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?
 Vision is a picture of what the firm wants to be and, in broad
terms, what it wants to ultimately achieve.
 Vision statement articulates the ideal description of an
organization and gives shape to its intended future.
 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
 An organization’s vision describes what the organization hopes to
become in the future and helps guide its strategies.
 A vision is often expressed in a vision statement.
 A vision statement points the firm in the direction of where it
would like to be in the years to come.
 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.
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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
A world-class commercial bank financially driving
Ethiopia's future.  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.
 A mission specifies the businesses in which the film intends to
compete and the customers it intends to serve.
 The firm’s mission is more concrete than its vision.
 Well-written mission statements effectively capture an
organization’s identity and provide answers to the fundamental
question “Who are we?”.
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?
Strategic Management
4. Technology—Is the firm technologically current?
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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Mission Statement
Examples of Mission Statements Vision Vs Mission
A strategic vision focuses on a A company’s mission statement
firm’s future strategic course – typically focuses on “who we are,
Addis Ababa University
“the direction we are heading” what we do, and why we are
Addis Ababa University’s mission is to produce competent ❖ It describes what a here”
graduates, provide need-based community service and produce company’s future ❖ It describes the company’s
problem-solving research outputs through innovative and creative business makeup will be present business
education, research and consultancy service to foster social and
economic development of the country. as concerns  Current products or services
 Products/services  Buyer needs it is seeking to serve
 Customers  Customer groups
 Markets it sells to
Ethiopian Airlines  Technologies  Current technological/business
capabilities
To become the leading Aviation group in Africa by providing safe and
reliable passenger and cargo air transport, Aviation Training, Flight Ten Benefits of Having a Clear Mission and Vision
Catering, MRO and Ground Services whose quality and price “value
proposition” is always better than its competitors, To ensure being  Achieve clarity of purpose among all managers and employees.
 Provide a basis for all other strategic planning activities, including the
an airline of choice to its customers, employer of choice to its
internal and external assessment, establishing objectives, developing
employees and an investment of choice to its Owner, To contribute strategies, choosing among alternative strategies, devising policies,
positively to socio economic development of Ethiopia in particular establishing organizational structure, allocating resources, and
and the countries to which it operates in general by undertaking its evaluating performance.
corporate social responsibilities and providing vital global air  Provide direction.
connectivity  Provide a focal point for all stakeholders of the firm.
 Resolve divergent views among managers.
 Promote a sense of shared expectations among all managers and
Commercial Bank of Ethiopia employees.
 Project a sense of worth and intent to all stakeholders.
We are committed to realize stakeholder’s values through enhanced  Project an organized, motivated organization worthy of support.
 Achieve higher organizational performance.
financial intermediation using the best professionals and
 Achieve synergy among all managers and employees.
technology.

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Values
 Every organization should be guided by a set of values.
CBE Values
 Values are beliefs which an organization's members hold in common and endeavor to put into  Innovative Organization
practice.  Integrity  Teamwork
 Values are explicit principles that the company endorses and lives by, and expects their employees  Service Excellence
to embrace.  Respect for Diversity
 Professionalism  Corporate Citizenship
 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?“  Empowerment
 Values are often rooted in ethical themes, such as honesty, trust, integrity, respect, fairness, etc.
 Values should be applicable across the entire organization Ethiopian Airlines
 Values may be appropriate for certain best management practices –best in terms of quality,
exceptional customer service, etc.  As an airline, safety is our first priority,
 Examples of values include: a commitment to excellent services, innovation, diversity, creativity,  Ethiopian is a high performance and learning
honesty, integrity, and so on. organization with continuous improvements,
innovation and knowledge-sharing. We accept change
 Values demonstrate to their employees and other stakeholders the important principles that the for the growth opportunity it brings and always seek
organization lives by. for and apply the best ideas regardless of their
 An organization should seriously consider its values statement when developing its strategies and source,
goals. If a potential strategy conflicts with one of its values, it needs to drop or modify that strategy  We recognize and reward employees for their
to ensure the company conforms to its corporate values as the organization move forward. performance and demonstrate integrity, respect to
 By developing a written statement of the values of the organization, group members have a chance others, candor and team work,
to contribute to the articulation of these values, as well as to evaluate how well their personal  Act in an open fashion and be result-oriented,
values and motivation match those of the organization. creative and innovative,

Examples of Values  Adopt Zero tolerance to indifference, inefficiency and

AAU Values
 Academic Freedom
 Excellence
 Integrity and Honesty
 Celebrating diversity
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bureaucracy,
 Encourage 360° free flow and sharing of information,
 Reliance on Evidence and Authority of Reason  Treat our customers the same way we would like to
be treated and always look for ways to make it easier
 Student-centeredness for customers to do business with us,
 Intolerance to corruption  We are an equal opportunity employer
 Transparency and Accountability
 Entrepreneurial spirit
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