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Chapter 8.docx

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Management Studies
MGST 391
Ahmad Ali Sohrabi

Chapter 8 : Mission Goals and Objectives Analyzing Vision, Mission and Objectives Hierarchy Vision--------Mission----------Goals (objectives and aims) at 3 levels----------strategy at 3 levels Vision: “ Where the organization wants to be” Advantages of vision: - gives general directions to organisation - gives hope and motivation - establishes scope and boundaries - enables flexibility in choice Problems with vision  It ignores real, practical problems  It can degenerate into wishful thinking Strategic intent: “Vision with an emotional core to energize and stretch” - similar to vision - stretch current competencies - gives sense of direction - gives coherence to plans Mission Statement: This is a statement purpose of existence-What it wants to accomplish in the larger environment. Mission statement includes Purpose, Competence, Strategic Scope, Product, Targeted customers, and Values of various stakeholders. It should be market oriented, specific, realistic, motivating and consistent with market environment. e.g. “To provide best satisfaction to customers and fair return on investment, keeping environment healthy and clean and promising secure future to employees”. Place of mission statement: - Annual reports - Publicity materials - In chairman’s office - Communal work area Elements of mission statement: - Purpose ( e.g creating wealth, satisfy shareholders) - Strategy ( e.g logic, product, service) - Scope - Politics & behaviors - Values & culture (e.g commitment) Characteristics of mission statement: - Bravity - Flexibility - Distinctiveness Problems with mission statement: - Ignorance in practice - Only for public showment and not for internal decision making - Only rationalising existence of organisation - Wish list, full of generalisations Functions/Importance of mission 1. Employee motivation 2. Contributes to profitability 3. Focus for strategic decision making 4. Replaces national or divisional subculture with a corporate culture 5. Communicates nature of organization to insiders and outsiders Problems with mission = Problems with Rational model of Strategic Management Goals: Goals could be  Objectives (quantifiable)  Aims A goal must be SMART. Goals S  Specific Operational goals Non-operational goals M  Measurable A  Attainable R  result-oriented Measurable not measurable T  time-bounded 3 levels of goals/objectives and strategy:  Corporate level  SBU level  Operational level Corporate level objectives: (trade off between objectives) 1. Profit (Accounting Profit = Economic Profit = Sale price – Explicit Cost – Implicit Cost i.e. Opportunity Cost) 2. Market share and growth 3. Cash flow Objectives 4. Customer satisfaction 5. Quality of product Primary Secondary 6. Industrial relations 7. ROCE 8. EPS Long-term Short-term Unit Objectives:  Commercial sector  Increase number of customer by 15% (sales department)  Decrease number of rejects by 50% (production department)  Public sector  To provide cheaper, subsidized bus traveling (local transport department)  Responding more quickly to calls (police, fire station, hospital) Types of Goals: 1. System Goals [Derived from organization’s existence] 2. Ideological Goals [Focus on organization’s mission] 3. Formal Goals [Imposed goals; e.g. from Shareholder’s] 4. Shared Personal Goals [Consensus b/w individual and collective goals] System goals (subverting Mission)  Survival  Efficiency  Control  Growth Dealing with goal conflict (inter departmental):  Rational evaluation (financial criteria)  Satisficing
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