Module 2

Hierarchy of Goals
Vision Strategic Intent

Mission

Goals

Objectives

Plans
 Vision

 Vision represents top management’s aspirations about the company’s direction & focus.

 A clearly articulated vision molds organizational identity, stimulates managers in a positive

way and prepares the company for the future.

 Description of something (an organization, a corporate culture, a business, a technology,

an activity) in the future.

 Vision is a mental perception of the kind of an organization aspires to create within a broad
time horizon & the underlying conditions for the actualization of this perception.

 It’s a category of intentions that are broad, all inclusive & forward thinking.
 Definitions

 Johnson: Vision is "clear mental picture of a future goal created jointly by a group for the
benefit of other people, which is capable of inspiring and motivating those whose support
is necessary for its achievement".

 Shoemaker: Vision is "the shared understanding of what the firm should be and how it
must change".

 Stace and Dunphy: Vision is "an ambition about the future, articulated today, it is a
process of managing the present from a stretching view of the future".

 For Boal and Hooijberg, effective visions have 2 components:

1. A cognitive component (which focuses on outcomes & how to achieve them)

2. An affective component (which helps to motivate people & gain their commitment to it)
 Features of Vision

 Creating an identity & a sense of purpose for an organization.

 Inspiring the organization to achieve the aim.

 Fostering long term thinking in an organization.

 Making sense in market place by being competitive, unique & original.

 Elevating the energy & self esteem of all the employees in the organization.
 Characteristics of Vision Statements

 Thompson & Strickland, characteristics of an effective vision statement are:

1. It must be easily communicable: Everybody should be able to understand it clearly.

2. It must be graphic: paint a picture of the kind of company the management is trying to create.

3. It must be directional: It must say something about the company’s journey or destination.

4. It must be feasible: which the company can reasonably expect to achieve in due course of time.

5. It must be focused: specific enough to provide managers with guidance in making decisions.

6. It must be appealing to the long term interests of the stakeholders.

7. It must be flexible: It must allow company’s future path to change as events unfold &
circumstances change.
 Process of Creating Vision

Vision

Core (“what we
Envisioned
(“what we aspire to
stand for and
Ideology Future become, to
why achieve, to
we exists”) create”)

Core Core Long-Term Vivid

Value Purpose Goals Description
 Vision Retreat (Nanus, 1996)

Phase 1:
Phase 2: Initial meeting: Two-day meeting Phase 3: Analysis and report
Preparation.
with discussion on vision audit (character of cycle. Facilitator prepares 3
Establish
organization), vision scope (who it includes scenarios of the future that are
purpose &
& desired vision characteristics), & vision discussed among participants over
goals of the
context (environmental issues) a no. of weeks
retreat

Phase 4: Final meeting- One day Phase 5: Post-retreat activities:

discussion & evaluation of vision Conclusions communicated throughout
alternatives & their strategic the organization including ways of
implications implementing it
 Formulating a Vision Statement

 Nutt and Backoff identify three different processes for crafting a vision:

1. Leader-dominated Approach: CEO provides the strategic vision. Criticism- it’s against the
philosophy of empowerment, which maintains that people across the organization should be
involved in processes & decisions that affect them.

2. Pump-priming Approach: CEO provides visionary ideas & selects people & groups within the
organization to further develop those ideas within the broad parameters.

3. Facilitation Approach: “Co-creating approach” - wide range of people participate in the

process of developing & articulating a vision. CEO acts as a facilitator. According to Nutt &
Backoff, this approach is likely to produce better visions & more successful organizational change
& performance as more people have contributed to its development & will therefore be more
willing to act in accordance with it.
 Mission

 Mission or purpose or reason for organization existence.

 A sentence describing a company's function, markets and competitive advantages. It is a

short written statement of your business goals and philosophies.

 David F. Harvey ―A mission provides the basis of awareness of a sense of purpose, the
competitive environment, degree to which the firm‘s mission fits its capabilities and the
opportunities which the government offers.

 Thompson ―essential purpose of the organization, concerning particularly why it is in

existence, the nature of the business it is in, and the customers it seeks to serve and
satisfy.
 Why Mission is Needed

 Serves as a focal point to identify the organization’s purpose & direction.

 Develop a basis or standard for allocating organizational resources.

 Helps in motivating the employees to use the resource efficiently.

 Ensures stability of the purpose within the organization.

 Facilitates the transformation of objectives & goals into the work structure of an
organization.
 Features of the Mission
 Feasible: Implies that a mission statement should be realistic in nature & achievable . It should aim
high, but should not be impossible to achieve.

 Clear: It should be transparent- not be complex & unclear in nature for action.

 Motivational: should encourage the member of the organization to work towards the organizational
goal; motivating for members of society.

 Unique: It should be unique & distinctive to attract the attention of the society; should be well
received by the society.

 Precise: broad mission statement- meaningless; narrower- restricts organization activities

 Societal linkage: will build long term perspective in a better way.

 Should indicate the process of accomplishing objectives; clues to achieve the mission will be
guiding force.
 Components of a Mission Statement
1. Customer: Who are the firm’s customers?

 A focus on customer satisfaction causes managers to realize the importance of providing

an excellent customer service; many companies have made a key component of their
mission statement.

2. Products or Services: What are the firm’s major products or services?

3. Markets: Geographically, where does the firm compete?

4. Technology: Is the firm technologically current?

 The above three components describe the company’s activity.

5. Concern for survival, growth and profitability: Is the firm committed to growth &
financial soundness?
 These 3 economic goals guide the strategic direction of almost every business. Firm
unable to survive- incapable of satisfying the aims stakeholders. Profitability- mainstay
goal of a business, & profit over the long term is the clearest indication of a firm’s ability
to satisfy the claims and desires of all stakeholders. A firm’s growth is inextricably linked
to its survival and profitability.

6. Company philosophy (also company creed): What are the basic beliefs, values,

aspirations & ethical priorities of the firm?

 It specifies the basic values, beliefs and aspirations to which the strategic decision-
makers are committed in managing the company.

7. Company self-concept: What is the firm’s distinctive competence or major competitive

advantage?
 Ability of company to survive in a highly competitive environment depends on its realistic
evaluation of its strengths & weaknesses. Description of the firm’s self-concept provides
a strong impression of the firm’s self-image.

8. Concern for public image: Is the firm responsive to social, community & environmental
concerns?

 Mission statements should reflect the public expectations of the firm since this makes
achievement of the firm’s goals more likely. Sometimes, a negative public image can be
corrected by emphasizing the beneficial aspects in the mission statements.

9. Concern for employees: Are employers considered a valuable asset of the firm?

 It should also emphasize their concern for improvement of quality of work life, equal
opportunity for all, measures for employee welfare etc.
10. Concern for quality: Is the firm committed to highest quality ?

 The emphasis on quality has received added importance in many corporate philosophies.
Ex: Motorola’s mission statement contains a statement that “dedication to quality is a way
of life at our company, so much so that it goes beyond rhetorical slogans.”
 Elements of Mission Statement
❑ History of the organization- The important characteristic of the past should be
considered for formulating & developing a mission statement.

❑ Environment of the organization- Refers to identifying the opportunities & threats by the
environment.

❑ Specification of Products or Services- Implies that the mission statement should specify
the products or services that are produced by an organization.

❑ Market’s & consumer Description- Implies that mission statement should clearly
describe the markets & customer that an organization needs to serve.
 Mission vs Purpose

(i) Mission is the societal reasoning while the purpose is the overall reason.

(ii) Mission is external reasoning and relates to external environment. Purpose is internal
reasoning and relates to internal environment.

(iii) Mission is for outsiders while purpose is for its own employees.
 Process of creating Mission

Analyzing the Vision

Defining the business Formulating a Mission
statement

❑ Analyzing the Vision statement- To understand about How you will get to where you
want to be.

❑ Defining the Business

1. Scope of the business- refers to business activity & potential- core competences,
resources & economic activities, competitive advantage.

▪ Factors to evaluate scope- market forces, economic operations, supply & demand, income
elasticity, industrial structure & competitive analysis.
2. Stakeholders of the business

3. Purpose of the business- An organization’s meaningful & enduring reason to exist that
aligns with long-term financial performance, provides a clear context for daily decision making
& unifies & motivates relevant stakeholders.

▪ The overall reason; internal reasoning & relates to internal environment: for employees.

4. Customers of the business

5. Techniques & methods employed in the business

❑ Formulating a Mission

1. Strategies for future operations

2. Key values of business

3. Code of conduct for the business operations

 Formulation of Mission Statement

 Different firms follow different approaches. As indicated in the strategic management

model, a clear mission statement is needed before alternative strategies can be
formulated and implemented.

1. In many cases, the mission is inherited i.e. the founder establishes the mission which may
remain unchanged down the years or may be modified as the conditions change.

2. In some cases, the mission statement is drawn up by the CEO and board of directors or a
committee of strategists constituted for the purpose.

3. Engaging consultants for drawing up the mission statement is also common.

4. Many companies hold brainstorming sessions of senior executives to develop a mission

statement. Soliciting employee’s views is also common.
5. According to Fred R. David, an ideal approach for developing a mission statement would
be to select several articles about mission statements and ask all managers to read these
as background information. Then prepare a draft mission statement. A facilitator or a
committee of top managers, merge these statements into a single document & distribute
this draft mission statement to all managers. Then the mission statement is finalized after
taking inputs from all the managers in a meeting. Thus, the process of developing a mission
statement represents a great opportunity for strategists to obtain needed support from all
managers in the firm.

6. Decision on how best to communicate the mission to all managers, employees & external
constituencies of an organization when the document is in its final form. Some organizations
even develop a videotape to explain the mission statement and how it was developed.
7. The practice in Indian companies appears to be a consultative-participative route.

 For example, at Mahindra and Mahindra, workshops were conducted at two levels within
the organization with corporate planning group acting as facilitators.

 The State Bank of India went one step ahead by inviting labor unions to partake in the
exercise.
 Vision vs Mission

Vision Mission
About It outlines WHERE you want to be. Talks about HOW you will get to where
Communicates the purpose & values of you want to. Defines the purpose &
the business. primary objectives related to customer
needs & team values.

What it is A mental image of a possible & Enduring statement of philosophy, a

desirable future state. creed statement.
A dream. The purpose or reason for a firm’s
existence.
Statement Broad. More specific than vision.
Answer “Where do we aim to be?” “What do we do? What makes us
different?”
“what we want to become?” “what is our business?”
 Vision Mission
Time A vision statement talks about the A mission statement talks about
future. the present leading to its future.
Function It lists where you see yourself It lists the broad goals for which the
some years from now. It inspires to organization is formed. Its prime
give your best. It shapes the function is internal; to define the
understanding of why you are key measure/s of the
working here. organization’s success & its prime
audience is the leadership, team &
stockholders.

Change As the organization evolves, you The mission statement may

might feel tempted to change the change, but it should still tie back
vision. However, it explains the to your core values, customer
organization’s foundation, so needs & vision.
change should be kept to a
minimum.
 Vision Mission

Developing a Where do we want to be going What do we do today? For whom

statement forward? When do we want to do we do it? What is the benefit?
reach that stage? How do we In other words, Why we do what
want to do it? we do? What, for Whom & Why?

Features of an Clarity & lack of ambiguity: Purpose & values of the

effective statement Describing a bright future (hope); organization: Who are the
Memorable & engaging organization’s primary “clients”
expression; realistic aspirations, (stakeholders)? What are the
achievable; alignment with responsibilities of the
organizational values & culture. organization towards the clients?
 Vision : To be globally significant in  Vision : "To be a globally respected
each of our chosen businesses by corporation that provides best-of-breed
2025. business solutions, leveraging

 Mission : To be the most reliable global technology, delivered by best-in-class

network for customers and suppliers, people."

that delivers value through products and  Mission : "To achieve our objectives in
services. To be a responsible value an environment of fairness, honesty,
creator for all our stakeholders. and courtesy towards our clients,
employees, vendors and society"
 Vision : A global  Vision : Indian railways shall provide safe, efficient,
engineering enterprise affordable, customer-focused and environmentally
providing solutions for sustainable integrated transportation solutions. It shall be a
better tomorrow. modern vehicle of inclusive growth, connecting regions,

 Mission : Providing communities, ports & centers of industry, commerce, tourism

sustainable business and pilgrimage across the country.

solution in the field of  Mission : Protect and safeguard railway property, passengers
energy, industry and and passenger area.
infrastructure.
 Ensure the safety, security and boost the confidence of the
traveling public in the Indian railways.
 Company: Tesla  Company: Amazon

 Vision: To create the most compelling car  Vision: To be Earth’s most customer-
company of the 21st century by driving the centric company, where customers can find
world’s transition to electric vehicles. and discover anything they might want to buy

 Mission: To accelerate the world’s transition online.

to sustainable energy.  Mission: We strive to offer our customers

 Why it works: What better word than the lowest possible prices, the best available

“accelerate” in a mission to serve as the driving selection, and the utmost convenience.

force behind what Tesla does. While boldly  Why it works: Amazon’s mission is cut-
stating “best in the century” reflects loftier and-dry about what they offer to customers.
dreams in the vision. The vision takes the offerings farther, saying
their company will offer “anything” customers
want.
 Company: LinkedIn  Company: Google

 Vision: To create economic opportunity for  Vision: To provide access to the world’s

every member of the global workforce. information in one click.

 Mission: To connect the world’s  Mission: To organize the world’s

professionals to make them more productive information and make it universally accessible
and useful.
and successful.
 Why it works: Its mission clarifies that
 Why it works: LinkedIn succinctly captures
organization and accessibility are what they
what they do (connect) and who they serve (the
offer. Their vision statement is about
world’s professionals) in their mission. While
improving accessibility in the future “in one
the vision encompasses every working
click.”
person in the world.
 Vision : To be the leading provider of financial services in India and a major global bank.

 Mission : We will leverage our people, technology, speed and financial capital to :

o Be the banker of first choice for our customers by delivering high quality, world-class products
and services.

o Expand the frontiers of our business globally.

o Play a proactive role in the full realization of India’s potential.

o Maintain a healthy financial profile and diversify our earnings across businesses and
geographies.

o Maintain high standards of governance and ethics.

o Contribute positively to the various countries and markets in which we operate.

o Create value for our stakeholders.

 Business Policy

❑ Business policy defines the scope or spheres within which decisions can be taken by the
subordinate in an organization.

❑ It permits the lower level management to deal with the problems & issues without
consulting top level management every time for decisions.

❑ Business policies are the guidelines developed by an organization to govern its actions.

❑ They define the limits within which decisions must be made.

❑ Business policy also deals with acquisition of resources with which organizational goals
can be achieved.

❑ Business policy is the study of the roles & responsibilities of top level management, the
significant issues & the decisions affecting organization in long-run.
 Features of Business Policy

❑ Specific – Policy should be specific/ definite. If it is uncertain, then the implementation will
become difficult.

❑ Clear – must be unambiguous. It should avoid use of jargons & connotations. There
should be no misunderstandings in following the policy.

❑ Reliable/ Uniform – must be uniform enough so that it can be efficiently followed by the
subordinates.

❑ Appropriate – to the present organizational goal.

❑ Simple - & easily understood by all in the organization.

❑ Inclusive/ Comprehensive – In order to have a wide scope, a policy must be

comprehensive.
❑ Flexible – should be flexible in operation / application. This does not imply that a policy
should be altered always, but it should be wide in scope so as to ensure that the line
managers use them in repetitive / routine scenarios.

❑ Stable – Policy should be stable else it will lead to indecisiveness & uncertainty in minds
of those who look into it for guidance.
 Strategic management and business policy both rely on the basic notion of setting
objectives that are "SMART" – an acronym

 Specific

 Measurable

 Attainable

 Realistic

 Time-bound goals.

 Ex- a goal to "sell more products" means little unless details are added to the goal
statement. A goal might be: "sell 25 percent more of the product within the next 30 days by
targeting new customers." This goal is clear and concise and it helps the business owner to
manage all of the policies and strategies necessary to enact that objective.
  Tata Motors has several policies in place that
❑ Ex: HR Policy- Hiring-firing, employee
documents relevant guidelines for different areas of
profile, training, transfers, promotions,
operation, whereby rules are stated through which
wages, incentives & bonus
conformation to norms may also be monitored.
❑ Marketing Policy- What to sell, where,
to whom, through whom,
communication

❑ Materials Policy- Quality-quantity,

vendors, payment terms, stores &
handling, documentation

❑ Quality Policy- Standards, checks &

controls, feedbacks, corrective
measures
 Business Policy Vs Strategy
Policy Strategy

It’s a blueprint of the organizational activities It’s concerned with those organizational
which are repetitive/ routine in nature. decisions which have not been dealt/ faced.
The policy is a set of common rules and The strategy is the best plan opted from a
regulations, which forms as a base to take the number of plans, in order to achieve the
day to day decisions. organizational goals and objectives.
Deals with routine/ daily activities essential for Strategy deals with strategic decisions.
effective & efficient running of an organization.
A policy is what is, or what is not done. Strategy is the methodology used to achieve a
target as prescribed by a policy.
 Policy Strategy

Concerned with both thoughts & actions. Concerned mostly with actions.

Policy formulation is responsibility of top Strategy formulation is by the top

level management. management, but sub-strategies are
formulated at the middle level.

Policies are uniform in nature. However, Strategies can be modified as per the
relaxations can be made for unexpected situation, so they are dynamic in nature.
situations.

Policies are made for the internal Strategies deal with external environmental
environment of business. factors.