Unit 2 Strategy Formulation

Developing strategic vision and mission for a company

A strategic vision is the intended future of the organization that reflects the
organization’s values and aspirations and intends to capture the heart and mind of the
employees and other stakeholders. The strategic vision paves the strategic direction of
the organization and charts a strategic plan to go there. A company vision seeks to
outline where the company is headed and what values are guiding that journey. It tells
us the company’s purpose by focusing on the future and what the organization exists
to achieve. The vision statement should not need revising often; it is the foundation of
the company and is based on the company’s core beliefs. These core beliefs or values
are those that remain constant—regardless of business climate, profit level, or sales
cycle. Many organizations choose to specifically outline or list their core values as
part of their vision statement. When taking this route, remember the list should be
short—typically no more than about five items. These values should not be dependent
on current profits, current trends, or current economic circumstances. They’re more
constant than that and represent the deep-seated core values that remain at the heart of
the organization. Because it tells the organizational purpose and values, the vision
statement often influences the company culture and expectations, thereby giving
direction for employees. It should be very short and easy to communicate.

Like the vision, the mission also tells everyone the organization’s purpose—what
does the organization exist to do? What are the objectives? It goes beyond the vision,
however, by making a clearer delineation of company goals and how the vision will
be accomplished. In other words, the mission statement is a way to express the vision
in practical terms. It should be concrete and include goal-oriented language. It should
include measurable objectives. Every person within the organization can evaluate
whether his or her own activities will serve to help the company achieve its mission.
A mission statement is usually disseminated internally. It is used by employees,
stockholders, and by leaders throughout the organization. Like the mission, it should
also be short. It could even be a single sentence in some cases. While the company
vision is future-focused, the mission combines forward thinking with present goals. It
may be modified over time, but it should always stay true to the company vision and
values.

“A vision statement presents the firm’s strategic intent that focuses the energies and
resources of the company on achieving a desirable future.” – Pearce and Robinson

A manager should follow the following considerations while developing strategic

visions.

 All the key factors such as internal strengths & weaknesses, external changes &
trends, emerging needs, and service expectations of customers should be
reviewed very carefully.
 It should be external and market-oriented and expressed in an inspirational way.
 All the managers from the top to the lower level should be involved in the
process of developing the strategic vision. It enhances commitment to the
organization. It facilitates the formulation and implementation of the strategy.
 The managers should be asked to review related literature on the statement and
prepare a strategic vision for the organization.
 The Statements prepared by different managers should be merged into a single
document and distributed the draft statements to all managers.
 A meeting of the managers should be held for modifications, additions, and
deletions if needed and to revise the documents.
 As mentioned earlier, the input and support from the employees and managers
enrich strategy formulation, implementation, and evaluation activities. Hence, the
development of a strategic vision statement provides an opportunity for strategists
to obtain needed support from all the employees and managers.
 Some organizations use group discussions to develop and modify the existing
statement. An outside consultant or facilitator may also be hired to manage the
process and help draft the language.
 After preparing the statements, decisions on how to communicate them to all
managers, employees, and external stakeholders are needed. A videotape may be
prepared to explain the statement.

Process to develop vision and mission for organization consists

1. Identify competitive advantage

The competitive advantage or the unique selling proposition is what distinguishes us

from other competitors in the field. In this step we may need the help of our
employees. we can also use analytic tools such as USP Analysis, SOWT Analysis and
Core Competence Analysis.
2. Identify goals

In this step, we are not only identifying the goals, we are also working on putting
action steps that will help us achieve the identified goals. Remember that our goals
must second and nurture us competitive advantage. Set clear goals that can be
measured; we can use the tool SMART to identify the goals.
3. Define the organization values

Define what are the values that we will adopt to achieve our goals. Think about the
values that our organization has or want to have; this will help us define or develop
great ones. It can consist of only one word such as “integrity, innovation, quality,
teamwork etc.” or a phrase such as “access to education for all”. Our team members
can be a vital tool that may help us in defining our values.
4. Build our mission and vision statement

Combine the three steps mentioned above and start creating our mission and vision
statement relying on them. While creating, remember that the statement must be short,
concise, inspiring, motivational, broad, timeless and easy to remember. The
statements should clearly communicate the direction and values of an organization.
Setting Strategic Objectives
Strategic objectives are purpose statements that help create an overall vision and set
goals and measurable steps for an organization to help achieve the desired outcome. A
strategic objective is most effective when it is quantifiable either by statistical results
or observable data.

Businesses create strategic objectives to further the company vision, align company
goals and drive decisions that impact daily productivity from the highest levels of the
organization to all other employees.Strategic objectives are often one of the most
challenging components of a strategic plan because they create the bridge between our
big, bold vision and the annual goals needed to achieve it.

Strategic objectives establish the boundaries for what your organization’s effort must
focus on. They create the top layer of your strategic plan’s framework, articulating
what you’ll focus on to achieve your vision of success.

Strategic objectives are broad statements of direction that create a bridge from your
vision to the annual plan or goals. We like to refer to strategic objectives as “mini
vision statements” because they should support your overall vision of success but
break it down into manageable and actionable focus areas.

To create a strategic objective, we should follow these steps:

1. Determine clear goals based on your vision

Before you make a strategic objective, decide on your overall goals and desired
outcomes. Plan what areas are most important to your development strategy. Think
about how many objectives you need to achieve your overall vision. Consider
discussing these ideas with colleagues and team members to get their input before you
create specific strategic objectives.

2. Make a purposeful statement

To create a strategic objective, form a statement that shares how you will move from
point A to point B in a certain amount of time. This formula ensures you've stated
what you want to achieve and how you will make it happen. Choosing a timeline also
helps make an objective measurable rather than something general that you are
working toward.

3. Use actionable steps

Make your objective actionable, meaning your plans can be achieved through a series
of steps or specific actions. Consider how much time it will take to complete the
objective and the measured outcomes that will prove you have met it. Use specific
data figures like percentages and years or quarters.

4. Check in on progress
Plan to reassess your progress as you work to meet strategic objectives on your
chosen timeline. Evaluate how you are using your action steps to make a change
toward your overall goals. Adjust any objectives that need different action steps, or
create new strategic objectives based on what you observe.

Balanced scorecard
The balanced scorecard is a management system aimed at translating an organization's
strategic goals into a set of organizational performance objectives that, in turn, are
measured, monitored and changed if necessary to ensure that an organization's
strategic goals are met.There are many benefits to using a balanced scorecard. For
instance, the BSC allows businesses to pool together information and data into a
single report rather than having to deal with multiple tools. This allows management
to save time, money, and resources when they need to execute reviews to improve
procedures and operations.
Scorecards provide management with valuable insight into their firm's service and
quality in addition to its financial track record. By measuring all of these metrics,
executives are able to train employees and other stakeholders and provide them with
guidance and support. This allows them to communicate their goals and priorities in
order to meet their future goals.
Another key benefit of BSCs is how it helps companies reduce their reliance on
inefficiencies in their processes. This is referred to as sub-optimization. This often
results in reduced productivity or output, which can lead to higher costs,
lower revenue, and a breakdown in company brand names and their reputations.
Corporations can use their own, internal versions of BSCs, For example, banks often
contact customers and conduct surveys to gauge how well they do in their customer
service. These surveys include rating recent banking visits, with questions ranging
from wait times, interactions with bank staff, and overall satisfaction. They may also
ask customers to make suggestions for improvement. Bank managers can use this
information to help retrain staff if there are problems with service or to identify any
issues customers have with products, procedures, and services.
 A balanced scorecard is a performance metric used to identify, improve, and
control a business's various functions and resulting outcomes.
 The concept of BSCs was first introduced in 1992 by David Norton and
Robert Kaplan, who took previous metric performance measures and adapted
them to include non-financial information.
 BSCs were originally developed for for-profit companies but were later
adapted for use by nonprofits and government agencies.The balanced
scorecard involves measuring four main aspects of a business: Learning and
growth, business processes, customers, and finance.
 BSCs allow companies to pool information in a single report, to provide
information into service and quality in addition to financial performance, and
to help improve efficiencies.

Characteristics of the Balanced Scorecard (BSC)

Information is collected and analyzed from four aspects of a business:
1. Learning and growth: They are analyzed through the investigation of training
and knowledge resources. This first leg handles how well information is
captured and how effectively employees use that information to convert it to
a competitive advantage within the industry.
2. Business processes: They are evaluated by investigating how well products are
manufactured. Operational management is analyzed to track any gaps, delays,
bottlenecks, shortages, or waste.
3. Customer perspectives: They are collected to gauge customer satisfaction with
the quality, price, and availability of products or services. Customers provide
feedback about their satisfaction with current products.
4. Financial data: Sales, expenditures, and income are used to understand
financial performance. These financial metrics may include dollar amounts,
financial ratios, budget variances, or income targets.

Company Goals and Company Philosophy

Company goals

A company goal is an endpoint, accomplishment or target an organization wants to

achieve in the short term or long term. Business goals can take many different forms
and be aspirational or motivational, such as driving an organization toward a certain
objective like improved customer service. They can also have very specific
objectives, such as reaching a particular revenue target, net income, profit margin,
profit goal or other financial milestone. A mission statement is often seen as the
definition of an organization's purpose and reason to exist, which is a form of a
business goal. A vision statement is another common way for an organization to
articulate its goals by providing an outlook on where it wants to go.

company goals are an essential part of establishing priorities and setting our company
up for success over a set period of time. Taking the time to set goals for our business
and create individual objectives to help us reach each goal can greatly increase our
ability to achieve those goals. Business goals are goals that a business anticipates
accomplishing in a set period of time. We can set business goals for our company in
general as well as for particular departments, employees, managers and/or customers.
Goals typically represent a company's larger purpose and work to establish an end
goal for employees to work toward. Company goals do not have to be specific or have
clearly defined actions. Instead, company goals are broad outcomes that the company
wishes to achieve.

Setting business goals are important for several reasons, including that they can:

 Provide a way to measure success

 Keep all employees on the same page as to what the goals of the company are
 Give employees a clear understanding of how decision-making reaches the
company's goals
 Ensure the company is headed in the right direction

Company philosophy
A company philosophy is basically meant to show a specific direction or guiding
principle for the company and positively influence the company’s public image.
Through the company philosophy, the self-image and fundamental principles are
written down in the form of a target state. A company’s philosophy defines the
mission statement, a clear vision and company values.

1. Mission Statement: Company’s mission statement describes an organization’s

core objective, usually from a social point of view or with emphasis on corporate
social responsibility (CSR). The mission corresponds, so to speak, to the way in
which goals should be achieved.

2. Vision: “What would we like to achieve together in the future?” This is the
question the company vision addresses. The goal is to formulate a meaningful
and motivating vision to positively influence an employee’s own actions.

3. Values: Company values provide concrete action orientation. They are primarily
directed at the company’s own employees and are often communicated to
applicants for employer branding purposes. First and foremost, values are aimed
at work practices, interpersonal collaboration and responsibility. When
implemented correctly, they act as a guide for how employees should act. Values
are modifiable components of the company philosophy. They can be reviewed
from time to time and adjusted as necessary, for example, if a company scales
and finds certain values are no longer in line with their company philosophy.

Hierarchy of Strategic Intent

Organizations must define “what they want to do” and “why they want to do this”.
This “why they want to do” underlies the end result that is likely to be achieved
through “what they want to do”. This end result is referred to as “strategic intent”. In
simple terms strategic intent envisions a desired leadership position of the corporate.
Strategic intent refers to “expression of the leadership position the organization wants
to attain and establishes a clear criterion on how progress towards its achievement
will be measured”.
It refers to the purpose that organization strives for? What a firm should set out to
achieve? It is important to understand that strategic intent is internally focused,
defining what will be to produced and marketed, utilizing its internal core
competencies. As a name suggesting that “intent” related to future, whereas strategic
included clear plan of action designed to achieve organizational long term goals.
Therefore strategic intent may be defined as the plan of action (mission, vision and
goal) which is developed by the organization intended to achieve future’s goal.
Strategic intent is considered to be very important for any organization because it
aligns the organizational activities with the goals itself. This has three attributes sense
of direction, sense of discovery, sense of destiny.
To ensure that the organization is able to realize its strategic Intent, this concept has a
hierarchy and it includes organizational vision, mission, objectives, goals and plan.
The framework within which firms operate, adopt a predetermined direction and
attempt to achieve their goal is provided by strategic intent. Let us briefly understand
each of these concepts, though a detailed discussion is provided in subsequent
modules.
1. Vision: Vision is highest in hierarchy of strategic intent and reflects the
aspiration of organization. It is defined as a long term goal of the organization in
which organization is intended to achieve in future. Vision of the organization is
developed before starting the business. Therefore it aligns the every employee’s
work with the organizational long term goal. It is what that organization aspires
to be in future. It is the first element that organization focuses upon and acts
accordingly to other activities. For example: What I want my business to be?
2. Mission: Mission is fundamental unique purpose that sets a business apart from
other firms. it gives the answer of why organization exists and also defines the
path to achieve vision of an organization. Mission statement is written process
that communicates why organization exists. For example what my business is and
does?
3. Goals: Goals denote what an organization hopes to accomplish in a future period
of time. These are tactical objectives that organization’s management defines to
outline predictable future outcomes and guide employees' efforts. For example,
what will get my business there?
4. Objectives: Objectives are the end state specifically how the goals shall be
achieved. Objectives of the organization are short-term and medium-term goals
that an organization seeks to accomplish. It plays an integral role in formulating
policies for business and allocation of organizational resources at right place. For
example, right person at a right place.
5. Plan: It includes deciding about future in advance. It helps to achieve the long
term objectives of the firm and monitoring explicit strategy to achieve them.
Human resource allocation is also considered as one of the important aspect of
the planning.
Importance of Strategic Intent
Having a clear and well defined strategic intent is important because of the following
reasons. These include – 
 Expression of strategic intent is to help individuals and organizations share the
common intention to survive and continue or extend themselves through time and
space. 
 Achieve clarity of purpose among all managers and employees. 
 Project a sense of worth and intent to all the stakeholders. 
 Helps in Optimum utilization and allocation of the resources. 
 Good Vision is always a source of inspiration to the employees. 
 Brings in role clarity among employees. 
 Fosters long term thinking approach among the employees. 
 Reduces the chances of conflict. 
 Fosters risk taking and experimentation among the employees. 
 Makes the organization competitive, original and unique. 
 Promotes logical implementations of the plans. 
 Creates synergy in the efforts of the firm due to common desired strategic
direction. 
 Provides a focal point for all the stakeholders in an organization. 
 Enables superior organizational performance and therefore enhances shareholder
value. 
 Resolve divergent views among the managers.

Merging the strategic vision, mission, objectives into a strategic plan

The main reason for strategic planning is to facilitate an organization’s mission with
its visions and objectives. With no mission and vision, a plan subsists in a vacuum,
this is because the mission is the kickoff for a plan, the vision is the destination, and
corporate objectives and strategic plan is the road map that assists the organization to
steer from one to the other. The fundamental purpose of strategic planning is to align
a company’s mission with its vision. Without mission and vision, the plan exists in a
vacuum, as the mission is the starting point for planning, the vision is the destination,
and the strategic plan is the road map that helps you navigate from one to the other.
Values are also important to the strategic planning process as they provide the
organization with a touchstone for developing appropriate strategies and tactics; if any
strategy or tactic is in opposition to the company’s values, then it should be
reconsidered. Even if your organization already has well-defined mission, vision, and
values statements, you should review them throughout the strategic planning process.
Don’t assume that every member of your strategic planning team can articulate your
mission, vision, and values – especially if some of these team members are relatively
new to the organization; you need to ensure that they are current, resonate with key
stakeholders, and provide a firm foundation for planning. If such statements don’t
exist – or they need to be revised and updated – invest whatever time is necessary to
create mission, vision, and values statements that can provide a powerful framework
for strategy development. If your mission, vision, and values statements aren’t up to
the task, then it will minimize the likelihood of your strategic plan succeeding.

Leaders should emphasize the current mission statement to employees, which

clarifies the purpose and primary, measurable objectives of the organization. A
mission statement is meant for employees and leaders of the organization. Strategic
plans may involve changing the mission statement to reflect a new direction of the
organization. Highlighting the benefits of the change and minimizing the deficits
will help employees and the public buy into the change.Another way to look at it is
that mission statements describe the company's mission as it is now and for the near
future. So if the company is undergoing major changes, it would make sense to
revise the mission statement so it is current.
Like mission statements, vision statements help to describe the organization's
purpose. Vision statements give direction for employee behavior and help provide
inspiration. Strategic plans may require a marketing strategy, which could include
the vision statement to also help inspire consumers to work with the organization.
A vision statement is a view into the future with hope and a positive outlook. It
describes a company's inspirational, long-term plan for what they'll be able to
accomplish, who they will help, and how the company will then be perceived. It's
often out of reach for now, but not so far out of reach as to be unattainable. The
vision statement gives everyone a description of what they're working towards.
Strategic planning will likely have its successes and failures. Leaders should
celebrate the little successes toward meeting objectives, which are part of the
mission and vision statement. The mission statement will help measure whether the
strategic plan aligns with the overall goals of the agency. The vision statement helps
to provide inspiration to employees. Employees who feel invested in the
organizational change are more likely to stay motivated and have higher levels of
productivity.
A successful change will involve communicating and repeating mission and vision
statements, which helps prevent people from becoming discouraged in the event of
small failures along the way. Leaders should continue to highlight the strengths of
the strategic plan and involve important stakeholders in the process. Engaging
employees and volunteers will help them to recognize and take ownership of the
change. Involving employees also helps to provide more minds to prevent possible
problems.