Course Title: Strategic Management

Unit 2
Organizational Objectives

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Contents

Corporate Mission and Objectives:

• Concept of Mission and Vision

• Constituents of Corporate Mission

• Goals

• Objectives

• Hierarchy and importance of Objective Setting

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 Company mission
Strategic and social
responsibility
Management
Process External
Possible?
Internal analysis
environment
Desired?

Strategic analysis and choice Feedback

Feedback

Long-term
Generic and grand strategies
objectives

Short-term objectives; Policies that

Functional tactics
reward systems empower action

Restructuring, reengineering
and refocusing the organization

Strategic control and

continuous improvement

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Mission and Vision

Company mission:

A mission statement is a statement of the purpose of a

company, organization or person, it’s reason for existing

The mission statement should:

• Guide the actions of the organization
• Spell out its overall goal
• Provide a path
• Guide decision-making
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Company Mission Contd..

It provides "the framework or context within which the company's

strategies are formulated"

Mission statement consists of three essential components:

(1) (3)
a r ket Cont (2) tion
Key M ribu nc
tio n Disti

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Examples: Vision Slogans

Levi Strauss & Company

“We will clothe the world by marketing the most appealing
and widely worn casual clothing in the world.”

Microsoft Corporation
“Empower people through great software—any time, any
place, and on any device.”

Mayo Clinic
“The best care to every patient every day.”
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Company Mission Contd..

Mission Statement of Coca Cola Ltd.

“Our Roadmap starts with our mission, which is

enduring. It declares our purpose as a company
and serves as the standard against which we weigh
our actions and decisions.
1. To refresh the world
2. To inspire moments of optimism and happiness
3. To create value and make a difference”
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Mission Statement

(a unique grocery store chain)

To give our customers the best food and beverage
values that they can find anywhere and to provide
them with the information required for informed
buying decisions. We provide these with a
dedication to the highest quality of customer
satisfaction delivered with a sense of warmth,
friendliness, fun, individual pride, and company
spirit.

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 Need for an Explicit Mission

The mission statement is a message designed to be inclusive of the

expectations of all the stakeholders for the company’s performance,
addresses the following:
Why is this firm Economic
in Business? Goals

Responsibilities Mission Operating

to Stakeholders Statement Philosophy

Who are the Core

customers Competencies 9
Formulating a Mission

•The process of defining the company mission starts at it’s inception

•Business begins with Beliefs Desires Aspirations

•Mission is based on the following Fundamental Beliefs:

Product or Service can provide Business must not just “Survive”
benefits at least equal to it’s price but also “Grow” & be “Profitable”

Satisfy a Customer need of specific Favorable Public Image

market segment

The technology will provide a cost & The employees and Stakeholders to
quality competitive product also adopt to the Mission
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 Constituents of Corporate Mission

• Mission statements can and do vary in length, content,

format and specificity

• An effectively written mission statement usually exhibits nine

characteristics or mission statement components

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Constituents of Corporate Mission Contd..

Concern for
Technology Public Image
Employees

Customers Self Concept

Constituents
of a Mission
Statement
Products/
Services Philosophy

Concern for Growth,

Markets
Survival
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Creating a Mission Statement, Setting Goals and Developing Strategies

A mission statement is a guiding light for a business and the

individuals who run the business.

It is usually made up of three parts:

1. Vision - big picture idea of what to achieve

2. Mission - general statement of how to achieve vision

3. Core Values - how to behave during the process

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Vision and Mission Statements

• Tools used by organizations to set priorities and give directions to its

members

• “Vision” and “mission statement” are often lumped together and

used interchangeably

• Organization’s vision is:

• Often called its “future state”
• Describes what the organization hopes to be in the future 

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Vision and Mission Statements Contd..

• A mission statement is:

• Short-term, usually 3-5 years

• Describes the organization’s “current state”

• More detailed than the vision

• Outlines how the organization will go about achieving its vision

 

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Vision and Mission Statements Contd..

• Vision and Mission Statements help an organization:

• Guide strategic planning and implementation

• Define performance standards and expectations

• Establish a more productive, goal-oriented corporate culture

• Communicate its purpose and goals to outside stakeholders

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Vision and Mission Statements Contd..

• Many organizations, especially small businesses, do not

have them

• One survey of 220 small businesses found that:

• 64%: Did not have a written mission statement

• 7%: Mission statements accessible to senior managers only

• 29%: Mission statement accessible to all employees

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Vision and Mission Statements Contd..

• Poorly written/ Non-existent Vision and Mission statements: has “lost

opportunities”
• Vision and Mission Statement have positive impact on:
• Recruitment and retention
• Employee engagement
• Corporate culture
• Productivity
• Management decision-making
• Organizational and inter-personal unity

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Benefits of Vision and Mission Statements
Contd..

• A powerful tool and motivator when it is highly visible

• Employees can rally behind a common goal that clearly

benefits themselves and the organization

• Help improve employee satisfaction and productivity

• When an employee knows what is expected of them, they

enjoy a greater sense of purpose

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Company Vision and Vision Statement Contd..
Important Tip
• The vision statement should be concise and easy to remember

• If it is easy to remember, it is easy for everyone in the organization

to focus on the vision

• Hence, daily activities are automatically directed towards achieving

the vision

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Coca Cola Ltd - Vision Statement

"Our vision serves as the framework for our Roadmap and guides
every aspect of our business by describing what we need to
accomplish in order to continue achieving sustainable, quality
growth.

• People: Be a great place to work where people are inspired to be

the best they can be.

• Portfolio: Bring to the world a portfolio of quality beverage brands

that anticipate and satisfy people's desires and needs.
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Coca Cola Ltd Vision Statement Contd..

• Partners: Nurture a winning network of customers and suppliers,

together we create mutual, enduring value.

• Planet: Be a responsible citizen that makes a difference by helping

build and support sustainable communities.

• Profit: Maximize long-term return to shareowners while being

mindful of our overall responsibilities.

• Productivity: Be a highly effective, lean and fast-moving

organization.”
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Vision Statement

• Vision for Boeing in 2016 is “People working

together as a global enterprise for aerospace
leadership”

• Microsoft – “To empower people through great

software, any time, any place, on any device”

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Characteristics of Good Mission Statements

• Mission - A statement of mission is a general statement of how to

achieve vision

• There is a very close relationship between the vision and mission

• The mission is an action statement that usually begins with the word
“to”

- Therefore, to construct a Good Mission Statement, The following

points must be kept in mind…

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Characteristics of Good Mission Statements Contd..

2. Short
and Concise 3.  Should be
1. Simple a single
thought

Characteristics
of Good
Mission
Statements
4. Fluid
5. Unique Process
Businesses 

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Corporate Values

Corporate Values: The philosophies or principles that guide

an organization's internal conduct as well as its relationship with its:

• Customers
• Partners
• Shareholders
Core values: are usually summarized in the mission
statement or in the company’s statement of core values

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Corporate Values Contd..

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Value Statement of Coca Cola Ltd.

Live Our Values

“Our values serve as a compass for our actions and describe how we
behave in the world.
• Leadership: The courage to shape a better future
• Collaboration: Leverage collective genius
• Integrity: Be real
• Accountability: If it is to be, it's up to me
• Passion: Committed in heart and mind
• Diversity: As inclusive as our brands
• Quality: What we do, we do well”

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Value Statement

Home Depot
Entrepreneurial
Creating spirit Excellent customer
shareholder value service

Building strong Giving back to the

relationships community

Taking care of Respect for all

people people
Doing the right
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thing
Value Statement

Du Pont

Safety Ethics

Respect for Environmental

people stewardship
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The Role of Goals and Objectives

• After developing ‘Vision, Mission and Core Values’, one can

develop the ‘goals and objectives’ needed to achieve Vision

Objectives
• Are the desired end-result or end-state

• Objectives could be qualitative and quantitative

• Goals
• General statements of what the company wants to achieve

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Setting Objectives

• Purpose of setting objectives

• Converts vision into specific performance targets
• Creates yardsticks to track performance
• Pushes firm to be inventive, intentional, and
focused in its actions
• Setting challenging, achievable objectives guards
against
• Complacency
• Internal confusion
• Status quo performance

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Characteristics of Objectives

• Represent commitment to achieve specific

performance targets
• Spell-out how much of what kind of performance by
when
• Well-stated objectives are
• Quantifiable
• Measurable
• Contain a deadline for achievement

Establishing objectives converts the

vision into concrete performance outcomes! 33
The Role of Goals and Objectives

Organizational goals and Objectives:

• Objectives are established by a company's management to

outline expected outcomes and guide employees' efforts
1. Economic Objectives

2. Human Objectives

3. Social Objectives

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The Role of Goals and Objectives Contd..

 Examples of company goals are:

• To improve profitability

• To increase efficiency

• To capture a bigger market share

• To provide better customer service

• To improve employee training

• To reduce carbon emissions

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 Examples: Financial Objectives

• X % increase in annual revenues

• X % increase annually in after-tax profits
• X % increase annually in earnings per share
• Annual dividend increases of X %
• Profit margins of X %
• X % return on capital employed (ROCE)
• Increased shareholder value
• Strong bond and credit ratings
• Sufficient internal cash flows to fund 100% of new capital
investment
• Stable earnings during periods of recession
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The Role of Goals and Objectives Contd..

• A goal should meet the following criteria:

Suitable: To fit with the vision and mission

Acceptable: To fit with the values of the company and the

employees
Understandable: Stated simply and easy to understand

Flexible: Can be adapted and changed as needed

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The Role of Goals and Objectives Contd..

Import
ant Tip

Make sure the goals are:

• Focused on the important properties of the business

• Be careful not to set too many goals

• Design goals so that they don’t contradict and interfere with each
other

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Goals

• Goals are:-
Specific
Quantifiable

Time-sensitive statements of:

a) What is going to be achieved and

b) When it will be achieved

They are milestones along the path of achieving goals

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Goals / Quantitative Objectives - Examples

• To earn at least a 20% after-tax rate of return on net

investment
• To increase market share by 10% over the previous year
• To lower operating costs by 15% over the next two years
by improving the efficiency
• To reduce the call-back time of customers inquiries and
questions to no more than four hours

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Quantitative Objectives Contd..

Criteria for Quantitative Objectives:

• Measurable: What will happen and when?
• Suitable: Does it fit as a measurement for
achieving the goal?
• Feasible: Is it possible to achieve?

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Quantitative Objectives Contd..

Criteria for Quantitative Objectives:

• Commitment: Are people committed to achieving the
objective?
• Ownership: Are the people responsible for achieving
the objective included in the objective-setting process?

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Approaches to Ethical Issues

• The Utilitarian: The action providing greatest good for the

greatest number of people
• The Moral Rights approach: The actions to maintain rights
and privileges of individual and group
• Social Justice approach: The actions to provide equity,
fairness and impartiality in the distribution of rewards and
costs among individuals and groups 43
Core Competencies

• The main strengths or strategic advantages of a business

• Combination of pooled knowledge and technical
capacities of a business to be competitive
• Allow a company to expand into new end markets as
well as provide a significant benefit to customers
• Hard for competitors to replicate

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Core Competencies

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Core Competencies Contd..

• A business should:-
1. Identify core competencies

2. Focus on its core competencies: establish aim to gain a solid

reputation and brand recognition

3. Leverage: for a company's continued growth and survival

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Competitive Advantage

• An advantage that a firm has over its competitors

• Allow firm to:
 Generate greater sales or margins
 Retain more customers than its competition

• Types of competitive advantages:-

 The firm's cost structure
 Product offerings
 Distribution network
 Customer support
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Competitive Advantage Contd..

• Competitive advantages give a company an edge over

its rivals
• Ability to generate greater value for the firm and its
shareholders
• The more sustainable the competitive advantage, the
more difficult it is for competitors to defuse the
advantage
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Competitive Advantage Contd..

• Types of competitive advantages: 

1. Comparative Advantage
2. Differential Advantage

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Competitive Advantage Contd..
Comparative Advantage
• Also called cost advantage
• Firm's ability to produce a
good or service at a lower
cost than its competitors
• Firm has the ability sell its
goods or services at a
lower price than its
competitors
Differential Advantage
• A firm's products or
services differ from its
competitors
• Firm’s offering are seen as
better than a competitor's
products by customers
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The Roots of Competitive Advantage

Resources Differentiation

Superior
• Efficiency
Distinctive • Quality Value Superior
competencies • Innovation creation profitability
• Customer
responsiveness

Capabilities Low cost

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Competitive Advantage
Generic Building Blocks Model

• Generic building blocks provide four basic ways to lower

cost and achieve differentiation

1. Efficiency 2. Quality

4. Customer
3. Innovation
Responsiveness

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Generic Building Blocks Model Contd..

1. Efficiency:
• Efficiency is based on the cost of inputs required to
produce a given output
• Higher efficiency of the firm – result in lower cost of its
inputs
• Employee productivity - key to efficiency

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Generic Building Blocks Model Contd..

2. Quality: is Vital for survival of the firm

3. Innovation:
• Anything new or novel about a firm's operation or product
• Innovation gives a firm something unique
• Pioneer firm in its industry can charge a higher price due
to lack of competition

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Generic Building Blocks Model Contd..

4.Customer Responsiveness:
• A firm must deliver exactly what the customer wants when the
customer wants it
• A firm must do everything it can to identify and satisfy customer needs
• Customise goods and services to meet the demands of individual
customers

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Generic Building Blocks Model Contd..

• Customer response time is a big factor in increasing

customer responsiveness
• Other factors are: superior design, superior service, and
superior after-sales service and support

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End of Session 2

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