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Posted on April 24th, 2014, by

  1. 1.      Vision and mission statements provide information about the organization.  What are they?  How should they be developed and used?

 

The company’s mission is a qualitatively expressed set of strategic objectives and business skills. The mission helps determine what the company’s actual occupation is, as well as its nature, scope, perspectives and direction of growth, and the difference from its competitors. Also, it focuses on the customer rather than product, as the mission is determined taking into account consumers’ interests, needs and requests that are met by the business.

Five factors should be taken into account when developing the mission of the organization (Pearce & Robinson, 2010):

– History of the organization, during which it its philosophy was elaborated, its profile and the style of business shaped, as well as the place in market, etc.;

– Style of behavior and mode of action of the owners and management personnel;

– State of the environment;

– Resources that the organization can use to achieve its goals;

– Distinguishing features of the organization.

Having the mission allows (Pearce & Robinson, 2010; Bryson, 2011):

– the owners to agree on the direction and priorities of business development;

– the partners and providers to understand the place the company aims to occupy in the market;

– the employees of the company to feel like a team of like-minded people, aimed at achieving success, to feel their importance, receive moral incentives to work;

– the consumers of the company’s production to treat the company that can satisfy their needs and requirements with attention and interest, to monitor the company’s products;

– the society as a whole (especially public authorities) to understand the social purpose of the company.

Vision is the image of the organization in the future, which may include the way to achieve this result. While the mission is stated in general terms, the vision must be very specific.

The principal difference between the mission and vision is that the mission reveals the mode of action, shows how certain goals or vision are achieved. The vision, in turn, is a picture of the future, the ideal state of affairs the organization is trying to achieve. The vision is more subject to change as in time new ideals and new insights emerge. The mission is a relatively constant element, though can also be adjusted to reflect the changes in various factors (Pearce & Robinson, 2010; Bryson, 2011).

While developing the vision the company’s managers must determine (Pearce & Robinson, 2010; Nolan et al., 2008):

– How they see the future of their company;

– In which direction it should develop;

– What the applied technology, products, and customers will be in the future;

– What position in the industry the company must occupy in the long term.

The formulated strategic vision significantly reduces the risk of random solutions and ensures consistency of units’ policy with the general policy of the company.

 


  1. 2.      An environmental scanning process involves both internal and external factors.  These factors are frequently categorized as strengths, weaknesses, opportunities, and threats.  Why do we need to know how the environmental factors can be categorized?  How are they used in strategic planning?

 

In order to determine the behavior strategy of the organization and to carry out this strategy into practice, the management should have an in-depth understanding of not only the internal environment of the organization, its capabilities and development trends, but also about the external environment, its development trends, and the place the organization occupies in it.

Thus, the external environment indicators include economic factors, political factors, market factors, technological factors, international factors, legal factors, and social factors. Indicators of the immediate environment are based on the analysis of customers, suppliers and competitors. In turn, the indicators of the internal environment of the company include the personnel, their capacity, skills and interests, management organization, production, research and development, company’s finance, marketing, organizational culture (Williamson et al., 2003). Frequently categorized as strengths and opportunities (positive effect), weaknesses and threats (negative effect), these factors are used in the SWOT-analysis technique widely used in the strategic planning process.

SWOT-analysis allowed the analysts to formulate the known but scattered and unsystematic ideas about the company and the competitive environment as a logically coherent scheme of interaction between these factors. Based on the quality of compliance of internal strengths and weaknesses of the company with the capabilities offered by the market, the experts conclude about the direction the organization should develop its business in, and ultimately determine the allocation of resources to segments. Currently, the main directions of development of a SWOT analysis are the following (Pahl & Richter, 2009):

– Display of dynamic changes in the company and its competitive environment in a model.

– Recording the results of the analysis of the company and its competitive environment, using the classical models of strategic planning.

– Development of SWOT models taking into account different scenarios of market situations.

 


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