JULIUS MAIN BODY WORK.docx

8/10/2019 JULIUS MAIN BODY WORK.docx

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CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Vision statements have been overwhelmingly accepted as an indispensable

part of the strategic management process for organizations of all types; be it

public sector, not-for-profit, private, for profit, a multinational or a small and

medium scale enterprise. It is widely believed that vision statements impact

on strategy and most aspects of organizational performance. Most firms have

vision statements. In the worst case scenario, vision statements are implied

implicitly. Supporting the above argument, Bart et al. (2001) posited,

referring to Bain et al. (1996) study, that vision statements had consistently

been shown to be the top-rated management tool deployed by senior

managers during each of the ten years prior to his study. Mullane (2002)

argued and supported it empirically that mission and vision statements are

useful for practical day-to-day operations, taking a contrary view to those

who assert they are archaic documents that are typically exhibited as wall

hangings.


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What differentiates firms from one another is their vision of the future and

their practical ability to act to realize that future by using their aesthetic

sensibilities to create knowledge (Nonaka, I. (2008). The process of creating

a sustainable vision is thought by some to be as important as the vision

itself. Although widely accepted in practice, the idea of a shared vision as a

driver or setting for sustainable change is elusive in academic literature. Yet,

little to no theoretical work has been done to integrate existing approaches in

the field of knowledge-based management and learning theory to design a

common vision model.

In the business world, a vision is a leaders ideological statement of a

desired, long-term future for an organization. A vision describes the ideal

future that the leader wants to create; it is articulated in what is referred to as

a vision statement. Most vision statements are not intended to be fully

achievable on a planned-out timetable; rather, they are intended to be

pursued or worked toward on a daily basis over the long term. The vision

often is communicated through concrete examples, stories, or analogies that

vividly describe the desired long-term state. For example, one flower shops

vision statement is We dont sell flowers,we sell beauty(Peters 2000).


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Its valuable to put your vision down on paper. A brief, well-crafted

statement creates clarity and provides employees and stakeholders with a set

of broadly stated principles against which our efforts can be measured and

that can be used to develop more specific guidelines, including your

strategy, goals, and key performance indicators.

But a sustainability vision is more than catchy words. It requires you to see

how to incorporate an emphasis on environmental, social, and economic

prosperity into every decision made throughout the organization, to think

about how it takes hold at the operating level. Having a vision means

constantly seeking answers to questions like these: What resources does

your business take from the environment? How are those resources

replenished? What are the biggest economic and social issues you face?

How do you interact with the community?

Each organization, in order to build their sustainable competitive ability and

long term growth and survival, has to include strategic and active monitoring

of their environment in their daily operations. In other words, organizational

change management. Example of long living companies show how change


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management can be considered as one of the major lever in organizational

survival. Only through active change management ,understanding needs and

predicting potential problem, mangers in long term can ensure case

functioning and development of organizations. With proper change

management and understanding the importance of organizational change in

different phases of life cycle, organization will be able to build and maintain

their sustainable competitive ability. Given that organizational change can

and should be managed if organization wants to be competitive, through this

paper basic principles of organizational change and change management in

building competitive advantage are presented as well as their impact on the

overall organizational behavior and longevity.

Special attention is given to the analysis of research done among long living

companies in the USA and Europe. Researches done among these companies

(Collins & Porras, 1994; de Geus, 2002; Stadler, 2007) have revealed that

one of the reasons why they survived is their sensitivity to the environment

in which they operate. Regardless of whether they have built their business

on knowledge or natural resources, they have stayed in harmony with the

environment surrounding them (de Geus, 2002:6). Although access to


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information as well as to other resources was not as easy as today, they still

have managed, in accordance with the given circumstances, to respond to the

conditions and requirements of the society around them. These companies

knew how to successfully manage their growth and development and they

have had a powerful engine for progress that allowed them to change and

adapt without compromising their fundamental ideals and values (Collins &

Porras, 1994).

1.2 Statement of the Problem

The role of organizational change and change management in building long

term organizational sustainability has been a major problem for most

corporate organizations. Organizations need to recognize the need for

different types of organizational changes that help them to achieve

congruence with their environment in order to stay in business for a long

period of time without critical shackles. Business practice has shown that

successful adaptation to changing environment can be considered as one of

the major source of sustainable competitive advantage and a source of

longevity. Most organizations find it difficult reacting to environment


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demands and managing changes in building sustainable competitive

advantage due to lack of visioning.

The sensitivity to the environment in which companies do business in is one

of the reasons for long term survival. Long living companies knew how to

successfully manage their growth their strong visioning for progress had

enabled them to change and adapt without endangering their core ideals and

values.

Long living companies differ from companies whose life expectancy was

very short by having successfully recognized needs of their organizations to

change in order to avoid different declines and crisis in their life cycle. The

capability to adapt to the environment, but at the same time to maintain

stability necessary for daily activities, becomes a critical issue.

Organizations need to have a built in mechanism for recognizing different

needs for change and developed mechanism for successful change

management.

However some organizations faced setbacks and made mistakes at some

point during their lives, they cant manage to maintain their basic principles


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and values, probably due to improper visioning. As Nohria, Joyce &

Roberson (2003) pointed out; with proper visioning an organization will

tend to display a remarkable resiliency, an ability to bounce back from

adversity. As a result, they attain extraordinary long-term performance. As

Nohria, et al., (2003) argue constant renewal to stay on top is essential since

falling down is easy but climbing back up is not. This study intends to

evaluate the effect of corporative visioning and organizational longevity in

Nigeria and thus recommends effective solution.

1.3 Objective of the Study

The main objective of this study is to evaluate the effect of corporate

visioning and organizational longevity in Nigeria, specifically the study aim;

1. To establish the relationship between corporate visioning and

organizational longevity

2. To establish the relationship between corporate visioning and

succession planning for longevity.

3. To recommend positive solutions towards organizational longevity


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1.4 Research Questions

1. What are the relationship between corporate visioning and

organizational longevity?

2. Is there any relationship between corporate visioning and succession

planning for longevity?

3. Are there positive factors that enhance organizational longevity?

1.5 Research Hypotheses

Hypothesis One

H0: There is no significant relationship between corporate visioning and

organizational longevity?

H1: There is significant relationship between corporate visioning and

organizational longevity

Hypothesis Two

H0: There is no significant relationship between corporate visioning and

succession planning for longevity


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H1: There is significant relationship between corporate visioning and

succession planning for longevity.

1.6 Significant of the Study

The important of visioning to organizational longevity are economical and

socially vital issues with important implications for shareholders. It seems

from the press, personal observation and scholars that the current economic

downturns have created awareness to corporate organizations in the business

environment unlike any in recent memory.

This research will be significance to all stakeholders such as the financial

sector, private sectors, government and policy maker

The research findings will enable the financial sector to know the right

approach in running their organization in order to create a strong vision to

successfully manage their growth and adapt without endangering their core

ideals and values.


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The findings from the research will be of immense benefit to private sectors

such as business organization, it will enable them to explore the barriers

behind growth and productivity in order to remain in business.

It is very obvious that key issue in accomplishing a high productivity

business organization is creating an effective visioning in order to remain

rigid in the business environment.

Finally this study will be of help to student and intellectuals, it will serve as

a body of literature for student who which to carry out research relating to

the topic.

1.7 Scope of the Study

The scope will cover issues on corporative visioning and organizational

longevity in Nigeria in ensuring growth, development and long life span in

an organization, with particular reference to Cutix Cable Plc Nnewi

1.8 Limitation of the Study

The researcher was limited by some constraint such as unavailability of

information as at when needed, as well as financial constraint.


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1.9 History Background of Cutix Cable Plc Nnewi

The idea for the company was conceived in 1981, when Dr.(Engr.) Ajulu

Uzodike decided to leave Raychem Corporation, a major international

manufacturer of aircraft & military wires and accessories, to set up an

indigenous firm to manufacture electrical cables and switchgear assemblies.

Adtec Ltd, a venture capital and management firm, which was incorporated

in 1978, started the two projects as separate divisions in 1982. Cutix Plc was

incorporated on November 4, 1982 as a Private Limited Company,

manufacturing electric cables and wires.

Ownership Structure

By mid-1983 some friends and relations of the founder and foundation staff

handling the projects were invited to invest in the projects initiated by Adtec

Ltd. After the private placement, 18 founding shareholders emerged for

Cutix Ltd, which took over the business of the cables division of Adtec Ltd.

The startup capital was N 400, 000.00. Cutix Ltd had been incorporated

earlier in 1982. Soon after the economy was liberalized in 1986, the

company went to the capital market, through the Second Tier Security


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Market, to raise funds. The public issue, which made Cutix the first private

company east of the Niger to be quoted on The Nigerian Stock Exchange,

was concluded by late 1987 (August 12,1987). After the public issue, the

company became Cutix Plc. The amount of new capital raised by Cutix since

inception to April 2008 stood at N264, 198,304.00 from both the private and

public issues. Through plough back of retained earnings into capital, the

book value of her capital as at April 2010 stood at N 475 million. The

market value of the company was N 1,057 million as at April 2010.

Machinery Programme

Cutix Plc started production with one extrusion line in 1984 and has been in

continuous production with the capacity to produce various cable and wire

products, and by 1985, they added a second line. By 1986, they added

several wire-processing lines to achieve integration par with leading cable

makers in Nigeria and elsewhere in the world. All machines were specified,

installed and commissioned by Cutix staff which is 100% Nigerian as a

deliberate policy. They also incorporated as much locally fabricated parts as

they could without lowering overall quality and efficiency. Their belief in


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the value of integration was so strong that during the difficult days of import

licensing, 1984 - 1986, the company used the bulk of the licenses obtained to

buy machinery for forward and backward integration. In 1992 the company

went a step ahead to become the first cable manufacturer to acquire a plastic

compounding line. In 1999 the first machine built by staff of Cutix was

successfully put in service.

Within 2000 to 2007, with a view to expanding our product lines and

capacity, Cutix had installed and commissioned a number of machines.

Which include, LBTS, F13, F-Shaw, Armouring Line, and Cabling machine

among others. The company believes in continual improvement and for the

purposes of expansion, another factory site is being developed opposite the

present one, and is expected to be commissioned before the end of 2012.

Business Logistics

Cutix Plc started manufacturing at Nnewi in a 1000 m2 facility it rented

from Adtec Limited. By 2009, they moved all their machinery to their own

factory premises and head office at 17 Osita Onyejianya Street, Umuanuka,

Otolo, Nnewi. Production now goes on at the new site, which has about


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6,000m2covered space. The company recently procured a new piece of land

adjacent to the head office where a permanent head office complex has been

completed and commissioned. The existing factory has also been extended

to create room for the installation of more machinery. The companys water

borehole and a 1000KVA generator have been commissioned. The company

has also acquired new delivery trucks to serve the distributors spread across

Nigeria. There are also sales offices of the company at Nnewi, Aba, Abuja,

Kaduna, Lagos and Uyo.

Stakeholders Welfare

Cutix Plc ensures that returns are distributed fairly to all stakeholders. The

company is managed in a way that maximizes long-term shareholders value

and takes into account the interest of all the stakeholders. Cutix Plc has been

paying regular dividends to her shareholders since she went public with the

dividends paid between 1997 and 2010 totaling about N246 million.

Cutix Plc has operated with an all-Nigerian workforce since inception. The

companys corporate philosophy is such that encourages growth of staff

from within and allows staff the opportunity for self-improvement while


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working. She was the first company in Nnewi to have a Condition of Service

in place for her workers. Salary paid to her staff is based on the productivity

of the company and she is generally respected for paying her staff very well.

Salaries have always been paid promptly on the 25th or 26th day of every

month.

Social Responsiveness

Cutix Plc are socially responsive and responsible. They pays due taxes to the

government promptly. Between 1997 and 2010, they pay about N239

million as Corporate Income tax to the Federal Government. Apart from

paying taxes and dividends, Cutix Plc has been pro-actively involved in

various social projects. Some of the projects include: - tarring and

maintenance of access roads to her factories; financial support to approved

vigilante groups, educational institutions, motherless babies homes,

community projects; educational assistance to the needy; heavily discounted

sales of cables to churches; sole sponsorship of annual ENIC Tennis League

tournaments; annual subvention to Nnewi Sports Club and provision of

water from her factory borehole to neighbours etc. Her top officers also have


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been playing and continue to play leading roles in many community

organizations.

Corporate Quality Policy

To provide exclusive high quality cable and wire products and

services with continual improvement in accordance with national and

international standards.

To meet customers requirements timely and at competitive prices.

Corporate Mission

To Power and illuminate the World.

Corporate Vision

To become one of the major three top players in the World producing

electrical energy products/services.

Core Values

Boldness

Excellence


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Innovation

Integrity

Openness

Corporate HSE Policy

Cutix Plc is committed to policies, procedures, regulations and code of

practices to enable her provide healthy and safe operating conditions for all

employees, visitors and the host community, as well as maintaining high

standard of environmental protection.

Points to Note

Cutix Plc is the first cable manufacturer in Nigeria to acquire a plastic

compounding line.

Cutix Plc is the first company east of the Niger to be quoted on the

Nigerian Stock Exchange.

There is a high commitment to quality as shown by the various quality

control (QC) points on their production chart.


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1.10 Definition of Terms

Corporative: A large company or group of companies authorized to act as a

single entity and recognized as such in law.

Visioning: The action of developing a plan, goal, or vision for the future.

Organizational:of or relating to an organization; "organizational structure

Longevity: Long life, long existence or service.


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CHAPTER TWO

REVIEW OF RELATED LITERATURE2.0 Introduction

This chapter discusses the view of previous writers on related studies on

corporative visioning and organizational longevity in Nigeria. According to

Anikpo (2001) knowledge is continuous and every new research is a stand in

the same unbroken intellectual chain. Reference must be made to the earlier

stands in the unfolding human knowledge to ensure continuity. After all, the

new can be a shadow of the old or flicker of light bread from a dark past.

This chapter will no doubt help firms, entrepreneurs, organizations,

government, managers, researchers and the general public to understand and

have a conceptual view on corporate visioning.

2.1 Theoretical Frame Work/Models of Corporate Vision

In this section, early concepts of vision, the theoretical literature on vision

definitions, attributes and content is discussed, followed by a review section

of the empirical literature.

Visioning theory by Locke & Latham, (1990 and 2002) was developed

inductively within industrial/organizational (I/O) psychology over a 25-year


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period, based on some 400 laboratory and field studies. These studies

showed that specific, high (hard) goals lead to a higher level of task

performance than do easy goals or vague, abstract visioning such as the

exhortation to do ones best. So long as a person is committed to the

vision, has the requisite ability to attain it, and does not have conflicting

visions, there is a positive, linear relationship between vision difficulty and

task performance. Because visioning refers to future valued outcomes, the

setting of vision is first and foremost a discrepancy creating process. It

implies discontent with ones present condition and the desire to attain an

objective or outcome.

Visioning is related to affect in that visioning set the primary standard for

self-satisfaction with performance. High, or hard, visions are motivating

because they require one to attain more in order to be satisfied than do low,

or easy, visions. Feelings of success in the workplace occur to the extent that

people see that they are able to grow and meet job challenges by pursuing

and attaining goals that are important and meaningful.


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The key moderators of vision setting are feedback, which people need in

order to track their progress; commitment to the vision, which is enhanced

by self-efficacy and viewing the vision as important; task complexity, to the

extent that task knowledge is harder to acquire on complex tasks; and

situational constraints. With regard to the latter, Brown, Jones, and Leigh

(2005) found that role overload (excess work without the necessary

resources to accomplish a task) moderates vision effects; visions affected

performance only when overload was low.

Visioning theory has high internal and external validity. As of 1990, support

for vision-setting effects had been found on more than 88 different tasks,

involving more than 40,000 male and female participants in Asia, Australia,

Europe, and North America (Locke & Latham, 1997). Vision effects have

been found in both laboratory and field settings, using both correlational and

experimental designs and numerous dependent variables. Time spans have

ranged from 1 minute to 25 years and effects have been obtained at the

individual, group, and organizational-unit levels. Visions are effective even

when they come from different sources; they can be assigned by others, they

can be set jointly through participation, and they can be self-set. In the latter


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instance, visioning are a key element in self-regulation. Visioning theory is

an open theory in that new elements are added as new discoveries are

made.

There is no doubt however that many leadership scholars have seen vision as

important to organizational longevity, strategy implementation, and change

(Collins & Porras, 1994; Doz & Prahalad, 1987; Humphreys, 2004; Hunt,

1991; Kotter, 1990; Robbins & Duncan, 1998; Sashkin, 1998). Although

some managers dismiss visions as irrelevant to organization performance

(Rynes, Colbert & Brown, 2002), businesses need a purpose (Avery, 2005).

Supporting this view, Handy (2002) argues that the purpose of a business

goes beyond making a profit, to something better, a higher-level purpose.

Bryman (2001) argues that charismatic leaders have a vision or a higher-

order purpose that they are capable of communicating to their followers in

such as way as to ensure that followers will enthusiastically commit

themselves to it. The leaders role then is to empower people to carry out the

vision, and to structure the organization and its culture according to the

vision. In trying to integrate the fragmented field of Leadership, Avery

(2004) names a paradigm of leadership Visionary Leadership, in which a


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leader espouses a vision to bring about superior performance outcomes

through involving follower emotional commitment to the vision. This

underlines the important role that vision plays.

2.2 Corporate Visioning

Despite its obvious importance, vision is still not defined in a generally

agreed upon manner, which is critical because empirical research on vision

may be affected by the various ways in which vision has been defined.

Moreover, practitioners may also be confused as to which definition to

adopt. Hunt (1996) and Sashkin (1988) suggest that vision is a form of

leadership in which a visionary leader transforms an organizational culture

to bring organization members to understand, accept and carry out his/her

plan for the organization. Quite differently, Pearson (2001), Phillip and Hunt

(1992) have viewed vision as one of the required tasks top managers

perform. Sashkin (1998) later on have viewed vision as a demonstration of

leadership competencies. Considerable disagreement also exists over

whether terms like mission, goals, core values, strategy, and organizational

philosophy differ from vision. For example, much confusion exists between


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vision and mission. In an educational setting, Hallinger and Heck (2002)

pointed out that an organizational mission is indeed a vision shared by

organizational members. According to them, mission or shared vision exists

when personal visions of a critical mass of people cohere in a common sense

of purpose within a community. Here, vision is a purpose. On the other

hand, Levin (2000) suggested that mission instead provides a statement of

the purpose of an organization's existence, while vision is a statement of

direction. Endorsing Levins view, OBrien and Meadows (2000) concurred

that mission is a statement of purpose, although others prefer to define

mission as an often-inseparable component of a business' vision. Lipton

(2002), among others, defined vision as a combination of mission, strategy,

and culture. In Liptons view, mission was defined as the purpose of an

organization, strategy as a basic approach to achieving the mission, and

culture as the values of an organization that support purpose and strategy.

Collins and Porras (1994) suggested two different components of vision:

core identity and envisioned future. To them, a good vision builds on

the interplay between these two complementary forces. The vision defines

what we stand for and why we exist that does not change (the core


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ideology) and sets forth what we aspire to become, to achieve, to create

that will require significant change and progress to attain (the envisioned

future). Therefore, a vision here indicates both purpose and direction.

Adopting a different view, other scholars stated that vision needs to come

first in order to subsequently drive development of mission and strategy

(Hay & Williamson, 1997; Parikh & Neubauer, 1993; Zaccaro & Banks,

2004). Therefore, vision, mission and strategy are three separable

components. In addition to the confusion between mission and vision, vision

is also seen as closely related to organizational goals and strategy (Levin,

2000; Schoemaker, 1992).

Philosophy and vision are also frequently confounded, probably because

both are inspirational and idealistic. However, Levin (2000) argued that

visions should go well beyond statements of philosophy by describing those

values and ideals in action, including a description of how these ideals are

practiced, what that experience is like for those affected, and a link between

these preferred behaviors and successful performance. It seems that a vision

here paints a picture of how it looks like and feels like when a vision is


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attained. Therefore, as opposed to many concise vision statements preferred

by other scholars (e.g. Locke et al., 1991), Levins notion of vision provides

for more lengthy vision statements.

From a view of New Science that means exciting breakthroughs especially

in quantum physics that are overturning centuries-old, Newtonian models of

science, Wheatley (2002) suggested that vision is a field which leaders can

use as a formative influence. Creating a vision means creating a power, not a

place; an influence, not a destination. This field metaphor would help leaders

to understand that they need congruency by matching visionary messages

with visionary behaviors. Leaders also would know that vision must

permeate through an entire organization as a vital influence on the behavior

of all stakeholders. Leaders would also feel genuinely threatened by

incongruous acts, because leaders would understand their disintegrating

effects on what they dream to accomplish. Their organization would become

an organization of integrity, where their words would be translated into

action.


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Despite the definitional confusion, a comparison of the various definitions of

vision suggests that they share a similar set of characteristics (Table 1).

Essentially, scholars agree that vision is about the future, induces people to

act towards a common goal, provides a sense of direction, and is important

for strategy and planning. Regardless of these commonly shared

characteristics resulting from attempts to define vision, there is little

agreement among academics as to what "vision" is. The situation does not

appear very different among practitioners, as they are equally confused with

the titles of mission, vision, values, beliefs, principles and strategic intent/

direction (Baetz & Bart, 2000). Raynor (1998) suggested that these concepts

are so tied together that to speak of one was to involve them all. Van der

Heijden (1999) introduced the term Business Idea, possibly as a way out,

which he defined as an organizations mental model of forces behind its

current and future success.


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Table-1: Commonly Shared Vision Characteristics

S/N Shared Characteristics Theories

1 Vision is always about adesirable future

e.g. Collins & Porras, 1994; Kotter,1997; Lipton, 2002; Sashkin 1998;Senge 2006

2 Vision is considered asnecessary for leadership, a

process of inducing othersto act towards a commongoal

e.g. Bennias 1990; locks et al 1991;Philips & Hunt, 1992; Quigley, 1993;Sashhkin 1998; Wheatley, 2002.

3 Vision provides a sense of

direction for organizationalmembers to proceed.

e.g. Collins & Porras,1994; Davis &

Meyer, 1998; Hunt; 2001; Jacobs &Jaques, 2000; Kotter, 1997; Levin2000; Lipton, 2002; Sashkin1988,1992; Seeley,1992; Senge,2000

4 Vision is seen as importantfor business strategy and

planning.

e.g. Collins & Porras,1994; Hay &Williamsom,1997; Pankin &

Neubauer, 1993; Shoemaker, 1992;Senge, 1990; Vandernerve, 2001.

Taking a pragmatic approach to resolve the definitional confusion, Baum,

Locke and Kirkpatrick (2001) chose to define the term vision as each leader

defines it, because it is the leaders actual vision that guides his/her choices

and actions. However, it appears that Baum et al. (1998) adopted the top-

down approach to leadership in defining a vision. Baum et al., (1998)

definition might not be practical in networked organizations of the future, in

which vision emerges from all organizational members (Avery, 2004).


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Indeed, the focus on vision has shifted from a vision as proclaimed by a

single central leader to a vision as proclaimed by all organizational

members. Avery (2004) provides a reason for this by suggesting that a vision

developed by a leader may not be the most effective as the business

environment becomes more heterogeneous, highly complicated and

dynamic. In the past where a business was locally defined and predictable, a

vision from the traditional single leader was enough to provide a right

direction. In such a dynamic and unpredictable context, leadership will need

to operate more through vision and values permeating the culture (Avery,

2004), which will become or replace the single guiding vision (Drath, 1998).

In this environment, each member of the organization shares the vision and

values, being able to respond effectively, innovatively and timely to

environmental changes. Avery (2005) also asserts that leaders that espouse a

vision will be able to sustain their corporate performance in the long run.

More appropriately dealing with the definitional issue and the changing

context, Mumford and Strange (2005) suggest that vision is ultimately a

cognitive construction or specifically a mental model, a conceptual

representation used to both understand system operations and guide actions


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within the system. I agree with Mumford and Stranges vision definition

because a vision, defined as a mental model, can accommodate both the top-

down and bottom-up approaches to leadership.

Vision Attributes

Senge (2006) argues that two types of vision exist: positive and negative

visions. According to Senge (2006), a positive vision emphasizes change

and aspirations for growth, while a negative vision emphasizes continuing

the status quo, even under changing environments. Despite the diverging

views on how to define a vision, many leadership scholars appear to agree

with Senge by providing different attributes seen to be necessary for a vision

to be positive. Among various opinions, Locke et al. (1994) view that an

effective vision is inspiring, abstract, brief, stable and motivating. On the

other hand, Conger (1998) suggests that an effective vision is strategic and

well-communicated while Jacobs and Jaques (2002) assert that long-term

and focus should be included. Sashkin (1998) proposed that effective visions

are inspirational, widely accepted, and integrated with visions of others. A

large group of scholars also argues that an effective vision should have

clarity, because the degree of clarity or precision of the vision statement


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influences how well the vision is understood and accepted (Jacobs & Jaques,

2002). Concurring with this view, Nanus (2000) suggested that effective

visions should be clearly understood and act to direct effort. Other scholars

have posited that effective visions should be inspiring and challenging to

energize employees around a shared value system (Locke et al, 1994)

Though many leadership theorists have postulated different attributes of

vision, there are some commonly shared attributes among them, as shown in

Table 2, which includes definitions derived from Baum (2001), Baum et al.

(2001) and Locke et al. (1994) who are among a few scholars studying the

commonly shared vision attributes.


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Table 2: Vision Attributes

S/N Shared

Attributes

Definition

1 Brevity A vision statement should be brief, but brevity shouloverrule the endeavor to state the vision definitely.

2 Clarity A vision statement should be clear and precise in such that it is understood and accepted. Clarity makeoverarching goals understandable to enable to everyone.

3 Future

orientation

A vision statement should focus on the long-term persp

of the organization andThe environment in which it functions. It should guid

organization for into the future.4 Stability A vision statement should be general and abstract enough

is not affected by most of the changes in the market technology.

5 Challenges A vision statement should motivate people to work towdesirable outcome. Ision challenge people to do their best

6 Abstractness A vision statement should represent a general ideal as opto a specific achievement. It is not a narrow, one-time go

can be met, then discarded.

7 Desirabilityor ability toinspire

A vision statement should represent an ideal that is working towards for the followers. If followers do not pethe vision as an attractive goal, they will never cothemselves to achieving it.

Although vision is emphasized as a core issue in the prevailing vision-based

leadership theories (Conger, 1998, Westley & Mintzberg, 2002), and many

characteristics of effective vision have been introduced, none of the

prevailing theories has exhaustively explained how each characteristic might

create an impact on organizational performance. In his effort to develop a


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vision theory to fill in the gap, Kantabutra (2003) asserted that the seven

vision attributes mentioned above interact to create a positive impact on

overall organizational performance initially through follower satisfaction. A

vision that is too brief will not positively impact overall organizational

performance unless it is clear to followers what needs to be done, or it may

not appear to challenge followers to do their best. A clear vision will not

positively influence follower satisfaction because it may be too lengthy,

preventing a leader to communicate it massively and frequently. It also may

be too abstract, therefore possibly creating conflicts among groups with

different specific purposes and not allowing for individual creative

interpretation among followers. A too specific vision makes it difficult to

form an effective group to carry out the vision. Moreover, abstractness

reflects stability in the vision because it implies no radical change over time.

An unstable vision suggests to followers a serious lack of managerial

integrity and commitment to the vision, negatively affecting follower

morale. A vision that is brief, clear, abstract, challenging and stable will not

draw follower commitment in working toward the vision unless the vision is

also inspiring or desirable. In addition, when a vision is not inspiring or


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desirable, it is unlikely to develop and nurture a shared vision, which is

critical to organizational performance. An inspiring vision that is clear, brief,

abstract, challenging, and stable will not be able to attract affective

commitment from followers unless it offers a compelling view of a better

future. Without a desirable future picture, a leader is unlikely to be able to

draw followers from where they presently are to work toward the vision.

Therefore, vision characterized by the seven vision attributes can improve

the visions effectiveness.

Vision content

Literature on vision content is sparse. Andrews, Boyne and Walker (2006)

draw from their study of one hundred and nineteen English local authorities

to suggest that measures of strategy content must be included in valid

theoretical and empirical models of organizational performance in the public

sector because strategy content impacts organizational performance. Baum

et al. (2001) argued that the content or core of a vision needs to be addressed

because it is important to organizational growth. In a healthcare context,

Williams-Brinkley (2003) argued that the focus of a healthcare vision should

always be on patients, their families, and staff. In a public school setting,


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Kantabutra (2005a) argued that vision content should contain reference to

teacher and student satisfaction, student achievement, and efficiency.

Kantabutra (2005b) also argues that a vision should contain reference to

corporate sustainability for a corporation to succeed in the long run. To be

specific, such vision content should contain reference to moderation,

reasonableness, the need for self-immunity mechanisms, knowledge and

morality to be able to sustain a business (Kantabutra, 2006).

A possible reason for the existence of many vision content proposals is that

what should be included in vision content depends on the types of business

and competitive environments in which they operate. If there is indeed

common vision content across organizations, whether and how organizations

can be developed, compete and sustain their strategic advantage are in a

serious doubt. Scholars appear to agree with this conclusion. For example,

Westley and Mintzberg (2002) suggest that the strategic content of a vision

may focus on products, services, markets, organizations, or even ideals, with

this strategic component being the central image that drives the vision.

Moreover, Collins and Porras (1994) suggest that vision content need not be

common across different visionary organizations. This is consistent with


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Pearson's view (1989) that a successful vision takes into account industry,

customers, and the specific competitive environment in identifying an

innovative competitive position in the industry.

In conclusion, what should be included in vision content depends on how a

business wants to position itself strategically, given that vision is ultimately

defined as a cognitive construction or mental model used to both understand

system operations and guide actions within the system (Mumford & Strange,

2005). This proposed vision definition appears to gain support from Westley

and Mintzberg (2002) who suggest that vision process and content are

blended together in accounts of visionary leadership. Though vision content

and process, and visionary leadership, are distinctly different, it is clear that

these aspects relate to one another in some complex ways. In theory, an

effective vision should also be brief, clear, abstract, future oriented, stable,

challenging and desirable or inspiring because these characteristics can

enhance visions effectiveness.


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2.3 Component of Visioning

Vision is the ability to think about or plan the future with imagination or

wisdom; a mental image of what a future will or could be like; and a

supernatural apparition (Oxford Dictionary of English, 2006). Merriams

Webster Dictionary (on line edition, 2011) defines Vision as a thought,

concept, or object formed by the imagination; a manifestation to the senses

of something immaterial; the act or power of imagination; mode of seeing

or conceiving; unusual discernment or foresight; direct mystical awareness

of the supernatural usually in visible form. Kotter (1996) states that vision

refers to a picture of the future with some implicit or explicit commentary on

why people should strive to create that future.

According to Kirkpatrick and Locke (2000), vision is a general transcendent

ideal that represents shared values, ideological nature and moral basis.

Conger and Kanungo (1997) referred vision to an idealized goal that leaders

want to achieve for organizations in the future. Visions challenge existing

norms, policies and conventional wisdom. Vision conveys expectations

of high performance. It provides confidence to the followers (House et al.,


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2001).Vision creates the spark and excitement to stop an organization from

doing ordinary things (Senge, 2006). Senge (2002) identified four factors

important to organizations vision as

(i) Core beliefs and values as the foundations of an organizations

vision

(ii) Vision elaborates a purpose for the organization,

(iii)

Vision explains what is to be done to fulfill its purpose, and

(iv) Vision specifies broad goals. According to Covey (2004),

leadership endures and changes the world for good when

conscience governs vision, discipline, and passion.

Vision serves three important functions in motivating change. One, it

clarifies the general direction of change; two, vision simplifies detailed

decisions; and three, it helps in coordinating quickly and efficiently the

actions of people having diversified background. Vision describes and

explains the organizations journey. Vision provides the basic reason why

the leaders and their followers are taking specific organization journey. It

must energize people and bring together the commitment of employees

towards organizational goals. This gives meaning to work. It establishes the


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standards of excellence. Vision describes and explains the journey and

provides the direction to reach the destination. It is concluded that vision is

conceptual and idealized representation of an organization. It is a strong

statement of believe about the right course of action which is necessary to

control the destiny of the organization. Vision is the mental perception and

understanding of the system and the environment that an organization

aspires to create. It is the manifestation of broad, creative and

applied picture or image that an organization sees of itself in the future.

Vision helps the organizations to conceptualize and understand the system

and guides towards the right course of action. It is vibrant, compelling and

comprehensive statement describing what the organization stands for, what

it believes in, and why it exists? It helps in setting idealized goals, plans,

targets and strategies through alignment of the resources accordingly

keeping in view the moral and ethical obligations of its stakeholders

in particular and for society in general.


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2.4 Effectiveness of Vision

Mission and vision statements have been overwhelmingly accepted as an

indispensable part of the strategic management process for organizations of

all types; be it public sector, not-for-profit, private, for profit, a multinational

or a small and medium scale enterprise. It is widely believed that mission

and vision statements impact on strategy and most aspects of organizational

performance. Most firms have mission and vision statements. In the worst

case scenario, mission and vision statements are implied implicitly.

Supporting the above argument, Bart et al. (2001) posited, referring to Bain

et al. (1996) study, that mission statements had consistently been shown to

be the top-rated management tool deployed by senior managers during each

of the ten years prior to his study. Mullane (2002) argued and supported it

empirically that mission and vision statements are useful for practical day-

to-day operations, taking a contrary view to those who assert they are

archaic documents that are typically exhibited as wall hangings.

Mullane (2002) have delineated how mission and vision statements can be

used to build a common and shared sense of purpose and also serve as


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conduit through which employees focus are shaped. Other schools of

thought believe mission and vision statements tend to motivate, shape

behaviours, cultivate high levels of commitment and ultimately impact

positively on employee performance (Mullane, 2002; Collins and Poras,

1991; Daniel, 1992, Campbell, 1989; Ireland and Hitt, 1992, Klemm et al.,

1991, Drucker 1959). Having accepted at least notionally the potential

strategic role of mission and vision statements, managers, researchers and

academics have tried to explore empirically their importance, especially in

terms of how the components impact on organizational performance since

1987 when the first attempt to investigate the relationship was made. Yet

most of the earlier empirical works have concentrated on senior executives

and managers; if not investigating how they formulate their mission and

vision statements then it is about how comprehensive their mission

statements are and how they impact on performance. The perspective of the

employee and, therefore, the larger work force has remained relatively

neglected.

For instance despite the missions significant and fundamental role in the

management and leadership of organizations, we know relatively little about


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how employees perceive the missions and how these perceptions relate to

other organisational attitudes such as satisfaction and behaviours such as

turnover (Brown and Yoshioka, 2003).

2.5 Development of Corporate Visioning

When developing the strategic visioning of an organization, it is important

to develop a vision of the future within which it will operate that is, an

awareness of why, where and how the organization and its competitors will

be competing in the future. There are five reasons for this:

1. Most organizations will compete for business and resources. They will

have ambitions that go well beyond the immediate future and it is

important for options to reflect this vision. Even not for-profit

organizations or those in the public sector usually need to compete for

charitable or government funds and often wish to increase the range of

services that they offer; such organizations will also benefit from a

picture of where they expect to be in the future.


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2. The organizations mission and objectives may be stimulated in a

positive way for the strategic options that are available from a new

vision.

3. There may be major strategic opportunities from exploring new areas

that go beyond the existing market boundaries and organization

resources (Hamel and Prahalad 1994).

4. Simple market and resource projections for the next few years will

miss the opportunities opened up by a whole new range of

possibilities, such as new information technologies, biogenetics,

environmental issues. New materials and lifestyle changes. Virtually

every organization will feel the impact of these significant

developments. Extrapolating the current picture is unlikely to be

sufficient (Hamel and Prahalad 1994).

5. Vision provides challenge for both senior and junior mangers without

the rigidities of an agreed mission and objectives.

Vision is therefore the backdrop for the development of the purpose and

strategy of the organization. It is not the same as mission and objectives,

vision is the future picture; mission and objectives describe the role and


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tasks that the organization chooses to adopt, based on the current situation.

However, it may be that the vision will lead to the mission and objectives;

for example the UBA vision led to the acquisition of Trade Bank.

A Vision of Success is a clear and succinct description of what the

organization or community should look like after successfully implementing

its strategies and achieves its full potential. It is an expression by the people

about what they want the organization to be a preferred future, a word or

picture of an organization you choose to create.

A Vision statement for an organization should include the organizations:

Mission

Basic philosophy, core values or cultural features

Goals (if established)

Basic strategies

Performance criteria

Important decision making rules


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Ethical standards of all employees

A Vision statement often includes a description of what the community will

look like in the future (related to housing, agriculture, trails etc), and how it

will embody opportunities and challenges.

Benefits of a Developing a Vision

Organizational members can see how they fit in an organization

Conception precedes perception

Agreement on vision gives the organization more power

The more specific and reasonable the vision, the greater the realization

Can help members recognize barriers to realizing the vision

May reduce organizational conflict

Helps the organization stay attuned to its environment

Example visioning processes:


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Develop a worksheet with a list of key questions to elicit values, desired

future state, challenges, and unique features of the organization.

However, vision will not always lead to mission, for example a small

company competing against a new hypermarket sees its vision as being

increased competition from a newly opened hypermarket. It might then

change is mission and objectives to that of moving from that geographical

area, rather than being driven out by the larger store in two years time.

Hamel and Prahalad have suggested five criteria for judging the relevance

and appropriateness of a vision statement.

These are shown in Table 1 they are important because it would be all too

easy to develop some wild and worthy that bore no relationship to the

organization, its resources and the likely market and competitive

developments.


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Table 1: Five criteria for judging the organizations investigation of itsvision.

Foresight

Breadth

Uniqueness

Consensus

Actionability

What imagination and real vision is shown? Over what time

frame?

How bro ad is the vision of the changes likely to take place in industry? And of the forces that will lead to the changes?

Is there an element of uniqueness about the future? Will it cauour competitors to be surprised?

Is there some consensus within the organization about the futurIf not, there may be a problem if too many different visions

pursued at once. Have the implications for current activity be

considered?Is basic agreement on the immediate steps required? Have tnecessary core competencies and future market opportunit

been identified?

Source: Hamel, A. and Prahalad, C.K. (1994) competing for the future. Harvard Business

School Press, Boston, p. 31.

2.6 Step to Corporate Visioning

There are generally five steps to a visioning process which each include

specific actions and tasks.


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TABLE 1: The Five Steps of Strategic Visioning

Visioning Step Action Description

STEP 1: Where are we

now?

Inventory Find descriptive data; Iden

values

STEP 2: Where are wegoing?

Trends Analysis Gather trend data; Determpossible future scenarios

STEP 3: Where do wewant to be?

Vision Statement Identify preferred future

STEP 4: How do weget there?

Action Plan Determine actions that supvision statement

STEP 5: Are we gettingthere?

Implement andMonitor

Implement plan; Monindicators

Source:Ames (2006)

STEP 1: Where are we now?

The first step to a corporate visioning process is to create a corporate

inventory that includes important data on the social, economic and

environmental aspects of an organization.

Start with corporate meetings or focus groups that generate statements about

core values, key standards and specific strategies that will help to define the

vision for the organization's future. The Asset Inventory and Mapping

process provides an opportunity for broad public participation. Survey the


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organization to discover important values, attitudes, beliefs, and knowledge.

This information can be compiled into a corporate profile to better

understand your current organization situation.

Asset Inventory and Mapping

In this approach to corporate visioning, assets include any item or

characteristic of value in an organization, and mapping helps identify how

the assets are connected. The Asset Inventory and Mapping (AIM) process

engages individuals by asking questions and focuses on the positive

attributes of a person, a situation, a resource, or the organization as a whole.

The process concentrates on what is working well, rather than trying to fix

what does not work. Instead of focusing on what is lacking, AIM identifies,

links, and enhances the core strengths of the organization. It is particularly

helpful for the organization trends analysis and in creating the vision

statement.

Several key principles when using AIM for visioning: organizational change

in the direction in which they ask questions; positive questions lead to

positive changes. With AIM, organization will discover more of what is


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good. The process is meant to engage the entire organization in a discovery

of what is working well around here?"

People have more confidence to make changes and move into the future (the

unknown) when they carry forward parts of the past (the known). Focusing

on the positive aspects of the past can lead to a positive future.

It is important to value differences in ideas, opinions, and assets because

these differences are a key part of the visioning process.

STEP 2: Where are we going?

The next step is to create a trends analysis. First, organize the data collected

in Step 1 to determine trends that happened in the past and appear to be

continuing in the present. Use the trends analysis to construct probable

scenarios or events that are likely to continue. The analysis should be based

on factual data to avoid controversy and to better understand where there

may be missing data. The trends analysis can be organized using the

Corporate Capitals Framework.


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The Corporate Capitals Framework

The Corporate Capitals Framework can be used in all of the visioning steps

but is very important when looking at trends. The framework helps to better

understand how investments within an organization exist, interact and

complement each other. Within each corporate firm, there are various assets

or capitals that contribute to the potential of an organization to develop and

prosper. Capital in at any given time; it is the net worth or value of all of the

tangible and intangible items in an organization. A corporate firm can invest

in these goods and services with the hope of increasing the worth of overall

organizational capital.

The corporate firm can identify key elements related to the following seven

organizational capitals:

Financial capital includes the fiscal resources available to invest in the

organization capacity-building. This includes supporting business

development, encouraging civic and social entrepreneurship, and

accumulating wealth for future organizational development. Political capital

reflects access to power and power brokers, such as local, county, state, or


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tribal government officials, or leveraging resources with a regional

company. Built capital is the organizational infrastructure such as

telecommunications, industrial parks, water and sewer systems, and

streets/roads.

Natural capital refers to environmental assets (natural resources and

amenities) such as parks, farm land, and features of the landscape. Cultural

capital reflects the way people act and interact, and the values, rituals,

customs, and habits that are shared and practiced. Human capital includes

the skills, abilities, and educational potential of people in a community, and

the ability to access outside resources. It also addresses the leadership

capacity of a community to be inclusive, participatory and proactive in

shaping the future. Social capital reflects the connections between people

and organizations and involves the ties that create and maintain trust,

reciprocity and networking.

STEP 3: Where do we want to be?

With an inventory and framework established, the organization should come

together to craft a vision statement describing how the future will look when


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the organization achieves its objectives and reaches its goals. The first draft

should organize recurring themes that have appeared from the inventory and

mapping and trends analysis and any organizational surveys that were

collected. The organization may decide that this draft will first be organized

by a smaller group of individuals, such as a steering committee.

The vision statement should be brief but detailed about significant attributes

of the organization, environment, people, and culture; it should describe a

clear picture of the preferred future. Look for organization efforts including

vision statements and strategic plans from the past, as these may be helpful

jumping-off points.

The Vision Statement

The vision statement is the mission of the organization and the benchmark or

standard by which change is measured. The statement is a critical aspect of

the visioning process and should be done deliberately and with as much

cooperation from the organization as possible. The statement should briefly

address the following questions: What is important in our organization? Is it

the geographic location, the culture, the history, etc? Who are we as a


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organization and what makes our organization unique? What do we want our

organization to be known for? What are the unique features of the area? Ask

the fundamental question, What isour story? What is our desired future?

What is our dream for the future if we had all the resources available to us?

Think about the what if portion of the statement. What attributes should be

enhanced? What do we do well and how can we continue on this path?

What do we want our organization to be, or look like in the future? How

would others describe our organization? How do we want others to describe

our organization? What parts of our organization do we want future

generations to enjoy, remember and appreciate?

STEP 4: How do we get there?

This step is the action planning phase that contains specific actions and

strategies that support the vision statement. Create a specific action plan that

details the following:

What is the desired outcome of theplan?

Who is responsible for accomplishing specific tasks in the plan?


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How detailed is the timeline to meet the objectives?

Is the budget realistic and are there commitments from funding sources?

How will the plan be implemented?

STEP 5: Are we getting there?

The final step involves implementing, monitoring and continuously

evaluating the action plan to ensure that the plan is being carried out with the

intended consequences. In order to effectively monitor and evaluate the plan,

identify key indicators so that the organization knows objectives are being

met. It is critical that the entire community understand the many

characteristics of indicators since it is often difficult to determine the

qualities of a good indicator.

Using Indicators to Evaluate Action Plans

An indicator is like a yardstick to measure how well an action plan is being

carried out and whether the goals of a strategic vision are being met. Good

features of indicators can make it easier to measure the progress of an

organization visioning process.


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There are eight desirable characteristics of an indicator:

Measurable: Indicators can be counted to measure change over a

given time period. For example, "there were 15 new jobs created in the

renewable energy sector in the last two years."

Reliable:Indicators should be measured precisely and accurately. If it

is reliable, it should also be repeatable and can be measured accurately by

different people. For example, changes in the number of new jobs over a

given period of time is a reliable indicator since the jobs can be counted and

are an observable fact by anyone.

Cost-Effective: Indicators should be cost-effective, generally using

simple equipment and techniques. A measurement that takes a long time to

acquire or is expensive is not likely to be analyzed over the long-term. An

example is a short survey asking business owners about economic trends and

job opportunities.

Significant: Indicators must relate to conditions or features that are

important to the visioning process. For example, the organization is


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number of jobs in the renewable energy sector, there should be a market for

those jobs and the potential to create those opportunities.

2.7 Factors Influencing the Vision of an Organization

Four major factors are identified that influence the vision of an organization.

These factors are Ideology, Purpose, Core values and Leadership. The

themes for these factors are derived using thematic analysis. These factors

give clarity and soundness to the vision. They provide the impetus, create

organizational culture, align people with goals and objectives and transform

them into an organizational force having clear and compelling vision. The

relationship of these factors and their influence on the vision of an

organization is presented in a thematic network (Figure 1) below


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Fig. 1: Thematic Network where Vision is the Global theme and Ideology, Purpose,

Core Values and Leadership are organizing themes. On the basis of these findings it

is proposed that;

The source of Sound

and authentic Ideology

is ethical Monotheism

Sound

Ideology leads

towards clear

Is the reason

of being of an

organizationIs the soul and

spirit of an

organization

Inspires, controls

and guides vision

of an organization

Defines the

belief system

and enduring

character of an

True leadership is

driven by

ideology, purpose

and core values

Instrumental in

transcendent and

transformation

of vision of an

Influences the

direction, spirit and

discipline of an

or anization

Are ideology and

purpose driven and

Explain

and justify the

existence of an

or anization

Are the

universal system

of belief and

behavior of an

Real purpose id

ideology driven

Provides the basis

for creation of

clear vision

Captures the soul

and spirit of an

organizationIdeology

Purpose

Leadership Core Value

Vision


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Proposition 1:The factors that influence the vision of an organization are

ideology, purpose, core values and leadership

Ideology

Ideology is the systematic body of beliefs, philosophy or concepts especially

about human life or culture. It is the systems of fundamental social

cognitions. It organizes the attitudes and other social representations shared

by members of groups. Ideology is the paradigms of thought at

organizational level. It defines the character of an organization. Ideology is

the soul and spirit of an organization and it inspires, guides, and controls the

vision of an organization. The source of guidance for sound ideology is God.

Ideology derived from human rationalism and collective wisdom, without

divine guidance, is weak ideology having narrow concept of values and

purpose. Sound ideology has universal principles, core values and greater

purpose.


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Proposition 2:

Vision based on sound and authentic ideology is sound, clear and

compelling while vision based on weak ideology is blurred and

unconducive.

Purpose: is the reason of being or existence of an organization. It provides

the basis for creation of vision, strategies, and all other course of action to

realize the vision. Purpose captures soul and spirit of an organization and

hence influences the vision of an organization. Collins (2001) elaborated

that purpose is broad, fundamental, and enduring when properly conceived.

The purpose serves to guide and inspire the organization for years, even a

century or more. Purpose creates vision whereas vision clarifies purpose.

Proposition 3: The companies with sound ideology and higher purpose

assign more importance to the normative aspects of life and are likely to be

more sustainable and profitable in the long run than those having weak

ideology and purpose based on week ideology


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Core Values

Core values represent the behavior and belief system of an organization.

They are set of universal principles, and standards for choosing right course

of action in day-to-day life of an organization. Values are not the exclusive

property of any one group or institution. Core values explain and justify

what people do and what organizations stand for. Since core values are

ideology and purpose driven they influence the vision of an organization.

Therefore, working on core values and practicing on them in the

organization setting is of profound importance for creating and clarifying the

vision of an organization.

Proposition 4: Purpose and Core Values increase the organizational

commitment by engaging, aligning and creating common and shared

workplace culture and hence the efficiency and performance of an

organization improve in the long-run

Leadership

Leadership influences the direction, spirit, and discipline of an organization.

It is perhaps the most important factor that influences the vision of an


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organization. Leaders transcend and transform the vision of the followers,

groups, and organizations. The future vision of the organizations will be

based on spirituality, ideology, and purpose driven leadership. Fry (2003)

identified five basic practices that enable leaders to get extraordinary things.

These fundamental practices include inspiring a shared vision, challenging

the process, enabling fellow beings to act, guiding the way, and setting the

example by behaving in manners consistent with shared values.

Proposition 5: Among the factors influencing the vision of an organization,

Leadership is the most important factor that influence the vision of an

organization

2.8 Corporate Governance/Visioning

Corporate governance is a system of structuring, operating and controlling a

company with a view to achieve long-term strategic goals to satisfy

shareholders, creditors, employees, customers and suppliers, and complying

with the legal and regulatory requirements, apart from meeting

environmental and local community needs. When it is practised under a

well-laid out system, it leads to the building of a legal, commercial and


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institutional framework and demarcates the boundaries within which these

functions are performed (International Financial Services Act, 2005)

Black (2006) defines corporate governance as the processes, structures and

information used for directing and overseeing the management of an

institution. A good corporate governance framework establishes the

mechanisms for achieving accountability between the Board, senior

management and shareholders, while protecting the interests of relevant

stakeholders. It also sets out the structure through which the division of

power in the organization is determined.

If all the government and governance systems and the people in them are

working well, in a perfect world, business can be conducted smoothly, fairly,

honestly, without hitches for the general good of all. It is a society in which

trust is taken for granted. There are many boards, companies and responsible

investors that make a positive difference. However, as we all know, the

world is far from perfect.

Good governance enables sustainable wealth creation whereas corrupt

governance erodes everything that enables decent sustainable living for the


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common good. Poor corporate governance, usually through a combination of

incompetence or criminal or corrupt practices, causes the eventual long-term

destruction of whole communities and countries. The reason for this is that

greedy people take as much as they can for their own short-term gains rather

than re-investing in continued productivity (Becht, 2003):.

The industry then lacks the resources to develop and grow. Millions of

people eventually lose their jobs and livelihoods while selfish rich people go

off to tax havens to play. What is even worse is that corruption breeds a

culture of bribery, blackmail, threat, cover up, deceit, favouritism and

vicious attempts to destroy any people who manifest integrity. A corrupt

culture infects the quality of our lives and our ability to live together in trust

and harmony.

Boards of directors are responsible for the corporate governance of

companies. The legacies they leave behind will determine whether our

children live in a healthy or unhealthy world. The quality of board

performance makes a huge difference.


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Good governance is integral to the very existence of a company. It inspires

and strengthens investors confidence by ensuring companys commitment

to higher growth and profits. It seeks to achieve following objectives (Becht,

2003):

1. That a properly structured Board capable of taking independent and

objective decisions is in place at the helm of affairs;

2.

That the Board is balanced as regards the representation of adequate

number of non-executive and independent directors who will take care

of the interests and well being of all the stakeholders;

3. That the Board adopts transparent procedures and practices and

arrives at decisions on the strength of adequate information. That the

Board has an effective machinery to subserve the concerns of

stakeholders;

4. That the Board keeps the shareholders informed of relevant

developments impacting the company; That the Board effectively and

regularly monitors the functioning of the management team; and


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5. That the Board remains in effective control of the affairs of the

company at all times.

The overall endeavour of the Board should be to take the organization

forward, to maximise long-term value and shareholders wealth.

2.9Appropriateness of Vision

According to conventional business thinking, the main goal of a company is

to create profit, and the fundamental task of the management is to find

solutions in order to increase continually this profit. Just give a test to all the

businessmen you know about this issue and the great majority of their

answers will be only one word: profit. May be, some of them will give a

more elaborate answer concerning strategies elaboration and implementation

in order to optimize the profit making process. Hardly, there will be a few of

them to consider a different perspective.

According to the new business wisdom, the main goal of a company is to

create social values, and the fundamental task of the management is to create

a competitive advantage for the company. Value creation is the raison

detre of firms: by devising and implementing strategies, firms create value


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for their customers and obtain returns for their owners (Woiceshyn and

Falkenberg, 2008, p. 85). The operational management has an inward

perspective, concentrating on productivity, efficiency and measures for cost

reductions, in order to increase the profit of the company and, thus, the

financial values for shareholders.

The term management refers to the process of getting things done,

effectively and efficiently, through and with other people (Robbins andDeCenzo, 2005, p. 7). Efficiency is the ratio between the output value to the

input value in a given process. It seeks to minimize resource costs. Actually,

we can define the efficiency as being the ratio between the maximum output

value of a given process to the minimum input value. Effectiveness refers to

goal attainment.

By contrast to this view, strategic management has an outward perspective

toward the market competition. According to Porter, competition is at the

core of the success or failure of the company. Competition determines the

appropriateness of the firms activities that can contribute to its performance,

such as innovations, a cohesive culture, or good implementation.


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Competitive strategy is the search for a fundamental arena in which

competition occurs. Competitive strategy aims to establish a profitable and

sustainable position against the forces that determine industry competition

(Porter, 1995, p. 1). In this perspective, strategic management is the process

of elaborating, implementing and evaluating strategies whose goal is

attaining the competitive advantage. Strategic management must provide a

dynamic equilibrium between the internal field of forces and the external

field of forces at the firms functional interface, and must be based on a

strategic thinking pattern (Bratianu and Murakawa, 2004). According to

Porter (1985, p. 3) Competitive advantage grows fundamentally out of

value a firm is able to create for its buyers that exceeds the firms cost of

creating it. Value is what buyers are willing to pay, and superior value stems

from offering lower prices than competitors for equivalent benefits or

providing unique benefits that more than offset a higher price.

Thus, in understanding the real essence of management we should use a

reverse logic, from the consumers needs toward value creation by the

company in order to satisfy these needs. A company does exists to create


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value for consumers, and the profit it makes represents only a consequence

of its actions and not a first priority.

The profit is necessary since it is an existential requirement, but it is not

anymore the driving force of the company. In this view, even the company

model changed from the mechanical one to a social one. A company is a

living entity which has got a mission, a vision and business wisdom based

on some core values. All companies exhibit the behaviour and certain

characteristics of living entities. All companies learn. All companies,

whether explicitly or not, have an identity that determines their coherence.

All companies build relationships with other entities, and all companies

grow and develop until they die (De Geus, 2001, p. 17).

2.10 Succession Planning and Longevity

Handler (2001) defines family enterprise succession as the passing of the

leadership baton from the founder-owner to a successor who will either be a

family member or a non-family member. The implication here is that

ownership will remain in the family. Handler (2001) divides succession into

two parts, ownership and management, which suggests there may be a


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variety of combinations of ownership and management available to the

enterprise in transition. Alcorn (2002) maintains that succession refers

specifically to changes in the boss position. Essentially, Aronoff (2003)

says that, narrowly speaking, succession means the transition of family

business leadership and ownership from one generation to the next. Broadly

speaking, he argues, succession is a lifelong process of planning and

management that encompasses a wide range of steps aimed at ensuring the

continuity of the business through generations.

Between 80 percent and 90 percent of businesses are family owned (Alcorn,

2002). Yet, many of these businesses never establish a structure for

succession of the business from current generation to future ownership.

Without proper planning, following the original owners death or retirement,

the business could be forced into sale or collapse from improper decisions

made by new, inexperienced management. Or, a protracted dispute could

develop, which might result in serious depletion of the companys resources

and a substantial reduction in the legacy passed along to future generations.


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The problems and resistance associated with developing a viable, coherent,

and agreeable succession plan are immense. For the family business owner,

the ability or willingness to manage and direct the interactions between the

extraordinarily complex areas of personal, family, management, ownership,

and estate issues can be daunting. Moreover, these issues are often further

obscured by, or in conflict with, other family members personal wants and

needs. Add to that the owners possible fear of losing control and position,

both in the business and in the family, and its no wonder then why

avoidance and denial are the principle responses to succession planning.

Succession of a family business really includes the strategic transition of five

distinct areas for business succession (Handler, 2001):

1. Business Succession

2. CEO/Owner Succession

3. Management Succession

4. Ownership Succession

5. Estate Succession


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1. Business Succession

Strategic planning relates to the actual viability of the business itself in the

future. The goal is to ascertain whether or not this is a business with a future.

And if so, what is the vision and values that will be needed to drive and

maintain it. Questions to ask include (Handler, 2001)::

Is this a business with a future?

Should the business be sold or should it go forward?

If it goes forward, what is required to make the transition a success?

What is the best way to accomplish these changes?

What impediments exist to defeat this business?

Do I/We want to continue this business?

How much change is required to run this business in the future?

Do the future values of this business match that of the family?


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2. CEO/Owner Succession

Strategic planning relates to the personal transition of the business owner.

How able and capable they are of shifting roles and handing over the reins of

business control are paramount. Issues of moving from action-maker to

consulting advisor or outsider are central. Thedesire/ability to develop

other non business interests that are valued are included. Strategic questions

include (Handler, 2001):

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