2. Competitions: If competition continues to be at the same level as at present, the future goal may not be significantly affected. In reality however the level of competition also continues to change. Take for example, if in a locality only one bank branch is operating till the current year and a new branch of another bank is expected to be opened upto next year, this may significantly affect the deposit and advance position of the old bank branch in the coming year. Similar, effects can be expected for manufacturing or sales outlets in the same area.
3. Price: The price of the company’s product can affect the demand for its product. The extent of fluctuations in demand will depend on price elasticity. Further, pricing cannot be thought of isolation from product-market policy. A company may think of entering low income market by keeping price low and thus aims at increasing volume and profit. It can alternatively aim at setting price high, creating only to the high income group buyers and attain high profit through high margin. There could still be another alternative under which a company may set the price marginally over cost and aim at high volume and high market share but not very high profit. Thus, price which is affected by company strategy, can affect significantly the future goal.
4. Government Policy: Further goal of a company can be significantly affected by government policy. An MRTP company may not be allowed to expand its conventional low technology areas. Similarly, a FERA company may not be allowed to expand into low technology area without diluting its foreign equity holding to the required 40% level. Some industries, specifically identified and reserved for small scale sector, may not be available for large houses. These restrictions create serious constraints for large companies in setting higher goals. In most of these cases companies sel their future goals approximately in accordance with their current corporate level, current marke share and existing capacity.
5. Critical Input Supply: This is another factor affecting corporate goal. If cri in short supply, such short supply becomes the bottleneck factor. A cement manufact which finds shortage in limestone deposits or finds difficulty in raising limestone, may to production target and its sales and profits goals. Similarly, an aluminium company cut and electricity being one of the major inputs to aluminium industry, may decide production and consequently sales. This may lead to lowering of profit goals.
Q.5. Write down different levels of strategy,
Ans. There are following three types of strategies:
1. Corporate Level Strategy: The board of directors and the chief executives are the primary groups involved in this level of strategy making. Corporate planners and consultants may also be involved. In small and family owned businesses the entrepreneur is both the general manager and chief strategic manager. Here, the strategy is concerned with what sorts of business should the company be in. Decisions like spreading the range of business interests, the type of business the company should enter, widening of range of products or services or geographic area to move in are strategic decisions.
2. Business Level Strategy: Strategic Business Unit (SBU) managers (e.g. Divisional General Managers), are involved at this level in taking strategic decisions. Here, strategies are about how to compete in particular product-makers. The strategies are related to a unit within the organisation.
3. Operating Level Strategy: This third level of strategy is at the operating end of the organisation. Here, the strategies are concerned with how the different functions of the enterprise like marketing, finance, manufacturing etc. contribute to the strategies of other levels. These contributions are important in terms of how can an organisation become competitive. Competitive strategy depends on a large extent on decisions about market entry, price, product offer, financing, manpower, investment in plant etc. In themselves these decisions are of strategic importance but are made, or at least strongly influenced at operational levels.