Business Policy and Strategy (SMUnit I of 4)

King and Cleland recommend that organizations carefully develop a written mission statement for six reasons. List and describe five of these reasons.  Your response should be at least 200 words in length. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations.

Learning Objectives

Upon completion of this unit, students should be able to:

1.    Analyze the nuances of strategic management.

2.    Analyze the characteristics of a business's vision and mission.

Written Lecture Module 1: What is Strategy?

Few would disagree that today's business environment is dynamic, constantly changing, and often chaotic. It would seem that it would be impossible to plan anything in such an environment since once a plan is in place, everything changes! Yet in spite of changing demographics, advancing technology, and even new ways of doing business, some companies seem to stand out. Companies that are in such a position are said to have a sustained competitive advantage. In other words, these successful companies always seem to find themselves in a winning position no matter what happens. How do they do it? One analogy that is often used to try and understand competitive advantage is the military. Consider, for instance, a field of battle. Imagine two groups of soldiers fighting. One is on a hill, and the other is in the valley. Which group of soldiers is more likely to win? Chances are that the soldiers on the hill are more likely to win because the high ground provides an advantage. Strategic management in the military would therefore involve choosing the best position in which to fight. Strategic management in industry is all about finding the equivalent of the "high ground"—the optimal position within the industry that tends to maximize your chances of success.

The difficulty with strategy in business is that the "high ground" is not so easy to recognize. For example, if you wanted to win the competition with another company, should you introduce a new product, or wait until your competitor introduces one and then follow with something better? Should you invest heavily in research and development and introduce a very special product with unique features, or should you instead offer a very inexpensive product and seek to sell it in high volume? Finally, should you attempt to compete head-to-head with a competitor, or should you instead try to find some niche that no one else is currently exploiting? Such questions are typical of those asked in strategic management. The field of strategic management offers an array of tools that senior managers can use to help a company make sense of a very complex environment, and proceed to focus and choose a direction.

Where Are We Going and Why?

Although it is true that today's business environment is complex and difficult to interpret, at some point managers will need to settle on an approach to the market and set the course for the company. Companies who never seem to find their internal compass and set a clear direction are said to suffer from "analysis paralysis." They continually study the marketplace, but never clearly state what the company stands for, what it means in terms of markets and products, and how they will achieve their stated goals.

Companies articulate their stated direction by clarifying themselves through various means, such as a statement of values, vision statements, mission statements, and goals. It would appear that there are many ways to articulate the basic direction of the company. Does a company need all of these statements in place in order to articulate strategic intent? Although it is popular to state values, vision, mission, and goals, the important aspect of setting the company direction is making sure that the direction is specific enough to meet the business goals of today, yet broad enough to allow for the future evolution of the company. As an example, imagine you were a company in the late 1800s that developed telegraph equipment for the transmission and reception of Morse Code. Suppose that the company featured the mission statement "To be the premier supplier of telegraph equipment". Now, fast forward 50 years to a time in which telegraph equipment is obsolete. Would a company with this mission statement still be able to sustain a competitive advantage? Would it still exist? It is far easier to see the limitations in the vision and mission of a company in retrospect than it is for a company's current mission. Imagine the difficulty of a CEO to see the future and to prepare for it with an appropriate mission. Consider Apple as an example. Apple produces a wide range of both products and content services. Such products are far removed from Apple's original line of computers. Apple's transition seems obvious in retrospect—but, what should Apple's vision and mission be in order to carry the company for another 10 to 20 years? Microsoft is another interesting case, as is Google. Both companies have evolved, but is the evolution over, or is there more yet to come? The challenge, then, of strategic management is to not only identify the optimal competitive position today, and to fully occupy it, but to be able to see what is next, and to prepare for and invest in that vision. It is not easy.

How Do We Get There?

Is it enough for a company to know how to determine the strategic "high ground," to occupy it, and to think ahead to the future? No. A company must also be capable carrying out the stated mission. This is not as easy as it may appear. The difficulty becomes apparent when you consider strategy implementation for a very large company such as GE. If more than 100,000 people come to work every day, how would senior management ensure that all employee activities are directly linked to the advancement of company strategy? Also, how would a CEO ensure that the employees of the company actually had the training and skills necessary for successfully executing strategic initiatives?

Strategic management therefore informs managers of:

•    How to judge the merits of available strategic alternatives, and how to select one.

•    How to see how the strategic arena will evolve over time so that the company may be prepared for tomorrow's business.

•    What is involved in formally setting the strategic direction of the company in terms of the company mission, and finally,

•    How to successfully implement the strategic intent of the company.