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Strategic formulation, intent & balance score card
The document discusses key elements of mission statements, visions, objectives, and strategic planning. It provides examples of mission statements from companies like Walmart and GE. It also discusses the differences between visions, which describe an envisioned future, and mission statements, which focus on current activities. Objectives should be specific, measurable targets derived from the strategic vision. A balanced scorecard approach uses both financial and strategic objectives. Finally, it outlines the hierarchy from vision to goals to objectives to tactics in strategic planning.
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Strategic formulation, intent & balance score card
- 1. Mission Statement “reason forbeing.” “What is our business?” what an organization wants to be and whom it wants to serve Also called a creed (Faith) statement, a statement of purpose, a statement of philosophy, a statement of beliefs, statement of business principles Wal-Mart : “Saving people money so they can live better.” GE: “build, move, power, and cure the world.” Why do you Exist _________________
- 4. Mission Statement –Key Elements Customer needs – What is being satisfied Customer groups – Who is being satisfied Technologies/Resources/Business approaches used --and activities performed – How customer needs are satisfied
- 5. Vision “reason” for beingin business Should significantly stretch the resources and capabilities of the farm Should inspire people Should unite people
- 6. Vision – Components Core ideology Core Values - timeless guiding principles Core Purpose - reason for being Envisioned future Big Hairy Audacious Goals (BHAG) - clearly articulated goals Vivid description - a graphic description of what success and the future will be like Recognition of service to stakeholders Owners/creditors Employees Customers
- 7. Vision – ShouldNot be A “high concept” statement, motto or literature or an advertising slogan A strategy or plan and a view from the top A history of our proud past A “soft” business issue Passionless
- 8. Vision Wal-Mart Vision To becomethe worldwide leader in retailing GE We bring good things to life South West Airline To become the world’s most loved, most flown, and most profitable airline
- 9. South West Airlines ConnectPeople to what’s important in their lives through friendly, reliable, and low-cost air travel. To become the world’s most loved, most flown, and most profitable airline. dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.
- 10. South West Airlines ConnectPeople to what’s important in their lives through friendly, reliable, and low-cost air travel. Purpose To become the world’s most loved, most flown, and most profitable airline. Vision dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit. Mission
- 11. Any Guess to inspireand nurture the human spirit – one person, one cup and one neighbourhood at a time. Starbucks is committed to a role of environmental leadership in all facets of our business
- 12. Vision V/S Mission VisionStatement Wal-Mart Vision “To become the worldwide leader in retailing” GE We bring good things to life Mission Statement Wal-Mart Vision “Saving people money so they can live better.” GE “build, move, power, and cure the world.”
- 13. Vision V/S Mission •A mission statement focuses on current Business activities - - “Who we are and what We do” Current product and service offerings Customer needs being served Technological and business capabilities • A Strategic Vision concerns a firm’s Future business path -- “Where we are going” Markets to be pursued Future technology-product-customer focus Kind of company that management is trying to create
- 14. represent a managerialcommitment to achieve specified results in a specified period, of time. They clearly spell out the quantity and quality of performance to be achieved, the time period, the process and the person who is responsible for the achievement of the same. Objectives
- 15. Setting the Objectives Convertsstrategic vision and mission into specific performance targets Creates yardsticks to track performance Pushes firm to be inventive and focused on results Helps prevent complacency
- 16. Outcomes focused on improvingFinancial Performance Outcomes focused on improving Long-term Competitive Business Position Financial Objectives Strategic Objectives $
- 17. Financial Objectives • 9to 11 percent growth in earnings per share • 4 to 6 percent organic revenue growth • more than 20 percent return on invested capital • 100 percent free cash flow conversion (Free Cash Flow = Operating cash flow – capital expenditure) Strategic Objectives • expand 3M’s relevance to customers and presence in the marketplace; • gain market share and accelerate penetration; • invest in innovation; • achieve regional self-sufficiency; • build high-performing and diverse global talent; • and drive consistent and superior operational excellence Financial Performance Competitive Business Position
- 18. Financial Objectives • Anx percent of increase in annual revenues. • Annual increase in after-tax profit of x percent. • Annual increase in earnings per share of x percent. • Annual dividend increases of x percent. • Profit margins of x percent. Strategic Objectives • Winning an x percent of market share. • Achieving lower overall costs than rivals. • Overtaking key 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. Financial Performance Competitive Business Position
- 19. Financial Objectives • Anx percent return on capital employed (ROCE) or return on shareholders 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. Strategic Objectives • Having broader or deeper technological capabilities than rivals. • Having a wider product line than rivals. • Having a better-know 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. Financial Performance Competitive Business Position
- 20. Which type ofObjective is more important – Strategic or Financial?
- 21. Emphasis on financialperformance may assume priority over strategic performance when company’s Financial performance is dismal and Survival is threatened Otherwise, management is advised to put more emphasis on achieving strategic objectives Balanced scorecard approach for measuring company performance requires both – Financial objectives Strategic objectives
- 22. Balanced Scorecard Approach– Strategic and Financial Objectives
- 23. Which type ofgoal is more important – Strategic or Financial?
- 24. Balance Score CardFinancial Perspective Internal Process Perspective Learning & Growth Perspective Customer Perspective Vision & Strategy How do we look to Shareholders? What must we excel at? How can we sustain our ability to change and improve? How do customers see us?
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- 26. Objectives Measures FY-2018FY-2019 FY-2020 Initiatives Financial Customer Internal Learning and Growth
- 28. Balance Score CardFinancial Perspective Financial perspective Financial results (Quat/year) Cash flow Return on investment Return on capital employed
- 29. Balance Score Card “NumberOne in delivering Value to Customers”. Time Quality Service Cost Customers Perspective
- 30. Balance Score CardInternal process perspective Internal process perspective Process alignment Process bottlenecks Process automation No of activates per function
- 31. Balance Score CardLearning & Growth Perspective Learning & Growth perspective Training & learning opportunitie s Employee Turnover Job satisfaction Is there the correct level of expertise for the job ?
- 32. Balance Score CardAdvantages •It is used to align the business activities to vision and strategy •It improves Internal & External communications •It is used to monitor organizations performance •It provides management with comprehensive picture of operations •It provides strategic feed back •It improves decisions & better solutions
- 33. Balance Score CardDisadvantages •It Doesn’t provide Recommendations •It is not fully Efficient •It takes time •It is High Implementation of cost •It can show low profit
- 34. Can you putthe following in an order Goals Strategy Objectives Tactics
- 35. •A goal isa broad primary outcome. •A strategy is the approach you take to achieve a goal. •An objective is a measurable step you take to achieve a strategy. •A tactic is a tool you use in pursuing an objective associated with a strategy.
- 36. vision: If it'ssmart and connected, it's best with Intel. Mission: Utilize the power of Moore's Law to bring smart, connected devices to every person on earth. Goal: Make our Core PC microprocessors a category leader in sales revenue by year X. Objective: Retain 70 percent or more of the active worldwide PC microprocessor market, according to Passmark's CPU benchmark report. Tactic: Through creative that underlies our messaging, leverage hardware partner brand awareness to include key messages about the Intel Inside program. Strategy: Persuade buyers that our Core processors are the best on the market by associating with large, well-established PC manufacturers.
- 37. STRATEGIC FIT MODEL Strategic Mindsets STRATEGICINTENT MODEL Strategic thinking is driven by the match between current capabilities and existing opportunities Searching for sustainable advantages Finding protected niches Strategic thinking is driven by bridging gap between today’s reality and tomorrow’s vision Finding ways to leverage resources Outpacing competitors in building new advantages Making new industry rules
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- 40. Hierarchy of strategicintent Plans Objectives Mission Goals Vision More Integrative Fewest in Number More Specific Greater in Number
- 41. Characteristics of StrategicIntent Essence of Winning Stable over Time Within “arm’s reach “ of every consumer in the world Increased quality, reduced costs, cultivated export markets and then developed a new product
- 42. Personal effort and Commitment Enormous Creativity Enormous amountof creativity and Innovation in terms of their products Trust on the technology and accuracy
- 44. What Is StrategicPlan Vision + Mission + Objectives + Strategy = Strategic Plan
- 45. Strategic Plan isNot a….. A prediction for the future A smooth, predictable, linear process A substitute for judgment of leadership
- 46. Merging the strategic Vision, Objectivesand Strategy into Strategic Plan How Do we do this?
- 47. Merging the strategic Vision, Objectivesand Strategy into Strategic Plan We need to achieve unity …. Vision + Mission + Objectives + Strategy = Strategic Plan Percolating