Strategic Management Mission Aim, Objectives & Stakeholders

The Strategic Management ProcessMission and objectives identification Analysis of business environment Internal business auditReview of Strategic Opportunities Comparison of Strategic OptionsImplementation of Strategy

The Lynch (2000) Polygon

The Business Idea

Strategic DirectionIdentifying the Organisations purpose, aims, objectives and goals

Key Issues:2)The Interested Parties 3)The Method of Communication1)The Message

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?

The Method of Communicating the purpose of the firmMission and Vision StatementsA visionary statement concerning the (long term) future direction of the firms, its products, markets and values. Essential purpose of the organisation

Mission StatementsMixed 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)

An overriding purpose in line with the values and expectations of stakeholders . Johnson & ScholesPersonal example: Be healthy and fit.A strong aspiration; Desired future stateAn aspiration around which to focus the attention and energies of members of the organizationHelps thinks creatively about how to prepare a company for the futurePersonal example: To run the London marathon 2. Vision (or strategic intent)1. Mission

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. Aim4. Strategic Objective

Mission StatementsOften summarises the firms reason for existingThe starting point for recognising the future direction of the firm and therefore the required strategic developments.Should be:Simple, Easily Remembered, ImpactfulPositive, visionary & motivatingShould outlineFirms roleWhat it wishes to achieve

Four Elements in the Mission Statement [1]Adapted from the Ashridge School (1991)1)PurposeWhy the firm exists and what it exists to do. What would happen if the firm did not exist?2)StrategyHow the firm will achieve its aspirations. What is it offering?To whom? Why should people buy it? What are its competitive advantages?

Four Elements in the Mission Statement [2]3)ValuesWhat the firm believes inWhy the world will better if the firm succeeds?4)Behaviour standardsThe routines, procedures and policies the firm adopt to fulfil its valuesWhat is the firm willing to do/not do in order to succeed?How low will it go?

Some Mission StatementsDisneyland Paris: To turn the dreams of the young and young at heart into realityTUI Nordic: Most satisfied customersandbest profitabilty in the business Hilton International: To always exceed customer expectations by delivering quality service through exceptional teamwork" McDonald's Corporation: Quality food products; efficient, friendly service; and restaurants renowned for the cleanliness and value they provide (Sufi & Lyons 2003)

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 worldAvis: Our mission is total customer satisfaction BA: Be the best and most successful company in the airline businessEasyjet: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 worlds best in chemical and electronic imaging Some More

Shangri la HotelsOur VisionThe first choice for customers, employees, shareholders and business partnersOur MissionDelighting customers each and every timeOur 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.

Some VisionsTui Nordic = Making holiday dreams come true Nike (1960s): Crush AdidasGiro Sport Design (1986): Become the Nike of the cycling industry

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)

Organisational Objectives [2]Generally SMART:SpecificMeasurableAchievableRealisticTimelyConsistent with the Mission and Aim. One direction, avoid dissonance!!!

Objectives - ExamplesA larger market shareQuicker design-to-market times than rivalsHigher product quality than rivalsLower costs relative to key competitorsBroader / more attractive product line than rivalsA stronger reputation with customers than rivalsSuperior customer serviceRecognition as a leader in technology and/or product innovationWider geographic coverage than rivals

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

Some Statements of ObjectivesMcDonalds: 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 in30% of the companys sales must come from products fewer than 4 years old

Interest Groups

StakeholdersStakeholders are groups or individuals who have a stake in, or expectation of, the organisations performance .....Johnson ,Scholes & Whittington Exploring Corporate Strategy Definition:

Functional/divisionalOrganisationalProfessional(or institutional)National(or regional)Industrial/sector(recipe)TheindividualFrames of Reference

Stakeholder Mapping: Power/ PredictabilityFew ProblemsUnpredictable but ManageablePowerful but PredictableGreatest Danger or OpportunitiesHIGHLOWHIGHLOWPowerPredictability

JUDGEMENTS on Stakeholder Power/Predictability MatrixLikelihood of each stakeholder group impressing their expectationsWhether they have the means to impress: Power of StakeholderEffect of stakeholder expectations on future strategies....

Stakeholder Mapping: Power/ InterestMinimal EffortKeep InformedKeep SatisfiedKey PlayersHIGHLOWHIGHLOWPowerLevels of Interest

Sub-group

Possible objectives

EMPLOYEES

Higher wages

Job satisfaction

Security of employment

Better working conditions

SHAREHOLDERS

Dividends

Capital growth

LOAN FINANCIERS

Interest

Prompt repayment of loan instalments

SOCIETY

No pollution

Clean image

No unsavoury relations

MANAGERS

Status

Power

Perks

Challenging tasks

Opportunities for development

CONSUMERS

Safe, affordable product

Quality Service

ConclusionDirection priorities will be influenced by key stakeholders May vary depending on size and complexity of organisationsSmall lifestyle businesses may not seek growthLarge complex organisations must be accountable to external owners/shareholdersCorporate social responsibility may be a factor in shaping directionManagerialism which focuses on return on capital employed/ investment dominates, it is a legal obligation to meet needs of shareholders

ReferencesBartkus B, Glassman m,& McAfee (2000) Mission statements are they smoke and mirrors, Business horizons, Nov./DecFletcher W (2001) Hypocritical oath or mission impossible, The Times 19 JanuaryRaynor ME (1998), The vision thing, do we need it, Long Range Plasnning Vol 31, No.3 pp 368-376Sufi T & Lyons H(2003) Mission statements exposed, International Journal of Contemporary Hospitality management, Emerald, 15/5 pp 255-262

21