MODULE BUSINESS POLICY AND STRATEGY

CHAPTER 2
CRITICAL BEGINNINGS

Objectives:
1. Define the vision statement
2. Differentiate the Vision and Mission statement

VISION STATEMENT
“One of the keys to a good strategic plan is that everyone [can understand] the
company’s vision, that is to say where it wants to be in the future.” A vision statement
should be focused on the future, usually looking out no more than three to five years. “A
vision statement should project to a point in time far enough from the present so that the
future for the organization is unpredictable.” Visualizing the focus of the organization
three to five years in the future can be extremely difficult. The vision statement should
be revised, as needed, to keep it fresh and useful. It should incorporate the company’s
main goals, as well as illustrate how the company plans to achieve these goals.
CHARACTERISTICS OF A GOOD VISION
An effective vision should describe the desired state that the company wants to
develop into in the next three to five years. It should be concrete, visual, and descriptive
of an ideal condition that provides direction for the company and all of the internal
stakeholders of the organization. The vision should be brief and focused, easily
understood, and remembered by the employees.
To summarize, vision statements should:
State where the company wants to be in the future, long term, usually three to
five years into the future.
Be concrete, visual, and descriptive of an ideal condition that provides direction and
guidelines.
Be brief — usually two to three sentences.
Be inspirational, challenging, and motivational.
Ensure that the vision is the CEO’s and, if applicable, the board of directors’ perception
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of what the firm will look like in the future.

The CEO, in his role as the figurehead, must live the vision and lead by
example. A vision must be more than a mere “slogan.” The CEO must communicate
the vision to all. Lee Iacocca (of Chrysler Corporation fame) and Herb Kelleher (CEO
of Southwest Airlines) are examples of CEOs who successfully communicated their
visions to their employees and stockholders.

VISION STATEMENT DEVELOPMENT

Companies have many options available to them when attempting to create a vision
statement. One method may be to hire a consultant and send the top management to a
resort for a few days until they come up with the vision the company will pursue. The
consultant’s responsibility is to keep all egos in check and keep everyone moving in the
right direction to complete the task as effectively as possible.

GUIDING PRINCIPLES AND COMPANY VALUES

Purpose and Goals
A company’s values should become the ethical guide that determines how business
will be conducted. For this reason, the values trump and deter- mine the firm’s mission,
in that the values must be congruent and sup- portive of the firm’s mission if it is to be
accomplished. Values are the principles that determine how an organization operates
and earns profit. Values must be lived by all levels to be effective. These principles
deter- mine the strategies that will be developed and the methods of strategy
implementation employed to achieve success.
Identification of Guiding Principles and Company Values

The guiding principles may be listed as follows:

■ Value statements should be short and clear.

■ Company values closely reflect the personal values of upper man-agement.

Can a leader impose his or her values on an organization if the culture already
exists? It is easier for a CEO to influence the organization if it is a newer
company than one that has been in existence for a long time.
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■
When conflict exists between stated values and a firm’s actions, believe the
action. “But when a company’s stated values clash with its actions, employees
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grow cynical and angry and often quit or check out mentally.”

■
Values must be operationalized (i.e., integrity may be a value, but how is
integrity demonstrated in the corporate environment?).
■
A problem many organizations encounter is that they do not consider the
customers’ needs as standards. Customer needs should be a value because
those who put customers first, succeed.
■
Values that are operationalized determine to a large extent how well the
organization will do.
■
It is best if organizational values are not directly linked to religious values.

This is because an organization’s value statement often becomes a public

document and differences in religious beliefs have often become the source of
conflict.
Identification of Values

Three of the more common methods used to develop organizational value

statements are:
1. The open listing approach uses nominal groups and brainstorming to help
identify values usually with the aid of a facilitator over several meeting periods.

2. The stakeholder listing approach is similar to the open listing approach;

however, values are characterized by those who have special interest in the
success of the organization including owners, customers, employees, the
community, suppliers, and creditors.
3. The business-function listing approach requires that values be
sorted and determined by individual business functions.
Recommendations for writing a good statement include:
1. Involve everyone.

2. Allow customization.
MODULE BUSINESS POLICY AND STRATEGY

3. Expect and accept resistance.

4. Keep it short.
5. Avoid religious references.

6. Challenge it.

7. Observe the values.

Examples of Typical Values

The following values (or similar values) are often stated by corporate America and
serve as examples:

■ We require adherence to a strict ethical code, which ensures that we

operate above reproach.
■ We acquire businesses that only support our strategic plan.
■ We will make training opportunities available to all employees.
■ We will meet our customer expectations.
■ Our company’s vision, values, and mission will drive our business
decisions.
Mission Statement
Whereas a vision statement focuses on the future, the mission statement should
focus on the present. It is typically about two to four sentences long and describes what
the organization does and the reason for the organization’s existence.

History of Mission Statements

A growing number of organizations, including both corporations and community
groups, have been utilizing mission statements since the 1980s. These mission
statements give “direction, purpose, and perspective” to those both inside and outside
of the organization including management, staff, clients, and prospects.
Mission Statement Development
A company mission statement is much more difficult to develop than one would
expect. Developing a mission statement involves taking the time to reflect on what the
company has accomplished and what it wants to accomplish.
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Stakeholders’ Involvement in the Development of a Mission

In developing a mission statement it is important to solicit input from all stakeholders.
An excellent mission statement is the product of many different stakeholders’
perspectives. Input should be sought from those stakeholders with the greatest
investment in the direction and success of the organization. Those stakeholders include
the shareholders, represented by the board of directors, the firm’s management and
nonmanagement personnel, and even its customers and suppliers.

Focus of the Mission Statement

The mission statement should keep an organization focused on the objec-tives it

wants to accomplish in relation to its key customers, products, and services. It should
be utilized by the firm when evaluating prospective business opportunities to ensure
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that would-be resource expenditures are in keeping with the company’s mission.
The mission should answer specific questions, such as the following:

■ Who are the customers of the organization?

■ Where does the organization compete geographically?
■ What are the major products or services?
■ What is the organization’s basic technology?
■ What is the organization’s attitude toward growth and profitability?
■ What are the organization’s strengths and competitive advantage?
■ What public image is desired?
■ What are the fundamental beliefs and values?
■ Does the mission statement address the wishes of key stakeholders?
■ Does the statement motivate people?

Mission Statement Measurement

An effective mission statement clearly states why an organization exists. Many
mission statements are eloquently stated, but they fail to include measur- able
objectives. Using the analogy that the mission statement is the road map for the
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company, the measurable objectives are the mile markers. For a company to know
where it is going, it needs these landmarks.
Mission Statement Benefits Should Exceed Costs
All organizations should weigh the benefits and the cost of the mission
measurement. The organization must be careful not to get carried away.

For further discussion please refer to the link provided: VISION STATEMENT

https://www.youtube.com/watch?v=7yBUBmciQBk

For further discussion please refer to the link provided Mission Statement Measurement

https://www.youtube.com/watch?v=NZkDGevwDqI

Reference:
Business Policy And Strategy 7th Edition