Strategic Management – Mission Aim, Objectives & Stakeholders

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The Strategic Management Process

• Mission and objectives identification • Analysis of business environment • Internal business audit• Review of Strategic Opportunities • Comparison of Strategic Options• Implementation of Strategy

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The Lynch (2000) Polygon

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The Business Idea

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Strategic Direction

• Identifying the Organisation’s purpose, aims, objectives and goals

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Key Issues:

• 2)The Interested Parties • 3)The Method of Communication• 1)The Message

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The Message:

• Why does the firm exist?• What is its aim and objectives?• How will it achieve these?

– What strategies?• How will its performance be measured?

– Which benchmarks?

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The Method of Communicating the purpose

of the firm• Mission and Vision Statements

– A visionary statement concerning the (long term) future direction of the firms, its products, markets and values.

– Essential purpose of the organisation

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Mission Statements

• Mixed reception:• ‘Smoke and mirrors (Barkhus et al (2000)• Building blocks, invisible hand (Strong

1997)• Motherhood statements, the hippocratic or

hypocritical oath, lantern, anchor, conscience, office manifesto, company slogan, motto,’ (Fletcher 2001)

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« An overriding purpose in line with the values and expectations of stakeholders ». Johnson & Scholes

Personal example: Be healthy and fit.

A strong aspiration; Desired future state

An aspiration around which to focus the attention and energies of members of the organization

Helps thinks creatively about how to prepare a company for the future

Personal example: « To run the London marathon »

2. Vision (or strategic intent)

1. Mission

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A broadly-worded, general statement of goal or purpose.

Personal example: « To lose weight and gain muscle ».

A quantification of that goal.

Personal example: « To lose 10 kg ».

3. Aim

4. Strategic Objective

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Mission Statements• Often summarises the firms reason for existing• The starting point for recognising the future

direction of the firm and therefore the required strategic developments.

• Should be:– Simple, Easily Remembered, Impactful– Positive, visionary & motivating

• Should outline– Firm’s role– What it wishes to achieve

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Four Elements in the Mission Statement [1]

• Adapted from the Ashridge School (1991)• 1)Purpose

– Why the firm exists and what it exists to do. • What would happen if the firm did not exist?

• 2)Strategy– How the firm will achieve its aspirations.

• What is it offering?• To whom? • Why should people buy it? • What are its competitive advantages?

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Four Elements in the Mission Statement [2]

• 3)Values– What the firm believes in

• Why the world will better if the firm succeeds?

• 4)Behaviour standards– The routines, procedures and policies the firm adopt to fulfil

its values• What is the firm willing to do/not do in order to succeed?• How low will it go?

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Some Mission StatementsDisneyland Paris: To turn the dreams of the young and Disneyland Paris: To turn the dreams of the young and

young at heart into realityyoung at heart into reality

• TUI Nordic: Most satisfied customers and best TUI Nordic: Most satisfied customers and best profitabilty in the business profitabilty in the business

•   Hilton International: To always exceed customer Hilton International: To always exceed customer expectations expectations

by delivering quality service through by delivering quality service through exceptional teamwork"exceptional teamwork"

McDonald's Corporation: Quality food products; efficient, friendly service; and restaurants renowned for the cleanliness and value they provide (Sufi & Lyons 2003)

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Otis: To provide any customers means of moving people and things up, down, and sideways over short distances with higher reliability than any similar enterprise in the world

Avis: Our mission is total customer satisfaction

BA: Be the best and most successful company in the airline business

Easyjet:To provide our customers with safe, low-cost, good value, point-to-point air services. To offer a consistent and reliable product at fares appealing to leisure and business markets from our bases to a range of domestic and European destinations. To achieve this we will develop our people and establish lasting partnerships with our suppliers Kodak: To be the world’s best in chemical and electronic imaging

Some More…

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Shangri la Hotels• Our Vision• The first choice for customers, employees, shareholders and business

partners• Our Mission• Delighting customers each and every time• Our Guiding Principles (Core Values)• We will ensure leadership drives for results.• We will make customer loyalty a key driver of our business.• We will enable decision making at customer contact point.• We will be committed to the financial success

of our own unit and of our company.• We will create an environment where our colleagues

may achieve their personal and career goals.• We will demonstrate honesty, care and integrity

in all our relationships.• We will ensure our policies and processes are customer

and employee friendly.• We will be environmentally conscientious and provide

safety and security for our customers and our colleagues.

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Some Visions

Tui Nordic = Making holiday Tui Nordic = Making holiday dreams dreams come truecome true

Nike Nike (1960s): Crush AdidasGiro Sport Design Giro Sport Design (1986): Become the Nike of

the cycling industry

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Organisational Objectives [1]

• ‘Is an organisation a single period profit maximiser?’

Johnson & Scholes

• ‘An organisation's objectives tend to emerge as the wishes of the most dominant coalition.’

based on R M Cyert & J G March's 'Behavioral Theory of the Firm' (1996)

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Organisational Objectives [2]

• Generally ‘SMART’:– Specific– Measurable– Achievable– Realistic– Timely

• Consistent with the Mission and Aim. • One direction, avoid dissonance!!!

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Objectives - Examples• A larger market share• Quicker design-to-market times than rivals• Higher product quality than rivals• Lower costs relative to key competitors• Broader / more attractive product line than rivals• A stronger reputation with customers than rivals• Superior customer service• Recognition as a leader in technology and/or product

innovation• Wider geographic coverage than rivals

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Objectives - Financial• Increased growth in revenues / earnings/ dividends per share• Wider profit margins• Attractive ROI• Strong credit ratings• Positive cash flows• Recognition as a blue chip company• Stable earnings during periods of recession• A more diversified revenue base• A rising stock price

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Some Statements of Objectives

McDonalds: To achieve 100% total customer satisfaction everyday in every restaurant, for every customer

To provide our shareholders with superior returns by achieving double-digit annual earnings per share growth, increasing dividends consistent with earnings growth, repurchasing shares when the opportunity is right, pursuing profitable international beer expansions, and generating quality earnings and cash flow returns

To become the most competitive enterprise in the world by being No.1 or No.2 in market share in every business the company is in

30% of the company’s sales must come from products fewer than 4 years old

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Interest Groups

Customers /Competitors

Technostructure/ Support staff

M iddle M anagers/ Operating Core

Suppliers

Shareholders /Board

Government /Professionalassociations

SeniorM anagement

Contract Staff /Special Interest

Groups

Interest Groups

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Stakeholders

““Stakeholders are groups or individuals Stakeholders are groups or individuals who have a stake in, or expectation of, the who have a stake in, or expectation of, the

organisation’s performance .....”organisation’s performance .....”

Johnson ,Scholes & Whittington Exploring Corporate Strategy

Definition:

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Functional/Functional/divisionaldivisional

OrganisationalOrganisationalProfessionalProfessional(or (or

institutional)institutional)

NationalNational(or regional)(or regional)

Industrial/Industrial/sectorsector

(recipe)(recipe)

TheTheindividualindividual

Frames of Reference

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Stakeholder Mapping: Power/ Predictability

Few Few ProblemsProblems

Unpredictable Unpredictable but but

ManageableManageable

Powerful Powerful but but

PredictablePredictable

Greatest Greatest Danger or Danger or

OpportunitiesOpportunitiesHIGHHIGH

LOWLOW

HIGHHIGH LOWLOW

PowerPower

PredictabiliPredictabilityty

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JUDGEMENTS on Stakeholder

Power/Predictability Matrix• Likelihood of each stakeholder group impressing

their expectations

• Whether they have the means to impress:Power of StakeholderPower of Stakeholder

• Effect of stakeholder expectations on future strategies....

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Stakeholder Mapping: Power/ Interest

Minimal Minimal EffortEffort

Keep Keep InformedInformed

KeepKeepSatisfiedSatisfied

KeyKeyPlayersPlayersHIGHHIGH

LOWLOW

HIGHHIGHLOWLOW

PowerPower

Levels of InterestLevels of Interest

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Sub-group Possible objectivesEMPLOYEES Higher wages

Job satisfactionSecurity of employmentBetter working conditions

SHAREHOLDERS DividendsCapital growth

LOAN FINANCIERS InterestPrompt repayment of loaninstalments

SOCIETY No pollutionClean imageNo unsavoury relations

MANAGERS StatusPowerPerksChallenging tasksOpportunities for development

CONSUMERS Safe, affordable productQuality Service

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Conclusion• Direction priorities will be influenced by key stakeholders • May vary depending on size and complexity of

organisations• Small lifestyle businesses may not seek growth• Large complex organisations must be accountable to

external owners/shareholders• Corporate social responsibility may be a factor in

shaping direction• Managerialism which focuses on return on capital

employed/ investment dominates, it is a legal obligation to meet needs of shareholders

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References

• Bartkus B, Glassman m,& McAfee (2000) Mission statements are they smoke and mirrors, Business horizons, Nov./Dec

• Fletcher W (2001) Hypocritical oath or mission impossible, The Times 19 January

• Raynor ME (1998), The vision thing, do we need it, Long Range Plasnning Vol 31, No.3 pp 368-376

• Sufi T & Lyons H(2003) Mission statements exposed, International Journal of Contemporary Hospitality management, Emerald, 15/5 pp 255-262