2. TOP MANAGEMENT
• Top management plays a critical role in each and every organizations.
• Top management must know the requirement of the firm as well as the key
three parts of firm external environment like- the general, industry and
competitor environment.
According to Peter F Drucker, a top management team must satisfy the
following –
1. Whoever has primary responsibility in a give area has , in effect, the final
say.
2. No member will make a decision with regard to a matter for which he doesn’t
have a primary responsibility.
3. Top management team need to like each other and must not agitate each other
in public
4. Top management is not a committee but a team with a captain and a leader.
3. • The board of director, president, vice president, CEO are all
example of top level managers.
• These managers are responsible for controlling and
overseeing the entire organization. They develop goals,
strategic plans , company policies, and make decisions on the
direction of the business.
• In addition top management play a significant role in the
mobilization of the outside resources.
4.
5. Responsibilities of Top management
Planning
Controlling
Organizing
Finance management
Policy developer
Resource provider
Defines parameters for human
resources
Determines infrastructure and
work environment.
6. Task of Top Management
To achieve company goals
To provide strategic guide
To support and manage assets
To achieve operational efficiency
To fulfill regularity norms
To manage finance
To inspire
7. Skills of top management
• Technical skill: are concerned with what is done. Theses skills
can be called as Hard Skills as this is easily visible in a person.
• Human skill: also called as human relation skills. Ability to
work effectively with others.
• Conceptual Skills: related to concepts and mental conception.
Conceptual skills are form of imagination like- fantasy,
notional, vision. Known as Soft skills and hardly visible in any
person.
Technical skills deals with things human
skills deals with people and conceptual
skill deals with ideas.
9. Strategic intent
• The strategic intent of a firm represents the organization belief about
its states of future.
• It refers to purpose for what organization strive for. Organization must
define “what they want to do” and “why they want to do?”
10. Hierarchy of strategic intent
Vision
Mission
Business Definition
Goals
Objective
Most Integrative
Most Specific
11. Models for developing strategic intent
Most of the organization use two major model to develop their VISION &
MISSION. Market activities are understood through the application of I/O
model.
The development and effective use of a firm resources, capabilities, and
competencies are understood through Resource based model of average
returns.
EXTERNAL
I/O
MODEL
INTERNAL
RESOURCE-
BASED
MODEL
12. I/O model assumption
• External environment impose pressure and restrains that determines
strategies.
• Most firm competing within an industry/ segment control similar
strategically relevant sources, therefore they pursue similar strategies.
• Resources are highly mobile across firms, so resources differences will
be short lived.
• Organization decision makers are rational and committed to acting in
firms best interest ( profit maximization)
14. Resource based model of above average return
• Assumes each organization is a collection of unique resources
and capabilities.
• Uniqueness of firms resources and capabilities is basis of
firm’s strategy and ability to earn above average returns.
• Core assumption:- Firms uniqueness, capabilities and core
competencies have more influence on selecting and using
strategies that the external environment.
• This model suggest that the strategy the firm chooses should
allow it to use its competitive advantage in an attractive
industry. ( I/O model is used to find an attractive industry)
15.
16.
17.
18. Vision
• According to Kolter- “ Vision is a description of something (
an organization, corporate culture, a business, a technology,
an activity) in nature.
• According to Miller & Dess, “ Vision is the category of
intensions that are board, all inclusive, and forward thinking”
19. Feature of Vision
1. Mental exercise
2. Selects the target market
3. Constitute organization
objective and focus
4. Reflects future plans
5. Dynamic and flexible
6. Comprehensive
7. Time- bound
8. Anticipates future
9. Simple and concise
10.Effective
11.Pervasive
12.Objective
13.Well defined
14.orientation
20. Need of Vision
1) Establishing standard of
excellence
2) Bridging the gap between
present and future
3) Providing strength to the
organization
4) Outlining the future
5) Helping employees in goal
setting
6) Helping in strategy forming
7) Creatinine effectiveness.
8) Giving meaning to organization.
22. Guidelines for formulating Visions
1.Learn everything about the organization
2.Keep an open mind as to explore options for new visions
3.Encourage input from colleagues and subordinates
4.Understand & appreciate existing vision
5.Bring the organizations major constituencies into a
visioning process.
23. Mission
• Mission is how you want to reach goal.
• It’s a game plan, mission is how you reach there to achieve your
vision.
• According to Drucker- “ Mission focuses the organization in
action. It defines strategies needed to attain goal. It creates a
disciplined organization. The business purpose and business
mission are so rarely given adequate thought, it perhaps the
most important single cause of business failure and business
frustration.”
24.
25. Feature of Mission
1. Feasibility
2. Precision
3. Clarity
4. Motivation
5. Distinctiveness
6. Reflection of major strategy
7. Formulating a business mission statement
26. Guidelines for formulating Mission
• Employee should be involved
• Elements of mission statements should be selected
carefully
• Length of the mission statement should be proper
• Mission statement should be updated regularly.
27. Changing mission statement
• A good mission statement expresses an organization in one line. But
organization work in a particular environment which is very dynamic and
changing in nature.
• Also mission statement should be re-visited periodically to see if it still
works for the organization.
The organization mission statement may be tweaked or rewrite completely
due to following reason-
I. Broadening Mission
II. Being specific
III. Addressing changing time
IV. Updating language
V. Addressing a merger or split.
28. Vision Mission
A vision statement is what the
organization wants to become
A mission statement concerns
what an organization is all
about
A vision statement describe
how the future will look if the
organization achieves its
mission
A mission statement answers
three key questions: What do
we do? For whom we do?
What is the benefit?
The vision statement generally
lasts for the life of the
organization.
A Mission statement should be
revisited periodically to make
sure that the means being use
to attain the vision are still
relevant.
29. Business Definition
• WHAT IS OUR BUSINESS?
• Defining business is not an easy task. Because employee in an
organization do only routine work but defining your business is really
tough for every entrepreneur.
• Business definition is a clear statement of the business the firm is
engaged in or is planning to enter. It answer the question : what is our
business? In a precise way..
• Most organization now a days operate several business they define their
business in terms of products.
Railways- Product definition( We run railways); Market definition ( we are
people and good mover)
30. Abell’s 3D model of Business definition
Technology
Customer Need
Customer Groups
31. Goal
• Goals of a company denotes what company hopes to accomplish in
future period of times. They represent the future state or an outcome
of effort put in now.
• Goal provides fundamental standard for measuring performance to
attain the end objective.
32. Types of Goal
• Official goal are general goal of the organization
as describe in the memorandum of association.
• They may be also found in public statement by
top management
Official
goal
• It indicate what the organization is attempting
to do
• They help managers to focus attention, reduce
uncertainty
Operative
goal
• OP goals are used by supervisory
personal to influence the behaviour of
subordinate and to measure their
performance.
Operational
goal
33. Feature of Goal
1) Goal addresses
2) Specific time period
3) Realistic and changing
4) Precise and measurable
5) Capable of attracting commitment
6) Addressing crucial issue.
34. Objective of Business
• Objective are the organizational targets, usually for the period of one
year or less and closely tied to annual budgets.
• They represent the intended outcomes of the organizations efforts to
meet the day-day needs of its customers and other direct stakeholders.
• Unlike purpose, goal or aim --- objective are subject to frequent ( at least
annual) amendment as the organization respond to change in the
stakeholders relationships and in its income and expenditure.
• H Igor Ansoff, “ objective are decision rules which enable management
to guide and measure the firm’s performance towards its purpose”
35. Characteristic of objective
1. Multiplicity of objectives
2. Hierarchy of objectives
3. Periodicity of objectives– short term, long term
4. Flexibility of objectives
5. Measurability of objectives
6. Network of objective– ( corporate objective, dept.
objective, sectional objective, employees objective)
36. Importance of objectives
• Objective serve the process of
revival.
• Objective ensure growth.
• Objective act as a base for business
growth.
• Objective provides base for
decentralization
• Objective provide the standard for
performance appraisal
• Objective helps an organization to
its Vision and Mission.
• Direction
• Legitimacy
• Coordination
• Motivation
• Benchmark for success
37. Classification of Objective
1. Primary objective: These objective have direct relation with primary
beneficiaries and fulfillment of consumer needs. Satisfaction of customer is
the primary objective of any business organization.
2. Secondary objective : employee, govt. , supplier, etc. are secondary
objectives. An organization determines secondary objectives for their
satisfaction. Like- good salary, employee satisfaction. Every organization
decide secondary objectives along with primary objectives.
3. Short time objectives: These objectives are completed in the duration of 1
year.
4. Long term objectives: Objectives which are completed in the duration of 5
years.
5. Individual objectives: These objectives are determined for the
organizations members. It may in various forms like – monetary, position,
recognition, collaborations etc.
38. 6. Equilibrium objectives : are that objectives by them an organization keep
equilibrium and balance with the changes of outside environment. Due to the
EO it become so easy for an organization to keep current market and elaborate
them. Preparation of long term objectives and continuous development is so
easy with the help of EO.
7. Improvement objectives: every organization wants to improve its action,
production, management etc. Target– optimal uses of available resources.
8. Social objectives: these organizations are determined for whole of the
society's profit. Like – unemployment, pollution, poverty etc.
9. Performance Objectives: are related with the persons job work. It
can be classified into- Routine objective, innovative objective, problem solving
objectives.
39. Overall hierarchy of objectives
1) Corporate level objectives: these are strategic objectives. Consist of
Vision, Mission and strategy.
2) Business Unit level objectives: they are set for each strategic
business unit ( SBU). SBU level objectives deals with the following
aspect for each SBUs-
(a) Long term profitability
(b) Market share growth
(c) Product line and items
(d) Positioning among competitive companies
(e) New business opportunity.
40. 3) Functional level objectives: they set specific targets for each function of SBU. The
function can be operation, marketing, finance, HR, R&D they follow from SBU
objectives-
(a) Lowering cost of production.
(b) Market coverage in the chosen segment.
(c) Level of customer satisfaction
(d) Fund generation
(e) advertisement and sales promotions targets
4) Individual level objectives: They are related to daily or weekly performance of each
employee. They follow from functional objectives. They deal with—
(a) Level of output per employee
(b) Reject and waste
(c) Sales per person
(d) Carrer planning and development.
41. Setting of objective
• Objective setting is an integral part of the performance management
process, which mainly emphasis on how individual can impact broader
business results.
• Objective setting creates an effective link between departments, team
or individual goals and the organizations strategic objectives so that
individual and team efforts are aligned with the organization overall
business plan.
• Setting formal objective helps individual and team efforts may pull in
directions contrary to broader organizational objectives.
42. Factors governing setting of objectives
Vision and value system of top management: Top management like BOD’s &
CEO are strategist of first order.
Objectives of the past: The starting point of new strategy and objectives are
the existing or past strategy and objectives. It is not a matter of starting the
work fresh but continuation of after updating and modifying the existing
objective and the parallel strategy.
External environment and power relations: The external environment is
made up of both micro and macro environment. Micro env.- creditors,
suppliers, customers and trade union. Macro env.- economic, demographic,
socio- cultural etc.
Internal resources and power relations: Shareholders, managers,
employees, and strategists themselves either as individuals or units they
represent also matters.
43. Developing Business objectives
Forces in environment : all environment internal/
external ( macro/micro) matters.
Realities of Enterprise’s resources and internal
power relationship
Value system of top executives
Awareness of the management.
book
45. Key areas involved in object setting
Drucker recommended 8 key areas in which business firms have
to set their objectives-
1. Survival and growth
Survival is assured if the business is in a position to meet the
expenditure out of its own income.
Growth is assured if it can increase investible funds by creations of
surplus.
These may be depended upon- market standing, innovation,
productivity, physical and financial resources etc.
2. Market standing
Share in a market
It should aim at production of certain quantity of old and new products.
Expansion of markets, improvement of the products.
46. 3. Innovation
It implies introduction of new ideas and technique with regard to products
, service, skill
The survival and growth of a business depends upon its ability to replace
its present products with its new products.
4. Productivity
Productivity objectives measures the competence of management and
show how well the resource are utilized and how much they yield.
Basically means revenue from sales.
5. Physical and financial resources
Physical resources- plants , machines , office premise etc.
Financial resource- requirement of capital
47. 6. Profitability
Profitability objective does not mean the maximum profit a business can
produce but the minimum it must produce to obtain maximum profit.
Drucker said- “ Profit is not the explanation, cause or the rational of
business behaviour and business decision but the least of their validity”
7. Manager performance and development
In order to solve continuity, training and control over the performance of
manager is an essential objectives of business.
8. Worker performance and development
A business enterprise must discharge its responsibility towards its
employees by setting up objectives which keep the performance and
attitude of workers at an optimum level.