CHAPTER TWO

VISION, MISSION, GOALS AND OBJECTIVES

The hierarchy of strategic intent lays the foundation for strategic management process. In the
hierarchy of strategic intent, the vision, mission, business definition and objectives are
established. Formulation of strategies is possible only when strategic intent is clearly set up. This
step is mostly philosophical in nature.
2.1 Creating a Strategic Vision
Creating vision is at the top in the hierarchy of strategic intent. It is what the firm would ultimately
like to become. A few definitions are as follows:
Vision is a compelling, conceptual, vivid image of the desired future. A vision focuses and
ennobles an idea about a future state of being in such a way as to excite and compel an agency
toward its attainment. It crystallizes what management wants the organization to be in the future.
A vision is not bound by time, represents global and continuing services, and serves as a
foundation for a system of strategic planning.
Vision is defined as the category of intentions that are broad, all inclusive and forward thinking.
As a whole, the organizational vision indicates the direction and values that bring people together
in their attempt to strive towards achieving the organizational goals. Vision articulates the position
of an organization which it may attain in distant future. Vision must be:
• Compelling
• Inspiring, and
• Make people want to join the organization
Advantages of having a Vision
A shared vision provides the following benefits:
• It is an initial force that brings people together
• Inspires stakeholders
• Promotes long term thinking
• Foster risk taking.
• Make organizations competitive, original and unique.
• Represents integrity.
• They are inspiring and motivating to people working in organization.
 2.2 Defining Mission statement and Values

An organization‟s mission is the purpose or the reason for the organization‟s existence. A well-conceived
mission statement defines the fundamental and unique purpose that sets a company apart from other firms of
its type and identifies the scope of the company's operation in terms of the products offered and markets
served.

Mission is the organization‟s unique reason for existence, usually contained within a formal statement of
purpose. It identifies what an organization, program or sub-program does (or should do) and why and for
whom it does it. The statutory mission statement is usually found in the legislation creating the agency.

A few additional definitions of mission are as follows:

 Mission is the essential purpose of the organization, concerning particularly why it is in existence, the
nature of the business it is in, and the customers it seeks to serve and satisfy.

 A company‟s mission is defined by the buyer needs it seeks to satisfy, the customer groups and market
segments it is endeavoring to serve and the resources and technologies it is deploying in trying to
pleasing its customers.

The essential questions for mission statement are:

 What function(s) does the organization perform? (Customer functions, products, or services)

 For whom does the organization perform these functions? (Customer or client groups)

 Where does the organization operate? (Geographic domain)

 How does the organization perform these functions? (Activities, technologies, and driving forces)

2.2.1. Mission Statement Components

Mission statements can and do vary in length, content, format, and specificity. Most practitioners
and academicians of strategic management feel that an effective statement should include nine
components. Because a mission statement is often the most visible and public part of the
strategic-management process, it is important that it includes the nine characteristics as
summarized below:
 1. Customers: Who are the firm‟s customers?
2. Products or services: What are the firm‟s major products or services?
3. Markets: Geographically, where does the firm compete?
4. Technology: Is the firm technologically current?
5. Concern for survival, growth, and profitability: Is the firm committed to growth and
financial soundness?
6. Philosophy: What are the basic beliefs, values, aspirations, and ethical priorities of the
firm?
7. Self-concept: What is the firm‟s distinctive competence or major competitive advantage?
8. Concern for public image: Is the firm responsive to social, community, and
environmental concerns?
9. Concern for employees: Are employees a valuable asset of the firm?
Characteristics of a Mission

In order to be effective, a mission statement should possess the following characteristics.

 A mission statement should be realistic and achievable.

 It should neither be too broad (meaningless) not be too narrow (not restrictive). The mission statement
should be precise.
 It must be clear for action. Highly philosophical statements do not give clarity.
 It should have societal linkage. Linking the organization to society will build long term perspective in
a better way.
 It should not be static. To cope up with ever changing environment, dynamic aspects be looked into.
 It should be motivating for members of the organization and of society.
 The mission statement should indicate the process of accomplishing objectives. The clues to achieve
the mission will be guiding force.
Strategic Values/ Principles

Strategic Values/Principles are human factors which drive the conduct of an organization and function as a
guide to the development and implementation of all policies and actions. Strategic Values are beliefs of top
management regarding employees‟ welfare, costumer‟s interest and shareholder‟s wealth. The beliefs may
have economic orientation or social orientation.

Often an organization‟s principles are implicitly understood, but it can be helpful to explicitly state them.
Principles summarize the operating philosophies or core values that will be utilized in fulfillment of the
vision and mission. Thus, principles are the bridge between where we are and where we want to be.

An organization‟s values identify the key stakeholders and their expectations. The entire organization
structure revolves around the philosophy coming out of core values. Example: Empowerment, commitment
to excellence…etc.

Defining the Business

Understanding business is vital to define it and answer the question „what is our business?‟ Clearly define the
business of an organization in terms of customer needs, customer groups and alternative technologies. It is
suggested to define business along the three dimensions of customer groups, customer functions and
alternative technologies.

 Customer groups are created according to the identity of the customers.

 Customer functions are based on provision of goods/services to customers.

 Alternative technologies describe the manner in which a particular function can be performed for a
customer.

A clear business definition is helpful in identifying several strategic choices. The choices regarding various
customer groups, various customer functions and alternative technologies give the strategists various
strategic alternatives. The diversification, mergers and turnaround depend upon the business definition. If
strategic alternatives are linked through a business definition, it results in considerable amount of synergic
advantage.

2.3. Setting Goals and Objectives

The vision, mission and business definition determine the business philosophy to be adopted in the long run.
The goals and objectives are set to achieve them.

Goals are the general desired end result, generally after three or more years, toward which organizations
direct their efforts. A goal addresses issues by stating policy intention. They are both qualitative and
quantitative. In a strategic planning system, goals are ranked for priority. Goals stretch and challenge an
organization, but they are realistic and achievable.

Goals denote a broad category of financial and non-financial issues that a firm sets for it self. They are
usually a collection of related programs and a reflection of the major action of the organization.

On the other hand, Objectives are described as being very precise, time-based, and measurable actions that
support the completion of a goal. They are the ends that state specifically how the goals shall be achieved. It
is to be noted that objectives are the manifestation of goals whether specifically stated or not.

Objectives are specific and measurable targets for accomplishment of a goal. They mark interim steps
toward achieving an organization‟s long-term mission and goals. Linked directly to organizational goals,
objectives are measurable, time-based statements of intent. They emphasize the results of organization‟s
actions at the end of a specific time.

Difference between goals/objectives

A goal is considered to be an open-ended statement of what one wants to accomplish with no
quantification of what is to be achieved and no time criteria for its completion. For example, a
simple statement of “increased profitability” is thus a goal, not an objective, because it does not
state how much profit the firm wants to make. Objectives are the end results of planned activity.
They state what is to be accomplished by when and should be quantified. For example, “increase
profits by 10% over the last year” is an objective.

As may be seen from the above, “goals” denote what an organization hopes to accomplish in a future period
of time. They represent a future state or outcome of the effort put in now. “Objectives” are the ends that state
specifically how the goals shall be achieved. In this sense, objectives make the goals operational. Objectives
are concrete and specific in contrast to goals which are generalized. While goals may be qualitative,
objectives tend to be mainly quantitative, measurable and comparable.
The points of difference between the two are as follows:
 The goals are broad while objectives are specific.
 The goals are set for a relatively longer period of time.
 Goals are more influenced by external environment.

Objectives
Goals
Specific
1. General
Quantitative, measurable
2. Qualitative
3. Broad organization–wide target Narrow targets set by operating divisions
4. Long term results Immediate, short term results
 Some writers, however, have reversed the usage, referring to objectives as the desired long term
results and goals as the desired short-term results. And still others use the terms interchangeably,
meaning one and the same. These authors view that; little is gained from semantic distinctions
between goals and objectives. The important thing is to recognize that the results an enterprise
seeks to achieve vary as to both scope and time-frame. To avoid confusion, it is better to use the
single term “objectives” to refer to the performance targets and results an organization seeks to
attain. We can use the adjectives long-term (long-range) and short-term (short range) to identify
the relevant time-frame, and try to describe their intended scope and level in the organization, by
using expressions like broad objectives, functional objectives, corporate objectives etc.
Some of the areas in which a company might establish its goals and objectives are:
 Profitability (net profit)
 Efficiency (low costs, etc)
 Growth (increase in sales etc)
 Shareholder wealth (dividends etc)
 Utilization of resources (return on investment)
 Market leadership (market share etc)

Need for Establishing Goals and Objectives

The following points specifically emphasize the need for establishing objectives:
 Objectives provide yardstick to measure performance of a department or organization.
 Objectives serve as a motivating force. All people work to achieve the objectives.
 Objectives help the organization to pursue its vision and mission. Long term perspective is
translated in short-term goals.
 Objectives define the relationship of organization with internal and external environment.
 Objectives provide a basis for decision-making. All decisions taken at all levels of management
are oriented towards accomplishment of objectives.
Objectives can be set in the areas of market standing, innovation productivity, physical and financial
resources, profitability, manager performance and development, worker performance and attitude and public
responsibility.

Characteristics of Goals/Objectives
The following are the characteristic of corporate objectives:
 They form a hierarchy. It begins with broad statement of vision and mission and ends with key
specific goals. These objectives are made achievable at the lower level.
 It is impossible to identify even one major objective that could cover all possible relationships and
needs. Organizational problems and relationship cover a multiplicity of variables and cannot be
integrated into one objective. They may be economic objectives, social objectives, political objectives
etc. Hence, multiplicity of objectives forces the strategists to balance those diverse interests.
 A specific time horizon must be laid for effective objectives. This timeframe helps the strategists to
fix targets.
 Objectives must be within reach and is also challenging for the employees. If objectives set are beyond
the reach of managers, they will adopt a defeatist attitude. Attainable objectives act as a motivator in
the organization.
 Objectives should be understandable. Clarity and simple language should be the hallmarks Vague
and ambiguous objectives may lead to wrong course of action.
 Objectives must be concrete. For that they need to be quantified. Measurable objectives help the
strategists to monitor the performance in a better way.
 There are many constraints internally as well as externally which have to be considered in objective
setting. As different objectives compete for scarce resources, objectives should be set within
constraints.