21-08-2018

Vision, Mission, Objectives, and Strategy

Learning Objectives
1. To understand the Strategy-Making and Strategy-Execution Process

2. Why it is critical for company managers to have a clear strategic vision of where a company
needs to head and why

3. The importance of setting both strategic and financial objectives

4. Why the strategic initiatives taken at various organizational levels must be tightly
coordinated to achieve companywide performance targets

5. What a company must do to achieve operating excellence and to execute its strategy
proficiently

6. The role and responsibility of a company’s board of directors in overseeing the strategic
management process

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The Strategy-Making, Strategy-Executing Process

Stage 1: Developing a strategic vision, mission, and core values

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Strategic Vision
A strategic vision describes management’s aspirations for the company’s
future and the course and direction charted to achieve them.

Infosys Vision Statement

Our vision is to build a globally-respected organization delivering the best-
of-breed business solutions, leveraging technology, delivered by best-in-
class people.

Communicating the Strategic Vision

 Motivates, informs, and inspires internal and external stakeholders

 Fosters employee commitment to the firm’s chosen strategic direction

 Demonstrates top management support for the firm’s future strategic

direction and competitive efforts

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Expressing the essence of the Vision in a Slogan

 Infosys: “Powered by intellect. Driven by values.”

 Levi Strauss & Company: “We will clothe the world by marketing the
most appealing and widely worn casual clothing in the world.”

 Nike: “To bring innovation and inspiration to every athelete in the world.”

Mission Statement
Describes the firm’s current business and purpose —“who we are, what we
do, and why we are here”
 Identifies the firm’s product or services
 Specifies the buyer needs it seeks to satisfy
 Identifies the customer groups or markets it is endeavoring to serve
 Specifies its approach to pleasing customers
 Sets the firm apart from its rivals
 Clarifies the firm’s business to stakeholders

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Mission Statement Example

Identify the companies with these Mission Statements

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Distinction between a strategic vision and a mission statement

 A strategic vision portrays a firm’s aspirations for its future (“where we
are going”).

 A firm’s mission describes the scope and purpose of its present business
(“who we are, what we do, and why we are here”).

Core Values
 A firm’s core 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.
 These are guiding principles for an organization.
 These are attributes that are reflected on the day-to-day interaction with the
internal as well as external stakeholders.

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Core Values Example: Infosys

 Client Value: To surpass client expectations consistently.

 Leadership by example: To set standards in our business and transactions and be

exemplary for the industry and ourselves.

 Integrity and transparency: To be ethical, sincere, and open in all our transactions.

 Fairness: To be open and transaction-oriented and thereby earn trust and respect.

 Excellence: To strive relentlessly, constantly improve ourselves, our teams, our services
and products to become the best.

Stage 2: Setting Objectives

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Stage 2: Setting Objectives

 Objectives are an organization’s performance targets—the specific
results management wants to achieve.

 The purposes of setting objectives

 To convert the vision and mission into specific, measurable, challenging and
timely performance targets
 To focus efforts and align actions throughout the organization

 To serve as yardsticks for tracking a firm’s performance and progress

 To provide motivation and inspire employees to greater levels of effort

Setting Objectives: Example

 A 10% percent increase in annual revenues during next fiscal year
 Winning a 15% percent market share in next 18 months
 Annual increase in earnings per share of 9%
 Profit margins of 22% percent over next two years
 Reduce the call-back time of customer inquiries to less than four
hours within next six months.

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Well-Stated Objectives
Increase market share
Specific
Reduce the call-back time of
customer inquiries

to 10%

Characteristics of
Quantifiable Challenging
Well-Stated
(Measurable) (Motivating)
Objectives
to less than 4
hours

Deadline for
Achievement

within next 18 months

within next 6 months

Short-Term Objectives and Long-Term Objectives

 Short-Term Objectives:
 Focus attention on quarterly and annual performance improvements to
satisfy near-term shareholder expectations.

 Long-Term Objectives:
 Force consideration of what to do now to achieve optimal long-term
performance.
 Stand as a barrier to an undue focus on short-term results.

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Financial Objectives and Strategic Objectives

 Financial objectives relate to the financial performance targets
management has established for the organization to achieve.
 Communicate top management’s goals for financial performance.
 Are focused internally on the firm’s operations and activities.

 Strategic objectives relate to target outcomes that indicate a company is

strengthening its market standing, competitive position, and future
business prospects.
 Are the firm's goals related to marketing standing and competitive position.
 Are focused externally on competition vis-à-vis the firm’s rivals.

Financial Objectives
 An x percent increase in annual revenues

 Annual increases in after-tax profits of x percent

 Annual increases in earnings per share of x percent

 Annual dividend increases of x percent

 Profit margins of x percent

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Strategic Objectives Examples

 Winning a 40% percent market share

 Deriving 5% percent of revenues from the sale of new products

 Having a wider product line than rivals

 Having 95% customer retention

Balanced Scorecard
The Balanced Scorecard is a widely used method for combining the
use of both strategic and financial objectives, tracking their
achievement, and giving management a more complete and balanced
view of how well an organization is performing.

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Balanced Scorecard

Stage 3: Crafting the Strategy

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Strategic Plan
 A company’s strategic plan
Elements of a Firm’s
lays out its future direction, Strategic Plan
business model, performance
targets, and competitive
strategy. Its strategic vision, business
mission, and core values

Its strategic and financial

objectives

Its chosen strategy

Stage 4: Executing the Strategy

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Executing the Strategy

 Staffing the firm with the needed skills and expertise
 Allocating ample resources to develop capabilities that are critical to
strategic success
 Ensuring that policies and procedures facilitate effective strategy
execution
 Installing information systems that enable company personnel to
perform essential activities
 Motivating people and tying rewards and incentives directly to the
achievement of performance objectives

Stage 5: Evaluating performance and initiating corrective action

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Summary
The Strategy-Making, Strategy-Executing Process
 The five stages of the process are:
1. Developing a strategic vision, mission, and core values
2. Setting objectives
3. Crafting a strategy to achieve the objectives and the firm’s vision
4. Executing the strategy
5. Monitoring developments, evaluating performance, and initiating corrective adjustments
 Stages 1, 2 and 3 are considered strategy making.
 Stages 4 and 5 are where strategy execution occurs.

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