2The Strategic Management Process Mission and objectives identificationAnalysis of business environmentInternal business auditReview of Strategic OpportunitiesComparison of Strategic OptionsImplementation of Strategy
5Strategic DirectionIdentifying the Organisation’s purpose, aims, objectives and goals
6Key Issues: 2)The Interested Parties 3)The Method of Communication 1)The Message
7The Message: Why does the firm exist? What is its aim and objectives? How will it achieve these?What strategies?How will its performance be measured?Which benchmarks?
8The Method of Communicating the purpose of the firm Mission and Vision StatementsA visionary statement concerning the (long term) future direction of the firms, its products, markets and values.Essential purpose of the organisation
9Mission Statements Mixed reception: ‘Smoke and mirrors (Barkhus et al (2000)Building blocks, invisible hand (Strong 1997)Motherhood statements, the hippocratic or hypocritical oath, lantern, anchor, conscience, office manifesto, company slogan, motto,’ (Fletcher 2001)
102. Vision (or strategic intent) 1. Mission« An overriding purpose in line with the values and expectations of stakeholders » Johnson & ScholesPersonal example: Be healthy and fit.2. Vision (or strategic intent)A strong aspiration; Desired future stateAn aspiration around which to focus the attention and energies of members of the organizationHelps thinks creatively about how to prepare a company for the futurePersonal example: « To run the London marathon »
113. Aim 4. Strategic Objective A broadly-worded, general statement of goal or purpose.Personal example: « To lose weight and gain muscle ».4. Strategic ObjectiveA quantification of that goal.Personal example: « To lose 10 kg ».
12Mission Statements Often summarises the firms reason for existing The starting point for recognising the future direction of the firm and therefore the required strategic developments.Should be:Simple, Easily Remembered, ImpactfulPositive, visionary & motivatingShould outlineFirm’s roleWhat it wishes to achieve
13Four Elements in the Mission Statement  Adapted from the Ashridge School (1991)1)PurposeWhy the firm exists and what it exists to do.What would happen if the firm did not exist?2)StrategyHow the firm will achieve its aspirations.What is it offering?To whom?Why should people buy it?What are its competitive advantages?
14Four Elements in the Mission Statement  3)ValuesWhat the firm believes inWhy the world will better if the firm succeeds?4)Behaviour standardsThe routines, procedures and policies the firm adopt to fulfil its valuesWhat is the firm willing to do/not do in order to succeed?How low will it go?
15Some Mission Statements Disneyland Paris: To turn the dreams of the young andyoung at heart into realityTUI Nordic: Most satisfied customers and best profitabilty in the businessHilton International: To always exceed customer expectations by delivering quality service through exceptional teamwork"McDonald's Corporation: Quality food products; efficient, friendly service; and restaurants renownedfor the cleanliness and value they provide (Sufi & Lyons 2003)
16Some More…Otis: To provide any customers means of moving people and things up, down, and sideways over short distances with higher reliability than any similar enterprise in the worldAvis: Our mission is total customer satisfactionBA: Be the best and most successful company in the airline businessEasyjet:To provide our customers with safe, low-cost, good value, point-to-point air services. To offer a consistent and reliable product at fares appealing to leisure and business markets from our bases to a range of domestic and European destinations. To achieve this we will develop our people and establish lasting partnerships with our suppliersKodak: To be the world’s best in chemical and electronic imaging
17Shangri la Hotels Our Vision The first choice for customers, employees, shareholders and business partnersOur MissionDelighting customers each and every timeOur Guiding Principles (Core Values)We will ensure leadership drives for results.We will make customer loyalty a key driver of our business.We will enable decision making at customer contact point.We will be committed to the financial success of our own unit and of our company.We will create an environment where our colleagues may achieve their personal and career goals.We will demonstrate honesty, care and integrity in all our relationships.We will ensure our policies and processes are customer and employee friendly.We will be environmentally conscientious and provide safety and security for our customers and our colleagues.
18Some Visions Tui Nordic = Making holiday dreams come true Nike (1960s): Crush AdidasGiro Sport Design (1986): Become the Nike of the cycling industry
19Organisational Objectives  ‘Is an organisation a single period profit maximiser?’Johnson & Scholes‘An organisation's objectives tend to emerge as the wishes of the most dominant coalition.’based on R M Cyert & J G March's 'Behavioral Theory of the Firm' (1996)
20Organisational Objectives  Generally ‘SMART’:SpecificMeasurableAchievableRealisticTimelyConsistent with the Mission and Aim.One direction, avoid dissonance!!!
21Objectives - Examples A larger market share Quicker design-to-market times than rivalsHigher product quality than rivalsLower costs relative to key competitorsBroader / more attractive product line than rivalsA stronger reputation with customers than rivalsSuperior customer serviceRecognition as a leader in technology and/or product innovationWider geographic coverage than rivals
22Objectives - Financial Increased growth in revenues / earnings/ dividends pershareWider profit marginsAttractive ROIStrong credit ratingsPositive cash flowsRecognition as a blue chip companyStable earnings during periods of recessionA more diversified revenue baseA rising stock price
23Some Statements of Objectives McDonalds: To achieve 100% total customer satisfaction everyday in every restaurant, for every customerTo provide our shareholders with superior returns by achieving double-digit annual earnings per share growth, increasing dividends consistent with earnings growth, repurchasing shares when the opportunity is right, pursuing profitable international beer expansions, and generating quality earnings and cash flow returnsTo become the most competitive enterprise in the world by being No.1 or No.2 in market share in every business the company is in30% of the company’s sales must come from products fewer than 4 years old
25Stakeholders Definition: “Stakeholders are groups or individuals who have a stake in, or expectation of, the organisation’s performance .....”Johnson ,Scholes & Whittington Exploring Corporate Strategy
26Frames of Reference Functional/ divisional Professional Organisational (or institutional)OrganisationalTheindividualIndustrial/sector(recipe)National(or regional)21
27Stakeholder Mapping: Power/ Predictability LOWUnpredictable but ManageableFew ProblemsPowerGreatest Danger or OpportunitiesPowerful but PredictableHIGHHIGHLOWPredictability
28JUDGEMENTS on Stakeholder Power/Predictability Matrix Likelihood of each stakeholder group impressing their expectationsWhether they have the means to impress: Power of StakeholderEffect of stakeholder expectations on future strategies....
31Conclusion Direction priorities will be influenced by key stakeholders May vary depending on size and complexity of organisationsSmall lifestyle businesses may not seek growthLarge complex organisations must be accountable to external owners/shareholdersCorporate social responsibility may be a factor in shaping directionManagerialism which focuses on return on capital employed/ investment dominates, it is a legal obligation to meet needs of shareholders
32ReferencesBartkus B, Glassman m,& McAfee (2000) Mission statements are they smoke and mirrors, Business horizons, Nov./DecFletcher W (2001) Hypocritical oath or mission impossible, The Times 19 JanuaryRaynor ME (1998), The vision thing, do we need it, Long Range Plasnning Vol 31, No.3 ppSufi T & Lyons H(2003) Mission statements exposed, International Journal of Contemporary Hospitality management, Emerald, 15/5 pp