Management

ORGANIZATIONAL MISSION: VISION, PURPOSE AND VALUES In order to think strategically, three strategic questions are essential: 1. Where are we now' 2. Where do we want to go' • Business positions management want seen • Financial outcomes to achieve • Strategic outcomes to achieve 3. How will we get there' Fundamental to effective strategy development and implementation is the establishment of the organization’s vision, purpose and values. The function of the mission is to identify the vision, basic purpose and core values of the organization. The first task of strategic management begins with thinking strategically about: i) the firm’s future make up ii) forming vision of the firm in 5-10 years The task is to: i) inject a sense of purpose into the firms activities ii) provide long term direction iii) Give firm strong identity iv) Decide who we are, what we do, and where we are headed This is often referred to as the organization’s “mission. Mission statement: An organization’s mission is the organization’s purpose or fundamental reason for existence. A statement of organizational aspirations. A mission statement is a broad declaration of the basic, unique purpose and scope of operations distinguishing the organization from others of its type. An organization mission: i) Reflects management’s vision of what the firm seeks to do and become ii) Provides clear view of what firm is tying to accomplish for its customers iii) In indicates intent to stake out a particular business poison. iv) For managers, it can be a benchmark against which to evaluate success. v) For employees, it defines a common purpose, nurtures organizational loyalty, and fosters a sense of community. vi) For external groups, it helps provide unique insight into an organization’s values and future directions. Most missions contain three elements: i) Vision statement—statement of the organization’s ideal – what it could achieve if it performed perfectly. ii) Purpose statement – summarizes the kind of work the organization does, what value it creates for its stakeholders. iii) Values statement – describe the beliefs of the organization, how it prefers to work as a human enterprise The mission statement typically defines the organization in terms of organizational attributes. • Customers: Who are the organization’s customers' • Products or services: What are the organisation's major products or services' • Location: Where does the organization compete' • Technology: What is the firm's basic technology' • Philosophy: What are the basic beliefs, values, aspirations, and philosophical priorities of the organisation' • Self-concept: What are the organisation's major strengths and competitive advantages' • Concern for public image: What are the organization’s public responsibilities, and what image is desired' • Concern for employees: What is the organization’s attitude toward its employees' Purpose of a mission statement: • In attempt to reach organizational consensus many mission statements are too broad to be of any value, they provide no real guidance for operational decisions. • To be of value, a mission statement should be precise and concise. It should capture the character and strategic intent of the organization in a simple statement that provides guidance to managers undergoing day-to-day decision-making activities. • The mission statement is fundamentally an internal working document which establishes the boundaries to guide strategic decision making. FORMULATING A MISSION The typical business begins with the beliefs, desires, and aspirations of a single entrepreneur whose mission usually is based on the following fundamental beliefs: 1. The product or service of the business can provide benefits at least equal to its price. 2. The product or service can satisfy a customer need of specific market segments that is currently not being met adequately. 3. The technology that is to be used in production will provide a cost- and all competitive product or service. 4. Hard work and the support of others, helps the business survive, grow and be profitable. 5. The management philosophy of the business will result in a favorable public and will provide financial and psychological rewards for those who are willing to put their labor and money in helping the business to succeed. 6. The entrepreneur's self-concept of the business can be communicated to be adopted by employees and stockholders. As the business grows or is forced by competitive pressures to alter its product market technology, redefining the company mission may be necessary. If so, the revised mission statement will contain the same components as the original. Company Goals: Survival, Growth, and Profitability Three economic goals guide the strategic direction of almost every business organization whether or not the mission statement explicitly states these goals, it reflects the firm's intension to secure survival through growth and profitability. A firm that is unable to survive will be incapable of satisfying the aims of any of its Stakeholders Three economic goals guide the strategic direction of almost every business organization whether or not the mission statement explicitly states these goals, it reflects the firm's intension to secure survival through growth and profitability. Growth in the number of markets served, in the variety of products offered, and in the technologies that are used to provide goods or services frequently lead to improvements in a firm's competitive ability. Growth means change, a proactive change is essential in a dynamic business environment. Growth is important in order to attract and hold high-caliber people, individuals will align their future only with a company that offers them considerable opportunity for personal progress. Opportunities are greater and more challenging in a growing company. Growth priorities 1. Development of the profitable market preeminence of existing companies in existing markets through new store development or new strategies within existing stores. 2. Expansion of our companies to feasible new markets. 3. Acquisition of other companies. 4. Internal development of new strategies. 1. COMPANY PHILOSOPHY It accompanies or appears within the mission statement often called the Company Creed. It reflects or specifies the basic beliefs, values, aspirations, and philosophical priorities to which strategic decision makers are committed in managing the company. Statements of company philosophy are often so similar and so platitudinous that they read more like public relations handouts than the commitment to values they are meant to be. 2. PUBLIC IMAGE Both present and potential customers attribute certain qualities to particular businesses. Mission statements should reflect the public's expectations, since this makes achievement of the firm's goals more likely. People should be immensely proud of their company's performance and be realistic enough to realize it is the public's perception of that performance that counts in the long run. COMPANY SELF-CONCEPT A major determinant of a firm's success is the extent to which the firm can relate functionally to its external environment. To achieve its proper place in a competitive situation, the firm realistically must evaluate its competitive strengths and weaknesses. It is important for the firm to know itself as this is the essence of the company self concept. Both individuals and firms have a crucial need to know themselves. Ordinarily, descriptions of the company self-concept per se do not appear in mission statements. Yet such statements often provide strong impressions of the company self-concept. NEWEST TRENDS IN MISSION COMPONENTS Three issues that have become so prominent in the strategic planning for organizations are: 1. sensitivity to consumer wants 2. concern for quality, and 3. statement of company vision. Vision statement: Specifies what an organization could achieve if it performed perfectly. Most organizations make them simple. There are certain questions that help from strategic visions: i) What business are we in now' ii) What business do we want to be in' iii) What will our customers want in the future' iv) What are expectations of our stakeholders' v) Who will be our future competitors' Suppliers' Partners' vi) What should our competitive scope be' vii) How will technology impact out industry' viii) What environmental scenarios are possible' Why A Shared Vision Matters A strategic vision widely shared among all employees functions similar to how a magnet aligns iron fillings. When all employees are committed to firm’s long term direction, optimum choices on business decisions are more likely: • Individuals and teams know intent of firm’s strategic vision • Daily execution of strategy is improved Purpose Statement The purpose statement is a description of the nature and scope of the activities of the organization—in the private sector this usually termed the definition of the organization’s “business”. 1. Narrow versus broad purpose: Many organizations make the mistake of defining their business too narrow, leading to what is known as “market myopia.” 2. Purpose and “Relevant Environment”. The relevant environment is that portion of the total economic, social, political and competitive environment that is relevant to the purpose of the organization. Stating organizational purpose is more than simply creating a striking sentence that describes what the organization does. Purpose and customer needs It is important to consider customer needs in broad rather than narrow terms. Many organizations make the mistake of defining customer needs in terms of a product or service, or in terms of existing customer rather than in terms of the broad needs of both present and potential customers. Purpose and customer segment: By defining the purpose in terms of its customer segments, management is focusing on customers that are already well known and hence the organization in building from strength. Again, every senior manager need to be able to analyze an organization in terms of its customer segments and to ask the questions: are there any further customer segments that have the capability to serve' What skills and resources will have need top develop to satisfy these segments' 1. Purpose and technology Since technology is often the basis for new products and services and hence future growth, it makes sense to define organizational purpose partly in terms of technology. Ideally, not statement of organizational purpose should be constructed along a single dimension. It is essential to consider all three elements i.e. customer needs, customer groups and technology. On average, the mission statement should undergo a thorough review every two to five years. Value statement: Values are underlying beliefs of the organization, how it chooses to work as a human enterprise. Value encourages unanimity of purpose and approach among staff. Values help to set the organization apart from others of its type and can be used most effectively as recruitment tool – people prefer to work in environments in which expected behaviors are compatible with their personal beliefs.