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Vision, Mission, External Analysis

"A business is not defined by its name, statutes, or articles of

incorporation. It is defined by the business mission. Only a clear
definition of the mission and purpose of the organization makes
possible clear and realistic business objectives.“
- Peter Drucker
"A corporate vision can focus, direct, motivate, unify, and
even excite a business into superior performance. The job
of a strategist is to identify and project a clear vision."
- John Keane
"The very essence of leadership is that you have to have
vision. You can’t blow an uncertain trumpet."
- Theodore Hesburgh
• Vision – A vision statement answers the
question “What do we want to become?”
Examples of Vision
• To be the most preferred destination for
education in creating, managing and leading
successful local and global organisations.
• Mission statements address one main
question: “What is our business?”

Characteristics of a Mission Statement

• A declaration of attitude
• Customer Orientation
Components of a Mission Statement

1. Customers—Who are the firm’s customers?

2. Products or services—What are the firm’s major products or services?
3. Markets—Geographically, where does the firm compete?
4. Technology—Is the firm technologically current?
5. Concern for survival, growth, and profitability—Is the firm committed to
growth and financial soundness?
6. Philosophy—What are the basic beliefs, values, aspirations, and ethical
priorities of the firm?
7. Self-concept—What is the firm’s distinctive competence or major
competitive advantage?
8. Concern for public image—Is the firm responsive to social, community,
and environmental concerns?
9. Concern for employees—Are employees a valuable asset of the firm?
Characteristics of a Mission Statement
• Broad in scope; do not include monetary amounts, numbers,
percentages, ratios, or objectives
• Less than 250 words in length
• Inspiring
• Identify the utility of a firm’s products
• Reveal that the firm is socially responsible
• Reveal that the firm is environmentally responsible
• Include nine components customers, products or services, markets,
technology, concern for survival/growth/profits, philosophy, self-
concept, concern for public image, concern for employees
• Reconciliatory
• Enduring
Examples of mission statements
• We believe our first responsibility is to the doctors, nurses, patients, mothers, and all others
who use our products and services.
(Johnson & Johnson)
• To create an innovative, congenial, value based, intelligent and research-oriented world-class
learning environment with access to the available wisdom, knowledge and skills of the world
through a perpetual process of interaction between students, academicians, managers,
invited industrialists and other dignitaries. –CBS
• To contribute to the economic strength of society and function as a good corporate citizen on
a local, state, and national basis in all countries in which we do business. (Pfizer)
Benefits of a mission statement
• To ensure unanimity of purpose within the organization
• To provide a basis, or standard, for allocating organizational resources
• To establish a general tone or organizational climate
• To serve as a focal point for individuals to identify with the
organization’s purpose and direction, and to deter those who cannot
from participating further in the organization’s activities
• To facilitate the translation of objectives into a work structure
involving the assignment of tasks to responsible elements within the
• To specify organizational purposes and then to translate these
purposes into objectives in such a way that cost, time, and
performance parameters can be assessed and controlled.

Source: King & Cleland,1979

External Environment
"It is not the strongest of the species that survive, nor the most
intelligent, but the one most responsive to change."
- Charles Darwin
"Organizations pursue strategies that will disrupt the normal
course of industry events and forge new industry conditions to
the disadvantage of competitors."
- Ian C. Macmillan
External Audit / External environment analysis

The purpose of an external audit is to develop a finite list of

opportunities that could benefit a firm and threats that should
be avoided. As the term finite suggests, the external audit is not
aimed at developing an exhaustive list of every possible factor
that could influence the business; rather, it is aimed at
identifying key variables that offer actionable responses.
Forces of External environment
Key Economic variables
• Shift to a service economy • Foreign countries’ economic
• Availability of credit conditions
• Level of disposable income • Import/export factors
• Propensity of people to spend • Demand shifts for different
• Interest rates categories of goods and services
• Inflation rates • Income differences by region and
consumer groups
• Money market rates • Price fluctuations
• Union / State government budget • Export of labor and capital from India
• Gross domestic product trend • Monetary policies
• Consumption patterns • Fiscal policies
• Unemployment trends • Tax rates
• Worker productivity levels • OPEC/SAARC/WTO/BRICS policies
• Value of the dollar in world markets • Coalitions of Lesser Developed
Countries (LDC) policies
• Stock market trends
Key Socio-cultural, demographic and natural
• Childbearing rates • Attitudes toward work • Population changes by race, age,
• Number of special-interest • Sex roles sex, and level of affluence
groups • Buying habits • Attitudes toward authority
• Number of marriages • Ethical concerns • Population changes by city,
• Number of divorces • Attitudes toward saving county, state, region, and country
• Number of births • Attitudes toward investing • Value placed on leisure time
• Number of deaths • Racial equality • Regional changes in tastes and
• Immigration and emigration • Use of birth control preferences
rates • Average level of education • Number of women and minority
• Social Security programs • Government regulation workers
• Life expectancy rates • Attitudes toward retirement • Number of high school and
• Per capita income • Attitudes toward leisure time college graduates by geographic
• Location of retailing, • Attitudes toward product quality area
manufacturing, and service • Attitudes toward customer service • Recycling
businesses • Pollution control • Waste management
• Attitudes toward business • Attitudes toward foreign peoples • Air pollution
• Lifestyles • Energy conservation • Water pollution
• Traffic congestion • Social programs • Ozone depletion
• Inner-city environments • Number of churches • Endangered species
• Average disposable income • Number of church members
• Trust in government • Social responsibility
• Attitudes toward government • Attitudes toward careers
Political, Legal & Governmental Forces
• Government regulations or • Indo-China/Indo-Pak/India-
deregulations Russia/India-UK/Indo-US
• Changes in tax laws relationships
• Special tariffs • EXIM regulations
• Political action committees • Government fiscal and monetary
• Voter participation rates policy
• Number, severity, and location of changes
protests by political groups • Political conditions in foreign
• Number of patents countries
• Changes in patent laws • Special local, state, and Central laws
• Environmental protection laws • Lobbying activities
• Level of defense expenditures • Size of government budgets
• Legislation on equal employment • World oil, currency, and labor
• Level of government subsidies • Location and severity of terrorist
• Reservation policies activities
• Local, state, and national elections
Key questions to be asked about your
1. What are the major competitors’ strengths?
2. What are the major competitors’ weaknesses?
3. What are the major competitors’ objectives and strategies?
4. How will the major competitors most likely respond to current economic, social, cultural,
demographic, environmental, political, governmental, legal, technological, and
competitive trends affecting our industry?
5. How vulnerable are the major competitors to our alternative company strategies?
6. How vulnerable are our alternative strategies to successful counterattack by our major
7. How are our products or services positioned relative to major competitors?
8. To what extent are new firms entering and old firms leaving this industry?
9. What key factors have resulted in our present competitive position in this industry?
10. How have the sales and profit rankings of major competitors in the industry changed
over recent years? Why have these rankings changed that way?
11. What is the nature of supplier and distributor relationships in this industry?
12. To what extent could substitute products or services be a threat to competitors in this
The need of a competitive intelligence program

• To provide a general understanding of an

industry and its competitors,
• To identify areas in which competitors are
vulnerable and to assess the impact strategic
actions would have on competitors, and
• To identify potential moves that a competitor
might make that would endanger a firm’s
position in the market

Source: Prescott & Smith, 1989

Porter’s Five Forces Model
Steps to analyse Porter’s Five Forces
1. Identify key aspects or elements of each competitive force
that impact the firm.
2. Evaluate how strong and important each element is for the
3. Decide whether the collective strength of the elements is
worth the firm entering or staying in the industry.
External Factor Evaluation (EFE) Matrix
An External Factor Evaluation (EFE) Matrix allows strategists to
summarize and evaluate economic, social, cultural, demographic,
environmental, political, governmental, legal, technological, and
competitive information.
• List key external factors as identified in the external-audit process. Include a
total of 15 to 20 factors, including both opportunities and threats, that affect
the firm and its industry.
• Assign to each factor a weight that ranges from 0.0 (not important) to 1.0
(very important). The weight indicates the relative importance of that factor
to being successful in the firm’s industry.
• Assign a rating between 1 and 4 to each key external factor to indicate how
effectively the firm’s current strategies respond to the factor, where 4 = the
response is superior, 3 = the response is above average, 2 = the response is
average, and 1 = the response is poor. Ratings are based on effectiveness of
the firm’s strategies.
• Multiply each factor’s weight by its rating to determine a weighted score.
• Sum the weighted scores for each variable to determine the total weighted
score for the organization.
Competitive Profile Matrix (CPM)
• The Competitive Profile Matrix (CPM) identifies a firm’s major competitors
and its particular strengths and weaknesses in relation to a sample firm’s
strategic position.
• The weights and total weighted scores in both a CPM and an EFE have the
same meaning. However, critical success factors in a CPM include both
internal and external issues; therefore, the ratings refer to strengths and
weaknesses, where 4 = major strength, 3 = minor strength, 2 = minor
weakness, and 1 = major weakness.
• The critical success factors in a CPM are not grouped into opportunities
and threats as they are in an EFE. In a CPM, the ratings and total weighted
scores for rival firms can be compared to the sample firm.
• This comparative analysis provides important internal strategic
Competitive Profile Matrix (CPM)