Chapter -4:- Basic Components of Strategic Plan
4.1 Strategic Planning
What is Strategy?
Is a tool to organize & allocate an organization’s resources
in a viable way based on its internal competencies &
shortcomings, anticipated changes in the environment
Is the use of entity’s resources in the pursuit of its objectives
against competition from rival organizations.
Is an integrated and coordinated set of commitments and
actions designed to exploit core competencies and gain a
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competitive advantage.
Con’t…
The “big picture” of what your agency is doing and where
it is going
Helps determine where your organization is going over
the next year or more
Why is this important?
Takes you outside the day-to-day activities of your organization
or project and helps give you clarity about what you actually
want to achieve and how to go about achieving it rather than a
plan of action for day-to-day operations.
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4.1.1 Components of a Strategic Plan
Vision – Developing a clear understanding of what is your preferred
future
Mission – Developing a sound statement about why you exist
Goal –are perceived as broad statements of the end results
Objective-Objectives amplify the set goals with quantitative terms-
considered as specific and tangible ones
Core Values and Beliefs – Describes behaviors and ideas that are
important to your organization
Strategic Issues – The issues that create a gap between the ideal and
reality
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Operational Plans – How are you going to achieve your vision?
1. Vision Statements
Developing a vision statement is often considered the first
step in strategic planning, preceding even development of
a mission statement
Many vision statements are a single sentence.
An organization’s vision describes what the organization
hopes to become in the future.
Well-constructed visions clearly articulate an
organization’s aspirations.
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Con’t….
Hickman and Silva (1984): “It is a mental trip from what is
well-known to what is much stranger, the creation of the future
from an assemblage of real facts, hopes, dreams, risks and
opportunities ”.
Hamel and Prahalad (1994): “It is the strategic intention, the
really seductive vision of the opportunities of the future. It is a
dream widely shared in which each and every one of the people
of the organization participates”.
Morrisey (1996): “It is intuition, what is thought that the
future of the organization should be from the point of view of 5the
clients, employees, owners and other important stakeholders”.
Benefits of Vision
• It empowers people and focuses their efforts
• It focuses energy for greater effectiveness
• It raises the standard of excellence
• It establishes meaning for today
• It gives hope for the future
• It brings unity to community
• It provides a sense of continuity
• It raises commitment level
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• It brings positive change
PITFALL S OF VISION
Though vision can fail:
If it reflects merely the leaders internal needs
If internal and external factors are not analyzed well
Due to lack of acceptance by the market and by those who implement it
Ignores stakeholders needs
Miscalculates the resources needed and available to achieve it
Examples of Vision Statements
CBE’s VISION
To become a world-class commercial bank by the year 2025.
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2 Mission Statements
Mission statements are “enduring statements of purpose that distinguish
one business from other similar firms.
A mission statement identifies the scope of a firm’s operations in product
and market terms.
It addresses the basic question that faces all strategists “What is our
business?”
• Mission is the fundamental purpose of the organization and its scope of
operation.
• Organizations mission is written in terms of the general set of products and
services the organization provides and the markets and clients it serves.
Mission serves to ensure unanimity of purpose, facilitates the translation
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goals and objectives.
Formulating the Mission
Your organization’s mission statement is a concise introduction to
its work. It describes an organization in terms of its:
Purpose: what the organization seeks to accomplish (WHY DO
WE EXIST?)
Target Audience: the target group or beneficiaries of the
organization’s work (WHO DO WE SERVE?)
Business: the main method or activity through which the
organization tries to fulfill this purpose (WHAT SERVICES DO
WE PROVIDE and HOW DO WE GO ABOUT PROVIDING
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THEM?)
Con’t….
Points of emphasis when articulating missions:
Awareness of legal constraints and responsibilities of all persons
of an organization
Definition of stakeholders - any group of individuals who are
affected by or can affect the future of the organization.
It should be recognized that the vision statement already defined
is embedded in the mission and mandate and also define the
structure and the general role of the organization.
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Con’t….
Ensures unanimity of purpose
Provides a basis for motivation
Assists allocation of organization’s resources
Establishes the necessary organizational climate
Serves as a basis for those who can identify with the
organization
Facilitates the translation of objectives & goals 11
Characteristics of a Mission Statement
1. A clear mission statement describes the values and priorities of an
organization.
2. Developing a mission statement compels strategists to think about the
nature and scope of present operations and to assess the potential
attractiveness of future markets and activities.
3. A mission statement broadly charts the future direction of an
organization.
4. A mission statement is a constant reminder to its employees of why the
organization exists and what the founders envisioned when they put
their fame and fortune at risk to breathe life into their dreams. 12
Mission Statement Components
Mission statements can and do vary in length, content,
format, and specificity. Most practitioners and
academicians of strategic management feel that an effective
statement should include nine components.
Because a mission statement is often the most visible and
public part of the strategic-management process, it is
important that it includes the nine characteristics
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Con’t…
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?
5. Concern for survival, growth, and profitability—Is the firm
committed to growth and financial soundness?
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Con’t…
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?
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?
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Vision VS Mission
About - Essence
• Mission: A Mission statement talks about HOW you will
get to where you want to be. Defines the purpose and
primary objectives related to your customer needs and
team values.
• Vision: A Vision statement outlines WHERE you want
to be. Communicates both the purpose and values of
your business.
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Con’t…
Time
A mission statement talks about the present
leading to its future.
A vision statement talks about your future.
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Con’t….
Function
• Mission: It lists the broad goals for which the organization
is formed. Its prime function is internal; to define the key
measure or measures of the organization's success and its
prime audience is the leadership, team and stockholders.
• Vision: It lists where you see yourself some years from
now. It inspires you to give your best. It shapes your
understanding of why you are working here. 18
Con’t….
Change
• Mission: Your mission statement may change, but it
should still tie back to your core values, customer needs
and vision.
• Vision: As your organization evolves, you might feel
tempted to change your vision. However, mission or
vision statements explain your organization's foundation,
so change should be kept to a minimum.
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Con’t…
Developing a statement
Mission: What do we do today? For whom do we do it?
What is the benefit? In other words, Why we do what we
do? What, For Whom and Why?
Vision: Where do we want to be going forward? When
do we want to reach that stage? How do we want to do it?
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3 Values
Every organization should be guided by a set of values.
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?“
Values are often rooted in ethical themes, such as honesty, trust,
integrity, respect, fairness, etc
Values should be applicable across the entire organization
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Values may be appropriate for certain best management practices –
best in terms of quality, exceptional customer service, etc.
Con’t…
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.
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Examples of value
CBE CORE VALUES
Our core values detailed below are the operating principles
that guide our internal conduct as well as our relationship
with our customers, partners, and shareholders.
1. Integrity 2. Customer satisfaction
3. Employee satisfaction 4. Learning organization
5. Public trust [Link] & collaboration
7. Value for money 8. Decentralization
9. Corporate citizenship
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Examples of value
Ethiopia Airline value
As an airline, safety is our first priority,
Ethiopian is a high performance and learning organization with
continuous improvements, innovation and knowledge-sharing. We
accept change for the growth opportunity it brings and always seek for
and apply the best ideas regardless of their source,
We recognize and reward employees for their performance and
demonstrate integrity, respect to others, candor and team work,
Act in an open fashion and be result-oriented, creative and innovative,
Adopt Zero tolerance to indifference, inefficiency and bureaucracy,
Encourage 360° free flow and sharing of information,
Treat our customers the same way we would like to be treated and
always look for ways to make it easier for customers to do business
with us, 24
We are an equal opportunity employer
4 Goals and Objectives
The strategic goal setting involves:
Translating the mission statement into concrete terms
Establishing the statement of desired outcomes
Define the benefits to be gained
Goal
Goals are perceived as broad statements of the end results
A goal is an open ended statement of what one wants to
accomplish, with no quantification of what is to be achieved
and no time criteria for completion 25
Con’t….
Examples of goals are:
HR: cut absenteeism
Finance: reduce bad debts
Marketing: increase sales levels
Production:cut production costs, etc.
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4.1 Objectives
Objectives amplify the set goals with quantitative terms-considered as
specific and tangible ones
Performance targets should be:
Concrete
Measurable
Time framed
Achievable
Periodically reviewed
Setting objectives means converting the strategic vision and business mission
into specific performance outcomes the organization wants to achieve
Objective must be SMART (Specific, Measurable , Attainable, Relevant &
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Time-bound
Con’t…
E.g: to increase sales 4%–6%. Each year increase the
profit margins from around 10% in 2008 to the mid-tens
by 2011, …
Objectives are the end results of planned activity.
They should be stated as action verbs and tell what is to
be accomplished by when and quantified if possible
The achievement of corporate objectives should result in
the fulfillment of a corporation’s mission
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Goals Vs Objectives
Goals Objectives
Goals are broad Objectives are narrow
ግቦች ሰፊ ናቸው። አላማዎች ጠባብ ናቸው።
Goals are general intentions Objectives are precise
ግቦች አጠቃላይ ዓላማዎች ናቸው። አላማዎች ትክክለኛ ናቸው።
Goals are abstract ግቦች ረቂቅ Objectives are concrete.
ናቸው። ዓላማዎች ተጨባጭ ናቸው
Goals are generally difficult to Objectives are measurable
measure
ግቦች በአጠቃላይ ለመለካት አስቸጋሪ ዓላማዎች የሚለኩ ናቸው።
ናቸው
Long time frame Short term frame
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Thank you
Questions and Comments
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