Defining Global is at Ion

8/8/2019 Defining Global is at Ion

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Authors Contacts

Jorge A. Vasconcellos e S

PhD Columbia University

Jean Monnet Professor at the University of Lisbon

Contacts: Alameda Combatentes Da Grande GuerraEdifcio S. Jos 405

2750-326 CascaisPORTUGAL

Tel. (351) 21 482 1544Fax (351) 21 482 1566

Email: [email protected]

Brief professional biography:

Jorge Alberto Souza de Vasconcellos e S has a PhD in Business Administration from

Columbia University in New York. At present he is Professor at the Technical

University. In 1997 he earned the Jean Monnet Chair, the high European Academic

Award.

Professor Vasconcellos has addressed conferences and given seminars at various

European universities including London Business School, IESE, Glasgow Business

School.

Has published fifteen books that have received endorsements, among others, from Peter

F. Drucker, Philip Kotler, Al Ries (author of the bestsellers Marketing Warfare and

Positioning), Don Hambrick (Professor at Columbia University and The Pennsylvania

State University), Karl Moore (Professor at Oxford and McGill University), Luiz

Moutinho (Professor at Glasgow University) and so on.


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Ftima Olo

Bachelor in Economics

Master in Financial Mathematics (current writing the thesis)



Tel. (351) 21 482 1544Fax (351) 21 482 1566


Magda Pereira

Bachelor in Management



Tel. (351) 21 482 1544Fax (351) 21 482 1566



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FROM LEVITT TO THE GLOBAL AGE:

ONE MORE TIME, HOW DO WE DEFINE OUR BUSINESS?

August 2008 (Revised August 2010)


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0. Abstract

Several works have focused on defining an organisation mission. Ansoff, Levitt

and Drucker, among others, have done seminal contributions.

But globalisation brought new challenges. Changes. Both in terms of new risks

and new opportunities.

Thus, the question: how does globalisation impact on how a firm should define its

business? What keeps on being valid, as before, and what must be adapted? And

why?

This article discusses the task of defining an organisation mission on a global age.

One of its main conclusions is that, more than ever, defining a business mission,

requires now that one incorporates location in the definition. Location includes

three different things: geographical area; distribution channels; and time location.

It may be seen paradoxical that as globalisation advances, location becomes more

important in a business definition. This article explains why.

Keywords: business, definition, mission, globalisation, advantage, and

differentiation.


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I. Introduction

There are four main reasons, which make of defining an organisations business,

mission, a very important management tool.

First of all, it is important to have present, that an institutions mission is never

obvious. Indeed, when defining a business, common expressions such as that

the institution intends to make money, obtain profits or grow are worthless.

They merely contribute to the dualism between theory and practice (Knights and

Mueller, 2004).

That is as useful as asking someone what it does in life and receiving the reply

that he/she tries to be happy. That is tautological. It adds nothing to what we

already know.

So, the sentence on business mission must answer clearly one basic question:

what does the organisation do to make a living?

By the same token, vague or tautological statements transmit nothing regarding

a given corporation. Except a bad image of management. Conveying the

message that they do not have a clue where they stand in the market, what their

business is.

Also, (Collis and Rukstad, 2008) companies that dont have a simple and clear

statement of strategy are likely to tall into the category of those who either fail to

implement their strategy, or never even had one.

Indeed, with a clear definition of the elements a company mission must include,

two things happen: formulation becomes easier since executives know what they

are trying to create; and implementation becomes simpler because the strategys

essence can be readily communicated and easily grasped by everyone in the

company.


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Having established the need to define an organisation mission well, the question

is: how to do it.

Literature has recommended that one uses three main elements. And

globalisation that one adds a fourth. The three elements suggested by literature

are:

1. the product/technology on offer; (Burgers, Bosch and Volberda, 2008)

2. the need served; (Burgers, Bosch and Volberda, 2008)

3. the type of clients served (Hanan, 1974);

4. and the fourth element that globalisation now requires is the location

(geographical area, distributions channels and time dimension) in which

the company operates.

These four elements of the mission are the four sides of the strategic square

which defines the context of the company, i.e. its business, its activity, what it

does for a living (see Figure 1).

We shall next present the rationale for this first three elements (product, need

and client) in section II; and then make the case for the importance of the fourth

element: location in section III. Thus showing what happens if location is not

included in the business definition.

Take in Figure (No.1)

II . The first three steps

The idea that the mission of an institution must be seen as a square, defining the

context of its market, is the result of a process of evolution. First Levitt, 1960,

called attention to the fact that any definition of mission must include the need

to be satisfied. This is illustrated by the story (Vasconcellos e S, 1999) when

Peter F. Drucker visited a company manufacturing glass bottles. As thecomplete board of directors awaited him, Drucker went in, sat down and calmly


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asked, Well, sirs, what is your business? A heavy silence filled the room. The

directors looked at one another, thinking had he not done his homework, to the

point that he did not even know what was the companys business.

Finally, the chairman of the board cut the uncomfortable silence and spoke up:

Mr Drucker, our business is to make glass bottles.

Drucker calmly replied, I dont agree. Your business is to make containers.

This need can be satisfied by making glass or plastic bottles, cardboard or

aluminium cartons or cartons in any other metals. For the time being you have

opted to satisfy the need for containers exclusively in the form of glass bottles.

Fine. But you must define your business by the need and not the product, in

order to keep potential opportunities in your mind (the eventual manufacture of

other types of containers), as well as who both your direct and indirect

competition is.

In other words, a companys business concerns the need it sets out to satisfy and

not the product it uses to satisfy this need. And from the need satisfied by the

company both the opportunities and the competitors are identified (Drucker,

1964).

The next step in the evolutionary process of defining mission as a square came

when Ansoff, 1967 observed that defining the mission of a company in terms of

need is not enough to provide a useful guide about the companys business.

Take the transportation business. It can include taxis, rental cars, all types of flights, including chartered, railway, the construction of boats and ships of

various sorts and all types of road vehicles: from subcompacts to luxury,

including vans, buses, armoured and station wagons. These are completely

different businesses, thus showing that the simple mention of the need does not

supply the necessary common thread. Something else is needed.

The same applies when considering Scholl, a manufacturer of products for feetfocusing on the need for comfort. First of all, foot comfort can be satisfied by


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shoes, sandals, powders, lotions or cushioned plasters. In fact, Scholl makes

these five kinds of products. And then the marketing including the distribution

channels differs in accordance with the products manufactured. Some

products are distributed through shoe shops (shoes and sandals), other by

supermarkets (cushioned plasters) and others still in pharmacies (powders and

lotions). Still, in a more general sense, comfort can be satisfied by cars,

furniture, interior design, ergonomic chairs, clothes, etc. So, again, all these

products satisfy the need for comfort. But businesses manufacturing these

various products have absolutely nothing in common with the others.

As a result, Ansoff suggested that an organisation mission should indicate the

product to be offered as well as the need. It is also frequently useful to add

some information about the technology to be used, as the same product can be

based on several alternative technologies. For instance, laboratory diagnostic

equipment can use: apparatus sensitive to colour, dyes, lasers, pressure,

computerised tomography, X-rays or ultrasound. The choice of the technology

to be used is critical in terms of its implications.

The third step towards how to define ones business came in a remarkable article

Hanan, 1974 who introduced a third dimension to the definition of the mission:

the definition of the client . Hanan argued that including the client dimension in

the definition of the business would not just make it more specific, precise, but

would also create a company which was more responsive to the clients needs.

In fact, as the needs in terms of hardware and software vary according to the

client, large computer companies have frequently opted to have a structure with

divisions specialised on various types of clients, distinguishing amonghouseholds, professionals, small companies, services such as finance,

distribution and hotels, and research centres.

There is no doubt that two companies - if their clients differ - can offer the same

product (computer hardware and software) and serve the same need (information

processing) but be in very different businesses (in terms of marketing,

competitors and objectives to be pursued). Tandy, which focuses on the self-employed profession and small firms, and Cray Computers which specialise in


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research centres are extreme instances. But other examples can be found among

Compaq, Packard, Bell, Oracle, Lotus, Gateway, and so on.

Another example illustrates the importance of the client dimension when

defining ones business.

The United States carpet industry is such an example. In the 50s the industry

was mature and apparently it would go into irreversible decline.

Then the industry carefully analysed who were the main clients at that time. The

traditional client of the industry was the housewife well into her 30s and 40s.

Not young couples buying their first house. At that phase they do not have

much money, concentrate on buying the essential and therefore put off the

acquisition of carpets. The industry recognised the opportunity to make the real

estate builder its client, as covering the floor is one of the few ways of altering

the comfort of a house. Thus, the industry started highlighting wall-to-wall

carpeting, by means of which a cheaply finished floor could be covered,

providing a better house at a lower cost for the builder.

So, in the past, Levitt, Ansoff and Hanan have stressed three of the four

elements in figure 1: 1) need; 2) product/technology; and 3) client.

The age of globalisation requires now a fourth dimension: location. As we will

see next.


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III. The location dimension on a global age

When markets were relatively closed, location played a secondary role. But as

they became more and more open and deregulated, location, in terms of 1)

geographical area, 2) distribution channels, and 3) time dimension, becomes more

important (Wu and Pangarkar, 2006), (Meyer and Tran, 2006) and (Yip, Rugman,

and Kudina, 2006).

By managing any of these three location dimensions (geography, distribution and

time), when defining its business, companies achieve four very important things:

A. - They select their competition ;

B. - They know how to adapt their products;

C. - They are directed towards the proper marketing efforts; and

D. - They face distinct opportunities . (Morris, 2005) as value innovation is

implemented (Kim and Mauborgne, 2005)

Let us see how by managing any of the three locations (geography, distribution

channels and time), organisations achieve A, B, C and D. And let us start with

geographical location.

3.1 Geographical location

Freedom from technical and economic barriers offer companies more flexibility

regarding how to geographically position their products. Flexibility means greaterfreedom of choice and thus increased management responsibility in choosing

location. Since location is no longer predetermined, or even strongly restricted, but

a wide open choice, the importance of the location decision increases. Just as has

been pointed out (Collis and Rukstad, 2008).

And so, by using the geographical dimension, companies are able to select their

competitors (Muller, 2006).


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For example, when, in the sixties, Japanese car manufacturers decided to venture

into Europe they started by focusing on Finland, Norway and Switzerland at the

beginning of the 1960s, then at the mid of that decade on the Benelux (Belgium,

The Netherlands and Luxembourg). At the end of the sixties, they started

focusing on Great Britain and only at the end of that decade did they venture

strongly into France and Germany. Italy was left for the early eighties, only. In

other words, Japanese companies started their activity and little by little entered

into Europe through the countries where the national car industry was nonexistent

or weak.

Geographic management enabled the Japanese to select their competition. And

globalisation, with its freedom from technical and legal barriers, provided for

greater geographic flexibility.

Delta Airlines provides another example of how the geographic location can be a

powerful tool to outmanoeuvre competition. In order to avoid direct competition

from Eastern, Delta decided to focus on the southeast of the United States. For

such a purpose it used Atlanta as the centre of its transfer system, having 40 to 50

planes on the ground 10 times a day. But there, of course, in the southeast, Delta

had to meet new direct competitors: those companies specializing in that area,

such as Dzark, Piedmont and Southern.

Thus, geographic location is a powerful tool to manage the type of competition a

company will face. But then it also plays another major role, by stressing the

characteristics that the product or need must have in order to succeed. BMW,

Boeing, Toyota and Knorr provide four such examples.

In order to enter the Japanese market, BMW had to change the steering wheel

from the left to the right. The USA market, however, required a different

adaptation: automatic transmission, a car characteristic that many American

consumers refused to abdicate from.


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Similarly when Boeing decided to enter into the Japanese market is had to alter its

planes to increase the space for seats and reduce the space for fuel and luggage, as

most internal journeys in Japan are short.

When Toyota decided to enter the American market at the beginning of the 1960s,

it studied this market carefully and opted to launch a subcompact (the Toyota

Corona) and no other type of car. And adapted the Corona to what the American

consumer demanded: softer driving (the Toyota Corona was the first imported car

with automatic transmission); low consumption (it went to decrease 30% in ten

years); legroom; and place to uphold the arms. All four characteristics which

Americans complained regarding the segment leader VW Beetle.

Knorr (the manufacturer of instant soup) provides a final example. It achieved

market share dominance in the southern European markets over Maggi, the brand

from the Nestl giant. That happened, although in blind tests of taste, consumers

do not have any declared preference between the brands. Why? Because when

Knorr entered the southern European markets of Portugal, Spain and Greece, it

immediately introduced types of soup adapted to the local customs and

preferences. On the contrary, Maggi of Nestl, tried first to push for the soups it

sold in Switzerland. Faced with rejection it tried to adapt later on, but since then

has never managed totally to recover the lost ground.

The changes in the geographical area also require alterations in marketing , both in

terms of product characteristics as well as of distribution channels. Contrary to

what happens on the North American market, where one of the critical factors of

success for cigarettes is the low level of tar and nicotine, in Latin America thesuccess factors are price and an image associated with more economically

developed countries, such as the United States. Hollywood and Manhattan are

examples of tobacco brands, which try to transmit this type of message and image.

Another example is provided by the Belgian editor Herg (editor of Tintin and

Lucky Luke), when it entered the USA. One of the main problems it encountered

was access to the distribution channels. In Europe, cartoons are usually sold inbook shops which often have a specialized section. That does not happen so often


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in America where the cartoon is usually acquired by newspapers and magazines

which publish them in very small excerpts. For this a different style of cartoon is

required, where at the end of each small excerpt (usually three or four frames)

there is a joke causing the reader to laugh or smile. That is not the case with

Tintin or Lucky Luke as they are different types of cartoons.

The examples above illustrate the impact of location, when included in a business

definition, in terms of selecting competition, adapting the products and directing

the marketing efforts.

However the use of the geographical area to define the business also brings a

fourth advantage: it draws attention to the opportunities the company encounters:

everything which occurs outside the geographical area defined as the centre of

operations. If they are opportunities which should be grasped (by firm X at the

moment Y), or not, is another question, but these opportunities should always be

borne in mind. For that to happen, the present geographical area of operations

should always be indicated. Thus the Asian market is an opportunity for the

Financial Times (which focuses on Europe and USA at the moment); geographical

expansion within the USA is an opportunity for Lone Star beer (which currently

focuses on Texas), and geographical concentration is a possibility for Schlitz

which covers all the United States.

And of course, the whole concept of what a business is for, also changes with

location.

Some countries (USA and UK) require a monistic outlook, that is, a shareholderoriented company.

In other countries (Germany, France), the socially accepted organization is

dualistic, putting a premium on the shareholder interest, but the interests of

employees are also accounted for.


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Finally in Japan (e.g.) prevails the pluralistic approach which assumes that the

firm belongs to all the stakeholders, with the employees interests taking

precedence.

As a corporation tries to adapt its legal subsidiaries to the social norms of each

location, its internal and external proceedings come different (Yoshimori, 1995;

Handy, 2002 and Wit and Meyer, 2004): the role of the CEO; the type of

shareholders meetings; the power of the chairman of the board; the board

members selection; the size of the boards; the effectiveness of the auditors; the

relations with the banks; and so on.

Finally, even the time element in business comes different. Enraptured in theculture of Japanese firms is a long term view where longevity and seniority are

important. The USA is found at the opposite point. European countries are

frequently pointed out as middle examples.

3.2 Location through distribution channels

Within each geographical area, distribution channels help also define an

organisation's location. Location is where. So the distribution channels used by an

organization, is an integrant part of its location, of where the competitor offers its

products.

And deregulation and technology is a key factor here, opening up channels which

were previously closed.

Examples abound. In the financial sector, ATMs can now be found in multiplelocations previously inaccessible, including airports, railway stations,

convenience shops, and bank agencies performing multiple services at major

retailers (Sears, J. Martins, etc.) and gas stations (Texaco, Repsol, etc.).

Location in distribution channels can be of extreme importance in avoiding

competition. When Pepsi Cola focused on kids, it put vending machines in small

beverage and food neighbourhood stores, not in supermarkets or hypermarkets.Sara Lee brand L'eggs of hosiery is distributed through supermarkets, not


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department stores. When American Greeting decided to enter the business of

cards, it opted to distribute its products through supermarkets, pharmacies, grocery

and discount stores, to avoid head on competition with the leader, Hallmark,

whose products could be found in department stores, bookstores, stationeries and

gift shops.

3.3 Time location

The third and final aspect of location is the time dimension. Deregulation now

allows banks to be open after-hours and several have opted to.

Convenience stores such as 7-11 and Select base their competitiveness in the

overnight schedule. So do Shell Shops, which launched its global advertising

campaign under the motto "where do you find everything at 3am?"

Companies which use time to differentiate their business, have distinct types of

competitors, objectives to follow (for instance in convenience stores, access and a

few models of each product is critical while price, variety and quality become

secondary) and, of course, the focus of marketing and the type of opportunities

(product line extensions) become also different.

In short, deregulation is one of the causes of globalization, as it makes entry into

new markets easier.

That, increases the importance of location as a source of opportunities. But

deregulation also means increased competition, forcing companies in order to

differentiate themselves to use the time dimension.

So, time location becomes both, a more viable option and a necessity. Due to

regulation and (its impact on) globalization.

Just as has been argued by Mintzberg, 2001 when he discussed the strategic

change of bringing McDonalds into a new market, the breakfast one and extending

the use of existing facilities. Or in alternative introducing candlelight dining with

personal service to capture the late evening market.


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3.4 The causes and consequences of the importance of location

Free trade, improved communications and transportation and common global

media, increased the importance of geographic location. Then, both deregulation

and technology had an impact on distribution channels and of using time as a new

source of location.

All these factors make the world both smaller (global village) and similar

(common markets across geographical areas).

And as the above examples illustrate, when the location in a business definition

changes, location changes, so do (one or more of) four other things: the objectives

a firm should pursue; its marketing; its competition; and the opportunities it faces

(see Figure 2).

In short, in a global age, location (geography, channels and time) must be added to

the former three mission elements when defining a mission, business: need,

product/technology and client suggested by Levitt, Ansoff and Hanan (see Figure

1).



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3.5 The mission statement as a synthesis of the organisation's market

standing

A mission/business must thus be defined indicating the four sides of the strategic

square: 1) product/technology; 2) client; 3) need; and 4) geographical area. Thus,

for example (Vasconcellos e S, 1999), the mission of the shoe division of Scholl

corporation 2 is the manufacturer of shoes with emphasis on comfort for all social

classes in the United States. Lone Star business definition is a beer with a taste

and image adapted to and distributed in Texas , mostly for males between 25 and

35 years old . But, Zima's mission is a beer for women to be used in cocktails with

soda and gin throughout the USA (Vasconcellos e S, 1999). Note that in all

cases, the four elements of product , need, client and location are present. Figure 3

presents other examples.


And of course that, since nothing is permanent except change, with time, needs,

technology, competition, etc. change, forcing companies to adapt and redefine their

mission.

Technology development led Casio to change the need it served from time information

to wrist technology with watches also performing other functions such as radio, TV,

photography, mobile phones, calculators, measuring temperature, humidity, and so on.

Then, increased competition led Holiday Inn to redefine its business around the

hospitality concept (motels, hotels and time sharing) and to phase out all other activities

including airlines, railways, buses services in between cities and chartering buses for

tourism.

And the search for scale economies was the reason that led Rockwell International, a

major manufacturer of axles and brakes for lorries and cars, to expand its geographical


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location into Germany and Italy, while keeping constant the product, type of client and

the need served.

It should be noted that, a company has an option of expanding any, (or more than one),

of the sides (product, client, need and location) of its strategic square, as shown in

figure one.

Marshall Field, a food retailer, opted for enlarging its location to Oregon, Washington,

both Carolinas, Ohio and Texas.

Other competitors, however, opted for changing other sides of the strategic square: the

need, e.g., as Dayton Hudson became a discounter; or the client, as Carlson Pirie Scott

transformed itself to become a caterer to airlines; or the product, as Albertsons did by

focusing on ethnic (mexican, new east, german, northern european, chinese) dietetic

food.

Kroger also redefined its product, but with different elements: decoration (creating a

very pleasant shopping experience); service (personalized delivery to the cars and

homes); and a special emphasis on four sections: wines; delicatessen; fruits; and flowers

(several hundred types).

It is also a well established fact that during this redefinition of business, to adapt to

market changes, companies are at least in part guided by its core ideology: in the words

of Collins and Porras, 1996, the core values that constitute a companys essential

tenants. They may include one or more of the following: science-based innovation,

integrity, reputation as being special, encouraging individual initiative, creativity, beinga pioneer, attention to detail, meritocracy, etc.

And it goes without saying that, since structure follows strategy, the internal

organization modes must adapt to the new business definition.

Chandlers path-breaking book The Visible Hand(1977) and a later series of papers

reinterpreting his work (Langlois, 2004; Lamoreaux, Raff and Temin, 2002; Sabel andZeitlin,2004), all stress how the modularity and standards that organizations work


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under, must adapt to the environmental conditions that their business definition led them

to face.

Here, we move beyond the simple markets versus hierarchies dichotomy, to focus

attention on the broad range of techniques that managers have developed over time to

coordinate their activities.

These coordination mechanisms can be seen along one-dimensional scale, where at the

left-hand extreme is pure market exchange and at the right-hand extreme is pure

hierarchy. In the middle of these extremes are long term relationships, that is repeated

transactions among independent players which opt to keep on dealing with each other.

In short, with time all changes. First the way a company defines its business. And then

the coordination mechanisms it uses to implement that business definition.


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IV. Precision as a vital condition for defining the mission .

By using the four elements of need, product/technology, client and geographical

area, both the company's position on the market and the conclusions obtained are

exact. Precise. Narrowly defined.

Indeed, conclusions can now be obtained regarding four aspects: the competitors

faced; the marketing to be developed; the characteristics of the product; the

objectives (critical factors of success) to be implemented; and the opportunities

available (see Figure 4). The proof that a mission where one of these four

elements is missing is not accurate, and therefore inadequate to be carried out, is

given by the fact that if one of the four elements is changed (one of the sides of the

strategic square), and even if the others remain constant, the conclusions regarding

objectives, marketing, competition and opportunities the company has, can be

different.

Let us provide a few examples that it is indeed so.



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4.1 Objectives

Success factors are areas where excellence is required (contrary to satisfactory

performance needed in all other areas). Thus, to achieve excellence in success

factors must be a companys objective. But the areas where special focus and

competence are necessary change with the definition of the mission. Sometimes it

is even enough to change one of the four sides of the strategic square of the

mission, for the critical factors of success to change (and therefore the objectives

of the company, too).

Scandinavian Airline Systems (SAS) is a good example of this. When Jan

Carlzon became CEO of SAS, he redefined its mission and decided to concentrate

on the executive segments of the air transport industry in the whole of Europe.

Thus: aeroplanes-product; air travel-need; executives-clients; Europe-geographical

area. The result was that SAS paid less attention to the other areas of the market,

such as charters, economy class, cargoes, tourism and the low-tariff segment.

By defining its business in this way, SAS acquired its particular success factors.

They are: 1) punctuality, 2) safety, 3) individuality; and 4) comfort, both on land

and in the air. Then, after establishing these objectives (success factors), SAS

developed programmes to implement them, which was the same as deciding where

the larger part of the company's budget, personnel and management time should

go. For example, in order to carry out the objective of providing comfort on land,

SAS developed various programmes in which reservations could be made in SAS

hotels in European and American cities. In addition, SAS manages a fleet of limousines, helicopters, cars for hire, to transport its passengers from the centre of

the city to the airport. And so on.

4.2 Marketing

Then a change in one of the four elements of the mission can also have

implications in terms of marketing tactics to be followed (publicity, message,distribution channels, price, etc.). All these marketing variables are very different


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from footwear to footwear company. Why? Because the need also changes:

fashion (C Jourdan); protection against the cold (Sorels); walking on the beach

(Jhol); large sizes (Eurico); in comfort (Scholl); home (Rilago); inpermeability

(Edmar); dancing (Interluva); easygoing image of youth (Commander) and so on..

4.3 Competition

With the mission defined by the four elements of the strategic square, straight

conclusions can also be taken regarding who is and is not our direct competition.

An example is provided by New York Air which, in order to avoid competing

directly with United Airlines, changed the client dimension of its mission, from

executives to low-price passengers. This meant having recourse to non-union

employees, stopping giving meals on board, using low-cost aeroplanes and having

very simple and spartan booking offices and rooms in the airports.

4.4 Opportunities

Finally, by defining its mission with the strategic square, a company can expand

its operations in four ways: expansion of products (new products for its

operations, keeping all or some of the others sides of the square constant);

expansion of clients (acquire new clients); expansion of needs; and geographical

expansion (see Figure 5).



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Yamaha is a good example of expansion of a product, and maintaining constant

the need (leisure), the geographical area (Japan, Europe and the United States) and

the type of client (medium/upper class between 20 and 40 years old). By defining

its need as leisure, not transport, Yamaha capitalised on its image, knowledge of

the psychology of clients, distribution channels and sales force (this to a lesser

degree) to commercialise a wide range of products such as motorcycles, ski

equipment, pianos, off board engines, tennis racquets, and soon. (See Figure 6) 3.



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V. Conclusion

Figures 1, 2 and 4 are central to summarise this article.

Figure 1 illustrates that due to various aspects of globalisation, location

(geography; plus distribution channels; plus time location) must be added as a new

element (Filippaios and Rama, 2008) to define an organisation's business or

mission. As the fourth side of the strategic square.

The globalisation elements which enhance the importance of location are: (1) free

trade; (2) improved communications; (3) faster transport; (4) shared mass media;

(5) deregulation; and (6) technology innovation (see Figure 2).

So an organisations mission or business must now be defined by a strategic

square which encompasses 1) the product/technology; 2) the need; 3) the client;

and 4) the location.

By using these four elements when defining a business, precision, a major

requirement, according to Drucker, is achieved. As well as business orientation

(Pearson, 1993). It becomes clear what the main objectives to be pursued are; what

type of marketing is required; which competitors must be faced; and where

opportunities stand. That is the message of Figure 4.

And with precision one avoids both strategic inflexibility (Combe and Greenley,

2004) and vague missions or business definitions which are 1) useless, 2) a waste

of time, and 3) ultimately portray a negative image of management.

As T. Levitt, in his Marketing Myopia article put it: "vague missions convey the

idea that any road is okay. If that is the case, the chief executive might as well

pack his attach case and go fishing. If an organisation does not know or care

where it is going, it does not need to advertise that fact with a ceremonial

figurehead. Everybody will notice it soon enough".


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Notes:

1 Others achieve good standards of performance in spite of (not due to) the lack of focus and due to theattractability of each divisions market segments and the strength of each division.2 Scholl corporation has other divisions which manufacture cushioned plasters, lotions, powders, etc.3

By contrast, Honda defined its need as transportation and therefore continuously upgraded itsmotorcycles and cars by launching new models of greater power and price, as well as other transportationvehicles: vans, all-terrain vehicles, buses, and so on.

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