Unit -1 Vision, Mission, Objective and Goal Learning Objectives After completion of the unit, you should be able to: ‘* Explain the meaning and concept of vision. ‘* Describe the purpose of having a mis * Know the different types of objectives and goals of an organization. ‘* Assess the concept of strategic intent and business definition. ‘* Also understand the difference between vision, mission, objective and goal. ion. Structure 1.1 Introduction 12 13. Mission 14 Objective LS Goal 1.6 Strategic Intent 1.7 Business Definition 1.8 Difference between vision, mission, objective and goals 1.9 Let's Sum-up 1.10 Key Terms 1.11 Self-Assessment Questions 1.12 Further Readings 1.13 Model Questions 1.14 Introduction Management of companies is essential for the systematic growth and development of the company. The management strategies are formulated on the basis of company mission and vision. In line with them, the goals and objectives are set for the company. The vision and mission statements play a significant role in the development of strategies by providing a basis for screening the strategic options Thus, understanding the concept of mission, vision, goals, objectives and related concepts is essential for implementing successful strategic management. 1.15 Vision A vision articulates the position that an organization would like to attain in the distant future. It helps in creating a common identity and a shared sense of —— Odisha State Open University Page 1purpose. A good vision is one which foster risk taking and experimentation. It answers the question: ‘What will success look like?” The vision of an organization must possess the following characteristics: * Its created by consensus. * It forms a company’s future mental image. © It forms the basis for formulating the mission statement. A good vision possesses the following features: * It should be inspiring. * It should foster long term thinking. © It should be original and unique. * It should be competitive. * It should be realistic Examples: ‘Company Vision Walt Make people happy Disne: ‘Stokes ‘Our vision is to take care of your vision Eye Clinic Infosys To be a globally respected organization that provides best of breed business solutions, leveraging technology, delivered by best-in-clas people. 1.16 Mission Mission refers to the purpose of an organization. Mission states the business reason for the organization's existence. It relates the organization to the society. The mission of an organization should aim high and at the same time it must be realistic. It should provide a strategic direction for the organization. “Mission is the fundamental work given by the society to an organization”. By Koontz & Q’ Ponn: “The company mission is defined as the fundamental unique purpose that sets a business apart from other firms of its type & identifies the scope of its operations in product & market terms”. By Pearce & Robinson In order to be effective, a mission statement should possess the following characteristics: Odisha State Open University Page 2(i) A mission statement should be realistic and achievable. Impossible statements do not motivate people. (i) It should neither be too broad not be too narrow. If it is broad, it will become meaningless. A narrower mission statement restricts the activities of organization. ‘The mission statement should be precise. (iii) A mission statement should not be ambiguous. It must be clear for action. Highly philosophical statements do not give clarity. (iv) A mission statement should be distinct. If it is not distinct, it will not have any impact. Copied mission statements do not create any impression. (v) It should have societal linkage. Linking the organization to society will build long term perspective in a better way. (vi) It should not be static. To cope up with ever changing environment, dynamic aspects should be considered. (vii) It should be motivating for members of the organization and of society. The employees of the organization may enthuse themselves with mission statement. (viii) The mission statement should indicate the process of accomplishing objectives. The clues to achieve the mission will be the motivating factor. Examples: Company n Statement Mayo To inspire hope and contribute to health and well- Clinic being by providing the best care to every patient through integrated clinical practice, education and research. The Bank We strive to be the acknowledged global leader of New and preferred partner in helping our clients succeed York in the world’s rapidly evolving financial markets. NIKE Ine. To Bring Inspiration and innovation to every athlete in the world. There are diverse issues which need to be covered while framing the mission statement of a company. The various components of a well framed mission statement are stated as follows: Product or service Customers Technology Survival, growth and profitability —__—————— Odisha State Open University Page 3* Company philosophy © Public image Y Check your progress Exercise 1 Suppose you are appointed as the head of the strategy planning department of a automobile company dealing in luxury segment cars. Frame a vision and miss ion statement for the company. Make necessary assumptions, L17 Objective Objectives are the end results of a planned activity. They are stated in quantifiable terms, Objectives are stated differently at various levels of management, Objectives play a very important role in enhancing the efficiency and effectiveness of an organization, The following characteristics must be present in fairly framed objectives: © They should be specific and unambiguous. They should have a particular time horizon within which it is expected to be achieved + They should be flexible enough so that if changes are required, they may be incorporated easily. They should be attainable. © They should be measurable. © They should be understandable © They should help in the achievement of the organization's mission and vision. ‘© They should be challenging. ‘There are many factors which have an impact on the formulation of objectives in an organization, These factors are kept in mind before making objectives. These factors are mentioned as below: * Size of the organization. © Level of management © Organization culture Odisha State Open University Page 41.19 Strategic Intent Strategic intent refers to the purpose for which the organization strives for. It is the philosophical framework of strategic management process. The hierarchy of strategic intent covers the vision and mission, business definition and the goals and objectives. The following figure indicates the hierarchy of the strategic intent framework: Vision Mission Business Definition Goals Objectives Following are the characteristics of strategic intent: * It should have an essence of winning. It should remain stable over a period of time. It should encourage personal effort and commitment. © It should foster creativity. . . ‘The strategic intent notion helps the managers to focus on creating new capabilities to exploit future opportunities. 1.20 Business Definition It explains business operations of a company stated in terms of customer needs, product specifications and technology. ‘Company Business Definition HUL To meet every day needs of people everywhere with branded products. Odisha State Open University Page 7Oerik Abell suggests defining business along the three dimension of customer groups. Customer functions and alternative technologies. They are developed as, follows: i, Customer groups are created according to the identity of the customers. Customer functions are based on provision of goods/services to customers. Alternative Technologies describe the manner in which a particular function can be performed for a customer. * For a watch making business, these dimensions may be outlined as follows: © Customer groups are individual customers, commercial organizations, sports organization, educational institutions etc. * Customer functions are record time, finding time, alarm service ete. It may be a gift item also. * Alternative technologies are manual, mechanical and automatic. The following figure depicts the three dimensions of business definition: feels ergot) 9 BUSINESS Pagel) eros eto A clear business definition is helpful in identifying several strategic choices. The choices regarding various customer groups, various customer functions and alternative technologies give the strategists various strategic alternatives. The diversification, mergers and turnaround depend upon the business definition. Customer oriented approach of business makes the organization competitive. On the same lines, product/service concept could also give strategic alternatives from a different angle, Business can be defined at the corporate or SBU levels. At the corporate level, it will concern itself with the wider meaning of customer groups, customer functions and alternative technologies. If strategic alternatives are linked through a business definition, it results in considerable amount of synergic advantage. Odisha State Open University Page 8Unit -3 SWOT Analysis Learning Objectives After completion of the unit, you should be able to: * Explain the meaningand objectives of conducting SWOT analysis. * Describe the concepts of strength, weakness, opportunity and threat. © Understand the benefits and applications of SWOT analysis. Structure 3.1 Introduction 3.2 History of SWOT Analysis 3.3. Meaning & Objectives of SWOT Analysis 3.4 Strength 3.5 Weakness 3.6 Opportunity 3.7 Threat 3.8 Benefits of SWOT Analysis 3.9. Essentials for a successful SWOT Analysis 3.10. Applications of SWOT Analysis 3.11 Let’s Sum-up 3.12 Key Terms 3.13 Self-Assessment Questions 3.14 Further Readings 3.15. Model Questions 3.1 Introduction A significant part of environment scanning is analyzing the internal as well as external environment of the organization. Internal analysis accounts for the analysis of the strengths and weaknesses of the organization. On the other hand, external analysis demands the screening of the threats and opportunities available in the relevant business environment. This sometimes is referred as SWOT analysis. The origin of this concept and the constituents are explained in the coming paragraphs,3.2 History of SWOT Analysis The SWOT analysis technique was developed by Albert Humphrey, who led a research project at Stanford University in the 1960s and 1970s using data from many top companies. The goal was to identify why corporate planning failed. The resulting research identified a number of key areas and the tool used to explore each of the critical areas was called SOFTanalysis.. Humphrey and the original research team used the categories “What is good in the present is Satisfactory, good in the future is an Opportunity; bad in the present is a Fault and bad in the future is a Threat.” Thus, this was later refined and restated as SWOT analysis. 3.3. Meaning & Objectives of SWOT Analysis SWOT analysis refers to the identification of the strengths and weaknesses of a company, the opportunities available to it, and the threats facing it at any given situation so as to facilitate the enterprise to develop a suitable strategy. While strengths and weaknesses relate to the enterprise internally, opportunities and threats are often products of the external environment. The important methodologies to be applied using SWOT analysis are as mentioned below: © Convert weaknesses into strengths Eliminate or minimize weaknesses © Analyze strengths to take advantage of the opportunities ‘© Convert threats into opportunities The following figure depicts SWOT analysis: Sona Marco Cee arThe objectives of SWOT analysis are enlisted below: v v vv 34 SWOT analysis can be used effectively to build organizational or personal strategy. It is used to find competitive advantage by matching the strengths to opportunities. It is useful in converting weaknesses or threats of a business into strengths or opportunities. Itis used as a tool for environmental scanning. Gap analysis may be done with the help of SWOT analysis and then the strategies may be devised to reduce this gap. Itis helpful in identifying the critical suecess factors of the business. It is used as a basis for developing new strategies and preparing project plans for strategy implementation. To explore new solutions to problems. To identify barriers that will limit goals or objectives. To reveal possibilities and limitations for change. Strength Strengths are internal competency of a firm, particularly in comparison with that of its competitors. Strengths may incorporate the following aspects: Company image brand image business synergies Functional areas such as marketing, finance, personnel, production and R&D. human competencies process capabilities financial resources products and services customer goodwill brand loyalty huge financial resources, broad product line no debt committed employees Strengths are the positive tangible and intangible attributes, which are internal to an organization. They are within the organization’s control.Y Check your progress Exercise 1 Making necessary assumptions, prepare a list of probable strengths of a company dealing industrial machinery parts 3.5 Weakness Weaknesses are those factors, which tend to decrease the competencies of the firm, particularly in comparison its competitors. Weaknesses are controllable. They must be minimized and eliminated. Such weaknesses may include the following: * poor product quality * obsolete technology © high production costs © lack of R&D back up © poor distribution infrastructure * poor financial position * weak management © depreciating machinery © narrow product range * poor decision-making * huge debts * high employee turnover * complex decision making process © large wastage of raw materials They indicate the factors that are within an organization’s control that detract from its ability to attain the desired goal. It suggests as to which areas the organization might improve.The following figure-1 provides a brief illustrative list of strengths and weaknesses. STRENGTHS AND WEAKNESS. STRENGTHS WEAKNESSES Marketing Strong brand image Poor brand image Strong distribution network Weak distribution Deep product mix Narrow product mix Efficient and motivated sales_| Poor sales force force Poor product quality High quality product Production Economics of scale High cost due to small size State of the art technology Obsolete technology Efficient input sourcing Inefficient input sourcing Efficient inventory management _| Poor inventory management Strong R&D support No R&D support Finance Comfortable debt-equity ratio Lop-sided capital structure Large internal accruals Very high interests payments High dividends and market Poor reserves Capitalization Low credit rating High credit rating Poor receivable management Human Resource ‘Qualified and experienced Redundant human resource Human resource Excess manpower Motivated human resource Poor morale Good industrial relations Poor industrial relations Good human resource management _| Poor human resource management Management Efficient board of directors Inefficient board of directors Unhealthy conflict between members of Board Efficient and motivated managers | Conflict between members of Board and top managers Inefficient managers 3.6 Opportunity Opportunit refer to those favourable external factors that an organization can use to give it a competitive advantage. They are basically the external attractive factors that represent the reason for an organization to exist and develop. It focus on the identification of what opportunities exist in the environment, which will propel the organization. Also they must be identified in association with specified time frames.Opportunities arise when an organization can take benefit of conditions in its environment to plan and execute strategies that enable it to become more profitable. Organizations can gain competitive advantage by making use of opportunities. Opportunities may arise from market, competition, industry/government and technology. For example - increasing demand for telecommunications accompanied by deregulation is a great opportunity for new firms to enter telecom sector and compete with existing firms for revenue. Y Check your progress Exercise 2 Differentiate between strengths and opportunities. 3.7. Threat Threats refers to factors that have the potential to harm an organization .They are basically those extemal factors, beyond an organization’s control, which could place the organization mission or operation at risk .The organization may benefit by having contingency plans to address them if they should occur .The business should classify the threats by their “seriousness” and “probability of occurrence”. ‘Threats arise when conditions in external environment put at risk the reliability and profitability of the organization’s business. They compound the vulnerability when they relate to the weaknesses. Threats are uncontrollable. When a threat comes, the stability and survival can be at stake, Examples of threats are - unrest among employees; ever changing technology; increasing competition leading to excess capacity, price wars and reducing industry profits; ete.The figure-2 provides an illustrative list of threats and opportunities. OPPORTUNITIES AND THREATS [_opporTUNTmEs THREATS Regulatory / Political Delicensing Delicensing MRTPA relaxations MRTPA relaxatior Import liberalization Import liberalization Price decontrol Liberalization of foreign Liberalization of foreign investment and investment and technology technology policy i Capital market reforms Economic Boom Recession Steady and fast increase Economic instability in income Social / Demographic Favourable change in Favourable change in consumer consumer attitude attitude Increase population Stagnating / declining population Change in age Change in age composition of composition of population population Growth of consumerism Growth of consumerism Growth of environmentalism In the above figure, several factors figure under opportunities as well as threats. This is because what is an opportunity for some firms is a threat for some others. For example, declining is an opportunity for many firms to enter new business or to expand existing business but it poses a threat to existing firms who were enjoying the benefits of a protected market. Similarly, while import liberalization is a threat to import competing industries, it is an opportunity for some other firms to obtain materials / technology at lower prices. 3.8 Benefits of SWOT Analysis A SWOT analysis is a great way to guide business-strategy discussions. Often the SWOT analysis reflect those factors of which we are unaware and would never be able to capture them without conducting such an analysis. SWOT analysis offers the following benefits: © Itfilters down to the specific segments like marketing, production, or sales and then it may be decided whether particular strategy may be adopted or not. ‘Segment specific SWOT analysis can be done and then focused functional strategy may be developed. Odisha State Open University Page 31* It isa source of information for strategic planning. © Ithelps in building organization’s strengths. © Ithelps in reversing its weaknesses. © Ithelps in maximizing its response to opportui © It focuses on overcoming the organization’s threats. © Ithelps in identifying core competencies of the firm, © Ithelps in setting of objectives for strategic planning. * It helps in knowing past, present and future so that by using past and current data, future plans can be chalked out. ies. SWOT Analysis provide information that helps in synchronizing the firm’s resources and capabilities with the competitive environment in which the firm operates. Y Check your progress Exercise 3 Conduct a SWOT analysis for a company running airlines in India. 3.9 Essentials for a successful SWOT Analysis Before conducting the SWOT analysis, there are certain pre considerations which must be kept in mind. Following points illustrate the essentials for conducting SWOT analysis and will lead to successful outcomes: * Be realistic about the strengths and weaknesses of your organization. should distinguish between where your organization is today, and where it could be in the future. + Be specific andavoid grey areas. + Always analyse in relation to your competition i.e. better than or worse than your competitors. + Keep your SWOT analysis short and simple — but only as short and simple as the situation demands. Avoid unnecessary complexity and over analysis.