STRATEGY FORMULATION

VISION, MISSION
What is your vision?
Business Vision
¨ The first task in the process of strategic
management is to formulate the organization's
vision and mission statements
¨ They are define the organisational purpose of a
firm
Business Vision

Vision

Mission

Objective

Goals

Plan
Vision
¨ A vision statement should
answer the basic question,
“What do we want to
become?”

¨ Vision statement: sets out the

reasons and purpose for
organization’s existence and
the ideal state that the
organization aims to achieve
Vision
¨ Collins and Porras (1994) stated that a well-
conceived vision consists of two major components:
¤ Core ideology is based on the enduring values of the
organization (“what we stand for and why we exists”),
which remain unaffected by environmental changes.
¤ Envisioned future consists of a long-term goal (what we
aspire to become, to achieve, to create”) which
demands significant change and progress.
Vision
¨ Thompson and Strickland (2003) argued that some important
characteristics of an effective vision statement are:
¤ It must be easily communicable: Everybody should be able to
understand it clearly.
¤ It must be graphic: It must paint a picture of the kind of company the
management is trying to create.
¤ It must be directional: It must say something about the company’s journey
or destination.
¤ It must be feasible: It must be something which the company can
reasonably expect to achieve in due course of time.
¤ It must be focused: It must be specific enough to provide managers with
guidance in making decisions.
¤ It must be appealing to the long term interests of the stakeholders.
¤ It must be flexible: It must allow company’s future path to change as
events unfold and circumstances change.
Vision
¨ Thompson and Strickland (2003) point out the
significance of “vision” which is broadly as follows:
¤ It crystallizes top management’s own view about firm’s
long-term direction.
¤ It reduces the risk of rudderless decision-making.
¤ It serves as a tool for maximizing the support of
organization members for internal changes.
¤ It serves as a “beacon” to guide managers in decision-
making.
¤ It helps the organization to prepare for the future.
Mission

¨ Mission statement
¤ reveals what an organization wants to be and
whom it wants to serve
¤ Also called a creed statement, a statement of
purpose, a statement of philosophy, a statement
of beliefs, and a statement of business principles
Mission

¨ The reasons the organization exists

¨ Who are we

¨ What do we do

¨ For whom do we do it

¨ Why do we do it
Mission Statement Components
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
current?
Mission Statement Components
5. Concern for survival, growth, and
profitability—Is the firm committed to growth
and financial soundness?
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?
 Mission Statement Components
2-16

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?
Example Mission Statements
¨ We aspire to make PepsiCo the world’s (3)
premier consumer products company, focused
on convenient foods and beverages (2). We
seek to produce healthy financial rewards for
investors (5) as we provide opportunities for
growth and enrichment to our employees (9),
our business partners and the communities (8)
in which we operate. And in everything we do,
we strive to act with honesty, openness, fairness
and integrity (6).
Telkomsel Mission

¨ Memberikan layanan dan

solusi mobile digital yang
melebihi ekspektasi
pelanggan, memberikan
nilai tambah kepada
para stakeholders, dan
mendukung pertumbuhan
ekonomi bangsa
Importance of Vision and Mission
Statements
1. To ensure unanimity of purpose within the
organization
2. To provide a basis, or standard, for allocating
organizational resources
4. To establish a general tone or organizational
climate
5. To serve as a focal point for individuals to identify
with the organization’s purpose and direction
6. To facilitate the translation of objectives into a
work structure
7. To specify organizational purposes
Vision, Mission and Strategy

Vision and Goal and

Mission Objectives Strategy
Goal and objective
¨ Goals are statements you make about the future for
your business. They represent your aspirations for it
¨ Objectives are the exact steps your company must
take to reach its goals. Typically measurable and
quantifiable.
¨ Long term objective is a statement of results to be
achieved by a company in a given period is
generally three to five years
Long-Term Objectives
¨ To achieve long-term prosperity, strategic
planners commonly establish long-term objectives
in seven areas:
¤ Profitability – Productivity
¤ Competitive Position – Employee
Development
¤ Employee Relations – Productivity
¤ Tech Leadership – Public Responsibility
Qualities of Long-Term Objectives
¤ Acceptable
¤ Flexible
¤ Measurable over time
¤ Motivating
¤ Suitable
¤ Understandable
¤ Achievable
The Balanced Scorecard
¤ The scorecard allows managers to evaluate the
company from four perspectives:
n financial performance
n customer knowledge
n internal business processes
n learning and growth
The Balanced Scorecard
Perspective Generic Measurements
Financial Return of Capital Employed, Economic
Value added, Sales Growth, Cash Flow
Customer Customer Satisfaction, Retention,
Acquisition, Profitability, Market Share
Internal Business Process Includes measurements along the internal
value chain for:
• Innovation - measures of how well the
company identifies the customers’ future
needs.
• Operations - measures of quality, cycle
time, and costs.
• Post sales service - measures for
warranty, repair and treatment of
defects and returns.
Learning and growth includes measurements for:
• People - employee retention, training,
skills, morale.
• Systems - measure of availability of
critical real time information needed
for front line employees.
Next Week

¨ External Analysis
¨ Group discussion