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2. Mission & Goals .ppt

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2. Mission & Goals .ppt

  1. 1. MISSION AND GOALS Mission Statement The corporate mission statement is the first key indicator of how an organization views the claims of its stakeholders. All strategic decisions flow from the mission statement. Typically, the mission statement has three components: 1. it defines the organization's business, 2. it states its vision and goals, and 3. it articulates its main philosophical values.
  2. 2. The following Figure gives an example of a mission statement of Weyerhaeuser Co., the largest U.S. forest Products Company. Although this statement does not define Weyerhaeuser's business, it clearly articulates the company's vision and philosophical values. Most of the items listed under "Our Strategies" are actually major goals of the company.
  3. 3. Mission statement of Weyerhaeuser Co. Our Vision The best forest products company in the World. Our Strategies We shall achieve our vision by: Making Total Quality the Weyerhaeuser way of doing business. Relentless pursuit of full customer satisfaction. Empowering Weyerhaeuser people. Leading the industry in forest management and manufacturing excellence. Producing superior returns for our shareholders.
  4. 4. Mission statement of Weyerhaeuser Co. •Our Values •Customers. We listen to our customers and improve our products to meet their present and future needs. People. Our success depends upon high- performing people working together in a safe and healthy workplace where diversity, development, and teamwork are valued and recognized.
  5. 5. Mission statement of Weyerhaeuser Co. Accountability. We expect superior performance and are accountable for our actions and results. Our leaders set clear goals and expectations, are supportive,- and provide and seek frequent feedback. Citizenship. We support the communities where we do business, hold ourselves to the highest standards of ethical conduct and environmental responsibility, and communicate openly with Weyerhaeuser people and the public. Financial Responsibility. We are prudent and effective in the use of the resources entrusted to us.
  6. 6. DEFINING THE BUSINESS The first component of a mission statement is a clear definition of the organization's business. Essentially, defining the business involves answering these questions. • What is our business? • What will it be? • What should it be? The answers vary depending on whether the organization is a single-business or a diversified enterprise.
  7. 7. A single-business enterprise is active in just one main business area. For example, U.S. Steel in the 1950s was involved just in the production of steel. By the 1980s, however, U.S. Steel had become USX Corporation, a diversified company with interests in steel, oil and gas, chemicals, real estate, transporta- tion, and the production of energy equipment.
  8. 8. A Single Business Company To answer the question, “What is our business”, Derek F. Abell has suggested that a company should define its business in terms of three dimensions:  Who is being satisfied (what customer groups),  What is being satisfied (what customer needs),  How are customer needs being satisfied (by what skills or distinctive competencies)?
  9. 9. Abell's approach stresses the need for a consumer-oriented rather than a product- oriented business definition. Product oriented definition A product-oriented business definition focuses just on the products sold and the markets served. This approach obscures the company's function, which is to satisfy customer needs.
  10. 10. Consumer oriented definition A product is only the physical manifestation of applying a Particular skill to satisfy a particular need of a particular consumer group. In practice, the particular need of a particular consumer group may be served in different ways. Identifying these ways through a broad, consumer-oriented business definition can safeguard companies from being caught unawares by major shifts in demand.
  11. 11. It can help answer the question what is our business.
  12. 12. Definition of a diversified company A diversified company faces special problems when trying to define its business because it actually operates several businesses. In essence, the corporate business is often one of managing a collection of businesses. In a diversified enterprise, the question, ‘what is our business?’ must be asked at two levels: the business level and the corporate level. At the business level, the focus should be on a consumer-oriented definition.
  13. 13. But at the corporate level, management cannot simply aggregate the various business definitions, for doing, so will lead to an imprecise and confusing Statement. Instead, the corporate business definition should focus on how the corporate level adds value to the constituent businesses of the company. That is, the mission statement should identify the contribution that the corporate level makes to the efficient operation of business units
  14. 14. VISION AND MAJOR GOALS The second component of a company's mission statement, the detailing of as vision and major corporate goals, is a formal declaration of what the company is trying to achieve. The spelling out of the vision and major goals gives direction to the corporate mission statement and helps guide the formulation of strategy.
  15. 15. Philip Morris’s Mission Statement Our Mission is to be the most successful consumer packaged, goods company in the world. We pursue our mission by: Maintaining the highest quality of people. Protecting and building our brand franchises. Growing profitable new business with line extensions, new products, geographic expansion, acquisitions, and joint ventures and strategic alliances. Maximizing productivity and synergy in all businesses at all times.
  16. 16. Philip Morris’s Mission Statement Making Total quality management a reality in every aspect of our everyday operations. Managing with a global perspective
  17. 17. Beyond articulating their vision, many companies also state other major goals in their mission statement. These goals specify how a company intends to go about attaining its strategic intent.
  18. 18. For example, the Weyerhaeuser mission statement tells the company that it intends to attain its vision by focusing on total quality, empowering its employees, and striving to satisfy customers. All these goals shape the choice of strategies. The goal of maximizing productivity, for instance, indicates that when a company reviews its strategic options, it will favor strategies that increase its productivity.
  19. 19. Maximizing shareholder Wealth Most profit-seeking organizations operate with a variety of major corporate goals. All these goals should be directed toward one end: maximizing stockholder wealth. Stockholders provide a company with capital and in exchange expect an appropriate return on their investment. A company's stockholders are its legal owners.
  20. 20. Stockholders receive returns in two ways: From dividend payments and from capital appreciation in the market value of a share (that is, by increases in stock market prices). A company can best maximize stockholder returns by pursuing strategies that maximize its own return on investment (ROI), which is a good general indicator of a company's efficiency.
  21. 21. Higher ROI leads to greater demand for a company's shares. Demand bids up the share price and leads to capital appreciation. An overzealous pursuit of ROI can misdirect managerial attention and encourage some of the worst management practices, such as maximizing short-run rather than long-run ROI.
  22. 22. A short-run orientation favors such action as cutting expenditures judged to be nonessential in a particular span of time— for instance, expenditures for research and development, marketing, and new capital investments. Although decreasing current expenditure increases current ROI, the resulting underinvestment, lack of innovation, and poor market awareness jeopardize long-run ROI.
  23. 23. Yet despite these negative consequences, managers do make such decisions because the adverse effects of a short-run orientation may not become apparent to stockholders for several years.
  24. 24. Secondary Goals To guard against short-run behavior, Drucker suggests that companies adopt a number of secondary goals in addition to ROI. These goals should be designed to balance short-run and long run considerations.
  25. 25. Drucker's list includes secondary goals relating to these areas: (1) Market share. (2) Innovation, (3) Productivity, (4) Physical and financial resources, (5) Managers’ performance and development, (6) Worker performance and attitude, and (7) Social responsibility.
  26. 26. CORPORATE PHILOSOPHY The third component of a mission statement is a summing up of the corporate philosophy: the basic beliefs, values, aspirations, and philosophical priorities that the strategic decision makers are committed to and that guide their management of the company.
  27. 27. It tells how the company intends to do business and often reflects the company's recognition of its social and ethical responsibility. A statement of corporate philosophy can have an important impact on the way a company conducts itself. A company's creed forms the basis for establishing its corporate culture.
  28. 28. The creed of Lincoln Electric Co., for instance, states that productivity increases should be shared primarily by customers and employees through lower prices and higher wages. This belief distinguishes Lincoln Electric from many other enterprises and, by all accounts, is acted on by the company in terms of its specific strategies, objectives, and operating policies.
  29. 29. Johnson and Johnson’s Credo Our Credo We believe our first responsibility is to the doctors, nurses, and patients, to mothers and fathers and all others who use our products and service In meeting their needs everything we do must be of high quality. We must constantly strive to reduce our costs in order to maintain reasonable prices.
  30. 30. Customers orders must be serviced promptly and accurately. Our suppliers and distributors must have an opportunity to make a fair profit. We are responsible to our employees, the men and women who work with us throughout the world. Everyone must be considered as an individual, We must respect their dignity and recognize their merit. They must have a sense of security in their jobs. Compensation must be fair and adequate,
  31. 31. and working conditions clean, orderly and safe. Employees must feel free to make suggestions and complaints. There must be equal opportunity for employment, development and advancement for those qualified. We must provide competent management, and their actions must be just and ethical. We are responsible to the communities in which we live and work and to the world community as well.
  32. 32. We must be good citizens support good works and charities and bear our fair share of taxes. We must encourage civic improvements and better health and education. We must maintain in good order the property we are privileged to use, protecting the environment and natural resources. Our final responsibility is to our stockholders. Business must make a sound profit. We must experiment with new ideas.
  33. 33. Research must be carried on, innovative programs developed and mistakes paid for, New equipment must be purchased, new facilities provided and new products launched. Reserves must be created to provide for adverse times. When we operate according to these principles, the stockholders should realize a fair return.
  34. 34. CORPORATE STAKEHOLDERS Stakeholders are individuals or groups that have some claim on the company. They can be divided into  internal claimants and  external claimants. Internal claimants are stockholders and employees, including executive officers and board members.
  35. 35. External claimants are all other individuals and Groups affected by the company's actions. Typically, they comprise customers, suppliers; governments, unions, competitors, local communities, and the general public.
  36. 36. Stakeholder impact analysis A company cannot always satisfy the claims of all stakeholders. The claims of different groups may conflict, and in practice few organizations have the resources to manage all stakeholders. For example, union claims for higher wages can conflict with consumer demands for reasonable prices and stockholder demands for acceptable returns. Often the company must make choices.
  37. 37. Typically, stakeholder impact analysis involves the following steps: • Identifying stakeholders • Identifying stakeholders' interests and concerns • As a result, identifying what claims stakeholders are likely to make on the organization • Identifying the stakeholders that are most important from the organization’s perspective • Identifying the resulting strategic challenges.