Chapter Two: Basic Components Of Strategy Design

CHAPTER TWO 1

BASIC COMPONENTS OF STRATEGY DESIGN

Contents 2

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Creating a Vision Outlining the Mission Values, and strategic issues Setting Goals and Objectives Strategic plan

Basic Components of Strategy design

Learning objectives 3

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Define vision, mission, goals, and objectives; Able to develop vision and mission statements; Discuss the nature and importance of vision and mission;

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Describe values and strategic issues

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Able to set goals and objectives Basic Components of Strategy design

Notable Quotes 4

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"The best laid schemes of mice and men often go awry.“ — Robert Burns (paraphrased) "That business mission is so rarely given adequate thought is perhaps the most important single cause of business frustration.“ — Peter Drucker

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Basic Components of Strategy design

Vision Vs Mission 5

Vision: 

An image of the future we seek to create.

A vision statement describes where an organization wants to see itself in the future; in the next 10 or 20 years if everything goes as planned.  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. 

Sample Vision Statements - Good 6

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Tyson Foods:- to be the world’s first choice for

protein solutions while maximizing shareholder value. (David comment:- Good statement, unless Tyson provides non-protein products) 

General Motor: to be the world leader in

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transportation products and related services. (David comment: Good statement)

Basic Components of Strategy design

Sample Vision Statements - Poor 7

PepsiCo’s:- to continually improve all aspects of the world in which we operate: environment, social, economic creating a better tomorrow than today. (David comment: Statement is too vague; it should reveal beverage and food business)  Dell: to create a company culture where environmental excellence is second nature. (David comment: Statement is too vague; it should reveal computer business in some manner; the word environmental is generally used to refer to natural environment so is unclear in its use here) 

Sample Vision 8

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DASHEN BANK: ‘‘In as much as Mount Dashen excels all other mountains in Ethiopia, Dashen Bank continues to prove unparalleled in banking services.’’ NIB: “To become an Icon of Excellence and the leading Commercial Bank in Ethiopia.”

Ethiotelecom: “To be a world-class provider of telecom services.” Basic Components of Strategy design

Mission 9

 Purpose, reason for being, the role of the organization in the industry and/or society.  Enduring statement of purpose

 Distinguishes one firm from another  Declares the firm’s reason for being  A clear mission statement is essential for effectively establishing objectives and formulating strategies. Basic Components of Strategy design

Importance of Mission Ch 2 -10

Benefits from a strong mission

Ensures Unanimity of Purpose

Standard Resource Allocation

Mission Organizational Climate/tone

Focal point for work structure Shared stated direction

Customers

Products Services

Markets

Technology Employees

Mission Elements Survival Growth Profit

Public Image Self-Concept

Philosophy

Mission - Examples Dell: - To be the most successful computer company in the world at delivering the best customer experience in markets we serve.

L’ Oreal: - We believe that lasting business success is built upon ethical standards which guide growth and on a genuine sense of responsibility to our employee, our customers, our environment, and to the communities in which we operate.

Mission Examples 13

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Dashen Bank: ‘‘Provide efficient and customer focused domestic and international banking services, overcoming the continuous challenges for excellence through the application of appropriate technology.’’ NIB: “To provide customer focused, efficient and effective fullfledged commercial banking services by deploying qualified, honest, motivated staff and state-of-the art technology and thereby optimize stakeholders’ interest.” Ethiotelecom: “To provide world-class, modern and high quality telecom services for all citizens equitably so as to transform the multifaceted development of the country to the highest level. Basic Components of Strategy design

Mission Statement Evaluation Matrix

COMPONENTS

Customers

Products Services

Markets

Concern for Survival, Growth, Profitability

Dell

Yes

yes

yes

yes

yes

L’Oreal

No

no

no

no

No

Organization

Technology

Mission Statement Evaluation Matrix COMPONENTS

Philosophy

SelfConcept

Concern for Public Image

Concern for Employees

PepsiCo

Yes

yes

yes

No

Ben & Jerry's

yes

no

Yes

Yes

Organization

Strategic Goals and Objectives 16

What are Strategic Goals? 

Strategic goals are statements of what the organization wishes to achieve over the period of the strategic plan (e.g. over the next year, five years, ten years.)

Basic Components of Strategy design

Strategic Goals and Objectives 17

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They reflect the analysis the organization did with creating vision, and mission statement, and then the analysis of the environment (strengths, weaknesses, opportunities and threats.)

Basic Components of Strategy design

What are Objectives and Are They Different from Strategic Goals 18

Objectives are usually specific/particular statements of goal that contribute to the achievement of "bigger" goals.  objectives within a strategic planning framework are "enabling goals", as their success contribute to the achievement of the larger strategic goal(s) 

Basic Components of Strategy design

What Should Strategic Goals Reflect In Terms Of Strategic Planning? 19

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The strategic goals, as part of the strategic planning process MUST reflect the analyses made (otherwise all that work is wasted). The strategic goals should: •

reflect the general themes of your vision and mission

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reflect the business realities outside of the company (as identified in your environmental scan)

Basic Components of Strategy design

Cont’d… 20

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Reflect the business and capabilities internal to the organization (also as identified in the environmental scan) Reflect the strengths, weaknesses, and opportunities and strengths identified in your SWOT analysis. Basic Components of Strategy design

Cont’d… 21

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It needs the entire organization to be aligned, or aimed at the achievement of the strategic goals, and for this to happen they need to be aligned with (or be consistent with and in supporting of) all the other parts of the strategic plan.

Basic Components of Strategy design

Goals Litmus Test 22

Test Question Does the goal support the mission? Is it consistent with your legislative authority? Does the goal deal with just one issue?

Does the goal represent a desired result that can be achievable? Does the goal reflect a primary activity, a strategic direction, a strategic issue or a gap in service?

Is the goal challenging, but still realistic and achievable? Does the goal encompass a relatively long period, i.e., three years or longer?

#1

#2

#3

#4

#5

Objective Setting 23

Allow review and appraisal of achievement  SMART 

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Make clear:  What is to be accomplished  How much is to be accomplished  By when it is to be accomplished  By whom it is to be accomplished Basic Components of Strategy design

Goals vs. Objectives Summary 24

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)

Basic Components of Strategy design

Objectives Litmus Test 25

Test Question

#1

Does the objective reflect specific, desired accomplishments? Can progress toward completion of an objective be measured?

Is the objective aggressive and challenging, yet realistic and attainable within available resources? Does the objective specify a result rather than an activity? Is there a specific time frame for completion of the objective?

Basic Components of Strategy design

#2

#3

#4

#5

Values 26

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Values are beliefs which your organization's members hold in common and endeavor to put into practice. The values guide your organization's members in performing their work. Specifically, you should ask, "What are the basic beliefs that we share as an organization?"

Basic Components of Strategy design

Values (Contd…) 27

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Values are often rooted in ethical themes, such as honesty, trust, integrity, respect, fairness, etc.

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Values should be applicable across the entire organization

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Values may be appropriate for certain best management practices – best in terms of quality, exceptional customer service, etc.

Basic Components of Strategy design

Values (Cont’d…) 28

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Examples of values include: a commitment to excellent services, innovation, diversity, creativity, honesty, integrity, and so on. By developing a written statement of the values of the organization, group members have a chance to contribute to the articulation of these values, as well as to evaluate how well their personal values and motivation match those of the organization. Basic Components of Strategy design

Values (Cont’d…) 29

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Ethiotelecom Customer-centricWe provide quick response to our customers and employees in line with their interest and values. ExcellenceWe are committed for quality and efficiency so that we are able to ensure excellent customer experience. AccountabilityWe carry out our activities with integrity, transparency, honesty and full responsibility. ImpartialityWe are committed to be impartial and serve without any bias. SharingWe always strive in synergy so as to accomplish the mission of our company. Basic Components of Strategy design

Values (Cont’d…) 30

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NIB Loyalty; Transparency; Accountability; Honesty and integrity; Social responsiveness; Organizational excellence; Equal employment opportunity; Prudent and Professional banking practice and Competitive services and sustainable growth. Basic Components of Strategy design

Values (Cont’d…) 31

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Dashen Bank Develop banking habit in the community Assist continuous growth of customers Sustainable growth and stability High integrity and accountability Esteemed customers satisfaction Non-stop openness for community access Brightened and trained employees Attend customers’ constructive outlook Normative confidentiality Keen to consciously build professionalism and service quality Basic Components of Strategy design

STRATEGIC PLAN 32

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The strategic plan refers to the arrangement and ordering of the activities and tasks that will be necessary to carry out the goals. Thus, this step focuses on defining and acquiring the necessary resources as well as establishing the timetable for the completion of the tasks.

Basic Components of Strategy design

STRATEGIC PLAN cont’d … 33

The development of a strategic plan involves in answering the following five questions: 1.

2. 3.

4.

5.

What are the practical alternatives that might be pursued to achieve the goal? What are the barriers to the realization of these alternatives? What major proposals might be pursued to achieve these alternatives or to overcome the barriers to their realization? What major actions with existing staff must be taken within the next year to implement the major proposals? What specific steps must be taken within the next six months to implement the major proposals and who is responsible? Basic Components of Strategy design

STRATEGIC PLAN cont’d … 34

Rucheman (1985) points out that the realization of the plan can be affected by the following six factors: 

Scope – where are the clients?

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Size – who are the potential clients?

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Complexity – how are specific are the objectives?

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Duration – how long it will take to implement the objectives?

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Components – how many discrete activities?

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Innovativeness – how much of a break from the past? Basic Components of Strategy design

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