Learning Unit 2 The Micro Environment

Outcomes Describe vision statement Characteristics of a vision statement Vision translated to mission statement Describe mission statement Core components of the mission statement Additional components of the mission statement Explain organisational values Construct a Balanced Scorecard Explain: Growth, decline and corporate combinations

StrengthsWeaknesses Internal Environment

Managers control the internal environment  Vision  Mission  Values  Goals  Strategies Managers control the internal environment  Vision  Mission  Values  Goals  Strategies Align with the market and macro environment  Survive over the long run! Align with the market and macro environment  Survive over the long run!

Business Environment InternalMicroExternalMarketMacro

Internal environment Organisation resources Vision and Mission Organisational Values Strategic Objectives Strategies

Organisational Resources

The Vision Statement “Dream” of the perfect future Mental picture Criteria: Depict the perfect future Attainable Inspiring Buy-in of managers and workers Acceptable for stakeholders

Mission Statement Additional Components Additional Components Core Components Core Components Questions

The Mission Statement Answer the following questions: What should we provide? Who is our market? How will we get the products to the market? Which resources? When is the best time to do it? Dream Reality

The Mission Statement: Core Components

The Mission Statement ADDITIONAL components  workers will know what top managements’ intent is: Profitability, growth and survival Productivity Stakeholders Philosophy of the organisation Public image Clients Safety, health and environment

The Nando’s Mission Statement Our mission at Nando’s is to always deliver the ‘Nando’s experience’ to our customers. The Nando’s Experience We will take you on a journey, your own voyage of discovery. You will come to discover how special it is to belong to the Nando’s family. You will experience our traditional hospitality, warmth and fun. Your senses will be fired with the unique products and tastes of Portugal, all prepared with pride and passion, and here, you will be touched by the magic that is the Nando’s Way.

We, as passionate committed retailers, understand and lead our customers through excellence and a deep knowledge of our products and services and the world we live in. We live the Woolworths difference through our values: quality and style – deliver the best value – a simple and fair deal service – think customer innovation – discover the difference integrity – do what you say you will do energy – be passionate and deliver sustainability – build for a better future

Organisational Values Often referred to in mission statement. Core components Additional components Statement of values = Company Creed = Company Philosophy = State acceptable behaviour and what is not.

Type of values Personal Organisational Motivational Societal

Personal Values Employees with own set of values. Personal values not in conflict with organisation values. Personal values from cultural background.

Societal Values Direct society business operate in Take into consideration..

Foundational values Organisation built on these values. Guide behaviour of everyone on every level. Values could be: Integrity Respect Accountability Fairness Caring

Motivational Values Give organisation ‘unique personality. State expected behaviour. Behaviour  Goals achieved. Examples: Make it happen  High Productivity Do it together  Teamwork Let’s do it  Taking action Do it better every time  Continuous improvement

Organisational Values Different interpretations What is integrity? Values linked to specific behaviour

The Balanced Scorecard Mission statements gives direction. Not specific or measureable! Mission clarity  Translate  Measurable Organisational goals BALANCED SCORECARD!

The Balanced Scorecard BSC  Mission statement  Measureable goals  Financial and non-financial dimension

DepartmentAreas FinanceReturn On Investment Cash Flow Return on Capital Employed Financial Results (Quarterly/Yearly) Internal Business Processes Number of activities per function Duplicate activities across functions Process alignment (is the right process in the right department?) Process bottlenecks Process automation Learning & GrowthIs there the correct level of expertise for the job? Employee turnover Job satisfaction Training/Learning opportunities CustomerDelivery performance to customer Quality performance for customer Customer satisfaction rate Customer percentage of market Customer retention rate Balanced Scorecard: Factors examples

The Balanced Scorecard

Strategies Organisations compete  Attain strategic objective. Strategy: Game plan Outwit competitors Attain goals Same industry  Often same goals But different approach! Pep vs. Woolworths

Strategies: 3 Possible Game plans Low-cost leadership strategy All decisions focus on  cost Differentiation strategy Can’t compete on low cost Distinguish yourself from the competitor Woolworths: Quality of products Focus strategy Limited resources  Small segment of market Thus, game plan on specific market  Focus Then low-cost or differentiation strategy

Strategies Each strategy  Risk Low-cost leadership strategy = Imitations Differentiation strategy = Not able to differentiate Focus strategy = Choose to small market segment Choose a strategy  Be more SPECIFIC on competing in industry Grand Strategy

Grand Strategies GrowthDecline Corporate Combinations

Grand Strategies: Growth Strategy Game plan for the organisation to grow. Introduce new products to existing customers Enter a new market Create a new, innovative product for existing market Take over supplier of raw materials Risk  Low  Sound knowledge of: Product Market How to serve the market

Grand Strategy: Decline Strategy Organisation unable to grow Many new competitors enter the market Solution: Cut costs Medium risk

Grand Strategy: Corporation Combination Strategy Strategic alliances High risk Companies work together  People problems Managers fighting for turf Different systems