CHARTING A COMPANY’S DIRECTION: VISION AND MISSION, OBJECTIVES, AND STRATEGY
Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
LO1 Grasp why it is critical for company managers to have a clear strategic vision of where a company needs to head and why. LO2 Understand the importance of setting both strategic and financial objectives. LO3 Understand why the strategic initiatives taken at various organizational levels must be tightly coordinated to achieve companywide performance targets. LO4 Become aware of what a company must do to achieve operating excellence and to execute its strategy proficiently. LO5 Become aware of the role and responsibility of a company’s board of directors in overseeing the strategic management process.
What Does the Strategy-Making, Strategy-Executing Process Entail? 1. 2. 3. 4. Developing a strategic vision Setting objectives Crafting a strategy Implementing and executing the chosen strategy 5. Monitoring developments, evaluating performance, and initiating corrective adjustments
The Strategy-Making, Strategy-Executing Process
Factors Shaping Decisions in the Strategy-Making, Strategy-Executing Process Internal Considerations
Does the company have an appealing customer value proposition? What are the company’s competitively important resources and capabilities and are they potent enough to produce a sustainable competitive advantage? Does the company have sufficient business and competitive strength to seize market opportunities and nullify external threats? Are the company’s prices and costs competitive with those of key rivals? Is the company competitively stronger or weaker than key rivals?
Does sticking with the company’s present strategic course present attractive opportunities for growth and profitability? What kind of competitive forces are industry members facing and are they acting to enhance or weaken the company’s prospects for growth and profitability? What factors are driving industry change and what impact on the company’s prospects will they have? How are industry rivals positioned and what strategic moves are they likely to make next? What are the key factors of future competitive success and does the industry offer good prospects for attractive profits for companies possessing those capabilities?
Factors Shaping Strategic Decisions
What are the industry’s economic characteristics? How strong are the competitive forces at play? What forces are driving change in the industry? What market positions do rivals occupy and what moves are they likely to make next? What are the key factors for future competitive success? What are the company’s external opportunities?
Factors Shaping Strategic Decisions
How well is the present strategy working? What are the company’s competitively valuable resources, capabilities, and internal weaknesses? Are the company’s prices and costs competitive? Is the company competitively stronger or weaker than key rivals?
Stage 1: Developing a Strategic Vision, a Mission, and Core Values Strategic Vision
Is top management’s views about the firm’s direction and future product-market-customer-technology focus Provides a panoramic view of “where we are going” Is distinctive and specific to a particular organization Avoids use of innocuous uninspiring language that could apply to most any firm Definitively states how the company’s leaders intend to position the firm beyond where it is today
Characteristics of Effectively Worded Vision Statements
Paints a picture of the kind of firm that management is trying to create
Is not so focused that it makes it difficult to adjust
Is within the realm of what is possible
Is forward looking to change