Chapter 2 - Charting a Company's Direction (Its Vision, Mission, Objectives, and Strategy)

strategic vision

-describes management's aspirations for the company's future and the course and direction charted to achieve them ="where we are going" -well-conceived visions are distinctive and specific -is a valuable management tool for enlisting the commitment of company personnel to actions that move the company in the intended long-term direction

Mission statement

-describes the enterprise's present business and purpose - "who we are, what we do, and why we are here" -must employ language specific enough to distinguish its business and purpose from those of other enterprises and give the company its own identity

Strategic Execution

1. Developing a strategic vision 2. setting objectives 3. crafting a strategy 4. executing the chosen strategy 5. monitoring developments, evaluating performance, and initiating corrective adjustments

A company's Board of Directors have 4 important obligations to fullfill

1. Oversee the company's financial accounting and financial reporting practices 2. Critically appraise the company's direction, strategy, and business approaches 3. Evaluate the caliber of senior executives' strategic leadership skills 4. Institute a compensation plan for top executives that rewards them for actions and results that serve stakeholder interests, and most especially those of shareholders

True or False: A company's vision, mission, objectives, strategy, and approach to strategy execution are final and never changes

False

Vision Statements

Whole Foods -forward-looking, graphic, focused BUT long and not memorable Dr. Pepper -easy to communicate, focused BUT not distinctive and not forward-looking Nike -forward-looking, flexible BUT vague and not focused

Balanced Scorecard

a widely used method for combining the use of both strategic and financial objectives, tracking their achievement, and giving management a more complete and balanced view of how well an organization is performing 1. Financial 2. Customer 3. Internal Process 4. Organizational

What is a company slogan? a. A brief phrase that summarizes the company's vision b. A catchphrase invented and repeated by employees to convey their feelings about the company c. A sentence that identifies the company's products or services d. A short paragraph that describes the company's history and accomplishments

a. A brief phrase that summarizes the company's vision

Financial objectives are important for doing which of the following? (Choose every correct answer.) a. Achieving shareholder satisfaction b. Increasing revenue c. Increasing profit margins d. Attaining higher labor productivity e. Developing effective communication within an organization

a. Achieving shareholder satisfaction b. Increasing revenue c. Increasing profit margins

What are strategic objectives primarily concerned with? (Choose every correct answer.) a. An organization's competitive position b. An organization's financial performance c. An organization's market standing d. An organization's employee relations

a. An organization's competitive position c. An organization's market standing

Better financial performance typically results from which of the following? (Choose every correct answer.) a. Competitive advantage b. Organizational complexity c. More competitive vitality d. A stronger market standing

a. Competitive advantage c. More competitive vitality d. A stronger market standing

What entrepreneurial skills help managers craft and implement a successful company strategy? (Choose every correct answer.) a. Daring to be innovative b. Making sure the company closely resembles its competitors c. Adjusting the strategy as conditions shift d. Noticing signs that the business climate is changing

a. Daring to be innovative c. Adjusting the strategy as conditions shift d. Noticing signs that the business climate is changing

Which factors do managers consider when establishing performance objectives? (Choose every correct answer.) a. Economic conditions within the industry b. The company's internal capabilities c. Competition from other businesses d. The strategic visions of rival businesses

a. Economic conditions within the industry b. The company's internal capabilities c. Competition from other businesses

A company mission statement should do which of the following? (Choose every correct answer.) a. Establish the company's own identity b. Describe where the company expects to head in the future c. Identify the company's customers or markets d. Specify what services and products the company offers

a. Establish the company's own identity c. Identify the company's customers or markets d. Specify what services and products the company offers

What are lagging indicators? a. Performance measurements resulting from decisions and activities in the past b. Evaluations that reveal each employee's weaknesses c. Financial reports that are compiled at the end of the fiscal year d. Clues that the company is falling behind its competitors

a. Performance measurements resulting from decisions and activities in the past

In which of the following situations is an adjustment of a company's strategy most likely needed? a. The company repeatedly fails to achieve performance goals. b. The company faces a drop in its market position. c. The company faces competition from longtime business rivals. d. The company is having difficulty recruiting the most desirable employees.

a. The company repeatedly fails to achieve performance goals. b. The company faces a drop in its market position.

What is described by a company's mission statement? (Choose every correct answer.) a. The company's present business b. The company's present purpose c. The company's aspirations d. The company's future strategic course

a. The company's present business b. The company's present purpose

What is the role of a company's board of directors? (Choose every correct answer.) a. To ensure that the company is operating in the best interests of shareholders and other stakeholders b. To oversee top executives and ensure that they craft and implement an effective strategy c. To direct all employees and managers on a day-to-day basis to ensure that everyone is working diligently d. To develop and execute the company strategy

a. To ensure that the company is operating in the best interests of shareholders and other stakeholders b. To oversee top executives and ensure that they craft and implement an effective strategy

The most demanding and lengthy part of the strategy management process is ______. a. implementing the strategy b. crafting the strategy c. setting objectives d. developing a strategic vision

a. implementing the strategy

The manager of a plant that produces canned goods and is owned by a food and beverage company develops a strategy for updating its production lines while maintaining its quality controls. This is an example of a(n): a. operating strategy. b. corporate strategy. c. business strategy. d. functional-area strategy.

a. operating strategy.

objectives

an organization's performance targets - the results management wants to achieve SMART specific measurable achievable Challenging/relevant time-limited

Which of the following should a manager do to implement a strategic plan? (Choose every correct answer.) a. Identify operating strategies with strategic significance b. Direct organizational change c. Motivate employees d. Develop a vision and mission statement e. See that lower-level strategies are well conceived and consistent f. Build and strengthen competitive capabilities

b. Direct organizational change c. Motivate employees f. Build and strengthen competitive capabilities

An organization should set performance targets for which of the following? (Choose every correct answer.) a. Each of the organization's top managers only b. Each of the organization's individual work units c. Each of the organization's product lines d. Each of the organization's separate businesses

b. Each of the organization's individual work units c. Each of the organization's product lines d. Each of the organization's separate businesses

Business strategy, in contrast to corporate strategy, involves which of the following? (Choose every correct answer.) a. Establishing a competitive advantage through cross-business synergies b. Improving the performance of individual business units c. Strengthening the market position of individual business units d. Managing all the businesses owned by a corporation

b. Improving the performance of individual business units c. Strengthening the market position of individual business units

Which statements are true of a company's strategic vision? (Choose every correct answer.) a. It achieves its effectiveness by being broad and vague. b. It is crafted by the company's top managers. c. It explains why the vision makes sound business sense. d. It steers the organization in a specific direction.

b. It is crafted by the company's top managers. c. It explains why the vision makes sound business sense. d. It steers the organization in a specific direction.

When setting objectives, which types of performance targets must be established? (Choose every correct answer.) a. Functional-area b. Strategic c. Financial d. Operational

b. Strategic c. financial

Sometimes a company's CEO is the main person who develops the organization's strategy. This most often happens in which of the following situations? (Choose every correct answer.) a. The CEO works under the close supervision of a board of directors. b. The CEO has particularly strong strategic leadership skills. c. The CEO is the founder of a company that grew into a larger corporation. d. The CEO is the owner and manager of a small company.

b. The CEO has particularly strong strategic leadership skills. c. The CEO is the founder of a company that grew into a larger corporation. d. The CEO is the owner and manager of a small company.

Which of the following are NOT likely to happen if a company's financial objectives are met or exceeded? Multiple select question. a. The company's creditors will be pleased. b. The company will go into bankruptcy. c. Revenues will decrease. d. Senior executives will be fired.

b. The company will go into bankruptcy. c. Revenues will decrease. d. Senior executives will be fired.

Top executives can unify the various strategies within a company by telling lower managers and other personnel about which of the following? (Choose every correct answer.) a. The organization's corporate structure and hierarchy of authority b. The major components of the corporate strategy c. The organization's vision d. The organization's objectives

b. The major components of the corporate strategy c. The organization's vision d. The organization's objectives

What purposes are served by a company slogan? (Choose every correct answer.) a. To present the company's strategic vision with supporting details b. To help employees maintain focus on the company's purpose c. To motivate personnel to overcome obstacles d. To define the organization's direction

b. To help employees maintain focus on the company's purpose c. To motivate personnel to overcome obstacles d. To define the organization's direction

What is the purpose of a company's strategic vision? a. To produce a catalog of all the company's products b. To steer the company toward long-term growth and profits c. To predict what the market will look like in future decades d. To expand the company's operations as broadly as possible

b. To steer the company toward long-term growth and profits

What is a stretch objective? a. A goal that can be adjusted to accommodate changing conditions b. A managerial tactic that involves adding numerous goods and services to what the company has traditionally offered c. A performance target that will require significant effort to achieve d. A performance strategy that seeks to include as many personnel as possible

c. A performance target that will require significant effort to achieve

To measure how well a company is moving in the intended direction, it is important to ______. a. adjust core values to maximize profits b. rethink the basic guiding vision periodically c. set objectives d. include a checklist in the mission statement

c. set objectives

Financial Objectives

communicate management's goals for financial performance

functional-area strategies

concern the approaches employed in managing particular functions within a business (R&D, production, sales and marketing)

Operating Strategies

concern the relatively narrow strategic initiatives and approaches for managing key operating units (plants, distribution centers, geographic units) and specific operating activities such as materials purchasing or Internet sales

Honor, integrity, teamwork, superior customer service, and innovation are examples of company ______. a. objectives b. functional-area strategies c. operating strategies d. core values

d. core values

Organizing and guiding a new business activity is called ______. a. capitalism b. industrialization c. monopoly d. entrepreneurship

d. entrepreneurship

To mobilize employee support for a new strategic vision for a company, executives should ______. a. remind employees that they failed to make the company prosper under the old system b. avoid discussing employee concerns and instead talk about the effort spent in creating the new vision c. summarize the plan on the internal company website rather than discussing it in person with all employees d. give convincing reasons for taking the organization in a new direction

d. give convincing reasons for taking the organization in a new direction

Corporate Strategy

establishes an overall game plan for managing a set of businesses in a diversified, multi-business company

stakeholders

its stockholders, employees, suppliers, the communities in which the company operates, and society at large

strategic plan

lays out its direction, business model, competitive strategy, and performance targets for some specific period of time

strategic inflection point

point at which the extent of industry change requires management to consider changing the company's strategic vision

Business Strategy

primarily concerned with strengthening the company's market position and building competitive advantage in a single business company or a single business unit of a diversified multibusiness corporation

Stretch Objectives

set performance targets high enough to stretch an organization to perform at its full potential and deliver the best possible results

Core Values

the beliefs, traits, and behavioral norms that employees are expected to display in conducting the firm's business and in pursuing its strategic vision and mission

Managing the Strategy Execution Process

•Creating a strategy-supporting structure •Staffing the firm with the needed skills and expertise •Developing and strengthening strategy supporting resources and capabilities •Allocating ample resources to the activities critical to strategic success •Ensuring that policies and procedures facilitate effective strategy execution •Organizing work effort to achieve best practices •Installing information and operating systems that enable company personnel to perform essential activities •Motivating people by tying rewards and incentives to the achievement of performance objectives •Creating a company culture conducive to successful strategy execution •Exerting the internal leadership needed to propel implementation forward