CHAPTER 2

CHARTING A COMPANY’S DIRECTION: VISION AND MISSION, OBJECTIVES, AND STRATEGY

Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

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2.1

The Strategy-Making, Strategy-Executing Process

Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

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2–3 Copyright © 2011 by The McGraw-Hill Companies.” Sets out the compelling rationale (strategic soundness) for the firm’s direction. Inc. Provides direction—“where we are going.Strategic Vision ♦ Developing a Strategic Vision: ● ● ● ● Delineates management’s future aspirations for the business to its stakeholders. . Uses distinctive and specific language to set the firm apart from its rivals. All rights reserved.

2–4 . All rights reserved.1 Wording a Vision Statement—the Dos and Don’ts The Dos Be graphic Be forward-looking and directional The Don’ts Don’t be vague or incomplete Don’t dwell on the present Keep it focused Have some wiggle room Be sure the journey is feasible Indicate why the directional path makes good business sense Make it memorable Don’t use overly broad language Don’t state the vision in bland or uninspiring terms Don’t be generic Don’t rely on superlatives only Don’t run on and on Copyright © 2011 by The McGraw-Hill Companies.2. Inc.

Vision Statement for UBS We are determined to be the best global financial services company. performance and learning as this attracts. and staff through our ability to anticipate. We foster a distinctive. Our purpose is to help our clients make financial decisions with confidence. By growing both our client and our talent franchises. and on investment banking and securities businesses. We focus on wealth and asset management. • Not forward-looking • Bland or uninspiring • Hard to communicate 2–5 . we add sustainable value for our shareholders. retains and develops the best talent for our company. Inc. shareholders. meritocratic culture of ambition. We share a common ambition to succeed by delivering quality in what we do. All rights reserved. Effective Elements Shortcomings • Focused • Feasible • Desirable Copyright © 2011 by The McGraw-Hill Companies. We use our resources to develop effective solutions and services for our clients. We continually earn recognition and trust from clients. learn and shape our future.

.♦ Mission We are a transformationmaking company that creates value to society based on interdependent co-arising ♦ Vision Indonesia’s Leading Food and Beverage Company ♦ Mission To provide sustainable solutions for food needs To continuously improve our people. Inc. processes and technologies To contribute to the welfare of the society To continuously improve stakeholders’ values ♦ Vision A Total Food Solutions Company 2–6 Copyright © 2011 by The McGraw-Hill Companies. All rights reserved.

All rights reserved. 2–7 . Inc.Follow-up ♦ How does the scope of a business affect the language of its vision statement? ♦ How would you reword the Garuda Food and Indo Food vision statement to reduce them to less than 100 words? Copyright © 2011 by The McGraw-Hill Companies.

and inspires internal and external stakeholders. ● Ensures understanding of its importance. ● Copyright © 2011 by The McGraw-Hill Companies. ● Motivates.Communicating the Strategic Vision ♦ Why Communicate the Vision: Fosters employee commitment to the firm’s chosen strategic direction. ● Demonstrates top management support for the firm’s future strategic direction and competitive efforts. All rights reserved. informs. Inc. 2–8 .

. All rights reserved. Describes the firm’s current business and purpose—“who we are. not on “making a profit”—earning a profit is an objective not a mission. what we do. and why we are here. Inc. 2–9 ● Copyright © 2011 by The McGraw-Hill Companies.Crafting a Mission Statement ♦ The Mission Statement: ● ● Uses specific language to give the firm its own unique identity.” Should focus on describing the company’s business.

2–10 . ♦ Sets the firm apart from its rivals. ♦ Identifies the customer groups or markets it is endeavoring to serve.The Ideal Mission Statement ♦ Identifies the firm’s product or services. ♦ Specifies the buyer needs it seeks to satisfy. ♦ Clarifies the firm’s business to stakeholders. Inc. Copyright © 2011 by The McGraw-Hill Companies. ♦ Specifies its approach to pleasing customers. All rights reserved.

2–11 . and behavioral norms that employees are expected to display in conducting the firm’s business and in pursuing its strategic vision and mission. Become an integral part of the firm’s culture and what makes it tick when strongly espoused and supported by top management.Linking Vision and Mission with Core Values ♦ Core Values ● Are the beliefs. mission. Inc. and strategy contribute to the firm’s business success. ● ● Matched with the firm’s vision. Copyright © 2011 by The McGraw-Hill Companies. traits. All rights reserved.

All rights reserved. and together we unite to strive for excellence and continuous innovation. We treat our stakeholders with respect. Inc. We conduct our business with integrity.” Copyright © 2011 by The McGraw-Hill Companies. 2–12 . processes and technologies To contribute to the welfare of the society To continuously improve stakeholders’ values ♦ Vision A Total Food Solutions Company Values “With discipline as the basis of our way of life.♦ Mission To provide sustainable solutions for food needs To continuously improve our people.

● ● To serve as yardsticks for tracking a firm’s performance and progress. To provide motivation and inspire employees to greater levels of effort. Inc. timely performance targets. . 2–13 Copyright © 2011 by The McGraw-Hill Companies. To focus efforts and align actions throughout the organization.OBJECTIVES ♦ The Purposes of Setting Objectives: ● ● To convert the vision and mission into specific. measurable. All rights reserved.

All rights reserved. Inc. Are focused externally on competition vis-àvis the firm’s rivals. Are related to a firm’s marketing standing and competitive vitality. ● ● Copyright © 2011 by The McGraw-Hill Companies. 2–14 .THE TWO ESSENTIAL KINDS OF OBJECTIVES TO SET ♦ Financial Objectives ● ♦ Strategic Objectives ● Communicate top management’s targets for financial performance. Are focused internally on the firm’s operations and activities.

2–15 .SETTING STRATEGIC OBJECTIVES Examples of Strategic Objectives ♦ Winning an x percent market share ♦ Achieving lower overall costs than rivals ♦ Overtaking key competitors on product performance or quality or customer service ♦ Deriving x percent of revenues from the sale of new products introduced within the next five years ♦ Having broader or deeper technological capabilities than rivals ♦ Having a wider product line than rivals ♦ Having a better-known or more powerful brand name than rivals ♦ Having stronger national or global sales and distribution capabilities than rivals ♦ Consistently getting new or improved products and services to market ahead of rivals Copyright © 2011 by The McGraw-Hill Companies. Inc. All rights reserved.

● ● Requires choosing among strategic alternatives.CRAFTING A STRATEGY ♦ Strategy Making: ● Addresses a series of strategic how’s. Promotes actions to do things differently from competitors rather than running with the herd. All rights reserved. ● Is a collaborative team effort that involves managers in various positions at all organizational levels. 2–16 . Inc. Copyright © 2011 by The McGraw-Hill Companies.

Inc.The Strategy-Making Hierarchy Corporate Strategy Multibusiness Strategy—how to gain synergies from managing a portfolio of businesses together rather than as separate businesses Two-Way Influence Business Strategy • How to strengthen market position and gain competitive advantage • Actions to build competitive capabilities of single businesses • Monitoring and aligning lower-level strategies Two-Way Influence Functional Area Strategies • Add relevant detail to the how’s of the business strategy • Provide a game plan for managing a particular activity in ways that support the business strategy Two-Way Influence Operating Strategies • Add detail and completeness to business and functional strategies • Provide a game plan for managing specific operating activities with strategic significance 2–17 Copyright © 2011 by The McGraw-Hill Companies. . All rights reserved.

2–18 . concentrating the full force of its resources and competitive actions on achieving that objective! Copyright © 2011 by The McGraw-Hill Companies. Inc. All rights reserved.The Concept of Strategic Intent An organization exhibits strategic intent when it relentlessly pursues an ambitious strategic objective.

Inc. business mission. All rights reserved. 2–19 .What Is a Strategic Plan? Elements of a Firm’s Strategic Plan Its strategic vision. and core values Its strategic and financial objectives Its chosen strategy Copyright © 2011 by The McGraw-Hill Companies.

Creating and nurturing a strategy-supportive work climate. All rights reserved. 2–20 Copyright © 2011 by The McGraw-Hill Companies.EXECUTING THE STRATEGY ♦ Converting strategic plans into actions requires: ● ● ● ● Directing organizational action. Building and strengthening the firm’s competencies and competitive capabilities. Motivating people. Inc. . ● Meeting or beating performance targets.

Managing the Strategy Execution Process ♦ Staffing the firm with the needed skills and expertise. ♦ Organizing work effort along the lines of best practice. Copyright © 2011 by The McGraw-Hill Companies. Inc. ♦ Ensuring that policies and procedures facilitate rather than impede effective strategy execution. ♦ Allocating ample resources to the activities critical to strategic success. ♦ Building and strengthening strategy-supporting resources and competitive capabilities. All rights reserved. 2–21 .

Copyright © 2011 by The McGraw-Hill Companies. Inc. 2–22 . All rights reserved. ♦ Motivating people and tying rewards and incentives directly to the achievement of performance objectives. ♦ Exerting the internal leadership needed to propel implementation forward and drive continuous improvement of the strategy execution processes.Managing the Strategy Execution Process ♦ Installing information and operating systems that enable effective and efficient performance. ♦ Creating a company culture and work climate conducive to successful strategy execution.