Strategic Management – Mission Aim, Objectives & Stakeholders

The Strategic Management Process Mission and objectives identification Analysis of business environment Internal business audit Review of Strategic Opportunities Comparison of Strategic Options Implementation of Strategy

The Lynch (2000) Polygon

The Business Idea

Strategic Direction Identifying the Organisation’s purpose, aims, objectives and goals

Key Issues: 2)The Interested Parties 3)The Method of Communication 1)The Message

The Message: Why does the firm exist? What is its aim and objectives? How will it achieve these? What strategies? How will its performance be measured? Which benchmarks?

The Method of Communicating the purpose of the firm Mission and Vision Statements A visionary statement concerning the (long term) future direction of the firms, its products, markets and values. Essential purpose of the organisation

Mission Statements Mixed reception: ‘Smoke and mirrors (Barkhus et al (2000) Building blocks, invisible hand (Strong 1997) Motherhood statements, the hippocratic or hypocritical oath, lantern, anchor, conscience, office manifesto, company slogan, motto,’ (Fletcher 2001)

2. Vision (or strategic intent) 1. Mission « An overriding purpose in line with the values and expectations of stakeholders ». Johnson & Scholes Personal example: Be healthy and fit. 2. Vision (or strategic intent) A strong aspiration; Desired future state An aspiration around which to focus the attention and energies of members of the organization Helps thinks creatively about how to prepare a company for the future Personal example: « To run the London marathon »

3. Aim 4. Strategic Objective A broadly-worded, general statement of goal or purpose. Personal example: « To lose weight and gain muscle ». 4. Strategic Objective A quantification of that goal. Personal example: « To lose 10 kg ».

Mission Statements Often summarises the firms reason for existing The starting point for recognising the future direction of the firm and therefore the required strategic developments. Should be: Simple, Easily Remembered, Impactful Positive, visionary & motivating Should outline Firm’s role What it wishes to achieve

Four Elements in the Mission Statement [1] Adapted from the Ashridge School (1991) 1)Purpose Why the firm exists and what it exists to do. What would happen if the firm did not exist? 2)Strategy How the firm will achieve its aspirations. What is it offering? To whom? Why should people buy it? What are its competitive advantages?

Four Elements in the Mission Statement [2] 3)Values What the firm believes in Why the world will better if the firm succeeds? 4)Behaviour standards The routines, procedures and policies the firm adopt to fulfil its values What is the firm willing to do/not do in order to succeed? How low will it go?

Some Mission Statements Disneyland Paris: To turn the dreams of the young and young at heart into reality TUI Nordic: Most satisfied customers and best profitabilty in the business   Hilton International: To always exceed customer expectations by delivering quality service through exceptional teamwork" McDonald's Corporation: Quality food products; efficient, friendly service; and restaurants renowned for the cleanliness and value they provide (Sufi & Lyons 2003)

Some More… Otis: To provide any customers means of moving people and things up, down, and sideways over short distances with higher reliability than any similar enterprise in the world Avis: Our mission is total customer satisfaction BA: Be the best and most successful company in the airline business Easyjet:To provide our customers with safe, low-cost, good value, point-to-point air services. To offer a consistent and reliable product at fares appealing to leisure and business markets from our bases to a range of domestic and European destinations. To achieve this we will develop our people and establish lasting partnerships with our suppliers Kodak: To be the world’s best in chemical and electronic imaging

Shangri la Hotels Our Vision The first choice for customers, employees, shareholders and business partners Our Mission Delighting customers each and every time Our Guiding Principles (Core Values) We will ensure leadership drives for results. We will make customer loyalty a key driver of our business. We will enable decision making at customer contact point. We will be committed to the financial success of our own unit and of our company. We will create an environment where our colleagues may achieve their personal and career goals. We will demonstrate honesty, care and integrity in all our relationships. We will ensure our policies and processes are customer and employee friendly. We will be environmentally conscientious and provide safety and security for our customers and our colleagues.

Some Visions Tui Nordic = Making holiday dreams come true Nike (1960s): Crush Adidas Giro Sport Design (1986): Become the Nike of the cycling industry

Organisational Objectives [1] ‘Is an organisation a single period profit maximiser?’ Johnson & Scholes ‘An organisation's objectives tend to emerge as the wishes of the most dominant coalition.’ based on R M Cyert & J G March's 'Behavioral Theory of the Firm' (1996)

Organisational Objectives [2] Generally ‘SMART’: Specific Measurable Achievable Realistic Timely Consistent with the Mission and Aim. One direction, avoid dissonance!!!

Objectives - Examples A larger market share Quicker design-to-market times than rivals Higher product quality than rivals Lower costs relative to key competitors Broader / 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

Objectives - Financial Increased growth in revenues / earnings/ dividends per share Wider profit margins Attractive ROI Strong credit ratings Positive cash flows Recognition as a blue chip company Stable earnings during periods of recession A more diversified revenue base A rising stock price

Some Statements of Objectives McDonalds: To achieve 100% total customer satisfaction everyday in every restaurant, for every customer To provide our shareholders with superior returns by achieving double-digit annual earnings per share growth, increasing dividends consistent with earnings growth, repurchasing shares when the opportunity is right, pursuing profitable international beer expansions, and generating quality earnings and cash flow returns To become the most competitive enterprise in the world by being No.1 or No.2 in market share in every business the company is in 30% of the company’s sales must come from products fewer than 4 years old

Interest Groups

Stakeholders Definition: “Stakeholders are groups or individuals who have a stake in, or expectation of, the organisation’s performance .....” Johnson ,Scholes & Whittington Exploring Corporate Strategy

Frames of Reference Functional/ divisional Professional Organisational (or institutional) Organisational The individual Industrial/ sector (recipe) National (or regional) 21

Stakeholder Mapping: Power/ Predictability LOW Unpredictable but Manageable Few Problems Power Greatest Danger or Opportunities Powerful but Predictable HIGH HIGH LOW Predictability

JUDGEMENTS on Stakeholder Power/Predictability Matrix Likelihood of each stakeholder group impressing their expectations Whether they have the means to impress: Power of Stakeholder Effect of stakeholder expectations on future strategies....

Stakeholder Mapping: Power/ Interest LOW Minimal Effort Keep Informed Power Keep Satisfied Key Players HIGH LOW HIGH Levels of Interest

Conclusion Direction priorities will be influenced by key stakeholders May vary depending on size and complexity of organisations Small lifestyle businesses may not seek growth Large complex organisations must be accountable to external owners/shareholders Corporate social responsibility may be a factor in shaping direction Managerialism which focuses on return on capital employed/ investment dominates, it is a legal obligation to meet needs of shareholders

References Bartkus B, Glassman m,& McAfee (2000) Mission statements are they smoke and mirrors, Business horizons, Nov./Dec Fletcher W (2001) Hypocritical oath or mission impossible, The Times 19 January Raynor ME (1998), The vision thing, do we need it, Long Range Plasnning Vol 31, No.3 pp 368-376 Sufi T & Lyons H(2003) Mission statements exposed, International Journal of Contemporary Hospitality management, Emerald, 15/5 pp 255-262