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Influences on Strategic Direction BroadEnvironment ExternalStakeholders InternalStakeholders History and Inertia Strategic Direction Vision Mission Business Definition Growth Orientation Organizational Ethics OrganizationalActionsOrganizational Outcomes Outcomes Feedback that Guides Impressions, Expectations and Behavior

Multiple Uses of Mission Statements Used for Decision Making and Resource Allocations ›Managers and employees are targeted ¤Mission statements should use terms that are understandable to internal stakeholders ¤Communicate mission to internal stakeholders on a regular basis Used to Inspire Higher Levels of Performance and Pride in Association ›Also targets managers and employees ¤Should be inspiring ¤However, organization must act accordingly Used for Decision Making and Resource Allocations ›Managers and employees are targeted ¤Mission statements should use terms that are understandable to internal stakeholders ¤Communicate mission to internal stakeholders on a regular basis Used to Inspire Higher Levels of Performance and Pride in Association ›Also targets managers and employees ¤Should be inspiring ¤However, organization must act accordingly

Multiple Uses of Mission Statements Communicates Organizational Purpose and Values ›Targets primarily managers, employees, shareholders and potential investors ¤Helps managers and employees resolve dilemmas when faced with tradeoffs ¤Helps external stakeholders know what to expect from the organization in particular situations Enhances Organizational Reputation ›Targets society and most external stakeholder groups, especially customers and potential venture partners ¤Carefully articulated to enhance reputation ¤Catchy slogans (but not cliché) are helpful ¤Should be short enough so that external stakeholders will attempt to read them ¤Widely dispersed to media sources and apparent in public settings Communicates Organizational Purpose and Values ›Targets primarily managers, employees, shareholders and potential investors ¤Helps managers and employees resolve dilemmas when faced with tradeoffs ¤Helps external stakeholders know what to expect from the organization in particular situations Enhances Organizational Reputation ›Targets society and most external stakeholder groups, especially customers and potential venture partners ¤Carefully articulated to enhance reputation ¤Catchy slogans (but not cliché) are helpful ¤Should be short enough so that external stakeholders will attempt to read them ¤Widely dispersed to media sources and apparent in public settings

Business Definition What is our business? ›Who is being satisfied (markets)? ›What is being satisfied (functions provided)? ›How are customer needs satisfied (capabilities and technologies)? ›What are our products and services? What is our business? ›Who is being satisfied (markets)? ›What is being satisfied (functions provided)? ›How are customer needs satisfied (capabilities and technologies)? ›What are our products and services?

Organizational Vision A sense of what the organization will be in the future ›CEO has primary responsibility for defining vision Microsoft Vision Statement ¤Empowering people through great software – any time, any place and on any device ›Bill Gates wants Microsoft to dominate the software systems that link all digital transactions and communications A sense of what the organization will be in the future ›CEO has primary responsibility for defining vision Microsoft Vision Statement ¤Empowering people through great software – any time, any place and on any device ›Bill Gates wants Microsoft to dominate the software systems that link all digital transactions and communications Source of Microsoft Vision: July 16, 2002

Organizational Values The underlying philosophies that guide decisions and behavior in a firm ›Also called core values OR organizational ethics CEO and other top managers have the most influence on organizational values Also a reflection of societal values The underlying philosophies that guide decisions and behavior in a firm ›Also called core values OR organizational ethics CEO and other top managers have the most influence on organizational values Also a reflection of societal values

Social Responsibility Economic Responsibilities Legal Responsibilities Moral Obligations Discretionary Responsibilities Economic Responsibilities Legal Responsibilities Moral Obligations Discretionary Responsibilities

Enterprise Strategy Joins ethical and strategic thinking Best possible reason for the actions it takes Focused on which stakeholder needs are given priority Mission statements often provide clues regarding the enterprise strategy of a firm ›“We focus on satisfying customer needs” ›“Our goal is to provide a satisfying work environment in which our employees can grow and develop” ›“Our primary purpose is to maximize shareholder returns” ›“We focus on giving back to the communities in which we operate”. Joins ethical and strategic thinking Best possible reason for the actions it takes Focused on which stakeholder needs are given priority Mission statements often provide clues regarding the enterprise strategy of a firm ›“We focus on satisfying customer needs” ›“Our goal is to provide a satisfying work environment in which our employees can grow and develop” ›“Our primary purpose is to maximize shareholder returns” ›“We focus on giving back to the communities in which we operate”.

Hilton Hotels’ Stakeholder Goals At Hilton, “minding our business” is about tending to the specific needs of our four primary constituencies: our customers, shareholders, hotel owners, and team members. For our customers: By providing the best service, value, and amenities, along with a wide variety of hotel products and price points, we are focused on our mission of being the first choice of the world’s travelers. For our shareholders: By taking care of our customers, maximizing our growth opportunities in each of our business segments, and effectively managing our costs, we remain dedicated to enhancing shareholder value. For our owners: By offering the industry’s most powerful collections of brands and the tools necessary to continue showing the strong market share performance, we are committed to seeing our hotel owners maximize their investment with us. For our team members: By providing growth opportunities, positive and productive places in which to work, and a commitment to diversity and community services, we strive to build on our reputation as an employer-of-choice in the hotel industry. Source: Annual Report 2002, Hilton hotels Corporation, 1, 2, 4, 7, 8. At Hilton, “minding our business” is about tending to the specific needs of our four primary constituencies: our customers, shareholders, hotel owners, and team members. For our customers: By providing the best service, value, and amenities, along with a wide variety of hotel products and price points, we are focused on our mission of being the first choice of the world’s travelers. For our shareholders: By taking care of our customers, maximizing our growth opportunities in each of our business segments, and effectively managing our costs, we remain dedicated to enhancing shareholder value. For our owners: By offering the industry’s most powerful collections of brands and the tools necessary to continue showing the strong market share performance, we are committed to seeing our hotel owners maximize their investment with us. For our team members: By providing growth opportunities, positive and productive places in which to work, and a commitment to diversity and community services, we strive to build on our reputation as an employer-of-choice in the hotel industry. Source: Annual Report 2002, Hilton hotels Corporation, 1, 2, 4, 7, 8.

Ethical Frames of Reference Economic Theory ›The purpose of business organizations is to maximize profits Legal Theory ›Compliance with laws ensures ethical behavior Religious Theory ›Everyone should act in accordance with religious teachings Utilitarian Theory ›Focus on outcomes from decisions. Everyone should act in a way that generates the greatest benefits for the largest number of people Universalist Theory ›Focus on the intent of the decision. “Would I be willing for everyone else in the world to make the same decision?” Economic Theory ›The purpose of business organizations is to maximize profits Legal Theory ›Compliance with laws ensures ethical behavior Religious Theory ›Everyone should act in accordance with religious teachings Utilitarian Theory ›Focus on outcomes from decisions. Everyone should act in a way that generates the greatest benefits for the largest number of people Universalist Theory ›Focus on the intent of the decision. “Would I be willing for everyone else in the world to make the same decision?”

Codes of Ethics Communicate the values of the corporation to employees and other stakeholders Ethics systems are sometimes established to ensure compliance Formal systems may not be enough to ensure ethical behavior ›Often people don’t personalize ethical behavior Ethical issues are even more difficult for firms working in more than one country Communicate the values of the corporation to employees and other stakeholders Ethics systems are sometimes established to ensure compliance Formal systems may not be enough to ensure ethical behavior ›Often people don’t personalize ethical behavior Ethical issues are even more difficult for firms working in more than one country

Major Concepts in Chapter 4 Strategic managers provide long-term direction for their organizations, while at the same time balancing the competing interests of stakeholders Mission statements communicate ideals and a sense of direction and purpose to internal and external stakeholders A mission is what a company is and its reasons for existing, while a vision is a forward-looking view of what the organization wants to become Businesses are defined in terms of customers, needs satisfied, capabilities and technologies, and products and services Strategic managers provide long-term direction for their organizations, while at the same time balancing the competing interests of stakeholders Mission statements communicate ideals and a sense of direction and purpose to internal and external stakeholders A mission is what a company is and its reasons for existing, while a vision is a forward-looking view of what the organization wants to become Businesses are defined in terms of customers, needs satisfied, capabilities and technologies, and products and services

Major Concepts in Chapter 4 Organizational values guide organizational decisions and help determine the firm’s attitude towards social responsibility and the treatment of various stakeholder groups (enterprise strategy). A code of ethics can communicate the values of the organization to employees and other stakeholders Globalization makes dealing with values and ethics even more difficult Organizational values guide organizational decisions and help determine the firm’s attitude towards social responsibility and the treatment of various stakeholder groups (enterprise strategy). A code of ethics can communicate the values of the organization to employees and other stakeholders Globalization makes dealing with values and ethics even more difficult