Unit 1: BUSINESS ORGANIZATIONS AND MANAGEMENT 1.2. Objectives, stakeholders & The External Environment.

HIERARCHY OF OBJECTIVES

Mission & Vision Statements

Source: Business & Management – Course Companion – Clark, Golden, O’Dea, Weiner, Woolrich, 2009. p24-51.

THE HIERARCHY OF OBJECTIVES

• There is a distinct hierarchy of objectives in an organization.

• At the top level, an organization will often create a “mission” setting out the purpose of the organization itself.

• This will be followed by a set of objectives relating to less significant, though still important, operational aspects such as market share, customer satisfaction and employee motivation.

• These objectives will be broken up by function and communicated to those entrusted with achieving them.

THE HIERARCHY OF OBJECTIVES Mission & Vision Statements

• These statements are usually written by the founders or senior managers of the business.

• They provide a “guiding hand” for all the business activities and the overall principles which the business operates.

THE HIERARCHY OF OBJECTIVES Corporate Objectives

• Corporative Objectives are set by senior management.• They are the practical application of the organizations

mission statement in that they detail specific goals for the entire enterprise and are quantifiable.

• One example might be: “the business will achieve a return on capital of 10% of any investments made in 2010”.

• Corporate objectives are long term in nature.• Setting these objectives is part of corporate planning.• Corporate planning is the process by which an

organization analyses its objectives, priorities, strategies and environment in light of its mission.

THE HIERARCHY OF OBJECTIVES Departmental Objectives

• Are corporate objectives broken down to allow each department to know what it must achieve if the corporate objectives are to be fulfilled.

THE HIERARCHY OF OBJECTIVES Team & Individual Objectives

• Provide a day to day focus for all employees to guide their actions.

• Team and individual objectives should contribute to the overall objectives of the organization.

MOST Analysis

One key tool used to examine corporate strategy and strategic planning is MOST analysis, which uses the hierarchy of objectives as a framework. This helps clarify:• The organization’s purpose and where it intends to go.

(Mission)• Key goals that will help to achieve the mission. (Objectives)• The options to achieve the mission and objectives.

(Strategies)• How these strategies will be put into action. • (Tactics)

MISSION AND VISION STATEMENTS

• Although the terms are sometimes used interchangeably, mission statements and visions statements do two distinctively different jobs.

Mission Statements

What is a Mission Statement for a Business?

Source: http://getentrepreneurial.com/images/mission%20statement.jpg Date: 18 April 2009

Source: http://www.championinternet.com/psf/dilbert.gif Date:17th April 2009

Mission Statement

• This is a concise description of what an organization currently does.

• It defines why the organization exists and the key measure or measures of the organization’s success.

• It is a “practical statement” and in simple terms it can be defined as “who we are” and “what we do” by putting corporate aims into words

• Its prime audience is the leadership team and shareholders, but every employee should be aware of the mission statement and be able to express its purpose.

Mission Statement

• When developed it should define the organization’s business, its objectives, and its approach to reach these objectives.

• Over the years, the business will build on this to establish its core competence or core competencies – skill(s) that competitors cannot easily match or imitate.

Corporate Mission Statement should be formulated in respect to stakeholders

• The corporate mission statement is a key indicator of how a company views the claims of its stakeholders.

What are Stakeholders?• Individuals or groups that have an interest,

claim or stake in an organization as a result of their ability to affect or their potential to be affected by the organization.

• There are internal and external stakeholders.

Internal or External Stakeholders

Internal Stakeholders• Internal stakeholders are shareholders and

employees, including senior management and board members.

External Stakeholders• All individuals and groups that have some claim on

the company.• This group typically comprises customers, suppliers,

governments, unions, local communities and the general public.

Corporate Mission Statements

• Corporate Mission Statements incorporate stakeholder claims into its strategic decision making and by doing so reduce the risk of losing stakeholder support.

• In a mission statement a company makes a formal commitment to its stakeholders, sending out the message that its strategies will be formulated with the claims of stakeholder in mind.

Three Main Elements of Mission Statements

Most corporate mission statements are builtaround three main elements:(1) A declaration of the overall mission of the company(2) A summary of the key philosophical values that

managers are committed to and that influence the decisions they make.

(3) The articulation of the key goals to which management believes the company must adhere to in order to attain the vision.

Mission Statement – ExampleSINGAPORE AIRLINES

• Singapore Airlines is a global company dedicated to providing air transportation services of the highest quality and to maximising returns for the benefit of its shareholders and employees

Mission Statements - Examples

Boeing• To be the number one aerospace company in the

world and among the premier industrial concerns in terms of quality, profitability and growth.

BHP Billiton• Aims to create value through the discovery,

development, and conversion of natural resources and the provision of innovative customer and market focused solutions.

Strategic Intent & the Mission Statement

• Managers should set an overarching ambitious goal that stretches a company.

• Many companies refer to being a dominant player in their particular industry.

• This ambition can be part of the process of creating strategic intent.

The Vision Statement

• In contrast to the mission statement, the vision statement describes the desired future position of the company.

• It also defines the organization’s purpose, but it does so in terms of the of the organization’s values rather than specific measures, such as the market share or profit targets.

• Values are traits or qualities that represent an individual’s highest priorities and deeply held driving forces.

The Vision Statement

Corporate Values• For a business, corporate values represent its

core beliefs and are set out in its vision statement.

• For employees, the vision statement gives direction about how they are expected to behave and it should inspire and motivate them to perform to their best.

The Vision Statement

Customer Understanding• When shared with customers, the vision

statement should shape their understanding of the business and its activities and outline why they should remain loyal to its goods and services.

The Vision Statement

The Role of Stakeholders• A vision statement should express how the

organization values its key stakeholders: its shareholders, customers, suppliers and the internal community.

Vision Statement – ExampleSAMSUNG

We will devote our human resources and technology to create superior products and services, thereby contributing to a better global society

The Vision Statement

Expectations of Employees• Employees of the business will be expected to uphold

and promote the values of the business.• This will be easier if they understand and share these

values. • It would seem sensible or possibly essential that

employees and other stakeholders of the business have the opportunity to help in the preparation of these statements. This will enable employees to represent accurately the core aims and values of the business.

What constitutes an excellent mission or vision statement?

• Excellent mission and vision statements are brief, memorable and practical as well as inspiring.

• Aspects of the mission and vision statement are normally combined to provide a statement of the organization’s purposes, goals, and values.

• These purposes, goals, and values, when represented and supported by the actions of senior leaders, are especially important in the development of a shared corporate culture.

Famous Quotes – Company Vision

“A leader shapes and shares a vision, which gives point to the work of others” (Charles Handy, 1932-)

Management Guru.

Famous Quotes – Company Vision

“To choose a direction, an executive must have developed a mental image of the possible and desirable future state of the organization. This image, which we call a vision, may be as vague as a dream or as precise as a goal or mission statement” (Warren Bennis, (1925-) – writer on leadership)

The Role of Mission & Vision Statements in an Organizations

• Mission and Vision Statements usually appear on all community literature, alongside logs, and other images of the business, and are generally included in documents such as business plans and staff handbooks.

• They are often used as part of the marketing message and are designed to influence the public perception of the business and its activities.

• As a consequence they are frequently criticized for being little more than a public relations (PR) exercise and not representing the reality of the business.

• They are often so vague and they may have little practical application.

Internal Benefits of Mission & Vision Statements

• Guide Management thinking of strategic issues.• Provide Stability during periods of significant change• Set performance standards for the whole

organization.• Provide employees with a focus on common goals. • Inspire employees to work more productively.• Guide employee decision making.• Help establish a framework for ethical behaviour.

External Benefits of Mission & Vision Statements

• Create goodwill and attract similar-minded individuals or groups to invest in the business.

• Create closer links and better communication with customers, suppliers, the local community and shareholders.

• Serve to promote the business and its operations to the general public.

• Act as a marketing tool, defining what the business represents.

Mission & Vision Statementsneed to be reviewed

• In many industries, changing markets and consumer preferences require organizations, periodically to re-evaluate their strategic mission.

• This process will serve to focus employees on the highest objectives of the company.

• In some cases, mission and vision statements may be non-commercial.

Non-Commercial Mission StatementsSalvation Army - Example

“The Salvation Army, an international movement, is an evangelical part of the universal Christian Church. Its mission is motivated by the love of God. Its mission is to preach the gospel of Jesus Christ and to meethuman needs in His name without discrimination”

Non-Commercial Mission StatementsTennis Australia

“To grow, manage, promote and showcase the sport of tennis throughout Australia, recognizing the health, social, economic and entertainment benefits of sport and tennis in particular for people of both sexes, all ages and abilities.”

Steps in Creating a Successful Mission Statement

1. Identify the organization’s USP (Unique Selling Point). This is the idea or approach that differentiates the organization from its competitors and is the reason customers buy its products and not its competitors.

2. Identify the key measures of the organizations success.

3. Combine the organization’s USP and key measures of success into a tangible and measureable goal.

4. Refine the words into a concise and precise statement expressing the USP, success measures and desired result.

Steps in Creating a Successful Vision Statement

1. Identify the values that underpin the business and its operations.

2. Focus on aspects of the operations that customers and stakeholders value most.

3. Prepare a statement that motivates employees and strengthens the message to other stakeholders.