Unit I - Introduction

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STRATEGIC MANAGEMENT
MBA, IV Semester  Course Code: CA 541

Purbanchal University
Singa Lama

TRAINER | EDUCATOR | COUNSELOR
Teaching Faculty for BBA/MBA: Kantipur Valley College (KVC)
SQC Master Trainer: QUEST – Nepal
Chief Trainer: SCHeME – Nepal
Principal: Golden Gate English Secondary School
Chairman/CEO: International Council of Education & Research
CONTACT:

[email protected]  www.facebook.com/singa.lama
www.icernepal.blogspot.com  Twitter: @singalama | 9841-299271

Syllabus Contents for Unit I

1. Business Policy and the Evolution of
Strategic Management
2. Conceptual Introduction to Strategy
3. Levels of Strategy
4. Introduction to Strategic Management –
4.1 Definition,
4.2 Model of Strategic Management Process
5. Understanding Strategic Intent
6. Business Vision, Mission, Objectives &
Goals

1. Business Policy and the Evolution of Strategic Management

1. Business Policy and the Evolution of Strategic Management
1.1 Concept of Strategic Management

1. Business Policy and the Evolution of Strategic Management
1.1 Business Policy
Business Policy defines the scope or spheres within which
decisions can be taken by the subordinates in an organization.
It permits the lower level management to deal with the
problems and issues without consulting top level management
every time for decisions. Business policies are the guidelines
developed by an organization to govern its actions. They
define the limits within which decisions must be made.
Business policy also deals with acquisition of resources with
which organizational goals can be achieved. Business policy is
the study of the roles and responsibilities of top level
management, the significant issues affecting organizational
success and the decisions affecting organization in long-run.

1. Business Policy and the Evolution of Strategic Management
1.1 Business Policy

• As defined by Christensen & Others: "the study of
the function and responsibilities of senior management,
crucial problems that affect success in the total
enterprise and the decisions that determine the
direction of the organisation and shape its future. The
problems of policy in business, like of those of policy in
public affairs have to do with the choice of purposes,
the moulding of organizational identity and character,
the continuous definition of what needs to be done and
the mobilisation of resources for the attainment of goals
in the face of competition or adverse circumstance.

1. Business Policy and the Evolution of Strategic Management
1.1 Business Policy

Business Policy, with its concern for
determination of the future course of actions,
lays down a long term plan which the
organisation then follows. The senior
management, while determining the future
course of action, has a mental picture of type
of organisation they want their company to
become.

1. Business Policy and the Evolution of Strategic Management
1.1 Business Policy






Features of Business Policy
Specific- Policy should be specific/definite. If it is uncertain,
then the implementation will become difficult.
Clear- Policy must be unambiguous. It should avoid use of
jargons and connotations. There should be no
misunderstandings in following the policy.
Reliable/Uniform- Policy must be uniform enough so that it
can be efficiently followed by the subordinates.
Appropriate- Policy should be appropriate to the present
organizational goal.

1. Business Policy and the Evolution of Strategic Management
1.1 Business Policy






Features of Business Policy (Contd….)
Simple- A policy should be simple and easily understood by
all in the organization.
Inclusive/Comprehensive- In order to have a wide scope, a
policy must be comprehensive.
Flexible- Policy should be flexible in operation/application.
This does not imply that a policy should be altered always,
but it should be wide in scope so as to ensure that the line
managers use them in repetitive/routine scenarios.
Stable- Policy should be stable else it will lead to
indecisiveness and uncertainty in minds of those who look
into it for guidance.

1. Business Policy and the Evolution of Strategic Management
1.2 Evolution of Strategic Management
Genesis (Starting Point) of Strategic Management & Business Policy
Can be traced to 1911 when Harvard Business School introduced an
integrative course in management aimed at creation of general
management capability ~ based on the instructional case studies of the
School since 1908
2 reports published in 1959 – Gordon and Howell report, sponsored by
Ford Foundation and Pierson Report, sponsored by Carnegie Foundation
– recommended capstone course on Business Policy ; the former says
“…… which will give students an opportunity to pull together what they
have learned in the separate business fields and utilize this knowledge in
the analysis of complex business problems.
In 1969, American Assembly of Collegiate Schools of Business, a
regulatory body, made the course of Business Policy a mandatory
requirement for recognition
The modern terms of traditionally used term Business Policy are Strategic
Management, Corporate Strategy and Policy, etc.

1. Business Policy and the Evolution of Strategic Management
1.2 Evolution of Strategic Management
Historical Perspective of Evolution of Strategic Management &
Business Policy
Hoofer and others view the evolution as paradigm shifts that can be
considered as four overlapping phases:
First Phase: Paradigm of Ad Hoc Policy Making (Mid 1930s)
Single product line firms expanded that created the need for to
integrate functional areas by framing policies to guide managerial
action. Policy making became the prime responsibility of erstwhile
entrepreneurs, who late assumed the role of senior management
Second Phase: Replacement of Ad Hoc Policy Making (In 30s
& 40s)
Increasing environmental changes replaced Ad Hoc policy making.
Based on the second paradigm, the emphasis shifted to integration
of functional areas in a rapidly changing environment.

1. Business Policy and the Evolution of Strategic Management
1.2 Evolution of Strategic Management
Third Phase: Critical look at the basic concept (1960s)
Increasing complexities and accelerating changes in the environment
made the planned policy paradigm irrelevant since the needs of business
could no longer be served by policy making and functional area
integration alone. By 1960s, there was demand for a critical look on the
basic concept of business and its relationship with environment. Concept
of strategy satisfied this requirement and the third phase, based on a
strategy paradigm emerged in early sixties.
Fourth Phase: Current thinking of Strategic Mgmt. Process (80s)
The initial focus was on intersection of two broad fields of enquiry: the
strategic processes of business firms and the responsibilities of general
management. The story is far from being complete and as Thompson and
Strickland say, the approaches and methods of analysis of strategic
management ‘have not yet coalesced into a “theory” of how to manage an
enterprise’ but they very definitely do represent a powerful way of thinking
to resolve strategic issues.’

2. Conceptual Introduction to Strategy

1.1 Concept of Strategy

The concept of strategy is central to understanding
the process of strategic management. The term
'strategy' is derived from a Greek word strategos,
which means generalship – the actual direction of
military force, as distinct from the policy governing
its deployment. Literally, therefore, the word
'strategy, means the art of the general. In business
parlance, there is no definite meaning assigned to
strategy. It is often used loosely to mean a number
of things.

2. Conceptual Introduction to Strategy

1.1 Concept of Strategy
A strategy could be:
• a plan or course of action or set of decision making a pattern or
creating a common thread;
• the pattern or common thread related to the organisation's activities
which are derived from the policies, objectives and goals;
• related to persuing those activities which move an organization from its
current position to a desired future state;
• concerned with the resources necessary for implementing a plan or
following a course of action;
• connected to the strategic positioning of a firm, making trade-offs
between its different activities and creating a fit among these activities;
and
• the planned or actual coordination of the firm's major goals and
actions, in time and space that continuously co-align the firm with its
environment.

2. Conceptual Introduction to Strategy

1.1 Concept of Strategy

In simplified terms, a strategy is a means to achieve
objectives. In complex terms, it may possess all the
characteristics mentioned above. With so many different
interpretations of a term, it is really difficult to fathom what
strategy really means. But the diversity of the interpretations
gives us valuable insights into what thinkers and writers have
proposed from time to time.
Practising Strategic Management by doing case analysis and
discussions aids in clarifying the issues. Just like there being
two sides to a coin, strategy often emerges as a concept
having two differing perspectives, making it a paradox. The
process of solving paradox leading to synthesis is an
interesting practice that leads to greater understanding.

2. Conceptual Introduction to Strategy

1.1 Concept of Strategy
Two points of consideration to temper our enthusiasm while
embracing the concept of strategy:
 The application of the concept of strategy to real-life
situations may tend to oversimplify things. Actual situations
are complex and contain several variables that are not
amenable to structuring. The concept of strategy tends to
distort reality and, as an abstraction of reality, it is anything
but a true reflection of the actual situation. Of course, this
limitation is not unique to strategy. It is there in any situation
where modelling has to be resorted to, to provide a
structured understanding of reality. Several mathematical
formulations start with a phrase indicating that a certain
number of variables are assumed to be constant.

2. Conceptual Introduction to Strategy

1.1 Concept of Strategy
 The application of the concept of the strategy commits an
organisation to a predetermined course of action. While this
is essential to chart out a path ahead, it often blinds the
organisation to the emergent situations as it goes along the
path. Rigidity leads to an attitude of finality with regard to the
situations that are actually not known at the time of starting
the journey. It might be better , for instance, to move slowly,
one step at a time and keep in mind the maxim: look before
you leap. One might say that this is already known to the
perceptive of managers. Yet, there is no harm in being
cautious. Discretion is certainly the better part of valour.

3. Levels of Strategy

3. Levels of Strategy
There are companies or group of companies that work in
different business lines like:
 Hindustan Levers, the venerable multinational subsidiary,
organises itself into four business of home and personal
care, foods, new ventures and exports
 The TVS group has companies like Sundaram Fasteners,
Lucas, TVS, Brakes India, Wheels India, Sundaram Brake
Linings, TVS Motor Company and TVS Electronics.
 Chaudhary Group has product lines like Wiwi Noodles, CG
Finco, CG Education, Banks, Insurance Company, etc.
 Golchha Organization deals in Bajaj Automobiles, Tinned
Roof, Food Chain, etc.

LEVELS OF MANAGEMENT

Corpora
te
Office

CORPORATE

SBU

LEVELS OF STRATEGY

SBU A

SBU B

FUNCTIONAL

Finance

CORPORATE LEVEL

SBU C

BUSINESS
LEVEL

FUNCTIONAL LEVEL

Marketi
ng

Operati
ons

HRM

Informati
on

Three levels of strategy

Course Instructor : B. G.
Bhattacharya

Ch 1 - 23

3. Levels of Strategy
Corporate Level:
– Defining what business the company is in setting the
overall structure, systems and processes

Business Level:
– Deciding how to compete
– Identifying competitive advantage
– Selecting key success factors

Operational/Functional (marketing, finance HR,
operations, R&D):
– Coordination of company departments or areas to
support achievement of business strategy and objectives.

Three levels of strategy
Corporate Level Strategy
Corporate strategy refers to the overarching
strategy of the diversified firm. Such a corporate
strategy answers the questions of "which
businesses should we be in?" and "how does being
in these businesses create synergy and/or add to
the competitive advantage of the corporation as a
whole?"

Course Instructor : B. G.
Bhattacharya

Ch 1 - 25

Three levels of strategy
Business Level Strategy
Business strategy refers to the aggregated
strategies of single business firm or a strategic
business unit in a diversified corporation. A firm
must formulate a business strategy that
incorporates either cost leadership, differentiation,
or focus to achieve a sustainable competitive
advantage and long-term success.

Course Instructor : B. G.
Bhattacharya

Ch 1 - 26

Three levels of strategy
Functional Level Strategy
Functional strategies include marketing
strategies, new product development strategies,
human resource strategies, financial strategies,
legal strategies, supply-chain strategies, and
information technology management strategies.
The emphasis is on short and medium term plans
and is limited to the domain of each department’s
functional responsibility.

Course Instructor : B. G.
Bhattacharya

Ch 1 - 27

4. Introduction to Strategic Management

4.1 Definition
“Strategic Management is defined as the dynamic
process
of
formulation,
implementation,
evaluation and control of strategies to realise the
organisation’s strategic intent.”
First, strategic management is a dynamic process. It is not one-time,
static or mechanistic process. By being dynamic, strategic
management is a continual, evolving, iterative process. By this, it
means that strategic management cannot be rigid, step-wise collection
of few activities arranged in a sequential order. Rather, it is a
continually evolving mosaic of relevant activities. Managers perform
these activities in any order contingent upon the situation they face at a
particular time. By being iterative, an activity may not be required to be
performed only once but repeated over time as the situation demands.

4. Introduction to Strategic Management

4.1 Definition

The next part of the definition states the four
phases in the strategic management process:
I. Establishment of Strategic Intent
II. Formulation of Strategies
III. Implementation of Strategies
IV. Strategic Evaluation and Control

4. Introduction to Strategic Management

4.1 Definition
Strategic Difference between Microsoft
Microsoft ®
 Employ a cadre of highly
skilled Microsoft
programmers to develop
proprietary code; compesate
them with premium pay and
lucrative stock options. Keep
the source code hidden from
users.
 Sell OS to PC makers at $75
and to retail consumers @
$100.
 Provide technical support at
NO COST.

®

& Redhat Linux®
Linux®

 Developed by Linus Torvalds in
1991, age 30, as a hobby and
collaborative efforts welcomed
 Give Linux OS free of cost for
downloads and charge $79 for
CD Pack sales
 Keep source code open for
modification as per wish
 Employ a cadre of technical
support personnel who provide
technical support FOR A FEE.

4. Introduction to Strategic Management

4.1 Definition
Strategic Difference between Microsoft ® & Redhat Linux®
Microsoft ®

Linux®

Who has the best Business
Model?
Microsoft's business model – sell
proprietary code and give service
away free – is a proven
moneymaker. But can Redhat make
money with a business model that
gives software free and charges

It is
all strategy
that
determines
success or
failure!

4. Introduction to Strategic Management

4.1 Definition
"Cheshire Puss", she [Alice] began ….. "would you tell me,
please, which way I ought to go from here?" "That depends a
good deal on where you want to get to." said the Cat. ~ Lewis
Carroll
"Without a strategy, the organization is like a ship without a
rudder." ~ Joel Ross and Michael Kami
"Strategic management is not a box of tricks or a bundle of
techniques. It is analytical thinking and commitment of
resources to action" ~ Peter Drucker
"The Internet Age implies Internet speed, a different pace and
a greater sense of urgency. Clearly, we need to invigorate
things here". ~ Carley Florina, CEO, Hewlett-Packard Co.

4. Introduction to Strategic Management

4.1 Definition

David (2005): Strategic Management can be defined as
the art and science of formulating, implementing and
evaluating cross functional decisions that enable an
organization to achieve its objectives.
Wheelen and Hunger (2002): Strategic Management is
a set of managerial decisions and actions that
determines the long-term performance of a corporation.
Johnson and Scholes (2004): Strategic Management
includes understanding the strategic position of an
organization, strategic choices for the future and turning
strategy into action.

4. Introduction to Strategic Management

4.1 Definition

• Strategic management is a field that deals with the major
intended and emergent initiatives taken by general
managers on behalf of owners, involving utilization of
resources, to enhance the performance of firms in their
external environments.
• Strategic
management
entails
specifying
the
organization's mission, vision and objectives, developing
policies and plans, often in terms of projects and
programs, which are designed to achieve these
objectives, and then allocating resources to implement the
policies and plans, projects and programs.
• In essence, the strategic plan is a company’s game plan


4. Introduction to Strategic Management

4.2 Model of Strategic Management Process
Strategic
Intent
Vision
Mission
Business
Definition

Business
Model
Objectives

Strategy
Formulation
Environmental
Organisational
Appraisal
Appraisal

SWOT Analysis
Corporate Level
Strategies
Business Level
Strategies
Strategic Analysis
& Choice
Strategic Plan

Strategy
Implementa
tion
Project
Procedural
Resource
Allocation

Structural
Behavioral
Functional &
Operational

Strategic Control

Strategic
Evaluati
on

4. Introduction to Strategic Management

4.2 Model of Strategic Management Process






A. Strategic Intent
Creating and communicating a vision
Designing a mission statement
Defining the business
Adopting the business model
Setting objectives









B. Formulation of Strategies
D. Strategic Evaluation & Control
 Performing strategic evaluation
Performing environmental appraisal
 Exercising strategic control
Doing organizational appraisal
Formulating corporate level strategies  Reforming strategies
Formulating business level strategies
Undertaking strategic analysis
Exercising strategic choice
Preparing strategic plan







C. Strategy Implementation
Activating strategies
Designing the structure
Managing behavioral implementation
Managing functional implementation
Operationalising strategies

4. Introduction to Strategic Management

4.2 Model of Strategic Management Process

Components of Strategic Management Process

4. Introduction to Strategic Management

4.2 Model of Strategic Management Process
Environment Scanning
Information Collection
Information Scrutinization (Close View)
Analyzing internal /external factors
Provide strategical information
Continuous Surrounding Evaluation

Plan and policy improvement

4. Introduction to Strategic Management

4.2 Model of Strategic Management Process

Environment
Scanning


The
The initial
initial step
step in
in St.
St.
Mgmt.
Mgmt.

Process
Process of
of collecting,
collecting,
scrutinizing
scrutinizing and
and
providing
providing information
information
for
for strategic
strategic purposes
purposes

It
It analyzes
analyzes the
the internal
internal
and
and external
external factors
factors
influencing
influencing an
an
organization
organization

Management
Management evaluates
evaluates
the
the environment
environment
analysis
analysis on
on aa

4. Introduction to Strategic Management

4.2 Model of Strategic Management Process
Strategy Formulation
Vision & Mission
External Opportunities & Threats
Internal Strengths & Weaknesses
Long-Term Objectives
Alternative Strategies
Strategy Selection

4. Introduction to Strategic Management

4.2 Model of Strategic Management Process

Issues in
Strategy
Formulation


New
New business
business
opportunities
opportunities

Businesses
Businesses to
to abandon
abandon

Allocation
Allocation of
of resources
resources

Expansion
Expansion or
or
diversification
diversification

International
International markets
markets

Mergers
Mergers or
or joint
joint
ventures
ventures

Avoidance
Avoidance of
of hostile
hostile
takeover
takeover

Strategy Formulation

4. Introduction to Strategic Management

4.2 Model of Strategic Management Process

Strategy Implementation

Annual Objectives
Policies
Employee Motivation
Resource Allocation

4. Introduction to Strategic Management

4.2 Model of Strategic Management Process

Strategy
Implementatio
n

Action
Action Stage
Stage of
of
Strategic
Strategic Management
Management
––

Most
Most difficult
difficult stage
stage

Mobilization
Mobilization of
of
employees
employees and
and
managers
managers

Interpersonal
Interpersonal skills
skills
critical
critical

Consensus
Consensus on
on goal
goal
pursuit
pursuit

4. Introduction to Strategic Management

4.2 Model of Strategic Management Process

Strategy Evaluation

Internal Review
External Review
Performance Metrics
Corrective Actions

4. Introduction to Strategic Management

4.2 Model of Strategic Management Process

Strategy
Evaluation
Final
Final Stage
Stage of
of Strategic
Strategic
Management
Management

Subject
Subject to
to future
future
modification
modification

Today’s
Today’s success
success no
no
guarantee
guarantee of
of future
future
success
success

New
New &
& different
different problems
problems

Complacency
Complacency leads
leads to
to
demise
demise

4. Introduction to Strategic Management

4.2 Model of Strategic Management Process

The process by which managers make a choice
of a set of strategies for the organization that will
enable it to achieve better performance.
 Dynamic & Continuous
 More formal in larger organizations


5. Understanding Strategic Intent

By strategic intent, we refer to the purposes of the
organization strives for. These may be expressed in terms of
a hierarchy of strategic intent. Broadly stated, these could be
in the form of vision and mission statements of the
organization as a corporate whole. At the business level of
firms, these could be expressed as the business definition
and business model. When stated in the precise terms, as
an expression of aims to be achieved operationally, these
may be goals and objectives. Here, we take the position that
strategic intent lays down the framework within which firms
would operate, adopt a predetermined direction and attempt
to achieve their goal.

5. Understanding Strategic Intent

 Coined by Hamel and Prahlad, it means “….. an obsession with
an organization: an obsession of having ambitions that may
even be out of proportion to their resources and capabilities.”
 “On the one hand, strategic intent envisions a desired
leadership position and establishes the criterion the organization
will use to chart its progress ….. At the same time, strategic
intent is more than simply unfettered ambition …. The concept
also encompasses an active management process that
includes: focusing on organization's attention on the essence of
winning, motivating people by communicating the value of
target, leaving room for individual and team contribution,
sustaining enthusiasm by providing new operational definitions
as circumstances change and using intent consistently to guide
resource allocations.”

5. Understanding Strategic Intent

 Several examples of global firms from USA and
Japan have been quoted ~ Their article in Harvard
Business School explain the lead taken by
Japanese firms over European counterparts
 Business Today, in a survey of 50 family business
houses, ranked highly the B.K.-K.M. Birla Group,
Lalbhai Group, Essar Group of Munjals, Ranbaxy
and Reliance Group of Ambanis (before it split into
the Mukesh and Anil Ambani Groups) on the
criterion of strategic intent.

5. Understanding Strategic Intent

 For instance, the late Dhirubhai Ambani of the Reliance Group is
credited with having strategic intent of being a global leader in his
field of activity by being the lowest-cost producer of polyester
products – a status achieved by a relentless pursuit of scale,
vertical integration and operational effectiveness.
 Not only the family owned businesses but also the professionallymanaged and multi-national subsidiary sector too have strategic
intent. Xerox India’s strategic intent is “to become the leader in
the document market in India by helping improve the customer
work processes, positively impacting productivity and costs while
digitally empowering them to transform their work” or “Helping
people find better ways to do great work”
 Conclusion: Strategic intent points to what a firm should set out to
achieve

5. Understanding Strategic Intent

Concept of Stretch, Leverage and Fit
Concept of stretch, leverage and fit are described below.
 Stretch: It is a misfit between resources and
aspirations.
 Leverage: It refers to concentrating, accumulating,
complementing, conserving, and recovering resources
in such a manner that the meagre resource base is
stretched to meet the aspirations that an organisation
dares to have.
 Fit: It means “positioning the firm by matching its
organisational resources to its environment”.

5. Understanding Strategic Intent



Hierarchy of Strategic Intent
The specific relationship between the long-term and short-term intentions
is described in the hierarchy of strategic intent.

6. Strategic Vision, Mission, Goals & Objectives
4.1 Vision

Clear Business
Vision
Comprehensive
Mission Statement

4. Strategic Vision, Mission & Objectives
4.1 Vision

Developing a Strategic Vision
Involves thinking strategically about
– Future of company
– Where are we going?

Statement about a company’s long-term
direction

4. Strategic Vision, Mission & Objectives
4.1 Vision

Kotler (1990): “description of something (an
organization, a corporate culture, a business, a
technology, an activity) in the future
El-Namaki (1992): “mental perception of the kind of
environment and individual, or an organization,
aspires to create within a broad time horizon and
underlying conditions for the actualization of this
perception.”
Miller & Dess (1996): “category of intentions that are
broad, all inclusive and forward thinking.

4. Strategic Vision, Mission & Objectives
4.1 Vision
The vision of the organisation refers to the broad category of
long-term intentions that the organisation wishes to pursue. It is
broad, all inclusive, and futuristic. As the word ‘vision’ suggests, it
is an image of how the organisation sees itself. It is in most
cases, a dream; the aspirations the organisation holds for its
future; a mental image of the future state. It might therefore be
difficult for the organisation to actually achieve its vision even in
long-term, but it provides the direction and energy to work
towards it.
A vision is often expressed in a unique way to combine
competitive influences in a way that directs a firm to pursue a
revolutionary strategy. A vision statement presents the firm’s
strategic intent that focuses the energies and resources of the
company on achieving a desirable future.

4. Strategic Vision, Mission & Objectives
4.1 Vision
The vision of the organisation refers to the broad category of
long-term intentions that the organisation wishes to pursue. It is
broad, all inclusive, and futuristic. As the word ‘vision’ suggests, it
is an image of how the organisation sees itself. It is in most
cases, a dream; the aspirations the organisation holds for its
future; a mental image of the future state. It might therefore be
difficult for the organisation to actually achieve its vision even in
long-term, but it provides the direction and energy to work
towards it.
A vision is often expressed in a unique way to combine
competitive influences in a way that directs a firm to pursue a
revolutionary strategy. A vision statement presents the firm’s
strategic intent that focuses the energies and resources of the
company on achieving a desirable future.

4. Strategic Vision, Mission & Objectives
4.1 Vision
Benefits of Vision
Thhe benefits accruing to an organisation having a vision are:
Good visions are inspiring and exhilarating.
Visions represent a discontinuity, a step function and a jump
ahead • so that the company knows what it is to be.
Good visions help in the creation of a common identity, and a
shared sense of purpose. T
Good visions are competitive, original and unique. They make
sense in the market place as they are practical.
Good visions foster risk-taking and experimentation.
Good visions foster long term thinking.
They represent integrity; they are truly genuine and can be used
for the benefit of people.

4. Strategic Vision, Mission & Objectives
4.1 Vision
Process of Envisioning
The process of envisioning is a difficult one. Collins & Poras
says, a well-conceived vision consists of two major components
which are given below.
Core ideology: It defines the enduring character of an
organisation that remains unchangeable as it passes through
the vicissitudes of vector, such as, technology, competition, or
management fads. The core ideology rests on the core
values and core purposes.
Envisioned future: It also consists of two components: a 1030 years audacious goal, and a vivid description of what it will
be like to achieve that goal. The process of envisioning is
indeed fascinating.

4. Strategic Vision, Mission & Objectives
4.1 Vision

Vision statement answers
the question:
“What do we want to
become?”

Example: Vision Statement
Verizon Communications

To be the customer’s first choice
for communications and
information services in every
market we serve,
domestic and international.

Example: Vision Statement
Levi Strauss & Company

We will clothe the world by
marketing the most appealing
and widely worn casual
clothing in the world.

Example: Vision Statement
General Electric
(Jack Welch)
We will become number one or
number two in every market we
serve, and revolutionize this
company to have the speed and
agility of a small enterprise.

Example: Vision Statement
General Electric
(Jeff Immelt)
GE is committed to achieving worldwide leadership in each of its
businesses. To achieve that leadership, GE's ongoing business strategy
centers on four key growth initiatives:
- Technology
- Services
- Customer Centricity
- Globalization

Example: Vision Statement

Microsoft Corporation (Old
Vision): “A computer on every
desk, in every home”
Microsoft Corporation (New
Vision): "To enable people and
businesses throughout the world
to realize their full potential"

4. Strategic Vision, Mission & Objectives
4.2 Mission
MISSION

DEFINES A COMPANY’S BUSINESS:
• PRODUCT / MARKET
• TERRITORY / GEOGRAPHY

4. Strategic Vision, Mission & Objectives
4.2 Mission

Mission statement answers the
question:
What is our business?”
Reveal what an organization wants to be and whom
it wants to serve
Essential for effectively establishing objectives and
formulating strategies

Simple Mission Statements
Eastman Kodak
We are in the picture business.

Wit Capital

(an Internet startup company)
Our mission is to be the premier Internet
investment banking firm focused on the offering
and selling of securities to a community of online
individual investors.

More Mission Statements …
Otis Elevator
Our mission is to provide any customer a means
of moving people and things up, down, and
sideways over short distances with higher
reliability than any similar enterprise in the world.

Avis Rent-a-Car
Our business is renting cars. Our mission is total
customer satisfaction.

INTERNAL REVENUE SERVICE
OLD MISSION
The purpose of the IRS is to collect
the proper amount of tax revenues at
the least cost to the public, and in a
manner that warrants the highest
degree of public confidence in our
integrity, efficiency and fairness.

IRS - NEW MISSION (Since 1998)
Provide America’s taxpayers top
quality service by helping them
understand and meet their tax
responsibilities and by applying the
tax law with integrity and fairness
to all.

4. Strategic Vision, Mission & Objectives
4.3 Objectives

Setting Objectives

• Converts vision and
mission into specific
performance targets
• Creates yardsticks to
track performance
• “Management by
Objective” (MBO) focused on results

GOALS
= BROAD TARGETS
OBJECTIVES:
SMART
(a) QUANTIFIED
(b) TIME-BASED

4. Strategic Vision, Mission & Objectives
4.3 Objectives

2 CATEGORIES
1) FINANCIAL
2) STRATEGIC

4. Strategic Vision, Mission & Objectives
4.3 Objectives

Financial Goals





Strive for stock price appreciation
equal to or above the S&P 500
average
Maintain a positive cash flow every
year
Achieve and maintain a AA bond
rating

4. Strategic Vision, Mission & Objectives
4.3 Objectives

Financial Objectives
Grow

earnings per share 15% annually

Boost

annual return on investment (or
EVA) from 15% to 20% within three years
Increase

annual dividends per share
to stockholders by 5% each year

4. Strategic Vision, Mission & Objectives
4.3 Objectives

Strategic Goals
• Increase firm’s market share
• Overtake key rivals on quality or
customer service or product performance Customer
• Attain lower overall costs than rivals
• Boost firm’s reputation with customers
• Attain stronger foothold in international markets
• Achieve technological superiority
• Become leader in new product introductions
• Capture attractive growth opportunities

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