INTRODUCTION
In formulating strategies, there are basic components or elements that we usually consider. These include company mission, profile, goals, objectives, strategy and policy. The components are not so cleanly and neatly performed in actual practice. Usually, there is an interplay of the elements. The boundaries between the components are hard or difficult to distinguish in practice. For example, establishing a mission may overlap with setting objectives for the organisation to achieve both of them involve direction setting for the organisation. So, the tasks involved in strategic management are never isolated from everything else that falls within a manager’s purview.
Strategic Management Components
There are many parts to strategic management. These parts are referred to as strategic components or elements. At times they are referred to as strategic planning components when the author interchanges strategic management with strategic planning. These components are explained below:
Company Mission
The mission of a company is the fundamental, unique purpose that sets it apart from other companies of its type and identifies the scope of its operations in product and market terms. The mission also carefully defines what the company does not do. It is a general statement of the company”s intent and represents the view that the senior managers have for the future of the company or what they want it to become or achieve. It is the central purpose for the company”s existence and implies the image the company seeks to project.
It reflects the company”s self-concept and indicates the principal product or service the company attempts to satisfy. The mission statement defines the aspirations, values, roles, growth, goals, survival and profitability of a company. In short, the mission describes the products, market and technological areas of emphasis for the business in a way that reflects the priorities of the strategic decision-maker. Rader (1994) enumerates seven characteristics of a powerful mission statement, which are:
- Engaging the imagination with powerful images of target outcome
- Employing images that are clear, concise and compelling
- Expressing strong values and beliefs about the future
- Providing guidance for actions that must and must not be done
- Focusing on discussion and shaping choices about consequences
- Challenging one to stretch continually beyond current performance
- Applying to each and every member of the community.
A company”s mission reflects the firm”s intention to secure its survival through sustained growth and profitability.
Many organisations have improperly defined mission statements in which some are not complete and in which the essential ingredients of the mission statement are not indicated. Some other companies misuse the mission statement as an external device for public relations rather than an integral part of strategic management. To be able to achieve its objectives, the mission statement must be understandable, applicable and serves to rule out actions.
Profile
A company’s profile is the product of its internal analysis, which determines the company”s performance capabilities based on existing or attainable resources. A company”s profile depicts the quantity and quality of financial, human and physical resources available to the firm. It assesses the inherent strengths and weaknesses of the company”s management and organisational structure.
The profile contrasts the historical success of the company and the traditional values and concerns of its management with the company”s current capabilities, and attempts to identify the future capabilities of the business. An example can be found in the company”s commitment to each of the functional areas of resource development matrix. The firm can easily calculate investments made in each of the functional areas as a basis for a better understanding of its comparative and competitive strengths and weaknesses.
Vision
According to Robson in 1997, a company’s vision is synonymous with the company”s mission. This means that the alternative name for the company”s mission is vision.
Goals
A company”s goal describes the desired future position the company wants to be.
The selection of the company”s goals is based on the defined mission of the company. In a situation where a strategic planning model separates the goals from the objectives, it means that the goals are broad and timeless statements of the end result that the organisation considers that they can use to achieve their mission. A goal should clearly state what is to be achieved and when the results will be accomplished.
Company goals do not state how the results will be achieved. Organisations normally have multiply goals at the same time all existing in a complex hierarchy. An organisation may have a series of less permanent goals that define targets for the organisation. All strategic goals affect the organisation” s overall direction and productivity. Profitability is usually the main goal of many business organisations, no matter how it is measured or defined. A goal is a statement of specifics that quantify the objectives.
Objectives
The organisation’s objectives establish the intended nature of the enterprise and the direction in which the organisation wants to move. Objectives are those ends or results which the organisation set out to achieve through not only its existence but also its operations. A number of different objectives are pursued by business organisations. Some examples include survival, growth, continuity of profit, production at least cost, good quality products or services, quick delivery, meeting target dates, customer and employee satisfaction to mention just a few. Every organisation has more than one objective at any given time.
There are at least three major reasons why an organisation establishes objectives and why these objectives are important in strategic management. The reasons are as follows:
- Objectives help to define the organisation in the environment because they enable the organisation to justify its existence and help
to attract people who identify with the objectives to work for the organisation.
- Objectives help to coordinate decisions and decision-makers. This is because objectives help to direct employees to the required standards of behaviour and reduce conflicts in decision making since all employees know the objectives of the organisation.
- Objectives also help to provide standards for assessing organisational performance. Without stated objectives, it would be difficult for an organisation to evaluate itself or for anybody to evaluate the success or failure of the organisation. Therefore, an organisation’s objectives are very crucial to strategic management
Objective, therefore, indicates management’s intentions towards pursuing and accomplishing its mission. Usually, objectives and goals address all the areas of the operation of the company including profitability, sales growth, market share, innovation, productivity, physical and financial resources, risk, public responsibility, manager performance and development.
Policies
Policies are management components taken as guides to actions. Policies usually indicate how resources are to be allocated. They equally indicate how tasks assigned to the organisation can be accomplished. They enable each manager at the functional level such as marketing, accounting or finance, production and personnel to execute the organisation’s strategy properly. Strategy exists as a collective umbrella for the policy component. The policy should give a broad assessment of the organisation’s structure, business system and the resources available to the selected strategies.
An organisation’s policies provide a framework for the implementation of any major changes needed to be made in that organisation. The policies should provide the key yardsticks or measurements for the expected benefits the strategy intends to produce or yield so that the success or the failure of the policies can be readily evaluated. Polices are, therefore, rules that express the limits within which action should occur. Policies also exist in hierarchy throughout an organisation just the way we have the strategic goals.
Strategy
A strategy is a plan that integrates an organisation’s major goal, policies and action sequences into a cohesive unit that is achievable. A well-formulated strategy helps to marshal and allocate the organisation’s resources into a unique and viable positive unit based on its relative internal competencies and shortcomings, anticipated changes in the environment and contingent moves by intelligent opponents.
Strategy defines the general direction in which the organisation chooses to move to meet its goals in order to achieve its mission. Strategies usually include how to move to achieve desired results. Strategies are often constrained by the nature of the organisation such as resources available, capabilities, culture, structure and tradition.
Strategy defines how an organisation will not achieve its aims. All management decisions can, therefore, be trusted against the rejected approach as a measure of acceptability. The strategy should document the strategic opportunities that are deemed most beneficial to pursue. The strategy should be stated in such a way that the organisation will make the best use of what is available and also adequately compensate for its limitation. There is no one best way to create a strategy, nor is there one best form of organisation.
However, Professor R. Andrews in his book,The Concept of Corporate Strategydescribes the central function of the chief executive as leading the continuous process of determining the nature of the enterprise and setting, revising and achieving its goals. He calls this central function “corporate strategy”.
He gives the definition as the pattern of decision in a company that determines and reveals its objectives, purposes or goals, produces the principal policies and plans for achieving those goals, and defines the range of business the company is to pursue, the kind of economic and human organisation it is or intends to be, and the nature of the economic and non-economic contributions it intends to its shareholders, employees, customers and communities.
So, Corporate Strategy defines the business in which a company will compete, preferably in a way that focuses resources to convert distinctive competence into a competitive advantage”.
INTRODUCTION
In formulating strategies, there are basic components or elements that we usually consider. These include company mission, profile, goals, objectives, strategy and policy. The components are not so cleanly and neatly performed in actual practice. Usually, there is an interplay of the elements. The boundaries between the components are hard or difficult to distinguish in practice. For example, establishing a mission may overlap with setting objectives for the organisation to achieve both of them involve direction setting for the organisation. So, the tasks involved in strategic management are never isolated from everything else that falls within a manager’s purview.
Strategic Management Components
There are many parts to strategic management. These parts are referred to as strategic components or elements. At times they are referred to as strategic planning components when the author interchanges strategic management with strategic planning. These components are explained below:
Company Mission
The mission of a company is the fundamental, unique purpose that sets it apart from other companies of its type and identifies the scope of its operations in product and market terms. The mission also carefully defines what the company does not do. It is a general statement of the company”s intent and represents the view that the senior managers have for the future of the company or what they want it to become or achieve. It is the central purpose for the company”s existence and implies the image the company seeks to project.
It reflects the company”s self-concept and indicates the principal product or service the company attempts to satisfy. The mission statement defines the aspirations, values, roles, growth, goals, survival and profitability of a company. In short, the mission describes the products, market and technological areas of emphasis for the business in a way that reflects the priorities of the strategic decision-maker. Rader (1994) enumerates seven characteristics of a powerful mission statement, which are:
- Engaging the imagination with powerful images of target outcome
- Employing images that are clear, concise and compelling
- Expressing strong values and beliefs about the future
- Providing guidance for actions that must and must not be done
- Focusing on discussion and shaping choices about consequences
- Challenging one to stretch continually beyond current performance
- Applying to each and every member of the community.
A company”s mission reflects the firm”s intention to secure its survival through sustained growth and profitability.
Many organisations have improperly defined mission statements in which some are not complete and in which the essential ingredients of the mission statement are not indicated. Some other companies misuse the mission statement as an external device for public relations rather than an integral part of strategic management. To be able to achieve its objectives, the mission statement must be understandable, applicable and serves to rule out actions.
Profile
A company’s profile is the product of its internal analysis, which determines the company”s performance capabilities based on existing or attainable resources. A company”s profile depicts the quantity and quality of financial, human and physical resources available to the firm. It assesses the inherent strengths and weaknesses of the company”s management and organisational structure.
The profile contrasts the historical success of the company and the traditional values and concerns of its management with the company”s current capabilities, and attempts to identify the future capabilities of the business. An example can be found in the company”s commitment to each of the functional areas of resource development matrix. The firm can easily calculate investments made in each of the functional areas as a basis for a better understanding of its comparative and competitive strengths and weaknesses.
Vision
According to Robson in 1997, a company’s vision is synonymous with the company”s mission. This means that the alternative name for the company”s mission is vision.
Goals
A company”s goal describes the desired future position the company wants to be.
The selection of the company”s goals is based on the defined mission of the company. In a situation where a strategic planning model separates the goals from the objectives, it means that the goals are broad and timeless statements of the end result that the organisation considers that they can use to achieve their mission. A goal should clearly state what is to be achieved and when the results will be accomplished.
Company goals do not state how the results will be achieved. Organisations normally have multiply goals at the same time all existing in a complex hierarchy. An organisation may have a series of less permanent goals that define targets for the organisation. All strategic goals affect the organisation” s overall direction and productivity. Profitability is usually the main goal of many business organisations, no matter how it is measured or defined. A goal is a statement of specifics that quantify the objectives.
Objectives
The organisation’s objectives establish the intended nature of the enterprise and the direction in which the organisation wants to move. Objectives are those ends or results which the organisation set out to achieve through not only its existence but also its operations. A number of different objectives are pursued by business organisations. Some examples include survival, growth, continuity of profit, production at least cost, good quality products or services, quick delivery, meeting target dates, customer and employee satisfaction to mention just a few. Every organisation has more than one objective at any given time.
There are at least three major reasons why an organisation establishes objectives and why these objectives are important in strategic management. The reasons are as follows:
- Objectives help to define the organisation in the environment because they enable the organisation to justify its existence and help
to attract people who identify with the objectives to work for the organisation.
- Objectives help to coordinate decisions and decision-makers. This is because objectives help to direct employees to the required standards of behaviour and reduce conflicts in decision making since all employees know the objectives of the organisation.
- Objectives also help to provide standards for assessing organisational performance. Without stated objectives, it would be difficult for an organisation to evaluate itself or for anybody to evaluate the success or failure of the organisation. Therefore, an organisation’s objectives are very crucial to strategic management
Objective, therefore, indicates management’s intentions towards pursuing and accomplishing its mission. Usually, objectives and goals address all the areas of the operation of the company including profitability, sales growth, market share, innovation, productivity, physical and financial resources, risk, public responsibility, manager performance and development.
Policies
Policies are management components taken as guides to actions. Policies usually indicate how resources are to be allocated. They equally indicate how tasks assigned to the organisation can be accomplished. They enable each manager at the functional level such as marketing, accounting or finance, production and personnel to execute the organisation’s strategy properly. Strategy exists as a collective umbrella for the policy component. The policy should give a broad assessment of the organisation’s structure, business system and the resources available to the selected strategies.
An organisation’s policies provide a framework for the implementation of any major changes needed to be made in that organisation. The policies should provide the key yardsticks or measurements for the expected benefits the strategy intends to produce or yield so that the success or the failure of the policies can be readily evaluated. Polices are, therefore, rules that express the limits within which action should occur. Policies also exist in hierarchy throughout an organisation just the way we have the strategic goals.
Strategy
A strategy is a plan that integrates an organisation’s major goal, policies and action sequences into a cohesive unit that is achievable. A well-formulated strategy helps to marshal and allocate the organisation’s resources into a unique and viable positive unit based on its relative internal competencies and shortcomings, anticipated changes in the environment and contingent moves by intelligent opponents.
Strategy defines the general direction in which the organisation chooses to move to meet its goals in order to achieve its mission. Strategies usually include how to move to achieve desired results. Strategies are often constrained by the nature of the organisation such as resources available, capabilities, culture, structure and tradition.
Strategy defines how an organisation will not achieve its aims. All management decisions can, therefore, be trusted against the rejected approach as a measure of acceptability. The strategy should document the strategic opportunities that are deemed most beneficial to pursue. The strategy should be stated in such a way that the organisation will make the best use of what is available and also adequately compensate for its limitation. There is no one best way to create a strategy, nor is there one best form of organisation.
However, Professor R. Andrews in his book,The Concept of Corporate Strategydescribes the central function of the chief executive as leading the continuous process of determining the nature of the enterprise and setting, revising and achieving its goals. He calls this central function “corporate strategy”.
He gives the definition as the pattern of decision in a company that determines and reveals its objectives, purposes or goals, produces the principal policies and plans for achieving those goals, and defines the range of business the company is to pursue, the kind of economic and human organisation it is or intends to be, and the nature of the economic and non-economic contributions it intends to its shareholders, employees, customers and communities.
So, Corporate Strategy defines the business in which a company will compete, preferably in a way that focuses resources to convert distinctive competence into a competitive advantage”.
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