Vision, values, culture, mission, aims, objectives, strategy and tactics

Vision and values A vision is a motivating summary of what an organisation hopes to achieve. It links the objectives with the core values of the business Values are a set of ethical or operating principles and beliefs that guide decision making

Culture Culture refers to the typical way of working within an organisation as demonstrated by the behaviours of the people that work for it

Types of business culture CultureCharacteristics Power culture Power is held by a small number of people Swift decisions are made Role culture Highly structured and defined roles May be bureaucratic and lack creativity Task culture Based on team-working within groups set up for a particular task Can respond quickly to changing environment Person culture Trained workers are given the freedom to share knowledge and expertise Entrepreneurial culture Encourages risk taking and creativity Failure is often accepted and learned from

Mission statement A mission statement is a written expression of the aims of the business

Mission statement The mission statement draws together the purpose, values, beliefs and non-financial goals of an Organisation. For example: Long term business success based on newly invented, innovatively designed products – James Dyson

Purpose of a mission statement To communicate the business aims to stakeholders To motivate employees To act as a PR tool to create an image for the organisation Develop customer loyalty

Aims Aims are the long term goals of an organisation “to ensure customer satisfaction” “to deliver shareholder value”

Objectives Objectives are medium term targets that act as stepping stones to achieving the aims “to achieve a return on equity of 16%” “to increase profits by 10% in 2013”

Aims and objectives Aims and objectives often relate to: Survival Profit Growth Providing a service Market share Customer satisfaction Ethics and sustainability

Changing objectives Organisations may change their objectives over time because... They may achieve their original objectives The business has grown The competitive environment changes The market changes Technology changes

Conflicting objectives Some objectives may conflict. For example: Profit and growth - expansion can increase costs, especially in the short term Providing a service and growth - smaller firms may know their customers better than large firms and therefore be able to provide a more personalised service

Purpose of aims and objectives To provide direction for the organisation To form a basis for allocating resources To be motivational To monitor performance To measure success

Setting objectives The objectives that organisations set will depend on several factors: The overall aims Analysis of business performance e.g. SWOT analysis Ownership – public sector objectives are more likely to focus on providing a service whereas private sector firms may focus on profit and growth

SMART objectives SMART objectives make it easier to assess if targets have been met S pecific M easurable A chievable R elevant T ime-framed For example... To achieve a 5% reduction in labour turnover in 2013 compared to 2012

Strategy A strategy is a long term plan by which the aims and objectives are met.

Strategy Strategies are medium to long-term plans for achieving business aims and objectives So... Aims/objectives identify where a business wants to be Strategies show how it is going to get there

Strategy Strategies consider the: Financial requirements Operational requirements Human resources requirements for achieving the aims and objectives. The external environment must also be taken into account when developing strategies

Strategy at different levels Strategies can be developed for different levels within an organisation: Corporate – for the overall business Divisional – for each area of the business Functional – departmental strategies for success Individual – often identified and developed through an appraisal system

Devising business strategy When devising business strategy firms consider: The current situation – SWOT analysis is useful for this The competitive environment – Porter identified Five Forces for analysing this:  Threat of new entrants  Bargaining power of buyers  Threat of substitutes  Bargaining power of suppliers  Rivalry among existing firms

Types of strategy Firms can adopt different types of strategy. According to Michael Porter, there are three generic competitive strategies Overall cost leadership - to maintain high returns Differentiation – to produce something unique in the market Focus – on one particular market segment or product

Tactics Tactics are the shorter term activities that a firm puts in place to implement its strategy.