SM C-2
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porashona.articleChapter 2
Charting a Company’s
Direction
I t s Vi s i o n , M i s s i o n , O b j e c t i v e s , a n d S t r a t e g y
Professor Dr. Md. Arifur Rahman
Department of Business Administration in Management Studies
Chapter Objectives
Understand why having a clear strategic vision is essential for managers
Explain the importance of well-defined mission statements
Describe how objectives help measure and guide company performance
Recognize the need for coordinated strategic initiatives at different
organizational levels
Understand the role of a company’s board of directors in overseeing strategy
Introduction to Strategy-Making
Strategy is the roadmap for how a company intends to achieve competitive advantage and
long-term success.
Without a clear strategy, businesses risk making inconsistent or conflicting decisions that
lead to inefficiency.
Key questions to consider
Where do we want to be in the future?
How will we compete successfully?
What are our priorities for growth and improvement?
The Five-Stage Strategy-Making Process
Stage 1 -
Developing a Strategic Vision
A strategic vision describes management’s aspirations for the company’s future
and the course and direction it intends to pursue.
The vision serves as a guiding principle for decision-making, helping leaders and
employees align their efforts toward a common goal. A well-articulated vision
statement inspires stakeholders, communicates the company’s ambitions, and
sets a foundation for strategic planning and execution.
Examples:
Google’s vision statement – "To organize the world’s
information and make it universally accessible and useful."
Example: Nike’s vision – "To bring inspiration and innovation to every athlete in the world."
Communicating the Strategic Vision
Vision communication involves systematically sharing the company’s long-term direction, goals, and
aspirations with internal and external stakeholders to ensure understanding, alignment, and
commitment.
This process helps employees see how their roles contribute to the bigger picture, builds investor
confidence, and enhances the organization’s credibility in the market. A strategic vision is only useful
if it is effectively communicated.
Effective communication of vision fosters motivation, ensures consistency in decision-making, and
provides a clear framework for strategic actions. Companies achieve this through leadership
engagement, internal training, corporate messaging, and aligning branding with strategic objectives.
Methods include:
Regular meetings and discussions
Internal branding and training
Example: Tesla’s vision communicated through an innovation-driven culture
How to Avoid Common Mistakes in Vision Statements?
Mission Statements
A mission statement defines a company’s purpose by articulating its reason for existence and its
fundamental objectives.
It answers key questions: "Who are we? What do we do? Why do we exist?"
A well-crafted mission statement provides a clear identity, establishes a company’s priorities, and
communicates its commitments to stakeholders, including customers, employees, and investors. It
serves as a guiding framework for decision-making, ensuring that business activities align with the
company’s overarching goals and values.
Mission statements help:
Differentiate the business from competitors
Define customer needs that the company serves
Guide company culture and decision-making
Example: FedEx – "Delivering packages fast and reliably worldwide."
Key Elements of a Strong Mission Statement
Example: Starbucks – "To inspire and nurture the
human spirit – one person, one cup, and one
neighbourhood at a time."
Core Values
Core values establish the ethical foundation of a company, shaping its culture by defining acceptable
behaviors, decision-making frameworks, and priorities.
They influence employee conduct, guiding interactions with colleagues, customers, and stakeholders
while fostering a sense of shared purpose and accountability.
Companies with strong core values create a positive work environment, attract talent aligned with
their mission, and build long-term trust with customers and partners.
Examples of strong core values:
Google: Innovation and openness
Zappos: Delivering WOW through service
Patagonia: Environmental responsibility
Strong values guide strategic decisions and create a distinct corporate identity.
Stage 2 - Setting Objectives
Objectives transform a company’s vision into specific, quantifiable targets that help
track progress and ensure strategic alignment. They provide a clear roadmap for
measuring success and prioritizing business activities. Well-defined objectives enable
companies to allocate resources efficiently, guide employee efforts, and adapt to
changing market conditions while maintaining focus on long-term goals.
Financial objectives: Revenue growth, profitability, shareholder value.
Strategic objectives: Market position, competitive advantage, customer satisfaction.
SMART Objectives
Example: Increase revenue by 10% within one year.
The Need for a Balanced Approach
The Balanced Scorecard is a strategic planning and management tool used to align an organization's activities
with its vision and strategy. It provides a comprehensive framework for measuring organizational
performance by balancing financial and non-financial objectives. The Balanced Scorecard evaluates
performance across four perspectives:
Aligning Objectives Across Levels
Top-Down Alignment: A hierarchical process where objectives flow from corporate leadership to frontline
teams, ensuring coherence.
Levels of Alignment:
Corporate: Broad goals (e.g., “Achieve 10% annual revenue growth”).
Business Unit: Division-specific targets (e.g., “Expand renewable energy sales by 15%”).
Functional: Departmental actions (e.g., R&D to develop 5 new patents annually).
Operating: Day-to-day metrics (e.g., “Reduce factory downtime by 20%”).
Key Benefits:
Eliminates conflicting priorities.
Ensures resource allocation aligns with strategy.
Creates accountability at all levels.
Stage 3 - Crafting a Strategy
Crafting a strategy involves deciding how to compete, allocate resources, and achieve
objectives. It answers critical questions like:
• How to attract customers?
• How to outcompete rivals?
• How to position the company in the market?
Financial objectives: Revenue growth, profitability, shareholder value.
Strategic objectives: Market position, competitive advantage, customer satisfaction.
Levels of Strategy
Disney acquiring Marvel & Pixar to dominate entertainment.
Coca-Cola’s focus on brand loyalty and global distribution.
Tesla’s R&D investing in battery innovation.
Amazon’s warehouse automation for faster delivery.
Stage 4 - Executing Strategy
Execution is the process of carrying out the company’s strategic plan effectively.
Key elements of successful execution
Strong leadership and commitment from top management.
Proper allocation of resources to critical activities.
Effective communication of strategic goals across the organization.
Alignment between strategy and company culture.
Example: Amazon’s strong execution in logistics and customer service has reinforced its
market dominance.
Challenges in Strategy Execution
Stage 5 - EVALUATING PERFORMANCE
AND CORRECTIVE ADJUSTMENTS
Companies must continuously assess performance to ensure strategic success.
Key performance indicators (KPIs) help measure progress.
Adapting to new market conditions or unexpected challenges.
Triggers:
Market changes (e.g., streaming disrupting cable TV).
Performance gaps (e.g., Nokia’s smartphone decline).
Options:
Revise objectives (e.g., McDonald’s health-focused menu).
Overhaul strategy (e.g., IBM’s shift to cloud computing).
Role of the Board of Directors in Strategy Execution
The board of directors ensures that management is effectively implementing the strategy by overseeing
decision-making, evaluating performance, and ensuring alignment with corporate goals.
Responsibilities include:
Reviewing and approving major strategic initiatives.
Monitoring financial and operational performance.
Holding executives accountable for results.
Ensuring ethical business practices and corporate governance.
Example: Apple’s board supported Tim Cook in transitioning Apple into a services-driven business.
