Very Short Question Answer
1. Define vision and mission.
Vision can be defined as the description of what an organization wants to be in future. It provides direction to the organization. Through vision, organization can focus on achieving the desired goals. The vision statement of McDonald’s is to be the world’s best quick service restaurant.
A mission defines the business in terms of customers, employees, suppliers and the community. It reflects every facet of the business. The importance of mission is as follows:
- Brings uniformity in actions
- Serves as the basis of resources allocation
- Develops organization culture
- Enhances employee ownership
2.State two characteristics of mission.
The two important characteristics of mission are as follows.
- Broad in scope: The mission of an organization determines its scope. It answers what is our business? In other words, it clears about the product and market of the business. It also provides base for the formulation of goal and strategies.
- Precise: A mission statement is always presented in a precise way. Normally, it includes not more than 250 words.
3. Define strength and weakness.
Strength is the basic capability which an organization can use to gain strategic advantages over its competitors. Weakness is the basic limitation, which creates a strategic disadvantage for an organization. Analyzing and identifying the weakness of an organization help a firm to avoid its constraints and achieve success.
4. Write about strength and mention any two conditions that create strength..
Strength is the basic capability which an organization can use to gain strategic advantages over its competitors. Analysis of strength is inherent requirement of an organization for its success. Strong brand image and sophisticated technology create the strength in an organization.
5. What do you mean by weakness? Write any two situations that make a firm weak.
Weakness is the basic limitation, which creates a strategic disadvantage for an organization. Analyzing and identifying the weakness of an organization help a firm to avoid its constraints and achieve success. Lack of skilled human power and obsolete technology are some conditions that make a firm weak.
6. Define opportunity with two examples.
Opportunity is a favorable condition in the environment, which enables an organization to consolidate and strengthen its position. Strong economy and social development are the likely opportunities for an organization.
7. Write about threat with suitable examples.
Threat is an unfavorable e condition in the environment, which creates risk or causes damage to the organization. Threat identification enhances an organization to change strategy or stand in strong position. Change in need and preference of customer and unfavorable law and politics are the examples of threats to an organization.
8. Write any two limitations of SWOT analysis.
- Found It generates lengthy list of environmental components.
- The same factor can be placed in two categories i.e. strength may also be a weakness and or an opportunity may also be a threat.
Short Question Answer
1. What is SWOT analysis? Enumerate its importance in strategic management.
SWOT analysis is one of the important steps in formulating a strategy. It presents the information about external and internal environment in a structured way by which the key external opportunities and threats can be compared systematically with internal capabilities and weakness. The main purpose of SWOT analysis is to identify the extent to which the current strategy of an organization and its strengths and weakness are relevant to deal with dynamic environment. It can also be used to assess whether there are unique resources or core competencies within the organization to exploit the opportunities.
SWOT analysis involves the relative analysis of the following four components.
- Strength: Strength is the basic capability which an organization can use to gain strategic advantages over its competitors. Analysis of strength is inherent requirement of an organization for its success.
- Weakness: Weakness is the basic limitation, which creates a strategic disadvantage for an organization. Analyzing and identifying the weakness of an organization enhance it to avoid its constraints and achieve success.
- Opportunity: Opportunity is a favorable condition in the environment, which enables an organization to consolidate and strengthen its position.
- Threat: Threat is an unfavorable condition in the environment, which creates risk or causes damage to the organization.
SWOT analysis is a tool for developing strategic options. The following are some of the likely strategic options developed through SWOT analysis.
Condition 1: Strengths and Opportunity
This is the condition of an organization in which it has sufficient strength to grab the market opportunities. The issue under this condition is how 626 strengths can be used to take advantage of the opportunities. The possible strategies
- Expansion
- Product development
- Market development
Condition 2: Strengths and Threat
This is the condition of an organization in which it has sufficient strength. However, a number of threats are likely to emerge from the environment. Hence, the issue under this remains as how can strengths be used to avoid current and potential threats. The possible strategies under this are;
- Diversification
- Consolidation
- Market penetration
Condition 3: Weaknesses and Opportunity
This is the condition of prevalence of market opportunities with lack of internal strength to grab the opportunities. The issue under this remains as how can opportunities be used to overcome the weaknesses you are To experiencing. The possible strategies under this are;
- Strategic alliance
- Collaboration
Condition 4: Weaknesses and Threat
This is the condition in which the organization is unlikely to avoid the possible threats that arise from the eternal environment. The issue under this is how weaknesses can be minimized to avoid threats. The possible strategies under this are;
- Downsize
- Divestiture
From the above discussion and analysis, it may be concluded that SWOT analysis is the base for the development of the possible strategies that are likely to be adopted by an organization.
2. What is SWOT analysis? Explain its components.
SWOT is an acronym used to describe the strength, weakness, opportunities and threats that are strategic factors for a company. An opportunity is a major favorable situation in a firm’s environment. On the other hand, a threat is a major unfavorable situation in a firm’s environment. Likewise, strength is a resource or capability controlled by or available to a firm that gives it an advantage relative to competitors in meeting the needs of the customer it serves. On contrary, a weakness is a limitation or deficiency in one or more of a firm’s resources or capabilities relative to its competitors that create a disadvantage in effectively meeting customer needs. SWOT analysis is one of the important steps in formulating a strategy. It presents the information about external and internal environment in a structured way by which the key ns external opportunities and threats can be compared systematically with hio internal capabilities and weakness. The main purpose of SWOT analysis is to identify the extent to which the current strategy of an organization and its strengths and weakness are relevant to deal with dynamic environment. It can also be used to assess whether there are unique resources or core competencies within the organization to exploit the opportunities.
Components of SWOT
SWOT analysis provides some useful strategic insights. It contributes to the formulation of strategy. In SWOT analysis current emerging issues relating to business’s strengths, weaknesses, opportunities and threats are identified, assign priorities to those issues and develop a plan for handling each of them. Properly used SWOT analysis can help to ensure organizational success. It enhances the improved organizational performance by providing environmental information for the effective performance of organizational functions.
Identification of SWOT provides the organization with strategic thought and insights to match the internal resources with environment. The following are the components of SWOT analysis.
- Strength: Strength is the basic capability which an organization can use to gain strategic advantages over its competitors. Knowing its strength, an organization formulates its strategy and enters into the competitions. Understanding strength is recognizing the weapons likely to be used to defeat the competitors. So, analysis of strength is inherent requirement of an organization for its success.
- Weakness: Weakness is the basic limitation, which creates a strategic disadvantage for an organization. Identification of weakness helps an organization to avoid its weakness and safeguard the organization from being damaged. So, analyzing and identifying the weakness of an organization enhance it to avoid its constraints and achieve success.
- Opportunity: Opportunity is a favorable condition in the environment, which enables an organization to consolidate and strengthen its position. An organization can grab benefits from the environment and improve its current position by identifying the prevalent opportunities.
- Threat: Threat is an unfavorable condition in the environment, which creates risk or causes damage to the organization. Threat identification enhances an organization to change strategy or stand in strong position. An organization can run in the safe road of the competitive industry by knowing the possible risk.
3. What do you mean by strategic vision? Why development of vision is important in modern organizations?
Meaning of Strategic Vision
Vision can be defined as the description of what an organization wants to be in future. It provides direction to the organization. It should be specific and distinctive to a particular organization. It provides managers with a reference point in making strategic decisions and prepares the company for the future. A strategic vision gives shape to its intended future. It reflects the firm’s values and aspirations and intends to capture the heart and mind of the employees as well as other stakeholders.
Importance of Strategic Vision
- Provides direction: Strategic vision is the intended future of an organization. It provides long-term direction to the organization.
- Guides for strategic decisions: Strategic vision reflects intent of the organization over a long period of time. Hence, it guides strategic decisions.
- Shapes strategy: Strategic management is largely guided by strategic vision. Hence, strategic vision shapes strategy.
- Sets priority: Strategic vision sets organizational priority. It determines organizational planning.
- Aligns people and activities: Strategic vision aligns people and activities across the organization. It enhances cooperation within the organization and finally enhances organizational effectiveness.
- Reflects core values and belief: Every organization has certain values and beliefs. Strategic vision reflects the core values and beliefs which guides the overall management system of the organization.
- Empowers employees: Employee motivation, commitment, and empowerment are vital for organizational success. Strategic vision aims employee empowerment for a superior organizational performance.
- Brings change: Strategic vision intends to bring changes in the organization. It also acts as the centre of hope in the organization.
4. Mention the characteristics of an effective strategic vision. Why is it necessary to communicate the vision?
Characteristics of Strategic Vision
- Future focused: A vision statement shows the organization’s desired future state. It clarifies the organization’s future aspiration.
- Directional: A strategic vision describes the path that the company intends to follow in developing and strengthening its business. Hence, it directs the organizational activities.
- Clear and precise: An effective strategic vision is clearly articulated. It should be easily understood by the stakeholders.
- Feasible: Strategic vision should be developed in such a way that it is feasible for the organization in terms of resource, capability and timing.
- Values based: An effective vision connects people to the organization’s core values. It enhances organizational effectiveness.
- Challenging: An effective vision should be challenging. It shows the future state which is difficult to achieve today but possible for tomorrow.
- Unique: An effective strategic vision reflects the uniqueness about Hence, it makes the organization different.
- Inspiring: An effective strategic vision inspires people towards organizational objectives. It intends to win the hearts and minds of people.
Communication of Strategic Vision
Vision is the description of what an organization wants to be in future. It provides direction to the organization. A strategic vision communicates management’s aspiration to stakeholders. It is the point of hope for the organization. Hence, it should be well communicated to all managers, employees, and external stakeholders. A clearly communicated strategic vision provides long-term direction to the organization. Hence, the management should convince the stakeholders about the strategic direction i.e. strategic vision. All the employee should understand the strategic direction is reasonable and beneficial. Effective communication of strategic vision helps to win the support of organizational stakeholders. Hence, the vision statement should be explained to all the employees as well as stakeholders. Communicating strategic vision provides the rationale for the new strategic vision and company direction. It also helps to remove resistance to change. If the essence of the vision is expressed in a catchy and easily remembered slogan, communication is easier.
5. What do you mean by mission? Mention the characteristics of a mission.
Mission is the reason of organizational existence. It defines the business in ferterms of customers, employees, suppliers and the community. It reflects every facet of the business like the products, pricing, quality, service, marketplace position, growth potential, use of technology, and the relationships with the customers, employees, and suppliers. It normally remains unchanged over time. Vision is the base for a firm’s mission. In other words, mission is developed on the basis of vision.
Characteristics of Mission
- Broad in scope: The mission of an organization determines its scope. It answers what is our business. It also provides base for the formulation of goal and strategies.
- Precise: A mission statement is always presented in a precise way.
- Inspiring: A mission statement inspires all the stakeholders and encourages them to involve in the organization in a rigorous way.
- Multi components: A mission statement involves many components as customer, product or services, market, technology, concern for survival, philosophy, and concern for employees.
- Distinctive: A mission statement makes the organization different to others. It helps in image building.
- Components of strategy: It involves the strategic components that are likely to be adopted by the business. It provides early signal about the strategy that the business is likely to pursue.
Long Question Answer
1. “Development of vision, mission and objective is the most important function of strategic management.” Elaborate this statement.
Development of vision, mission and objective are the parts of strategic direction of an organization. They specify the long term roadmap of an organization. They specify where and how the organization would like to move forward in future. The strategic direction is framed within the environmental conditions (opportunities and threats). The strategic direction motivates and encourages employees towards the strategy implementation process. It also specifies the resource requirement for the organization. Hence, it should be clearly communicated to all affected parties in the organization.
Vision can be defined as the description of what an organization wants to be in future. It provides direction to the organization. Through vision, organization can focus on achieving the desired goals. A strategic vision communicates management’s aspiration to managers with a reference point in making strategic decisions and preparing the company for the future. The vision statement of McDonald’s is to be the world’s best quick service restaurant.
A mission defines the business in terms of customers, employees, suppliers and the community. It reflects every facet of the business like the products, price, quality, service, marketplace position, growth potential, use of technology, and the relationships with the customers, employees, and suppliers. Vision is the base for a firm’s mission. In other words, a mission is developed on the basis of vision. The expected outcomes of an organization are known as objectives. They are the performance targets. They show the managerial commitment towards future performance. Hence, they are the end result of planned activity. All the organizational activities are directed towards achievement of objectives. Objectives may be formulated for a long as well as short term. Similarly, they may also be formulated in different levels as corporate, business, operational and individual.
Strategic direction is always long-term. It is based on environmental analysis. It always aims at strategic fit. It lists out the set of organizational priorities. The top management is involved in setting out strategic direction with the involvement of the middle and lower level management. It always intends strategic advantage for sustainable development. Hence, it may be concluded that development of vision, mission and objective is the most important function of strategic management.