STRATEGIC MANAGEMENT

BACKGROUND READING

The Strategic Management Process: Vision, Mission, Values, Goals, Stakeholders

Strategic management is a company-wide process that includes the development of a long-term plan of action that assists an organization in achieving its objectives and fulfilling its company vision.

This course is focused on the steps and stages of preparing and implementing a strategic plan. Although we do not have time in one short course to go through the entire process in detail, by the end of the course you will know what you would need to do, and you will have the tools to develop a plan if you need to participate in the process. The following two readings and PowerPoint presentation are intended to provide you with an overview of the planning process. They also serve as an introduction and overview of the course.

McNamara, C. (2009). Developing your strategic plan. Free Management Library.  http://www.managementhelp.org/np_progs/sp_mod/str_plan.htm

The strategic planning process. (2010). Quick MBA.  http://www.quickmba.com/strategy/strategic-planning/

Click on the link for a PowerPoint presentation summarizing  Strategic Management  by Professor Anastasia M. Luca.

Mission, Vision, Values, and Goals

We will begin by studying the first step of the strategic planning process. This is the step that informs the rest of the process. It is also the step that ensures that all parties to the strategic plan are in agreement as to why the company exists, what the company does, where the company should go, and how it should get there. Those who run an organization should continually be asking the following two questions: "What business are we in?" and "What business should we be in?" Why? Because the answers may not necessarily be the same, in which event the strategic course must be corrected.

Mission statements are explicit statements concerning the reason(s) for an organization's existence. At the most basic level, mission statements articulate what the company is, why it exists, and what it does. The mission statement sets up the long-term direction of the company, reflects the goals of its major stakeholders (i.e., shareholders, customers, suppliers, and employees), and should be capable of standing the test of time.

The mission statement should be the first consideration for anyone engaged in the strategic planning process, or in decisions which have strategic implications. Any action taken by the organization must be compatible with its expressed mission. Following are several mission statements:

The Elephant Sanctuary: "A natural refuge where sick, old and needy elephants can once again walk the earth in peace and dignity." This is one powerful statement that evokes emotion and instant attachment to the cause of this organization.

Sun Microsystems: "Solve complex network computing problems for governments, enterprises, and service providers." This is a simple mission statement identifying the company's market and what the company does.

Ben & Jerry’s Ice Cream: A product mission is stated as: "To make, distribute and sell the finest quality all natural ice cream and euphoric concoctions with a continued commitment to incorporating wholesome, natural ingredients and promoting business practices that respect the Earth and the Environment." This mission inspired Ben & Jerry’s to build a cause-related company.

Joe Boxer: "JOE BOXER is dedicated to bringing new and creative ideas to the marketplace, both in our product offerings as well as our marketing events. We will continue to develop our unique brand positioning, to maintain and grow our solid brand recognition, and to adhere to high quality design standards. Because everyone wants to have fun every day, JOE BOXER will continue to offer something for everyone with fun always in mind."

Some mission statements are epic in scope. Here are some examples of mission statements from the past that promised nothing less than revolutionizing an industry:

The Ford Motor Company (early 1900s): "Ford will democratize the automobile."

Sony (early 1950s): "Become the company most known for changing the worldwide poor-quality image of Japanese products."

Boeing (1950): "Become the dominant player in commercial aircraft and bring the world into the jet age."

Wal-Mart (1990): "Become a $125 billion company by the year 2000."

Vision statements are similar to mission statements in the sense that they also define the organization's purpose. However, they do so by focusing on the organization's core beliefs as to how things should be done, and they establish an image of a future that the organization aspires to create. Vision statements are meant to be inspiring. They give direction to employees concerning how they should carry out their jobs, and they signal customers about the values of the organization.

Examples of vision statements:

Heinz: "The world's premier food company, offering nutritious, superior tasting foods to people everywhere." Being the premier food company does not mean being the biggest, but it does mean being the best in terms of consumer value, customer service, employee talent, and assuring consistent and predictable growth.

Chevron: “At the heart of The Chevron Way is our vision ... to be the global energy company most admired for its people, partnership and performance."

Pfizer: "To become the world's most valued company to patients, customers, colleagues, investors, business partners, and the communities where we work and live."

Value statements identify the ethos of a company—or the ethics under which an organization plans to conduct business. Every mission and vision is inherently based on the organization's core values. Some organizations articulate those values (often, they do so in rather lengthy treatises), while others simply depend on their mission and vision to communicate their values.

Goals and objectives parcel out the vision into achievable units that are further subdivided into smaller and smaller units. Goals are quantifiable and measurable, they are important, and they are attainable. Goals can include deadlines, and are expressed in terms of market share, revenue, and profit for the organization as a whole.

The following short articles will give you a better idea about the functions and content of mission and vision statements:

The business vision and company mission statement. (2010). QuickMBA.  http://www.quickmba.com/strategy/vision/

McNamara, C. (2009). Basics of developing mission, vision and values statements. Free Management Library.  http://www.managementhelp.org/plan_dec/str_plan/stmnts.htm

Heathfield, S. M. (2009). Build a strategic framework: mission statement, vision, values. About.  http://humanresources.about.com/cs/strategicplanning1/a/strategicplan.htm

Organizational Stakeholders

Organizational stakeholders are all of the individuals and groups of individuals who have an interest in (give-and-take relationship with) the firm. Many people think only of shareholders when they think about stakeholders. However, we will see that shareholders are only one of many groups of stakeholders. It may be helpful to remember what you learned in elementary school about the relationships between squares and rectangles. That is, "All squares must be rectangles but not all rectangles are squares." Similarly, all shareholders are stakeholders, but not all stakeholders are shareholders.

Classification of Stakeholders

Internal Stakeholders	External Stakeholders
Stockholders	Customers
Employees	Suppliers
CEO and executives	Government
Managers and supervisors	Unions
Board members	Communities (local and beyond)
	The general public

The following resources provide a very good overview of organizational stakeholders:

Hammonds, K. H. (2001). Michael Porter's big ideas. Fast Company.  https://www.fastcompany.com/42485/michael-porters-big-ideas

Luca, A. M. (2007).  Organizational Stakeholders  [PowerPoint slides].

Stakeholder analysis. (2014). 12 Manage.  http://www.12manage.com/methods_stakeholder_analysis.html

Welch, J., & Welch, S. (2008). State your business: Too many mission statements are loaded with fatheaded jargon. Play it straight. Bloomberg.  http://www.bloomberg.com/bw/stories/2008-01-02/state-your-business

OTHER USEFUL RESOURCES:

Useful Internet Sites:

You may access some useful Internet and other resources relating to such matters as financial ratios and processes for measurement of organizational resources (both tangible and intangible) at: http://www.investopedia.com/university/ratios/#axzz2JNe7QCr3 or http://www.sveiby.com/files/pdf/intangiblemethods.pdf