization, a corporate culture, a business,
a technology, an activity in future”.

Mission is the strategic intent It is the first and core step in strategic intent.

Mission statements are formulated on the basis A vision is like a dream which is derived from
of vision decided by entrepreneur. the actions.
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Mission statement an organization’s philosophy, Vision statement, goals, objectives, strategies,

identity, character and images are reflected. policies and programmes can be developed.

GOALS
The term goal signifies general statement of direction in line with the mission. It may be well be
qualitative in nature. A company’s goal describes the desired future position the company wants to
reach. The selection of goal is based on the defined mission of the company. Goals are the overall
objectives of a department or organization.
Definition: goal is defined as what an organization wants to achieve during (or) by the end of a given
period of time.
Any goal is said to be effective it should be consist of following elements:
Specific enough for focus and feedback.
Meaningful enough to engage participants.
Accepted by the participants.
Realistic but challenging.
Time framed means it should be complete in given time.

Significance:
It helps to define organization in its environment: By stating the goals, the company can attract
people who identity with these goals to work for them. A non-government organization announces its
mission as ‘to empower women’ and goal as ‘to educate the tribal women about the self-employed
opportunities during next five years’.
It helps in coordinating decisions: Goals help the managers to coordinate resources and the efforts
of the employees under their command effectively.
Goals are more tangible targets: Goals are capable of being measured. At times, the mission
statement may look abstract one should be innovative in the goal- setting process.
It facilitates performed appraisal: The performance of both the organization and the individuals in
it can be evaluated by considering whether the goals have been achieved or not.
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OBJECTIVES
Objectives are formulated from mission statements. Objectives and goals are used interchangeably in
management literature. Objective is the ended statement. Objectives are the targets, that define what
the organization achieve for its employee, shareholders, consumers etc.
Definition: objectives are to be defined as what an organization wants to achieve over a long period
of time duration.
Objectives may be defined as” the targets people seek to achieve over various time periods”.
--- Robert L. Trewatha & M. Gene
Newport
Characteristics of Objectives
The following are the characteristics of corporate objectives:
i) They form a hierarchy. It begins with broad statement of vision and mission and ends with key
specific goals. These objectives are made achievable at the lower level.
ii) It is impossible to identify even one major objective that could cover all possible relationships
and needs. Organizational problems and relationship cover a multiplicity of variables and
cannot be integrated into one objective. They may be economic objectives, social objectives,
political objectives etc. Hence, multiplicity of objectives forces the strategists to balance those
diverse interests.
iii) A specific time horizon must be laid for effective objectives. This timeframe helps the
strategists to fix targets.
iv) Objectives must be within reach and is also challenging for the employees. If objectives set
are beyond the reach of managers, they will adopt a defeatist attitude. Attainable objectives
act as a motivator in the organization.
v) Objectives should be understandable. Clarity and simple language should be the hallmarks.
Vague and ambiguous objectives may lead to wrong course of action.
vi) Objectives must be concrete. For that they need to be quantified. Measurable objectives help
the strategists to monitor the performance in a better way.
vii) There are many constraints internal as well as external which have to be considered in
objective setting. As different objectives compete for scarce resources, objectives should be
set within constraints.
Difference between objectives and goals

GOALS OBJECTIVES

Goals are short- term objectives of a business Objectives are goals, aims or purpose that
organization. organizations wish to achieve over varying
periods of time.

Goals are to be set at different levels of the The objectives should vary with levels of
organization i.e., corporate, divisional and management. Example, objective of top
operational levels. The established are SMART. management is to maximize profit, but at lower
Specific, measurable, achievable, realistic, time it is to manufacture quality oriented products.
specific
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In corporate planning after setting goals, In corporate planning objectives can be set after
objectives are set. setting goals.

Goals are higher in hierarchy. Objectives are down the hierarchy as they serve
the goals.

Goals are short-term nature. Objectives are intangible.

Goals are broad Objectives are narrow

Goals are short-term in nature. Objectives are long-term in nature.

Policy
Policies are generic statements, which are basically a guide to channelize energies towards a particular
strategy. It is an organization’s general way of understanding, interpreting, and implementing
strategies. Like for example, most companies have a return policy or recruitment policy or pricing
policy etc.
Policies are made across all levels of management, from major policies at the top-most level to minor
policies. The managers need to form policies to help the employees navigate a situation with
predetermined decisions. They also help employees to make decisions in unexpected situations.
Features of Policy
It expresses organizational culture: Policy statement is an expression of organizational culture and
commitment to the given mission. It is a statement of how one has to conduct oneself in a given
situation. It outlines what one can or cannot do.
It is a guide to managerial performance: it is intended to help the managers in their routine.
Whenever there is any confusion in conducting organizational matters, the managers refer to what is
stated in the policy.
It brings out uniformity in action: Policies are designed to bring uniformity in the managerial
performance, particularly in multi-location setting of an organization. Policies cause managers to take
action in a defined way.
It provides discretion to managers: They also provide certain amount of discretion to the managers
the manager can use his/her discretion, in the best interest of the organization, to decide when the given
situation is different from what is outlined in the policy. In this case, the manager will have to justify
his/her decision.
It creates and sustains good conduct and character: policies are meant for creating and sustaining
good conduct and character among employees at different levels in the organization. Payment of
salaries on the first day of the month can be cited as policy and if this is strictly adhered to, it will
create good conduct and character among the work force.
Policies can be different kinds based on their purpose: some policies are based on ethical and
philosophical considerations. Some focus on functional aspects of business, say, marketing, finance
and so on.
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Programmes:
Programmes refer to the logical sequence of operations to be performed in a given project or job.
Programmes tell you ‘What to do.’ A programme is based on a set of goals, policies, procedures, rules,
and task assignments.
The size of each programme is assessed in terms of resources and duration. If a programme takes larger
resources and time, it is said to be a major programme. Innumerable number of minor or supporting
programmes may support a major proggramme. If the activities involved in a programme require
logical sequence and there is a shortage of resources, they require special attention of the manager.
Programmes are an in-depth statement that outlines a company’s policies, rules, objectives, procedures
etc. These programmes are important in the implementation of all types of plan. They create a link
between the company’s objectives, procedures and rules.
Primary programmes are made at the top level of management. To support the primary program all
managers will make other programs at the middle and lower levels of management.

STRATEGIC MANAGEMENT:
Introduction: Strategic management is the process of management of strategic decision-making,
implementation and control. It is not a complete meaning of strategic management as it fails to cover
many important aspects of Strategic management.
Definition: According to Samuel C. Certo and J. Paul Peter, “Strategic management is a continuous,
iterative, cross-functional process aimed at keeping an organization as a whole appropriately matched
to its environment.”
Schellenberger and Bosenan define the term strategic management as, “the continuous process of
effectively relating the organization’s objectives and resources to the opportunities in the
environment.”

STEPS IN STRATEGIC MANAGEMENT (OR) STRATEGIC MANAGEMENT PROCESS

1. Identifying or defining business mission, purpose and objectives: Identifying or defining an
organization’s existing mission, purpose and objectives is the logical starting point as they lay
foundation for strategic management. Every organization has a mission, purpose and objectives, even
if these elements are not consciously designed, written and communicated. These elements relate to
organization with the society and states that it has to achieve for itself and to the society.
2. Environmental analysis: Environmental factors- both internal environment and external
environment- are analyzed to: (1) identify changes in the environment, (2) identify present and future
threats and opportunities, and (3) assess critically its own strengths and weaknesses. Organizational
environment encompasses all factors both inside and outside the organization that can influence the
organization positively and negatively. Environmental factors may help in building a sustainable
competitive advantage. Managers must understand the purpose of environmental analysis and
recognize the multiple organizational environments in which they operate.
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3. Revise organizational direction: A thorough analysis of organization's environment pinpoints its

strengths, weaknesses, opportunities and threats (SWOT). This can often help management to reaffirm
or revise its organizational direction.
4. Strategic alternatives and choice: Many alternative strategies are formulated based on possible
options and in the light of organizational analysis and environmental appraisal. Alternative strategies
will be ranked based on SWOT analysis. The best strategy out of the alternatives will be chosen. The
steps from identification of business mission, purpose and objectives of alternative strategies and
choice can be grouped into the broad step of strategy formulation.
5. Strategy Implementation: The fifth step of strategic management process is the implementation of
strategy. The logically developed strategy is to be put into action. The organization cannot reap the
benefits of strategic management, unless the strategy is effectively implemented. The managers should
have clear vision and idea about the competitor's strategy, organization's culture, handling change,
skills of the managers-in-charge of implementation and the like. The progress from the stage of
identification of business mission, purpose and objectives to the stage of achieving desired
performance must overcome many obstacles.
6. Strategic Evaluation and Control: The final step of strategic management process is strategic
evaluation and control. It focuses on monitoring and evaluating the strategic management process in
order to improve it and ensure that it functions properly. The managers must understand the process
of strategic control and the role of strategic audit to perform the task of control successfully.
Strategy
Identifying business Environmental Strategy Strategy
evaluation
vision, mission, and analysis formulation implementation
objectives

CORPORATE PLANNING
The corporate plans provide a rational approach to achieve corporate goals. Through corporate
planning, uncertain events can be turned to relatively less uncertain, less certain events to more certain.
Corporate planning is an intellectually demanding process; it sets the background for a viable course
of action based on the organizational goals, skills and resources.
DEFINITION: Corporate planning can be defined as the process of formulating the corporate
mission, scanning the business environment, evolving strategies, creating necessary infrastructure, and
assigning resources to achieve the given mission.
Corporate planning has a company-wide and comprehensive perspective. It is not just a
long term planning where, usually, there is a selective focus like that on a department of the
organization. Strategic planning, if done for the entire organization, can also be called corporate
planning.

ELEMENTS OF CORPORATE PLANNING PROCESS

The elements of the corporate planning process can be described as below:

Identify corporate mission: Identify what the organization wants to be achieve, to start with. For this
purpose, it is necessary that all concerned parties understand the overall purpose of the organization
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and the methods of attaining them. It is also desirable that they agree on the corporate policies of the
organization.
Formulate strategic objectives: By preparing statements of mission, policy, strategy, and goals, the
top management establishes the frame work with in which its divisions or departments prepare their
plans. It is essential that the members of the organization agree on these given strategic objectives. The
goals should be very specific in terms of profits, market share, and employee retention and soon. The
strategic objectives thus formulated reinforce the commitment of the members of the organization to
achieve corporate goals.

Appraise internal and external environment: To evolve alternative strategies to achieve these goals,
a detailed appraisal of both the internal and external environment is carried out. The appraisal of
internal environment reveals the strengths and weaknesses of the firm. The appraisal of the external
environment reveals the opportunities and threats for the firm. An analysis of strengths, weaknesses,
opportunities, and threats, popularly called SWOT analysis, is an essential exercise every firm has to
carry out to evolve an appropriate strategy to achieve the given goal.
Develop and evaluate alternative strategies: There could be some alternative strategies to pursue a
given goal. If the goal is to expand the business, the following could be the three alternatives:
• Adding new products to the existing product line
• Finding new markets, apart from the present market territories
• Manufacturing within the organization, the components, which were earlier procured from
out side?
Similarly, if the goal is to attain stability, the alternative strategies could be maintaining the following:

• The existing range of products

• The existing markets
• The functions presently being carried out
To arrive at a feasible strategy, it is necessary to identify the possible alternative strategies.
Select the best strategy: For the firm to be more successful, it is necessary to focus its strategies
around its strengths and opportunities. It is a prerequisite that the members of the team or organization
agree on a strategic plan. Such a plan, which has been generally agreed upon, is normally considered
as the best strategy. Such strategies ensure a better degree of participation and involvement of its
members in the process of achieving the goals.

Establish strategic business units: It is more strategic to define a business unit in terms of customer
groups, needs, and/or technology and set up the business unit accordingly. This is not followed many
a time. Most of the companies define their businesses in terms of products. For instance, if a company
defines its business as electronic typewriting machines, it may have to change such a product-based
definition when the technology changes. In due course, when the technology changes, the company
may prefer to switch over to personal computers. A business must be viewed as a customer-satisfying
process, not as a goods-producing process.

Fix targets and allot resources to each SBU: The purpose of identifying the company’s strategic
business units is to develop separate strategies and assign appropriate funding. The top management
knows that its portfolio has certain old, established, relatively new, and brand new products. It cannot
rely just on opinions; it needs to classify its businesses by profit potential by using analytical tools.
The major factors indicating market attraction are: overall market size, rate of annual increase in the
market size, profit margin, and degree of competition, technological standards, rate of inflation,
energy needs, impact on environmental issues, and others. These factors affect the decision-making
at the macro level.
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Management should visualize what each SBU should become in the next 3 to 5 years,
given the current strategy. In this process, it is necessary to identify the specific stage for each of its
products and services in their product life cycle and analyze this in relation to the competitor
strategies, new technologies, economic events, and the like. The management also has to critically
evaluate, from time to time, their portfolio-the list of products and services they have to offer through
each SBU.
Resources should be allocated based on market growth rate and relative market share of
each SBU. Here, resources mean executive talent, money, and time. The resources have to be
assigned in line with the strategy. If the strategy is to expand, then the resources should be adequate
enough to reinforce the strategy. Where the resources are not adequate, they fail to give the necessary
force to the strategy and the strategy remains a tiger on paper.

Developing operation plan: The operating plans explain how the long-term goals of the organization
can be met. The corporate plans reveal how much the projected sales and revenues are. Most often,
the management would like to have performed better than these projections. Where the top
management finds a significant gap between the targeted sales and actual sales, it can either develop
the existing business or acquire a new one to fill the gap.

Monitor performance: The results of the operating plans should be well monitored from time to
time. In the case of poor or low performance, check up with the members of the team to find out their
practical problems and sort these out. Also, it is essential to verify whether there are any gaps in
formulating the operating plans.

Corporate Mission

Formulate Strategic Objectives

Appraise Internal and External Environment

Develop and Evaluate Alternative Strategies

Feedback

Select the Best Strategy

Fix Key Targets and Allot Resources to Strategic Business Units

Develop Operating Plans

Monitor the Performance

Revise, where Necessary

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Revise the operating plans, where necessary: It is necessary to revise the operational plans
particularly when the firm does not perform as well as expected. The operating plans can be revised
in terms of focus, resources, or time frame. In case of any organizational bottlenecks, suitable changes
can be initiated to the organization structure itself. This would ensure adequate authority or freedom
for the members of the team and enable them to achieve the targets.

SWOT ANALYSIS:
Introduction: Organizational analysis requires data and information about the internal environment.
SWOT analysis refines this information by applying a general framework for understanding and
managing the environment under which a company operates. SWOT analysis was developed in the
middle of the 1960’s.
SWOT analysis strands for strengths, weaknesses, opportunities, and threats.
Definition:
SWOT analysis is defined as the rational and overall evaluation of a company’s strengths,
weaknesses, opportunities, and threats which are likely to affect the strategic choices significantly.
Internal environment (strengths & weaknesses):
The internal environment of the organisation will cover the organizational position with respect to
different functional areas like production, finance, marketing, R&D etc. it is necessary to analyze own
strengths and weaknesses. It mainly concentrates on the organizational sales volume, market share,
profitability and employee competencies.
Strength: strengths are the internal capabilities of the organization when compared to the competitors
in the market. The strength of an organization provides competitive advantages such as good customer
service, high quality product, etc.
Weakness: weakness is the limitation, faults, defects in the organization that will keep it from
achieving its objectives. The weakness may due to the financial resource, technical knowledge, etc.
External environment (opportunity and threat):
The external environment will do necessary scanning of the business environment to identify any
threat and opportunities posed on the company, its products or services. More especially this will
include the industry performance, competitive activities and a review of the growth and decline of the
user industry.
Opportunities: opportunities are those favorable conditions in a firm’s environment which help the
firm strengths its position. These are the external factors and forces in the business environment that
provide scope for the organization to grow and increase its market share and profitability.
Threats: threat is the any unfavorable situation in the organization environment that may directly
damage the organization’s strategy. The threat may be problem or constraints anything may cause
problem to the organization. These are the factors that can hide the organization to achieve its goals.
Significance:
SWOT analysis provides four alternative strategies to deal with the factors in the external and the
internal environment. They are:
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The threat- weakness (TW) strategy: this attempt to minimize the both weaknesses and threats. As
a part of this strategy, the firm may have to add new product base or the range of services by taking
over the competitors business. The government of India has been disinvesting from most of the public
sector units in recent years through this strategy. It is able to minimize its threats & weaknesses of
public sector are minimized.
The opportunity – weaknesses (OW) strategy: here, the weaknesses are minimized while the
opportunities are minimized. As a part of this strategy, the firm can overcome its weaknesses by
developing necessary competencies among the workforce by investing moderately in the latest
technology, and thus offering products of the best quality to its customers.
The strength – threat (ST) strategy: the strategy enables the firm to address the threats through its
strengths. The focus is to maximize the strengths and minimize the weaknesses. In this strategy the
firm can seek long term and low invest loans to minimize the cost of its operations.
The strength – opportunity (SO) strategy: in this strategy the firm considers expanding in to new
markets with the existing products and services. This is the most preferred strategy. Here, the firm can
take advantage of the available opportunities through its present strengths.

Internal Assessment of the Organization

What are our strengths? What are our weaknesses?

Manufacturing efficiency? Outdated facilities?

Skilled work force/ Inadequate R&D?

Strong financing? Weak management?

Superior reputation/ Past planning failure?

Obsolete technologies?
SWOT

What are opportunities?

Analysis
What are threats?
Possible new markets? New competitors?
Strong economy? Shortage of resources?
Weak market rivals? Changing market tastes?
Emerging technologies? New regulations?
Growth of existing market? Substitute products?

External assessment of the organization

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STRATEGY FORMULATION AND IMPLEMENTATION:

After preparation of the strategy then we take the steps for its implementation both actions are plays a
crucial role to get the results of the strategy.
Strategy formulation: Strategy formulation is the process through which management develops an
organisation’s strategic mission, derives specific objectives to implement.
Strategy implementation: Strategy implementation and execution means that translating a decision
in to action is essentially an administrative task.
The strategy formulation and implementation includes the following stages:

Enterprise strategists Mission and objectives

General environment

Industry and international environment

Internal factors

Generic strategy alternatives

Strategy variations

Feed back

Strategic choice

Allocate resources and develop organizational structure

Formulation of plans, policies, programmes and

administration

Evaluation and control

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Identification of mission and objectives:

For formulating a strategy first the company has to clearly analyse its mission statement and what are
its objectives according to that it frames a strategy.
Environmental scanning:
After analyzing the mission statement the strategist has to analyse the environment of the company.
For doing this activity he has to know about in which type of environmental situations present the firm
is operates its business activities, what are the various factors like international, industrial, general
environmental factors influences the environment of the firm. By this analysis he knows the SWOT of
the organization.
Generic strategy alternatives:
Generic strategy alternatives refer to the strategy alternatives in broader terms. After the nature of
business of the firm is defined, the next task is focus on the type of strategic alternative, in general,
the firm should pursue. The strategist seeks to identify the right alternative through questions such as:
▪ Should we get out of this business entirely?
▪ Should we try to expand?
For any firm mainly four generic strategic alternatives are available thy are: i) to expand, ii) to wind
up or retrench, iii) to stabilize, iv) to combine its operations pertaining to is products, markets, or
functions.
Considering strategy variations:
Strategy variation is a global phenomenon. When the firm finds that it is not possible to fill up a gap
in the market with the existing strategy, it may consider a change in the focus of the strategy. There
can be a no. of variations of the generic strategy alternatives. For instance, if strategy is to expand,
then the alternatives are internal expansion or external expansion. Internal expansion can be achieved
through any of the following approaches:
▪ Penetrate existing markets
▪ Add new markets
▪ Add new products, and so on.
Similarly, the external expansion can be achieved through mergers or acquisitions, if the firm is to
attain stability, then the alternatives could be internal or external stability.
Selection of best alternative:
The best alternative is the one that can improve the performance. The selection of the right alternative
is depend upon the
▪ Particular configuration of the objectives
▪ Environmental threat and opportunity
▪ Strategic advantage profile
▪ The generic strategy itself.

Strategic Choice:
Here the exact strategy is chosen. Strategic choice involves the decision to select from among the
alternatives; the best strategy which effectively contributes to the business objectives. The spade work
to be undertaken before making a strategic choice consists of
▪ Identifying the few viable alternative course of action
 17

▪ Considering the parameters for selection of best alternative

▪ Evaluating each alternative on its own merits and in relation to other alternative
▪ Making the final choice
▪ Keeping the next best alternative as stand by

The following are the questions in terms of which environmental and internal conditions are analysed:

• What are the main business objectives?

• Does the selected strategy contribute to these objectives?
• What is the business definition – is it product based, market based, or function- based?
• Will it be achieved in the future?
These questions help us to examine the performance gap between the expected and the ideal
outcomes in relation to the alternatives under consideration.

→ If the gap is negligible or narrow stability strategy is best. Stability strategy focuses on “doing
in the best way what we do”
→ If the gap is large or significant, the alternatives are either to expand or with draw from the
under related areas.
In this way different factors influences the decision maker by analyzing the all these questions and
choices he has to take one best alternative course of action.
Allocation of resources and development of organizational structure:
The process of strategy implementation calls for an integrated set of choices and activities. These
include allocating resources, organizing, assigning appropriate authority to the key managers, setting
policies and developing procedures.
A good strategy with effective implementation has a higher probability of success. The resource
allocation decisions such as, which department is sanctioned how much amount of money and
resources, in the name of budget, and so on. Set the operative strategy of the firm.
Formulation of policies, plans, programmes and administration:
The resources allocated are said to be well utilized only when they are well monitored. For this
purpose it is essential
▪ To develop policies and plans
▪ To assign or reassign leaders task and decisions to support the chosen strategy.
▪ To provide a conductive environment in the organization through proper administration to
achieve the given objectives.
The implementation of plans and policies is designed in accordance with the strategy chosen. The firm
creates plans and policies to guide the managerial performance, and these make the chosen strategies
work.
The implementation of the strategy becomes easy when the organization

• Plan for career development of its personnel at all levels

• Applies organizational development concepts in its normal functioning
• Ensure that the strategist is capable, experienced, and versatile enough to match the strategy
demands.
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Evaluation and control:

It is the last phase in the strategic management process. It is at this high stage that the success of the
programmes can be assessed. There should be a built-in mechanism to examine the deviations and
initiate corrections as and when required. This assures that the chosen strategies will be implemented
properly. Timely measurement of performance and the effectiveness of the implementation of the
strategy
MARKETING MANAGEMENT
Introduction:
Marketing is an essential function of a modern organization whether it deals in products or services.
In other words, marketing constitutes an essential function of modern business organizations to ensure
that demand for a product or service persists along with customer retention. It has become vital
ingredient in the success of a business.
Market:
Market is a place where buyers and sellers gather to exchange goods and services.

Definition of Marketing:

Marketing is the performance of business activity that direct the flow of goods and services from
production centre to consumption centre.
- American Marketing Association.
Marketing as societal process by which individuals and groups obtain what they need and want through
creating, offering and freely exchanging products and services of value with others.
-Philip Kotler
Objectives of marketing:
• Ensuring profit to the manufacturers.
• Providing satisfaction to the consumers.
• To provide best solutions for the marketing problems.
• To develop the guiding policies and their implementation for good results.
• To review existing marketing functions.
MARKETING CONCEPT:
The marketing concept is the way of life in which all the resources of an organization are mobilized to
create, stimulate and satisfy the consumer at a profit. Here mainly we have to know about two concepts
namely: i) The selling concept. ii) The marketing concept.
The selling concept:
Selling refers to the act of transferring the ownership of the goods and services from the seller to buyer.
Selling is the term applied to the process of distributing goods from producer to consumer. It is a
function of marketing. The selling concept is practiced most aggressively with unsought goods, goods
that buyers normally don’t think of buying such as insurance, encyclopedia etc.
Most of the firms practice the selling concept when they have over capacity. Their aim is to sell what
they make rather than make what they market wants.

The marketing concept:

The marketing concept holds that key to achieve its organizational goals consists of the company being
more effective and efficient in determining the needs, wants, interests of the target markets and
delivering the desired satisfactions than the competitors. It is a customer centric approach which
focuses on customer needs and wants and not on the product. “Marketing starts and ends with the
customer only the concept is shown in the diagram.
Starting point Focus Means Ends

Market Customer needs Integrated marketing Profits through

Customer satisfaction
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The marketing concept

The marketing concept resets on 4 pillars.

Target market: Companies do best when they choose their target markets carefully and prepare
marketing programmes according to their target market.
Customer needs: Understanding customer needs and wants is not always simple. It is important to
satisfy target customer because each company’s sales each period come from two groups, new
customer and repeat customers. Customer retention is more important than customer attraction.
Integrated marketing: When all departments in the company work together to serve the customers
interests, the result is integrated marketing. All the different functions of business must be tightly
integrated with one another because every function has a bearing on the customer and all the functions
make profitable impact on customer.
Profitability: The ultimate purpose of the marketing concept is to help organizations achieve their
objectives. Any company major objective is profit whether it is private company or in the case of non
private company. A company makes money by satisfying customer needs better than its competitors.
Benefits of the marketing:
➢ Marketing concept benefits the organization:
The practice of the concept brings substantial benefits to the organization that practices. Any
organization which practices the concepts of marketing audit, market research and consumer testing,
it can easily faces any changes regarding the buyer behavior, and capable to provide the satisfaction to
the customers then automatically the organization benefited.
➢ Marketing concept benefits the Consumer:
The consumer is in fact the major beneficiary of the marketing concept. the attempts of various
computing firms to satisfy the consumer put him in an enviable position. The concept prompts the
producers to constantly improve their products and to launch totally new products it is more beneficiary
to consumers.
➢ Marketing concepts benefits the society:
The concept guarantees that only products that are required by the consumers are produced and
thereby it ensures that the societies economic resources or channelized in the right direction. It also
makes economic planning more meaningful and relevant to the life of the people.

Selling versus Marketing:

Selling refers to the act of transferring the ownership of the

goods andservices from the seller to the buyer.

Marketing refers to the whole process encompassing the entire

range of activities starting from identifying the customers‟ requirements
to satisfying these ina mutually beneficial manner.

Selling Marketing

1. Product enjoys the supreme 1. Customer enjoys unique

importance importance

2. Emphasis on company (sellers) 2. Emphasis an market customers

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Needs needs

3. Company oriented selling effects 3. Market oriented selling effects

4. Goods are already produced and 4. customers demand determines

then sold as profit production supply is adjusted to
demand

5. Selling aims at short-term 5. Marketing aims as long-term

Objectives objectives

6. Top priority is given to sales 6. To priority is given to profitable

volume rather than profits increasing volume of sales and market share at
Sales fair prices and reasonable risk

7. Production oriented 7. Customer oriented.

Marketing Function:

Buying: Buying involves both the marketing and the customers. The
marketing manager must know about the type of customers, their
consuming habits demands and buying pattern.

Selling: It creates a demand for a product selling function involves.

1. Product planning and development

2. Finding out or locating buyers

3. Demand creation through salesmanship, advertising and sales promotion

4. Negotiation of terms of sales such as price, quantity and quality etc.

Transporting: It involves the creation of place utility. In order to have value goods must
first be transported from the place they are produced to the place where they are needed.

Storage: It concerned with storing finished products properly without any damage, until they are
dispatched to the customers it is also concerned to the customers it is also concerned with maintaining
stock of raw materials with maintaining stock of raw materials, components etc. to meet production
schedules.

Standardization and grouping: These two functions are supplementary and complementary to each other.
A standard is a measure of fixed value. The standard could be based on colour, weight, quality, and
number of items, price, or any other parameter. Both domestic and export markets rely extensively on
this function. Grading is the process of sorting the goods. The price varies with the grade of the goods.
This function enables the marketer to fix a uniform price for a given grade of the goods. It further
 21

promotes good understanding between the buyer and the seller.

Finance: Finance is the life blood of business value of goods is expressed is money and it
donated by price to be paid by buyer to seller credit is necessary in marketing it plays all
important role in retail trade particularly in the sales of costly consumer goods.
Marketing Mix
Definition of Marketing Mix
The marketing mix is defined by the use of a marketing tool that combines a number of components
in order to become harden and solidify a product’s brand and to help in selling the product or service.
Product based companies have to come up with strategies to sell their products, and coming up with a
marketing mix is one of them.
Marketing Mix is a set of marketing tool or tactics, used to promote a product or services in the market
and sell it. It is about positioning a product and deciding it to sell in the right place, at the right price
and right time. The product will then be sold, according to marketing and promotional strategy. The
components of the marketing mix consist of 4Ps Product, Price, Place, and Promotion. In the business
sector, the marketing managers plan a marketing strategy taking into consideration all the 4Ps.
However, nowadays, the marketing mix increasingly includes several other Ps for vital development.

Product in Marketing Mix:

A product is a commodity, produced or built to satisfy the need of an individual or a group. The product
can be intangible or tangible as it can be in the form of services or goods. It is important to do extensive
research before developing a product as it has a fluctuating life cycle, from the growth phase to the
maturity phase to the sales decline phase.
A product has a certain life cycle that includes the growth phase, the maturity phase, and the sales
decline phase. It is important for marketers to reinvent their products to stimulate more demand once
it reaches the sales decline phase. It should create an impact in the mind of the customers, which is
exclusive and different from the competitor’s product. There is an old saying stating for marketers,
 22

“what can I do to offer a better product to this group of people than my competitors”. This strategy
also helps the company to build brand value.
Price in Marketing Mix:
Price is a very important component of the marketing mix definition. The price of the product is
basically the amount that a customer pays for to enjoy it. Price is the most critical element of a
marketing plan because it dictates a company’s survival and profit. Adjusting the price of the product,
even a little bit has a big impact on the entire marketing strategy as well as greatly affecting the sales
and demand of the product in the market. Things to keep on mind while determining the cost of the
product are, the competitor’s price, list price, customer location, discount, terms of sale, etc.,
Place in Marketing Mix:
Placement or distribution is a very important part of the marketing mix strategy. We should position
and distribute our product in a place that is easily accessible to potential buyers/customers.
Promotion in Marketing Mix:
It is a marketing communication process that helps the company to publicize the product and its
features to the public. It is the most expensive and essential components of the marketing mix, that
helps to grab the attention of the customers and influence them to buy the product. Most of the
marketers use promotion tactics to promote their product and reach out to the public or the target
audience. The promotion might include direct marketing, advertising, personal branding, sales
promotion, et
People in Marketing Mix:
The company’s employees are important in marketing because they are the ones who deliver the
service to clients. It is important to hire and train the right people to deliver superior service to the
clients, whether they run a support desk, customer service, copywriters, programmers…etc. It is very
important to find people who genuinely believe in the products or services that the particular business
creates, as there is a huge chance of giving their best performance. Adding to it, the organisation should
accept the honest feedback from the employees about the business and should input their own thoughts
and passions which can scale and grow the business.
Process in Marketing Mix:
We should always make sure that the business process is well structured and verified regularly to avoid
mistakes and minimize costs. To maximise the profit, Its important to tighten up the enhancement
process.
Physical Evidence in Marketing Mix:
In the service industries, there should be physical evidence that the service was delivered. A concept
of this is branding. For example, when you think of “fast food”, you think of KFC. When you think of
sports, the names Nike and Adidas come to mind.
Product Life Cycle:
A product begins with an idea. Within the confines of modern business, that idea isn't likely to go
further until it undergoes research and development (R&D). If the business finds that it is feasible and
potentially profitable, the product will be produced, marketed, and rolled out.
The life cycle of a product is broken into four stages:
1. Introduction
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2. Growth
3. Maturity
4. Decline
Some product life cycle models include product development as a stage, though at this point, the
product has not yet been brought to customers.
Introduction Stage
The introduction phase is the first time customers are introduced to the new product. This stage
generally requires that the business make a substantial investment in advertising. At this point,
the marketing is focused on making consumers aware of the product and its benefits, especially if it is
broadly unknown what the item will do.
During the introduction stage, there may be little or no competition for a product, as competitors may
just be getting a first look at the new offering. Even if the business is offering a new product or service
in response to another business's sales, the marketing will still be focused on introducing the new
product rather than on differentiating it from competitors' products.
Companies often experience negative financial results at this stage. Sales tend to be lower, promotional
pricing may be low to drive customer engagement, marketing spending is high, and the sales strategy
is still being evaluated.
Growth Stage
If the product is successful, it then moves to the growth stage. This is characterized by:
• Growing demand
• Increase in production
• Expanded availability
The amount of time spent in the introduction phase before a company's product experiences strong
growth will vary between industries and products.
During the growth phase, the product becomes more popular and recognizable. A company may still
choose to invest heavily in advertising if the product faces heavy competition. However, marketing
campaigns will likely be geared towards differentiating its product from others as opposed to
introducing the goods to the market. A company may also refine its product by improving functionality
based on customer feedback.
Financially, the growth period of the product life cycle results in increased sales and higher revenue.
As peer businesses begin to offer rival products, competition increases, potentially forcing the
company to decrease prices and experience lower margins.
 24

Maturity Stage
The maturity stage of the product life cycle is the most profitable stage, the time when the costs of
producing and marketing decline. With the market saturated with the product, competition is now
higher than at other stages, and profit margins start to shrink. Some analysts refer to the maturity stage
as when sales volume is "maxed out."
Depending on the good, a company may begin deciding how to innovate its product or introduce new
ways to capture a larger market presence. This includes getting more feedback from customers and
researching their demographics and their needs.
During the maturity stage, competition is at the highest level. Rival companies have had enough time
to introduce competing and improved products, and competition for customers is usually highest. Sales
levels stabilize, and a company strives to have its product exist in this maturity stage for as long as
possible.
Decline Stage
As the product takes on increased competition and other companies emulate its success, the product
may lose market share. This is when the decline state begins.
Product sales begin to drop due to market saturation and alternative products. If customers have already
decided whether they are loyal to the product or prefer those of competitors, the company may choose
to not invest in additional marketing efforts. Should a product be entirely retired, the company will
stop generating support for it and will entirely phase out marketing and production endeavors.

Product Life Cycle Strategies:

Product introduction strategies

Marketing strategies used in the introduction stages include:

• rapid skimming - launching the product at a high price and high promotional level
• slow skimming - launching the product at a high price and low promotional level
• rapid penetration - launching the product at a low price with significant promotion
• slow penetration - launching the product at a low price and minimal promotion
During the introduction stage, you should aim to:
 25

• establish a clear brand identity

• connect with the right partners to promote your product
• set up consumer tests, or provide samples or trials to key target markets
• price the product or service as high as you believe you can sell it, and to reflect the quality
level you are providing
You could also try to limit the product or service to a specific type of consumer - being selective can
boost demand.

Product growth strategies

Marketing strategies used in the growth stage mainly aim to increase profits. Some of the common
strategies to try are:

• improving product quality

• adding new product features or support services to grow your market share
• entering new markets segments
• keeping pricing as high as is reasonable to keep demand and profits high
• increasing distribution channels to cope with growing demand
• shifting marketing messages from product awareness to product preference
• skimming product prices if your profits are too low
The growth stage is when you should see rapidly rising sales, profits and your market share. Your
strategies should seek to maximise these opportunities.

Product maturity strategies

When your sales peak, your product will enter the maturity stage. This often means that your
market will be saturated and you may find that you need to change your marketing tactics to prolong
the life cycle of your product. Common strategies that can help during this stage fall under one of
two categories:

• market modification - this includes entering new market segments, redefining target markets,
winning over competitor's customers, converting non-users
• product modification - for example, adjusting or improving your product's features, quality,
pricing and differentiating it from other products in the marking
Product decline strategies
During the end stages of your product, you will see declining sales and profits. This can be caused
by changes in consumer preferences, technological advances and alternatives on the market. At this
stage, you will have to decide what strategies to take. If you want to save money, you can:

• reduce your promotional expenditure on the products

• reduce the number of distribution outlets that sell them
• implement price cuts to get the customers to buy the product
• find another use for the product
• maintain the product and wait for competitors to withdraw from the market first
• harvest the product or service before discontinuing it
Another option is for your business to discontinue the product from your offering. You may choose
to:
 26

• sell the brand to another business

• significantly reduce the price to get rid of all the inventory
Many businesses find that the best strategy is to modify their product in the maturity stage to avoid
entering the decline stage.

CHANNELS OF DISTRIBUTION
Meaning: Distribution Channels are the paths that goods and title to them follow from producer to
consumer. They are the means by which all organization distribute the goods and services they are
producing and marketing.
Definition:
According to Philip Kotler- “A channel of distribution is a set of independent organization involved
in the process of marketing a product or service available for use or consumption.
Factors Affecting the Choice of Channel of Distribution:
There are several factors that affect the choice of a channel. Some of the factors are listed below.
The nature of company’s business: choose the channel according to the nature of business activity
such as agricultural products, industrial products, and soon.
The type of product sold: The goods may be consumer goods (such as bread), consumer durable
goods (TV or refrigerator), or producer or industrial goods (engines, bearings), and others.
The price of unit of sale: If the price of one unit is as high as that of an aeroplane, the producer can
contact the consumer directly.
The profit margins and mark-ups: These, together with the extent of the seller’s product line, play
a role in attracting distributors to handle the goods.
Degree of competition: If the competition is intense, the manufacturer has to arrange for even door-
to-door selling or retail outlets such as automatic vending machines at prominent, busy, and crowded
places.

LEVELS/TYPES OF CHANNELS
There are mainly two types of distribution channels namely
i) Direct Market Channel ii) Indirect Market Channel
Direct Market Channel:
Direct Market Channel is the simplest and shortest channel through which goods reach the ultimate
consumer without the services of middlemen and it is highly applicable in the case of industrial goods.
Ex: Amway Co. (Zero Level Channels)
0 Level Channel

Producer Consumer

Zero Level Channel

Indirect Marketing Channels:

In this channel the manufacturer doesn’t sell the goods directly to the consumer. He sells goods to the
middlemen, the middle men sells goods to consumers. Various types of indirect marketing channels
are in the distribution network they are as follows:
 27

i) One- Level Channel: As can be seen from figure in this type of channel there is only one
intermediary between producer and consumer. This intermediary may be a retailer or a
wholesaler/distributor. This type of channel is used for specialty products like washing machines.
Refrigerators, televisions typewriters, and electric fans etc..,

One- Level channel

Producer Wholesaler / Distributor Consumer

Producer Retailer Consumer

ii) Two Level Channel: This type of channel has two intermediaries, namely, wholesaler/distributor
and retailer between producer and consumer. Under this method, the producer sells the goods to the
wholesaler, who in turn, sells to the retailers. The retailers in turn sell the goods to the ultimate
consumers. This channel is used for consumer durable products.

Two- Level Channel

Producer Wholesaler / Distributor Retailer Consumer

iii) Three-Level Channel: As shown in the figure this type of channel has three intermediaries namely
distributor, wholesaler and retailer. In this method, the producer sells his goods to the distributors who
sell them to the wholesalers who in turn sell them to the retailers and the retailers sell them to the
consumers. This pattern is used for convenience products.
Three – Level Channel

Producer Distributor Wholesaler Retailer Consumer

iv) Four –Level Channel: This type of channel has four intermediaries, namely agent, distributor,
wholesaler and retailer. This type of channel is used for consumer durable products. This type of
channel is very popular in agricultural marketing and it is the longest route of distribution.

Four – Level Channel

Producer Agent Distributor Wholesaler Retailer Consumer