CHARTING A COMPANY’S DIRECTION VISION AND MISSION

1、CHARTING A COMPANYSDIRECTION: VISION AND MISSION, OBJECTIVES, AND STRATEGYChapter 2MGT 4380Strategic Management Process1. Developing a strategic vision, mission, and values2. Setting objectives3. Crafting a strategy4. Implementing and executing the chosen strategy5. Monitoring developments, evaluati

2、ng performance, and initiating corrective adjustmentsStrategic Management ProcessFactors Shaping Strategic DecisionsExternal ConsiderationsWhat are the industrys economic characteristics?How strong are the competitive forces at play?What forces are driving change in the industry?What market position

3、s do rivals occupy and what moves are they likely to make next?What are the key factors for future competitive success?What are the companys external opportunities?Factors Shaping Strategic DecisionsInternal ConsiderationsHow well is the present strategy working?What are the companys competitively v

4、aluable resources, capabilities, and internal weaknesses?Are the companys prices and costs competitive?Is the company competitively stronger or weaker than key rivals?Stage 1: Developing a Strategic Vision,a Mission, and Core ValuesA strategic vision concerns a firms future business path“where we ar

5、e going” Markets to be pursuedFuture product/ market/customer/technology focusThe mission statement of a firm focuses on its present business purpose“who we are and what we do”Current product and service offeringsCustomer needs being servedStrategic VisionIts top managements views about the firms di

6、rection and future product-market-customer-technology focusProvides a panoramic view of “where we are going”Is distinctive and specific to a particular organizationAvoids use of innocuous uninspiring language that could apply to most any firmDefinitively states how the companys leaders intend to pos

7、ition the firm beyond where it is todayTABLE 2.2 - Characteristics of Effectively Worded Vision StatementsGraphicPaints a picture of the kind of company that management is trying to create and the market position(s) the company is striving to stake out.DirectionalIs forward looking; describes the st

8、rategic course that management has charted and the kinds of product-market-customer-technology changes that will help the company prepare for the future.FocusedIs specific enough to provide managers with guidance in making decisions and allocating resources.FlexibleIs not so focused that it makes it

9、 difficult for management to adjust to changing circumstances in markets, customer preferences, or technology.FeasibleIs within the realm of what the company can reasonably expect to achieve.DesirableIndicates why the directional path makes good business sense.Easy to communicateIs explainable in 5

10、to 10 minutes and, ideally, can be reduced to a simple, memorable “slogan”Strategic VisionVague or incompleteShort on specifics about where the company is headed or what thecompany is doing to prepare for the future.Not forward lookingDoesnt indicate whether or how management intends to alter the co

11、mpanys current product-market-customer-technology focus.Too broadSo all-inclusive that the company could head in most any direction, pursue most any opportunity, or enter most any business.Bland or uninspiringLacks the power to motivate company personnel or inspire shareholderconfidence about the co

12、mpanys direction.Not distinctiveProvides no unique company identity; could apply to firms in any of several industries (including rivals operating in the same market arena).Too reliant on superlativesDoesnt say anything specific about the companys strategiccourse beyond the pursuit of such distincti

13、ons as being a recognized leader, a global or worldwide leader, or the first choice of customers.TABLE 2.3 Common Shortcomings of Company Vision StatementsStrategic VisionExample: Coca-ColaThe Importance of Communicating the Strategic VisionAn engaging, inspirational visionChallenges and motivates t

14、he workforceArticulates a compelling case for “where we are going and why”Evokes positive support and excitementArouses a committed organizationaleffort to move in a common directionExpressing the Essence of the Vision in a SloganNikeTo bring innovation and inspiration to every athlete in the worldT

15、he Mayo ClinicThe best care to every patient every dayGreenpeaceTo halt environmental abuse and promote environmental solutions.Why a Sound, Well-Communicated Strategic Vision Matters1. It crystallizes senior executives own views about the firms long-term direction.2. It reduces the risk of rudderle

16、ss decision making by management at all levels.3. It is a tool for winning the support of employees to help make the vision a reality.4. It provides a beacon for lower-level managers in forming departmental missions.5. It helps an organization prepare for the future.Changing Strategic VisionsPeriodi

17、cally, firms are required to change their strategic visionA change in vision is required when it becomes evident to management that the industry has changed in a significant way that renders the companys current vision obsoleteMission StatementsIdeally, a company mission statement is sufficiently de

18、scriptive to:Identify the companys products or services.Specify the buyer needs it seeks to satisfy.Specify the customer groups or markets it is endeavoring to serve.Specify its approach to pleasing customers.Give the company its own identity.Mission StatementsMission of Nike:“To bring inspiration a

19、nd innovation to every athlete in the world.”Mission of Duke Energy:“Our purpose is to create superior value for our customers, employees, communities and investors through the production, conversion, delivery and sale of energy and energy services.”Vision, Mission, & ProfitFirms sometimes state

20、 that their mission is to simply earn a profit.Profit is the obvious intent of every commercial enterprise.Profit is not “who we are and what we do.”Profit is more correctly an objective and a result of what a firm does.Core ConceptA firms values are the beliefs, traits, and behavioral norms that th

21、e firms personnel are expected to display in conducting the firms business and pursuing its strategic vision and mission.Stage 2: Setting ObjectivesWhy set objectives?To convert the strategic vision into specific performance targetsTo create yardsticks to track progress and measure performanceObject

22、ives should:Be well-stated (clearly worded)Be challenging, yet achievable in order to stretch the organization to perform at its full potentialBe quantifiable (measurable)Contain a specific deadline for achievementObjectives are an organizations performance targetsthe results management wants to ach

23、ieve.Stage 2: Setting ObjectivesWhat Kinds of Objectives to SetFinancial objectivesCommunicate managements targets for financial performanceAre lagging indicators that reflect the results of past decisions and organizational activitiesExamples: revenue growth, profitability, and return on investment

24、Stage 2: Setting ObjectivesWhat Kinds of Objectives to SetStrategic objectivesAre related to a firms marketing standing and competitive vitalityAre leading indicators of a firms future financial performance and business prospects.If achieved, indicate that a firms future financial performance will b

25、e better than its current or past performance.Examples: market share, new customers, geographical expansionStage 2: Setting ObjectivesAn approach to performance measurement that incorporates multiple types of measures, financial and non-financial, into a single “balanced” measure. While there is no

26、uniform method for creating a balanced scorecard, the measures that are used should incorporate the interests and contributions of all important stakeholders. Kaplan & Nortons Model: (1) financial, (2) customer, (3) internal business practices, and (4) learning and growth (expansion)Triple Botto

27、m Line (3 Ps): People (Social), Planet (Environmental), and Profits (Economic)Example ObjectivesReduce the percentage of automobiles using internal combustion engines through the development of hybrids, range-extended electric vehicles, and hydrogen fuel cell electric engines.Reduce automotive struc

28、tural costs to benchmark levels of 23% of revenue by 2012 from 34% in 2005.Reduce annual U.S. labor costs by an additional $5 billion by 2011.Example ObjectivesBe the number one destination for professional contractors.Improve in-stock positions so customers can find and buy exactly what they need.D

29、eliver differentiated customer service and the know-how that our customers have come to expect.Repurchase $22.5 billion of outstanding shares during 2008.Open 55 new stores with 5 store relocations in 2008.Short-Term v. Long-Term ObjectivesShort-Term ObjectivesTargets to be achieved soon ( 2 years)M

30、ilestones or stair steps for reaching long-range performanceLong-Term ObjectivesTargets to be achieved within 3 to 5 yearsLong-term objectives outweigh short-term objectivesStage 3: Crafting a StrategyCrafting a strategy means asking:How to attract and please customersHow to compete against rivalsHo

31、w to position the firm in the marketplace and capitalize on attractive opportunities to grow the businessHow best to respond to changing economic and market conditionsHow to manage each functional piece of the businessHow to achieve the firms performance targetsStage 3: Crafting a StrategyA firms st

32、rategy is a collection of initiatives undertaken by managers at all levels in the organizational hierarchy Crafting strategy is a collaborative effort that:Involves managers from various levels of the organizationIs rarely something only high-level executives engage inRequires choosing among the var

33、ious strategic alternativesStage 3: Crafting a StrategyCorporate strategy establishes an overall game plan for managing a set of businesses in a diversified, multi-business firmOrchestrated by the CEO and other senior executivesEstablishes an overall game plan for managing a set of businesses in a d

34、iversified, multi-business companyTypically thought of in terms of overarching strategic decisions (e.g., concentration strategies, diversification strategies, vertical integration, etc.)Stage 3: Crafting a StrategyBusiness strategy is primarily concerned with strengthening the firms market position

35、 and building competitive advantage in a single business company or a single business unit of a diversified multibusiness corporationOrchestrated by the mid- to upper-level managersPrimarily concerned with building competitive advantage in a single business unit of a diversified companyTypically tho

36、ught of in terms of low-cost v. differentiation v. focus strategies (e.g., Wal-Mart = broad low-cost; Simms = focused differentiation)Stage 3: Crafting a StrategyCorporate strategy Addresses the questions of how to capture cross-business synergies, what businesses to hold or divest, which new market

37、s to enter, and how to best enter new marketsby acquisition, creation of a strategic alliance, or through internal development.Business strategy Is primarily concerned with building competitive advantage in a single business unit of a diversified company or strengthening the market position of a non

38、diversified single business company.Functional-area strategies Are concerned with the strategies specifically related to particular functions or processes within a business (marketing strategy, production strategy, finance strategy, customer service strategy, product development strategy, and human

39、resources strategy).Operating strategies Are relatively narrow strategic initiatives and approaches of limited scope for managing key operating units (plants, distribution centers, geographic units) and specific operating activities such as materials purchasing or Internet sales.FIGURE 2.2A Companys

40、 Strategy-Making HierarchyStage 4: Implementing and Executing the Chosen StrategyManaging the strategy execution process involves:Staffing the organization to provide needed skills and expertise.Allocating ample resources to activities critical to good strategy execution.Ensuring that policies and p

41、rocedures facilitate rather than impede effective execution.Installing information and operating systems that enable personnel to perform essential activities.Stage 4: Implementing and Executing the Chosen StrategyManaging the strategy execution process involves (continued):Pushing for continuous im

42、provement in how value chain activities are performed.Tying rewards and incentives directly to the achievement of performance objectives.Creating a company culture and work climate conducive to successful strategy execution.Exerting the internal leadership needed to propel implementation forward.Sta

43、ge 5: Evaluating Performance and Initiating Corrective AdjustmentsTriggering change as needed:Monitoring new external developmentsEvaluating the firms progressMaking corrective adjustmentsManaging strategy is an ongoing process, not an every-now-and-then taskA firms vision, objectives, strategy, and

44、 approach to strategy execution are never finalLeading the Strategic Management ProcessThe Strategic Management Process calls for six managerial actions:1. Making sure the company has a good strategic plan2. Stay on top of what is happening (MBWA)3. Putting constructive pressure on organizational un

45、its to achieve good results4. Pushing corrective actions to improve both the firms strategy and how well it is being executed5. Leading the development of better competitive capabilities6. Displaying ethical integrity and leading social responsibility initiativesMaking Sure a Firm Has a Good Strategic PlanResponsibility of CEOEffectively communicate the vision, objectives, and major strategy componentsExercise due diligence in reviewing lower-level strategies for consistency with higher-level strategiesCorpora