STRATEGIC MANAGEMENT

MISSION STATEMENT
Topic3: THE STRATEGIC MANAGEMENT PROCESS
● Distinguishes one firm from another
Strategic Management Process ● Declares the firm’s reason for being
● Reveal what an organization wants to
- describes its methods by which managers
be and whom it wants to serve
conceive of and implement a strategy that
● Essential for effectively establishing
can lead to a sustainable competitive
objectives and formulating strategies
advantage.
● Also referred to as:
Managers ask the following questions:
➢ Creed statement
● What do we want to accomplish
➢ Statement of purpose
ultimately? What is our vision?
● What are we about? What is our mission? ➢ Statement of philosophy
● How do we accomplish our goals?
What are our values? ➢ Statement of business principles

VISION, MISSION, VALUES Mission Statement Components

VISION ● Customers: Who are the firm’s

customers?
A vision statement provides direction and ● Products or services: What are the
describes what the founder wants the firm’s major products or services?
organization to achieve in the future; it’s more ● Markets: Geographically, where does
about the “what” of a business. It is different the firm compete?
from a mission statement, which describes the ● Technology: Is the firm technologically
purpose of an organization and more about current?
the “how” of a business. ● Concern for survival, growth, and
profitability: Is the firm committed to
Importance of a Vision Statement
growth and financial soundness?
1. A vision statement should answer the basic ● Philosophy: What are the basic beliefs,
question, “What do we want to become?” values, aspirations, and ethical priorities
of the firm?
❑ A clear vision provides the ● Self-concept: What is the firm’s
foundation for developing a distinctive competence or major
comprehensive mission statement. competitive advantage?
● Concern for public image: Is the firm
2. Many organizations have both a vision and responsive to social, community, and
a mission statement, but the vision statement environmental concerns?
should be established first and foremost. ● Concern for employees: Are
employees a valuable asset of the firm?
❑ The vision statement should be short,
preferably one sentence, and as many ROLES PLAYED BY MISSION AND VISION
managers as possible should have input
into developing the statement. Mission and vision statements play three
critical roles:

(1) communicate the purpose of the

organization to stakeholders,
STRATEGIC MANAGEMENT
(2) inform strategy development, and What is strategy formulation?

(3) develop the measurable goals and ● includes developing a vision and
objectives by which to gauge the success of mission
the organization’s strategy. ● identifying an organization's external
opportunities and threats,
Key Roles of Vision and Mission ● determining internal strengths and
weaknesses,
● establishing long-term objectives,
● creating alternative strategies, and
● choosing particular strategies to pursue.

Strategy Formulation

● Deciding what new businesses to enter

● What businesses to abandon
● How to allocate resources
● Whether to expand operations or
diversify
Living the Ethical Values
● Whether to enter international markets
● Whether to merge or form a joint
● Organizational Values are the ethical
venture
standards and norms that govern the
● How to avoid a hostile takeover
behavior of individuals within a firm or
organization and within society. Strategy Implementation
● Strong ethical values have two
important functions: ● requires a firm to establish annual
objectives, devise policies, motivate
❖ They form a solid foundation on employees, and allocate resources so
which a firm can build its mission and that formulated strategies can be
long term success. implemented
● developing a strategy-supportive
❖ They serve as the guardrails put in
culture,
place so the company can stay on
● creating an effective organizational
track when pursuing its quest for
structure,
competitive advantage.
● redirecting marketing efforts,
STEPS IN THE STRATEGIC MANAGEMENT ● preparing budgets,
PROCESS ● developing and utilizing information
systems, and
● relating employee reward to
organizational performance.
● Often called the action stage

Strategy Evaluation

Three fundamental strategy-evaluation

activities are:

1) Reviewing external and internal factors that

are the bases for current strategies
STRATEGIC MANAGEMENT
2) Measuring performance

3) Taking corrective actions

Integrating Intuition and Analysis

● Most organizations can benefit from

strategic management, which is based
upon integrating intuition and analysis in
decision making
● Intuition is particularly useful for making
decisions in situations of great Internal Strengths and Weaknesses
uncertainty or little precedent
- Controllable activities that are performed
Adapting to Change especially well or poorly.

● The second largest bookstore chain in Long-term Objectives

the United States, Borders Group,
declared bankruptcy in 2011 as the firm - essential for organizational success
had not adapted well to changes in
book retailing from traditional bookstore Strategies
shopping to customers buying online,
- are the means by which long term objectives
preferring digital books to hard copies.
● Borders was on the brink of financial will be achieved.
collapse before being acquired in July
Annual Objectives
2011 by Direct Brands
- are short term milestones that organizations
KEY TERMS IN STRATEGIC MANAGEMENT
must achieve to reach long term objectives.
Competitive Advantage
Policies
- anything that a firm does especially well
- are the means by which annual objectives
compared to rival firms.
will be achieved.
Strategists
Levels of Strategies
- Help an organization gather, analyze, and
❑ Corporate Strategy
organize information
❑ Business Strategy
Vision Statement
❑ Functional strategy
- “what do we want to become?”
❑ Operational Strategy
Mission Statement
Benefits of Strategic Management
- “What is our business?”.
➢ Non-financial Benefits
External Opportunities and Threats
● Enhanced awareness of threats
- are factors which could harm or benefit the
● Improved understanding of
organization in the future
competitors’ strategies
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● Increased employee productivity
● Reduced resistance to change
● Clearer understanding of performance-
reward relationship
● Enhanced problem-prevention
capabilities

WHY SOME FIRMS DO NO STRATEGIC PLANNING

● Lack of knowledge of strategic planning

● Poor reward structures
● Fire fighting
● Waste of time
● Too expensive
● Laziness
● Content with success
● Fear of failure
● Overconfidence
● Prior bad experience
● Self-interest
● Fear of the unknown
● Honest difference of opinion
● Suspicion