MGF 3684

Business Strategy
Week 2
Vision, Mission & Generic Strategy
 What you need to know today

1. Mission, Vision & Objectives 3. Yellow Tail Case

2. Generic Competitive Strategies 4. Capstone Simulation

Concepts Case Studies MGF

3684

Concepts StratBusines
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IT Security Vs
Take-aways Cybersecurity
What we will be covering this week?
Housekeeping
Announcements

• Have you form your Capstone Group

yet and hence got your login
details?
 S E C T I O N 1

Mission, Vision
& Objectives
Recall Last Lesson’s Strategy Making Process Framework
 Mission & Vision

This Unit’s Definitions

Definitions from Collins & Porras 1996
Mission defines the enterprise’s key
PURPOSE of existence – is functional
in description

Mission & Values Values defines the enterprise’s targeted

BEHAVIORS expected on employees and
partners – is principals based in description

Vision describes the future environment & key

Vision business characteristics / drivers – is object
oriented & characteristic in description
 Leadership Roles

TRADITION ROLE CONTEMPORARY ROLE

Articulates the mission, values
Defines a Clear Strategic Plan & create a vision

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Jim Collins
 In Dynamic & Turbulent Environments

“The envisioned future [ie ‘vision’] is

what we aspire to become, to
achieve, to create—something that
will require significant change”
(p.66). “Vision provides guidance …
“Companies that enjoy enduring towards what future to stimulate
success have core values and a core progress towards.” (p.66)
purpose [i.e. ‘mission’] that remain
fixed while their business strategies ie their vision propels them forward;
and practices endlessly adapt to a propels them in a particular
changing world.” (Collins & Porras direction (motivates people with a
1996: p.65) clear & better future promise)
Ie these companies have a mission &
shared values that anchor them
(mission gives purpose to go through
challenges and values anchors
shared determination against the
odds)
 Stating the MISSION

The core purpose of the organisation:

Who are we?
What business are we in?
What is it that we do?
Who do we serve?
What ensures our existence?

Markides (2004, in Week 1 readings) calls them

essential “parameters”—who to serve, what to
produce, and how to achieve all this.

Mission often includes values: the organisation’s

guiding principles, such as integrity, safety,
transparency…
 Examples of Mission Statements

3M: To solve unsolved problems innovatively.

McKinsey & Company: To help leading

corporations and governments be more
successful.

Harvard Business School: We educate leaders

who make a difference in the world.

BHP: We are BHP Billiton, a leading global

resources company. Our purpose is to create long-
term value through the discovery, development
and conversion of natural resources, and the Values:
provision of innovative customer- and market- HYBE innovates the music industry business model under the mission,
"We believe in music". HYBE strive for the world's best entertainment
focused solutions.
lifestyle platform company based on music.
Pfizer: …helping humanity and delivering
"Content" that leads the global trend and "fans" who are our customers
exceptional financial performance by discovering,
are the two pillars to our values, and we are committed to satisfying our
developing and providing innovative health care
customers by continuously improving our services with the highest
products that lead to healthier and more
standards.
productive lives.
Quote from Hybe, 2022
 Mission Statements set Practice Directions

PRACTICE DIRECTIONS

HYBE innovates the music industry business model under the mission, "We
believe in music". HYBE strive for the world's best entertainment lifestyle
platform company based on music.
"Content" that lead the global trend and "fans" who are our customers are
the two pillars to our values, and we are committed to satisfying our
customers by continuously improving our services with the highest
standards.
(Hybe#1, 2022)
 Mission Statements also set Behaviour Directions
HYBE CASE: BEHAVIOUR DIRECTIONS

(Hybe#2, 2022)
From Corporate to #ENHYPEN #IBelieveInTeamwork
Differentiated Team #SEVENTEEN #IBelieveInSettingGoals
Values that steer how #GFRIEND #IBelieveInMyself
people behave & work #NUEST #IBelieveInSmile
Shared Goals & Differentiation Yourself & #TXT #IBelieveInPineapplePizza
Interests & Agility Others in alignment to their
#BTS #IBelieveInConnection
mission statement (Rappler, 2021)
Should Shareholder Value be part of the Mission Statement

Maximising long-run performance (profitability, CF, shareholder

value…) is the ultimate and underlying objective of firms, but…

…it provides little purpose, guidance and direction to the

company; neither does profit maximisation capture the
imagination of employees.
Profits are to business as breathing is to life. Breathing is essential to life,
but is not the purpose for living.
(Dennis Bakke, CEO AES)

Shareholder value in profit making organisations is a given.

The Mission Statement needs to indicate, at a high level, how this assumption is achieved.
 Poor Mission Statements

If you don’t know where you are going, your

mission statement will be unclear ………

Hence setting a Vision gives a focused

outcome & direction for determining your
mission.
Source:
https://carpenterstrategytoolbox.com/2014/07/19/missi
on-out-of-control/
 Setting the VISION

“The envisioned future [i.e. ‘vision’] is what we aspire

to become, to achieve, to create”
(Collins & Porras 1996)

What do we want to become in 10 or 20 years?

What do we want to achieve over the next 10 or 20
years?
Eg Future University Vision
Format:
BIG HAIRY AUDACIOUS GOAL (BHAG)
framework to elaborate a vivid description of the
future
(Collins & Porras 1996)
 Characteristics of a Good Vision Statement

A good Vision Statement communicates a

compelling goal that:
• Resonates with people and focuses their
attention;
• Is tangible;
• Is daunting but doable
Examples:
“Putting a man on the moon”
(Kennedy Administration)

“Wiping out Malaria” (WHO)

“Beat Xerox” (Canon)

“To create a third [major] iron ore player in the

Pilbara.” (Andrew Forrest)
 Characteristics of a Good Vision Statement: Vivid Description
More Examples: BTS’ Business Manager: HYBE’s Vision:
Henry Ford – ““to build a motor car for the great “The world’s top music-based
multitude”
Further elaboration: It will be so low in price that no man entertainment lifestyle platform
making good wages will be unable to own one and to enjoy
with his family the blessing of hours of pleasure in God’s great company.”
open spaces … When I'm through, everybody will be able to
afford one, and everyone will have one. The horse will have Further Elaboration: All experiences that are filled with infinite
disappeared from our highways, the automobile will be taken imagination and joy that stem from music, increases happiness
for granted...[and we will] give a large number of men and convenience in life.”
employment at good wages.”
Ultimate Goal of Entertainment Lifestyle: To have these
• Sony - “To become the company most known experiences lead to personal growth, which in turn leads to
for changing the worldwide poor-quality connections among individuals and with the world, exchanging
image of Japanese products.” positive influence, and forming healthy relationships.
Further elaboration: “We will create products that become (BTS US Army, 2021)
pervasive around the world.... We will be the first Japanese
company to go into the U.S. market and distribute directly....
We will succeed with innovations that U.S. companies have
failed at - such as the transistor radio.... Fifty years from now,
our brand name will be as well known as any in the
world. ..and will signify innovation and quality that rival the
most innovative companies anywhere.... "Made in Japan" will
mean something fine, not something shoddy.” (Collins &
Porras 1996)
 Strategic Objectives
Vision: Be the world’s top
music-based entertainment
lifestyle platform company.

Characteristics of Strategic Objectives:

Objectives
(Achievement
Specific
Mission: Targets) & Associated Measurable
Measures to validate Attainable (but challenging)
Vision Accomplished
Realistic
Time prioritized

Passion Autonomy Trust

 Strategic Objectives: Inferred Examples

Strategic objectives are usually

not publicly specified, however
they can be inferred from
strategic & marketing
communications media.

Example: Watch Hybe Rebranding video (38.53m)and you will get glimpse of the
underpinning objectives of their new strategy plan compromising of their vision, mission
and values, platform business model and even office space design that brings to live an
office work culture that resonates with the company’s mission and values
 Conclusion: Mission, Vision, and Objectives

Mission, vision, and objectives provide

guidance:

 provide inspiration and motivation

 act as “corporate glue”
 provide direction in exceptional
circumstances.

They also impose broad constraints on

strategic choice.
 Integration of Mission, Vision & Objectives

1
Set the Vision to know what and
where a firm is heading in the
future, and why

3
Define the Objectives that set the
targeted performance indicators
2 that validate successful delivery of
Define the Mission to know how the the Vision
firm would achieve the Vision with
its people and functional Next Phase
capabailities
4
Define the Actionable Strategies in
alignment with the Mission, to
deliver the Objectives, hence Vision.
 S E C T I O N 2

Generic Competitive
Strategies
Generic Strategies

Generalising these strategies into 2 generic

strategic approaches in creating or
sustaining competitive advantage:
 Porter’s Generic Strategies

2 generic strategic approaches to compete: Costs Vs Differentiation

Cost

Broad
(Market) Scope
Leadership Differentiation

Narrow
Cost Differentiation
Focus Focus

Lower Cost Uniqueness

Competitive Advantage Focus

 Porter’s Generic Strategies
3. Lower cost partly passed on to customers as lower
prices.

4. Several ways of achieving cost leadership:

• economies of scale (falling unit costs with volume per
period)
• learning effects (falling unit costs with cumulative
volume)
• capacity utilisation
• product design (e.g. standardised, simple designs)
• proprietary technology / automation …
COST LEADERSHIP CLASSIFIED STRATEGIES
1. Objective is to attain lower cost than competition.
Value chain analysis can assist.
2. Cost leadership strategy does not imply “cheap and “We think about the whole process between
manufacturers and consumers. We think about
nasty” products! every single step and how we can streamline that
1. If the cost leader’s “product is not perceived as […] step and be more efficient.”
acceptable by buyers, a cost leader will be forced to Australian MD of (German-owned) supermarket chain Aldi
discount prices well below competitors’ to gain sales.
This may nullify the benefits of its favourable cost
position.” (Porter 1985)
Examples of Companies Pursuing Low Cost Strategies
Cost Leadership Strategic Approaches - Risks

1. Going too far in cost-cutting, thus endangering acceptability

2. Sources of cost leadership (scale, learning effects,

automation, product or process design…) rendered
obsolete through radical innovation

3. Competitors can easily imitate

 Differentiation Strategic Approaches
3. Options for Differentiation

Infinite number of options for achieving differentiation

eg:
• Product functionality (e.g. bigger, faster, more user-
friendly…)
• Quality/reliability
• Convenient locations
• Aesthetics
• Innovativeness
• Customer responsiveness
DIFFERENTIATION CLASSIFIED STRATEGIES • “Cool” image
1. Objective of differentiation is “uniqueness” in the • Offering a “solution”
eyes of customers that allows the firm to charge a (convenience and assurance
premium price. Note: uniqueness may be real or perceived (e.g. that things work together).
brands of bottled water, petrol, …)

2. Differentiation-based CA relies on obtaining a price

premium that exceeds the cost of providing
“There is no such thing as a commodity! Differentiation
differentiation.
is possible in every industry.”
Differentiation Strategic Approaches

4. Successful differentiation requires, initially,

an understanding of the customer:
• Asking them (e.g. conversations, market
research)
• Observing their behaviour (e.g. CRM)
• Thinking about customers’ underlying needs
• Experimental offerings to find out.

5. Value chain analysis to aid differentiation

• Regard each process identified within the value
chain as a potential source of differentiation.
Examples of Companies Adopting Differentiation Strategic Approaches
Differentiation Strategic Approaches - Risks

1. Unique but of no/little value (“over-

engineering” and “gold plating”)

2. Too high a premium price (too few

can afford)

3. Source of differentiation rendered

obsolete through radical innovation

4. Competitors imitate

5. Changing perceptions of buyers (no

longer valued)
 Focused Strategic Approaches

1. Focused strategies appeal to the entire

market.

Cost
Broad

Differentiation 2. Provided market segments are sufficiently

Leadership different, a broad-based competitor will
find it difficult to serve all market
segments equally well (compromises,
distraction).
Narrow

Cost Differentiation
Focus Focus 3. Focused competitor can single-mindedly
serve a particular segment.
Lower Cost Uniqueness
4. Objective is the “exploitation of a narrow
target’s differences from the balance of
the industry.” (Porter 1985: p.15)
 Focused Strategic Approaches: Examples

Two kinds of focus strategy: cost leadership or

differentiation in the chosen segment.

Cost
Broad

Differentiation 1. Focus + Differentiation:

Leadership Luxury sports cars;
Shangri-La: luxury hotels with a clear
Asia-Pacific regional focus
Narrow

Cost Differentiation 2. Focus + Cost Leadership:

Focus Focus Papa Murphy’s: inexpensive take-and-
bake pizzas for value-conscious
Lower Cost Uniqueness families; accepts food stamps
Focused Strategic Approaches - Risks
1. Against broad-based competitors:
• Technology may make serving the specialised
segment less demanding for broad-based
competitors (e.g. flexible manufacturing
technology and logistics);
• Changes in customer preferences may render a
segment less distinct from other industry
segments.

2. Against imitators (i.e. other focusers):

• Especially in growing industry segment, danger
of being “out focused” as sub-segments
become viable and “outfocusers” emerge.

3. Segment disappears or no longer viable (e.g.

demographic changes)
• NB: if segment threatened, focuser’s existence
threatened!
Case Study
Translating Theories into Practice
Yellow Tail Wines

1. How would you characterise Yellowtail's

strategy? (in terms of Porter’s generic
strategy framework)
2. Is their competitive advantage sustainable
in light of the firm's external
environment?

Follow-up: Yellow Tail Shiraz

was ranked as the No.1 selling
750ml red wine in the US!
Tutorial Discussions: Yellow Tail Wines

Read the case prior attending tutorial class

Apply the relevant case information and apply this

week’s concepts to answer the following Qs:

1. How would you characterise Yellowtail's strategy?

(in terms of Porter’s generic strategy framework)

2. Is their competitive advantage sustainable in light

of the firm's external environment?

Your Answers should clearly:

• Introduce the relevant concepts
• Apply these concepts, using the relevant case
information to answer the 2 questions.

Your answers should be well structured with the

appropriate headings and connected paragraph flows
that convey your critical reasoning flows.
Next Week’s Lesson

Strategic Positioning