Transcript Strategic Management – Objectives, Mission & Stakeholders

Strategic Management – Mission
Aim, Objectives & Stakeholders
The Strategic Management Process
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Mission and objectives identification
Analysis of business environment
Internal business audit
Review of Strategic Opportunities
Comparison of Strategic Options
Implementation of Strategy
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The Lynch (2000) Polygon
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The Business Idea
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Strategic Direction
• Identifying the Organisation’s purpose,
aims, objectives and goals
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Key Issues:
• 2)The Interested Parties
• 3)The Method of Communication
• 1)The Message
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The 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?
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The Method of
Communicating the purpose
of the firm
• Mission and Vision Statements
– A visionary statement concerning the (long
term) future direction of the firms, its
products, markets and values.
– Essential purpose of the organisation
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Mission 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)
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1. Mission
« An overriding purpose in line with the values and expectations of
stakeholders ».
Johnson & Scholes
Personal example: Be healthy and fit.
2. Vision (or strategic intent)
A strong aspiration; Desired future state
An aspiration around which to focus the attention and energies of
members of the organization
Helps thinks creatively about how to prepare a company for the future
Personal example: « To run the London marathon »
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3. Aim
A broadly-worded, general statement of goal or purpose.
Personal example: « To lose weight and gain muscle ».
4. Strategic Objective
A quantification of that goal.
Personal example: « To lose 10 kg ».
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Mission 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, Impactful
– Positive, visionary & motivating
• Should outline
– Firm’s role
– What it wishes to achieve
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Four Elements in the
Mission Statement [1]
• Adapted from the Ashridge School (1991)
• 1)Purpose
– Why the firm exists and what it exists to do.
• What would happen if the firm did not exist?
• 2)Strategy
– How the firm will achieve its aspirations.
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What is it offering?
To whom?
Why should people buy it?
What are its competitive advantages?
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Four Elements in the
Mission Statement [2]
• 3)Values
– What the firm believes in
• Why the world will better if the firm succeeds?
• 4)Behaviour standards
– The routines, procedures and policies the firm adopt to fulfil
its values
• What is the firm willing to do/not do in order to succeed?
• How low will it go?
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Some Mission Statements
Disneyland Paris: To turn the dreams of the
young and
young at heart into reality
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TUI Nordic: Most satisfied customers and best
profitabilty in the business
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Hilton International: To always exceed customer
expectations by delivering quality service through
exceptional teamwork"
McDonald's Corporation: Quality food products;
efficient, friendly service; and restaurants
renowned
for the cleanliness and value they provide (Sufi
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Some 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 world
Avis: Our mission is total customer satisfaction
BA: Be the best and most successful company in the airline business
Easyjet:To provide our customers with safe, low-cost, good value, pointto-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 suppliers
Kodak: To be the world’s best in chemical and electronic imaging
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Shangri la Hotels
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Our Vision
The first choice for customers, employees, shareholders and business
partners
Our Mission
Delighting customers each and every time
Our 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.
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Some Visions
Tui Nordic = Making holiday dreams
come true
Nike (1960s): Crush Adidas
Giro Sport Design (1986): Become the Nike of
the cycling industry
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Organisational Objectives [1]
• ‘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)
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Organisational Objectives [2]
• Generally ‘SMART’:
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Specific
Measurable
Achievable
Realistic
Timely
• Consistent with the Mission and Aim.
• One direction, avoid dissonance!!!
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Objectives - Examples
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A larger market share
Quicker design-to-market times than rivals
Higher product quality than rivals
Lower costs relative to key competitors
Broader / more attractive product line than rivals
A stronger reputation with customers than rivals
Superior customer service
Recognition as a leader in technology and/or product
innovation
• Wider geographic coverage than rivals
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Objectives - Financial
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Increased growth in revenues / earnings/ dividends per
share
Wider profit margins
Attractive ROI
Strong credit ratings
Positive cash flows
Recognition as a blue chip company
Stable earnings during periods of recession
A more diversified revenue base
A rising stock price
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Some Statements of
Objectives
McDonalds: To achieve 100% total customer
satisfaction everyday in every restaurant, for every
customer
To 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 returns
To become the most competitive enterprise in the world
by being No.1 or No.2 in market share in every
business the company is in
30% of the company’s sales must come from products
fewer than 4 years old
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Interest Groups
Shareholders /
Board
Senior
Management
Government /
Professional
associations
Middle Managers
/ Operating Core
Interest Groups
Technostructure
/ Support staff
Customers /
Competitors
Suppliers
Contract Staff /
Special Interest
Groups
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Stakeholders
Definition:
“Stakeholders are groups or individuals
who have a stake in, or expectation of, the
organisation’s performance .....”
Johnson ,Scholes & Whittington
Exploring Corporate Strategy
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Frames of Reference
Functional/
divisional
Professional
(or
institutional)
National
(or regional)
Organisational
The
individual
Industrial/
sector
(recipe)
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Stakeholder Mapping:
Power/ Predictability
LOW
Few
Problems
Power
HIGH
Powerful
but
Predictable
HIGH
Unpredictable
but
Manageable
Greatest
Danger or
Opportunities
Predictability
LOW
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JUDGEMENTS on
Stakeholder
Power/Predictability Matrix
• Likelihood of each stakeholder group impressing
their expectations
• Whether they have the means to impress:
Power of Stakeholder
• Effect of stakeholder expectations on future
strategies....
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Stakeholder Mapping: Power/
Interest
LOW
Minimal
Effort
Keep
Informed
Keep
Satisfied
Key
Players
Power
HIGH
LOW
HIGH
Levels of Interest
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Sub-group
EMPLOYEES
SHAREHOLDERS
LOAN FINANCIERS
SOCIETY
MANAGERS
CONSUMERS
Possible objectives
Higher wages
Job satisfaction
Security of employment
Better working conditions
Dividends
Capital growth
Interest
Prompt repayment of loan
instalments
No pollution
Clean image
No unsavoury relations
Status
Power
Perks
Challenging tasks
Opportunities for development
Safe, affordable product
Quality Service
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Conclusion
• Direction priorities will be influenced by key stakeholders
• May vary depending on size and complexity of
organisations
• Small lifestyle businesses may not seek growth
• Large complex organisations must be accountable to
external owners/shareholders
• Corporate social responsibility may be a factor in
shaping direction
• Managerialism which focuses on return on capital
employed/ investment dominates, it is a legal obligation
to meet needs of shareholders
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References
• Bartkus B, Glassman m,& McAfee (2000)
Mission statements are they smoke and
mirrors, Business horizons, Nov./Dec
• Fletcher W (2001) Hypocritical oath or
mission impossible, The Times 19 January
• Raynor ME (1998), The vision thing, do we
need it, Long Range Plasnning Vol 31, No.3
pp 368-376
• Sufi T & Lyons H(2003) Mission statements
exposed, International Journal of
Contemporary Hospitality management,
Emerald, 15/5 pp 255-262
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