NBS Strategic Management Division2004/5 Page 1 SM352 Strategy Strategy Mission and Objectives

NBS Strategic Management Division2004/5 Page 2 Initial Assumption  Strategies are devised to achieve organisational objectives

NBS Strategic Management Division2004/5 Page 3 Vocabulary of Strategy  Mission  Vision  Goal  Objective  Unique resources and core competences  Strategies  Control  Overriding purpose  Desired future state  General aim  Quantification of a goal  To provide competitive advantage  Long-term direction  Monitoring

NBS Strategic Management Division2004/5 Page 4 Strategy Decisions  Tend to be long term  About gaining advantage  A search for position  Involve the whole scope of an organisation’s activities  Match resources with the environment – strategic fit  But can be about building and stretching the organisations resources  May require major resource changes  Will affect operational decisions  BUT decisions may be affected by stakeholders

NBS Strategic Management Division2004/5 Page 5 Levels of Strategy  Corporate Strategy –Concerned with the firm as a whole; –How the organisation is run/structured; –Allocation of resources to different parts of the firm and target setting; –How can value be added; –Clearly linked to mission.

NBS Strategic Management Division2004/5 Page 6  Business Unit Strategy –Concerned with the individual units compete in different markets; –Concerned with gaining advantage over competitors; –Identifying new opportunities.  Operational Strategy –concerned with the functions of the organisation and how they contribute to the higher levels of business and corporate strategy

NBS Strategic Management Division2004/5 Page 7 Mission  From 1970’s. Peter Drucker advocated the need to define a business  Various types: broad or specific statements, emphasis distinctiveness, appeal to stakeholders

NBS Strategic Management Division2004/5 Page 8  A generalised statement of the overriding purpose of the organisation: –Visionary: long lasting, a backcloth for objectives –Change over time –Clarify the main intentions and aspirations (strategic intent) –Describe main activities and position –Key organisational values –Soft

NBS Strategic Management Division2004/5 Page 9 To managers  A means of communicating and a lever for leadership  An assertion of leadership/authority  Challenges old ideas and captures new ones  Promotes a uniform culture via sharing expectations  Motivates staff  Assists recognition of stakeholder aspirations

NBS Strategic Management Division2004/5 Page 10 Examples of Mission Statements  AOL TimeWarner: To become the world’s most respected and valued company by connecting, informing and entertaining people everywhere in innovative ways that will enrich their lives.  NHS Hospital Trust: We will strive to deliver excellent and innovative health care to our patients throughout the region and beyond with our traditional standards of kindness, courtesy and cheerfulness.

NBS Strategic Management Division2004/5 Page 11 Objectives  Clearly defined objectives are essential if an organisation is to have meaningful strategic development

NBS Strategic Management Division2004/5 Page 12 Why have objectives?  to define the purpose of the organisation or parts of the organisation  to provide a framework for decisions  to provide a standard against which performance can be measured  to promote the image of the organisation  to form the basis of strategy

NBS Strategic Management Division2004/5 Page 13 Hierarchy of Objectives 1 Missio n Corporate Objectives Business Unit Objectives Personal Objectives For example by scope:

NBS Strategic Management Division2004/5 Page 14 Hierarchy of Objectives 2 Strategic Objectives Operational Objectives For example by type:

NBS Strategic Management Division2004/5 Page 15 Hierarchy of Objectives 3  Each level of objective should be consistent with and governed by the objectives at higher levels  For each step down the hierarchy the objectives become more specific with shorter time horizons and narrower scope

NBS Strategic Management Division2004/5 Page 16 Economic/Non-economic Objectives  Economic, e.g.: –Gross Margin –Return on Investment –Sales per employee  Non-economic, e.g.: –A caring organisation –Environmental issues –Quality

NBS Strategic Management Division2004/5 Page 17 Closed/Open Objectives  Closed, i.e. quantified, specific, set timescale, e.g.: –increase sales by 20% in the next 12 months –Launch new product by June 2000  Open, i.e. qualitative, general, no fixed timescale, e.g.: –increase customer satisfaction –continue international expansion

NBS Strategic Management Division2004/5 Page 18 Corporate Objectives  The organisation as a whole, usually closed - relate to Key Success Factors, e.g.: –Financial, e.g. profitability –Market Position, e.g. market share –Product Development, e.g. R&D targets –Employees, e.g. training –Organisation, e.g. communication –Public Responsibility, e.g. the environment

NBS Strategic Management Division2004/5 Page 19 Business Objectives  If part of a corporation: –nature of objectives depend on the style of management practised by centre –may be part of management contract between unit and corporate centre  If a stand-alone business: –Governed by stakeholders –Growth, market share, profitability

NBS Strategic Management Division2004/5 Page 20 The Problem with specific objectives  James Quinn has a number of objections:  They can limit creative strategic options  Can act as a rallying point for opposition  Can limit flexibility and responsiveness  Can be a hostage to fortune  Can give information to competitors  Specific goals are only needed in times of change or where survival is at stake

NBS Strategic Management Division2004/5 Page 21 From Objectives to Strategy  The overall objective describes “where” the organisation wants to be  The strategy describes “how” the organisation will get there –Markets + Products = Strategic Direction –Competitive Strategy

NBS Strategic Management Division2004/5 Page 22 You need to be able to:  Identify and distinguish between the various levels of objectives for each organisation studied  Identify and map the main organisation stakeholders  Evaluate how successful strategies have been in achieving organisational objectives