Learning Unit 2 The Micro Environment

Outcomes
Describe vision statement Characteristics of a vision statement

Vision translated to mission statement

Describe mission statement Core components of the mission statement Additional components of the mission statement Explain organisational values Construct a Balanced Scorecard Explain: Growth, decline and corporate

combinations

Strengths

Weakness es

Internal Environment

Managers control the internal environment Vision Mission Values Goals Strategies

Align with the market and macro environment Survive over the long run!

Business Environment
Internal
Micro

External
Market Macro

Internal environment
Organisation resources

Vision and Mission

Organisational Values Strategic Objectives Strategies

Organisational Resources

The Vision Statement

Dream of the perfect future

Mental picture
Criteria:
Depict the perfect future Attainable Inspiring Buy-in of managers and workers Acceptable for stakeholders

Mission Statement
Core Components

Questions

Additional Components

The Mission Statement

Dream
What should we provide? Who is our market? How will we get the products to the market? Which resources? When is the best time to do it?

Reality

Answer the following questions:

The Mission Statement: Core Components

The Mission Statement

ADDITIONAL components workers will know

what top managements intent is:

Profitability, growth and survival Productivity Stakeholders Philosophy of the organisation Public image Clients Safety, health and environment

The Nandos Mission Statement Our mission at Nandos is to always deliver the Nandos experience to our customers. The Nandos Experience We will take you on a journey, your own voyage of discovery. You will come to discover how special it is to belong to the Nandos family. You will experience our traditional hospitality, warmth and fun. Your senses will be fired with the unique products and tastes of Portugal, all prepared with pride

We, as passionate committed retailers, understand and lead our customers through excellence and a deep knowledge of our products and services and the world we live in. We live the Woolworths difference through our values: quality and style deliver the best value a simple and fair deal service think customer innovation discover the difference integrity do what you say you will do energy be passionate and deliver sustainability build for a better future

Organisational Values
Often referred to in mission

statement.
Core components Additional components Statement of values

Statement of values

= Company Creed = Company Philosophy = State acceptable behaviour and what is not.

Type of values
Person al

Organisatio nal

Societ al

Motivational

Personal Values
Employees with own set of values.

Personal values not in conflict with organisation

values. Personal values from cultural background.

Societal Values
Direct society business operate in

Take into consideration..

Foundational values
Organisation built on these values.

Guide behaviour of everyone on every level.

Values could be:
Integrity Respect Accountability Fairness Caring

Motivational Values

Give organisation unique

personality. State expected behaviour. Behaviour Goals achieved. Examples:

Make it happen High

Productivity Do it together Teamwork Lets do it Taking action Do it better every time

Organisational Values
Different interpretations
What is integrity?

Values linked to specific behaviour

The Balanced Scorecard

Mission statements gives direction.
Not specific or measureable!

Mission clarity Translate Measurable

Organisational goals
BALANCED SCORECARD!

The Balanced Scorecard

BSC Mission statement Measureable goals

Financial and non-financial dimension

Balanced Scorecard: Factors examples

Department Finance Areas Return On Investment Cash Flow Return on Capital Employed Financial Results (Quarterly/Yearly)

Internal Business Processes Number of activities per function Duplicate activities across functions Process alignment (is the right process in the right department?) Process bottlenecks Process automation Learning & Growth Is there the correct level of expertise for the job? Employee turnover Job satisfaction Training/Learning opportunities Customer Delivery performance to customer Quality performance for customer Customer satisfaction rate Customer percentage of market Customer retention rate

The Balanced Scorecard

Strategies
Organisations compete Attain strategic

objective. Strategy:
Game plan

Outwit competitors
Attain goals

Same industry Often same goals

But different approach! Pep vs. Woolworths

Strategies: 3 Possible Game plans

Low-cost leadership strategy
All decisions focus on cost

Differentiation strategy
Cant compete on low cost Distinguish yourself from the competitor Woolworths: Quality of products

Focus strategy
Limited resources Small segment of market

Thus, game plan on specific market Focus

Then low-cost or differentiation strategy

Strategies
Each strategy Risk
Low-cost leadership strategy = Imitations Differentiation strategy = Not able to differentiate Focus strategy = Choose to small market segment

Choose a strategy Be more

SPECIFIC on

competing in industry

Grand Strategy

Growth

Grand Strategies

Decline

Corporate Combinations

Grand Strategies: Growth Strategy

Game plan for the organisation to grow.
Introduce new products to existing customers Enter a new market Create a new, innovative product for existing market Take over supplier of raw materials Risk Low Sound knowledge of: Product Market How to serve the market

Grand Strategy: Decline Strategy

Organisation unable to grow
Many new competitors enter the market Solution: Cut costs

Medium risk

Grand Strategy: Corporation Combination Strategy

Strategic alliances

High risk
Companies work together People problems Managers fighting for turf Different systems