CHAPTER TWO

BASIC COMPONENTS OF
STRATEGY DESIGN
 Contents
2

 Creating a Vision
 Outlining the Mission
 Values, and strategic issues
 Setting Goals and Objectives
 Strategic plan

Basic Components of Strategy design

 Learning objectives
3

 Define vision, mission, goals, and objectives;

 Able to develop vision and mission
statements;
 Discuss the nature and importance of vision
and mission;
 Describe values and strategic issues
 Able to set goals and objectives
Basic Components of Strategy design
 Notable Quotes
4

 "The best laid schemes of mice and men often go awry.“

— Robert Burns (paraphrased)

 "That business mission is so rarely given adequate

thought is perhaps the most important single cause of
business frustration.“ — Peter Drucker


Basic Components of Strategy design

 Vision Vs Mission
5

Vision:
 An image of the future we seek to create.
 A vision statement describes where an organization
wants to see itself in the future; in the next 10 or 20
years if everything goes as planned.
 A vision statement should answer the basic question,
“What do we want to become?”
 A clear vision provides the foundation for developing a
comprehensive mission statement.
Sample Vision Statements - Good
6

 Tyson Foods:- to be the world’s first choice for

protein solutions while maximizing shareholder value.
(David comment:- Good statement, unless Tyson provides
non-protein products)
 General Motor: to be the world leader in
transportation products and related services.
 (David comment: Good statement)

Basic Components of Strategy design

 Sample Vision Statements - Poor
7

 PepsiCo’s:- to continually improve all aspects of the world

in which we operate: environment, social, economic
creating a better tomorrow than today.
(David comment: Statement is too vague; it should reveal
beverage and food business)
 Dell: to create a company culture where environmental

excellence is second nature.

(David comment: Statement is too vague; it should reveal
computer business in some manner; the word environmental
is generally used to refer to natural environment so is
unclear in its use here)
 Sample Vision
8

 DASHEN BANK: ‘‘In as much as Mount Dashen excels

all other mountains in Ethiopia, Dashen Bank
continues to prove unparalleled in banking
services.’’

 NIB: “To become an Icon of Excellence and the

leading Commercial Bank in Ethiopia.”

 Ethiotelecom: “To be a world-class provider of

telecom services.”
Basic Components of Strategy design
 Mission
9

 Purpose, reason for being, the role of the organization in

the industry and/or society.
 Enduring statement of purpose
 Distinguishes one firm from another
 Declares the firm’s reason for being
 A clear mission statement is essential for effectively
establishing objectives and formulating strategies.

Basic Components of Strategy design

 Importance of Mission
Ch 2 -10

Benefits from a strong mission

Ensures Unanimity of Purpose

Standard Resource Allocation

Mission
Organizational Climate/tone

Focal point for work

structure

Shared stated direction

 Products
Services Markets
Customers

Technology
Mission
Employees
Elements

Survival
Growth
Profit
Public
Image
Self-Concept Philosophy
 Mission - Examples
Dell: - To be the most successful computer
company in the world at delivering the best
customer experience in markets we serve.

L’ Oreal: - We believe that lasting business

success is built upon ethical standards which guide
growth and on a genuine sense of responsibility to
our employee, our customers, our environment, and
to the communities in which we operate.
 Mission Examples
13

 Dashen Bank: ‘‘Provide efficient and customer focused domestic

and international banking services, overcoming the continuous
challenges for excellence through the application of appropriate
technology.’’
 NIB: “To provide customer focused, efficient and effective full-
fledged commercial banking services by deploying qualified,
honest, motivated staff and state-of-the art technology and
thereby optimize stakeholders’ interest.”
 Ethiotelecom: “To provide world-class, modern and high quality
telecom services for all citizens equitably so as to transform the
multifaceted development of the country to the highest level.

Basic Components of Strategy design

 Mission Statement Evaluation Matrix

COMPONENTS

Concern for
Survival,
Products Growth,
Organization Customers Services Markets Profitability Technology

Dell Yes yes yes yes yes

L’Oreal No no no no No
 Mission Statement Evaluation Matrix

COMPONENTS

Self- Concern for Concern for

Organization Philosophy Concept Public Image Employees

PepsiCo Yes yes yes No

Ben & Jerry's yes no Yes Yes

 Strategic Goals and Objectives
16

What are Strategic Goals?

 Strategic goals are statements of what the

organization wishes to achieve over the
period of the strategic plan (e.g. over the
next year, five years, ten years.)

Basic Components of Strategy design

 Strategic Goals and Objectives
17

 They reflect the analysis the organization

did with creating vision, and mission
statement, and
 then the analysis of the environment
(strengths, weaknesses, opportunities and
threats.)

Basic Components of Strategy design

 What are Objectives and Are They
18
Different from Strategic Goals
Objectives are usually specific/particular
statements of goal that contribute to the
achievement of "bigger" goals.
 objectives within a strategic planning
framework are "enabling goals", as their
success contribute to the achievement of the
larger strategic goal(s)

Basic Components of Strategy design

 What Should Strategic Goals Reflect In
Terms Of Strategic Planning?
19

 The strategic goals, as part of the strategic

planning process MUST reflect the analyses made
(otherwise all that work is wasted). The strategic
goals should:
• reflect the general themes of your vision and mission
• reflect the business realities outside of the company (as
identified in your environmental scan)

Basic Components of Strategy design

 Cont’d…
20

 Reflect the business and capabilities

internal to the organization (also as
identified in the environmental scan)

 Reflect the strengths, weaknesses, and

opportunities and strengths identified in
your SWOT analysis.

Basic Components of Strategy design

 Cont’d…
21

 It needs the entire organization to be

aligned, or aimed at the achievement of the
strategic goals, and for this to happen they
need to be aligned with (or be consistent
with and in supporting of) all the other parts
of the strategic plan.

Basic Components of Strategy design

 Goals Litmus Test
22

Test Question #1 #2 #3 #4 #5

Does the goal support the mission?

Is it consistent with your legislative authority?
Does the goal deal with just one issue?

Does the goal represent a desired result that can

be achievable?
Does the goal reflect a primary activity, a
strategic direction, a strategic issue or a gap in
service?
Is the goal challenging, but still realistic and
achievable?
Does the goal encompass a relatively long
period, i.e., three years or longer?
 Objective Setting
23

Allow review and appraisal of achievement

 SMART

 Make clear:
 What is to be accomplished
 How much is to be accomplished
 By when it is to be accomplished
 By whom it is to be accomplished
Basic Components of Strategy design
 Goals vs. Objectives Summary
24

GOALS OBJECTIVES

Very short statement, Longer statement, more

few words descriptive

Broad in scope Narrow in scope

Directly relates to the Indirectly relates to the

Mission Statement Mission Statement

Covers long time period Covers short time period

(such as 10 years) (such 1 year budget cycle)

Basic Components of Strategy design

 Objectives Litmus Test
25

Test Question #1 #2 #3 #4 #5

Does the objective reflect specific, desired

accomplishments?
Can progress toward completion of an objective be
measured?
Is the objective aggressive and challenging, yet
realistic and attainable within available resources?

Does the objective specify a result

rather than an activity?

Is there a specific time frame for completion of the

objective?

Basic Components of Strategy design

 Values
26

 Values are beliefs which your organization's

members hold in common and endeavor to put into
practice.
 The values guide your organization's members in
performing their work. Specifically, you should
ask, "What are the basic beliefs that we share as
an organization?"

Basic Components of Strategy design

 Values (Contd…)
27

 Values are often rooted in ethical themes, such as

honesty, trust, integrity, respect, fairness, etc.

 Values should be applicable across the entire

organization

 Values may be appropriate for certain best

management practices – best in terms of quality,
exceptional customer service, etc.

Basic Components of Strategy design

 Values (Cont’d…)
28

 Examples of values include: a commitment to excellent

services, innovation, diversity, creativity, honesty,
integrity, and so on.

 By developing a written statement of the values of the

organization, group members have a chance to
contribute to the articulation of these values, as well as
to evaluate how well their personal values and
motivation match those of the organization.

Basic Components of Strategy design

 Values (Cont’d…)
29
 Ethiotelecom
 Customer-centricWe provide quick response to our customers
and employees in line with their interest and values.
 ExcellenceWe are committed for quality and efficiency so that
we are able to ensure excellent customer experience.
 AccountabilityWe carry out our activities with integrity,
transparency, honesty and full responsibility.
 ImpartialityWe are committed to be impartial and serve
without any bias.
 SharingWe always strive in synergy so as to accomplish the
mission of our company.

Basic Components of Strategy design

 Values (Cont’d…)
30

 NIB
 Loyalty;
 Transparency;
 Accountability;
 Honesty and
 integrity;
 Social responsiveness;
 Organizational excellence;
 Equal employment opportunity;
 Prudent and Professional banking practice and
 Competitive services and sustainable growth.
Basic Components of Strategy design
 Values (Cont’d…)
31
 Dashen Bank
 Develop banking habit in the community
 Assist continuous growth of customers
 Sustainable growth and stability
 High integrity and accountability
 Esteemed customers satisfaction
 Non-stop openness for community access
 Brightened and trained employees
 Attend customers’ constructive outlook
 Normative confidentiality
 Keen to consciously build professionalism and service quality
Basic Components of Strategy design
 STRATEGIC PLAN
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 The strategic plan refers to the arrangement and

ordering of the activities and tasks that will be
necessary to carry out the goals.

 Thus, this step focuses on defining and acquiring

the necessary resources as well as establishing the
timetable for the completion of the tasks.

Basic Components of Strategy design

 STRATEGIC PLAN cont’d …
33

The development of a strategic plan involves in answering the

following five questions:
1. What are the practical alternatives that might be pursued to
achieve the goal?
2. What are the barriers to the realization of these alternatives?
3. What major proposals might be pursued to achieve these
alternatives or to overcome the barriers to their realization?
4. What major actions with existing staff must be taken within the
next year to implement the major proposals?
5. What specific steps must be taken within the next six months to
implement the major proposals and who is responsible?

Basic Components of Strategy design

 STRATEGIC PLAN cont’d …
34
Rucheman (1985) points out that the realization of the
plan can be affected by the following six factors:
 Scope – where are the clients?
 Size – who are the potential clients?
 Complexity – how are specific are the objectives?
 Duration – how long it will take to implement the
objectives?
 Components – how many discrete activities?
 Innovativeness – how much of a break from the past?
Basic Components of Strategy design
35

THANK YOU!