Stage of Formulation

STRATEGIC MANAGEMENT

Stake holders• External –Customers, Suppliers , Government,

Society, banks , creditors, trade unions, NGOs, local communities.

• Internal- Shareholders, employees, Owners• Functional areas Marketing, Finance, operations, HR, systems

STRATEGIC MANAGEMENT

Type of FirmGrowing, Stagnant, Declining

Level of employeesStrategic level, Management control level,

operational level

Major Components of theStrategic Plan / Down to Action

Mission

Vision

Goals

Objectives

Measures

Why we exist

What we want to be

Indicators and Monitors of success

Desired level of performance and timelines

Planned Actions to Achieve Objectives

O1 O2

AI1 AI2 AI3

M1 M2 M3

T1 T1 T1

Specific outcomes expressed in measurable terms (NOT activities)

Strategic Plan

Action Plans

Evaluate Progress

Targets

Action Plan

What we must achieve to be successful

Vision statement answers the question:

“What do we want to become in future?”

Vision

Mission Statements

Mission statement answers the question:

“What is our business today?”Or

What we do today?

Mission Statements

Mission Statement:

– Enduring statement of purpose– Distinguishes one organization from another in

similar enterprises– Declaration of an organization’s “reason for

being”

Importance of Mission• Unanimity of purpose within the organization• Basis for allocating resources• Establish organizational climate• Focal point for direction• Translate objectives into work structure• Cost, time and performance parameters

assessed and controlled

Mission Statement

• Captures the essence of why the organization exists – Who we are, what we do • Explains the basic needs that you fulfill• Expresses the core values of the organization• Should be brief and to the point• Easy to understand• If possible, try to convey the unique nature of your organization and the role it plays that differentiates it from others

Apollo Hospitals

• Vision- Apollo's vision for the next phase of development is to 'Touch a Billion Lives'.

• Mission-"Our mission is to bring healthcare of International standards within the reach of every individual. We are committed to the achievement and maintenance of excellence in education, research and healthcare for the benefit of humanity"

TVS Motor Company• Mission

We are committed to being a highly profitable, socially responsible, and leading manufacturer of high value for money, environmentally friendly, lifetime personal transportation products under the TVS brand, for customers predominantly in Asian markets and to provide fulfilment and prosperity for employees, dealers and suppliers.

Vision StatementTVS Motor will be responsive to customer requirements consonant with its core competence and profitability. TVS Motor will provide total customer satisfaction by giving the customer the right product, at the right price, at the right time.

Examples – Good and BadMission Statements

To Make People Happy

To Explore the Universe and Search for Life and to Inspire the Next Generation of Explorers

NASA

Walt Disney

Does a good job of expressing the core values of the organization. Also conveys unique qualities about the organization.

Too vague and and unclear. Need more descriptive information about what makes the organization special.

Components of Mission

Mission statements vary in…

Length Content Format Specificity

Must include the 9 elements, as the mission statement is the most public and visible part of the strategic-management process.

1. Customers2. Products or services3. Markets4. Technology5. Survival, growth, and profitability6. Philosophy7. Self-concept8. Concern for public image9. Concern for employees

Mission Components

Components of Mission• Customers:

“Who are the firm’s customers?”• Products or services:

“What are the firm's major products or services?”

• Markets:“Geographically, where does the firm compete?”

• Technology:“Is the firm technologically current?”

• Concern for survival, growth, and profitability: “Is the firm committed to growth and financial

soundness?”

Components of Mission• Philosophy:

“What are the basic beliefs, values, aspirations, and ethical priorities of the firm?”

• Self-concept: “What is the firm’s distinctive competence or major

competitive advantage?”• Concern for public image:

“Is the firm responsive to social, community, and environmental concerns?”

• Concern for employees:“Are employees a valuable asset of the firm?”

Importance of Vision & Mission

A research results reveals, firms with formal mission statements have

• 2 times average return on shareholder’s equity

• Positive relationship to organizational performance

• 30% higher return on certain financial measures

PepsiCo Mission StatementPepsiCo’s mission is to increase the value of our

shareholders’ investment. We do this through sales growth, cost controls, and wise investment resources. We believe our commercial success depends upon offering quality and value to our consumers and customers; providing products that are safe, wholesome, economically efficient and environmentally sound; and providing a fair return to our investors while adhering to the highest standards of integrity.

Ben & Jerry’s Mission Statement

Ben & Jerry’s mission is to make, distribute and sell the finest quality all-natural ice cream and related products in a wide variety of innovative flavors made from Vermont dairy products. To operate the Company on a sound financial basis of profitable growth, increasing value for our shareholders, and creating career opportunities and financial rewards for our employees. To operate the Company in a way that actively recognizes the central role that business plays in the structure of society by initiating innovative ways to improve the quality of life of a broad community—local, national and international.

COMPONENTS          

Organization CustomersProducts Services Markets

Concern for Survival, Growth,

Profitability Technology

           

PepsiCo Yes No No Yes No

Ben & Jerry's No Yes Yes Yes No

           

Evaluation Matrix of Mission Statements

Evaluation Matrix of Mission Statements

COMPONENTS          

Organization PhilosophySelf-

ConceptConcern for Public Image

Concern for Employees

         

PepsiCo Yes No No No

Ben & Jerry's No Yes Yes Yes

         

Vision

• How the organization wants to be perceived in the future – what success looks like • An expression of the desired end state • Challenges everyone to reach for something significant – inspires a compelling future• Provides a long-term focus for the entire organization

Examples of Vision Descriptors• Adept

• Aggressive

• Agile

• Aligned

• Assertive

• Available

• Best-in-class

• Challenging

• Clear

• Competent

• Complex

• Compliant

• Conservative

• Coordinated

• Critical

• Direct

• Equal

• Disciplined

• Effective

• Efficient

• Enduring

• Expanding

• Expert

• Fast

• Fast-paced

• Financially-sound

• Focused

• Growth

• Healthy

• Improving

• Incentivized

• Solid

• Solvent

• Stable

• State of the Art

• Strong

• Streamlined

• Sufficient

• Strategic

• Sustainable

• Timely

• Value-added

• Vigilant

• Visionary

• World-class

• Informative

• Innovative

• Leading

• Logical

• Major

• Nimble

• Pioneering

• Protected

• Organized

• Over-Arching

• Quick

• Ready

• Responsive

• Savvy

• Simple

Goals• Describes a future end-state – desired outcome that is supportive of the mission and vision.• Shapes the way ahead in actionable terms.• Best applied where there are clear choices about the future.• Puts strategic focus into the organization – specific ownership of the goal should be assigned to someone within the organization. • May not work well where things are changing fast – goals tend to be long-term for environments that have limited choices about the future.

Developing Goals• Cascade from the top of the Strategic Plan – Mission, Vision• Look at your strategic analysis – SWOT, Environmental Scan, Past Performance, Gaps . . • Limit to a critical few – such as five to eight goals.• Broad participation in the development of goals: Consensus from above – buy-in at the execution level.• Should drive higher levels of performance and close a critical performance gap.

Examples of GoalsReorganize the entire organization for better responsiveness to customersReorganize the entire organization for better responsiveness to customers

We will partner with other businesses, industry leaders, and government agencies in order to better meet the needs of stakeholders across the entire value stream.

We will partner with other businesses, industry leaders, and government agencies in order to better meet the needs of stakeholders across the entire value stream.

Manage our resources with fiscal responsibility and efficiency through a single comprehensive process that is aligned to our strategic plan.

Manage our resources with fiscal responsibility and efficiency through a single comprehensive process that is aligned to our strategic plan.

Improve the quality and accuracy of service support information provided to our internal customers.Improve the quality and accuracy of service support information provided to our internal customers.

Establish a means by which our decision making process is market and customer focus.Establish a means by which our decision making process is market and customer focus.

Maintain and enhance the physical conditions of our public facilities.Maintain and enhance the physical conditions of our public facilities.

Establish the means by which our operations can achieve cost efficiencyEstablish the means by which our operations can achieve cost efficiency

Goals and Objectives

Objectives and goals:Goals denotes what an organization hopes to

accomplish in a future period of time. Goals are qualitative.

Objectives are the ends that state specifically how the goals shall be achieved. Objectives are quantitative

Examples of Goals and objectives:1. Goal - Profits Objectives-Return on investments, return on

shareholders capital , net sales2. Goal – Growth Objectives- Output, sales turnover, investments.3. Goal- Market leader Objectives- Increase in sales volume, improving

customer services, reduction in marketing cost, new product development.

Goals and Objectives

Objectives

• Relevant - directly supports the goal• Compels the organization into action• Specific enough so we can quantify and measure the

results• Simple and easy to understand• Realistic and attainable• Conveys responsibility and ownership• Acceptable to those who must execute• May need several objectives to meet a goal

Goals vs. Objectives

GOALS OBJECTIVES

Very short statement, few words

Longer statement, more descriptive

Broad in scope Narrow in scope

Directly relates to the Mission Statement

Indirectly relates to the Mission Statement

Covers long time period (such as 10 years)

Covers short time period (such 1 year budget cycle)

Examples of ObjectivesDevelop a customer intelligence database system to capture and analyze patterns in purchasing behavior across our product line.

Develop a customer intelligence database system to capture and analyze patterns in purchasing behavior across our product line.

Launch at least three value stream pilot projects to kick-off our transformation to a leaner organization.

Launch at least three value stream pilot projects to kick-off our transformation to a leaner organization.

Centralize the procurement process for improvements in enterprise-wide purchasing power.

Centralize the procurement process for improvements in enterprise-wide purchasing power.

Consolidate payable processing through a P-Card System over the next two years.Consolidate payable processing through a P-Card System over the next two years.

Monitor and address employee morale issues through an annual employee satisfaction survey across all business functions.

Monitor and address employee morale issues through an annual employee satisfaction survey across all business functions.

What are Action Plans?

• The Action Plan identifies the specific steps that will be taken to achieve the initiatives and strategic objectives .

• Each Initiative has a supporting Action Plan(s) attached to it

• Action Plans are geared toward operations, procedures, and processes

• They describe who does what, when it will be completed, and how the organization knows when steps are completed

• Like Initiatives, Action Plans require the monitoring of progress on Objectives, for which measures are needed

Creation of Action Plans1. Assign responsibility to the team- for the successful

completion of the Action Plan. Who is responsible? What are the roles and responsibilities?

2. Establish a time frame for the completion of each steps. 3. Establish a list of documents/ documents to carry out the

work- Questionnaires, dairies (digital), reports.4. Assign location to carry out the work.5. Detail all required steps to achieve the Initiative that the

Action Plan is supporting. 6. Define the expected results and milestones of the action

plan.7. Provide a brief status report on each step, whether

completed or not. What communication process will we follow? How well are we doing in executing our action plan?

8. Correct and revise the action plan if the execution is not feasible.

Quantify from Action Level Upin terms of Measurements

• Measure your milestones – short-term outcomes at the Action Item level.• Measure the outcomes of your objectives.• Try to keep your measures one per objective.• May want to include lead and lag measures to depict cause-effect relationships if you are uncertain about driving (leading) the desired outcome.• Establish measures using a template to capture critical data elements

Integrity – Complete; useful; inclusive of several types of measure; designed to measure the most important activities of the organization

Reliable: Consistent

Accurate - Correct

Timely – Available when needed: designed to use and report data in a usable timeframe

Confidential and Secure: Free from inappropriate release or attack

Criteria for Good Measures

Examples of MeasurementsLead Indicators

• Average time to initiate customer contact => shorter time should lead to better customer service

• Average response time to incident => below average response times should lead to increased effectiveness in dealing with incident

• Facilities that meet facility quality A1 rating => should lead to improved operational readiness for meeting customer needs

Examples of MeasurementsLag Indicators

• Overall customer satisfaction rating => how well you are doing looking back

• Business Units met budgeted service hour targets => after the fact reporting of service delivery volume

• Number of category C safety accidents at construction sites => historical report of what has already taken place

Targets• For each measurement, you should have at

least one target• Targets should stretch the organization to

higher levels of performance• Incremental improvements over current

performance can be used to establish your targets

• Targets put focus on your strategy• When you reach your targets, you have

successfully executed your strategy

Examples of TargetsAverage Time to Process New Employee Setups in DB

65 days Year 2007

60 days Year 2008

55 days Year 2009

Utilization Rate for Rental Housing Units

90% forYear 2007

92% for Year 2008

95% for Year 2009

Toxic Sites meeting in-service compliance

55% for Year 2007

70% for Year 2008

95% for Year 2009

Personnel Fully Trained in Safety and Emergency

65% by 2rd Quarter

75% by 3th Quarter

90% by 4th Quarter

Open Positions Filled after 30 day promotion period

75 positions Sept 2007

100 positions Jan 2008

135 positions July 2008

% Reduction in Orders Filled Short in 1st Cycle

50% by Year 2008

65% by Year 2009

85% by Year 2010

Task on targets

• Assign the sales target to sales team.• Assign the recruitment target to HR team.• Assign the finance department the target of

cost cutting .• Assign systems people to setup system

network for newly recruited sales team.