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Developing Vision Mission and Understanding Strategies

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Eloisa Veronica Desierto

on 23 January 2014

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Transcript of Developing Vision Mission and Understanding Strategies

Stage 1: Developing a Strategic Vision, a Mission, and a Set of Core Values
Stage 3: Crafting Strategy
Stage 4: Executing the Strategy
Developing Vision Mission and Understanding Strategies
Charting A Company's Direction: Vision and Mission, Objectives, and Strategy

Developing a Strategic Vision, a Mission, and a Set of Core Values
Stage 2: Setting Objectives
Setting Objectives
Crafting a Strategy
Executing The Strategy
Evaluating Performance and Initiating Corrective Adjustments
Corporate Governance: The Role of the Board of Directors in the Strategy - Crafting, Strategy - Executing Process
Arriola | Desierto | Salvador | Sese | Usi
Strategic Vision
It describes management's aspirations for the future and delineates the company's strategic course and long – term direction.
It is a panoramic view of “where we are going”.
It must be well – conceived, distinctive and specific.
Communicating The Strategic Values
An effectively communicated vision is a tool for enlisting the commitment of company personnel to actions that move the company forward in the intended direction.
Effectively communicating the strategic vision down the line to lower – level managers and employees is as important as the strategic soundness of the long – term direction top management has chosen.
The support of organization members for the vision nearly always means putting “where we are going and why” in writing, distributing the statement organizationwide, and having executives personally explain the vision and its rationale to as many as people as feasible.
Wording A Vision Statement
The Do's
Be graphic.
Be forward - looking and directional.
Keep it focused.
Have some wiggle.
Be sure the journey is feasible.
Indicate why the directional path makes good business sense.
Make it memorable.
The Don'ts
Don't be vague or incomplete.
Don't dwell on the present.
Don't use overly broad language.
Don't stable the vision in the bland and uninspiring terms.
Don't be generic.
Don't rely on superlatives only.
Don't run and on.
The Payoffs of a Clear Vision Statements
It crystallizes senior executive's own views about the firm's long-term direction.
It reduces the risk of rudderless decision making.
It is a tool for winning the support of the organization members for internal changes that will help make the vision a reality.
It provides a beacon for lower – level managers in setting department objectives and crafting departmental strategies that are in sync with company's overall strategy.
It helps an organization prepare for the future.
Crafting a Mission Statement
Strategic Vision

A well - conceived mission statement conveys a company's purpose in language specific enough to give the company its own identity.
It describes the enterprise's current business and purpose - “who we are, what we do, and why are we are here.”
A company mission statement is sufficiently descriptive to:
Identify the company's product or services.
Specify the buyer needs it seeks to satisfy.
Identify the customer groups or markets it is endeavoring to serve.
Specify its approach to pleasing customers.

Give the company its own identity.
Linking the Vision and Mission with Company Values
A company's values are the beliefs, traits, and behavioral norms that company personnel are expected to display in conducting the company's business and pursuing its strategic vision and mission.
Objectives
Objectives are an organization's performance targets – the specific results management wants to achieve.
It is to convert the vision and mission into specific performance targets.
Concrete Measurable Objectives
1. They focus efforts and align actions throughout the organization.
2. They serve as yardsticks for tracking a company's performance and progress.
3. They provide motivation and inspire employees to greater levels of effort.
Kinds of Objectives to Set
Financial Objectives
Relates to the financial performance targets management has established for the organization to achieve.rmance
Strategic Objectives

Relates to target outcomes that indicate a company is strengthening its market standing, competitive vitality, and future business prospects.
Financial Objectives
An x percent increase in annual revenues.
Annual increases in after-tax profits of x percent.
Annual increases in earning per share of x percent.
Annual dividend increases of x percent.
Profit margins of x percent.
An x percent return on capital employed (ROCE) or return on shareholder's equity investment (ROE)
Increased shareholder value – in the form of an upward – trending stock price.
Bond and credit ratings of x.
Internal cash flows of x dollars to fund new capital investment.
Strategy Objectives
Winning an x percent market share.
Achieving lower overall costs than rivals.
Overtaking ket competitors on product performance or quality or customer service.
Deriving x percent of revenues from the sale of new products introduced within the past five years.
Having broader of deeper technological capabilities than rivals.
Having a wide product line than rivals.
Having a better – known or more powerful brand name than rivals.
Having stronger national or global sales and distribution capabilities than rivals.
Consistently getting new or improved products to market ahead of rivals.
The Merits of Setting Stretch Objectives
It challenges the company personnel to go all out and deliver “stretch” gains in performance.
It pushes to be more inventive, urgency to improve both financial performance and business position.
Be more intentional and focused in its action.
Short & Long Term Objectives
Short Term Objectives
Focus attention on delivering performance improvements in the current period and satisfy shareholder expectations for near-term progress.
Long Term Objectives
Force managers to consider what to do now to put the company in position to perform better later.
Need for Objectives at All Organizational Level
Company objectives need to be broken down into performance targets for each of the organization's separate businesses, product lines, functional departments, and individual work units.
Objective setting is a top-down process.
Corporate Strategy
Multibusiness Strategy - how to gain advantage from managing a group of businesses.
Two - Way Influence
Business Strategy
(One for each business the company has diversified into)
How to strengthen market position and gain competitive advantage.
Actions to build competitive capabilities businesses.
Two - Way Influence
Functional Area Strategies
(within each business)
Add relevant detail to the hows of the business strategy.
Provide a game plan for managing particular activity in ways that support the business strategy.
Two-Way Influence
Operating Strategies
within Each Business
Add detail and completeness to business and functional strategies
Provide a game plan for managing specific lower-echelon activities with strategic significance.
In the case of a single-business company, these two levels of the strategy making pyramid merge into one level -
business strategy

- that is orchestrated by the company's CEO and other top executives.
Orchestrated by the CEO and other senior executives.
Orchestrated by the general managers of each of the company's different lines of business, often with advice and input from more senior executives and the heads of functional-area activities within each business.
Orchestrated by the heads of major functional activities within a particular business, often in collaboration with other key people.
Orchestrated by brand managers, the operating managers of plants, distribution centers, and purchasing centers, and the managers of strategically important activities like Web site operations, often in collaboration with other key people.
Company's Strategy - Making Hierarchy
A Strategic Vision + Objectives + Strategy = A Strategic Plan
Strategic Plan
Includes commitment to allocate resources to the plan and specifies a period for achieving goals.
It lays out its future direction and business purpose, performance targets and strategy.
Strategy Implementation
It is an operations – oriented, make-things-happen activity aimed at performing core business activities in a strategy – supportive manner.
It is demanding and time-consuming.
It convert strategic plan into action, motivate people, build and strengthen company competencies and competitive capabilities.
It create and nurture a strategy-supportive work climate and meet or beat performance target.
Principal Aspects in Executing Strategies
Staffing the organization with the needed skills and expertise.
Building and strengthening strategy – supporting resources and competitive capabilities.
Organizing the work effort along the lines of best practice.
Allocating ample resources to the activities critical to strategic success.
Ensuring that policies and procedures facilitate rather than impede effective strategy execution.
Principal Aspects in Executing Strategies
Installing information and operating systems that enable company personnel to carry out their roles effectively and efficiently.
Motivating people and trying rewards and incentives directly to the achievement of performance objectives.
Creating a company culture and work climate conducive to successful strategy execution.
Exerting the internal leadership needed to propel implementation forward and drive continuous improvement of the strategy execution processes.
Stage 5: Evaluating Performance and Initiating Corrective Adjustments
It is the fifth component of strategy management process.
It is the trigger point for deciding whether to continue or change the company's vision and mission, objectives, strategy, and/or strategy execution methods.
It monitors new external developments, evaluate company's progress, and make corrective adjustments.
Corporate Governance: The Role of the Board of Directors in the Strategy - Crafting, Strategy - Executing Process
Important Role of Board of Directors
1. Critically appraise the company's direction, strategy, and business approaches.
2. Evaluate the caliber or senior executives' strategic leadership skills.
3. Institute a compensation plan for top executives that rewards them for actions and results that serve stakeholder interests – especially those of shareholders.
4. Oversee the company's financial accounting and financial reporting practices.
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