Vision Mission values and goals, Summaries of Strategic Management

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STRATEGIC MANAGEMENT

Vision-Mission-Values-Goals

2 Vision

• (^) The vision of a company lays out some desired future state—it articulates, often in

bold terms, what the company would like to achieve.

• (^) For example, Nokia, the world’s largest manufacturer of mobile (wireless) phones, has

been operating with a very simple but powerful vision for some time: “If it can go

mobile, it will!”

• (^) This vision implied that not only would voice telephony go mobile, but also a host of

other services based on data, such as imaging and Internet browsing. This vision led

Nokia to become one of the early leaders in developing “smart” mobile handsets that

not only can be used for voice communication but that also take pictures, browse the

Internet, play games, and manipulate personal and corporate information.

• (^) Good vision statements are meant to stretch a company by articulating some

ambitious, but attainable future state that will help to motivate employees at all levels

and drive strategies. It is especially important for managers and executives in any

organization to agree on the basic vision that the firm strives to achieve in the long

term.

• (^) A vision statement should answer the basic question, “What do we want to become?”

A clear vision provides the foundation for developing a comprehensive mission

statement. Many organizations have both a vision and mission statement, but the

vision statement should be established first and foremost. The vision statement should

be short, preferably one sentence, and as many managers as possible should have

The Mission

• (^) The mission describes what it is that the company does. For example, the mission of Kodak is to provide “customers with the solutions they need to capture, store, process, output, and communicate images—anywhere, anytime.” 6
• Kodak is a company that exists to provide imaging solutions to consumers. This missions focuses on the customer need that the company is trying to satisfy (the need for imaging), as opposed to the products that the company produces (film and cameras). This is a customer-oriented rather than product-oriented mission.
• An important first step in the process of formulating a mission is to come up with a definition of the organization’s business. Essentially, the definition should answer these questions:
• (^) “What is our business? What will it be? What should it be?”
• (^) The responses guide the formulation of the mission. To answer the question, “What is our business?” a company should define its business in terms of three dimensions:
• Who is being satisfied (what customer groups),
• (^) what is being satisfied (what customer needs), and
• (^) how customers’ needs are being satisfied (by what skills, knowledge, or competencies).
• (^) Figure illustrates these dimensions.

Fig: Defining Business

• (^) The need to take a customer-oriented view of a company’s business has often been ignored. History is littered with the wreckage of once-great corporations that did not defi ne their business or defined it incorrectly so that ultimately they declined.
• (^) In the 1950s and 1960s, there were many office equipment companies such as Smith Corona and Underwood that defi ned their businesses as being the production of typewriters. This product-oriented definition ignored the fact that they were really in the business of satisfying customers’ information processing needs. Unfortunately for those companies, when a new technology came along that better served customer needs for information processing (computers), demand for typewriters plummeted.
• The last great typewriter company, Smith Corona, went bankrupt in 1996, a victim of the success of computer-based word processing technology
• In contrast, IBM correctly foresaw what its business would be. In the 1950s, IBM was a leader in the manufacture of typewriters and mechanical tabulating equipment using punch card technology. However, unlike many of its competitors, IBM defined its business as providing a means for information processing and storage, rather than just supplying mechanical tabulating equipment and typewriters.
• Given this definition, the company’s subsequent moves into computers, software systems, office systems, and printers seem logical.

Values

• (^) The values of a company state how managers and employees should conduct themselves, how they should do business, and what kind of organization they should build to help a company achieve its mission.
• (^) Values help drive and shape behavior within a company, values are commonly seen as the bedrock of a company’s organizational culture.
• (^) organizational culture: the set of values, norms, and standards that control how employees work to achieve an organization’s mission and goals. An organization’s culture is often seen as an important source of its competitive advantage.
• (^) For example, Nucor Steel is one of the most productive and profitable steel firms in the world. Its competitive advantage is based in part on the extremely high productivity of its workforce something, the company maintains, that is a direct result of its cultural values, which shape how it treats its employees.
• These values are as follow:
• (^) “Management is obligated to manage Nucor in such a way that employees will have the opportunity to earn according to their productivity.”
• (^) “Employees should be able to feel confident that if they do their jobs properly, they will have a job tomorrow.”
• (^) “Employees have the right to be treated fairly and must believe that they will be.”
• (^) “Employees must have an avenue of appeal when they believe they are being treated unfairly.”

Central goal of companies and dangers of overemphasis on profitability

• Well-constructed goals also provide a means by which the performance of managers can be evaluated.
• (^) Although most companies operate with a variety of goals, the central goal of most corporations is to maximize shareholder returns , and maximizing shareholder returns requires high profitability and profit growth.
• Thus, most companies operate with goals for profitability and profit growth. However, it is important that top managers do not make the mistake of overemphasizing current profitability to the detriment of long-term profitability and profit growth.
• The overzealous pursuit of current profitability to maximize short-term performance can encourage such misguided managerial actions as cutting expenditures judged to be nonessential in the short run— for instance, expenditures for research and development, marketing, and new capital investments.
• (^) Although cutting current expenditure increases current profitability, the resulting underinvestment, lack of innovation, and diminished marketing can jeopardize long-run profitability and profit growth.
• These expenditures are vital if a company is to pursue its long-term mission and sustain its competitive advantage and profitability over time. Despite these negative consequences, managers may make such decisions because the adverse effects of such a short run decision may not be known to shareholders for several years or because they are under extreme pressure to hit short-term profitability goals.
• (^) It is also worth noting that pressures to maximize short-term profitability may result in managers’ acting in an unethical manner. This apparently occurred during the late 1990s at a number of companies including Enron Corporation, Tyco, WorldCom, and Computer Associates. In these companies, profits were systematically inflated by managers who manipulated financial accounts in a manner that misrepresented the true performance of the fi rm to shareholders.