Company Direction

Chapter 2
 Course Contains:-
 Mission And Mission Statement.
 Vision
 Strategic Intent
 Strategic Objectives Vs Financial Objectives
 Policies
 Long Term And Short Term Objectives
 Five task of strategic management
 1. Defining business, stating a mission, &
forming a strategic vision
 2. Setting measurable objectives
 3. Crafting a strategy to achieve objectives
 4. Implementing & executing strategy
 5. Evaluating performance, reviewing new
developments, & initiating corrective
adjustments
Developing Vision & Mission Statement
First Task of Strategic
management
 Vision & Mission
• Vision is a bigger picture & future oriented while the
mission is more immediately focused on the present
• It is the vision that defines the end game and the
mission is the road map that will take you there
For example, for a luxury products company, the
vision could be 'To be among most admired luxury
brands in the world' and mission could be 'To add style
to the lives'
Developing Vision & Mission Statement...

 Corporate vision is a short and inspiring

statement of what the organization intends to
become and to achieve at some point in the
future, often stated in the competitive terms.
 Developing Vision & Mission...
 A mission statement is a brief description of
the higher goals of an organization.

 A mission statement makes concrete the

leader’s view of the direction and purpose of
the organization.
 Vision
 In business, vision is foresight (psychology) - the
capacity to envisage future market trends and plan
accordingly
 A vision statement is a declaration of
an organization's objectives, ideally based on
economic foresight, intended to guide its
internal decision-making. A vision statement is not
limited to business organizations and may also be
used by non-profit or governmental entities. [
 A vision statement is a company's road map,
indicating both what the company wants to become
and guiding transformational initiatives by setting a
defined direction for the company's growth. Vision
statements undergo minimal revisions during the life
of a business, unlike operational goals which may be
updated from year-to-year. Vision statements can
range in length from short sentences to multiple
pages. Vision statements are also formally written
and referenced in company documents rather than,
for example, general principles informally
articulated by senior management.
 Mission
 A mission statement is a short statement of an 
organization's purpose, identifying the scope of
its operations: what kind of product or service it
provides, its primary customers or market, and its
geographical region of operation. It may include
a short statement of such fundamental matters as
the organization's values or philosophies, a
business's main competitive advantages, or a
desired future state—the "vision".
 A mission statement is not simply a description of
an organization by an external party, but an
expression, made by its leaders, of their desires and
intent for the organization. The purpose of a
mission statement is to focus and direct the
organization itself. It communicates primarily to
the people who make up the organization—its
members or employees—giving them a shared
understanding of the organization's intended
direction. Organizations normally do not change
their mission statements over time, since they
define their continuous, ongoing purpose and focus.
 Vision & Mission of RBB Ltd.
 Vision: "To provide innovative banking services to
everyone ,every time and everywhere for the economic
development of the nation.“

 Mission: "To provide easy and innovative banking

products and services for our customers by implementing
one stop service concept from our wide network using our
modern technology qualified human resources in
competitive environment. We always look for the benefit of
the local communities supporting entrepreneurship ,social
responsibility and economic prosperity of the nation."
 Characteristics of good vision statement
 Be inspirational
 Be ambitious
 Be realistic
 Be creative
 Be descriptive
 Be clear
 Be steady
 Characteristics of good mission statement
 Make it short as possible
 Make it memorable
 Make it unique
 Make it realistic
 Make sure it's current
 Example of strategic Vision

UNITED NATION

‘Peace’ - United Nations

 Example of strategic Vision ...

Microsoft

‘There will be a personal computer on every

desk running Microsoft software.’
[Short, simple, unique, memorable and long term] - Microsoft
 Example of strategic Vision
DELTA AIRLINES

... We want Delta to be the

world wide Airlines of choice
 Example of business mission
McDonald

Serving limited menu of hot, testy food quickly

in clean, friendly restaurant for a good value to
a broad base of fast-food customers
worldwide.
 Example of business mission...
GOOGLE

‘To organize the world’s information and make

it universally accessible and useful’
 Difference in between vision and mission
statement
1. A vision statement is a 1. Mission statement defines the
description of where a company organization's purpose and
wants to be in the future primary objectives
2. It concerns a firms future path 2. It focuses on current business
and position activities.
3. It tells about future technology 3. It tells about the current
and products technology and current
4. It answer the question why we products
are here 4. It answer the question what
5. It should remain intact, even if do we do.
the market changes dramatically, 5. It may change, but it should
because it speaks to what you tie back to your core values
represent, not just what you do and vision.
Communicating the strategic vision
 Proper communication is one of the most
important functional activities for the future
success of your strategic plan.
 Proper communication makes good
understanding of management’s goal or
objective
 Formulate best strategy is not only the
important function but proper communication
up to the functional level has great importance.
 Objectives
 A specific result that a person or system aims to
achieve within a time frame and with available
resources.
In general, objectives are more specific and easier to
measure than goals. Objectives are basic tools that
underlie all planning and strategic activities. They
serve as the basis for creating policy and evaluating
performance. Some examples of business objectives
include minimizing expenses, expanding
internationally, or making a profit.
 Objectives of RBB Ltd.
 Focus on providing innovative financial
services.
 Increase in capital base of the Bank by meeting
the minimum capital requirement.
 Business growth and increase in market share.
 Enhance operational efficiency.
 Sustainable increase in profits.
 Focus on empowerment of deprived class.
 Setting Objectives
Second task of strategic management

 Objectives represent a managerial commitment

to achieve specific outcomes and results
 Which is converted in to the strategic vision
and directional course into specific
performance targets.
 Setting objectives...

 Purpose of setting OBJECTIVES is to

Convert mission into performance targets
Create standard to track the performance
Establish performance goals requiring stretch
Push firm to be inventive, intentional, focused
 Types Of Objectives
(Business Objective)
 Survival Objectives
 Stability Objective
 Growth Objectives
 Profit Objectives
 Efficiency Objectives
 Types of objectives
Financial Objective Strategic Objective

Outcomes that improve Outcomes that

a firm’s financial strengthen a firm’s
performance competitiveness and
long term market
position
 Unilever’s Strategic and Financial
objectives
 Grow annual revenues by 5-6% annually
 Increase operating profit margins from 11 to
16% within 5 years
 Cut company’s 1200 food, house hold and
personal care product down to 400 core brands
 Focus sales and marketing efforts on those
brands with potential to become respected,
market leading global brands
 Streamline company’s supply chain
 Examples: Financial Objectives
 Achieve revenue growth of 10% per year
 Increase earnings by 15% annually
 Increase dividends per share by 5% per year
 Increase net profit margins from 2% to 4%
 Attractive EVA performance
 Stronger bond and credit ratings
 A rising stock price
 Attractive increases in MVA
 A more diversified revenue base
 Examples: Strategic Objectives
 A bigger market share
 Quicker design-to-market than rivals
 Higher quality product than rivals
 Lower costs relatively than competitors
 Broader product line than rivals
 A stronger reputation with customers than rivals
 Better customer service than rivals
 Recognition as a leader in technology
 Wider geographic coverage than rivals
 More innovative products than rivals
 Financial v/s Strategic Objective
FINANCIAL OBJECTIVE
 Growth in revenues
 Growth in earnings
 Higher dividends
 Wider profit margins
 Higher returns on invested
capital
 Attractive EVA performance
 Strong bond and credit ratings
 Bigger cash flows
 A rising stock price
 Attractive and sustainable
increased in market value added
(MVA)
 A more diversified revenue base
 Stable earnings during periods of
recession
STRATEGIC OBJECTIVE
 A bigger market share
 Quicker design-to-market times than
rivals
 Lower costs relative to key
competitors
 Broader or more attractive product
line than rivals
 A stronger reputation with customers
than rivals
 Superior customer service
 Recognition as a leader in technology
and /or product innovation
 Wider geographic coverage than
rivals
 Higher levels of customer satisfaction
than rivals
 Strategic intent
 Strategic intent answers the question: “What exactly are
we trying to accomplish?”
 The SI of Organization represents the organization’s
belief about its state of future.
 Strategic Intent is leaders’ clear sense of vision and
expectation to achieve in result.
 SI is a framework of firms operation, adoption and pre
determined direction and expectation to achieve their
goal.
 The hierarchy of strategic intent covers the vision,
mission, business definition, business model and the
goals and objectives.
 In the field of management and organizational development,
strategic intent is defined as a compelling statement about where an
organization is going that succinctly conveys a sense of what that
organization wants to achieve in the long term. Strategic intent
answers the question: “What exactly are we trying to accomplish?”
 Strategic intent can provide a sense of direction, a particular point of
view about the long-term market or competitive position the
organization hopes to develop and occupy.
 Strategic intent can provide a sense of discovery in that it holds out
to the organization’s members the promise of learning about other
organizations that operate in the same market, adopting their best
practices and avoiding pitfalls.
 Strategic intent can provide a sense of destiny, a worthwhile goal
around which energies can be focused across the organization.
 Three Things Must be Coordinated
 Direction
 Motivation
 Hard Work
 B o

c
r
u p
o
s
Strategy
t imaking pyramid
r
a
t
n
i e
e

o s
s
S
t
r

n a
t
S e
at g
y

l a
r

O
p
e
t
e
r
a

s
t
i
o

g
n
S
t
r
a
t

y
t
e
g
y
 This goes way back to the year 1998, when Tata Motors launched
their first car Tata Indica they wanted to enter the passenger car
market with this one.
 But unfortunately it proved to be a flop. People advised Ratan Tata
to sell their passenger car company and he agreed to do that, he
proposed Ford to buy their passenger company and Ford also
showed interest in their proposal. Ratan Tata along with his team
went to Detroit where the headquarters of the Ford was situated.
The meeting went well, Bill Ford the chairman of Ford said to
Ratan Tata,”Why did you enter the passenger car business when
you were not knowing of it. It will be a favor if we buy this
business from you.”. Ratan Tata returned to India in a tense mood.
 After early struggle, Tata Motors became a big name in India by
2008. But it was not a good time for Ford as they were on the edge
of being bank corrupt, Ratan Tata gave them an offer of selling
their luxury brands Jaguar and Land Rover. The deal was done and
Ford sold their luxury car branding(s) to Ratan Tata for 2.3 billion
$ or 9300 crore INR. The Bill Ford said,”You are doing a big favor
for us by buying Jaguar-Land Rover.”.
 Policies
 A policy is a deliberate system of principles to guide decisions and
achieve rational outcomes. A policy is a statement of intent, and is
implemented as a procedure or protocol. Policies are generally
adopted by the board of directors or senior governance body within
an organization, where procedures or protocols are developed and
adopted by senior executive officers. Policies can assist in
both subjective and objective decision making. Policies to assist in
subjective decision making usually assist senior management with
decisions that must be based on the relative merits of a number of
factors, and as a result are often hard to test objectively, e.g. work-life
balance policy. In contrast policies to assist in objective decision
making are usually operational in nature and can be objectively
tested, e.g. password policy.
 The term may apply to government, private
sector organizations and groups, as well as
individuals. Policy differs from rules or law.
While law can compel or prohibit behaviors
(e.g. a law requiring the payment of taxes on
income), policy merely guides actions toward
those that are most likely to achieve a desired
outcome.
 Short Term Objectives
 A smaller, intermediate milestone to achieve
when moving toward an important goal. Many
business operators will set a short term
objective for their staff in order to assist them
in moving gradually toward the company's
longer term goals.
Long Term Objectives
 C H
M U
Y
V ER
O U
K Y
A N
TH