Ch 02-Establishing Direction

8/18/2019 Ch 02-Establishing Direction

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2

“If you don’t know whereyou are going, any road

will take you there.”

Cheshire Cat to Alice

Lewis Carroll, Alice in

Wonderland


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3

“If you articulate a ision

that !akes "eo"le "assionate,

there are so !any a!a#ing things

you can do.”

$r. %o"hie &ande'roek

(ero) Cor"oration


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THE STRATEGY-MAKING, STRATEGY-EXECUTING

PROCESS

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DEVELOPING A STRATEGIC VISION

A Strategic Vision

Mission Statement

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STRATEGIC VISION VS.MISSION

Astrategic vision

concerns a firm’s future business path -“where

we are going”

Themission statement of a firmfocuses on its present business purpose -“who we are and

what we do”


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Vision 'To be a sustainable, quality-driven company that

ensures the continuing prosperity of all its

stakeholders.‘

Mission Statement 'Our goals are to achieve customer satisfaction, and to

build and defend the first position as market leader in

every category in which we compete. In landtransportation, we provide reliable, high quality and

superior services with the efficient use of resources,

and we do it as a team.-


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&ision

To become a leading InfoCom player in the region

Telkom has strong will to become a leading

Information and Communication Player in South-East Asia, Asia and to all over Asia Pacific

ission

! To Provide One Stop InfoCom Services with

Excellent Quality and Competitive Price" To e the !ole "odel as the est "anaged

Indonesian Corporation/


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VISI & MISIUNIVERSITAS GADJAH MADA

Visi Menjadi universitas riset kelas dunia yang unggul, mandiri,

bermartabat, dan dengan dijiwai Pancasila mengabdi kepada

kepentingan dan kemakmuran bangsa.

Misi Misi Umum :

Melaksanakan pembelajaran dan pengabdian berbasis

riset.

Misi Khusus :Meningkatkan kegiatan pendidikan, penelitian dan

pengabdian kepada masyarakat berkelas dunia,beridentitas kerakyatan serta membangun sosio-budaya

IndonesiaMenuntaskan transisi UGM menjadi universitas yang

mandiri dan mempunyai tata kelola yang baik (Good

University Governance).

0


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MEDCO ENERGY COMPANY

(ANNUAL REPORT 2006)

Vision:

The Energy Company of Choice

Mission:

To develop energy resource potentials into profitable investment portfolios

Strategy:1. Replace or add reserves through acquisition and exploration

2. Replace and increase production volumes through the development ofreserves

3. Development new market for uncommitted gas

4. Maintain financial flexibility and conservative financial structure andcost control

5. Build strategic alliances with international operators

6. Ensure support from local community

7. Focus on maintaining Good Corporate Governance standards 1


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VISION SLOGANS: AN INSPIRATIONALSTATEMENT

Levi Strauss & Company

“We will clothe the world by marketing the most appealing andwidely worn casual clothing in the world.”

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egadaian

“engatasi !asalah tan"a !asalah”

oshi'a

“Leading Innoation

oyota

“oing forward ”


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CHARACTERISTICS OF ANGOOD VISION STATEMENT

Graphic

Directional

Focused

Flexible

Feasible

DesirableEasy to communicate

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COMMON SHORTCOMINGS IN VISION STATEMENT

Vague or incomplete

Not forward-looking

Too broad

Bland or uninspiring

Not distinctive

Too reliant or superlative

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DISCUSSION

What is the importance of strategic vision

for a company?

1*


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ROLE OF A STRATEGIC VISION

Give the organizationa sense ofdirection,

Create acommitted enterpriseInformcompany’s stakeholdersBea reference point to make strategicdecisions

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COMPANY VALUES

Beliefs, traits, and ways of doing things that

management has determined should guide the

pursuit of its vision and strategy

The desired character, identity, and behavioral

norms-the values become the company’sgenetic makeup, its DNA

1


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EXAMPLE OF CORE VALUES

Disney: Nurturing/promulgation of wholesome American values

Creativity, dreams and imagination

Fanatical attention to consistency and detail

Preservation and control of the “Disney Magic”

Sony:

Elevation of the Japanese culture and national status

Being a pioneer – not following others; doing theimpossible

Encouraging individual ability and creativity1-


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COMPANY VALUES

Custo!er

co!!it!ent

4uality and

Integrity

ea!work5es"ect

for "eo"le

"-!#

1/


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DISCUSSION:

What are the importance of company

value for the company?

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CHANGES FOR A NEWSTRATEGIC DIRECTION:

“STRATEGIC INFLECTIONPOINTS”

PT POS INDONESIANOKIA

INTEL

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Visi

2009 - 2010 :Integrated mail, logistic & financial

services infrastructure

2011 - 2013 :Indonesia’s leader in the mail logistics &financial services

2014 - 2018 :ASEAN Champion of Postal Industries

MisiPos Indonesia menyediakan solusi handal dalam mail,

logistik dan jasa keuangan dengan menggunakan jejaring

bisnis dan infrastruktur terluas dan terpadu serta

mengembangkan hubungan kolaboratif.21


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Produk Pos Kiriman Internasional

Filateli

Hybrid-Mail Ritel

Logistik Keuangan

Paket Pos

Surat Pos

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http://www.posindonesia.co.id/produk_list.php?id=8http://www.posindonesia.co.id/produk_list.php?id=8http://www.posindonesia.co.id/produk_list.php?id=7http://www.posindonesia.co.id/produk_list.php?id=6http://www.posindonesia.co.id/produk_list.php?id=5http://www.posindonesia.co.id/produk_list.php?id=4http://www.posindonesia.co.id/produk_list.php?id=3http://www.posindonesia.co.id/produk_list.php?id=2http://www.posindonesia.co.id/produk_list.php?id=2http://www.posindonesia.co.id/produk_list.php?id=1http://www.posindonesia.co.id/produk_list.php?id=1http://www.posindonesia.co.id/produk_list.php?id=1http://www.posindonesia.co.id/produk_list.php?id=2http://www.posindonesia.co.id/produk_list.php?id=2http://www.posindonesia.co.id/produk_list.php?id=3http://www.posindonesia.co.id/produk_list.php?id=4http://www.posindonesia.co.id/produk_list.php?id=5http://www.posindonesia.co.id/produk_list.php?id=6http://www.posindonesia.co.id/produk_list.php?id=7http://www.posindonesia.co.id/produk_list.php?id=8http://www.posindonesia.co.id/produk_list.php?id=8http://www.posindonesia.co.id/produk_list.php?id=8


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THE STORY OF NOKIA - A CENTURY AND A HALF OF INNOVATION,

FROM A RIVERSIDE PAPER MILL IN SOUTHWESTERN FINLAND

TO A GLOBAL TELECOMMUNICATIONS LEADER.

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$rom roots in %a%er, rubber, and cables, in &ust over !''

years (okia becomes a %owerful industrial conglomerate

The newly formed (okia Cor%oration is ideally %ositioned for a

%ioneering role in the early evolution of mobile

communications

As mobile %hone use booms, (okia makes the sector its core business)y the turn of the century, the com%any is the world leader

(okia sells its billionth mobile %hone as the third generation of

mobile technology emerges


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CHANGES FOR A NEW STRATEGIC DIRECTION:

INTEL’S “STRATEGIC INFLECTION POINTS”

Prior to mid-1980s:Focus on memory chipsThen, facing competition from Japanesemanufacturers with lower-prices strategy

Starting in mid-1980s Although the former business contributed for 70%of Intel revenue, the company switch to be thepreeminent supplier of microprocessors to the PCindustry.

1998Focuses on installing million of servers andbuilding internet infrastructure and serve as aworldwide communication medium

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SETTING OBJECTIVES

Purpose ofsetting objectivesConverts vision into specific performancetargets

Creates milestone to track performance- at the

end as a parameter to the achievement of theestablished vision

Well-stated objectives areQuantifiable

MeasurableContain adeadline for achievementSpell-outhow much ofwhat kind ofperformanceby when

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TYPES OF OBJECTIVES

REQUIRED

2

Financial Objectives

Outcomes focused

on improving financial performance

Strategic Objectives

Outcomes focused on improvingcompetitive

vitality and future business position (market)


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OBJECTIVES

Annual revenue growth of X% X % increase in after-tax profits annualEarnings per share growth of X% annually Annual dividend increases of X%

Profit margins of X% X% return on capital employed (ROCE) Annual stock price increases that average X% over timeStrong bond and credit ratings

Sufficient internal cash flows to fund 100% of newcapital investmentStable earnings during periods of recession

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EXAMPLES:STRATEGIC


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EXAMPLES: STRATEGIC

OBJECTIVES

Winning an X% market share within 3 years Achieving lower overall costs than rivalsOvertaking key competitors on product performance or

quality or customer service within 2 yearsDeriving X% of revenues from sale of new products

introduced in past 5 yearsBeing the recognized industry leader in product

innovation and/or technological know-howHaving a wider product line than rivals

Consistently getting new or improved products tomarket ahead of rivals

Having stronger national or global sales and

distribution capabilities than rivals 2/


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MCDONALD’S FINANCIAL AND STRATEGIC OBJECTIVES

Place more emphasis on delivering anexceptional customer experience

Add approximately 350 netnew McDonald’s restaurants

Reduce general and administrativespending as a percent of total revenues

AchievementsSystemwide sales and revenue growth of 3-5%

Annual operating income growth of 6-7% Annual returns on incremental investedcapital in high teens

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H. J. HEINZ COMPANY’S FINANCIAL AND STRATEGIC OBJECTIVES

Achieve 4-6% sales growth, 7-10% growth in operating income,EPS in the range of $2.35 to $2.45, and operating free cash flow of$900 million to $1 billion in fiscal 2006

Pay dividends equal to 45-50% of earnings Increase focus on company’s 15 power brands and give topresource priority to those brands with number one and twomarket positions

Continue to introduce new and improved food products Add to the Heinz portfolio of brands by acquiringcompanies with brands that complement existing brands

Increase sales in Russia, Indonesia, China, and India

by 50% in fiscal year 2006 to roughly 6% of total sales By end of fiscal 2008, derive approximately 50% of sales andprofits from North America, 30% from Europe, and 20% from allother markers

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DISCUSSION:

The relationship between strategic

objectives and financial objectives

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GOOD STRATEGIC PERFORMANCE IS THE KEY

TO BETTER FINANCIAL PERFORMANCE

Current financial results are“laggingindicators” reflecting results of past decisions

and action

Good strategic performance is thus a “leading indicator” of a company’scapability to deliver improved

future financial performance

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A HIERARCHY: CORPORATELEVEL AND BUSINESS

LEVEL33


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3*

Cor"orate

%trategy

6usiness %trategies

7unctional %trategies

8"erating %trategies

wo9:ay Influence

wo9:ay Influence

wo9:ay Influence

Cor%orate-*evel

+anagers

)usiness-*evel+anagers

$unctional

+anagers

8"erating

anagers

Leels of %trategy9aking in a $iersified

Co!"any


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3+

ACOMPANY’SSTRATEGYMAKING


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A COMPANY’S STRATEGY-MAKINGHIERARCHY

Corporate Strategy

todiversify into different industries; toboostthecombined performanceof the company’s different

businesses;

to capturecross-business synergies;

to establishinvestment priorities and steeringcorporate resources into

the most attractive businesses

Business Strategy

toconcern with the actions and approaches crafted to produce

successful performance in one specific line of business

Functional Strategy

to concernsthe game plan for a function, activity, or process within a

business; is usually orchestrated by the functional head and involves Operating Strategy

Concern onmanaging key operating units or strategically-relevant

operating activities(such as advertising, supply chain activities, internet

sales) 3


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MISSION AND VISION ONREFLECTION

1. Are mission or vision important for a

company?

2.Without one or both of them, can the

company be success or survive (in thecompetition)?

3.When a company already have mission,

do you think the company does not need

vision anymore and oppositely4.What is the importance of mission for

vision?30

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Ch 02-Establishing Direction