Strategic Business Analysis

Key Terms in Strategic Management

Key Terms in Strategic Management

Strategists - According to David and David (2017), “strategists are the individuals
who are most responsible for success or failure of an organization”. 

▪ They are the mind behind of where the business is now. Companies
nowadays the strategists are the managers or the CEO. They are the ones
who constantly formulate ideas to bring the company to its next level.

▪ Jay Congres said that “All strategists have to be chief learning officers”.
Because if the strategists are not adaptable with the environment the
organization itself will not be able to adopt. For this reason, it is a must for an
organization's strategists to constantly learn new things since the
environment is continuously changing.

Nature of Vision and Mission Statement

Vision Statement - According to David (2011), vision answers the question of what
the organization what to become. 

▪ Vision talks about what to attain some-time in the future, it’s a distant goal of
the organization. 

▪ Every organization should have a crystal-clear vision statement simply

because it serves as a guideline to formulate their mission statements. A vision
statement comes first before a mission statement (David and David, 2011). 

▪ Organization can measure their success as to how close their current state to
their vision. 

(example)

PUP’s Vision Statement:

“Clearing the paths while laying new foundations to transform the Polytechnic
University of the Philippines into an epistemic community”

Mission Statement - According to David (2011) organization’s ‘...mission statement is a

declaration of an organization’s “reason for being”’.

▪ It is what separates your business from the rest. 

▪ Ducker explains the mission statement as “…foundation for priorities,

strategies, plans, and work assignments. It is the starting point for the design of
managerial jobs and, above all, for the design of managerial structures.

Page | 1
 Strategic Business Analysis
Key Terms in Strategic Management

Nothing may seem simpler or more obvious than to know what a company’s
business is.

▪ A steel mill makes steel, a railroad runs trains to carry freight and passengers,
an insurance company underwrites fire risks, and a bank lends money.
Actually, “What is our business?” is almost always a difficult question and the
right answer is usually anything but obvious. The answer to this question is the
first responsibility of strategists. Only strategists can make sure that this
question receives the attention it deserves and that the answer makes sense
and enables the business to plot its course and set its objectives.” 

(example)

LinkedIn’s Mission Statement:

“Connect the world’s professionals to make them more productive and
successful”

Importance of Vision and Mission

● According to the book Strategic Management Concepts and Cases by David, “Rarick
and Vitton found that firms with a formalized mission statement have twice the
average return on shareholders’ equity than those firms without a formalized
mission statement have”
● In other words organizations who had a vision and mission and followed it benefited
shareholder’s equity greatly by doubling their average return. 

● According to King and Cleland organizations who develop a mission statement can
reap the following benefits: “To ensure unanimity of purpose within the
organization”. The word unanimity means the state of being one opinion about
something.
● In other words, having a mission that organizations studied about and adhere to
ensures that everyone would have the same opinion about their purpose and why
they are doing what they are doing. It unifies different people inside the organization
that results in hitting the organizations objective without getting sidetracked of other
things around their business environment.

● According to King and Cleland organizations who develop a mission statement can
reap the following benefits: “To provide a basis, or standard, for allocating
organizational resources”.
● Knowing that all organizations have only limited resources, by looking into the
mission of the business, this can be used as to what they should be prioritized within
their business. 

Page | 2
 Strategic Business Analysis
Key Terms in Strategic Management

● Some studies have found that having a mission statement does not directly
contribute positively to financial performance.”
● This statement sound contradicting to Businessweek reports that adhering to
mission statements impact the organization financially, while on the other hand there
are studies that have found that it does not affect at all. The line that can separate
these two as to why things work while for others to does not work is the “content of
the mission”. There are organizations that have not been updating their mission
according to what is needed in the market. They are sticking to their old self which
can be outdated by the environment. Below is an example of a failure story of a
business because of sticking to their old self

(example)
Kodak’s Failure:
Before, Kodak was known for its brand as film-based photography. They are a major
holder of market share. But during the 1980s, Sony introduced its first electronic
camera. Kodak made a study about this, and it turns out that this business can throw
down totally their filmed photography. But on the other hand, they have 10 years to
prepare before this digital camera can take hold of the market totally. So in other
words, they have much time to do it. But during those 10 years, Kodak only did a little
and continuously declined the digital camera business. As a result, people embraced
digital photography and causes a big decline for Kodak in the competition

Page | 3
 Strategic Business Analysis
Key Terms in Strategic Management

Page | 4