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“ A vision, there fore, articulates the position that a firm would like to attain in the distant
future. A vision is more dreamt of that it is articulated. This is the reason why it is difficult to
say what vision an organization has. Some times it is not even evident to the entrepreneur
who usually thinks of the vision. By its nature, it could be as hazy and vague as a dream that
one experienced the previous night and is not able to recall perfectly in broad daylight. Yet it
is a powerful motivator to action. And it is from the actions that a vision could often be
derived. Henry Ford wished to democratize the automobile when he visualized that an
affordable vehicle could be available for the masses. Walt Disney an entertainment industry
known world wide probably wanted to make people happy.
A) Defining vision
Vision has defined in several different ways. Kotter (1990) defines it as a "description of
something (an organization, corporate culture, a business, a technology, an activity) in the
future" El-Namaki (1992) considers it as a "mental perception of the kind of environment an
individual, or an organization, aspires to create within a broad time horizon and the
underlying conditions for the actualization of this perception." Miller and Dess (1996) view it
simply as the "category of intentions that are broad, all inclusive, and several other available
in strategic management literature relates to 'vision' being future aspirations that lead to an
inspiration to b e the best in one's field of activity.
B) The benefits of having a vision
Parikh and Neubauer (1993) point out the several benefits accruing to an organization having
a vision. Here is what they say, good vision is
inspiring and exhilarating
represent a discontinuity, a step function and a jump ahead so that the company
knows what it is to be
help in the creation of a common identity and a shared sense of purpose
Are competitive, original and unique. They make sense in the marketplace as they are
practical
Foster risk taking and long-term thinking.
Represent integrity; they are truly genuine and can be used for the benefit of people.
VISION VERSUS MISSION some organizations develop both a mission statement and a
vision statement. Whereas the mission statement answers the question “what is our
business?” the vision statement answers the question “what do we want to become?”
It can be argued that profit, not mission or vision is the primary corporate motivator. But profit
alone is not enough to motivate people. Profit is perceived negatively by some employees in
companies. Employee may see profit as something that they earn and management then
uses and even gives away-to shareholders. Although this perception is undesired and
disturbing to management, it clearly indicates that both profit and vision are needed to
effectively motivate a work force.
When employees and mangers together shape or fashion the vision or mission for a firm, the
resultant document can reflect the personal vision that mangers and employees have in their
hearts and minds about their own futures. Shared vision creates a commonality of interests
that can lift workers out of the monotony of daily work and put them into a new world of
opportunity and challenge.
2. Value
It specifies how to conduct and play the role of business in the society. it also
describes what is to be hold inviolate.
Most importantly it spells out the basic beliefs of the organization about its stakeholders.
In order to understand what the organization stands for and to provide input to strategy, it is
essential to clarify the current values upon which a business operates.
A DECLARATON OF value:
value: embrace managerial philosophy and thinking at the
highest levels of an organization. For this reason social policy affects the development of a
business mission statement. Social issues mandate that strategists consider not only what
the organization owes its various stakeholders but also what responsibilities the firm has to
consumers, environmentalists, and minorities. After decades of debate on the topic of social
responsibility, many firms still struggle to determine appropriate social policies.
Organizational values directly affect a firm’s customers, products and services, technology,
profitability, self-concept, and public image. An organization’s value should integrated into all
strategic- management activities, including the development of a mission statement.
Corporate value should be designed and articulated during strategy formulation, administered
during strategy implementation, and reaffirmed or changed during strategy evaluation. The
emerging view of social responsibility holds that social issues should be attended to both
directly and indirectly in determining strategies.
Why have Values?
to handle the inescapable such as the legal limits’
to Avoid bad publicity
to act in more enlighten self interest way
to professionalize the business
3. Mission
Mission is the description of an organization’s reasons for its existence and its fundamental
purpose. It is the guiding principle that drives the processes of goal and action plan
formulation, “a pervasive, although general, expression of the philosophical objectives of the
enterprise.” Mission should focus on “long-range economic potentials, attitudes toward
customers, product and service quality, employee relations, and attitudes toward owners.” It
provides identity, continuity of purpose, and overall definition, and should convey the
precisely why the organization exists, its purpose, in terms of
(a) its basic product or service,
(b) its primary markets, and
(c) its major production technology.
Thus mission outlines the firm’s identity and provides a guide for shaping strategies at all
organizational levels.
Mission:
Serves as a basis for consolidation around the organization’s purpose.
Provides impetus to and guidelines for resource allocation.
Defines the internal atmosphere of the organization, its climate.
Serves as a set of guidelines for the assignment of job responsibilities.
Facilitates the design of key variables for a control system.
The mission statement must be believable in that the company’s behavior should correspond
to it over both the short and long term. In this way it can serve as the foundation for the
development of respect for and pride in the firm by management, employees, owners,
customers, suppliers, and others who interact with it.
Organizations relate their existence to satisfying a particular need of the society. They do this
in terms of their mission. Mission is a statement, which defines the role that an organization
plays in a society. It refers to the particular needs of that society, for instance, its information
needs. A book publisher and a magazine editor are both engaged in satisfying the information
needs of society buy they do it through different means. A book publisher may aim at
producing excellent reading material while a magazine editor may strive to present news
analysis in a balanced and unbiased manner. Both have different objectives but an identical
mission.
A) Defining the organization’s mission
An organization’s mission is an overall goal of the organization that provides a sense of
direction and a guide to decision making for all levels of management. Without a clear
mission, it is virtually impossible for an organization to develop objectives and strategies.
Capmbell and Yeung also differentiate between the terms vision and mission, saying vision is
“a possible and desirable future state of an organization” that includes specific goals,
whereas mission is more associated with behavior and with the present.
Since no two organizations are exactly the same in terms resources, management or
environmental situations; the mission statement is personal to each organization.
A widely used approach to developing a mission statement is first to select several articles
about mission statements and ask all managers to read these as background information.
Then ask managers themselves to prepare a mission statement for the organization. A
facilitator, or committee of top managers, then should merge these statements into a single
document and distribute this draft mission statement to all managers. A request for
modifications, additions, and deletions is needed next, along with a meeting to revise the
document.
Employees and external constituencies of an organization are needed when the document is
in final form. Some organizations even develop a videotape to explain the mission statement
and how it was developed.
Mission statements can and do vary in length, content format and specificity. Most
practitioners’ academicians of strategic management consider an effective statement to
exhibit nine ideal components. Because a mission statement is often the most visible and
public part of the strategic-management process, it is important that it includes all of these
essential components. Components and corresponding questions that a mission statement
should answer are given here.
i. CUSTOMERS: who are the firm’s customers: for example,
- We believe our first responsibility is to the doctors, nurses, and patients, to mothers
and all others who use our products and services. (Johnson & Johnson)
ii. PRODUCTS OR SERVICES: What are the major products or services? For example,
“ Standard Oil Company (Indiana) is in business to find and produce crude oil, natural gas,
and natural gas liquids: to manufacture high-quality products useful to society from these raw
materials: and to distribute and market those products and to provide dependable related
service to the consuming public at reasonable prices. (Standard Oil Company)”
iii. MARKETS: Where does the firm compete? Geographically? For example
“ We are dedicated to the total success for Corning Glass Works as a worldwide competitor.
(Corning Glass Works) our emphasis is on North American markets, although global
opportunities will be explored. (Block Way)
vi. PHILOSOPHY: What are the basic beliefs involves aspirations and ethical priority of
the firm? It May be necessary to briefly reflect the issue value of the organization. For
example.” We believe human development to be the worthiest of the goals of civilization and
independence to be the superior condition for nurturing growth in the capabilities of people.
(Sun Company)”
“ It is all part of the Mary Kay philosophy- a philosophy based on the golden rule. A spirit of
sharing and caring where people give cheerfully of their time, knowledge, and experience.
(Mary Kay Cosmetics)”
vii. SELF-CONCEPT:
SELF-CONCEPT: heat is the firm’s distinct competence or major competitive
advantage for example,
“ Crown Zellerbach is committed to leapfrogging competition within 1.000 days by unleashing
the constructive and creative abilities and energies of each of its employees. (Crown
Zellerbach)
Viii CONCERN FOR PUBLIC IMAGE: is the firm responsive to social, community and
environment the concern? For example,
“ To share the world’s obligation for the protection of the environment. (Dow Chemical)”
“ To contribute to the economic strength of society and function as a good corporate citizen on
a local, state, and national basis in all countries in which we do business. (Pfizer)”
ix CONCERN FOR EMPLOYEES: are employee a valuable assets of the firm?
For example: “to recruit, develop, motivate, reward, and retain personnel of exceptional
ability, character, and dedication by providing good working conditions, superior leadership,
compensation on the basis of performance. Attractive benefit program, opportunity for growth,
and a high degree of employment security. (The Wachovia Corporation)”
D) The Importance of a Good Mission
The importance of a mission statement to effective strategic management is well documented
in a literature. A recent study comparing mission statements of Fortune 500 terms performing
well and firms performing poorly concluded that high performers have more comprehensive
mission statements than low performers. King and Cleland recommend that organizations
carefully develop a written mission statement for the following reasons:
1. To ensure unanimity of purpose within the organization.
2. To provide a basis or standard for allocating organizational resources.
3. To establish a general tone or organizational climate.
4. To serve as a focal point for individuals to identify with the organization’s purpose and
direction, and to deter those who cannot from participating further in the
organization’s activities.
5. To facilitate the translation of objectives into a work structure involving the
assignment of tasks to responsible elements within the organization.
6. To specify organizational purposes and the translation of these purposes into
objectives in such a way that cost, time, and performance parameters can be
assessed and controlled.
E) The Nature of Good Mission
Organizational mission should define the organization’s line or lines of business, identify its
products and services, and specify the markets it serves at present and within a time frame of
three to five years. An effective mission should be challenging to the organization, but should
be achievable. It should be in writing and should also have a time frame for achievement.
Mission should process the following desirable quality
Most business statements of mission are expressed at high levels of abstraction. Vagueness
nevertheless has its virtues. Mission statements are not designed to express concrete ends.
But
An effective mission statement arouses positive feelings and emotions about an organization:
it is inspiring in the sense that it motivates reader’s action. An effective mission statement
generates the impression that a firm is successful, has direction, and is worthy of time,
support, and investment.
ii) Customer ORIENTATION A good mission statement reflects the anticipations of
customer. Rather than developing a product and then trying to find a market, the operating
philosophy of organizations should be to identify customers’ needs and then provide a
product or service to fulfill those needs. Good mission statements identify the utility of a
firm’s products to its customers.
The company does not offer things rather offer value or benefit,
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Hence a company;
o Offers attractive looks not cloth
o Offers energy not fuel
o Offers comfort for the feet and the pleasure of walking not shoes
o Offers security, Comfort, and a place that is clean not house
o Offers hours of pleasure and the benefit of knowledge not book
o Offers leisure and the sound of music not records
o Offers the benefit and the pleasure of making beautiful things not tools
o Offers ideas, emotions, ambience, feelings, and benefits etc.
A major reason for developing a business mission is to attract customers who give meaning
to an organization. Meaning what a product or service does for him or her. The customer is
the foundation of a business and keeps it in existence.
iii. A RESOLUTION OF DIVERGENT VIEWS What are the reasons some strategists
are reluctant to develop a statement of their business mission? First, the question “what is
our business?” can create controversy. Raising the question often reveals differences among
strategists in the organization. Individuals who have worked together for a long time and who
think they know each other suddenly may realize that they are in fundamental disagreement.
For example, in a college or university, divergent views regarding the relative importance of
teaching, research and service often are expressed during the mission statement
development process. Negotiation, compromise, and eventual agreement on important issues
are needed before focusing on more specific strategy formulation activities.
Factors that influence in changing or reviewing the mission are several. Hence some of that
signal that need for reexamination of mission are:
Decline profit and market share
Changes in competitive position
Changes in top-level management
Changes new technologies
Decreased availability or increased cost of resources
Changes in market demographics
Changes in government regulations
4. Objectives
Objectives are the end results of planned activity. They state what is to be accomplished by
when and should be quantified if possible. The achievement of corporate objectives should
result in the fulfillment of a corporation does a good job of fulfilling its mission
Objectives also can be classified according to their breadth of influence in the organization.
For example, objectives that apply to the entire organization are called corporate or
organizational objectives. Objectives that apply only to a certain division within an
organization are referred to as divisional objectives; those that apply to a certain function or
department within an organization are referred to as functional or departmental objectives.
Organizational long-range objectives should sport the organization's mission, and they need
to be established for every area of the organization where performance directly influences its
survival and success
An organization's objective depends on the particular organization and its mission. Although
objective can vary widely form organization to organization, normally they can be categorized
as follows:
1. Profitability
2. Service to customers, clients, or other recipients
3. Employee needs and well-being; and
4. Social responsibility
B) Result areas
Objectives should be expressed as clearly as possible and in quantities terms whenever
possible. The following items provide potential areas and examples for establishing
objectives for most organizations:
Customer service.
Financial resources
Human resources.
Markets.
Organizational Structure.
Physical Facilities.
Facilities.
Product.
Productivity.
Profitability.
Research and development.
Social responsibility.
5. Strategy
A. Corporate- Level Strategy
It describes a company's overall direction in terms of its general attitude toward growth and
the management of it s various business and product lines.
A corporation's portfolio by business units (SBU's) can vary in at desirability just a financial
manger's portfolio of investment can. The acceptability of a particular business portfolio is
determined by factoring corporate purpose, mission into the present portfolio's acceptable or
expected strength; weakness threat and opportunity to generate a desired portfolio for a
stated planning horizon
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The content of corporate level strategy is a set of action plans and corresponding corporate
level objective.
A corporate level objective expresses a desired portfolio of business units by the end of the
firms planning period
A corporate level action plan defines how to get form the present portfolio to that targeted in
terms of
a. business unit strategies to be remained
b. Additional of business units expressed as either growth strategy. Parameters (for
"none grown" units) or merger acquisition strategy
c. business units to be divested
Decisions made at this level establishing priorities and the se of resource of buying new
businesses assets, developing new ideas liquidating assets, making joint venture, or merges
and so on. In the case of the small business the owner makes their decisions. Congruency
and synergy are important in making the decision that the whole greater than the sum of its
parts.
B) Business-Level Strategy
Business level strategic mangers must determine the bases on which company can complete
in the selected product/market area business level strategy usually occurs at business unit
or product level and it emphasizes improvement the competitive position of corporations'
products or services in the specific industry or market segment served by the business unit.
Business strategy may fit with in two overall category of competitive or cooperative strategy.
Competitive approach: gain advantage through battling against competitor for
example
o Apple computer uses a differentiation competitive strategy that
emphasizes innovative product with creative design
Cooperative approach: gain advantage by working together with one more
competitors or others. For example, Forming an alliance with different
organizations for example works in coloration Kenya airway with KLM air line
6. Developing policy
The selection of the best strategic alternatives at all level is not the end of strategy
formulation. The organization must now engage in developing policies. Polices define the
broad guidelines for implementation.
Policies let both employees and mangers know what is expected of them, thereby increasing
the likelihood that strategies will be implemented successfully. They provide a basis for
management control. Allow coordination across organizational units. And reduce the amount
of time mangers spend making decisions. Policies also clarify what work is to be done by
whom. They promote delegation of decision making to appropriate managerial levels where
various problems usually arise. Many organizations have a policy manual that serves to guide
and direct behavior .
A) Characteristics of an effective policy
Simply because a firm has a set of written or implied policies does not mean the policies
always achieve the desired result. Some of the characteristics of an effective policy include
the following:
o Effective policies are action oriented guidelines-they
guidelines-they provide
enough detail to direct behavior toward a specific goal or objective, but are not so
detailed that they discourage personnel form following the policy
o Effective policies are pertinent (applicable) and concise a
concise policy states a position with a minimum number of words while a pertinent
policy avoids trivial or unimportant issues.
o Effective policies are unambiguous-personnel
unambiguous-personnel should have little doubt
as to how to interpret the policy's intent and direction policies subject to different
interpretations will, over a period of time, result in several possible outcomes.
Ambiguous policies lead to a number of divergent behaviors within a firm as a result
of the ambiguity or personnel ignoring the policy altogether because of the difficulty
interpreting its content.
o A policy should be reviewed for clarity and conformanc e . All
employees should understand organization's polices. A policy is ineffective if it is
conducing, ignored, or outdated. Policy formation and review is a dynamic activity.
A policy is a timely directive that guides behavior and action through all levels of the
organizational hierarchy. An organization must review its policies to determine if
employees understand and follow directives. A firm must also determine if it
requires a written policy where none currently exists. This review should further
identify policies and procedures that no longer support a firm's objectives.
B) The Policy Hierarchy
Organizational policies exist within a hierarchy. Different levels of policy exist that
when taken together guide the actions of an entire organization. Policies procedures, and
rules and regulations must be consistent and compatible throughout each level of an
organization. A hierarchy implies that upper-level directives work downward trough an
Prepared by : Tariku Besrat, UU-CBESS, DEPT. of
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organization. Different departments or functions should not create policies and procedures
that are inconsistent with the policy objectives of executive management.
Policies range from the highest directives of executive management to the basic rules and
regulations governing day-to day operations.