Outline

COMPANY VISION, MISSION STATEMENTS

 What is vision, mission, goals, objectives and
strategy?
 Core ideology and envisioned future
 Mission and organisation performance

Professor. Pradeep Dharmadasa, Dean , Faculty of

Management and Finance, University of Colombo

Key Strategic Management Questions The New Business Environment

 What kind of business should we become?

 Are we in the right fields?
 Are there new competitors?
 What strategies should we pursue?
 How are our customers changing?
Characteristics of a World-Class Organisation Strategy Formulation
Phase 1: What is the company doing now ?
 Identify current strategy
 Identify assumptions

Phase 2: What is happening in the environment?

 Identify key factors for success and failure in the industry
 Identify capabilities and limitations of competitors
 Identify likely government and societal changes
 Identify company’s strengths and weakness relative to competitors

Phase 3: What should the company do next?

 Compare present strategy to environmental situation
 Identify alternative course of action
 Choose best alternative

Strategy Levels of Strategy

Strategy is the determination of basic long

Corporate
term goals of an enterprise, and the adoption What direction are we going and
of courses of action and the allocation of what business(es) are we in or do we
want to be in?
resources necessary for carrying out these
goals (Chandler, 1962, p.13). Business/ Competitive:
How are we going to compete in
our chosen business(es)?
Strategy is a broad formula for how a
business is going to compete what its goals
should be, and what policies will be needed to Functional
What resources and capabilities do
carry out these goals (Porter) we have to support the corporate and
competitive strategies?
Chandler, A.D. (1962). Strategy and structure, Cambridge, MA: MIT
Press
 Who Does Strategy? Who is on the Board of Directors?

 The Role of the Board of Directors  Chairman of the board

 Elected representatives of the company’s stockholders  Chief Executive officer (CEO)
 Legally obligated to represent and protect stockholder’s  President/GM
rights
 Chief Operating officer (COO)/GM
 The Role of Top Management  Other C’s
 Responsible for decisions and action of every employee  Chief Financial officer
 Providing effective leadership  Chief Information officer
 Other Organisational Employees  Inside board members
 Implement— put the strategies into action and monitor  Outside board members
performance
 Evaluate—do the actual evaluations and take necessary
actions

The Role of Top Management Strategic Management Principle

Determining
Organisational
Mission/Vision

Establishing Exploiting and

Appropriately Maintaining
Balanced Controls Core Competencies
Effective strategy-making begins
Effective with a vision of where the
Strategic
Leadership organisation needs to head!
Developing
Emphasizing Human Capital
Ethical Decisions
and Practices Creating and
Sustaining Strong
Organisational Culture
Vision Business Vision Statement

 Vision is a mental perception of the kind of environment an

individual, or an organisation, aspires to create within a A statement that clearly defines the firm’s where we
broad time horizon (El-Namaki, 1992). are going. “What do we want to become?”
 Vision is the statement about a company's long term
Shouldsignificantly stretch the resources and
direction capabilities of the firm

Should inspire people in the organisation to achieve
 This is like a dream to the future. It addresses the things they never thought possible
fundamental question of “where do we want to be.”

Should unite people in the organisation toward the
El-Namaki, M.S.S (1992), Creating a corporate vision, Long pursuit of one common goal
Range Planning, 25(6), 25-29

Business Vision Statement Why a Vision ?

 Vision is built on the foundation of the organisation’s

 A need to control an organisation's destiny -
values and beliefs
vision has an ability to control the firm destiny and
 Those things that are fundamentally important to affirm a sense of direction
 Examples: customer service, emphasis on quality, focus
on integrity and ethics  Need for creative strategies - the essence of vision
is that organisations must create rather than merely
 Vision elaborates a purpose
react
 Vision explains what the organisation does
 Demand of recovery
 Vision specifies goals and guides actions
 Need for a change in corporate culture
 Articulating a Vision Core ideology

Companies that enduring

Success have core values and  Enduring character of an organisation ( e.g. a
a core purpose that remain fixed. dedication to affordable quality and reliability)

 Core ideology  Leaders die, products become obsolete, market

change, new technologies emerge, and
 Envisioned future management fads come and go but.....
 Core ideology in a great company endures as a
source of guidance and inspiration
Truly great companies understand the difference between
what should never change and what should open to change

Core ideology Core Values

 Require no external justification

Two parts
 Have intrinsic value that important to insiders
 Core values – a system of guiding principles and
tenets  Stem from the founder’s inner belief
Company Core values
 Core purpose – the organisation’s most Merck Corporate Social Responsibility
fundamental reason for existence. Honesty and integrity

 Companies tend to have only a few core values Philip Morris The right to freedom to choice
Encouraging individual initiative
 There is no universally right set of core values
Sony Being a pioneer – not following others:
doing the impossible
Core Purpose Examples of Vision Statement
 Organisation reason for being
 This guides and inspire the organisation  General Motors’ vision is to be become the world’s
 This not simply describes the firm output most valued automotive company.
Company Core purpose  Bank of Ceylon : To be the nation's preferred bank
3M To solve unsolved problems with a strong global presence providing customer
innovatively
centric innovative financial solutions
Wal-Mart To give ordinary folk the chance to buy  Seylan Bank : "To be Sri Lanka's leading financial
the same things as rich people services provider - as recognized by all our
stakeholders.
Walt Disney To make people happy

Examples of Vision Statement David Packard …..1960

I want to discuss why a company exists in the first place. In other

 Commercial Bank : "To be the most technologically words, why are we here? I think many people assume, wrongly,
advanced, innovative and customer friendly financial that a company exists simply to make money. While this is an
services organisation in Sri Lanka, poised for further important result of a company’s existence, we have to go deeper
and find the real reasons for our being. As we investigate this, we
expansion in South Asia.”
inevitably come to the conclusion that a group of people get
 NDB : The driving force for a financially together and exist as an institution that we call a company so they
empowered Sri Lanka are able to accomplish something collectively that they could not
accomplish separately- they make a contribution to society a
 People’s Bank : To be recognized as Sri Lanka’s phrase which sounds trite but is fundamental…Your can look
undisputed market leader for financial services. around [in the general business world and] see people who are
interested in money and nothing else, but the underling drivers
come largely from a desire to do something else; to make a
product, to give a service – generally to do something which is of
value.
Core Purpose Envisioned Future

 One powerful method for getting at purpose is five What we aspire to become – something that will
whys. require significant change and progress to attain
 Maximise shareholders wealth is not a....  Envision is somewhat paradoxical
Why
Big, Hairy, Audacious Goals (BHAG) – a clearly

It does not inspire people at all levels of an organisation articulated goals

When people in great organisations talk their Vivid description – specific deception of what
achievements they say very little about EPS it will be like to achieve the BHAG

Vision to Focus What Makes a Good Vision

 Be realistic and feasible, and simple and clear
 Vision provides a direction  Provide a challenge for the whole organisation

 Direction provides a confidence  Be far but close in terms of time span and
organisational commitment
 Confidence provides an urgency
 Able to focus the attention with respect to scope and
 Urgency provides a focus time
 Endorsed and frequently articulated by top
management
 Derived from a sense of direction
What Kills a Vision What Do We Want to Become?

 Fear to mistakes  A vision statement should answer the basic

question, “What do we want to become?”
 Inability to tolerate ambiguity
 Preference for judging ideas instead of creating them  The vision statement should be short,
 Lack of access to areas of imagination preferably one sentence, and as many
managers as possible should have input into
 Inability to “sleep on it”
developing the statement
 Lack of top management commitment
 Weakly communicated

Vision to Mission Mission

 Fundamentally, a mission must answer the questions

of why a company exists, what is it purpose/
Clear Business
business, and what should it be What is our
Vision
business

Comprehensive  A mission statement may be presented under a maze

Mission Statement of labels including “creed statement”, “statement of
purpose”, “statement of philosophy” or a statement
“defining our business”
Mission Statement Mission Statement

 The mission statement of an organisation is Two school of thought

normally short, to the point, and contains the  The ‘strategy’ school of thought describes mission in
following elements: terms of business strategy and views it as a strategic

Provides a concise statement of why the organisation tool, an intellectual discipline which defines the
exists, and what it is to achieve; company’s commercial rationale and target market

States the purpose and identity of the organisation; (Horn, 1998). The mission statement is perceived as

Describes how the organization will serve those the first step in strategic management, answering two
affected by its work. fundamental questions: What is our business? and
“What is our business?” What should it be?

Mission Statement Roles of the Mission Statement

 To provide a basis for consistent planning decisions

 The ‘philosophy and ethical’ school views mission as
the cultural ‘glue’ which enables an organization to  To assist in translating purposes and direction into
function as collective unity (Horn,1998). objectives suitable for assessment and control
 This cultural glue consists of strong norms and values  To provide a consistent purpose between different
that influence the way in which people behave, how interest group connected to the organisation
they work together and how they pursue the goals of
the organization.  To establish organisational goals and ethics
 To improve understanding and support from key
groups outside the organisation
Source: Hooley, G.J., Cox, A.J. & Adams, A. (1992). Our five year mission: To boldly go which no man has gone
before” Journal of Marketing Management 8, 35-48
 Drivers that promote the development of Primary Objectives of Mission
Mission Statement Statements
Bartkus et al. (2000) contend that
Bart (1997) found six drivers  making a public declaration of the company’s
 providing a common purpose, direction,
 defining the business scope,  stating where the company is headed;

 setting behavior standards,  providing a control mechanism by identifying

 helping employees’ identity with the company, boundaries that prevent a company from engaging
 creating shared values, and
in unrelated or inappropriate business activities;
 assisting employees in making non-routine decisions
 inspiring employees
by expressing the company’s values; and
 motivating and inspiring employees by creating a
shared sense of purpose

Strategic Vision vs. Mission Examples of Mission Statement

BOC - To provide highly efficient, customer focused,

 A strategic vision concerns a  The mission statement of a firm technologically sophisticated, resilient and innovative
firm’s future business path - focuses on its present business
“where we are going” purpose - “who we are and
financial services to the nation with global access,

Markets to be pursued what we do” empowering employees and enhancing value to the

Future product/market/
Current product and service stakeholders
customer/technology focus offerings NDB - To be the catalyst in the financial services
Kind of company management
Customer needs being served


industry by creating superior shareholder value and
is trying to create
Technological and business
capabilities
contributing to the national development through the
empowerment of individuals with innovative financial
solutions delivered by an inspired and dedicated
team committed to excellence.
 Components of Mission Statement Components …

 Target customers and the markets - Who are the  Concern for survival, growth, and profitability - are
specific customers or clients organisation intended to there particularly important and fundamental
serve accomplishments that must take place to ensure
organisational survival in the specific organisational
 Principal products or services - what are the specific environment
products or services that organisation intends to
provide to the target clients  Company philosophy - Does the organisation have a
particular philosophy that accounts for its distinctiveness
 Geographic domain - Does the organisation recognise
a geographical limits to the clients it intends to serve?  Company self-concept - Does the organisation have a
concept of itself that should be conveyed or stakeholders
 Core technologies - Does the organisation intend to
concentrate its efforts into a particular technology  Desired public image - is there an image that those inside
the organisation want to convey to the public

Components - Examples Components - Examples

We believe our first responsibility is to the doctors, nurses, and
patients, to mothers and all others who use our products and The company will conduct its operations prudently, and
Customers services. (Johnson & Johnson) Concern for will provide the profits and growth which will assure
survival Hoover’s ultimate success. (Hoover Universal)
To anticipate and meet market needs of farmers, ranchers, and
rural communities within North America. (CENEX)
We are committed to improve health care throughout the
AMAX’s principal products are coal, iron ore, or Service copper, Philosophy world. (Baxter Travenol)
Product lead, zinc, petroleum and natural gas, potash, phosphates, nickel,
tungsten, silver, gold, and magnesium. (AMAX) We are responsible to the communities in which we live
Self-Concept and Public Image work and to the world community as
We are dedicated to the total success of Corning Glass Works as a well. (Johnson & Johnson)
Markets worldwide competitor. (Corning Glass)
We must be responsive to the broader concerns of the
public including especially the general desire for
Control Data is in the business of applying micro-electronics and
computer technology in two general areas: computer related Concern for improvement in the quality of life, equal opportunity for
Technology hardware; and computing-enhancing services, which include Public Image all, and the constructive use of natural resources. (Sun
computation, information, education and finance. (Control Data) Company)
Components … Mission Statements ….

Components Business Ran Their research found that

firms % k
 Nearly all of the mission statements included the “
Target customer/market 48 6
“concern for survival” and “desired public image”
Principal product/service 67 5 components
Geographical domain 41 7
Core technology 20 8  Mission statement omit discussions of “core
Concern for survival/growth 90 1 technology” and “geographic domain”
Organisational philosophy 79 3  “Corporate philosophy”, “self-concept” and “public
Organisational self-concept 77 4 image” are specially important components to include
Desired public image 87 2 in an organisational mission statement.
Source: Pearce II , J.A., & David, F (1987) Corporate mission statement s : The bottom line. Academy of
Management Executive 1 (2) 109- 115

Steps in Developing a Mission Steps in Developing a Mission

Statements Statements
Communication Analysis ( Denotative Analysis)
Orientation (Readability)
 Create a Strategic Planning Task Force  Write clear and concise
 Review the Strategic Planning Process  Compute Fog Index
 Review Mission Statement Significance in  Rewrite if necessary
Strategic Planning
Connotative Analysis
 Review MS developmentprocess
 Identify connotative feelings desired
Component Analysis from reading MS
 Identify desired components  Administer Questionnaire to users
 Draft MS including derived components (readers)
 Rewrite if necessary
Readability Goals

 Compute the number of words

 Compute the number of sentences Goals is an open ended statement of what one
Compute the average number of words per sentence (Item1divided by item 2)

want to accomplish with no quantification of
 Compute the number of hard words (Treat as hard words all words of three or
more syllables, abbreviations and symbols. Do not count capitalized words, what is to be achieved and no time criteria for
unless symbolized or abbreviated.) completion
 Compute the number of hard words per 100 words (Item 4 divided
byItem1times100)
“increased profits”
 Compute the sum of the word average and the hard word percent (Item3 plus
Item 5)
 Compute The Fog Index Which Indicates The Readability Level (Item 6
multiplied by 0.4)

Strategic Goals Objectives

 Objectives are the end results of the planed

 Profitability
activity. They state what is to be
 Efficiency accomplished by when and should be
 Growth quantified if possible.
 Shareholders wealth
 Utilisation of resources  To achieve 10% of annual growth in earnings
 Market leadership per share
 Technological leadership  To achieve 25% return on capital employed.
 Contribution to employees
Setting strategic objectives Setting strategic objectives….
Another way of looking this
When setting the objectives, followings are
important
 Specific - unambiguous in what is to be achieved

 A precise formulation of the attributes sought  Measurable - specified as a quantity

 A measure for progress towards the attributes  Attainable - within reach
 A target to be achieved  Relevant - appropriate to the mission of the firm
 A time frame in which it is to be achieved
 Time- bound - with a complete date

What is a Strategic Plan?

Crafting a Strategy

Where is headed - Strategic  Strategy involves determining whether to

vision and business  Concentrate on a single business or several
mission businesses (diversification)
 Cater to a broad range of customers or focus on
Short and long term performance
a particular niche
targets - Strategic and financial
 Develop a wide or narrow product line
objectives
 Pursue a competitive advantage based on
Action approaches to achieve  Low cost or
targeted results - A  Product superiority or
comprehensive strategy  Unique organisational capabilities