Establishing Organizational

Direction

Strategic Management- MBA-202

Course Coordinator: G.T.Wasantha Sriyani
Faculty of Management & Finance
Handout No: 02
Knowledge Testing

What are the important elements in setting

the organizational direction?
What do you mean by Vision, Mission, and
Corporate Goals?
Who are the Inside Stakeholders & Outside
Stakeholders who contribute in setting the
organizational direction?
What is meant by Social Responsibility &
How your firm concern on SR?

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VISION: What Do We Want to Become?
A vision statement should answer the basic question
of What do we want to become?
Vision refers to the goals that are broadest, most
general, and all- inclusive.
Vision is articulating the dreams and hopes for your
business. It reminds you of what you are trying to
build.
While a vision statement doesnt tell you how youre
going to get there, it does set the direction for your
business planning.

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 VISION Contd..
Describes future aspirations, without specifying the
means used to achieve them
It is especially important for managers and executives in
any organization to agree upon the basic vision for
which the firm strives to achieve in the long term.
Both should be to energize employees to work towards
corporate goals, vision and mission
Both should be internalize by executives & constantly
communicated to employees

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 VISION Contd..
A good vision is realistic & idealistic: It is believed as
achievable, but it cannot be achieved without stretching.
The most effective visions are those that inspire, and
this inspiration often takes the form of asking for the
best, the most, or the greatest.
It may be the best service, the most rugged product,
or the greatest sense of achievement, but it must be
inspirational.
A vision offers a roadmap to the future and provides
guidelines to their followers.

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 VISION Contd..
A clear vision provides the foundation for
developing a comprehensive mission
statement.

Many organizations have both a vision and

mission statement, but the vision statement
should be established first and foremost.

The vision should be short, preferably one

sentence, and as many managers as possible
should have input into developing the
statement.
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 MISSION: What Is Our Business?
Mission is a written form of the
organizations vision
It is called as a creed statement, a
statement of purpose, a statement of
philosophy, a statement of beliefs, or a
statement of business principles
It is a brief description of a company's
fundamental purpose.
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 Mission contd

It is a very broad statement of organizational

direction and it answers the pivotal question,
What is our business? Why do we exist?
At a minimum, your mission statement
should define who your primary customers
are, identify the products and services you
produce, and describe the geographical
location in which you operate.
A clear mission statement is essential for
effectively establishing objectives and
formulating strategies.
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Mission contd

The mission statement reflects every facet

of your business: the range and nature of
the products you offer, pricing, quality,
service, marketplace position, growth
potential, use of technology, and your with
your customers, employees, suppliers,
competitors and the community.

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Mission contd

Drucker says asking the question of

What is our business, is
synonymous with asking the
question, What is our mission?
It specifies the leaders beliefs about
an organization and the directions in
which it should move.

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 The vision of Volvo Groups

The vision of Volvo Groups is to become

the world leader in sustainable transport
solutions

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Mission Contd.

Vital element for corporate leaders to

motivate employees & instil sense of
priority
It can also identify what is unique
about the character of the organization.
An enduring statement of purpose that
distinguishes one organization from
other similar enterprises, the mission
statement is a declaration of an
organization's "reason for being."
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Vision & Mission of Harishchandra PLC
Vision: To enhance our heritage brand status
and serve the nation
Mission: To provide the public with a variety of
high quality foods & soaps
How implement: Harischandra Mills Ltd plans to
soon launch 100% red rice flour noodles, ulundu
and rice flour papadam for the first time for local
market in keeping with their mission of providing
the public with a variety of high quality foods

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 Mission

Inside Outside
Stakeholders Stakeholders

Customers
Executive officers Suppliers
Board of Directors Company Creditors
Stockholders Mission Governments
Employees Unions
Competitors
General Public

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Components of the Mission Statement
Organizational Philosophy: establishes
the values, beliefs, and guidelines for the
manner in which the organization is going
to conduct its business
Organizational purpose: defines the
activities that the organization performs or
intends to perform and the kind of
organization that it is or intends to be.

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 Importance of Organizational philosophy
(Thomas J. Watson, Jr., former chairman of the board of
IBM).
I firmly believe that any organization, in order to survive and
achieve success, must have a sound set of beliefs on which it
premises all its policies and actions

Next, I believe that the most important single factor in

corporate success is faithful adherence to those beliefs.

And finally, I believe that if an organization is to meet the

challenges of a changing world, it must be prepared to change
everything about itself except those beliefs as it moves through
corporate life.
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IBMs philosophy was to be:
Respect for the individual: IBM occupies a major
portion of management time & devotes more effort to
it than anything else.
IBM gives the best customer service of any company
in the world.
It believes that an organization should pursue all
tasks with the idea that they can be accomplished in a
superior fashion.

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 Organizational purpose
The establishment of an organizations purpose is
critical; without a concrete statement of purpose it is
virtually impossible to develop clear objectives and
strategies.
An organizations purpose must be defined not only
at its inception but also must be redefined regularly
during both difficult and successful periods.

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 Defining an organizations purpose starts with defining its
present and potential customers.
Questions that need to be answered in defining the present
customers are:
a. Who is the customer?
b. Where is the customer located?
c. How does the customer buy?
d. How can the customer be reached?
e. What does the customer buy?
f. What does the customer consider value? (i.e., what does the
customer look for when he or she buys the product?) 19
 In defining an organizations potential customers,
the following questions need to be answered:
1. What are the market trends and market potential?
2. What changes in market structure might occur as a result of
economic developments, changes in styles or fashions, or moves
by the competition?
3. What innovations will alter the customers buying habits.
4. What needs does the customer currently have that are not being
adequately met by available products and services?
5. One final question needs to be addressed in an organizations
purpose. Is the organization in the right business or should it
change its business?
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 Examples for Organizational Purposes
Sell shoes of the highest quality so every customer can
find a pair of shoes they actually love to wear.

Provide educational services that allow all children to

experience learning success and become life-long
learners and contributing members of our community.

Grow & market vegetables using organic, sustainable

farming practices to give people safe and healthy food
choices.

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 Components of a Mission Statement
1. Customers: Who are the firm's customers?
2. Products or services: What are the firm's
major products or services?
3. Markets: Geographically, where does the
firm
compete?
4. Technology: Is the firm technologically state
of art or out dated?
5. Concern for survival, growth, and
profitability:
Is the firm committed to growth and
financial 22
Components contd..
6. Philosophy: What are the basic beliefs,
values, aspirations, and ethical priorities of
the firm?
7. Self-concept: What is the firm's distinctive
competence or major competitive
advantage?
8. Concern for public image: Is the firm
responsive to social, community, and
environmental concerns?
9. Concern for employees: Are employees a
valuable asset of the firm?
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 Corporate Social Responsibility
CSR is the Idea that business has a duty to
serve society as well as the financial interest
of stockholders
Outside stakeholders often demand that
issues such as pollution, the disposal of
solid & liquid wastes, conservation of natural
resources etc should be principal
considerations in strategic management.
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CSR contd

Insiders tend to competing claims of

outsiders balance against one another
in a way that protects the company
mission
The MS not only identifies what
products or services a company
produces, how it produces it, and what
markets it serves, it also embodies
what the company believes
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CSRs Effect contd

It is essential that the MS recognize the

legitimate claims of its external
stakeholders( creditors, customers,
suppliers, government, unions,
competitors, local communities, &
elements of the general public)
In developing MS, managers must
identify all stakeholder groups & weigh
their relative rights & abilities to affect
the firms success 26
 Types of Corporate Responsibility

Economic Responsibilities: The duty of managers as

agents of the company owners, to maximize stockholder
wealth
Legal Responsibilities: The firm's obligations to comply
with the laws that regulate business activities
Ethical Responsibilities: The strategic managers,
notion of right and proper business behaviour
Discretionary Responsibilities: Responsibilities
voluntarily assumed by a business, such as public
relations, good citizenship, & full corporate responsibility

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 Examples for Vision & Mission
The Bellevue Hospital
Vision Statement
The Bellevue Hospital is the LEADER in providing
resources necessary to realize the community's highest
level of HEALTH throughout life.
Mission Statement
The Bellevue Hospital, with respect, concern, integrity
and courage, honours the individuality and
confidentiality of our patients, employees and
community, and is progressive in anticipating and
providing future health care services. 28
Massachusetts Division of Banks

Vision Statement
To protect the public interest, ensure competition, accessibility
and fairness within the relevant financial services industries,
respond innovatively to a rapidly changing environment, and
foster a positive impact on the Commonwealth's economy.

Mission Statement
To maintain a safe and sound, competitive banking and financial
services environment throughout the Commonwealth and ensure
compliance with community reinvestment and consumer
protection laws by chartering, licensing and supervising state
regulated financial institutions in a professional and innovative
manner.
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 Vision Vs Mission
Mission statement answers the question, What is our
business?, the Vision answers the question, What do
we want to become?
Campbell 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.

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 Importance of a Vision and Mission

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.

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Importance contd..
4. To serve as a focal point for individuals to
identify with the organization's purpose and
direction, and to prevent 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.

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 Importance contd
6. Tospecify 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.
7. Work as effective vehicles for communicating with
important internal and external stakeholders.
8. Provide managers with a unity of direction that go
beyond individual, narrow-minded, and momentary
needs.
9. Promote a sense of shared expectations among all
levels and generations of employees.

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 Importance contd

10. Consolidate values over time and across individuals and

interest groups.

11.Project a sense of worth and intent that can be identified and

assimilated by company outsiders.

12. Assert the company's commitment to responsible action,

which is symbiotic with its need to preserve and protect the
essential claims of insiders for sustained survival, growth, and
profitability of the firm.

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 Characteristics of a Mission Statement
1. A Declaration of Attitude
A mission statement is a declaration of attitude and outlook
more than a statement of specific details.
It usually is broad in scope for at least two major reasons.
I. A good mission statement allows for the generation and
consideration of a range of feasible alternative objectives and
strategies without unduly stifling management creativity.
II. A mission statement needs to be broad to effectively
reconcile differences among and appeal to an organization's
diverse stakeholders, the individuals and groups of persons who
have a special stake or claim on the company.

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 Characteristics contd
A good mission statement indicates the
relative attention that an organization will
devote to meeting the claims of various
stakeholders. More firms are becoming
environmentally proactive in response to the
concerns of stakeholders.
Most mission statements are expressed at
high levels of abstraction.

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 Characteristics contd
Mission statements are not designed to express
concrete ends, but rather to provide motivation,
general direction, an image, a tone, and a
philosophy to guide the enterprise.
More flexibility in adapting to changing
environments and internal operations. It facilitates
flexibility in implementation.
An effective mission statement arouses positive
feelings and emotions about an organization; it is
inspiring in the sense that it motivates readers to
action.
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 Characteristics contd
An effective mission statement generates the
impression that a firm is successful, has direction,
and is worthy of time, support, and investment.
It reflects judgments about future growth directions
and strategies based upon forward-looking external
and internal analyses.
A clear mission statement provides a basis for
generating and screening strategic options

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2. A Customer Orientation
A good mission statement describes an organization's
purpose, customers, products or services, markets,
philosophy, and basic technology.
According to Vern McGinnis, a mission statement should
(1) define what the organization is and what the organization
aspires to be,
(2) be limited enough to exclude some ventures and broad
enough to allow for creative growth,
(3) distinguish a given organization from all others,
(4) serve as a framework for evaluating both current and
prospective activities, and
(5) be stated in terms sufficiently clear to be widely understood
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throughout the organization.
Reflects the anticipations of customers.
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 fulfil those needs.
Identifies the utility of a firm's products to its customers.
Eg. I) AT&Ts mission statement focuses on communication
rather than telephones,
II) Exxons mission statement focuses on energy rather
than oil and gas
III) Universal Studios mission statement focuses on
entertainment instead of movies.
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3. A Declaration of Social Policy
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,
minorities, communities, and other groups.
Social policies directly affect a firms customers, product and
services, markets, technology, profitability, self-concept, and
public image.
An organizations social policy should be integrated into all
strategic-management activities: development of a mission
statement; strategy formulation; strategy implementation; and
strategy evaluation.

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Definitions for Core Values

Values, by definition, are emotional. A strongly

held value is a guiding principle that engages
passions. The term core value is the sameit
conjures the emotions and can mean different
things to different people. So, today, Im pausing
in my original plan to talk about one core value
per day and instead I want to define what I mean
by core value.

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Core Values.

Core refers to that which is central, innermost,

vital or the most essential part of something,
according to online dictionaries. The word
derives from the Latin corpus, meaning body.
We speak, for example, of the corpus of
literature on a subject. For me, a core value is
central or essential in a neutral sense. It means
that there is widespread consensus, not
disagreement.

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Core Values of Volvo Group
Quality, Safety and Environmental Care
are the corporate values of the Volvo
Group, each reflected in how we develop
our products, how we act in society, and
how we approach our customers and
employees.
The values of the Volvo Group summarize
what we stand for & what we focus on

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Our vision Volvo Group
The Volvo Group's vision is to become the world
leader in sustainable transport solutions by:
creating value for customers in selected
segments
pioneering products and services for the
transport and infrastructure industries
driving quality, safety and environmental care
working with energy, passion and respect for the
individual.

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Quality as a corporate value
Focus on the customers' needs
Quality is an expression of our goal to
offer reliable products and services. In all
aspects of our operations, from product
development and production, to delivery
and customer support, the focus shall be
on customers' needs and expectations.

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Quality as a ..
Our goal is to exceed their expectations
With a customer focus based on everyone's
commitment and participation, combined
with a process culture, our aim is to be
number one in customer satisfaction.
This is based on a culture in which all
employees are responsive and aware of
what must be accomplished to be the best
business partner.

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Quality as a ..
Hybrids on broad front
It saves fuel. It reduces emissions. And it
can be used together with alternative
fuels. Hybrid technology is one of the most
promising and competitive technologies
for commercial vehicles

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Safety
Safety isas
partaofcorporate
our soul value
Safety has been our guiding star since 1927. The Volvo
founders stated that Safety is and must be the basic
principle in all design work.
Our vision: Zero accidents
We have worked diligently for more than 80 years to
develop increasingly better protection for people in the
case of an accident. Our Accident Research Teams have
given us good insight into the causes of accidents and
injuries and what can be done to prevent them. Our
products are built to minimize the consequences of
accidents.

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Safety as a
Our ultimate goal is zero accidents with Volvo Group
products. This vision of zero accidents guides our
product development. We are committed to work hard to
prevent accidents, but we are also aware of the fact that
most accidents involve factors that are out of our control.
Therefore, the Volvo Group cooperates with users,
authorities, scientists and other actors in society who
want to create a safer world.

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Safety as a

In recent years we have also launched

intelligent safety systems with the potential
to prevent accidents from happening in
the first place. Safety innovations
A series of pioneering safety innovations
has made Volvo a world leader in
automotive safety over the years. It is our
firm ambition to maintain this position.

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Environmental care as a corporate value

Taking the lead to reduce climate

impact
The Volvo Group is the first heavy duty
vehicle manufacturer to develop seven
different demonstration trucks that can all
be driven without any emissions of
climate-impacting carbon dioxide.

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