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2. Mission & Goals .ppt
1. MISSION AND GOALS
Mission Statement
The corporate mission statement is the
first key indicator of how an organization
views the claims of its stakeholders. All
strategic decisions flow from the mission
statement. Typically, the mission statement
has three components: 1. it defines the
organization's business, 2. it states its
vision and goals, and 3. it articulates its
main philosophical values.
2. The following Figure gives an example of a
mission statement of Weyerhaeuser Co.,
the largest U.S. forest Products Company.
Although this statement does not define
Weyerhaeuser's business, it clearly
articulates the company's vision and
philosophical values. Most of the items
listed under "Our Strategies" are actually
major goals of the company.
3. Mission statement of Weyerhaeuser Co.
Our Vision
The best forest products company in the World.
Our Strategies
We shall achieve our vision by: Making Total
Quality the Weyerhaeuser way of doing
business. Relentless pursuit of full customer
satisfaction. Empowering Weyerhaeuser
people. Leading the industry in forest
management and manufacturing excellence.
Producing superior returns for our shareholders.
4. Mission statement of Weyerhaeuser Co.
•Our Values
•Customers. We listen to our customers and
improve our products to meet their present and
future needs.
People. Our success depends upon high-
performing people working together in a safe
and healthy workplace where diversity,
development, and teamwork are valued and
recognized.
5. Mission statement of Weyerhaeuser Co.
Accountability. We expect superior performance
and are accountable for our actions and results. Our
leaders set clear goals and expectations, are
supportive,- and provide and seek frequent
feedback.
Citizenship. We support the communities where we
do business, hold ourselves to the highest standards
of ethical conduct and environmental responsibility,
and communicate openly with Weyerhaeuser people
and the public.
Financial Responsibility. We are prudent and
effective in the use of the resources entrusted to us.
6.
7. DEFINING THE BUSINESS
The first component of a mission statement is a
clear definition of the organization's business.
Essentially, defining the business involves
answering these questions.
• What is our business?
• What will it be?
• What should it be?
The answers vary depending on whether the
organization is a single-business or a diversified
enterprise.
8. A single-business enterprise is active in just
one main business area.
For example, U.S. Steel in the 1950s was
involved just in the production of steel.
By the 1980s, however, U.S. Steel had
become USX Corporation, a diversified
company with interests in steel, oil and
gas, chemicals, real estate, transporta-
tion, and the production of energy
equipment.
9. A Single Business Company
To answer the question, “What is our business”,
Derek F. Abell has suggested that a company
should define its business in terms of three
dimensions:
Who is being satisfied (what customer
groups),
What is being satisfied (what customer
needs),
How are customer needs being satisfied (by
what skills or distinctive competencies)?
10. Abell's approach stresses the need for a
consumer-oriented rather than a product-
oriented business definition.
Product oriented definition
A product-oriented business definition
focuses just on the products sold and the
markets served. This approach obscures
the company's function, which is to satisfy
customer needs.
11. Consumer oriented definition
A product is only the physical manifestation of
applying a Particular skill to satisfy a particular
need of a particular consumer group. In
practice, the particular need of a particular
consumer group may be served in different
ways.
Identifying these ways through a broad,
consumer-oriented business definition can
safeguard companies from being caught
unawares by major shifts in demand.
12. It can help answer the question what is our
business.
13. Definition of a diversified company
A diversified company faces special problems
when trying to define its business because it
actually operates several businesses. In essence,
the corporate business is often one of managing
a collection of businesses.
In a diversified enterprise, the question, ‘what is
our business?’ must be asked at two levels: the
business level and the corporate level. At the
business level, the focus should be on a
consumer-oriented definition.
14. But at the corporate level, management
cannot simply aggregate the various
business definitions, for doing, so will lead to
an imprecise and confusing Statement.
Instead, the corporate business definition
should focus on how the corporate level
adds value to the constituent businesses of
the company. That is, the mission statement
should identify the contribution that the
corporate level makes to the efficient
operation of business units
15. VISION AND MAJOR GOALS
The second component of a company's
mission statement, the detailing of as
vision and major corporate goals, is a
formal declaration of what the company
is trying to achieve. The spelling out of
the vision and major goals gives direction
to the corporate mission statement and
helps guide the formulation of strategy.
16. Philip Morris’s Mission Statement
Our Mission is to be the most successful
consumer packaged, goods company in the
world. We pursue our mission by:
Maintaining the highest quality of people.
Protecting and building our brand franchises.
Growing profitable new business with line
extensions, new products, geographic
expansion, acquisitions, and joint ventures and
strategic alliances.
Maximizing productivity and synergy in all
businesses at all times.
17. Philip Morris’s Mission Statement
Making Total quality management a reality in
every aspect of our everyday operations.
Managing with a global perspective
18. Beyond articulating their vision, many
companies also state other major goals in
their mission statement.
These goals specify how a company
intends to go about attaining its strategic
intent.
19. For example, the Weyerhaeuser mission
statement tells the company that it intends
to attain its vision by focusing on total
quality, empowering its employees, and
striving to satisfy customers. All these goals
shape the choice of strategies. The goal of
maximizing productivity, for instance,
indicates that when a company reviews its
strategic options, it will favor strategies
that increase its productivity.
20. Maximizing shareholder Wealth
Most profit-seeking organizations operate
with a variety of major corporate goals. All
these goals should be directed toward one
end: maximizing stockholder wealth.
Stockholders provide a company with
capital and in exchange expect an
appropriate return on their investment. A
company's stockholders are its legal
owners.
21. Stockholders receive returns in two ways:
From dividend payments and from capital
appreciation in the market value of a share
(that is, by increases in stock market prices).
A company can best maximize stockholder
returns by pursuing strategies that
maximize its own return on investment
(ROI), which is a good general indicator of a
company's efficiency.
22. Higher ROI leads to greater demand for a
company's shares. Demand bids up the
share price and leads to capital
appreciation.
An overzealous pursuit of ROI can
misdirect managerial attention and
encourage some of the worst management
practices, such as maximizing short-run
rather than long-run ROI.
23. A short-run orientation favors such action
as cutting expenditures judged to be
nonessential in a particular span of time—
for instance, expenditures for research and
development, marketing, and new capital
investments.
Although decreasing current expenditure
increases current ROI, the resulting
underinvestment, lack of innovation, and
poor market awareness jeopardize long-run
ROI.
24. Yet despite these negative consequences,
managers do make such decisions because
the adverse effects of a short-run
orientation may not become apparent to
stockholders for several years.
25. Secondary Goals
To guard against short-run behavior,
Drucker suggests that companies adopt a
number of secondary goals in addition to
ROI. These goals should be designed to
balance short-run and long run
considerations.
26. Drucker's list includes secondary goals relating
to these areas:
(1) Market share.
(2) Innovation,
(3) Productivity,
(4) Physical and financial resources,
(5) Managers’ performance and development,
(6) Worker performance and attitude, and
(7) Social responsibility.
27. CORPORATE PHILOSOPHY
The third component of a mission
statement is a summing up of the
corporate philosophy: the basic beliefs,
values, aspirations, and philosophical
priorities that the strategic decision
makers are committed to and that guide
their management of the company.
28. It tells how the company intends to do
business and often reflects the company's
recognition of its social and ethical
responsibility. A statement of corporate
philosophy can have an important impact
on the way a company conducts itself.
A company's creed forms the basis for
establishing its corporate culture.
29. The creed of Lincoln Electric Co., for
instance, states that productivity increases
should be shared primarily by customers
and employees through lower prices and
higher wages.
This belief distinguishes Lincoln Electric
from many other enterprises and, by all
accounts, is acted on by the company in
terms of its specific strategies, objectives,
and operating policies.
30. Johnson and Johnson’s Credo
Our Credo
We believe our first responsibility is to the
doctors, nurses, and patients, to mothers and
fathers and all others who use our products
and service In meeting their needs everything
we do must be of high quality. We must
constantly strive to reduce our costs in order
to maintain reasonable prices.
31. Customers orders must be serviced
promptly and accurately. Our suppliers and
distributors must have an opportunity to
make a fair profit. We are responsible to
our employees, the men and women who
work with us throughout the world.
Everyone must be considered as an
individual, We must respect their dignity
and recognize their merit. They must have
a sense of security in their jobs.
Compensation must be fair and adequate,
32. and working conditions clean, orderly and
safe. Employees must feel free to make
suggestions and complaints. There must
be equal opportunity for employment,
development and advancement for those
qualified. We must provide competent
management, and their actions must be
just and ethical. We are responsible to
the communities in which we live and
work and to the world community as
well.
33. We must be good citizens support good works
and charities and bear our fair share of
taxes. We must encourage civic
improvements and better health and
education. We must maintain in good order
the property we are privileged to use,
protecting the environment and natural
resources. Our final responsibility is to our
stockholders. Business must make a sound
profit. We must experiment with new ideas.
34. Research must be carried on, innovative
programs developed and mistakes paid
for, New equipment must be purchased,
new facilities provided and new
products launched. Reserves must be
created to provide for adverse times.
When we operate according to these
principles, the stockholders should
realize a fair return.
35. CORPORATE STAKEHOLDERS
Stakeholders are individuals or groups that
have some claim on the company.
They can be divided into
internal claimants and
external claimants.
Internal claimants are stockholders and
employees, including executive officers and
board members.
36. External claimants are all other individuals
and Groups affected by the company's
actions. Typically, they comprise
customers, suppliers; governments, unions,
competitors, local communities, and the
general public.
37. Stakeholder impact analysis
A company cannot always satisfy the claims
of all stakeholders. The claims of different
groups may conflict, and in practice few
organizations have the resources to manage
all stakeholders. For example, union claims
for higher wages can conflict with consumer
demands for reasonable prices and
stockholder demands for
acceptable returns.
Often the company must make choices.
38. Typically, stakeholder impact analysis involves
the following steps:
• Identifying stakeholders
• Identifying stakeholders' interests and concerns
• As a result, identifying what claims stakeholders
are likely to make on the organization
• Identifying the stakeholders that are most
important from the organization’s perspective
• Identifying the resulting strategic challenges.