Part Two: Part Two: STRATEGY FORMULATION and STRATEGY FORMULATION and

IMPLEMENTATIONIMPLEMENTATION

COMPANY VISION COMPANY VISION and MISSIONand MISSION

Prepared and Presented by:LORENZO E. GARIN JR., MPMNUIC, Instructor

Learning ObjectivesLearning ObjectivesDescribe a company mission and explain Describe a company mission and explain

its valueits valueExplain why it is important for the mission Explain why it is important for the mission

statement to include the company basic statement to include the company basic product or service, its primary markets, product or service, its primary markets, and its principal technologyand its principal technology

Discuss the importance of company Discuss the importance of company philosophy, public image, and company philosophy, public image, and company self concept to stockholdersself concept to stockholders

Describe the company’s board of directorsDescribe the company’s board of directors

What is Strategic Management?What is Strategic Management?

Strategic ManagementStrategic ManagementThe set of decisions and actions used The set of decisions and actions used

to formulate and implement strategies to formulate and implement strategies that will provide a competitively that will provide a competitively superior fit between the organization superior fit between the organization and its environment so as to achieve and its environment so as to achieve organizational goals.organizational goals.

Defines the desired or intended future Defines the desired or intended future state of an organization or enterprise in state of an organization or enterprise in terms of its strategic direction. Vision terms of its strategic direction. Vision is a long term view, sometimes is a long term view, sometimes describing how the organization would describing how the organization would like the world in which it operates to be. like the world in which it operates to be.

For example a charity working with the For example a charity working with the poor might have a vision statement which poor might have a vision statement which read "A world without povertyread "A world without poverty

What is Company Vision?What is Company Vision?

Reasons for having a vision Reasons for having a vision statementstatement

Gets team focused.Gets team focused.Shows a picture of where the company Shows a picture of where the company

is going.is going.Instills focus, discipline, and structure Instills focus, discipline, and structure

within the organization.within the organization. Ensures that team understands Ensures that team understands

company direction.company direction.

    

How to write a Vision? How to write a Vision?    Determine the organization's overriding goalDetermine the organization's overriding goal State what the organization envisions itself to be in State what the organization envisions itself to be in

terms of values, employees, growth and contributions to terms of values, employees, growth and contributions to society.society.

Look at vision statements of competitors in the industryLook at vision statements of competitors in the industry Use wording that will inspire your team. Think of Use wording that will inspire your team. Think of

adjectives and sentences that will get the team excited adjectives and sentences that will get the team excited and will make them think they are part of something that and will make them think they are part of something that is much bigger than something they could have thought is much bigger than something they could have thought of themselves.of themselves.

Get other people on the team to critique the draft of the Get other people on the team to critique the draft of the vision to make sure it's effective and inspiring. If there vision to make sure it's effective and inspiring. If there are any key customers the organization trusts, ask them are any key customers the organization trusts, ask them to review the draft too.to review the draft too.

What is Company Mission?What is Company Mission?

Company MissionCompany Mission

The unique purpose that The unique purpose that sets sets a company apart from a company apart from others of its others of its type and type and identifies the scope of its identifies the scope of its operation. In product, operation. In product, market, market, and and technologytechnology

MissionMission Definition: A sentence describing a company's Definition: A sentence describing a company's

function, markets and competitive advantages; a function, markets and competitive advantages; a short written statement of your business goals short written statement of your business goals and philosophies and philosophies

A mission statement defines what an A mission statement defines what an organization is, why it exists, its reason for organization is, why it exists, its reason for being. At a minimum, your mission statement being. At a minimum, your mission statement should define who your primary customers are, should define who your primary customers are, identify the products and services you produce, identify the products and services you produce, and describe the geographical location in which and describe the geographical location in which you operateyou operate

Importance of Mission

MissionResource Allocation

Unanimity of Purpose

Organizational Climate

Focal point for work structure

Benefits from a strong mission

Mission Elements

CustomersMarkets

Employees

PublicImage

Self-Concept

SurvivalGrowthProfit

ProductsServices

Technology

How to write a Mission?How to write a Mission? Ask "What do we do?"; "How do we do it?"; Ask "What do we do?"; "How do we do it?";

and "For whom do we do it," and "For whom do we do it," Create a draft mission statement describing Create a draft mission statement describing

how the company uniquely answers these how the company uniquely answers these questions. Touch on the organization's current questions. Touch on the organization's current operations and the industry it is in.operations and the industry it is in.

Look at competitors in the industry and use Look at competitors in the industry and use their mission statements for research. Ask their mission statements for research. Ask yourself what works and what does not work. yourself what works and what does not work. Revise your mission statement as needed.Revise your mission statement as needed.

Get feedback from other members of the Get feedback from other members of the organization once the statement is drafted. organization once the statement is drafted. 

The Difference between The Difference between Vision & MissionVision & Mission

Vision - The FutureVision - The FutureDefinition: The way in which one Definition: The way in which one sees or conceives something; a sees or conceives something; a mental image; An overall statement of mental image; An overall statement of the goal of the organization.the goal of the organization.Vision should describe what will be Vision should describe what will be achieved in the wider sphere if the achieved in the wider sphere if the organization and others are successful organization and others are successful in achieving their individual missions. in achieving their individual missions. 

Mission - The PresentMission - The PresentDefinition: An assignment one is sent to Definition: An assignment one is sent to carry out; a self-imposed duty. A mission carry out; a self-imposed duty. A mission statement identifies the reason for the statement identifies the reason for the existence of the organization. The statement existence of the organization. The statement should be linked to the overall operations should be linked to the overall operations and business of the organizationand business of the organizationA Mission statement is more specific to A Mission statement is more specific to what the enterprise can achieve itself.what the enterprise can achieve itself.

The Difference between The Difference between Vision & MissionVision & Mission

Which comes first?Which comes first?    That depends. If you have a new start up business, That depends. If you have a new start up business,

new program or plan to reengineer your current new program or plan to reengineer your current services, then the vision will guide the mission services, then the vision will guide the mission statement and the rest of the strategic plan. If you statement and the rest of the strategic plan. If you have an established business where the mission is have an established business where the mission is established, then many times, the mission guides the established, then many times, the mission guides the vision statement and the rest of the strategic plan. vision statement and the rest of the strategic plan. Either way, you need to know your fundamental Either way, you need to know your fundamental purpose - the mission, your current situation in terms purpose - the mission, your current situation in terms of internal resources and capabilities (strengths of internal resources and capabilities (strengths and/or weaknesses) and external conditions and/or weaknesses) and external conditions (opportunities and/or threats), and where you want to (opportunities and/or threats), and where you want to go - the vision for the future. It's important that you go - the vision for the future. It's important that you keep the end or desired result in sight from the start keep the end or desired result in sight from the start 

To remain competitive, companies To remain competitive, companies develop strategies that focus on:develop strategies that focus on:

1.1. Core competenceCore competence A business activity that an organization does A business activity that an organization does

particularly well in comparison to competitors.particularly well in comparison to competitors.

2.2. SynergySynergy The condition that exists when the The condition that exists when the

organization’s parts interact to produce a joint organization’s parts interact to produce a joint effect that is greater than the sum of the parts effect that is greater than the sum of the parts acting alone.acting alone.

3.3. Value CreationValue Creation The heart of strategy.The heart of strategy. Value can be defined as the combination of Value can be defined as the combination of

benefits received and costs paid by the benefits received and costs paid by the customers.customers.

Levels of StrategyLevels of Strategy

Corporate-Level StrategyCorporate-Level StrategyThe level of strategy concerned with the question, The level of strategy concerned with the question, “What “What

business are we in?”business are we in?”. Pertains to the organization as a . Pertains to the organization as a whole and the combination of business units and whole and the combination of business units and product lines that make it up.product lines that make it up.

Business-Level StrategyBusiness-Level StrategyThe level of strategy concerned with the question, The level of strategy concerned with the question, “How “How

do we compete?”do we compete?”. Pertains to each business unit or . Pertains to each business unit or product line within the organization.product line within the organization.

Functional-Level StrategyFunctional-Level StrategyThe level of strategy concerned with the question, The level of strategy concerned with the question, “How “How

do we support the business-level strategy?”do we support the business-level strategy?”. Pertains to . Pertains to all of the organization’s major departments.all of the organization’s major departments.

Three Levels of Strategy in OrganizationThree Levels of Strategy in Organization

Corporation

Textile Units Chemicals Unit Auto Parts Unit

Finance R & D Manufacturing Marketing

Corporate-Level Strategy:What business are we in?

Business-Level Strategy:How do we compete?

Functional-Level Strategy:How do we support the business-level strategy?

Corporation

Textile Units

Finance R & D Manufacturing Marketing

Corporate-Level Strategy:What business are we in?

Business-Level Strategy:How do we compete?

Functional-Level Strategy:How do we support the business-level strategy?

Strategy Formulation Versus ImplementationStrategy Formulation Versus Implementation

Strategy FormulationStrategy FormulationThe stage of strategic management that involves The stage of strategic management that involves

the planning and decision making that lead to the the planning and decision making that lead to the establishment of the organization’s goals and of a establishment of the organization’s goals and of a specific strategic plan.specific strategic plan.

Strategy ImplementationStrategy ImplementationThe stage of strategic management that involves The stage of strategic management that involves

the use of managerial and organizational tools to the use of managerial and organizational tools to direct resources toward achieving strategic direct resources toward achieving strategic outcomes.outcomes.

Situation AnalysisSituation AnalysisAnalysis of the strengths, weaknesses, Analysis of the strengths, weaknesses,

opportunities, and threats (SWOT) that affect opportunities, and threats (SWOT) that affect organizational performance.organizational performance.

StrengthsStrengths Positive internal characteristics that the organization can exploit to Positive internal characteristics that the organization can exploit to

achieve its strategic performance goals.achieve its strategic performance goals.

WeaknessesWeaknesses Internal characteristics that might inhibit or restrict the Internal characteristics that might inhibit or restrict the

organization’s performance.organization’s performance.

OpportunitiesOpportunities Characteristics of the external environment that have the potential Characteristics of the external environment that have the potential

to help the organization achieve or exceed its strategic goals.to help the organization achieve or exceed its strategic goals.

ThreatsThreats Characteristics of the external environment that may prevent the Characteristics of the external environment that may prevent the

organization from achieving its strategic goals.organization from achieving its strategic goals.

Competitive StrategiesCompetitive Strategies

1.1. DifferentiationDifferentiation a type of competitive strategy with which the a type of competitive strategy with which the

organization seeks to distinguish its products or organization seeks to distinguish its products or services from competitors.services from competitors.

2.2. Cost LeadershipCost Leadership A type of competitive strategy with which the A type of competitive strategy with which the

organization aggressively seeks efficient organization aggressively seeks efficient facilities, cuts costs, and employs tight cost facilities, cuts costs, and employs tight cost controls to be more efficient than competitors.controls to be more efficient than competitors.

3.3. FocusFocus A type of competitive strategy that emphasizes A type of competitive strategy that emphasizes

concentration on a specific regional market or concentration on a specific regional market or buyer group.buyer group.

Formulating Functional-Level StrategyFormulating Functional-Level Strategy

the action plans adopted by major the action plans adopted by major departments to support the execution of departments to support the execution of business-level strategy.business-level strategy.

major organizational functions include major organizational functions include marketing, production, finance, human marketing, production, finance, human resources, and research & development.resources, and research & development.

Strategy Implementation and ControlStrategy Implementation and Control

Implementation is the final step in the Implementation is the final step in the strategic management process and it is strategic management process and it is how strategy put into action.how strategy put into action.

Some people argue that strategy Some people argue that strategy implementation is the most difficult and implementation is the most difficult and important part of strategic management.important part of strategic management.

STRUCTURAL DESIGN

• Design organization chart• Create teams• Determine centralization• Arrange facilities, task design

LEADERSHIP

• Use persuasion• Motivate employees• Shape culture/values

HUMAN RESOURCES

• Recruit/select employees• Manage transfers/promotions/training• Direct layoffs/recalls

INFORMATION AND CONTROL SYSTEMS• Revise pay, reward system• Change budget allocations• Implement information systems• Apply rules and procedures

OrganizationEnvironment

StrategyPerformance

Tools for Putting Strategy into ActionTools for Putting Strategy into Action

The group of stockholder The group of stockholder representatives and strategic representatives and strategic managers responsible for managers responsible for overseeing the creation and overseeing the creation and accomplishment of the company accomplishment of the company mission.mission.

Board of DirectorsBoard of Directors

Organizational Structure of Organizational Structure of CorporationsCorporations

Stockholders

Directors

Officers (Top Management)

President Vice Treasurer Secretary President

elect

elect

Board of Directors- job responsibilitiesBoard of Directors- job responsibilities To establish and update the company missionTo establish and update the company mission To elect the company’s top officers (CEO)To elect the company’s top officers (CEO) To establish the compensation levels of the top To establish the compensation levels of the top

officers, including the salaries and bonusesofficers, including the salaries and bonuses To set broad company policy on such matters as To set broad company policy on such matters as

labor-management relations, product or service lines labor-management relations, product or service lines of business, and employee benefit packagesof business, and employee benefit packages

To set company’s objectives and to authorize To set company’s objectives and to authorize managers to implement the long term strategies that managers to implement the long term strategies that the top officers and the board have found agreeable the top officers and the board have found agreeable

To mandate company compliance with legal and To mandate company compliance with legal and ethical dictatesethical dictates

To determine the amount and timing of the To determine the amount and timing of the dividends paid to stockholdersdividends paid to stockholders

THE ENDTHE END

Any clarification?Any clarification?

HAVE A NICE DAY!!! HAVE A NICE DAY!!!