CHAPTER TWO

BASIC COMPONENTS OF
THE STRATEGIC
MANAGEMENT
 Contents
2

1. Creating a Vision
2. Outlining the Mission
3. Values, and strategic issues
4. Setting Goals and Objectives
5. Strategic plan
 Unit Learning Outcomes
3

Upon completion of this unit, participants are

expected to:
 Define vision, mission, goals, and objectives;
 Be able to develop vision and mission statements;
 Discuss the nature and importance of vision and mission;
 Describe values and strategic issues; and
 Be able to set goals and objectives
 Reflection
4

 What do you understand by the term

“vision”?
 What do you understand by the term
“mission”?
 How are they different?
 1. Creating a Vision
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 The strategic mgt effort begins with
creation of organizational vision (mental
journey).
 Managers should envision where the org. should
be headed in the long run & understand how it
might get there.
 In general, the corporate vision can be defined
considering internal & external changes
 vision statement is often considered the first step in
strategic planning
 It is the desired future state of a company.
 An aspirational description of what an organization
would like to achieve or accomplish in the future
 Vision is used to set out a 'picture' of the organization in
the future.
 A vision statement may apply to an entire company or
to a single division of that company.
 Group Exercise 1
7

• Envision an article written in the future

about you or your organization.
• Imagine yourself receiving an award for
a major accomplishment.
• What is the award?
• What has been accomplished?
 Vision cont’d …
8

 In defining a vision, the management must pose a

question “What business are we in?”
 In this respect, the firm’s size, scope, the products
/services it provides & the markets it serves should
be considered.
 This is simply for the purpose of identifying the gap
between what is and what will be the firm.
 Usually, in defining a vision, what the company
wants to be & the timeframe to achieve it are stated.
 Whether for all or part of an organization, the
vision statement answers the question,
“Where do we want to go?”
 “What do we want to become?”

 In short, vision statement;

 is
a statement about a company’s long-term
direction;
 hope for the reality to be

 While a vision statement doesn’t tell you how

you’re going to get there, it does set the direction

for your business planning.
 Features of an effective vision statement include:
 Clarity and lack of ambiguity
 Vivid and clear picture 0f future
 Memorable and engaging wording
 Realistic aspirations
 Alignment with organizational values and culture

 To become really effective, an organizational vision

statement must become assimilated into the
organization's culture.
 Example of Vision Statement
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Addis Ababa City Government 2025 Vision

“In 2025, Addis Ababa will be world class city, a

green, clean and livable city; with vibrant economy
and residents all living above poverty line, hub of
conference tourism and national bench-mark of
good governance.”
 Example cont’d …
12

Ethiopian Airlines Vision

 By the year 2025, to become the most competitive
and leading aviation group in Africa.
Vision of CBE: To become a world-class
commercial bank by the year 2025.

ECSU Vision “To become a leading center of

excellence in public service capacity building in
Africa by 2025.
 Group Exercise 2
13

 Drafting a Vision Statement

 Imagine five years in to the future:

 What kind of organization do you
want to become?
 What will your organization look like
in five years?
 2.Mission statement
Mission statement-is identifies scope of it operation in terms
of product offered and market served.
Mission also means what we are and what we do.

Mission Statements Sometimes called

 A creed statement,
 A statement of purpose,
 A statement of philosophy,
 A statement of beliefs,
 A statement of business principles,
 Or a statement “defining our business,
Some mission statements are complex, long, and very
broad; whereas some mission statements are simple and
direct.
  Mission is defined as “the fundamental
15
purpose of the organization & its scope of
operation.”

 Organization mission is written in terms of

the general set of products & services the
organization provides & the markets &
clients it serves.
 Formulating the Mission
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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?)
 Formulating the Mission (Cont’d…)
17

 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 THEM?)

 A mission is subject to continuous alteration &

expansion.
Characteristics of a Mission Statement
 In order to be effective, a mission statement should
possess the following characteristics.
Broad in scope; It usually is broad in scope

Inspiring: It should be motivating members of the

organization or being its customers.

 Mission cont’d …
19

Mission serves several functions:

 Ensures unanimity of purpose
 Provides a basis for motivation
 Allocates 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
 Include nine components: customers, products or
services, market place, technology, concern for
survival/growth/profits, philosophy, self-concept,
concern for public image, concern for employees.
 Reveal that the firm is socially responsible
 Reveal that the firm is environmentally responsible


A mission statement should be enduring.
1) Customer: Who are the firm’s customers?
2) Products or services: What are the firm’s major
products or services?
3) Markets Place: 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?
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?
 Example–1
We aspire to make PepsiCo the world’s premier
consumer Products Company, focused on convenient
foods and beverages. We seek to produce healthy
financial rewards for investors as we provide
opportunities for growth and enrichment to our
employees, our business partners and the communities
in which we operate. And in everything we do, we
strive to act with honesty, openness, fairness and
integrity.
 Evaluate, using the elements of mission statement.
 Examples-cont.......
We aspire to make PepsiCo the world’s (mkt- geog)
premier consumer Products Company, focused on
convenient foods and beverages(Products or
services: ). We seek to produce healthy financial
rewards for investors (survival, growth, and
profitability) as we provide opportunities for growth
and enrichment to our employees(Concern for
employees), our business partners and the communities
(Concern for public image ) in which we operate. And
in everything we do, we strive to act with honesty,
openness, fairness and integrity (Philosophy).
(comment: Statement lacks three components:
Customers, Technology, and Self-Concept)
 Group Exercise 3
26

Drafting a Mission Statement

 Consider the following questions and draft a

mission statement of your organization.

 Why do we exist?
 Who do we serve?
 What services do we provide?
 How do we go about providing them?
 Example Mission Statement
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 The Addis Ababa City Government mission

statement:
“The core mission of the city government is
to ensure welfare, safety & security of the
Addis Ababa city residents, through
improved serviced delivery and good
governance”
 Example cont’d …
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CBE’s Mission
• We are committed to best realize stakeholders'’ needs
through enhanced financial intermediation globally
and supporting national priorities.
 Vision Vs Mission
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Vision:
 An image of the future we seek to create.
 A vision statement describes where an
organization/a region wants to see itself in the
future; in the next 10 or 20 years if everything
goes as hoped.
 Mission = purpose, reason for being, the
role of the organization in the society.
 Vision Vs Mission Example
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 Mahatma Gandhi had a simple

vision of getting rid of British
rule in India and establishing a
vibrant democracy in India.

 He had a specific image of post

British India in his mind and
he talked of that image at every
opportunity and to every one.
31
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 (Contd…)
32

 Values are often rooted in ethical themes, such

as honesty, trust, integrity, respect, fairness,
etc.
 Values should be applicable across the entire
organization.
 Values may be appropriate for certain best
management practices – best in terms of
quality, exceptional customer service, etc.
 VALUE cont’d …
33

Categories of value:
 Value is low price
 Value is what is wanted
 Value is the quality received for
the price paid
 Group Exercise 4
34

Organizational Values/guiding principles

 Think of about the vision and mission statement you
have developed before and work on the following
question.

 What are the values implicit in your vision and

mission statement that should guide your work if you
are to make a contribution to your vision and
mission?
 4.Identifying Strategic Issues

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Identifying strategic issues is the heart of the
strategic planning process.
 A strategic issue is:
 A Fundamental policy questions/critical challenges that
affect: mission, values, level or mix of services, clients,
donors, cost, financing, structure or management.
 Strategic issues are issues which if not addressed
will severely handicap the organization’s/regional
government’s ability to function effectively.
 4/Identifying Strategic Issues
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(Contd...)
 Strategic issues are fundamental policy or
program concerns that define the most
important situations and choices your
organization/regional government faces
now and in the future.
 Group Exercise 5
37

Strategic Issue Identification

 In group try to identify strategic issues
that you think can affect the overall
operation of your organization.
 Benefits of strategic issues
38
identification
 Enables focusing attention on important
issue,
 Attention is focused on issues not answers
(there are several instances where serious
conflicts arise over solutions to problems that
have not been clearly defined)
 Provides useful clues about how to resolve
them,
 Enables to see the consequences of not
meeting them.
 Reflection
39

 What do you think is the

difference between Strategic
goals and objectives?
 5.Strategic Goals and Objectives
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What are Strategic Goals?

 Strategic goals are statements of what
you wish to achieve over the period of
the strategic plan (e.g. over the next
year, five years, ten years.)
 5.Strategic Goals and Objectives
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 They reflect the analysis you do that

starts with creating a vision, a role
statement and a mission statement, and
then your analysis of your environment,
strengths, weaknesses, opportunities and
threats.
 What are Objectives and Are They
42
Different from Strategic Goals
 Objectives are usually specific
statements (they are actually a
particular kind of goal) that contribute
to the achievement of "bigger" goals.
In other words they are actually goals,
but they are more specific.
 What are Objectives and Are They Different
from Strategic Goals? (Cont’d…)
43

 Another term for objectives within a

strategic planning framework is to call
these "enabling goals", since, if you hit
all your objectives, they will contribute to
the achievement of the larger strategic
goal(s), they enable.
 What Should Strategic Goals Reflect
In Terms Of Strategic Planning?
44

 Your strategic goals, as part of the strategic

planning process MUST reflect the analyses
you use in the strategic planning process
(otherwise all that work is wasted). Your
strategic goals should:
• reflect the general themes of your vision, role and
mission
• reflect the business realities outside of your
company (as identified in your environmental scan)
 What Should Strategic Goals Reflect In
Terms Of Strategic Planning?
45 (Cont’d…)
 Reflect the business and capabilities

internal to your organization/regional

government (also as identified in your
environmental/internal scan)
 Reflect your strengths, weaknesses, and
opportunities and strengths you've
identified in your SWOT analysis.
 Group Exercise 6
46

Drafting your Goals

 What do you want to accomplish in
the next 5 years, given the available
resources, vision, mission values and
strategic issues of your organization?
 6.Objective Setting
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 Quantification (if possible) of more precise

statement of the goal.
 Indicate how the mission can be achieved
 Represent specific planned levels of
achievement
 Provide precise points or states to be
achieved
 Objective Setting (Cont’d…)
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 Allow review and appraisal of achievement

 Make clear:
 What is to be accomplished
 How much is to be accomplished
 By when it is to be accomplished
 By whom it is to be accomplished
 Objective Setting (Contd…)
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In short an objective should be Specific, Measurable,

Achievable, Relevant and Time bound (SMART)
 Specificity indicates clearly what needs to be
achieved. Example: reduce delay.
 Measurability indicates the possibility to determine if
the desired condition is fulfilled. Example: Reduce
delays by 40% by the end of 2010.
 Achievability indicates a consensus and commitment
to the objectives among the major stakeholders
 Objective Setting (Contd…)
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 Relevance indicates objectives need to be

achievable. It answers feasibility, the
availability of authority of the managers and
the means of realization.
 Time bound indicates a clear understanding
of the time scales associated with each
objective as defined. It is difficult to have
commitment without time frame.
 Group Exercise 7
51

Drafting your Objectives

 What do you want to accomplish in the
next 5 years, given the available
resources, vision, mission values,
strategic issues, and goals of your
organization?
 Goals vs. Objectives Summary
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GOALS OBJECTIVES

Very short statement, Longer statement, more

few words descriptive

Broad in scope Narrow in scope

Directly relates to the Indirectly relates to the

Mission Statement Mission Statement

Covers long time period Covers short time period

(such as 10 years) (such 1 year budget cycle)
 7. STRATEGIC PLAN
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 The strategic plan refers to the arrangement

and ordering of the activities and tasks that
will be necessary to carry out the goals.

 Thus, this step focuses on defining and

acquiring the necessary resources as well as
establishing the timetable for the completion
of the tasks.
 STRATEGIC PLAN cont’d …
54

The development of a strategic plan involves in answering the

following five questions:
1. What are the practical alternatives that might be pursued to
achieve the goal?
2. What are the barriers to the realization of these alternatives?
3. What major proposals might be pursued to achieve these
alternatives or to overcome the barriers to their realization?
4. What major actions with existing staff must be taken within
the next year to implement the major proposals?
5. What specific steps must be taken within the next six months
to implement the major proposals and who is responsible?
 STRATEGIC PLAN cont’d …
55

Rucheman (1985) points out that the realization of

the plan can be affected by the following six factors:
 Scope – where are the clients?
 Size – who are the potential clients?
 Complexity – how are specific are the objectives?
 Duration – how long it will take to implement the
objectives?
 Components – how many discrete activities?
 Innovativeness – how much of a break from the past?
56

Thank you!