MGT Notes

Reference: Strategic Management (5e) – Frank T. Rothaermel (Pg 40)

A Vision Statement forms part of the Analysis portion of the Analyze, Formulate and Implement process we looked at in the previous post. It aims to answer the question, “What do we want to accomplish ultimately ? ‘ The purpose of the vision statement is to set the long term objective of the organization. It forces a leader to begin with the end in mind.

Crafting a vision statement is akin to (part of) the process of designing a blueprint for a house, since it must be done before construction begins.

A vision statement is useful since it enables employees to feel part of something bigger, find meaning and have a greater sense of purpose. A vision statement must be forward looking and inspiring. However, single minded pursuit of a vision can be detrimental.

Vision statements can be of two types:

1. Product Oriented Vision Statements: These define the business in terms of a product or service. By definition, they take a myopic view of the competitive landscape.
2. Customer Oriented Vision Statements: These define the business in terms of providing solutions to customers needs. Needs are identified but the means of fulfilling them are left open. Adaptability is implied since if needs change, means to fulfill them can change.

Vision statements can be tied to firm performance if:

1. They are customer oriented.
2. Internal stakeholders are invested in defining them
3. Organizational structures align with the vision.

A well-crafted vision statement is an important part of a firm’s strategy and will lead to competitive advantage.