Trigger 2

1.How to utilize your existing resources to expand your business? (Company’s mission)

I am going to approach this learning objective in four steps:

First I will define the terms company’s mission and existing resources.

What is a mission? In business dictionary a mission is described as ‘A written declaration of an organization's core purpose and focus that normally remains unchanged over time…. a mission is something to be accomplished whereas a vision is something to be pursued for that accomplishment.’ (1)

Company’s existing resources, can be best established by finding out, what are company’s core competences. These are defined as follows: ‘core competencies, … meet these three requirements: they provide potential access to a wide variety of markets, make a contribution to the customer benefits of the product, and are difficult for competitors to imitate.’ (2) I have defined these three factors on the image below:

*producing end-products that are well aimed to target customers

A company can, of course expand within a market it has already entered. This is called Market Penetration. In a changing world it is crucial for any given company to thrive to expand to new markets as well, such as new geographic locations, a new target buyers or new industries. This is called Market expansion. In order to wisely use the company’s existing resources for expansion, the company must first analyse its competences so that it can start building its vision and strategy based on those competencies. (3)

(There are several techniques in defining company’s core competencies. One of these is domain mapping matrix (DMM) (Danilovic and Browning, 2006), which applies Steward’s (1981) dependency structure matrix (DSM). (3)

Once the core competences have been defined, a company can start building its strategy and mission on the basis of their best attributes. In 2013 Patrick Hull, the founder and CEO of GetLoaded.com, wrote an article ‘Answer 4 Questions to Get a Great Mission Statement’ to Forbes. In this article, he defines the four essential questions a mission must answer:

1.      What do we do?
2.       How do we do it?
3.      Whom do we do it for?
4.      What value are we bringing? (4)

      A company with well-defined core competence should be able to answer these questions easily. Questions 1. and 2. can be answered once the core competences have been defined. Question 3. can be traced to the ‘customer focus’ aspect of core competence. The value of a company (question 4.) can be defined using the core competences as well. Especially the ‘impossible to imitate’ aspect is one way to define what the company has to offer, that other companies do not have. 

      As stated before, a company can expand in multiple different ways.

Looking at Ansoff’s Matrix we can deduce that there are for main ways for the company to expand:

Kuva: Ansoff's Matrix, free-management-ebooks.com

1.       Increase existing product’s market share on existing market (Market penetration)
2.       Develop a new product to a new market (Product development)
3.       Bring an existing product to a new market (Market expansion or Market development)
4.       Develop a new product to aim at a new market (Diversification)

      To sum all of this up, the goal of expansion can be made much easier by having a well-defined core competence, and a mission (a red thread so to speak) closely tied to core competence.

  2.How to foresee trends? (Company’s vision)

  a) How do you translate this into a company’s vision

  

      What is a business trend? Cambridge dictionary defines business trend as a general change in the way business is developing. But how can anyone know beforehand what changes will occur in the future? 

      In his article in Harvard Business Review Maxwell Wessel states that anyone can get better at predicting how markets will evolve if we ask ourselves three questions.

·         What’s changed?

·         What business assumptions become irrelevant?

·         How could new models take advantage of the change?

      Some examples of changes that have affects on businesses around the world are:

•          Climate change
•          Rise of internet
•          Wars
•          Financial crisis

      What is a vision?

      Business dictionary defines a vision as “an aspirational description of what an organization would like to achieve or accomplish in the mid-term or long-term future. It is intended to serves as a clear guide for choosing current and future courses of action.” (1)

  

     Why is Vision important?

      As a study by Rafferty and Griffin suggests “Vision and inspirational communication have a unique positive relationship with affective commitment to the organization” (6)

"    Concrete performance such as profit, return on shareholder equity, employee turnover and rate of new product development improve when Visions are used as strategic tools to manage organizational cultures" Wall Street Journal 22 Sept 1994 p. A1

      Various studies show the positive impact of a clear vision, when used in everyday business management as well as the company’s strategic tool.

     How to form a vision?

(    Kantabutra, 2008b) defines following characteristic as building blocks of a strong vision:

1. conciseness;
2. clarity;
3. future orientation;
4. stability;
5. challenge;
6. abstractness; and
7. desirability or ability to inspire.

      

      And also in the study of Kantabutra, S. and Avery, G:

·                    is brief (so that it can be remembered and repeated easily);
·         contains a prime goal to be achieved;
·         can encompass all organizational interests;
·         Is not a one-time, specific goal that can be met, and then discarded;
·         provides a source of motivation for employees to do their best by including a degree of difficulty or         stretch (e.g. to achieve a national/international status);
·         offers a long-term perspective for the organization and indicates the future environment in which it         will function;
·         is unlikely to be changed by market or technology changes; and
·         is viewed as desirable by employees (8)

      Looking at these characteristics, it seems there’s not much space for our goal of implementing foreseeing trends into the vision. But this being said, the vision should contain something about future goals. and challenge. So depending on the type of company, the vision should say something about the variability of the industry. Couple of key words could be analysing, (product) development, proactivity, and such.

   3.How to create strategy based on vision and mission? (Company’s strategy)

  

      Definition of a strategy by the Business dictionary: A method or plan chosen to bring about a desired future, such as achievement of a goal or solution to a problem.

      How to wisely build a strategy?

      A company’s mission and vision have value of their own. But how can they contribute towards the company’s strategy?

      In order to build a strategy a company needs to have vision, mission and objectives. (9) I think that keeping things simple is the best approach, and so the objectives would naturally be conducted from vision and mission. In our goal of a growing, dynamic company in the changing world we wanted to base the mission on ‘expanding the company utilizing the existing resources’ and we based our vision (partly) on foreseeing trends.

      So goals in this learning objective could be, for example, to:

•          Use company’s core competence to expand
•          Always prepare for what’s around the corner
•          Be innovative

      And how do we build a strategy based on these objectives?

      Here’s a list of pointers to building a strategy:

      The following list of questions can be a guide for deciding on the most beneficial strategies for your group:

•      What resources and assets exist that can be used to help achieve the vision and mission? How can they be used best?
•      What obstacles or resistance exist that could make it difficult to achieve your vision and mission? How can you minimize or get around them?
•      What are potential agents of change willing to do to serve the mission?
•      Do you want to reduce the existing problem, or does it make more sense to try to prevent (or reduce risk for) problems before they start?
•      How will your potential strategies decrease the risk for experiencing the problem? How will the strategies increase protective factors? (9)

      Some things a good strategy takes into consideration:

·         Gives overall direction (this can be conducted from mission and/or vision)

·         It fits resources (At this point it is important to know company’s core competence)

References:
(1) http://www.businessdictionary.com/definition/mission-statement.html

(2) Prahalad, C.K. and Hamel, G. (1990) "The core competence of the corporation", Harvard Business Review (v. 68, no. 3) pp. 79–91.

(3) Danilovic, M., & Leisner, P. (2007). "Analyzing core competence and core products for developing agile and adaptable corporation." In Proceedings of the 9th Dependency Structure Matrix (DSM) International Conference, 16–18 October 2007, Munich, Germany.

(4) Hull, P., 2013, Forbes:
"Answer 4 Questions to Get a Great Mission Statement". Forbes

(5) http://www.free-management-ebooks.com/dldebk-pdf/fme-ansoff-matrix.pdf

(6) Rafferty, A., Griffin, M. 2004 Dimensions of transformational leadership: Conceptual and
empirical extensions

(7) Wessel, M. 2015 Predict the Future of Your Business, Harward Business review

(8) Kantabutra, S. and Avery, G. 2010, JOURNAL OF BUSINESS STRATEGY vol 31 no. 1 The power of vision: statements that resonate

(9) http://ctb.ku.edu/en/table-of-contents/structure/strategic-planning/develop-strategies/main