Strategy - mission

A strategic plan starts with a clearly defined business mission.

Mintzberg defines a mission as follows:

“A mission describes the organisation’s basic function in society, in terms of the products and services it produces for its customers”.

A clear business mission should have each of the following elements:

Taking each element of the above diagram in turn, what should a good mission contain?

(1) A Purpose
Why does the business exist? Is it to create wealth for shareholders? Does it exist to satisfy the needs of all stakeholders (including employees, and society at large?)
(2) A Strategy and Strategic Scope
A mission statement provides the commercial logic for the business and so defines two things:
- The products or services it offers (and therefore its competitive position)
- The competences through which it tries to succeed and its method of competing
A business’ strategic scope defines the boundaries of its operations. These are set by management.
For example, these boundaries may be set in terms of geography, market, business method, product etc. The decisions management make about strategic scope define the nature of the business.
(3) Policies and Standards of Behaviour
A mission needs to be translated into everyday actions. For example, if the business mission includes delivering “outstanding customer service”, then policies and standards should be created and monitored that test delivery.
These might include monitoring the speed with which telephone calls are answered in the sales call centre, the number of complaints received from customers, or the extent of positive customer feedback via questionnaires.
(4) Values and Culture
The values of a business are the basic, often un-stated, beliefs of the people who work in the business. These would include:
• Business principles (e.g. social policy, commitments to customers)
• Loyalty and commitment (e.g. are employees inspired to sacrifice their personal goals for the good of the business as a whole? And does the business demonstrate a high level of commitment and loyalty to its staff?)
• Guidance on expected behaviour – a strong sense of mission helps create a work environment where there is a common purpose
What role does the mission statement play in marketing planning?
In practice, a strong mission statement can help in three main ways:
• It provides an outline of how the marketing plan should seek to fulfil the mission
• It provides a means of evaluating and screening the marketing plan; are marketing decisions consistent with the mission?
• It provides an incentive to implement the marketing plan

STRATEGIC VISION

A specialist was hired to develop and present a series of half-day training seminars on empowerment and teamwork for the managers of a large international oil company. Fifteen minutes into the first presentation, he took a headlong plunge into the trap of assumption. With great intent, he laid the groundwork for what he considered the heart of empowerment-team-building, family, and community. He praised the need for energy, commitment, and passion for production. At what he thought was the appropriate time, he asked the group of 40 managers the simple question on which he was to ground his entire talk: "What is the vision of your company?" No one raised a hand. The speaker thought they might be shy, so he gently encouraged them. The room grew deadly silent. Everyone was looking at everyone else, and he had a sinking sensation in his stomach. "Your company does have a vision, doesn't it?" he asked. A few people shrugged, and a few shook their heads. He was dumbfounded. How could any group or individual strive toward greatness and mastery without a vision? That's exactly the point. They can't. They can maintain, they can survive; but they can't expect to achieve greatness.

Mapes (1991)

SKY Magazine

Vision is a widely used term, but not well understood. Perhaps leaders don't understand what vision is, or why it is important. One strategic leader is quoted as saying, "I've come to believe that we need a vision to guide us, but I can't seem to get my hands on what 'vision' is. I've heard lots of terms like mission, purpose, values, and strategic intent, but no-one has given me a satisfactory way of looking at vision that will help me sort out this morass of words. It's really frustrating!" (Collins and Porras 1991). To understand vision, clarify what the term means.


DEFINING VISION
One definition of vision comes from Burt Nanus, a well-known expert on the subject. Nanus defines a vision as a realistic, credible, attractive future for [an] organization. Let's disect this definition:

• Realistic: A vision must be based in reality to be meaningful for an organization. For example, if you're developing a vision for a computer software company that has carved out a small niche in the market developing instructional software and has a 1.5 percent share of the computer software market, a vision to overtake Microsoft and dominate the software market is not realistic!
• Credible: A vision must be believable to be relevant. To whom must a vision be credible? Most importantly, to the employees or members of the organization. If the members of the organization do not find the vision credible, it will not be meaningful or serve a useful purpose. One of the purposes of a vision is to inspire those in the organization to achieve a level of excellence, and to provide purpose and direction for the work of those employees. A vision which is not credible will accomplish neither of these ends.
• Attractive: If a vision is going to inspire and motivate those in the organization, it must be attractive. People must want to be part of this future that's envisioned for the organization.
• Future: A vision is not in the present, it is in the future. In this respect, the image of the leader gazing off into the distance to formulate a vision may not be a bad one. A vision is not where you are now, it's where you want to be in the future. (If you reach or attain a vision, and it's no longer in the future, but in the present, is it still a vision?)

Nanus goes on to say that the right vision for an organization, one that is a realistic, credible, attractive future for that organization, can accomplish a number of things for the organization:

• It attracts commitment and energizes people. This is one of the primary reasons for having a vision for an organization: its motivational effect. When people can see that the organization is committed to a vision-and that entails more than just having a vision statement-it generates enthusiasm about the course the organization intends to follow, and increases the commitment of people to work toward achieving that vision.
• It creates meaning in workers' lives. A vision allows people to feel like they are part of a greater whole, and hence provides meaning for their work. The right vision will mean something to everyone in the organization if they can see how what they do contributes to that vision. Consider the difference between the hotel service worker who can only say, "I make beds and clean bathrooms," to the one who can also say, "I'm part of a team committed to becoming the worldwide leader in providing quality service to our hotel guests." The work is the same, but the context and meaning of the work is different.
• It establishes a standard of excellence. A vision serves a very important function in establishing a standard of excellence. In fact, a good vision is all about excellence. Tom Peters, the author of In Search of Excellence, talks about going into an organization where a number of problems existed. When he attempted to get the organization's leadership to address the problems, he got the defensive response, "But we're no worse than anyone else!" Peters cites this sarcastically as a great vision for an organization: "Acme Widgets: We're No Worse Than Anyone Else!" A vision so characterized by lack of a striving for excellence would not motivate or excite anyone about that organization. The standard of excellence also can serve as a continuing goal and stimulate quality improvement programs, as well as providing a measure of the worth of the organization.
• It bridges the present and the future. The right vision takes the organization out of the present, and focuses it on the future. It's easy to get caught up in the crises of the day, and to lose sight of where you were heading. A good vision can orient you on the future, and provide positive direction. The vision alone isn't enough to move you from the present to the future, however. That's where a strategic plan, discussed later in the chapter, comes in. A vision is the desired future state for the organization; the strategic plan is how to get from where you are now to where you want to be in the future.

Another definition of vision comes from Oren Harari: "Vision should describe a set of ideals and priorities, a picture of the future, a sense of what makes the company special and unique, a core set of principles that the company stands for, and a broad set of compelling criteria that will help define organizational success." Are there any differences between Nanus's and Harari's definitions of vision? What are the similarities? Do these definitions help clarify the concept of vision and bring it into focus?
An additional framework for examining vision is put forward by Collins and Porras. They conceptualize vision as having two major components: a Guiding Philosophy, and aTangible Image. They define the guiding philosophy as "a system of fundamental motivating assumptions, principles, values and tenets." The guiding philosophy stems from the organization's core beliefs and values and its purpose.


CORE BELIEFS AND VALUES
Just as they underlie organizational culture, beliefs and values are a critical part of guiding philosophy and therefore vision. One CEO expressed the importance of core values and beliefs this way:

I firmly believe that any organization, in order to survive and achieve success, must have a sound set of beliefs on whichit premises all its policies and actions. Next, I believe that the most important single factor in corporate success is faithful adherence to those beliefs. And, finally, I believe [the organization] must be willing to change everything about itself except those beliefs as it moves through corporate life. (Collins and Porras 1991)

Core values and beliefs can relate to different constituents such as customers, employees, and shareholders, to the organization's goals, to ethical conduct, or to the organization's management and leadership philosophy. Baxter Healthcare Corporation has articulated three Shared Values: Respect for their Employees, Responsiveness to their Customers, and Results for their Shareholders, skillfully linking their core values to their key constituencies and also saying something about what is important to the organization. The key, however, is whether these are not only stated but also operating values.
Collins and Porras have provided examples of core values and beliefs from a survey of industry they conducted, and cite the following examples, among others:

• About People

Marriott: "See the good in people, and try to develop those qualities."

• About Customers

L.L. Bean: "Sell good merchandise at a reasonable price; treat your customers like you would your friends, and the business will take care of itself."

• About Products

Sony: "We should always be the pioneers with our products--out front leading the market. We believe in leading the public with new products rather than asking them what kind of products they want."

• About Management and Business

Motorola: "Everything will turn out alright if we just keep in motion, forever moving forward."

PURPOSE
The second part of guiding philosophy is purpose-why the organization exists, what needs it fills. Collins and Porras believe a good purpose statement should be "broad, fundamental, inspirational, and enduring." Consider this purpose statement: "The purpose of the United States Naval Academy at Annapolis, MD, is to prepare midshipmen to become professional officers in the naval service." Or this purpose statement from Apple Computer: "To make a contribution to the world by making tools for the mind that advance humankind." How do these statements of purpose stack up?
Whether individual, team, organization or nation, a sense of purpose and direction is essential to commitment. A shared sense of purpose is the glue that binds people together in common cause, often linking each individual's goals with the organization's goals. Properly formulated, a shared sense of purpose provides understanding of the need for coordinated collective effort -- for subordinating individual interest to the larger objective that can be achieved only by the collective effort. When it is long range in nature, it is the basis for detailed planning for the allocation of resources. When it is noble and inspiring, it gives dignity and respect to those participating in the effort. And, when it promises a better future, it gives hope to all who seek it.
The second major component of vision is tangible image. This is composed of a mission and a vivid description. Mission is "a clear and compelling goal that serves to unify an organization's effort. An effective mission must stretch and challenge the organization, yet be achievable" (Collins and Porras). There are four ways of approaching developing a mission statement: targeting, common enemy, role model, and transformation. Targeting means developing your mission statement around a clear, definable goal. An example is the mission Merck Pharmaceuticals set in 1979: To establish Merck as the preeminent drug-maker worldwide in the 1980s. The common enemy approach is to focus the mission on overtaking or dominating a rival. Athletic shoe, automobile, and telecommuncations companies are all examples of areas where competition with rivals dominates company missions. Role model missions take an exemplar in another industry, and benchmark off that exemplar. For example, a mission "To be the Microsoft of retail sales companies" employs the role modeling technique. Finally, the internal transformation approach mission tends to focus on the internal remaking, restructuring, or rebirth of an organization. One example of a transformational mission might be the Army's recent efforts to transform itself into a newer, leaner Army positioned for the 21st century.
This may be a good point to address the confusion over the use of the terms purpose, mission and vision. Collins and Porras view purpose and mission as components of vision. Others, such as Nanus, differentiate between mission and vision. Nanus states, "A vision is not a mission. To state that an organization has a mission is to state its purpose, not its direction." Further complicating the semantics, different organizations may have mission statements, vision statements, purpose statements, or all three. To take one example, Quorum Health Group, Inc. a hospital management company, differentiates between its mission and vision this way:

MISSION STATEMENT

Quorum Health Group, Inc., is a hospital company committed to meeting the needs of clients as an owner, manager, consultant or partner through innovative services that enhance the delivery of quality healthcare.

VISION STATEMENT

Quorum Health Group, Inc., will be valued for its expertise in hospital management and its ability to positively impact the delivery of quality healthcare.

What are the differences between these two statements? Note that the mission is oriented in the present ("QHG is a company . . ."), while the vision is oriented in the future ("QHG will be valued . . ."). The mission states what QHG does in relatively concrete terms (meet the needs of clients by providing services that enhance the delivery of quality healthcare), while the vision states what it wants to do in more idealistic terms (be valued for its expertise and its ability to positively impact the delivery of quality healthcare).
One final example may illustrate how confused mission and vision can become. The Coca-Cola Company in 1994 published a booklet entitled "Our Mission and Our Commitment." In that booklet, the company defines their mission as follows:

We exist to create value for our share owners on a long term basis by building a business that enhances The Coca-Cola Company's trademarks. This also is our ultimate commitment. As the world's largest beverage company, we refresh that world. We do this by developing superior soft drinks, both carbonated and non-carbonated, and profitable non-alcoholic beverage systems that create value for our Company, our bottling partners, and our customers.

Does this sound like a mission, a vision, or a combination of both?
In Collins and Porras's framework for vision, their last element is a vivid description or picture of the end state that completion of the mission represents. They view this as essential to bringing the mission to life. A vivid description gives the mission the ability to inspire and motivate. Look back at the Coca-Cola Company mission shown above. Does it paint a vivid description of completion of the mission, or would The Coca-Cola Company have to amplify the mission statement?


To put this all together, Collins and Porras present the following framework:

core beliefs and values + purpose = guiding philosophy

mission + vivid description = tangible image

guiding philosophy + tangible image = vision

Note that, as opposed to Nanus, Collins and Porras do not focus on a vision statement, but on a vision as consisting of elements shown above. It's worth exploring the properties of a good vision. Nanus has several guidelines for creating a realistic, credible, attractive future for an organization:


PROPERTIES OF A GOOD VISION

• A good vision is a mental model of a future state. It involves thinking about the future, and modeling possible future states. A vision doesn't exist in the present, and it may or may not be reached in the future. Nanus describes it like this: "A vision portrays a fictitious world that cannot be observed or verified in advance and that, in fact, may never become reality" (emphasis added). However, if it is a good mental model, it shows the way to identify goals and how to plan to achieve them.
• A good vision is idealistic. How can a vision be realistic and idealistic at the same time? One way of reconciling these apparently contradictory properties of a vision is that the vision is realistic enough so that people believe it is achievable, but idealistic enough so that it cannot be achieved without stretching. If it is too easily achievable, it will not set a standard of excellence, nor will it motivate people to want to work toward it. On the other hand, if it is too idealistic, it may be perceived as beyond the reach of those in the organization, and discourage motivation. A realistic vision for that software company might be to maintain their current market share and produce instructional software that meets quality standards. Realistic, yes; but inspiring? No. A realistic yet also idealistic vision might be: To become the industry leader in the development of state-of-the-art instructional software products, known for the quality and the innovativeness of their design.
• A good vision is appropriate for the organization and for the times. A vision must be consistent with the organization's values and culture, and its place in its environment. It must also be realistic. For example, in a time of downsizing and consolidation in an industry, a very ambitious, expansionistic vision would not be appropriate. An organization with a history of being conservative, and a culture encouraging conformity rather than risk taking, would not find an innovative vision appropriate. The computer software company mentioned above, with a history of producing high quality instructional software, would not find a vision to become the industry leader in video games or virtual reality software an appropriate one.
• A good vision sets standards of excellence and reflects high ideals. Generally, the vision proposed above for the software company does reflect measurable standards of excellence and a high level of aspiration. The actual measure could be the external reputation of the company, as assessed by having users evaluate the company and its products.
• A good vision clarifies purpose and direction. In defining that "realistic, credible, attractive future for an organization," a vision provides the rationale for both the mission and the goals the organization should pursue. This creates meaning in workers' lives by clarifying purpose, and making clear what the organization wants to achieve. For people in the organization, a good vision should answer the question, "Why do I go to work?" With a good vision, the answer to that question should not only be, "To earn a paycheck," but also, "To help build that attractive future for the organization and achieve a higher standard of excellence."
• A good vision inspires enthusiasm and encourages commitment. An inspiring vision can help people in an organization get excited about what they're doing, and increase their commitment to the organization. The computer industry is an excellent example of one characterized by organizations with good visions. A recent article reported that it is not unusual for people to work 80 hour weeks, and for people to be at work at any hour of the day or night. Some firms had to find ways to make employees go home, not ways to make them come to work! What accounts for this incredible work ethic? It is having a sense of working organizations that are building the future in a rapidly evolving and unconstrained field, where an individual's work makes a difference, and where everyone shares a vision for the future.
• A good vision is well articulated and easily understood. In order to motivate individuals, and clearly point toward the future, a vision must be articulated so people understand it. Most often, this will be in the form of a vision statement. There are dangers in being too terse, or too long-winded. A vision must be more than a slogan or a "bumper sticker." Slogans such as Ford Motor Company's "Quality Is Job One" are good marketing tools, but the slogan doesn't capture all the essential elements of a vision. On the other hand, a long document that expounds an organization's philosophy and lays out its strategic plan is too complex to be a vision statement. The key is to strike a balance.
• A good vision reflects the uniqueness of the organization, its distinctive competence, what it stands for, and what it is able to achieve. This is where the leaders of an organization need to ask themselves, "What is the one thing we do better than anyone else? What is it that sets us apart from others in our area of business?" A good example of a visioning process refocusing a company on its core competencies is Sears. A few years ago, Sears had expanded into areas far afield from its original business as a retailer. Among other things, Sears began offering financial services at their stores. Poor performance led Sears to realize that they could not compete with financial services companies whose core business was in that area, so they dropped that service and eliminated other aspects of their business not related to retailing. Interestingly, Sears' primary competitor is Wal-Mart, an organization with a very clear and compelling vision. Sam Walton found a niche in providing one stop shopping for people in rural areas, and overwhelmed "Mom and Pop" stores with volume buying and discounting. Wal-Mart is very clear about their vision, and has focused on specific areas where they can be the industry leader. The key is finding what it is that your organization does best. Focus your vision there.
• A good vision is ambitious. It must not be commonplace. It must be truly extraordinary. This property gets back to the idea of a vision that causes people and the organization to stretch. A good vision pushes the organization to a higher standard of excellence, challenging its members to try and achieve a level of performance they haven't achieved before. Inspiring, motivating, compelling visions are not about maintaining the status quo.

DEVELOPING A VISION
At this point you should know what a good vision consists of, and recognize a vision statement when you see one. But how does a strategic leader go about developing a vision for an organization? Nanus also offers a few words of advice to someone formulating a vision for an organization:

• Learn everything you can about the organization. There is no substitute for a thorough understanding of the organization as a foundation for your vision.
• Bring the organization's major constituencies into the visioning process. This is one of Nanus's imperatives: don't try to do it alone. If you're going to get others to buy into your vision, if it's going to be a wholly shared vision, involvement of at least the key people in the organization is essential. "Constituencies," refer to people both inside and outside the organization who can have a major impact on the organization, or who can be impacted by it. Another term to refer to constituencies is "stakeholders"- those who have a stake in the organization.
• Keep an open mind as you explore the options for a new vision. Don't be constrained in your thinking by the organization's current direction - it may be right, but it may not.
• Encourage input from your colleagues and subordinates. Another injunction about not trying to do it alone: those down in the organization often know it best and have a wealth of untapped ideas. Talk with them!
• Understand and appreciate the existing vision. Provide continuity if possible, and don't throw out good ideas because you didn't originate them. In his book about visionary leadership, Nanus describes a seven-step process for formulating a vision:

1. Understand the organization. To formulate a vision for an organization, you first must understand it. Essential questions to be answered include what its mission and purpose are, what value it provides to society, what the character of the industry is, what institutional framework the organization operates in, what the organization's position is within that framework, what it takes for the organization to succeed, who the critical stakeholders are, both inside and outside the organization, and what their interests and expectations are.
2. Conduct a vision audit. This step involves assessing the current direction and momentum of the organization. Key questions to be answered include: Does the organization have a clearly stated vision? What is the organization's current direction? Do the key leaders of the organization know where the organization is headed and agree on the direction? Do the organization's structures, processes, personnel, incentives, and information systems support the current direction?
3. Target the vision. This step involves starting to narrow in on a vision. Key questions: What are the boundaries or constraints to the vision? What must the vision accomplish? What critical issues must be addressed in the vision?
4. Set the vision context. This is where you look to the future, and where the process of formulating a vision gets difficult. Your vision is a desirable future for the organization. To craft that vision you first must think about what the organization's future environment might look like. This doesn't mean you need to predict the future, only to make some informed estimates about what future environments might look like. First, categorize future developments in the environment which might affect your vision. Second, list your expectations for the future in each category. Third, determine which of these expectations is most likely to occur. And fourth, assign a probability of occurrence to each expectation.
5. Develop future scenarios. This step follows directly from the fourth step. Having determined, as best you can, those expectations most likely to occur, and those with the most impact on your vision, combine those expectations into a few brief scenarios to include the range of possible futures you anticipate. The scenarios should represent, in the aggregate, the alternative "futures" the organization is likely to operate within.
6. Generate alternative visions. Just as there are several alternative futures for the environment, there are several directions the organization might take in the future. The purpose of this step is to generate visions reflecting those different directions. Do not evaluate your possible visions at this point, but use a relatively unconstrained approach.
7. Choose the final vision. Here's the decision point where you select the best possible vision for your organization. To do this, first look at the properties of a good vision, and what it takes for a vision to succeed, including consistency with the organization's culture and values. Next, compare the visions you've generated with the alternative scenarios, and determine which of the possible visions will apply to the broadest range of scenarios. The final vision should be the one which best meets the criteria of a good vision, is compatible with the organization's culture and values, and applies to a broad range of alternative scenarios (possible futures).


IMPLEMENTING THE VISION
Now that you have a vision statement for your organization, are you done? Formulating the vision is only the first step; implementing the vision is much harder, but must follow if the vision is going to have any effect on the organization. The three critical tasks of the strategic leader are formulating the vision, communicating it, and implementing it. Some organizations think that developing the vision is all that is necessary. If they have not planned for implementing that vision, development of the vision has been wasted effort. Even worse, a stated vision which is not implemented may have adverse effects within the organization because it initially creates expectations that lead to cynicism when those expectations are not met.
Before implementing the vision, the leader needs to communicate the vision to all the organization's stakeholders, particularly those inside the organization. The vision needs to be well articulated so that it can be easily understood. And, if the vision is to inspire enthusiasm and encourage commitment, it must be communicated to all the members of the organization.
How do you communicate a vision to a large and diverse organization? The key is to communicate the vision through multiple means. Some techniques used by organizations to communicate the vision include disseminating the vision in written form; preparing audiovisual shows outlining and explaining the vision; and presenting an explanation of the vision in speeches, interviews or press releases by the organization's leaders. An organization's leaders also may publicly "sign up" for the vision. You've got to "walk your talk." For the vision to have credibility, leaders must not only say they believe in the vision; they must demonstrate that they do through their decisions and their actions.
Once you've communicated your vision, how do you go about implementing it? This is where strategic planning comes in. To describe the relationship between strategic visioning and strategic planning in very simple terms, visioning can be considered as establishing where you want the organization to be in the future; strategic planning determines how to get there from where you are now. Strategic planning links the present to the future, and shows how you intend to move toward your vision. One process of strategic planning is to first develop goals to help you achieve your vision, then develop actions that will enable the organization to reach these goals.


Implementing the vision does not stop with the formulation of a strategic plan - the organization that stops at this point is not much better off than one that stops when the vision is formulated. Real implementation of a vision is in the execution of the strategic plan throughout the organization, in the continual monitoring of progress toward the vision, and in the continual revision of the strategic plan as changes in the organization or its environment necessitate.  


The bottom line is that visioning is not a discrete event, but rather an ongoing process.





A FORMULA FOR VISIONARY LEADERSHIP


Burt Nanus sums up his concepts with two simple formulas (slightly modified):

STRATEGIC VISION X COMMUNICATION = SHARED PURPOSE

SHARED PURPOSE X EMPOWERED PEOPLE X

APPROPRIATE ORGANIZATIONAL CHANGES X STRATEGIC THINKING =

SUCCESSFUL VISIONARY LEADERSHIP

Each one of the terms places unique and special demands on the strategic leader. If you can put these elements together in an organization, and you have a good vision to start with, you should be well on the way to achieving excellence. 


Collins and Porras affirm: "The function of a leader-the one universal requirement of effective leadership-is to catalyze a clear and shared vision of the organization and to secure commitment to and vigorous pursuit of that vision."

THE STRATEGIC MANAGEMENT PROCESS

Ford Motor Company, facing huge losses and hemorrhaging market share to Toyota and Nissan, knew it needed a new strategic plan. Competition was fierce, Ford’s costs were higher than competitors’, and Ford’s unused plant capacity was draining profits. Ford’s managers devised “The Way Forward.” This new strategic plan entailed closing a dozen plants and terminating 20,000 employees. As at Ford, a strategic plan is the company’s plan for how it will match its internal strengths and weaknesses with external opportunities and threats in order to maintain a competitive advantage. The essence of strategic planning is to ask, “Where are we now as a business, where do we want to be, and how should we get there?” The manager then formulates specific (human resources and other) strategies to take the company from where it is now to where he or she wants it to be. A strategy is a course of action. Ford’s strategies included closing plants and terminating employees. We
discuss various standard strategies shortly. First, we look more closely at the strategic management process.

Steps in Strategic Management


Strategic planning is part of the strategic management process. Strategic management entails both strategic planning and implementation, and is “the process of identifying and executing the organization’s strategic plan, by matching the company’s capabilities with the demands of its environment.” Strategic planning comprises (see Figure) the first 5 of 7 strategic management tasks: (1) defining the business and developing a mission,
(2) evaluating the firm’s internal and external strengths, weaknesses, opportunities, and threats, (3) formulating a new business statement, (4) translating the mission into strategic goals, and (5) formulating strategies or courses of action. In its simplest sense, however, strategic planning is remarkably simple: Decide what business you’re in now and which ones you want to be in, formulate a strategy for getting there, and execute your plan. The entire 7-step strategic management process follows:

Step 1: Define the Current Business Every company must choose the terrain on

which it will compete—in particular, what products it will sell, where it will sell

them, and how its products or services will differ from its competitors’. Rolex

and Seiko are both in the watch business, but Rolex sells a limited product line of

high-priced quality watches. Seiko sells a wide variety of relatively inexpensive

but innovative specialty watches with features like compasses and altimeters.

Therefore, the most basic strategic decisions managers make involve

deciding “what business” their firms should be in: For instance, in terms of the

products or services they’ll sell, the geographic locales in which they’ll sell

them, and how they’ll distinguish their products or services from competitors’.

They ask, “Where are we now in terms of the business we’re in, and what business

do we want to be in, given our company’s opportunities and threats, and

its strengths and weaknesses?” Managers then choose strategies—courses of

action such as buying competitors or expanding overseas—to get the company

from where it is today to where it wants to be tomorrow.

Managers sometimes use a vision statement as a sort of shorthand to summarize

how they see the business down the road. The company’s vision is a

general statement of its intended direction that shows, in broad terms, “what we

want to become.” Rupert Murdoch, chairman of News Corporation (which

owns MySpace.com, the Fox network, and many newspapers and satellite TV

operations), has a vision of an integrated, global satellite-based news-gathering,

entertainment, and multimedia firm. WebMD launched its business based on

a vision of a Web site supplying everything one might want to know about

medical-related issues. One eye care company says, “our vision is caring for

your vision.” Not surprisingly, it helps to be something of a visionary to

formulate a vision statement that sums up in just a few words the manager’s

image of where the business is heading. Two management gurus, Warren Bennis

and Bert Manus say,

To choose a direction, a leader must first have developed a mental image

of a possible and desirable future state for 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. The critical point is that a vision articulates a view

of a realistic, credible, attractive future for the organization, a condition

that is better in some important ways than what now exists.

Visions are usually longer term, broader images; most managers also formulate

mission statements to “. . . communicate ‘who we are, what we do, and where we’re

headed.’” Whereas visions usually lay out in very broad terms what the business

should be, the mission lays out in broad terms what our main tasks are now. In the

movie several years ago, “Saving Private Ryan,” the team’s mission was, of course,

to save private Ryan. Before their more recent turndown, Ford pursued and then

strayed from a remarkably successful mission, summed up by the phrase, “Where

Quality is Job One.” The mission of the California Energy Commission is to “assess,

and act through public/private partnerships to improve energy systems that

promote a strong economy and a healthy environment.” (The Commission’s vision,

by way of comparison, is “for Californians to have energy choices that are affordable,

reliable, diverse, safe, and environmentally acceptable.”)

Step 2: Perform External and Internal Audits Ideally, managers begin their strategic

planning by methodically analyzing their external and internal situations. The

strategic plan should provide a direction for the firm that makes sense, in terms

of the external opportunities and threats the firm faces and the internal strengths

and weaknesses it possesses. To facilitate this strategic external/internal audit,

many managers use SWOT analysis. This involves using a SWOT chart

to compile and organize the process of identifying company

Strengths, Weaknesses, Opportunities, and Threats.

Step 3: Formulate New Business and Mission Statements Based on the situation

analysis, what should our new business be, in terms of what products it will

sell, where it will sell them, and how its products or services will differ from its

competitors’? What is our new mission and vision?

Step 4: Translate the Mission into Strategic Goals Saying the mission is “to make

quality job one” is one thing; operationalizing that mission for your managers

is another. The firm’s managers need strategic goals. What exactly does that

mission mean, for each department, in terms of how we’ll boost quality? As an

example, WebMD’s sales director needs goals regarding the number of new

medical-related content providers—vitamin firms, hospitals, HMOs—it must

sign up per year, as well as sales revenue targets. The business development

manager needs goals regarding the number of new businesses—such as using

WebMD to help manage doctors’ offices online—he or she is to develop and

sign. Similarly, Citicorp can’t function solely with a mission like, “provide integrated,

comprehensive financial services worldwide.” To guide managerial

action, it needs goals in terms of things like building shareholder value, maintaining

superior rates of return, building a strong balance sheet, and balancing

the business by customer, product, and geography.

Step 5: Formulate Strategies to Achieve the Strategic Goals Again, a strategy is a

course of action. It shows how the enterprise will move from the business it is

in now to the business it wants to be in (as laid out by its vision, mission, and

strategic goals), given the firm’s opportunities, threats, strengths, and weaknesses.

The strategies bridge where the company is now, with where it wants

to be tomorrow. The best strategies are concise enough for themanager to express

in an easily communicated phrase that resonates with employees.

illustrates “this principle.” For example, the essence of Dell’s strategy is, “be

direct.”Wal-Mart’s strategy boils down to “low prices, every day.”

Keeping the strategy clear and concise helps ensure that employees all share

that strategy and so make decisions that are consistent with it. For example, the

executive team’s shared understanding of Nokia’s strategy reportedly helps explain

how the firm can make thousands of decisions each week so coherently.

Step 6: Implement the Strategies Strategy implementation means translating the

strategies into actions and results—by actually hiring (or firing) people, building

(or closing) plants, and adding (or eliminating) products and product lines.

Strategy implementation involves drawing on and applying all the management

functions: planning, organizing, staffing, leading, and controlling.

Step 7: Evaluate Performance Strategies don’t always succeed. For example,

Procter & Gamble announced it was selling its remaining food businesses—Jif,

Crisco, and Folger’s coffee—because management wants to concentrate on

household and cosmetics products.8

Managing strategy is an ongoing process. Competitors introduce new

products, technological innovations make production processes obsolete, and

social trends reduce demand for some products or services while boosting demand

for others. Strategic control keeps the company’s strategy up to date.

Five Facets of Strategic Management

Strategic management comprises five key facets: goal-setting, analysis, strategy formation,
strategy implementation, and strategy monitoring (see Figure). These are the integral elements
that, when applied together, distinguish strategic management from less comprehensive
approaches, such as operational management or long-term planning. Strategic management
is an iterative, continuous process that involves important interactions and feedback among the
five key facets, which are explained in more detail in Table.

The Concept of Strategic Management

Strategic management is a comprehensive area that covers almost all the functional areas of the organization. It is an umbrella concept of management that comprises all such functional areas as marketing, finance & account,human resource, and production & operation into a top level management discipline. Therefore, strategic management has an importance in the organizational success and failure than any specific functional areas.

Strategic management is different than the routine and operation management. Strategic management deals with organizational level and top level issues whereas functional or operational level management deals with
the specific areas of the business. Strategic management has relatively longterm focus in comparison to the operational management. Top-level managers such as Chairman, Managing Director, and corporate level planners involve more in strategic management process whereas functional managers and other employees involve more in operational management areas. Strategic management area is broader than any specific functional management area.Strategic management relates to setting vision, mission, objectives, and strategies that can be the guideline to design functional strategies in other functional areas. Therefore, it is top-level management that paves the way for other functional or operational management in an organization.


Strategic management is very important area. It determines whether an organization excels, survives, or dies. Strategic management is very important because it guides all the functional areas of the business. It is generally
believed that businesses, which develop formal strategic management systems, have a higher probability of success than those, which do not. Strategic management helps firms anticipate future problems and
opportunities. It provides clear vision, mission, objectives, and strategies that lead organization into the secured future.

"Strategic management is defined as the art and science of formulating, implementing, and evaluating cross-functional decisions that enable the organization to achieve its objectives." Generally, strategic management is
not only related to a single specialization but covers cross-functional or overall organization.

Strategic management is a stream of decisions and actions. It is a process by which top-level management decides and does for the success of the organization. It helps to determine the best possible strategy so that
organization could win the game in competitive business environment. Thus, strategic management is a way where a strategist finds where organization is and where it wants to reach. The gap between desired and possible is known as performance gap. In this context, strategic management process not only identifies the performance gap but also attempts to reduce the gap.

Sometimes, the performance gap can be positive, too. In such case a strategist uplifts his or her goal and minimizes the gap. Strategist tries to repair the system and strategy to reach at the targeted goal to fulfill the performance gap in case of negative gap.


Below are concepts to help expand your understand of strategic management for a business. These will
help sharpen your focus for using Strategic Management for a Value-added Farm Business.

1) Strategic management involves deciding what is important for the long-range success of your business and focusing on it.
2) Strategic management asks, “How should I position my business to meet management and business goals?”
3) A business strategy is a series of business decisions that lead to achieving a business goal.
4) Strategic management involves the “big picture” of your business.
5) Strategic management involves planning, analyzing and implementing a business strategy.

6) Strategic management is most effective if you can step back far enough and say “all things are possible.”
7) The essence of strategic management is matching business resources to market opportunities.
8) Strategic management involves seeking and identifying opportunities and threats in the market and industry and the outside world in general.
9) Strategic management is based on the premise that “all businesses are not the same.”
10) Strategic management involves assessing the strengths and weaknesses of your business.
11) When assessing strengths and weaknesses, personal skills and abilities are likely to be more important than business assets.
12) Strategic management involves looking into the future rather than dwelling on the past.
13) Strategic management is proactive rather than reactive.
14) Strategic management involves anticipating change and taking advantage of it.
15) Strategic thinking involves assessing how decisions made today will affect my business in the future.
16) Strategic management is more of a state-of mind than a rigid process.
17) A military connotation of strategic management is “it hasn’t won every war, but it has avoided a lot of ambushes.”
18) Strategic management is most useful for businesses with unique or differentiated products for niche, specialty or differentiated product markets.
19) Strategic planning comes before business planning. Strategic planning is used to identify and assess alternative business strategies. Business planning is used to implement a business strategy.
20) Strategic planning is more words and less numbers than business planning.
21) A strategic plan is a “living” document that changes as your goals and resources evolve.