Copyright 2005 Prentice Hall1 BUS 411 DAY 3. Copyright 2007 Prentice Hall Ch 2 -2 Agenda Review of...

Copyright 2005 Prentice Hall 1

BUS 411

DAY 3

Copyright 2007 Prentice Hall Ch 2 -2

Agenda

Review of last Class Questions?

Make sure you have read the Google Case for next class In-class exercises using the Google Case study case

Discuss the Nature of Strategic Management Describe the benefits of good strategic management. Explain why good ethics is good business in strategic management. Explain the advantages and disadvantages of entering global markets. Discuss how a firm may achieve sustained competitive advantage. Explain ISO 9000, 14000, and 14001 Discuss the relevance of Sun Tzu’s The Art of War to strategic management.

Mission and vision statements Describe the nature and role of vision and mission statements in strategic management. Discuss why the process of developing a mission statement is as important as the resulting

document. Identify the components of mission statements. Discuss how clear vision and mission statements can benefit other strategic-management activities. Evaluate mission statements of different organizations. Write good vision and mission statements.

Assignment #1 Due next Class


Benefits of Strategic Management

• Proactive in shaping firm’s future

• Initiate and influence firm’s activities

• Formulate better strategies

•Systematic, logical, rational



Financial Benefits

• Improvement in sales

• Improvement in profitability

• Productivity improvement



Non-Financial Benefits

• Improved understanding of competitors strategies

• Enhanced awareness of threats

• Reduced resistance to change

• Enhanced problem-prevention capabilities


Benefits of Strategic Management (Greenley)

1. Identification of Opportunities

2. Objective view of management problems

3. Improved coordination & control

4. Minimizes adverse conditions & changes

5. Decisions that better support objectives


Benefits of Strategic Management (Greenley – cont’d)

6. Effective allocation of time & resources

7. Internal communication among personnel

8. Integration of individual behaviors

9. Clarify individual responsibilities

10. Encourage forward thinking


Benefits of Strategic Management (Greenley – cont’d)

11. Encourages favorable attitude toward change

12. Provides discipline and formality to the management of the business


Why Some Firms Do No Strategic Planning

Poor reward structures

Fire-fighting

Waste of time

Too expensive

Laziness

Content with success


Why Some Firms Do No Strategic Planning

Fear of failure

Overconfidence

Prior bad experience

Self-interest

Fear of the unknown

Suspicion


Principles of conduct within organizations that guide decision making and behavior

Business Ethics & Strategic Management

Business Ethics defined –


Prerequisite for good strategic management


Good business ethics –


Provides basis on which policies can be devised to guide daily behavior and decisions in the workplace


Code of business ethics –


Misleading advertising Misleading labeling Harm to the environment Insider trading Dumping flawed products on foreign markets Poor product or service safety Padding expense accounts


Business practices always considered unethical –


ISO 9000 focuses on quality control > 1.5 million companies incorporate ISO

Natural Environment Perspective

ISO used to gain strategic advantage


Voluntary standards ISO 14001 standard for Environmental

Management System Firms minimize harmful effects on

environment

Natural Environment Perspective

ISO 14000 standards


Parent company Host country

The Nature of Global Competition

International/multinational corporations


Cultural differences Norms Values Work ethic

The Nature of Global Competition

Strategy implementation may be difficult


Advantages of International Operations

Absorb excess capacity

Reduce unit costs

Spread risk over wider markets

Low-cost production facilities


Advantages of International Operations (cont’d)

Less intense competition

Lower taxes

Economies of scale


Sun Tzu and the Art of Business The Six Principles from

Sun Tzu and the Art of Business: Six Principles for Managers Mark McNeilly (Oxford Press University - 1996)

Capture your market without destroying it "Generally in war, the best policy is to take a state intact; to ruin it is inferior to this....For to win one

hundred victories in one hundred battles is not the acme of skill. To subdue the enemy without fighting is the acme of skill."

Avoid your competitor's strength, and attack their weakness "Now an army may be likened to water, for just as flowing water avoids the heights and hastens to

the lowlands, so an army avoids strength and strikes weakness." Use foreknowledge and deception to maximize the power of business intelligence.

"Know the enemy and know yourself; in a hundred battles you will never be in peril." Use speed and preparation to swiftly overcome the competition.

"To rely on rustics and not prepare is the greatest of crimes; to be prepared beforehand for any contingency is the greatest of virtues."

Use alliances and strategic control points in the industry to "shape" your opponents and make them conform to your will. "Therefore, those skilled in war bring the enemy to the field of battle and are not brought there by

him." Develop your character as a leader to maximize the potential of your employees.

"When one treats people with benevolence, justice and righteousness, and reposes confidence in them, the army will be united in mind and all will be happy to serve their leaders."


Assignment #1 Prepare a two to three page paper (not less than 500 and not

more than 1000 words) that covers the listed requirements. Turn in a well formatted typed document. You may also e-mail the document to me. Prepare Mission and Vision statements for yourself (25 %) Carefully articulate your career objectives (25 %) Perform a SWOT analysis of your current situation as it relates to

you desired career objectives (25 %) Develop a strategic plan (less than a page!) that takes you from

your current situation to your desired career objectives (25 %) This assignment is due Friday 26, January at 9:30 AM Resources

http://humanresources.about.com/cs/strategicplanning1/a/strategicplan.htm http://change.monster.com/articles/swot/ http://www.mindtools.com/pages/article/newTMC_05_1.htm http://www.work911.com/planningmaster/


Chapter 2The Business Vision & Mission

Strategic Management: Concepts & Cases

11th Edition

Fred David


Chapter Outline

What do we want to become?

What is our business?

Importance of Vision and Mission Statements


Chapter Outline (cont’d)

Characteristics of a mission statement

Components of a mission statement

Writing & evaluating mission statements


“The last thing IBM needs right now is a vision.” (July 1993)

Vision

What IBM needs most right now is a vision.” (March 1996)

-- Louis V. Gerstner, Jr., CEO, IBM Corporation


Vision

Agreement on the basic vision for which the firm strives to achieve in the long run is critically important to the firm’s success.


“What do we want to become?”

Vision


ComprehensiveMission Statement

Vision

Clear Business Vision


Shared Vision -- Creates commonality of interests Reduce daily monotony Provides opportunity & challenge

Vision & Mission


A national organization which represents its members in all aspects of poultry and eggs on both a national and international level

Vision Statement Examples

-- U.S. Poultry & Egg Association


The Vision of Manley Baptist Church is to be the people of God, on mission with God, motivated by a love for God, and a love for others


-- Manley Baptist Church


The Vision of USGS is to be a world leader in the natural sciences through our scientific excellence and responsiveness to society’s needs


-- U.S. Geological Survey (USGS)


To be the first choice in the printed communications business. The first choice is the best choice, and being the best is what Atlanta Web pledges to work hard at being—every day!


-- Atlanta Web Printers, Inc.


Vision Statement Examples The University of Maine at Fort Kent is a quality small public institution, with a

curriculum tightly focused on undergraduate education in the traditions of the liberal arts and sciences. The university will select academic and professional programs of the highest quality, which respond to the needs of northern Maine and which build upon the region's unique culture and rural environment. The university will be recognized nationally and regionally as the education and outreach partner of choice. We Are Committed to:

A legacy of preparing quality teachers High quality affordable and accessible education Programs which foster a sense of community Technically advanced academic and distance learning environments Development of distinct rural-based identity and curriculum Expanded rural research and development activities Study and interaction with Maine's wilderness environments Development of graduate program initiatives Expanded outreach activities A fully developed student life program that supports educational development Student preparation to meet the changing need of society Active community membership and cultural enrichment

The University of Maine at Fort Kent seeks to become the best small university within the University of Maine System and beyond.


Vision statement examples

The mission and vision of Rainbow Cove, LLC is to develop the properties owned on big Madawaska Lake, Maine into several profitable business ventures that satisfy the following four requirements; Benefit the economic condition of Northern Maine Preserve the unique Swedish cultural heritage of the Big

Madawaska Lake region Foster an appreciation for the natural beauty of Northern

Maine Promote environmentally sound, four-season outdoor

recreational activities

Copyright 2005 Prentice Hall 37

BUS 411

DAY 4


Agenda

Review of last Class Questions?

Mission and vision statements Discuss why the process of developing a mission

statement is as important as the resulting document. Identify the components of mission statements. Discuss how clear vision and mission statements can

benefit other strategic-management activities. Evaluate mission statements of different organizations. Write good vision and mission statements.

Assignment #1 Due next Class


-- 90% of all companies have used a mission statement in the previous five years

Mission Statements


“What is our business?”

Mission Statements


Mission Statements

•Enduring statement of purpose

•Distinguishes one firm from another

•Declares the firm’s reason for being


Mission Statements

•Creed statement

•Statement of purpose

•Statement of philosophy

•Statement of business principles

Also referred to as:


Reveal what an organization wants to be and whom it wants to serve

Mission Statements


Essential for effectively establishing objectives and formulating strategies

Mission Statements


Vision & Mission

Many organizations develop both vision & mission statements


Vision & Mission

Profit & vision are necessary to effectively motivate a workforce. Profit alone is not enough.


Vision & Mission

Shared vision creates a community of interests


Developing Vision & Mission

Clear mission is needed before alternative strategies can be formulated and implemented


Developing Vision & Mission

Participation from diverse managers is important in developing the mission


It is the California Energy Commission’s mission to assess, advocate, and act through public/private partnerships to improve energy systems that promote a strong economy and healthy environment.

Mission Statement Examples

-- California Energy Commission


The Bellevue Hospital, with respect, compassion, integrity, and courage, honors the individuality and confidentiality of our patients, employees, and community, and is progressive in anticipating and providing future health care services.


-- The Bellevue Hospital


John Deere has grown and prospered through a long-standing partnership with the world’s most productive farmers. Today, John Deere is a global company with several equipment operations and complementary service businesses. These businesses are closely interrelated, providing the company with significant growth opportunities and other synergistic benefits.


-- John Deere, Inc.


Importance of Mission

MissionResource Allocation

Unanimity of Purpose

Organizational Climate

Focal point for work structure

Benefits from a strong mission


Broad in scope

Generate strategic alternatives

Not overly specific

Reconciles interests among diverse stakeholders

Finely balanced between specificity & generality

Broad in scope

Generate strategic alternatives

Not overly specific

Reconciles interests among diverse stakeholders

Finely balanced between specificity & generality

Effective Missions


Arouse positive feelings & emotions (Pride)

Motivate readers to action

Generate favorable impression of the firm

Arouse positive feelings & emotions (Pride)

Motivate readers to action

Generate favorable impression of the firm

Effective Missions


Reflect future growth

Provide criteria for strategy selection

Basis for generating & evaluating strategic options

Are dynamic in nature

Reflect future growth

Provide criteria for strategy selection

Basis for generating & evaluating strategic options

Are dynamic in nature

Effective Missions


Define what the organization is Define what it aspires to be Limited to exclude some ventures

Mission & Customer Orientation – Vern McGinnis

Broad enough to allow for growth Distinguishes firm from all others Stated clearly – understood by all


Anticipates customer needs Identifies customer needs Provides product/service to satisfy needs

Mission & Customer Orientation

An Effective Mission Statement --


Mission & Customer Orientation Customer manifesto (page 60)

Do not offer me things Do not offer me clothes, offer me attractive looks Do not offer me shoes, Offer me comfort for my feet and

the pleasure of walking Do not offer me a house, offer me security, comfort, and a

place that is clean and happy Do not offer me books, Offer me hours of pleasure and the

benefit of knowledge Do not offer me things, Offer me ideas, emotions,

ambience, feelings, and benefits. Please, do not offer me things


Affects development of vision & mission

Responsibilities to – Consumers Environmentalists Minorities Communities

Social Policy & Mission

Managerial philosophy shapes social policy --


Social Policy & Mission

Social policy should be integrated in all strategic-management activities

Mission should convey the social responsibility of the firm


Mission Statements

1. Fannie Mae

2. Proctor & Gamble

3. Intel Corporation

4. St. Paul Companies

5. Green Mtn. Coffee

6. Deer & Company

2005 Rated Best in Social Responsibility

7. Avon Products, Inc.

8. Hewlett-Packard Co.

9. Agilent Technologies

10.Ecolab, Inc.

11.Imation Corp

12.IBM


2x average return on shareholder’s equity Positive relationship to company performance 30% higher return on certain financial measures

Vision & Mission

Research results are mixed, however, firms with formal mission statements generally see a:


Mission Elements

CustomersMarkets

Employees

PublicImage

Self-Concept Philosophy

SurvivalGrowthProfit

ProductsServices

Technology

Table 2-2 on Page 71


Components and Questions That a Mission Statement Should Answer1. Customers: Who are the firm’s customers?2. Products or services: What are the firm’s major products?3. Markets: Geographically, where does the firm compete?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?


PepsiCo Mission

PepsiCo’s mission is to increase the value of our shareholders’ investment. We do this through sales growth, cost controls, and wise investment resources. We believe our commercial success depends upon offering quality and value to our consumers and customers; providing products that are safe, wholesome, economically efficient and environmentally sound; and providing a fair return to our investors while adhering to the highest standards of integrity.


Ben & Jerry’s Mission

Ben & Jerry’s mission is to make, distribute and sell the finest quality all-natural ice cream and related products in a wide variety of innovative flavors made from Vermont dairy products. To operate the Company on a sound financial basis of profitable growth, increasing value for our shareholders, and creating career opportunities and financial rewards for our employees. To operate the Company in a way that actively recognizes the central role that business plays in the structure of society by initiating innovative ways to improve the quality of life of a broad community—local, national and international.


Mission Statement Evaluation Matrix

COMPONENTS

Organization CustomersProducts Services Markets

Concern for Survival, Growth,

Profitability Technology

PepsiCo Yes No No Yes No

Ben & Jerry's No Yes Yes Yes No


Mission Statement Evaluation Matrix

COMPONENTS

Organization PhilosophySelf-

ConceptConcern for Public Image

Concern for Employees

PepsiCo Yes No No No

Ben & Jerry's No Yes Yes Yes


Group Work

Three groups Page 77 Experiential Exercise 2A

A business mission statement is an integral part of strategic management. It provides direction for formulating, implementing, and evaluating strategic activities. This exercise will give you practice evaluating mission statements, a skill that is a prerequisite to writing a good mission statement.

Evaluate (15 min) Criterion Productions, Inc. Mid-America Plastics Hatboro Area YMCA UMFK

On next slide Rainbow Cove, LLC

On next slide


Mission Statement Examples UMFK

The University of Maine at Fort Kent is a liberal arts based university offering quality baccalaureate and associate degree programs responding to the needs of northern Maine. The UMFK academic experience provides close interaction with faculty, small classes and the use of leading technology to prepare students for lifelong learning and success as professionals and engaged citizens of a democracy.

Our curriculum emphasizes the special challenges of rural communities in America. The university preserves and fosters an appreciation of the Acadian and Franco-American heritage and culture while welcoming students of all ethnic and racial heritages. We celebrate our proximity to the wonder of Maine's wilderness and the joys of outdoor sports. UMFK contributes to the economic, social and cultural development of the St. John Valley and we believe that a diverse student body enriches the learning experience of all. In addition, the University of Maine at Fort Kent joins the University of Maine at Machias and the University of Maine at Presque Isle working in a consortium with the goal of maximizing efficiencies of operation while enhancing educational quality and opportunity for all those served by the three campus communities.

Rainbow Cove, LLC The mission and vision of Rainbow Cove, LLC is to develop the properties owned on

Big Madawaska Lake, Maine into several profitable business ventures that satisfy the following four requirements; Benefit the economic condition of Northern Maine Preserve the unique Swedish cultural heritage of the Big Madawaska Lake region Foster an appreciation for the natural beauty of Northern Maine Promote environmentally sound, four-season outdoor recreational activities


Evaluation

Components 1 2 3 4 5 6 7 8 9

Criterion Productions Yes Yes No No No Yes Yes No No

Mid-America Plastics No No No No No Yes No No Yes

Hatboro YMCA Yes Yes Yes No No Yes Yes Yes No

UMFK Yes Yes Yes No No No Yes Yes No

Rainbow Cove LLC ? ? ? ? ? ? ? ? ?

1. Customers: 2. Products or services: 3. Markets: 4. Technology: 5. Concern for survival, growth, and profitability:6. Philosophy: 7. Self-concept: 8. Concern for public image:9. Concern for employees:


Group Work

There is no one best vision or mission statement for a given organization. Analysts feel that Google needs a clear vision and mission statement to prosper. Writing a mission statement that includes desired (9) components—and at the same time is inspiring and reconciliatory—requires careful thought. Mission statements should not be too lengthy; statements under 200 words are desirable.

INSTRUCTIONS: Take 15 minutes to write a vision and mission statement for

Google. Scan the case for needed details as you prepare your statements.

Join with other classmates to form a group of three or four people. Read each other’s statements silently. As a group, select the best vision statement and the best mission statement from your group.

Read those “best” statements to the class.


Text book answer

Google Vision Statement: Google strives to be the leader in technology-based solutions for consumer and business problems.

Google Mission Statement: Google seeks to maintain its loyal customer base and attract new customers in both current and developing markets with its commitment to quality and promise to put its users above all else (1, 2, 3, 6, 8). Google will lead the industry via a commitment to innovation, service, growth, and quality (4, 5). Its solutions for businesses ensure profitability while providing desirable information for consumers (5). Google desires to instill the belief that the company is a set of capabilities, not just a product or brand (6, 7, 8). It recognizes that its own success is dependent upon the success of its employees (9).


Key Terms & Concepts

For Review (Chapter 2)

Concern for Employees Customers

Concern for Public Image Markets

Survival, Growth, & Profitability

Mission Statement Components

Creed Statement Managerial Philosophy


Key Terms & Concepts

For Review (Chapter 2)

Self Concept Stakeholders

Social Policy Vision Statement

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