Department of Management

College of Business and Economics

Addis Ababa University

Strategic Management
Short Note

Yohannes Neda
yohannesneda@gmail.com

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Yohannes Neda
 Chapter Two
Setting the
Strategic Direction
Chapter Objectives Contents

At the end of this unit, students will be able to:  Vision statement
 Define the concept of vision, mission and values of a  Mission statement
business  Business values
 Develop vision and mission statements;
 Describe the benefits of mission, vision and values

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 Chapter Two: Setting the Strategic Direction
Vision Statement
What is a Vision?
 A vision or strategic intent is a view of a future reality that
the organization seeks.
 Vision is also defined as a realistic, credible, attractive
future for an organization.
 Vision is a mental journey from known to the unknown,
creating the future from a montage of current facts, hopes,
dreams, threats and opportunities.
 Visioning is the process of developing a vivid picture of the
future.
 A vision can be:
 a mental picture of an "ideal" organization.
 an image of the future we seek to create
 We are more likely to reach an objective if we can see it
and can imagine the steps to reach it.
 Visioning is a common strategy in sports.
 Olympic skaters imagine themselves going
through the steps and landing a perfect jump.
 A vision is often expressed in a vision statement.
 A vision statement is concerned with what the organization
aspires to be. Its purpose is to set out a view of the future
so as to enthuse, gain commitment and stretch
performance.
Strategic Management
Creating a Vision
 Managers should envision where the organization should be headed in
the long run & understand how it might get there.
 A strategic vision describes the route a company intends to take in
developing and strengthening its business. It lays out the company’s
strategic course in preparing for the future.
 A strategic vision provides a panoramic view of “where we are going”
and why this direction and strategic path makes good business sense
 In general, the corporate vision can be defined considering internal &
external changes
Key Traits of a Strategic Vision
 Delineates management’s aspirations for the business
 Is distinctive and specific to a particular organization
 Is challenging and a bit beyond a company’s immediate reach
 Paints a clear picture of a company’s long-term direction, rather than
hiding it in foggy language.
A vision statement is little more than a bunch of
meaningless words unless it says something substantive
about the company’s long-term direction and the market
position(s) that company leaders are striving to stake
out.
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Examples of Vision Statements A Vision Can Fail

Addis Ababa University Though vision is important it can fail:

 If it reflects merely the leaders internal needs
Addis Ababa University aspires to be ranked among
 If internal & external factors are not analyzed well
the top ten pre-eminent African graduate and
research universities in 2023.  Due to lack of acceptance by the market & by those
who implement it
 Ignores stakeholders needs
 Miscalculates the resources needed and available to
Ethiopian Airlines achieve it

VISION 2025
To become the most competitive and leading aviation A well-conceived, well-communicated
group in Africa by providing safe, market driven and
vision:
customer focused passenger and cargo transport, aviation
training, flight catering, MRO and ground services by  Points an organization in a particular direction
2025.
 Sets forth a strategic path for it to follow in
preparing for the future
 Molds organizational identity
Commercial Bank of Ethiopia  Communicates management’s aspirations to
stakeholders
To become a world-class commercial bank by the year
2025.  Helps steer the energies of company personnel in a
common direction.

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 Chapter Two: Setting the Strategic Direction
Mission Statement
What is a Mission?
 Mission is defined as “the fundamental purpose of the
organization & its scope of operation.”
 Organization mission is written in terms of the general
set of products & services the organization provides &
the markets & clients it serves.
 Clear mission statement serves to define the mandates
(the context within which the organization operates).
 Operative mandates are subject to continuous
alteration & expansion.
Formulating the Mission
Mission statements can and do vary in length, content,
format, and specificity. Most practitioners and academicians
of strategic management feel that an effective statement
should include nine components. Because a mission
statement is often the most visible and public part of the
strategic-management process, it is important that it
includes the nine characteristics as summarized below.
1. Customers—Who are the firm’s customers?
2. Products or services—What are the firm’s major
products or services?
3. Markets—Geographically, where does the firm
compete?
4. Technology—Is the firm technologically current?
Strategic Management
5. Concern for survival, growth, and profitability—Is the firm committed to
growth and financial soundness?
6. Philosophy— What are the basic beliefs, values, aspirations, and ethical
priorities of the firm?
7. Self-concept—What is the firm’s distinctive competence or major competitive
advantage?
8. Concern for public image—Is the firm responsive to social, community, and
environmental concerns?
9. Concern for employees—Are employees a valuable asset of the firm?
Points of emphasis when articulating mandates & missions:
 Awareness of legal constraints & responsibilities of all persons of an
organization
 Definition of stakeholders any group of individuals who are affected by or
can affect the future of the organization.
 It should be recognized that the vision statement already defined is
embedded in the mission and mandate and also define the structure and the
general role of the organization.
Revising a Mission
If you already have a mission statement in your organization you can review it by
asking the following questions.
 Is it relevant as when the statement was written?
 Are there items that ought to be added?
 Does the statement address the points suggested for inclusion in a mission
statement?
 Does the statement effectively describe the unit to those who work within it as
well as to those external to it?
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Vision Statement
Examples of Vision Statements Vision Vs Mission
A strategic vision focuses on a A company’s mission statement
Addis Ababa University firm’s future strategic course – typically focuses on “who we are,
Addis Ababa University’s mission is to produce competent graduates, “the direction we are heading” what we do, and why we are
provide need-based community service and produce problem-solving  It describes what a here”
research outputs through innovative and creative education, research company’s future  It describes the company’s
and consultancy service to foster social and economic development of
the country. business makeup will be present business
as concerns  Current products or services
 Products/services  Buyer needs it is seeking to serve
Ethiopian Airlines  Customers  Customer groups
 Markets it sells to
 To become the leading Aviation group in Africa by providing safe
 Technologies  Current technological/business
and reliable passenger and cargo air transport, Aviation Training,
Flight Catering, MRO and Ground Services whose quality and price capabilities
“value proposition” is always better than its competitors, Ten Benefits of Having a Clear Mission and Vision
 To ensure being an airline of choice to its customers, employer of
choice to its employees and an investment of choice to its Owner,  Achieve clarity of purpose among all managers and employees.
 To contribute positively to socio economic development of Ethiopia  Provide a basis for all other strategic planning activities, including the
internal and external assessment, establishing objectives, developing
in particular and the countries to which it operates in general by
strategies, choosing among alternative strategies, devising policies,
undertaking its corporate social responsibilities and providing vital establishing organizational structure, allocating resources, and
global air connectivity, evaluating performance.
 Provide direction.
 Provide a focal point for all stakeholders of the firm.
Commercial Bank of Ethiopia  Resolve divergent views among managers.
 Promote a sense of shared expectations among all managers and
We are committed to best realize stakeholders' needs through employees.
enhanced financial intermediation globally and supporting national  Project a sense of worth and intent to all stakeholders.
development priorities, by deploying highly motivated, skilled and
disciplined employees as well as state-of-the-art technology. We  Project an organized, motivated organization worthy of support.
strongly believe that winning the public confidence is the basis of our  Achieve higher organizational performance.
success.  Achieve synergy among all managers and employees.

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Values
 Every organization should be guided by a set of values.
 Values are beliefs which an organization's members hold in common and
endeavor to put into practice.
 The values guide an organization's members in performing their work.
Specifically, a question should be asked is, "What are the basic beliefs that
we share as an organization?“
 Values are often rooted in ethical themes, such as honesty, trust, integrity,
respect, fairness, etc.
 Values should be applicable across the entire organization
 Values may be appropriate for certain best management practices –best in
terms of quality, exceptional customer service, etc.
 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.
Examples of Values
Ethiopian Airlines
 As an airline, safety is our first priority,
 Ethiopian is a high performance and learning
organization with continuous improvements, innovation
and knowledge-sharing. We accept change for the
growth opportunity it brings and always seek for and
apply the best ideas regardless of their source,
 We recognize and reward employees for their
performance and demonstrate integrity, respect to
others, candor and team work,
 Act in an open fashion and be result-oriented, creative
and innovative,
 Adopt Zero tolerance to indifference, inefficiency and
bureaucracy,
 Encourage 360° free flow and sharing of information,
 Treat our customers the same way we would like to be
treated and always look for ways to make it easier for
customers to do business with us,
 We are an equal opportunity employer

CBE’s Values

 Corporate Citizenship  Teamwork

 Customer Satisfaction  Integrity
 Quality Service  Employees
 Innovation  Public Confidence

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