Lecture 2 SM

The process of crafting and executing a companys strategy is an ongoing,

continues process consisting of five interrelated stages:
1. Developing a strategic vision that charts the companys long term direction. a
mission statement that describes the companys purpose, and as set of core values
to guide the pursuit of the vision and mission
2. Setting objectives for measuring the companys performance and tracking its
progress in moving in the intended long term direction
3. Crafting a strategy for advancing the company along the path management has
charted and achieving its performance objectives
4. Executing the chosen strategy efficiently and effectively.
5. Monitoring developments, evaluating performance, and initiating corrective
adjustments in the companys vision and mission statement, objectives, strategy,
or approach to strategy executive in light of actual experience, changing
conditions, new ideas, and new opportunities.
The first three stages of the strategic management process involve making a strategic
plan. A strategic plan maps out here a company is headed, establishes strategic and
financial targets, and show the competitive moves and approaches to be used in
achieving the desired business results.

Developing a strategic vision

- Top managements views and conclusions about the companys long term direction
and what product-market-customer business mix seems optimal for the road ahead
constitute a strategic plan for the company.
- A strategic plan explains where we going, managements aspirations for the
company and the course and direction charted to achieve them. (Core Concept)
- A clearly articulated strategic vision communicates managements aspirations to
stakeholders (customers, employees, stockholders, suppliers) and helps steer the
energies of the company personnel in a common direction.
- For example, Henry Fords vision of a car in every garage had power because it
captured the imagination of others, aided internal efforts to mobilize the Ford
Motor Companys resources and served as a reference point for gaming the merits
of the companys strategic actions.
Well conceived visions are distinctive and specific to a particular organizations, they
avoid generic, fell good statements like we will become a global leader and the first
choice of the customers in every markets we serve. Likewise, a strategic vision
proclaiming managements quest to be market leader offers scant guidance about a
companys direction or the kind of company that management is striving to build.
Wording a vision statement the Dos and Donts

The Dos The Donts

Be graphic. Paint a clear picture of Dont be vague or incomplete. Never
where the comapnay is headed and the skimp on specifies about where the
market position(s) the company is company is headed or how the company
striving to stake out. intends to prepare for the future.
Be forward-looking and Dont dwell on the present. A vision is
directional.Explain the startegic course not about what a company once dis or
that will help the company prepare for the does now; its about where we are
future. going
Keep it focused. Focus on providing Dont use overly broad language. A
managers with guidance in making void all-inclusive language that gives the
decisions and allocating resources. company license to pursue any
opportunity.
Have some wiggle room. Language that Dont state the vision in bland or
allows some flexibility allows the uninspring terms. The best vision
directional course to be adjusted as statemetns have the power to motivate
amarket, customer, and technology company personnel and inspire
circumstances change. shareholder confidence about the
companys future
Be sure the journey is feasible. The path Dont be generic. A vision statement hat
and direction should kbe within the realm could apply to companies in any of
of what the company can accomplish; several industries (or to any of several
over time, a companoy should kbe abe to companies in the same industry) is not
demonstarte measureable progress in specific enough to provide any guidance
achieving the vision.
Indicate why the directionla path Dont rely on superlatives. Vision that
makes good business sense. The claim the companys staretgic course is
directional path should be in the long- the best or most successful
term interests of stakeholders (especially usuallylack specifies about the path the
sharehoders, employees, and suppliers) company is taking to get there.
Make it memorable. To give Dont be run on and on. A vision
organisation a sense of direction and statement that is not short and to the point
purpose, the vision needs to be easily will tend to lose its audience.
communicated. Ldeay, it should be
reducible to afew choice lines ot a
memorable sign.

Developing a Company Mission statement

Mission statemnt describes the enterprises present business and purpose. Ideally, a
company mission stataement
1. identifies the companys products and/or services.
2. Specifies the buyer needs that the company seeks to satisfy and the customer
groups or markets that it serves
3. Gives the company its own identify.
The mission statements that one finds in company annual reports or posted on
company websites are typically quiet brief. Some do a better job than others of
conveying what the enterprise is all about.
Example: The mission statement of Trader Joes (a specialty grocery chain)

The mission of Trader Joes is to give our customers the best food and beverage
values that they can find anywhere and to provide them with the information required
for informed buying decisions. We provide these with dedication to the highest
quality of customer satisfaction delivered with a sense of warmth, friendliness, fun,
individual pride, and company spirit.

Profit is more correctly an objective and result of what a company does. Moreover,
earning a profit is the obvious intent of every commercial enterprise such companies
as Volkswagen, Wegmans, Edward Jones.

Setting Objectives
The main purpose of setting objectives is to convert the vision and mission into
specific performance targets. Objectives describes an organisations performance
targets (specific results management wants to achieve).
Measureable objectives are valuable for three reasons
1. They focus organizational attention and align actions throughout the
organisation
2. They serve as yardsticks for tracking a companys performance and progress
3. They motivate employees to expend greater effort ad perform at high level

Stretch objectives
- promote outsatnding company performance is for managers to set performance
targets high enough to stretch an organisation to perform at its full potential and
deliver the best posssible results.