Ch-2 SM

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					Chapter 2 – The Business Vision And Mission
    “A business is not defined by its name, statutes, or articles of incorporation. It is
defined by the business mission. Only a clear definition of the mission & the purpose of
         the organization make possible clear & realistic business objectives”
                                                                         Peter Drucker

 “A corporate vision can focus, direct, motivate, unify, & even excite a business into a
  superior performance. The job of a strategist is to identify & project a clear vision”
                                                                         John Keane

   “The job of a strategist to see the company not as it is …. but as it can become.”
                                        John W. Teets Chairman of Greyhounds.Inc.

The Purpose & Objectives of the Chapter
    To focus on the tools & concepts needed to evaluate & write Business vision &
      mission statements
    Role of vision & mission in strategic management
    The importance of process of developing a vision &mission statement

Understanding Vision & Mission Statement

      A new business is a collection of ideas that the organization can offer some
       product or service to some customers, in some geographic area, using some type
       of technology, at a profitable price.
      That the management philosophy would result in a favorable public image & this
       concept of business would be communicated to & adopted by important
      Is profit the primary corporate motivator. Yes but it can’t motivate the employees
       or other stakeholders.
      These ideas underlie the vision & mission statements.
       These are living documents. With growth the ideas can be revised & hence the
      Vision & mission statements form part of all important documents.(Annual
       reports, information sent to constituencies,, loan requests, supplier& customer
       agreements, labor contracts…)

The Vision Statement
    A desirable future state
    What the organization wants to become in long term
    Provides the foundation for mission statement hence framed first
    Be short preferably one statement & involve input from as many managers as
     In a global environment push one vision instead of driving home different
      messages in different cultures, by keeping it simple. “ we make the world’s fastest
The Mission Statement (creed, purpose, philosophy, beliefs)
    What is the organization’s business (it is beyond building steel, furniture, lending
    The reason for being, statement of purpose which distinguishes it from other
      similar enterprises
    More associated with present & with behavior; how to do the business, what it
      wants to do & whom it wants to serve
    Not designed to express concrete ends but to provide motivation, direction, image,
      tone & a philosophy to guide the enterprise.

The Process of developing a Mission Statement:- the first step in SM

      Involve as many managers as possible.
       Series of steps
           1. Give managers, employees reading material.
           2. Ask them to prepare the statements.
           3. A facilitator or committee of top managers to merge these statements &
               referred back to mangers for modifications. Divergent views need be
               revealed & resolved (or else top, management would remain divided e.g.
               of failed Grant Bank, Wal-Mart Vs JC penny) through the process.(e.g. in
               a university divergent views regarding importance of teaching, research &
               service / consultancy). It is always a choice between alternatives which in
               turn rest on different assumptions regarding business & its environment.
           4. finally communication of final statement to all internal & external stake
               holders(e.g. video tape)

Importance of Vision & Mission Statements
    Shared vision / mission create commonality of interests, purpose, shared
      expectations (as against individual & parochial interests) & give mangers &
      employees a cause for motivation. Through involvement people become
      committed. This would later help in formulation & implementation of strategies.
      An emotional bond comes when an individual personally identifies with the
      underlying values & behaviors of a firm.
    Positive      relation   between      mission       statements      &    organizational
      performance.(mixed research results)
    Sets tone for organizational culture & climate.
    Essential for setting priorities, objectives, strategies, plan, allocation of resources.
      Starting point for design of managerial jobs, managerial structures etc.(a change
      in mission / vision leads to changes in these)
    Without clear statements firms’ short term actions may be counter productive to
      long-term interests
   Mission Statement Components:- A Frame Work for writing &Evaluating
   1. Customers; who are the firm’s customers
   2. Product or services; What are the firms’ major product & services
   3. Markets; Geographically where does the firm compete
   4. Technology; is it technologically current
   5. Concern for survival, growth, and profitability; Is it committed to growth &
      financial soundness
   6. Philosophy; what are the basic beliefs, values, aspirations, & ethical priorities of
      the firm
   7. Self concept; What is the firm’s distinctive competence or major competitive
   8. Concern for public image; Is the firm responsive to social, community &
      environmental concerns.
   9. Concern for employees; are employees a valuable asset of the firm.

Some Further Characteristics
    Usually broad in scope for two reasons(rigidity resisting change vs creativity
      permits flexibility)
           Leads to generation of a range of alternative objectives & strategies
             without unduly stifling management creativity which is due to excess
             specificity. Overly general statement could result in dysfunctional
             strategies.(e.g. apple computers diversifying into pesticides, ford into food
           To effectively reconcile differences among important stake holders .e.g.
             general pubic interested in social responsibility & stock holders in
             profitability. All claims on an organization can’t be pursued with equal
             emphasis, mission statement indicates relative priority to be given.
    Define what the organization is & what it aspires to be
    Broad to allow creativity & limited enough to exclude some ventures
    distinguish it from others
    serve as a frame work for evaluating both current & prospective activities
    be clearly & simply stated to be widely understood in the entire organization
    Reflects the anticipations of customers & identify the utility of products to
      customer. E.g. AT&T focuses on communication & not on telephones, Universal
      studios on entertainment rather than movies, e.g. offering clothes vs. attractive
    Recommended length less than 200 words.
    Gives the message that the business is being conducted in socially responsible
      way, responsibilities towards, consumers, environmentalists, minorities, ,
      communities & other groups. Engage in activities having economic benefits. E.g.
      Merck developed & distributed free of cost river blindness drug ivermectin
    Arouses a positive feeling & motivates readers to action.
    Creates impression that firm is successful has direction & is worthy of time,
      support & investment
    Provides useful criteria for selecting among alternate strategies.
    Mission Statement of
   Pepsi:- to increase the value of our shareholders’ investment. We do this through
   sales growth, cost controls, & wise investment resources. We believe our commercial
   success depends upon offering quality & value to our consumers & customers;
   providing products that are safe, wholesome, economically efficient, &
   environmentally sound; & providing a fair return to our investors while adhering to
   the highest standards of integrity

   Dell:- to be the most successful computer company in the world at delivering the
   best customer experience in markets we serve. In doing so, Dell will meet customer
   expectations of highest quality; leading technology; competitive pricing; individual &
   company accountability, best in class service & support; flexible customization
   capability; superior corporate citizenship[; financial stability

The Bellevue Hospital (BH)
The BH is the leader in providing resources necessary to realize the community’s highest
level of health throughout life

The BH , with respect, compassion, integrity & courage, honors the individuality &
confidentiality of our patients, employees, & community, & is progressive in anticipating
& providing future health care services

John Deere(JD), Inc
JD is committed to providing genuine value to the Company’s stake holders, including
our customers, dealers, shareholders, employees & communities. In support of that
commitment, Deere aspires to
    Grow & pursue leadership positions in each of our businesses
    Extend our preeminent leadership position in the agriculture equipment market
    Create new opportunities to leverage the John Deere brand globally

JD has grown & prospered through a longstanding partnership with the world’s most
productive farmers. Today, JD is a global company with several equipment operations &
complementary service businesses. These businesses are closely interrelated, providing
the company with significant growth opportunities & other synergistic benefits.