1 / 40

CHARTING A COMPANY’S DIRECTION: VISION AND MISSION, OBJECTIVES, AND STRATEGY

CHARTING A COMPANY’S DIRECTION: VISION AND MISSION, OBJECTIVES, AND STRATEGY. Chapter 2 MGT 4380. Strategic Management Process. Developing a strategic vision, mission, and values Setting objectives Crafting a strategy Implementing and executing the chosen strategy

keanu
Télécharger la présentation

CHARTING A COMPANY’S DIRECTION: VISION AND MISSION, OBJECTIVES, AND STRATEGY

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. CHARTING A COMPANY’SDIRECTION: VISION AND MISSION, OBJECTIVES, AND STRATEGY Chapter 2 MGT 4380

  2. Strategic Management Process • Developing a strategic vision, mission, and values • Setting objectives • Crafting a strategy • Implementing and executing the chosen strategy • Monitoring developments, evaluating performance, and initiating corrective adjustments

  3. Strategic Management Process

  4. Factors Shaping Strategic Decisions • External Considerations • What are the industry’s economic characteristics? • How strong are the competitive forces at play? • What forces are driving change in the industry? • What market positions do rivals occupy and what moves are they likely to make next? • What are the key factors for future competitive success? • What are the company’s external opportunities?

  5. Factors Shaping Strategic Decisions • Internal Considerations • How well is the present strategy working? • What are the company’s competitively valuable resources, capabilities, and internal weaknesses? • Are the company’s prices and costs competitive? • Is the company competitively stronger or weaker than key rivals?

  6. Stage 1: Developing a Strategic Vision,a Mission, and Core Values • A strategic vision concerns a firm’s future business path—“where we are going” • Markets to be pursued • Future product/ market/customer/technology focus • The mission statement of a firm focuses on its present business purpose—“who we are and what we do” • Current product and service offerings • Customer needs being served

  7. Strategic Vision • It’s top management’s views about the firm’s direction and future product-market-customer-technology focus • Provides a panoramic view of “where we are going” • Is distinctive and specific to a particular organization • Avoids use of innocuous uninspiring language that could apply to most any firm • Definitively states how the company’s leaders intend to position the firm beyond where it is today

  8. Strategic Vision TABLE 2.2 - Characteristics of Effectively Worded Vision Statements

  9. Strategic Vision TABLE 2.3 – Common Shortcomings of Company Vision Statements

  10. Example: Coca-Cola

  11. The Importance of Communicating the Strategic Vision • An engaging, inspirational vision • Challenges and motivates the workforce • Articulates a compelling case for “where we are going and why” • Evokes positive support and excitement • Arouses a committed organizationaleffort to move in a common direction

  12. Expressing the Essence of the Vision in a Slogan • Nike • To bring innovation and inspiration to every athlete in the world • The Mayo Clinic • The best care to every patient every day • Greenpeace • To halt environmental abuse and promote environmental solutions.

  13. Why a Sound, Well-Communicated Strategic Vision Matters • It crystallizes senior executives’ own views about the firm’s long-term direction. • It reduces the risk of rudderless decision making by management at all levels. • It is a tool for winning the support of employees to help make the vision a reality. • It provides a beacon for lower-level managers in forming departmental missions. • It helps an organization prepare for the future.

  14. Changing Strategic Visions • Periodically, firms are required to change their strategic vision • A change in vision is required when it becomes evident to management that the industry has changed in a significant way that renders the company’s current vision obsolete

  15. Mission Statements • Ideally, a company mission statement is sufficiently descriptive to: • Identify the company’s 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.

  16. Mission Statements • Mission of Nike: “To bring inspiration and 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.”

  17. Vision, Mission, & Profit • Firms sometimes state 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 resultof what a firm does.

  18. Core Concept A firm’s values are the beliefs, traits, and behavioral norms that the firm’s personnel are expected to display in conducting the firm’s business and pursuing its strategic vision and mission.

  19. Stage 2: Setting Objectives • Why set objectives? • To convert the strategic vision into specific performance targets • To create yardsticks to track progress and measure performance • Objectives should: • Be well-stated (clearly worded) • Be challenging, yet achievable in order to stretch the organization to perform at its full potential • Be quantifiable (measurable) • Contain a specific deadline for achievement Objectives are an organization’s performance targets—the results management wants to achieve.

  20. Stage 2: Setting Objectives • What Kinds of Objectives to Set • Financial objectives • Communicate management’s targets for financial performance • Are lagging indicators that reflect the results of past decisions and organizational activities • Examples: revenue growth, profitability, and return on investment

  21. Stage 2: Setting Objectives • What Kinds of Objectives to Set • Strategic objectives • Are related to a firm’s marketing standing and competitive vitality • Are leading indicators of a firm’s future financial performance and business prospects. • If achieved, indicate that a firm’s future financial performance will be better than its current or past performance. • Examples: market share, new customers, geographical expansion

  22. Stage 2: Setting Objectives • An approach to performance measurement that incorporates multiple types of measures, financial and non-financial, into a single “balanced” measure. • While there is no uniform method for creating a balanced scorecard, the measures that are used should incorporate the interests and contributions of all important stakeholders. • Kaplan & Norton’s Model: (1) financial, (2) customer, (3) internal business practices, and (4) learning and growth (expansion) • Triple Bottom Line (3 P’s): People (Social), Planet (Environmental), and Profits (Economic)

  23. Example Objectives General Motors • Reduce 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 structural 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.

  24. Example Objectives The Home Depot • Be the number one destination for professional contractors. • Improve in-stock positions so customers can find and buy exactly what they need. • Deliver 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.

  25. Short-Term v. Long-Term Objectives • Short-Term Objectives • Targets to be achieved soon (< 2 years) • Milestones or stair steps for reaching long-range performance • Long-Term Objectives • Targets to be achieved within 3 to 5 years • Long-term objectives outweigh short-term objectives

  26. Stage 3: Crafting a Strategy • Crafting a strategy means asking: • How to attract and please customers • How to compete against rivals • How to position the firm in the marketplace and capitalize on attractive opportunities to grow the business • How best to respond to changing economic and market conditions • How to manage each functional piece of the business • How to achieve the firm’s performance targets

  27. Stage 3: Crafting a Strategy • A firm’s strategy 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 organization • Is rarely something only high-level executives engage in • Requires choosing among the various strategic alternatives

  28. Stage 3: Crafting a Strategy • Corporate strategy establishes an overall game plan for managing a set of businesses in a diversified, multi-business firm • Orchestrated by the CEO and other senior executives • Establishes an overall game plan for managing a set of businesses in a diversified, multi-business company • Typically thought of in terms of overarching strategic decisions (e.g., concentration strategies, diversification strategies, vertical integration, etc.)

  29. Stage 3: Crafting a Strategy • Business strategy is primarily concerned with strengthening the firm’s market position and building competitive advantage in a single business company or a single business unit of a diversified multibusinesscorporation • Orchestrated by the mid- to upper-level managers • Primarily concerned with building competitive advantage in a single business unit of a diversified company • Typically thought of in terms of low-cost v. differentiation v. focus strategies (e.g., Wal-Mart = broad low-cost; Simms = focused differentiation)

  30. Stage 3: Crafting a Strategy

  31. A Company’s Strategy-Making Hierarchy FIGURE 2.2

  32. Stage 4: Implementing and Executing the Chosen Strategy • Managing 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 procedures facilitate rather than impede effective execution. • Installing information and operating systems that enable personnel to perform essential activities.

  33. Stage 4: Implementing and Executing the Chosen Strategy • Managing the strategy execution process involves (continued): • Pushing for continuous improvement 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.

  34. Stage 5: Evaluating Performance and Initiating Corrective Adjustments • Triggering change as needed: • Monitoring new external developments • Evaluating the firm’s progress • Making corrective adjustments • Managing strategy is an ongoing process, not an every-now-and-then task • A firm’s vision, objectives, strategy, and approach to strategy execution are never final

  35. Leading the Strategic Management Process • The Strategic Management Process calls for six managerial actions: • Making sure the company has a good strategic plan • Stay on top of what is happening (MBWA) • Putting constructive pressure on organizational units to achieve good results • Pushing corrective actions to improve both the firm’s strategy and how well it is being executed • Leading the development of better competitive capabilities • Displaying ethical integrity and leading social responsibility initiatives

  36. Making Sure a Firm Has a Good Strategic Plan • Responsibility of CEO • Effectively communicate the vision, objectives, and major strategy components • Exercise due diligence in reviewing lower-level strategies for consistency with higher-level strategies

  37. Corporate Governance: The Role of the Board Of Directors • The Role of the Board Of Directors in the Strategy-Making, Strategy-Executing Process: • Oversee the firm’s financial accounting and reporting practices. • Diligently critique and oversee the company’s direction, strategy, and business approaches. • Evaluate the caliber of senior executives’ strategy-making and strategy-executing skills. • Institute a compensation plan for top executives that rewards them for actions and results that serve shareholder interests.

  38. Strong Boards Lead to Good Corporate Governance • A Strong, Independent Board of Directors: • Is well informed about the company’s performance • Guides and judges the CEO and other top executives • Has the courage to curb management actions it believes are inappropriate or unduly risky • Certifies to shareholders that the CEO is doing what the board expects • Provides insight and advice to management • Is intensely involved in debating the pros and cons of key decisions and actions

  39. Initiating Corrective Actions to Improve Strategy and Execution • The leadership challenge of making corrective adjustments is twofold: • Deciding when adjustments are needed • Deciding what adjustments to make • Leader’s responsibility is to step forward and push corrective actions

  40. Leading the Development of Better Competitive Capabilities • Lead efforts to strengthen existing competitive capabilities • Anticipate changes in customer-market requirements • Proactively build new competencies and capabilities that hold promise for building an enduring competitive edge

More Related