strategic management course

1. Unit II
Company Direction

2. Vision
• Vision states where the org. aspires to be in the
long run. Indicates a broad aspiration of the org.
• It answers the question, “where do we aim to
be?”
• Or, “What will the future look like? What will be
different?”
• It is a far-sighted view of an organization.
• Vision reflects the intention of the management
to lead the org.
• It provides a roadmap for organizational future
• It sees future but is the heart of the organization

3. Vision Statement
• A vision statement is a company's road map,
indicating both what the company wants to
become and guiding transformational initiatives
by setting a defined direction for the company's
growth.
• The Vision Statement focuses on the future; it is
a source of inspiration and motivation. Often it
describes not just the future of the org. but the
future of the industry or society in which the
organization hopes to effect change.
• It is stated in short and open-ended form

4. Vision Statement -Example
• Microsoft Corporation,
“To help individuals and businesses realize their full
potential.”
• World Bank,
“An Asia and Pacific region free of poverty”
• Chaudhary Group,
“To serve society, nation and the world”
• BB&T,
“The Best of The Best”

5. Benefits of Vision Statement
• A clear vision statement defines the direction the
organization is going and illustrates exactly what
an organization “stands for”.
• Other significant benefits for the people in an org.
• Benefit one: It acts as a unifying force, brings
together & has a positive impact on organizational
effectiveness
• Benefit two: It acts as a guide for employees
actions and decision making
• Benefit three: Another most significant benefit
that it can motivate and inspire employees

6. Mission
– Purpose/reason for the organization’s existence
– States not only what the co. is now, but what it
wants to become –management’s strategic vision of
the firm’s future.
– Alternatively, it tells who we are and what we do as
well as what we’d like to become.
– So, it sees present and future too and is head of an
org.
– Indicates intent to stake out a particular business
position
– In short, it is a basic/broad goal to be accomplished
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7. Mission Statement
• A written declaration of an organization's core purpose
and focus that normally remains unchanged over time.
• The unique purpose that sets a company apart from others
– Tells what the org. providing to society
– Describes the firm’s product, market and technological areas
of emphasis
• Properly crafted mission statements
(1) serve as filters to separate what is important
from what is not,
(2) clearly state which markets and products will
be served and how, and
(3) communicate a sense of intended direction to
the entire organization.

8. Examples: Mission Statement
World Bank: To help our developing member countries reduce
poverty and improve their quality of life
IBM: The basic philosophy, spirit and drive of the business lies in
three concepts: respect for the individual, dedication to
service and a quest for superiority in all things.
McDonald: To offer the fast food customers, food prepared in
the same high quality manner world wide, tasty and
reasonably priced, delivered in a consistent, low key décor
and friendly atmosphere.
Newport News Shipbuilding: We shall build good ships here -at
a profit if we can -at a loss if we must -but always good ships.
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9. Benefits of Mission Statement
• It sets parameters and guidelines for how you continue your
org.
• Writing a mission statement forces you to think deeply about
your org.
• A mission statement helps you to uncover talents and
contributions that reveal your very reason for existence.
• Crafting a mission statement allows you to connect with your
own unique purpose and the profound satisfaction that
comes in fulfilling it.
• A mission statement helps you to address three important
questions:
– What org. is about?
– What do it stand for?
– What actions management is taking to exists and like to become?

10. Goals
• It is an open-ended statement of what one
wants to accomplish with no quantification of
what is to be achieved and no time criterion
for completion
• Example:
• Increase in profitability
• Increase in market share/market standing

11. Strategic Objectives
• Strategic Objective /Goal denotes the highest goals of
the organization
• Strategic objectives are used in strategic management.
• A Strategic Objective is a specific goal that you want to
achieve, with a clearly stated outcome and a
deadline. In other words, it is something that can be
tangibly achieved.
• Formulated for a longer period of time, not less than
three or five years.
• It is also one of the primary ‘goals’ of the organization,
underneath which many sub-goals will eventually align.

12. Strategic objectives are, in general, externally focused and
according to the management guru Peter Drucker, it falls into
eight major classifications:
(1) Market standing: desired share of the present and new
markets;
(2) Innovation: development of new goods and services, and of
skills and methods required to supply them;
(3) Human resources: selection and development of employees;
(4) Financial resources: identification of the sources of capital
and their use;
(5) Physical resources: equipment and facilities and their use;
(6) Productivity: efficient use of the resources relative to the
output;
(7) Social responsibility: awareness and responsiveness to the
effects on the wider community of the stakeholders;
(8) Profit requirements: achievement of measurable financial
well-being and growth.

13. Strategic Objectives -Example
Current customers
• Expand sales to existing customers.
• Increase customer retention.
• Achieve and maintain outstanding customer
service.
New customers
• Introduce existing products into a new market.
• To expand sales to the global marketplace.
• Improve our service approach for new and
existing customers.

14. Financial Objectives
• Financial Objective means the financial
requirements or goals that a company or an
organization plan for the future.
• In simple words it means to set a target how
to achieve profit and make more money. But
sometimes it also includes the amount of
money that is required for a specific goal, the
timeframe in which that task must be finished
and how to spend the money.

15. Financial Objectives
• To exceed $10 million sales in the next 10
years.
• To increase revenue by 10% annually.
• Financial Efficiency: To decrease expenses by
5%.
• Financial Efficiency: To increase net profit by
10% annually.

16. Financial vs Strategic Objectives
• In Financial Objectives an organisation only plans for
the financial issues of the business. These Objectives
only covers how much money needs to invest in the
company to achieve the required target. How to earn
more profit within the amount available for the
business and how to increase the profit ratio and
decrease the expenditures.
• While in Strategic Objectives all the aspects of the
business are taken into consideration. Planning to run
the business, to invest the money, to hire the
employers, marketing, deal with the competitors, etc.
• So we can say that Financial Objectives covers only
financial issues while Strategies Objectives deals with
all the aspects of business.

17. Financial vs Strategic Objectives
Financial Objectives
• Increase earning growth from 10 to 15% per year
• Boost return on equity investment from 15 to 20%
• Achieve and maintained a “AAA” bond rating
Strategic Objectives
• Up firm’s market share from 18 to 22%
• Overtake rivals on quality or customer service
• Attain lower overall cost than rival’s
• Become leader in new product introductions
• Achieve technological superiority

18. Goals Vs Objectives
(Clashing Views)
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Objectives
Goals
Time Based
Specific
(20% on…)
Internal Focus
(Resource Utilization)
Measurement
(Quantitative)
Timeless
Broad, General
(Maximize Profit)
External Consideration
(Maintaining Market
Leadership)
Measurement
(Quantitatively
In relative terms)
Example: Goal -Increase in profitability
Objective –Increase 10% annual profit
Note: Objectives set at “SMART”

19. Strategic Intent
• Describes how the firm’s energy and resources are
channeled into a focused and unified overall goal.
• It is the strategic direction and destiny to be pursued
by the company.
• In the field of management and organizational
development, strategic intent is defined as a
compelling statement about where an organization is
going that conveys a sense of what that organization
wants to achieve in the long term.

20. Strategic Intent
• Strategic intent answers the question: “What exactly
are we trying to accomplish?”
• Strategic intent can provide a sense of direction, a
particular point of view about the long-term market or
competitive position the organization hopes to develop
and occupy.
• Strategic intent can provide a sense of discovery in
that members they promise of learning about other
organizations that operate in the same market,
adopting their best practices and avoiding pitfalls.
• Strategic intent can provide a sense of destiny, a
worthwhile goal around which energies can be focused
across the organization.

21. Policies
• Policies are comprehensive guidelines (or, set
rules) for decision making to achieve goals
• They specify general response to problem
situations
• It defines the area within which a decision is to
be made and ensures that decision will be
consistent with objectives
• Managers develop policies to make sure that
employees of the organization make decisions
and take actions that support the mission, goals
and strategies

22. • Business policies are the guidelines developed by
an organization to govern its actions.
They define the limits within which decisions
must be made. Business policy also deals with
acquisition of resources with which
organizational goals can be achieved.
• The foreign policy of the newly formed
government was to isolate itself from any foreign
influence and attack any influences that might
threaten the power of the government.
• The School's policy on missed classes is that you
must have a letter from a parent or a doctor
excusing you from class time.
Policies

23. Policies -Example
• Procurement of required raw materials only from local
suppliers
• Minimum balance of petty cash fund should maintain
upto Rs.1000/-
• Each employee is provided casual leave for 6 days and
sick leave of 6 days annually
• Every employee should present in the formal uniform
in the work place
• Government announces for not to establish any brick
factory in the Kathmandu valley

24. Short-Term Objectives
• Short-term objectives represent the goals an
organization sets that can be achieved within
the next six months or, at the outset, within
one year.
• An example of a short-term objective might
be “to increase sales by 10 percent annually”
• This is an easily measurable objective and
employees can be held directly accountable
for ensuring that it is met.

25. Long-Term Objectives
• Long-term objectives define any goal that has a
time frame exceeding one year.
• Business objectives that are normally considered
long term include developing a new product in
next two years, growing annual revenue and
developing a comprehensive marketing and
public relations strategy.
• Importantly, long-term objectives must not go on
forever. Long-term objectives must be realistic
and time bound.
• To exceed $10 million sales in the next 10 years.