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Mba strategic management 2


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Mba strategic management 2

  1. 1. Chapter 2 The Business Vision & MissionStrategic Management: Concepts & Cases 10th Edition Fred David PowerPoint Slides by Va Siheng, MBA.National University of Management 1
  2. 2. Chapter Outline• Value• Vision statement• Mission statement• Goal and objective 2
  3. 3. “Management’s job is not to see the company as it is….but as it can become.”John W. Teets “Quote” 3
  4. 4. I-Corporate Values• Corporate values are the underlying principles which guide and also drive the actions and activities of individual companies. – A set of principles that further clarifying what we stand for. – A compass for individual and collective behavior. – A clarification of what we are prepared to be judged on by audiences. 4
  5. 5. I-Corporate ValuesEach company or organization has their own set of values.• “Heart and Soul” of the organization – Performance – Reputation• Endure throughout the life of the organization. 5
  6. 6. Developing a Corporate Values • Question: What values or beliefs do you want to represent your company? • Facilitator selected top managers and key personnel to complete values form. • Brainstorming Exercise • Final agreement by consensus on the best values to represent company. 6
  7. 7. VALUES SELECTION FORMAccountability Innovation Social ResponsibilityCommitment Leadership SpeedCreativity Loyalty TeamworkCustomer Service Multi-Cultural TechnologyDependability Partnership TransparencyEquality Privacy TrustEntrepreneurial Progressive UniqueExcellence Quality Other Values:Freedom ReliabilityHonesty SafetySource: William Bean, Strategic Planning That Makes Things Happen, p. 101. 7
  8. 8. Important values Customers Management & Employees Living values 8
  9. 9. II- Vision statement Agreement on the basic vision for which the firm strives to achieve in the long run is critically important to the firm’s success. “What do we want to become?” 9
  10. 10. Vision & Mission Clear Business Vision Comprehensive Mission Statement 10
  11. 11. Vision & MissionMany organizations develop both vision &mission statements.Vision statement-- • Should be established first and foremost • Short – preferably one sentence • Broad management involvement 11
  12. 12. Vision Statement ExamplesNational Pawnbrokers Association: “The Vision of the National Pawnbrokers Association is to have complete and vibrant membership that enjoys a positive public and political image and is the focal organization of all pawn associations”. -- National Pawnbrokers Association ( 12
  13. 13. Vision Statement Examples The Bellevue Hospital: “Is the LEADER in providing resources necessary to realize the community’s highest level of HEALTH throughout life”. -- U.S POULTRY & EGG Association 13
  14. 14. III- Mission statement -- 90% of all companies have used a mission statement in the previous five years. “What is our business?” •Enduring statement of purpose •Distinguishes one firm from another •Declares the firm’s reason for being 14
  15. 15. Mission StatementsAlso referred to as: •Creed statement •Statement of purpose •Statement of philosophy •Statement of business principles 15
  16. 16. Mission Statements Reveal what an organization wants to be and whom it wants to serve Essential for effectively establishing objectives and formulating strategies. 16
  17. 17. Vision & MissionMany organizations develop both vision &mission statements. It can be argued that profit, not mission or vision. 17
  18. 18. Vision & MissionProfit & vision are necessary to effectivelymotivate a workforce Shared Vision -- – Creates commonality of interests – Reduce daily monotony – Provides opportunity & challenge 18
  19. 19. Developing Vision & MissionClear mission is needed before alternativestrategies can be formulated andimplemented Participation from diverse managers is important in developing the mission. 19
  20. 20. Developing Vision & Mission Approach to developing -- – Select several articles about vision or mission – Read as background information – Ask to prepare a draft statement – A facilitator merge into document – Request for modifications, Additions, and deletions – Revise the document • Reach final agreement by consensus on vision or mission of the company. 20
  21. 21. Mission Statement ExamplesThe Bellevue Hospital, with respect, compassion, integrity, and courage, honors the individuality and confidentiality of our patients, employees, and community, and is progressive in anticipating and providing future health care services. -- The Bellevue Hospital 21
  22. 22. Mission Statement ExamplesMicrosoft: “Since its inception in 1975, Microsoft’s mission has been to create software for the personal computer that empowers and enriches people in the workplace, at school and at home.”Coca-Cola: “As the world’s largest beverage company, we refresh the world. We do this by developing superior soft drinks, both carbonated and non-carbonated, and profitable non-alcoholic beverage systems that create value for our company, our bottling partners and our customers.” 22
  23. 23. Importance of Mission Benefits from a strong mission Unanimity of Purpose Resource Allocation Mission Organizational Climate Focal point for work structure 23
  24. 24. Effective Missions Broad in scope Broad in scope Generate strategic Generate strategic alternatives alternatives Not overly specific Not overly specific Reconciles interests among Reconciles interests among diverse stakeholders diverse stakeholders Finely balanced between Finely balanced between specificity & generality specificity & generality 24
  25. 25. Effective Missions Arouse positive feelings & Arouse positive feelings & emotions emotions Motivate readers to action Motivate readers to action Generate favorable Generate favorable impression of the firm impression of the firm 25
  26. 26. Effective Missions Reflect future growth Reflect future growth Provide criteria for strategy Provide criteria for strategy selection selection Basis for generating & Basis for generating & evaluating strategic options evaluating strategic options Are dynamic in nature Are dynamic in nature 26
  27. 27. Mission & CustomerOrientation – Vern McGinnis• Define what the organization is• Define what it aspires to be• Limited to exclude some ventures• Broad enough to allow for growth• Distinguishes firm from all others• Stated clearly – understood by all 27
  28. 28. Mission & CustomerOrientation An Effective Mission Statement -- • Anticipates customer needs • Identifies customer needs • Provides product/service to satisfy needs 28
  29. 29. Vision & Mission Research results are mixed, however, firms with formal mission statements -- • 2x average return on shareholder’s equity • Positive relationship to company performance • 30% high return on certain financial measures 29
  30. 30. Products Services Markets Customers Technology MissionEmployees Elements Survival Growth Profit Public Image Self-Concept Philosophy 30
  31. 31. PepsiCo MissionPepsiCo’s mission is to increase the value of our shareholders’ investment. We do this through sales growth, cost controls, and wise investment resources. We believe our commercial success depends upon offering quality and value to our consumers and customers; providing products that are safe, wholesome, economically efficient and environmentally sound; and providing a fair return to our investors while adhering to the highest standards of integrity. 31
  32. 32. Ben & Jerry’s MissionBen & Jerry’s mission is to make, distribute and sell the finest quality all-natural ice cream and related products in a wide variety of innovative flavors made from Vermont dairy products. To operate the Company on a sound financial basis of profitable growth, increasing value for our shareholders, and creating career opportunities and financial rewards for our employees. To operate the Company in a way that actively recognizes the central role that business plays in the structure of society by initiating innovative ways to improve the quality of life of a broad community—local, national and international. 32
  33. 33. Mission Statement Evaluation MatrixCOMPONENTS Concern for Survival, Products Growth, Organization Customers Services Markets Profitability TechnologyPepsiCo Yes No No Yes NoBen & Jerrys No Yes Yes Yes No 33
  34. 34. Mission Statement Evaluation MatrixCOMPONENTS Self- Concern for Concern for Organization Philosophy Concept Public Image EmployeesPepsiCo Yes No No NoBen & Jerrys No Yes Yes Yes 34
  35. 35.                                                                                                                                                                                   THE AEROSPACE CORPORATION  -- VISION -- To be the worlds leader in the application of space technology.   -- MISSION -- To apply our technical knowledge and expertise to enable our customers to successfully exploit the full potential of space and space technology. -- VALUES -- Integrity - Technical Excellence - Objectivity Dedication to Mission Success - Commitment to Our People. 35
  36. 36. NORTHWEST AIRLINESThe VISION of Northwest Airlines : To build together the worlds mostpreferred airline with the best people; each committed to exceeding ourcustomers expectations every day.Our MISSION: The people of Northwest Airlines will provide reliable,convenient and consistent air transportation that meets or exceedscustomer expectations and earns a sustainable profit.Our VALUES: Northwest has eight essential values or standards thatNorthwest people are expected to uphold. Safety first Honesty and integrity Trustworthiness Respect for self, others and for property Caring Resourcefulness and innovation Commitment to profitability Enthusiasm and camaraderie 36
  37. 37. Summary Values, Vision, Mission• The reason for preparing Values, Vision and Mission statements is to provide a sense of purpose and direction for the organization which is much greater than simply making a profit.• Once completed, these statements should be shared with the company’s management, employees and primary customers.• These statements should also serve to both motivate and guide the actions of the company’s managers and employees. 37
  38. 38. IV-Goals and Objectives • Goals and objectives are statements focusing on “what” the company or organization wants to do, accomplish or achieve. • Strategies are the methods or actions necessary to achieve or accomplish goals and objectives. • Goals and objectives can have:  Short-term range (1 year or less);  Intermediate term range (1 to 2 years);  Long-term range (2 to 5 years or more); • Strategic goals/objectives have a long term range. 38
  39. 39. Goals & Objectives • It is important to note that for some people, goals and objectives are slightly different. – Some people define “goals” as being general statements (usually long-term) of what a company wants to do or accomplish, while defining “objectives” as specific statements (usually short-term). • We can therefore use the terms strategic goals or strategic objectives in an equivalent or interchangeable manner. 39
  40. 40. Goals/Objectives should be SMART • Specific • Measurable • Attainable • Results-Oriented • Time-Limited 40
  41. 41. Areas for Strategic Goals1.19 Areas for Objectives Areas in Which to Set Objectives • Prof it abilit y • Ef f iciency • Grow t h • Shareholder w ealt h • Ut ilizat ion of resources • Reput at ion • Cont ribut ions t o em ployees • Cont ribut ions t o societ y • Market leadership • Technological leadership • Survival • Personal needs of m anagem ent Prentice Hall, 2000 Chapter 1 19 41
  42. 42. Benchmarking • The benchmarking process can help to facilitate the formulation of strategic goals /objectives. • Benchmarking is a process of identifying best practices in specific areas in organizations both within and outside of an industry for the purpose of matching or exceeding them. • After monitoring the performance of industry competitors and outsiders, challenging strategic goals/objectives can be set which seek to rival or surpass main competitors in regards to key strategic areas. 42
  43. 43. Conclusion• Strategic goals/objectives are not formulated in isolation from the general environment.• The internal and external audits, which are the focus of the next lesson, have an impact on the quantitative and qualitative aspects of long term goals.• In other words, strategic goals/objectives are set and periodically revised in relation to the firms existing strengths and weaknesses and external opportunities and threats.• Strategic management is very much a dynamic process. 43