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

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

3. 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

4. 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

5. 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.

6. 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

7. 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

8. 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

9. 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

10. 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.

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

12. 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

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

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

15. 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

16. 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

17. 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

18. 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

19. 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

20. 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

21. 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

22. 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