Description
The ppt is explaining about strategy concepts and definitions.
The vocabulary of strategy
Relation between a firm?s mission, objectives, strategies and tactics Mission Objectives A firm’s fundamental purposes. Specific measurable performance targets that firms aspire to reach in each of the areas covered by a firm’s mission. Means through which firms accomplish a mission and objectives. Actions firms take to implement their strategies.
Strategies
Tactics / Policies
Developing a Strategic Vision
? Involves thinking strategically about
? Firm‘s future business plans ? Where to ?go?
? Tasks include
? Creating a roadmap of the future ? Deciding future business position to
stake out ? Providing long-term direction ? Giving firm a strong identity
Characteristics of a Strategic Vision
? A roadmap of a company‘s future
? Future
technology-productcustomer focus and product markets to to be developed
? Geographic
pursue
? Capabilities ? Kind
of company management is trying to create
Committing the company to one directional path versus another: External considerations
? Is the outlook for the company promising if it simply maintains
?
? ? ?
its present product / market / customer / technology focus? Does sticking with the company‘s present strategic course present attractive growth opportunities? Are changes under way in the market and competitive landscape enhancing or weakening the outlook for the company‘s present business? What, if any, new customer groups and/or geographic markets should the company get in position to serve? Which emerging market opportunities should the company pursue and which ones should it avoid? Should the company plan to abandon any of the markets, market segments, or customer groups currently served?
Committing the company to one directional path versus another: Internal considerations
? What are the ambitions for the company? What industry ? ?
?
?
standing does management want the company to have? Will the company‘s present business generate sufficient growth and profitability in the years ahead to please stakeholders? What organizational strengths ought the company be trying to leverage in terms of adding new products or services and/or getting into new businesses? Is the company stretching its resources too thin by trying to compete in too many markets or segments? Are some pieces of the company‘s business unprofitable? Is the company‘s technological focus too broad or too narrow? Are any changes needed?
Example: John Deere?s Strategic Vision Who Are We?
John Deere has grown and prospered through a longstanding partnership with the world‘s most productive farmers. Today, John Deere is a global company with several equipment operations and complementary service businesses. These businesses are closely interrelated, providing the company with significant growth opportunities and other synergistic benefits.
Example: John Deere?s Strategic Vision Where Are We Going?
? Deere is committed to providing genuine value to
the company‘s stakeholders. In support of that commitment, Deere aspires to: ? Grow and pursue leadership positions in each of our businesses. ? Extend our preeminent leadership position in the agricultural equipment market worldwide. ? Create new opportunities to leverage the John Deere brand globally.
Example: John Deere?s Strategic Vision
How Will We Get There?
? By pursuing the broader corporate goals of
profitable growth and continuous improvement, each of the company‘s businesses is expected to:
? Achieve world-class performance by attaining a
strong competitive position in target markets.
? Exceed customer expectations for quality and
value.
? Earn in excess of the cost of capital over a
business cycle.
Example: John Deere?s Strategic Vision
How Will We Get There?
? By growing profitably and continuously improving,
each of the company‘s businesses will benefit from and contribute to Deere‘s unique intangible assets: ? Our distinguished brand. ? Our heritage of integrity and teamwork. ? Our advanced skills. ? The special relationships that have long existed between the company and our employees, customers, dealers and other business partners around the world.
Example: John Deere?s Strategic Vision
How Will We Measure Our Performance?
? Each business will make a positive contribution to
the corporation‘s objectives in the pursuit of creating genuine value for our stakeholders. Our ?scorecard? includes: ? Human Resources--employee satisfaction, training ? Customer Focus--loyalty, market leadership ? Business Processes--productivity, quality, cost, environment ? Business Results--return on assets, sales growth
Example: Delta Airline?s Strategic Vision
DELTA AIRLINES
. . . . . . we want Delta to be the WORLDWIDE AIRLINE OF CHOICE.
Example: Delta Airline?s Strategic Vision
DELTA AIRLINES
WORLDWIDE, because we are and intend
to remain an innovative, aggressive, ethical, and successful competitor that offers access to the world at the highest standards of customer service. We will continue to look for opportunities to extend our reach through new routes and creative global alliances.
Example: Delta Airline?s Strategic Vision
DELTA AIRLINES
AIRLINE, because we intend to stay in the
business we know best -- air transportation and related services. We won‘t stray from our roots. We believe in the long-term prospects for profitable growth in the airline industry, and we will continue to focus time, attention, and investment on enhancing our place in that business environment.
Example: Delta Airline?s Strategic Vision
DELTA AIRLINES
OF CHOICE, because we value the loyalty of
our customers, employees, and investors. For passengers and shippers, we will continue to provide the best service and value. For our personnel, we will continue to offer an ever more challenging, rewarding, and result-oriented workplace that recognizes and appreciates their contributions. For our shareholders, we will earn a consistent, superior financial return.
Three Elements of a Strategic Vision
Use the mission statement as a starting point Develop a strategic vision that spells out a course to pursue
Communicate the vision in a clear and exciting manner
Characteristics of an effectively worded vision statement
? Graphic: ? A well-stated vision paints a picture of the kind of
company that management is trying to create and the market position the company is striving to stake out. ? Directional: ? A well-stated vision says something about the company‘s journey or destination and signals the kinds of business and strategic changes that will be forthcoming. ? Focused: ? A well-stated vision is specific enough to provide managers with guidance in making decisions and allocating resources.
Characteristics of an effectively worded vision statement
? Flexible:
pronouncement – visions about a company‘s future path may need to change as events unfold and circumstances change. ? Feasible: ? A well-stated vision is within the realm of what the company can reasonably expect to achieve in due time. ? Desirable: ? A well-stated vision appeals to the long-term interests of stakeholders. ? Easy to communicate: ? A well-stated vision is explainable in less than 10 minutes and ideally can be reduced to a simple, memorable slogan.
? A well-stated vision is not a once-and-for-all-time
Common shortcomings in company vision statements
? Incomplete: short on specifics about where the company is headed
?
?
?
?
?
?
for or what kind of company management is trying to create. Vague: doesn‘t provide much indication of whether or how management intends to alter the company‘s current product / market / customer / technology focus. Bland: lacking in motivational power. Not distinctive: could apply to most any company (or at least several others in the same industry). Too reliant on such superlatives as ?best‘, ?most successful‘, ?recognized leader‘, ?global leader‘ or ?first choice of customers‘. Too generic: fails to identify the business or industry to which it is supposed to apply. The statement could apply to companies in any of several industries. So broad that it really doesn‘t rule out most any opportunity that management might opt to pursue.
Characteristics of a Mission Statement
? Defines current business activities ? Highlights boundaries of current business
? Conveys
? Who we are, ? What we do, and
? Where we are now
? Company specific, not generic —
so as to give a company its own identity
A company’s mission is not to make a profit ! The real mission is always—“What will we do to make a profit?”
Defining a Company?s Business
? A good business definition incorporates
three factors ? Customer needs -- What is being satisfied ? Customer groups -- Who is being satisfied ? Technologies and competencies employed -- How value is delivered to customers to satisfy their needs
Business Mission: Cardinal Health
? Cardinal Health is a leading provider of
services supporting health care worldwide.
? The company offers a broad array of services for
health-care providers and manufacturers to help them improve the efficiency and quality of health care.
? These services include pharmaceutical distribution,
health-care product manufacturing and distribution, drug delivery systems development, . . . , retail pharmacy franchising, and health-care information systems development.
Business Mission: JDS Uniphase
? JDS Uniphase is the leading provider of advanced fiber
optic components and modules.
? These products are sold to the world’s
leading telecommunications and cable television system providers . . .
? Our products perform both optical-only functions and
optoelectronic functions within fiber option networks.
? Our products include semiconductor lasers, . . . , and
isolators for fiber optic applications.
? In addition, we design, manufacture, and market laser
subsystems for a broad range of OEM applications, which include . . .
Business Mission: Russell Corp.
? Russell Corporation is a vertically integrated
international designer, manufacturer, and marketer of athletic uniforms, . . . , and a comprehensive line of lightweight, yarn-dyed woven fabrics.
? The Company‘s manufacturing operations include
the entire process of converting raw fibers into finished apparel and fabrics.
? Products are marketed to sporting goods
dealers, department and specialty stores, mass merchandisers, . . . , and other apparel manufacturers.
Broad or Narrow Mission Statements?
? Narrow enough to specify real arena of
interest
? Serve as ? Boundary for what to do and not do ? Beacon of where top management intends
to take firm
? Diversified companies have broader
business definitions than single-business enterprises
Definitions: Broad vs. Narrow Scope
? Broad Definition
? Furniture ? Telecommunications ? Beverages
? Narrow Definition
? Wrought-iron lawn
furniture
? Long-distance
telephone service
? Soft drinks
? Global mail delivery
? Travel & tourism
? Overnight package
delivery
? Caribbean cruises
Business Mission: The McGraw Hill Companies (a diversified firm)
? The McGraw-Hill Companies is a global publishing,
financial, information and media services company with such renowned brands as Standard & Poor’s, Business Week, and McGraw-Hill educational and professional materials.
? The Company provides information via various media
platforms: books, magazines and newsletters; on-line; via television, satellite and FM sideband broadcast; and software, videotape, facsimile and CD-ROM products.
? The Company now creates more than 90 % of its
information on digital platforms and its business units are represented on more than 75 Web sites.
Business Mission: FDX Corporation
(a diversified firm)
? FDX is composed of a powerful family of companies:
FedEx, RPS, Viking Freight, FDX Global Logistics and Roberts Express.
? These companies offer logistics and distribution
solutions on a regional, national and global scale: fast, reliable, time-definite express delivery; . . . expedited same-day delivery; . . . ; and integrated information and logistics solutions
? With all this expertise under one umbrella, the FDX
companies can provide businesses with the competitive advantage they need by providing streamlined solutions that are on the cutting edge of technology.
Example: Mission Statement
Pfizer Inc.
Pfizer is a research-based, global pharmaceutical company. We discover and develop innovative, value-added products that improve the quality of life of people around the world and help them enjoy longer, healthier, and more productive lives. The company has three business segments: health care, animal health and consumer health care. Our products are available in more than 150 countries.
Example: Mission Statement
Ritz-Carlton Hotels
The Ritz-Carlton Hotel is a place where the genuine care and comfort of our guests is our highest mission. We pledge to provide the finest personal service and facilities for our guests who will always enjoy a warm, relaxed yet refined ambiance. The Ritz-Carlton experiences enlivens the senses, instills well-being, and fulfills even the unexpressed wishes and needs of our guests.
Example: Mission Statement
Apple Computer
Apple Computer, Inc., ignited the personal computer revolution in the 1970s with the Apple II, and reinvented the personal computer in the 1980s with the Macintosh.
Apple is now committed to its original mission--to bring the best personal computing products and support to students, educators, designers, scientists, engineers, business persons and consumers in over 140 countries around the world.
Example: Mission Statement
The Gillette Company
The Gillette Company is a globally focused consumer products company that seeks competitive advantage in quality, value-added personal care and personal use products. We compete in four large, worldwide businesses: personal grooming products, consumer portable power products, stationery products and small electrical appliances. As a company, we share skills and resources among business units to optimize performance. We are committed to a plan of sustained sales and profit growth that recognizes and balances both short- and long-term objectives.
Example: Mission Statement
The Gillette Company
Our mission is to achieve or enhance clear leadership, worldwide, in the existing or new core consumer product categories in which we choose to compete. Current core categories are: ? Male grooming products - blades and razors, electric shavers, shaving preparations and deodorants . . . ? Female grooming products - wet shaving products, hair removal and hair care appliances and deodorants . . . ? Alkaline and specialty batteries and cells. ? Writing instruments and correction products. ? Certain areas of the oral care market - toothbrushes . . . ? Selected areas of the high-quality small household appliance business - coffeemakers . . .
Mission Statements for Functional Departments
? Spotlights department‘s ? Role and scope of activities ? Direction which department needs
to pursue
? Contribution to firm‘s overall
mission
Mission Statements of Functional Departments
HUMAN RESOURCES To contribute to organizational success by developing effective leaders, creating high performance teams, and maximizing the potential of individuals.
CORPORATE SECURITY To provide services for the protection of corporate personnel and assets through preventive measures and investigations.
Entrepreneurial Challenges in Forming a Strategic Vision
? How to creatively prepare a company for the
future
? How to keep the company responsive to
? Evolving customer needs
? Competitive pressures ? New technologies ? New market opportunities ? Growing or shrinking opportunities
Intel?s “Strategic Inflection Points”
? Prior to mid-1980s ? Focus on memory chips ? Starting in mid-1980s ? Abandon memory chip business and ? Become preeminent supplier of
microprocessors to PC industry ? Make PC central appliance in workplace and home ? Be undisputed leader in driving PC technology forward
? 1998 ? Shift focus from PC technology to becoming the
preeminent building block supplier to the Internet economy
Communicating the Vision
? An exciting, inspirational vision ? Challenges and motivates workforce ? Arouses strong sense of organizational
purpose
? Induces employee buy-in ? Galvanizes people to live the business
Managerial Value of a Well-Conceived Strategic Vision and Mission
? Crystallizes long-term direction
? Reduces risk of rudderless decision-
making
? Conveys organizational purpose and
identity
? Keeps direction-related actions of
lower-level managers on common path
? Helps organization prepare for the
future
Missions vs. Strategic Visions
? A mission statement ? A strategic vision
focuses on current business activities -“who we are and what we do”
? Current
concerns a firm‘s future business path -“where we are going”
? Markets
product and service offerings ? Customer needs being served ? Technological and business capabilities
to be pursued ? Future technologyproduct-customer focus ? Kind of company that management is trying to create
Why is a Strategic Vision Important?
? A managerial imperative exists to look beyond
today and think strategically about
? Impact of new technologies
? How customer needs and expectations are
changing
? What it will take to outrun competitors
? Which promising market opportunities ought to
be aggressively pursued
? External and internal factors driving what a
company needs to do to prepare for the future
Here are more examples:
Microsoft Corporation
Empower people through great software anytime, anyplace, and on any device.
Examples: Mission and Vision Statements
Intel
Our vision: Getting to a billion connected computers worldwide, millions of servers, and trillions of dollars of e-commerce. Intel’s core mission is being the building block supplier to the Internet economy and spurring efforts to make the Internet more useful. Being
connected is now at the center of people’s computing experience. We are helping to expand the capabilities of the PC platform and the Internet.
Examples: Mission and Vision Statements
Otis Elevator
Our mission is to provide any customer a means of moving people and things up, down, and sideways over short distances with higher reliability than any similar enterprise in the world.
Avis Rent-a-Car
Our business is renting cars. Our mission is total customer satisfaction.
Examples: Mission and Vision Statements
(a unique grocery store chain)
Our mission: To give our customers the best food and beverage values that they can find anywhere and to provide them with the information required for informed buying decisions. We provide these with a dedication to the highest quality of customer satisfaction delivered with a sense of warmth, friendliness, fun, individual pride, and company spirit.
Examples: Mission and Vision Statements
American Red Cross
The mission of the American Red Cross is to improve the quality of human life; to enhance self-reliance and concern for others; and to help people avoid, prepare for, and cope with emergencies.
Examples: Mission and Vision Statements
3Com
Our mission is to connect more people and organizations to information in more innovative, simple, and reliable ways than any other networking company in the world. Our vision of pervasive networking is of a world where connections are simpler, more powerful, more affordable, more global, and more available to all.
Examples: Mission and Vision Statements
To be America’s best quick service restaurant chain. We will provide each guest great tasting, healthful, reasonably priced fish, seafood, and chicken in a fast, friendly manner on every visit.
The mission is to extend and enhance human life by providing the highest quality health and personal care products. We intend to be the preeminent global diversified health and personal care company.
Examples: Mission and Vision Statements
Eastman Kodak
We are in the picture business.
Wit Capital
(an Internet startup company)
Our mission is to be the premier Internet investment banking firm focused on the offering and selling of securities to a community of online individual investors.
Setting Objectives
? Converts strategic vision and mission into
specific performance targets
? Creates yardsticks to track performance ? Pushes firm to be inventive and focused
on results
? Helps prevent complacency and coasting
Types of Objectives Required
Financial Objectives
Outcomes focused on improving financial performance
Strategic Objectives
Outcomes focused on improving long-term, competitive business position
Examples of Financial Objectives
? ?
Grow earnings per share 15% annually Boost annual return on investment (or EVA) from 15% to 20% within three years
?
Increase annual dividends per share to stockholders by 5% each year
Strive for stock price appreciation equal to or above the S&P 500 average Maintain a positive cash flow every year
?
? ?
Achieve and maintain a AA bond rating
Examples of Strategic Objectives
? Increase firm‘s market share ? Overtake key rivals on quality or
customer service or product performance
? Attain lower overall costs than rivals ? Boost firm‘s reputation with customers ? Attain stronger foothold in international markets ? Achieve technological superiority
? Become leader in new product introductions
? Capture attractive growth opportunities
Examples: Strategic Objectives Banc One Corporation
To be one of the top three banking companies in terms of market share in all significant markets we serve.
Domino?s Pizza
To safely deliver a hot, quality pizza in 30 minutes or less at a fair price and a reasonable profit.
Example: Strategic Objectives
? To satisfy our customers by providing ? Quality cars and trucks,
? Developing new products,
? Reducing the time it takes to bring new
vehicles to market, ? Improving the efficiency of all our plants & processes, and ? Building on our teamwork with employees, unions, dealers, and suppliers.
Examples: Strategic and Financial Objectives Alcan Aluminum
To be the lowest-cost producer of aluminum and to outperform the average return on equity of the Standard and Poor’s industrial stock index.
Atlas Corporation
To become a low-cost, medium-size gold producer, producing in excess of 125,000 ounces of gold a year and building gold reserves of 1,500,000 ounces.
Example: Strategic Objective
To focus globally on those businesses in health and personal care where we can be number one or number two through delivering superior value to the customer.
Example: Financial and Strategic Objectives
3M Corporation
? Annual growth in earnings per share of 10% or
better, on average;
? A return on stockholders’ equity of 20-25%;
? A return on capital employed of 27% or better;
and
? Have at least 30% of sales come from
products introduced in the past four years.
Crafting a Strategy: Two questions – „whether? and „how?
? Strategy involves determining whether to
? Concentrate
on a single business or several businesses (diversification) ? Cater to a broad range of customers or focus on a particular niche ? Develop a wide or narrow product line ? Pursue a competitive advantage based on ? Low cost or ? Product superiority or ? Unique organizational capabilities
Crafting a Strategy: Two questions – „whether? and „how?
? Involves
deciding how to ? Respond to changing buyer preferences ? Respond to new market conditions ? Grow the business over the long-term ? Achieve performance targets ? Outcompete rivals
The Hows That Define a Firm's Strategy
? ? ?
How to grow the business How to please customers How to outcompete rivals
?
?
How to respond to changing market conditions
How to manage each functional piece of the business and develop needed organizational capabilities How to achieve strategic and financial objectives
?
Understanding a Company?s Strategy -What to Look For
Actions to diversify Actions to strengthen resources & capabilities How functional activities are managed Efforts to pursue new opportunities or defend against threats Actions to outcompete rivals Responses to changing external circumstances Actions to alter geographic coverage Actions to merge or acquire rival companies
Pattern of Actions That Define Strategy
Actions to form strategic alliances and collaborative partnerships
Strategic Priorities of McDonald?s
?
? ? ? ? ?
Continued growth
Providing exceptional customer care Remaining an efficient and quality producer Developing people at every organizational level Sharing best practices among all units Reinventing the fast food concept by fostering innovation in the menu, facilities, marketing, operation, and technology
Core Elements of McDonald?s Strategy
? ?
? ? ? ?
?
?
Add 1750 restaurants annually Promote frequent customer visits via attractive menu items, low-price specials, and Extra Value Meals Be highly selective in granting franchises Locate on sites offering convenience to customers and profitable growth potential Focus on limited menu and consistent quality Careful attention to store efficiency Extensive advertising and use of Mc prefix Hire courteous personnel; pay an equitable wage; provide good training
Crafting Strategy is an Exercise in Entrepreneurship
?
Strategy-making is a market-driven and customer-driven activity that involves ? Keen eye for spotting emerging market opportunities ? Keen observation of customer needs ? Innovation and creativity ? Prudent risk-taking ? Strong sense of how to grow and strengthen business
Characteristics of Managers with Good Entrepreneurial Skills
? ? ?
Boldly pursue new strategic opportunities
Emphasize out-innovating the competition
Lead the way to improve firm performance
?
?
Willing to be a first-mover and take risks
Respond quickly and opportunistically to new developments Devise trail blazing strategies
?
Why Do Strategies Evolve?
?
There is always an ongoing need to react to ? Shifting market conditions ? Fresh moves of competitors ? New technologies ? Evolving customer preferences ? Political and regulatory changes ? New windows of opportunity ? Crisis situations
What is a Strategic Plan?
Where firm is headed -Strategic vision and business mission Short and long term performance targets -- Strategic and financial objectives Action approaches to achieve targeted results -- A comprehensive strategy
Implementing and Executing Strategy
? Taking actions to put a freshly-chosen
strategy into place
? Supervising the ongoing pursuit of strategy ? Improving the competence and efficiency
with which the strategy is being executed
?
Showing measurable progress in achieving the targeted results and objectives
Monitoring, Evaluating, and Taking Corrective Actions as Needed
?
The tasks of crafting, implementing, and executing a strategy are not a one-time exercise
? ? ? ? ?
Customer needs and competitive conditions change New opportunities appear; technology advances; any number of other outside developments occur One or more aspects of executing the strategy may not be going well New managers with different ideas take over Organizational learning occurs
?
All these trigger the need for corrective actions and adjustments
doc_811269549.ppt
The ppt is explaining about strategy concepts and definitions.
The vocabulary of strategy
Relation between a firm?s mission, objectives, strategies and tactics Mission Objectives A firm’s fundamental purposes. Specific measurable performance targets that firms aspire to reach in each of the areas covered by a firm’s mission. Means through which firms accomplish a mission and objectives. Actions firms take to implement their strategies.
Strategies
Tactics / Policies
Developing a Strategic Vision
? Involves thinking strategically about
? Firm‘s future business plans ? Where to ?go?
? Tasks include
? Creating a roadmap of the future ? Deciding future business position to
stake out ? Providing long-term direction ? Giving firm a strong identity
Characteristics of a Strategic Vision
? A roadmap of a company‘s future
? Future
technology-productcustomer focus and product markets to to be developed
? Geographic
pursue
? Capabilities ? Kind
of company management is trying to create
Committing the company to one directional path versus another: External considerations
? Is the outlook for the company promising if it simply maintains
?
? ? ?
its present product / market / customer / technology focus? Does sticking with the company‘s present strategic course present attractive growth opportunities? Are changes under way in the market and competitive landscape enhancing or weakening the outlook for the company‘s present business? What, if any, new customer groups and/or geographic markets should the company get in position to serve? Which emerging market opportunities should the company pursue and which ones should it avoid? Should the company plan to abandon any of the markets, market segments, or customer groups currently served?
Committing the company to one directional path versus another: Internal considerations
? What are the ambitions for the company? What industry ? ?
?
?
standing does management want the company to have? Will the company‘s present business generate sufficient growth and profitability in the years ahead to please stakeholders? What organizational strengths ought the company be trying to leverage in terms of adding new products or services and/or getting into new businesses? Is the company stretching its resources too thin by trying to compete in too many markets or segments? Are some pieces of the company‘s business unprofitable? Is the company‘s technological focus too broad or too narrow? Are any changes needed?
Example: John Deere?s Strategic Vision Who Are We?
John Deere has grown and prospered through a longstanding partnership with the world‘s most productive farmers. Today, John Deere is a global company with several equipment operations and complementary service businesses. These businesses are closely interrelated, providing the company with significant growth opportunities and other synergistic benefits.
Example: John Deere?s Strategic Vision Where Are We Going?
? Deere is committed to providing genuine value to
the company‘s stakeholders. In support of that commitment, Deere aspires to: ? Grow and pursue leadership positions in each of our businesses. ? Extend our preeminent leadership position in the agricultural equipment market worldwide. ? Create new opportunities to leverage the John Deere brand globally.
Example: John Deere?s Strategic Vision
How Will We Get There?
? By pursuing the broader corporate goals of
profitable growth and continuous improvement, each of the company‘s businesses is expected to:
? Achieve world-class performance by attaining a
strong competitive position in target markets.
? Exceed customer expectations for quality and
value.
? Earn in excess of the cost of capital over a
business cycle.
Example: John Deere?s Strategic Vision
How Will We Get There?
? By growing profitably and continuously improving,
each of the company‘s businesses will benefit from and contribute to Deere‘s unique intangible assets: ? Our distinguished brand. ? Our heritage of integrity and teamwork. ? Our advanced skills. ? The special relationships that have long existed between the company and our employees, customers, dealers and other business partners around the world.
Example: John Deere?s Strategic Vision
How Will We Measure Our Performance?
? Each business will make a positive contribution to
the corporation‘s objectives in the pursuit of creating genuine value for our stakeholders. Our ?scorecard? includes: ? Human Resources--employee satisfaction, training ? Customer Focus--loyalty, market leadership ? Business Processes--productivity, quality, cost, environment ? Business Results--return on assets, sales growth
Example: Delta Airline?s Strategic Vision
DELTA AIRLINES
. . . . . . we want Delta to be the WORLDWIDE AIRLINE OF CHOICE.
Example: Delta Airline?s Strategic Vision
DELTA AIRLINES
WORLDWIDE, because we are and intend
to remain an innovative, aggressive, ethical, and successful competitor that offers access to the world at the highest standards of customer service. We will continue to look for opportunities to extend our reach through new routes and creative global alliances.
Example: Delta Airline?s Strategic Vision
DELTA AIRLINES
AIRLINE, because we intend to stay in the
business we know best -- air transportation and related services. We won‘t stray from our roots. We believe in the long-term prospects for profitable growth in the airline industry, and we will continue to focus time, attention, and investment on enhancing our place in that business environment.
Example: Delta Airline?s Strategic Vision
DELTA AIRLINES
OF CHOICE, because we value the loyalty of
our customers, employees, and investors. For passengers and shippers, we will continue to provide the best service and value. For our personnel, we will continue to offer an ever more challenging, rewarding, and result-oriented workplace that recognizes and appreciates their contributions. For our shareholders, we will earn a consistent, superior financial return.
Three Elements of a Strategic Vision
Use the mission statement as a starting point Develop a strategic vision that spells out a course to pursue
Communicate the vision in a clear and exciting manner
Characteristics of an effectively worded vision statement
? Graphic: ? A well-stated vision paints a picture of the kind of
company that management is trying to create and the market position the company is striving to stake out. ? Directional: ? A well-stated vision says something about the company‘s journey or destination and signals the kinds of business and strategic changes that will be forthcoming. ? Focused: ? A well-stated vision is specific enough to provide managers with guidance in making decisions and allocating resources.
Characteristics of an effectively worded vision statement
? Flexible:
pronouncement – visions about a company‘s future path may need to change as events unfold and circumstances change. ? Feasible: ? A well-stated vision is within the realm of what the company can reasonably expect to achieve in due time. ? Desirable: ? A well-stated vision appeals to the long-term interests of stakeholders. ? Easy to communicate: ? A well-stated vision is explainable in less than 10 minutes and ideally can be reduced to a simple, memorable slogan.
? A well-stated vision is not a once-and-for-all-time
Common shortcomings in company vision statements
? Incomplete: short on specifics about where the company is headed
?
?
?
?
?
?
for or what kind of company management is trying to create. Vague: doesn‘t provide much indication of whether or how management intends to alter the company‘s current product / market / customer / technology focus. Bland: lacking in motivational power. Not distinctive: could apply to most any company (or at least several others in the same industry). Too reliant on such superlatives as ?best‘, ?most successful‘, ?recognized leader‘, ?global leader‘ or ?first choice of customers‘. Too generic: fails to identify the business or industry to which it is supposed to apply. The statement could apply to companies in any of several industries. So broad that it really doesn‘t rule out most any opportunity that management might opt to pursue.
Characteristics of a Mission Statement
? Defines current business activities ? Highlights boundaries of current business
? Conveys
? Who we are, ? What we do, and
? Where we are now
? Company specific, not generic —
so as to give a company its own identity
A company’s mission is not to make a profit ! The real mission is always—“What will we do to make a profit?”
Defining a Company?s Business
? A good business definition incorporates
three factors ? Customer needs -- What is being satisfied ? Customer groups -- Who is being satisfied ? Technologies and competencies employed -- How value is delivered to customers to satisfy their needs
Business Mission: Cardinal Health
? Cardinal Health is a leading provider of
services supporting health care worldwide.
? The company offers a broad array of services for
health-care providers and manufacturers to help them improve the efficiency and quality of health care.
? These services include pharmaceutical distribution,
health-care product manufacturing and distribution, drug delivery systems development, . . . , retail pharmacy franchising, and health-care information systems development.
Business Mission: JDS Uniphase
? JDS Uniphase is the leading provider of advanced fiber
optic components and modules.
? These products are sold to the world’s
leading telecommunications and cable television system providers . . .
? Our products perform both optical-only functions and
optoelectronic functions within fiber option networks.
? Our products include semiconductor lasers, . . . , and
isolators for fiber optic applications.
? In addition, we design, manufacture, and market laser
subsystems for a broad range of OEM applications, which include . . .
Business Mission: Russell Corp.
? Russell Corporation is a vertically integrated
international designer, manufacturer, and marketer of athletic uniforms, . . . , and a comprehensive line of lightweight, yarn-dyed woven fabrics.
? The Company‘s manufacturing operations include
the entire process of converting raw fibers into finished apparel and fabrics.
? Products are marketed to sporting goods
dealers, department and specialty stores, mass merchandisers, . . . , and other apparel manufacturers.
Broad or Narrow Mission Statements?
? Narrow enough to specify real arena of
interest
? Serve as ? Boundary for what to do and not do ? Beacon of where top management intends
to take firm
? Diversified companies have broader
business definitions than single-business enterprises
Definitions: Broad vs. Narrow Scope
? Broad Definition
? Furniture ? Telecommunications ? Beverages
? Narrow Definition
? Wrought-iron lawn
furniture
? Long-distance
telephone service
? Soft drinks
? Global mail delivery
? Travel & tourism
? Overnight package
delivery
? Caribbean cruises
Business Mission: The McGraw Hill Companies (a diversified firm)
? The McGraw-Hill Companies is a global publishing,
financial, information and media services company with such renowned brands as Standard & Poor’s, Business Week, and McGraw-Hill educational and professional materials.
? The Company provides information via various media
platforms: books, magazines and newsletters; on-line; via television, satellite and FM sideband broadcast; and software, videotape, facsimile and CD-ROM products.
? The Company now creates more than 90 % of its
information on digital platforms and its business units are represented on more than 75 Web sites.
Business Mission: FDX Corporation
(a diversified firm)
? FDX is composed of a powerful family of companies:
FedEx, RPS, Viking Freight, FDX Global Logistics and Roberts Express.
? These companies offer logistics and distribution
solutions on a regional, national and global scale: fast, reliable, time-definite express delivery; . . . expedited same-day delivery; . . . ; and integrated information and logistics solutions
? With all this expertise under one umbrella, the FDX
companies can provide businesses with the competitive advantage they need by providing streamlined solutions that are on the cutting edge of technology.
Example: Mission Statement
Pfizer Inc.
Pfizer is a research-based, global pharmaceutical company. We discover and develop innovative, value-added products that improve the quality of life of people around the world and help them enjoy longer, healthier, and more productive lives. The company has three business segments: health care, animal health and consumer health care. Our products are available in more than 150 countries.
Example: Mission Statement
Ritz-Carlton Hotels
The Ritz-Carlton Hotel is a place where the genuine care and comfort of our guests is our highest mission. We pledge to provide the finest personal service and facilities for our guests who will always enjoy a warm, relaxed yet refined ambiance. The Ritz-Carlton experiences enlivens the senses, instills well-being, and fulfills even the unexpressed wishes and needs of our guests.
Example: Mission Statement
Apple Computer
Apple Computer, Inc., ignited the personal computer revolution in the 1970s with the Apple II, and reinvented the personal computer in the 1980s with the Macintosh.
Apple is now committed to its original mission--to bring the best personal computing products and support to students, educators, designers, scientists, engineers, business persons and consumers in over 140 countries around the world.
Example: Mission Statement
The Gillette Company
The Gillette Company is a globally focused consumer products company that seeks competitive advantage in quality, value-added personal care and personal use products. We compete in four large, worldwide businesses: personal grooming products, consumer portable power products, stationery products and small electrical appliances. As a company, we share skills and resources among business units to optimize performance. We are committed to a plan of sustained sales and profit growth that recognizes and balances both short- and long-term objectives.
Example: Mission Statement
The Gillette Company
Our mission is to achieve or enhance clear leadership, worldwide, in the existing or new core consumer product categories in which we choose to compete. Current core categories are: ? Male grooming products - blades and razors, electric shavers, shaving preparations and deodorants . . . ? Female grooming products - wet shaving products, hair removal and hair care appliances and deodorants . . . ? Alkaline and specialty batteries and cells. ? Writing instruments and correction products. ? Certain areas of the oral care market - toothbrushes . . . ? Selected areas of the high-quality small household appliance business - coffeemakers . . .
Mission Statements for Functional Departments
? Spotlights department‘s ? Role and scope of activities ? Direction which department needs
to pursue
? Contribution to firm‘s overall
mission
Mission Statements of Functional Departments
HUMAN RESOURCES To contribute to organizational success by developing effective leaders, creating high performance teams, and maximizing the potential of individuals.
CORPORATE SECURITY To provide services for the protection of corporate personnel and assets through preventive measures and investigations.
Entrepreneurial Challenges in Forming a Strategic Vision
? How to creatively prepare a company for the
future
? How to keep the company responsive to
? Evolving customer needs
? Competitive pressures ? New technologies ? New market opportunities ? Growing or shrinking opportunities
Intel?s “Strategic Inflection Points”
? Prior to mid-1980s ? Focus on memory chips ? Starting in mid-1980s ? Abandon memory chip business and ? Become preeminent supplier of
microprocessors to PC industry ? Make PC central appliance in workplace and home ? Be undisputed leader in driving PC technology forward
? 1998 ? Shift focus from PC technology to becoming the
preeminent building block supplier to the Internet economy
Communicating the Vision
? An exciting, inspirational vision ? Challenges and motivates workforce ? Arouses strong sense of organizational
purpose
? Induces employee buy-in ? Galvanizes people to live the business
Managerial Value of a Well-Conceived Strategic Vision and Mission
? Crystallizes long-term direction
? Reduces risk of rudderless decision-
making
? Conveys organizational purpose and
identity
? Keeps direction-related actions of
lower-level managers on common path
? Helps organization prepare for the
future
Missions vs. Strategic Visions
? A mission statement ? A strategic vision
focuses on current business activities -“who we are and what we do”
? Current
concerns a firm‘s future business path -“where we are going”
? Markets
product and service offerings ? Customer needs being served ? Technological and business capabilities
to be pursued ? Future technologyproduct-customer focus ? Kind of company that management is trying to create
Why is a Strategic Vision Important?
? A managerial imperative exists to look beyond
today and think strategically about
? Impact of new technologies
? How customer needs and expectations are
changing
? What it will take to outrun competitors
? Which promising market opportunities ought to
be aggressively pursued
? External and internal factors driving what a
company needs to do to prepare for the future
Here are more examples:
Microsoft Corporation
Empower people through great software anytime, anyplace, and on any device.
Examples: Mission and Vision Statements
Intel
Our vision: Getting to a billion connected computers worldwide, millions of servers, and trillions of dollars of e-commerce. Intel’s core mission is being the building block supplier to the Internet economy and spurring efforts to make the Internet more useful. Being
connected is now at the center of people’s computing experience. We are helping to expand the capabilities of the PC platform and the Internet.
Examples: Mission and Vision Statements
Otis Elevator
Our mission is to provide any customer a means of moving people and things up, down, and sideways over short distances with higher reliability than any similar enterprise in the world.
Avis Rent-a-Car
Our business is renting cars. Our mission is total customer satisfaction.
Examples: Mission and Vision Statements
(a unique grocery store chain)
Our mission: To give our customers the best food and beverage values that they can find anywhere and to provide them with the information required for informed buying decisions. We provide these with a dedication to the highest quality of customer satisfaction delivered with a sense of warmth, friendliness, fun, individual pride, and company spirit.
Examples: Mission and Vision Statements
American Red Cross
The mission of the American Red Cross is to improve the quality of human life; to enhance self-reliance and concern for others; and to help people avoid, prepare for, and cope with emergencies.
Examples: Mission and Vision Statements
3Com
Our mission is to connect more people and organizations to information in more innovative, simple, and reliable ways than any other networking company in the world. Our vision of pervasive networking is of a world where connections are simpler, more powerful, more affordable, more global, and more available to all.
Examples: Mission and Vision Statements
To be America’s best quick service restaurant chain. We will provide each guest great tasting, healthful, reasonably priced fish, seafood, and chicken in a fast, friendly manner on every visit.
The mission is to extend and enhance human life by providing the highest quality health and personal care products. We intend to be the preeminent global diversified health and personal care company.
Examples: Mission and Vision Statements
Eastman Kodak
We are in the picture business.
Wit Capital
(an Internet startup company)
Our mission is to be the premier Internet investment banking firm focused on the offering and selling of securities to a community of online individual investors.
Setting Objectives
? Converts strategic vision and mission into
specific performance targets
? Creates yardsticks to track performance ? Pushes firm to be inventive and focused
on results
? Helps prevent complacency and coasting
Types of Objectives Required
Financial Objectives
Outcomes focused on improving financial performance
Strategic Objectives
Outcomes focused on improving long-term, competitive business position
Examples of Financial Objectives
? ?
Grow earnings per share 15% annually Boost annual return on investment (or EVA) from 15% to 20% within three years
?
Increase annual dividends per share to stockholders by 5% each year
Strive for stock price appreciation equal to or above the S&P 500 average Maintain a positive cash flow every year
?
? ?
Achieve and maintain a AA bond rating
Examples of Strategic Objectives
? Increase firm‘s market share ? Overtake key rivals on quality or
customer service or product performance
? Attain lower overall costs than rivals ? Boost firm‘s reputation with customers ? Attain stronger foothold in international markets ? Achieve technological superiority
? Become leader in new product introductions
? Capture attractive growth opportunities
Examples: Strategic Objectives Banc One Corporation
To be one of the top three banking companies in terms of market share in all significant markets we serve.
Domino?s Pizza
To safely deliver a hot, quality pizza in 30 minutes or less at a fair price and a reasonable profit.
Example: Strategic Objectives
? To satisfy our customers by providing ? Quality cars and trucks,
? Developing new products,
? Reducing the time it takes to bring new
vehicles to market, ? Improving the efficiency of all our plants & processes, and ? Building on our teamwork with employees, unions, dealers, and suppliers.
Examples: Strategic and Financial Objectives Alcan Aluminum
To be the lowest-cost producer of aluminum and to outperform the average return on equity of the Standard and Poor’s industrial stock index.
Atlas Corporation
To become a low-cost, medium-size gold producer, producing in excess of 125,000 ounces of gold a year and building gold reserves of 1,500,000 ounces.
Example: Strategic Objective
To focus globally on those businesses in health and personal care where we can be number one or number two through delivering superior value to the customer.
Example: Financial and Strategic Objectives
3M Corporation
? Annual growth in earnings per share of 10% or
better, on average;
? A return on stockholders’ equity of 20-25%;
? A return on capital employed of 27% or better;
and
? Have at least 30% of sales come from
products introduced in the past four years.
Crafting a Strategy: Two questions – „whether? and „how?
? Strategy involves determining whether to
? Concentrate
on a single business or several businesses (diversification) ? Cater to a broad range of customers or focus on a particular niche ? Develop a wide or narrow product line ? Pursue a competitive advantage based on ? Low cost or ? Product superiority or ? Unique organizational capabilities
Crafting a Strategy: Two questions – „whether? and „how?
? Involves
deciding how to ? Respond to changing buyer preferences ? Respond to new market conditions ? Grow the business over the long-term ? Achieve performance targets ? Outcompete rivals
The Hows That Define a Firm's Strategy
? ? ?
How to grow the business How to please customers How to outcompete rivals
?
?
How to respond to changing market conditions
How to manage each functional piece of the business and develop needed organizational capabilities How to achieve strategic and financial objectives
?
Understanding a Company?s Strategy -What to Look For
Actions to diversify Actions to strengthen resources & capabilities How functional activities are managed Efforts to pursue new opportunities or defend against threats Actions to outcompete rivals Responses to changing external circumstances Actions to alter geographic coverage Actions to merge or acquire rival companies
Pattern of Actions That Define Strategy
Actions to form strategic alliances and collaborative partnerships
Strategic Priorities of McDonald?s
?
? ? ? ? ?
Continued growth
Providing exceptional customer care Remaining an efficient and quality producer Developing people at every organizational level Sharing best practices among all units Reinventing the fast food concept by fostering innovation in the menu, facilities, marketing, operation, and technology
Core Elements of McDonald?s Strategy
? ?
? ? ? ?
?
?
Add 1750 restaurants annually Promote frequent customer visits via attractive menu items, low-price specials, and Extra Value Meals Be highly selective in granting franchises Locate on sites offering convenience to customers and profitable growth potential Focus on limited menu and consistent quality Careful attention to store efficiency Extensive advertising and use of Mc prefix Hire courteous personnel; pay an equitable wage; provide good training
Crafting Strategy is an Exercise in Entrepreneurship
?
Strategy-making is a market-driven and customer-driven activity that involves ? Keen eye for spotting emerging market opportunities ? Keen observation of customer needs ? Innovation and creativity ? Prudent risk-taking ? Strong sense of how to grow and strengthen business
Characteristics of Managers with Good Entrepreneurial Skills
? ? ?
Boldly pursue new strategic opportunities
Emphasize out-innovating the competition
Lead the way to improve firm performance
?
?
Willing to be a first-mover and take risks
Respond quickly and opportunistically to new developments Devise trail blazing strategies
?
Why Do Strategies Evolve?
?
There is always an ongoing need to react to ? Shifting market conditions ? Fresh moves of competitors ? New technologies ? Evolving customer preferences ? Political and regulatory changes ? New windows of opportunity ? Crisis situations
What is a Strategic Plan?
Where firm is headed -Strategic vision and business mission Short and long term performance targets -- Strategic and financial objectives Action approaches to achieve targeted results -- A comprehensive strategy
Implementing and Executing Strategy
? Taking actions to put a freshly-chosen
strategy into place
? Supervising the ongoing pursuit of strategy ? Improving the competence and efficiency
with which the strategy is being executed
?
Showing measurable progress in achieving the targeted results and objectives
Monitoring, Evaluating, and Taking Corrective Actions as Needed
?
The tasks of crafting, implementing, and executing a strategy are not a one-time exercise
? ? ? ? ?
Customer needs and competitive conditions change New opportunities appear; technology advances; any number of other outside developments occur One or more aspects of executing the strategy may not be going well New managers with different ideas take over Organizational learning occurs
?
All these trigger the need for corrective actions and adjustments
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