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
• 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
• 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
organization
• 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
• Availability of credit
• Level of disposable income
• Propensity of people to spend
• Interest rates
• Inflation rates
• Money market rates
• Union / State government budget
deficits
• Gross domestic product trend
• Consumption patterns
• Unemployment trends
• Worker productivity levels
• Value of the dollar in world markets
• Stock market trends
• Foreign countries’ economic
conditions
• Import/export factors
• Demand shifts for different
categories of goods and services
• Income differences by region and
consumer groups
• Price fluctuations
• Export of labor and capital from India
• Monetary policies
• Fiscal policies
• Tax rates
• OPEC/SAARC/WTO/BRICS policies
• Coalitions of Lesser Developed
Countries (LDC) policies
 Key Socio-cultural, demographic and natural
variables
• Childbearing rates
• Number of special-interest
groups
• Number of marriages
• Number of divorces
• Number of births
• Number of deaths
• Immigration and emigration
rates
• Social Security programs
• Life expectancy rates
• Per capita income
• Location of retailing,
manufacturing, and service
businesses
• Attitudes toward business
• Lifestyles
• Traffic congestion
• Inner-city environments
• Average disposable income
• Trust in government
• Attitudes toward government
• Attitudes toward work
• Sex roles
• Buying habits
• Ethical concerns
• Attitudes toward saving
• Attitudes toward investing
• Racial equality
• Use of birth control
• Average level of education
• Government regulation
• Attitudes toward retirement
• Attitudes toward leisure time
• Attitudes toward product quality
• Attitudes toward customer service
• Pollution control
• Attitudes toward foreign peoples
• Energy conservation
• Social programs
• Number of churches
• Number of church members
• Social responsibility
• Attitudes toward careers
• Population changes by race, age,
sex, and level of affluence
• Attitudes toward authority
• Population changes by city,
county, state, region, and country
• Value placed on leisure time
• Regional changes in tastes and
preferences
• Number of women and minority
workers
• Number of high school and
college graduates by geographic
area
• Recycling
• Waste management
• Air pollution
• Water pollution
• Ozone depletion
• Endangered species
 Political, Legal & Governmental Forces
• Government regulations or
deregulations
• Changes in tax laws
• Special tariffs
• Political action committees
• Voter participation rates
• Number, severity, and location of
protests by political groups
• Number of patents
• Changes in patent laws
• Environmental protection laws
• Level of defense expenditures
• Legislation on equal employment
• Level of government subsidies
• Reservation policies
• Local, state, and national elections
• Indo-China/Indo-Pak/India-
Russia/India-UK/Indo-US
relationships
• EXIM regulations
• Government fiscal and monetary
policy
changes
• Political conditions in foreign
countries
• Special local, state, and Central laws
• Lobbying activities
• Size of government budgets
• World oil, currency, and labor
markets
• Location and severity of terrorist
activities
 Key questions to be asked about your
competitors
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
competitors?
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
industry?
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
Model
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
firm.
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.
Steps
• 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
information.
Competitive Profile Matrix (CPM)