nbs strategic management division2004/5 page 1 sm352 strategy strategy mission and objectives

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NBS Strategic Management Division 2004/5 Page 1 SM352 Strategy Strategy Mission and Objectives

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Page 1: NBS Strategic Management Division2004/5 Page 1 SM352 Strategy Strategy Mission and Objectives

NBS Strategic Management Division 2004/5 Page 1

SM352 Strategy

Strategy Mission and Objectives

Page 2: NBS Strategic Management Division2004/5 Page 1 SM352 Strategy Strategy Mission and Objectives

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Initial Assumption

Strategies are devised to achieve organisational objectives

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Vocabulary of Strategy

Mission Vision Goal Objective Unique resources and

core competences Strategies Control

Overriding purpose Desired future state General aim Quantification of a goal To provide competitive

advantage Long-term direction Monitoring

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Strategy Decisions

Tend to be long term About gaining advantage A search for position Involve the whole scope of an organisation’s activities Match resources with the environment – strategic fit But can be about building and stretching the

organisations resources May require major resource changes Will affect operational decisions BUT decisions may be affected by stakeholders

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Levels of Strategy

Corporate Strategy– Concerned with the firm as a whole;– How the organisation is run/structured;– Allocation of resources to different parts of

the firm and target setting;– How can value be added;– Clearly linked to mission.

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Business Unit Strategy– Concerned with the individual units compete in

different markets;– Concerned with gaining advantage over

competitors;– Identifying new opportunities.

Operational Strategy– concerned with the functions of the organisation

and how they contribute to the higher levels of business and corporate strategy

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Mission

From 1970’s. Peter Drucker advocated the need to define a business

Various types: broad or specific statements, emphasis distinctiveness, appeal to stakeholders

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A generalised statement of the overriding purpose of the organisation:– Visionary: long lasting, a backcloth for objectives– Change over time– Clarify the main intentions and aspirations

(strategic intent)– Describe main activities and position– Key organisational values– Soft

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To managers

A means of communicating and a lever for leadership

An assertion of leadership/authority Challenges old ideas and captures new ones Promotes a uniform culture via sharing

expectations Motivates staff Assists recognition of stakeholder aspirations

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Examples of Mission Statements

AOL TimeWarner: To become the world’s most respected and valued company by connecting, informing and entertaining people everywhere in innovative ways that will enrich their lives.

NHS Hospital Trust: We will strive to deliver excellent and innovative health care to our patients throughout the region and beyond with our traditional standards of kindness, courtesy and cheerfulness.

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Objectives

Clearly defined objectives are essential if an organisation is to have meaningful strategic development

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Why have objectives?

to define the purpose of the organisation or parts of the organisation

to provide a framework for decisions to provide a standard against which

performance can be measured to promote the image of the organisation to form the basis of strategy

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Hierarchy of Objectives 1

Mission

Corporate Objectives

Business Unit Objectives

Personal Objectives

For example by scope:

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Hierarchy of Objectives 2

Strategic Objectives

Operational Objectives

For example by type:

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Hierarchy of Objectives 3

Each level of objective should be consistent with and governed by the objectives at higher levels

For each step down the hierarchy the objectives become more specific with shorter time horizons and narrower scope

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Economic/Non-economic Objectives

Economic, e.g.:– Gross Margin– Return on Investment– Sales per employee

Non-economic, e.g.:– A caring organisation– Environmental issues– Quality

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Closed/Open Objectives

Closed, i.e. quantified, specific, set timescale, e.g.:– increase sales by 20% in the next 12

months– Launch new product by June 2000

Open, i.e. qualitative, general, no fixed timescale, e.g.:– increase customer satisfaction– continue international expansion

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Corporate Objectives

The organisation as a whole, usually closed - relate to Key Success Factors, e.g.:– Financial, e.g. profitability– Market Position, e.g. market share– Product Development, e.g. R&D targets– Employees, e.g. training– Organisation, e.g. communication– Public Responsibility, e.g. the environment

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Business Objectives

If part of a corporation:– nature of objectives depend on the style of

management practised by centre– may be part of management contract

between unit and corporate centre

If a stand-alone business:– Governed by stakeholders– Growth, market share, profitability

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The Problem with specific objectives

James Quinn has a number of objections: They can limit creative strategic options Can act as a rallying point for opposition Can limit flexibility and responsiveness Can be a hostage to fortune Can give information to competitors Specific goals are only needed in times of

change or where survival is at stake

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From Objectives to Strategy

The overall objective describes “where” the organisation wants to be

The strategy describes “how” the organisation will get there– Markets + Products = Strategic Direction– Competitive Strategy

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You need to be able to:

Identify and distinguish between the various levels of objectives for each organisation studied

Identify and map the main organisation stakeholders

Evaluate how successful strategies have been in achieving organisational objectives