Basic Concept of Strategic Management, Mission, Vision and Objectives
The foundation for the strategic management is laid by the hierarchy of strategic intent. The concept of strategic intent makes clear WHAT AN ORGANISATION STANDS FOR HARVARD Business Review, 1989 described the concept in its infancy HAMED AND PRAHALAD coined the term strategic intent. A few aspects about strategic intent are as follows:
· It is an obsession with an organization.
· This obsession may even be out of proportion to their resources and capabilities.
· It envisions a derived leadership position and establishes the criterion; the organization will use to chart its progress.
· It involves the following:
o Creating and Communicating a vision
o Designing a mission statement
o Defining the business
o Setting objectives
Vision serves the purpose of stating what an organization wishes to achieve in the long run.
Mission relates an organization to society.
Business explains the business of an organization in terms of customer needs, customer groups and alternative technologies.
Objectives state what is to be achieved in a given time period.
· The strategic intent concept also encompasses an active management process that includes focusing the organization’s attention on the essence of winning.
· The concept of stretch and leverage is relevant in this context.
Imp: Stretch is a misfit between resources and aspirations.
Leverage concentrates, accumulates, conserves and recovers resources so that a meager resource base can be stretched.
Leverage reduces the stretch and focuses mainly on efficient utilization of resources.
· The strategic fit matches organizational resources and environment. This positions the firm by assessing organizational capabilities and environmental opportunities.
· Under fit, the strategic intent would seem to be more realistic.
· It is hierarchy of intentions ranging from a board vision through mission and purpose down to specific objectives.
VISION
It is at the top in the hierarchy of strategic intent. It is what the firm would ultimately like to become. A few definitions are as follows:
KOTTER description of something (an organization, corporate culture, a business, a technology, an activity) in the future. The definition itself is comprehensive and states clearly the futuristic position.
MILLER and DESS defined vision as the “category of intentions that are broad, all inclusive and forward thinking”
The definition lays stress on the following:
(1) broad and all inclusion intentions
(2) vision is forward thinking process.
A few important aspects regarding vision are as follows:
· It is more of a dream than articulated idea
· It is an aspiration of organization. Organization has to strive and exhert to achieve it.
· It is powerful motivator to action.
· Vision articulates the position of an organization which it may attain in distant future.
This is the process of creating vision. It is a difficult and complex task. A well conceived vision must have
· Core Ideology
· Envisioned Future
Core Ideology will remain unchanged. It has the enduring character. It consists of core values and core purpose. Core values are essential tenets of an organization. Core purpose is related to the reasoning of the existence of organization.
Envisioned Future will basically deal with following:
· The long term objectives of the organization.
· Clear description of articulated future.
Advantages of Having a Vision
A few benefits accruing to an organization having a vision are as follows:
· They foster experimentation.
· Vision promotes long term thinking
· Visions foster risk taking.
· They can be used for the benefit of people.
· They make organizations competitive, original and unique.
· Good vision represent integrity.
· They are inspiring and motivating to people working in organization.
CORE VALUES AND CORE PURPOSE
Initial reference of these two terms were given in section 3.3. These concepts are very important in the process of envisioning. COLLINS and PORRAS have developed this concept for better philosophical perspective. As has already been discussed, a well conceived vision consists of core ideology and envisioned future. Core ideology rests on core values and core purpose.
Core Values are the essential and enduring tenats of an organization. They may be beliefs of top management regarding employees welfare, costumer’s interest and shareholder’s wealth. The beliefs may have economic orientation or social orientation. Evidences clearly indicate that the core values of Tata’s are different from core values of Birla’s or Reliance. The entire organization structure revolves around the philosophy coming out of core values. Core Purpose is the reason for existence of the organization. Its reasoning needs to be spelt.
A few characteristics of core purpose as follows:
(i) It is the overall reason for the existence of organization.
(ii) It is why of organization.
(iii) This mainly addresses to the issue which organization desires to achieve internally.
(iv) It is the broad philosophical long term rationale.
(v) It is the linkage of organization with its own people.
MISSION
The mission statements stage the role that organization plays in society. It is one of the popular philosophical issue which is being looked into business mangers since last two decades.
Definition
A few definitions of mission are as follows:
HYNGER and Wheelen “ purpose or reason for the organization’s existence.
DAVID F. Harvey states “ A mission provides the basis of awareness of a sense of purpose, the competitive environment, degree to which the firm’s mission fits its capabilities and the opportunities which the government offers.
Thompson states mission as the “ essential purpose of the organization, concerning particularly why it is in existence, the nature of the business it is in, and the customers it seeks to serve and satisfy.
The above definition reveals the following:
(i) It is the essential purpose of organization
(ii) It answers “ why the organization is in existence”.
(iii) It is the basis of awareness of a sense of purpose.
(iv) It fits its capabilities and the opportunities which government offers.
A few points regarding nature of mission statement are as follows.
· It gives social reasoning. It specifies the role which the organization plays in society. It is the basic reason for existence.
· It is philosophical and visionary. It relates to top management values. It has long term perspective.
· It legitimises societal existence.
· It is stylistic objectives. It reflects corporate philosophy, identify, character and image of organization.
In order to be effective, a mission statement should posses the following characteristics.
(i) A mission statement should be realistic and achievable. Impossible statements do not motivate people. Aims should be developed in such a way so that may become feasible.
(ii) It should neither be too broad not be too narrow. If it is broad, it will become meaningless. A narrower mission statement restricts the activities of organization. The mission statement should be precise.
(iii) A mission statement should not be ambiguous. It must be clear for action. Highly philosophical statements do not give clarity.
(iv) A mission statement should be distinct. If it is not distinct, it will not have any impact. Copied mission statements do not create any impression.
(v) It should have societal linkage. Linking the organization to society will build long term perspective in a better way.
(vi) It should not be static. To cope up with ever changing environment, dynamic aspects be looked into.
(vii) It should be motivating for members of the organization and of society. The employees of the organization may enthuse themselves with mission statement.
(viii) The mission statement should indicate the process of accomplishing objectives. The clues to achieve the mission will be guiding force.
A few examples of mission statement ( academically not accepted) are as follows:
India Today “ The complete new magazine”
Bajaj Auto, “Value for Money for Years”
HCL, “ To be a world class Competitor”
HMT, “Timekeepers of the Nation”
Some experts argue that these are the publicity slogans. They are not mission statements. A few other examples are as follows:
Ranbaxy Industries “ To become a research based international Pharmaceuticals Company”.
Eicher Consultancy “ To make India an economic power in the lifetime, about 10 to 15 years, of its founding senior managers.”
Formulation of Mission Statements
The mission statements are formulated from the following sources:
(i) National Priorities projected in plan documents and industrial policy statements.
(ii) Corporate philosophy as developed over the years.
(iii) Major strategists have vision to develop mission statements.
(iv) The services of consultants may be hired.
The term purpose was used by some strategists. At some places, it was used as synonymous to mission. A few major points of distinction are as follows:
(i) Mission is the societal reasoning while the purpose is the overall reason.
(ii) Mission is external reasoning and relates to external environment. Purpose is internal reasoning and relates to internal environment.
(iii) Mission is for outsiders while purpose is for its own employees.
It explains the business of an organization in terms of customer needs, customer groups and alternative technologies.
Oerik Abell suggests defining business along the three dimension of customer groups. Customer functions and alternative technologies. They are developed as follows:
(i) Customer groups are created according to the identity of the customers.
(ii) Customer functions are based on provision of goods/services to customers.
(iii) Alternative Technologies describe the manner in which a particular function can be performed for a customer.
For a watch making business, these dimensions may be outlined as follows:
· Customer groups are individual customers, commercial organizations, sports organization, educational institutions etc.
· Customer functions are record time, finding time, alarm service etc. It may be a gift item also.
· Alternative technologies are manual, mechanical and automatic.
A clear business definition is helpful in identifying several strategic choices. The choices regarding various customer groups, various customer functions and alternative technologies give the strategists various strategic alternatives. The diversification, mergers and turnaround depend upon the business definition. Customer oriented approach of business makes the organization competitive. On the same lines, product/ service concept could also give strategic alternatives from a different angle. Business can be defined at the corporate or SBU levels. At the corporate level, it will concern itself with the wider meaning of customer groups, customer functions and alternative technologies. If strategic alternatives are linked through a business definition, it results in considerable amount of synergic advantage.
OBJECTIVES AND GOALS
Objectives refer to the ultimate end results which are to be accomplished by the overall plan over a specified period of time. The vision, mission and business definition determine the business philosophy to be adopted in the long run. The goals and objectives are set to achieve them.
Objectives are openended attributes denoting a future state or out come and are stated in general terms.
When the objectives are stated in specific terms, they become goals to be attained.
In strategic management, sometimes, a different viewpoint is taken.
Goals denote a broad category of financial and non-financial issues that a firm sets for it self.
Objectives are the ends that state specifically how the goals shall be achieved.
It is to be noted that objectives are the manifestation of goals whether specifically stated or not.
Difference between objectives and goals.
The points of difference between the two are as follows:
· The goals are broad while objectives are specific.
· The goals are set for a relatively longer period of time.
· Goals are more influenced by external environment.
· Goals are not quantified while objectives are quantified.
Broadly, it is more convenient to use one term rather than both. The difference between the two is simply a matter of degree and it may vary widely.
Need for Establishing Objectives
The following points specifically emphasize the need for establishing objectives:
· Objectives provide yardstick to measure performance of a department or SBU or organization.
· Objectives serve as a motivating force. All people work to achieve the objectives.
· Objectives help the organization to pursue its vision and mission. Long term perspective is translated in short-term goals.
· Objectives define the relationship of organization with internal and external environment.
· Objectives provide a basis for decision-making. All decisions taken at all levels of management are oriented towords accomplishment of objectives.