Tuesday, February 21, 2012

IMPACT OF CORPORATE VISION AND MISSION STATEMENTS ON AN ORGANISATION.

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CHAPTER ONE


1.1 BACKGROUND OF STUDY


The function of Leadership � the number one responsibility of a leader is to catalyze a clear and shared vision for the company and to secure commitment to and vigorous pursuit of that vision. As we discussed earlier, this is a universal requirement of leadership, and no matter what your style, you must perform this function.


Why is visioning and mission statements so important? What exactly is a vision and a mission statement? And how do we go about setting them?


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Answering these questions is the essence of this project work. The writer hopes to inspire its readers to put “catalyze a shared vision” as its number one priority.


I will present the “Collins-Porras Vision Frame work” � a useful, concrete framework that removes the fuzziness that surrounds the topic yet, at the same time, preserves the magic or spark that’s an essential quality of Vision. Throughout this project I will provide specific pointers on the process of catalyzing a shared vision, I’ll like to provide you a quick snapshot of the overall structure that.


Figure 1.1





STRATEGY STRATEGY


TACTICS TACTICS


Figure 1.1 shows the basic flows you begin with Vision; move to strategy, and then to tactics. It also shows that vision is composed of three basic parts core values and beliefs, purpose, and mission.


I will explain each of these parts later in the chapter, and give many examples. But first I will explain why an organization should take on the challenging task of setting a vision.


Instilling an organization with a lasting corporate vision is a challenging task. As one manager told me, “By asking me to do this you’re setting the bar at a very high level.


The purpose of this study therefore, is to ascertain the role which corporate vision and mission statements plays in the overall performance of an organization.


1. DEFINITION OF PROBLEM


The ability of organizations to formulate a clear strategy can be most tasking for the modern managers. And often times this puts to test the competencies and managerial capabilities of the leader of an organization.


There are thousands of pages in management literature written about strategy. Strategic Management is a required course at most business schools. Large consulting firms build client lists by selling “strategy solutions”. There is good reason for this sound strategy is essential to attaining greatness.


But think for a minute about the word strategy. What does it really mean? Strategy is how one intends to go about attaining a desired end. It is the means to an end. Thus, it is wholly impossible to have an effective strategy unless you are clear absolutely clear about what the end point is. Strategy is a path to attaining your vision. Knowing how to get “there” is impossible if you can’t articulate what “there” is.


Most companies let crises, firefights, and tactical decisions drive the company. We refer to this as “tactics-driving strategy”. Vision should drive strategy and strategy, in turn, should drive tactics, not the other way around.


This may seem obvious and the reader may be wondering why the writer is harping on it. However, its practice is also extraordinarily rare. I’ve noticed that in my short career that in almost every company (including my present organization) with significant organizational problems, one of the root difficulties is the lack of a clear vision. As I write this thesis we have a group of consultants in-house at my company helping us out with a corporate vision. Meanwhile we have a strategy for the organization but no clear picture of what we hope to achieve or where we are headed. I hope the outcome of visioning going on in my organization right now will form the basis for a future work.


1. OBJECTIVE OF STUDY


Vision isn’t necessary to make money; you can certainly create a profitable business without it. There are plenty of people who have made a lot of money, yet had no compelling vision. But if you want to do more than just make a lot of money � if you want to build an enduring, great company � then you need a vision.


If the historical evolution of great companies was examined closely � companies like IBM, L.L. Bean, Hewlett-Packard, Mckinsey & Company, Sony, McDonald, NIKE, Disney among others you will find that at some point, while the company was still relatively small, key leaders instilled a compelling vision into the organization.


1.4 SIGNIFICANCE OF STUDY


In view of the great importance that a clear vision and mission statement plays in the overall performance of an organization and the last legacy the presence of such visions leave in an organization a sound and well articulated vision is a basic pre-requisite for an organization that desires to be great and stay above board.


This study will be useful to various managers and entrepreneurs of both big and small organizations who are saddled with the responsibility for steering the course of their businesses and ensuring the leave an institution that will survive them and stand the test of time.


Though these managers may be acquainted with visioning and mission statements, this study may add more to their knowledge of this topic or even raise questions which may create room for further research.


1.5 BASIS OF COMPARISON


In as much as one realizes that no attempt to compare the performance of business can provide absolute answers, however relative insight can be gained as the process of coming up with a Vision, Mission statement and a Strategy can vary from organization to organization.


It is therefore reasonable that comparisons should be made between companies with a clear vision and companies without a vision.


This writer believes is the only way the reader can fully comprehend and appreciate the impact that visioning makes on an organization.


1.6 SYNOPSIS


This work is structured in such a way that Chapter one dealt with the introduction of the research, objective and significance of study, definition of problem and also basis of comparison.


Chapter two dwells on the literature review and theoretical framework of the research.


Chapter three deals with research methodology focusing mainly on system of research.


Chapter four has its main thrust on data presentation and Analysis and finally chapter five is a brief summary, conclusion and recommendation.


REFERENCES


1. Vincent, D.R (18, March-April). Understanding Organisational Power.


Journal of Business Strategy, pp. , 40-44.


. Carlson, F.P (10, May-June). The long and short of strategic planning.


Journal of Business Strategy. pp. 11, 15-1


. Shapiro, B.P (188, November-December). What the hell is market-oriented?


Havard Business Review, 66, 11-15.


CHAPTER TWO


.1 LITERATURE REVIEW


Various researches have been carried out on the different aspect of this study, “Impact of Corporate Vision and Mission on an Organization”. Among these researches are those done by Edward O. Welles, Harold Evans, Richard Barrett, Gregory G. Dess among others.


Richard Barrett (18), while writing on “Creating Vision, Mission and Values” recognized that a well-designed vision, mission and values statements are essential for building strong, positive corporate cultures and giving an organization a strategic direction and purpose.


The “Four Why’s” process creates inspirational vision, mission and values statements that address the motivations of employees, customers and society-at-large. The vision statement describes how the organization will find fulfillment. The mission statement declares the organization’s core business and sets out its intentions with regards to meeting stakeholders needs. The values create a code of behavioral principles that support the mission and vision and build a cohesive culture.


The “Four Why’s” process offers several advantages over traditional methods


1. It separates the internal motivation from the external motivation of the organization. This gives greater focus and clarity to the mission and vision statements by specifically addressing the needs of the principal stakeholders e.g. employees, customers and society.


. It links every statement in a motivational chain. The internal mission and vision statements inspire employees. The external mission inspires customers. The external vision inspires society-at-large.


. The process allows every employee, division and department to develop mission and vision statements that are motivationally linked to the organization’s vision and mission statements. Everyone can see how their mission makes a difference I serving the greater whole.


4. The values are chosen to support the internal and external motivations.


5. The vision, mission and values drive the process of building a Balanced Needs Scorecard.





Gregory G. Dess and Alex Miller in Chapter one of their book “Strategic Management” also threw some light on the impact of corporate vision and mission statement on an organization.


The writers went on to discuss Vision and Mission in details. The focus of their study was on strategy but with emphasis on how the presence of a Vision and a Mission statement affects the formulation of corporate strategies.


In the early phases of an organization, a company’s vision comes directly from its early leaders; it is very much their personal vision. To become great, however, a company must progress past excessive dependence on one or a few key individuals. The vision must become shared as a community, and become identified primarily with the organization rather than with certain individuals running the organization. The vision must actually transcend the founders.


To illustrate this point, we like to use the powerful historical example of the founding and subsequent development of the United States. Instead of creating a country that depended on the continued presence on the then living leaders (Washington, Jefferson, Adams, et. Al.), the founders put in place a set of basic principles that would guide the country for centuries after their death.


In essence, the codified the vision of the country in the Declaration of independence and the United States Constitution. They thereby ensured that the future of the United States would come close to living up to their beliefs about how the country should run and, just as important, would not require the continued presence of these individuals.


The early leaders of America were smart by instituting the enduring principles of the constitution, they created the “glue” that would hold the country together even in the absence of a common enemy or the single “great dictator”.


It’s interesting to note that when Tom Watson, Jr. took over IBM from his father in 156, he had the constitution in mind when he took the top executives off-site to create the “Williamsburg Plan”,.


In contrast, there is the example of Duncan Syme and Vermont Castings. Syme had a vision to make the best wood stoves in the world. He believed in this so much that he would personally stand on the production line to ensure that each stove met his exact standards. During the 170s, Vermont Castings became the fastest growing company in the wood stove industry, reaching sales of $million and margins as high as 60%.


Then, in the early 180’s, Syme stepped away from daily operations and turned the company over to professional managers.


But her was a critical problem Syme’s vision went into retirement with Syme. In his absence, the company lowered quality standards, diluted its traditional focus on wood stoves, reduced customer service and, pulled the company away from its original vision. Sales and profit growth flattened, the company lost its ability to bring out innovative new products, and many felt the company had lost its greatness.


Syme returned to Vermont Casting in 186 and got it back on track, reinstalling his vision and regaining the company’s position as the premier wood stovemaker.


This time, however, he took an entirely different approach, as he explained to Inc. magazine. Instead of relying solely on himself to be the guardian of the “Vermont Castings Way”, he began a process of ensuring that it was expressed in all operational decisions.


Creating a company with a vision rather than a company with a single visionary leader on whom everything depends, is difficult for some leaders. They like being the “visionary” the hero or great leader in whom everything depends. The truly visionary managers are those who make the vision property of the entire enterprise and instill it in such a way that it remains strong and intact well after the leader departs from daily operation.


. VISION


In strategic management, a vision refers to the goals that are broadest, most general, and all-inclusive. A vision describes aspirations for the future, without specifying the means necessary to achieve those desired ends. The most effective visions are those that inspire, and this inspiration often takes the form of asking for the best, the most, or the greatest. It may be the best service, the most rugged product, or the greatest sense of achievement, but it must be inspirational. As one observer puts it, “A vision must have an appeal to the emotions and aspirations of the troops but goes beyond the usual carrots and sticks.


If they are to inspire, visions must be communicated; often, to very large number of people. Communicating a vision takes place in two ways. The most obvious is the mission statement (which will be discussed later in this chapter). A less obvious, but perhaps an even better means of communication vision is through persuasive leadership. For example the behavior of the leaders espousing any particular vision will define what is meant by the terms used in a mission statement.


Bruce Merrifield, former deputy secretary of commerce, was convinced that small businesses, especially entrepreneurial high-tech firms were important to the US economy and that the department of commerce should actively seek to encourage their development. To explain his idea, Merrifield prepared three simple charts documenting the contribution of small technology firms to the US economy. In case he had an opportunity to talk about these points away from the office, he carried a smaller version of the same charts with him when he traveled. Managers, like Merrifield see that a critical part of their role is personal involvement in communicating their vision.


. MISSION STATEMENTS


A vision becomes tangible as a mission statement. Writing such a statement specifies a leader’s beliefs about an organization and the directions in which it should move. It can also identify what is unique about the character of the organization.


Although they are still personal statements, not subject to any particlar rules regarding what they must include, mission statements usually attempt to answer several of the following questions


§ What is our reason for being? What is our basic purpose?


§ What is unique or distinctive about our organization?


§ What is likely to be different about our business to 5 years in the future?


§ Who are, or who should be, our principal customers, clients, or key market segments?


§ What are our principal products and services, present and future?


§ What are, or what should be, our principal economic concerns/


§ What are the basic beliefs, values, aspirations, and philosophical priorities of the firm?


.4 COMPONENTS OF CORPORATE VISION


A number of CEO’s have told us that they can’t seem to get their hands on what vision is. They’ve heard lots of terms like mission, purpose, values, strategic intent, but no one has given them a satisfactory way of looking at it that will transcend the morass of words and set a coherent vision for the company.


Out of this frustration comes, the Collins-Porras Vision Framework was developed (See Fig 1.1). Much of the material in this chapter is based on extensive research at Standford done by (Mcgraw.) and published in the article, “ Organizational Vision and Visionary Organizations” (California Management Review, Fall 11). We need no go into all of the theoretical underpinnings and background research of the framework here. The essence of it is that a good vision consists of


§ Core Values and Beliefs


§ Purpose


§ Mission


Vision Component 1 Core Values and Beliefs


Core values and beliefs are where vision begins. Core values and beliefs ae like ether that permeates an organization � its decisions, its policies, its actions � throughout all phases of its evolution. Some companies refer to this as their “guiding philosophy”.


They form a system of fundamental motivating principles and tenets � precepts about what is important in both business and life, how business should be conducted, its view of humanity, its role in society, the way the world works, what is to be held inviolate, and so on.


The core values and beliefs come from inside you. You, as a leader of the company, imprint your personal values and beliefs about life and business through your daily actions.


And therein lies the crucial aspect of core values and beliefs they must be an absolutely authentic extension of the values and beliefs you hold in your own gut. You don’t “set” values. The proper question isn’t, “What values and beliefs should we have?” but rather “What values and beliefs do we actually hold in our gut?”


Example of Core Values from Johnson and Johnson


§ We believe that our first responsibility is to our customers.


§ Our second responsibility is to our employees


§ Our third responsibility is to our management


§ Our fourth responsibility is to the community in which we live. We must be good Citizens.


§ Our fifth and last responsibility is to our stockholders. Business must make good profit.


Vision Component Purpose


Purpose, the second primary part of a good vision, is an outgrowth of your core values and beliefs. Purpose is the fundamental reason for your company’s existence-its ultimate reason for being. Your company’s purpose dovetails with the sense of personal purpose that you and other members of the company hold deep within you, and thereby provides meaning to work.


A crucial aspect of purpose is that it’s always worked towards, but never fully achieved, like chasing the earth’s horizon or pursuing a guiding star. The enduring aspect of purpose is well illustrated by Steve Jobs, co-founder of Apple and founder on NEXT


I don’t feel that I’ll ever be done. There are lots of hurdles out there, and there’s always a hurdle that I’ll never reach in my lifetime. The point is to keep working towards it.


A statement of purpose should quickly and clearly convey why your company exists, how it fills basic human needs and impact the world. A good purpose statement is broad, fundamental, inspirational, and enduring. It should serve to guide your organization for at least 100 years.


Vision Component Mission


Mission, the third key part of an effective vision, is a clear and compelling overall goal that serves as a focal point of effort.


To quickly grasp the concept of mission, think of the NASA moon mission as articulated by President Kennedy in 161


This nation should dedicate itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to earth.


Unlike purpose, which is never achieved, a mission is achievable. It translates values and purpose into an encrisp, clear, bold, exhilarating. It reaches out and grabs people in the gut. It requires little or no explanation; people “get it” right away. Once you reach the top, you sight again on the guiding star and pick yet another mountain to climb.


A good mission has a finish line-you must be able to know when you’ve done it, like the moon mission or a mountaintop. A good mission is risky, falling in the grey area where reason says, “This is unreasonable,” and intuition says, “But we believe we can do it nonetheless”.


.5 OBJECTIVES OF VISION AND MISSION STATEMENTS


There are several reasons why businesses write mission statements. Businesses write them so clients will know what type of business they are, so employees know what to expect from the business, or to direct future decision-making. Adrienne Lumpkin of Alternate Access, a business that helps companies that do business by phone be more efficient, believes that their mission statement is important for two reasons. Externally it helps position you with other competitors, it shows you where you fit in the market. Internally it keeps you on track and in focus. Its easy to get diverted by the latest opportunity and the mission statement keeps you on track and keeps you motivated, explains Lumpkin.


Recently, what is now Triangle United Way underwent what president Tom Dugard of the United States refers to as a marriage and needed to rewrite their mission statement to incorporate three counties. A mission statement helps us in dealing with donors, says Dugard. We needed a central focus on why we are doing what were doing. When a business is spread over a wide area, such as with banks, a mission statement gives the organization coherence. It casts in concrete the guiding principles and mission of the bank, so theres a uniform understanding, says Alex McFadyen, Jr., manager of communication for First Citizen Bank. Susan Fonville of Triangle Bank agrees that having a mission statement only directs the organization but serves the client as well. In the process of making decisions, we go back to the mission statement, she explains. Its a common way of doing business, if you stick to the mission statement, the shareholders will be protected and know what to expect. Most businesses that have mission statements agree that the importance of a mission statement lies in keeping the business focused and always productive. Cheston Mottershead, Jr., president of TCI, an organization that provides rehabilitation services for disabled individuals, says that the mission statement keeps his organization where it should be. Its like a guide post, a focal point in the distance, the direction we look at it changes but our focal point never changes, says Mottershead.


.6 BENEFITS OF CORPORATE VISION


The following are benefits of corporate vision


§ Vision forms the basis of extraordinary human efforts


§ Vision provides a context for strategic and tactical decisions


§ Shared vision creates cohesion, teamwork, and community.


§ Vision lays the groundwork for the company to evolve past dependence on a few key individuals.


REFERENCES


1. Edward O. W (1) “ A shared vision” Business Leader Online, pp. -5


. Harold Evans (10, January � February) Implementing the Vision The lessons


Learned. Planning Review, pp. 18,-44


. Richard Barret (186, Fall). What business are we really in? The question


Revisited. Sloan Management Review, pp. 5-6


4. Gregory G. D & Alex M Strategic Management. (United States Mcgraw Hill,


1), pp , 4-0


CHAPTER THREE


RESEARCH METHODOLOGY


.1 SOURCES OF INFORMATION


The primary and only source of information for this study was through research into works done by various writers. From these writeup this writer was able to draw a conclusion.


.1.1 SYSTEM OF RESEARCH


The system of research for this study was based on written works by various write on this study.


.1. LIMITATION OF STUDY


This study was conducted based solely on researches carried out by other writers as stated above. It does not however mean that the writer drew her conclusion based solely on these researches. The writer was also fortunate to witness first hand at her current place of employment the impact the absence of a vision and mission statement can have on an organization.


Certain factors posed as limitations to this study. They are


1. The inability of this writer to lay her hands on works done on this study by Nigerian authors.


. At the time this research was being conducted various CEO’s the writer wanted to interview were preoccupied and couldn’t spare the time to discuss with her.


CHAPTER FOUR


RESEARCH ANALYSIS


4.1 INTRODUCTION


In this chapter, the information derived from various case studies will be analysed and a logical conclusion arrived at.


4. DATA PRESENTATION AND ANALYSIS � CASE STUDIES


4..1 CASE STUDY 1 � MIPS COMPUTER


MIPS Computer was founder in the mid-180s to capitalize on significant advances in computer technology. It had over $10 million of venture capital financing, state-of-the-art technology, and the promise of growing market demand for powerful computers. Yet, four years after its founding, it was in turmoil and on the brink of bankruptcy. Why?


MIPS had no clear idea of what precisely it was trying to do. It had no clear idea of what it wanted to become. Instead, the sales department blindly pursued every revenue opportunity, without asking the question what revenue opportunities make the most sense within the context of what we are trying to achieve?


This, in turn, drove R&D to develop (at great cost) a plethora of unrelated products, without asking the question how do these products help us attain our vision? MIPS leaders pursued joint ventures that severely limited the opportunity to distribute overseas, without market fit with our vision?


Of course the couldn’t ask the question, as there was no clear vision. There was no clear vision. There was no focal point of united effort, and the organization gradually disintegrated into factions. Each faction blamed others for the perilous position of the organization. Morale declined. Good people left for better opportunities. Investors and customers lost confidence and, hence, cash flow went negative.


It took the leadership of a new CEO, Bob Miller, to save the company. Commenting on how he successfully pulled the company out of its malaise to a prominent position in the RISC Technology industry, Miller commented


“The most important question is what do you want to be five to ten years from now? The company never asked or clearly answered that question. That may seem simplistic, but posing that question was the basic solution. Only then could we make good strategic decisions”.


4.. CASE STUDY � THE UNITED STATES WAR IN VIETNAM


In terms of tactics and logistic, the United states Army was successful in Vietnam. Over a million Soldiers a year were transported to and from Vietnam, and they were sustained in the field better than an army in history.


In tactical engagements, the army had an extraordinary success rate, with enemy forces thrown back with terrible losses in engagement after engagement. Even so, it was North Vietnam that emerged victorious. How could the United state have succeeded so well, yet failed so miserably?


The reason was quite simple. The confusion over objectives had a devastating effect on the United States ability to conduct the war. The principals never defined either the mission or the number of troops. It seems incredible in retrospect, but it was the truth. Hence, there was no clear demonstration of what the strategy would be. Without this clarity of aim, it would have been absolutely impossible to even have a strategy in the first place.


4.. CASE STUDY � STRATEGIC SOFTWARE, INC


Founded in 176 with no outside venture financing, Strategic Software’s founders were dedicated to building a company that would provide excellent software products, financial stability for employees and owners, and a stimulating work environment. For the first seven years, employees and managers worked twelve-hour days in tiny cubicles. “It was us against the world” explained one of the founders. “We were a great team then”.


Gradually, year-by-year, the company attained financial success (reaching $5


Million in annual revenue with healthy profit margins) and a stable customer base. In 18, it moved to a prestigious office complex with modern sculptures, perfectly manicured green lawns, water ponds, thick carpets, handcrafted cherry-wood furniture, and its own parking lot.


Then the whole place fell apart. What happened, of course, is that the organization had fulfilled its firs big mission (to reach a point where survival was no longer a question). It seemed like there was nothing more to work for. It had arrived. Its leaders should have created a new mission, but they didn’t. And the organization stagnated, eventually putting itself up for sale.


REFERENCES


1. Gregory G. D & Alex M Strategic Management. (United States Mcgraw Hill,


1), pp 11-1


. Harold Evans (10, January � February) Implementing the Vision The lessons


Learned. Planning Review, pp. 46-48


. Carlson, F.P (10, May-June). The long and short of strategic planning.


Journal of Business Strategy. pp. 1


CHAPTER FIVE


SUMMARY, RECOMMENDATIONS AND CONCLUSIONS.


5.1 SUMMARY OF FINDINGS


I would like to dispel the myth that setting a vision requires that you be should somehow with almost mystical or super-human charismatic visionary qualities. To believe this myth, every organization would need a CEO who is a cross between Churchill, Kennedy, and Martin Luther King. Indeed, many managers respond to the notion of vision by thinking, “It’s not for me. I don’t fit the stereotypical mold of a visionary.”


But it is for you, no matter what your style or personal magnetism. Charisma’s role in setting vision is vastly overrated. Some of the folks that have instilled extraordinary vision in companies didn’t bowl us over with charisma. Bob Miller of MIPS, Bill Hewlett of HP, even Abraham Lincoln doesn’t fit the stereotype of charismatic visionary.


The task before you is not to be a single charismatic individual with a vision. The task is to build an organization with vision. Individuals die; great companies can live fro centuries.


5. RECOMMENDATIONS


Corporate vision provides a context within which people at all levels can make decisions. The importance of this cannot be overemphasized.


A shared vision is like having a compass and distant destination in the mountains. If you give a group of people a compass and destination, they will probably figure out a way to get there.


They may encounter obstacles, detours, bad turns, and side canyons along the way. However, with the general directions of the compass, a clear end-goal, and the belief that they are working towards a worthy destination, they will probably reach the target.


In contrast, companies without a shared overall aim have no context, and their people wander aimlessly in the side canyons and take detours to nowhere. Such companies resemble overworked fire departments, with people responding to crises and revenue opportunities as they emerge, rather than proactively making decisions within a coherent conception of what the organization is ultimately trying to do.


Corporate vision forms the foundation that directs all the activities, policies, and objectives of the organization. It defines in clear terms the business of the organization as stated in the mission statement. This forms the basis for channeling all the resources of the organization.


5. CONCLUSION


The writer does not mean to imply that vision is necessary only if you want to become big. It is understandable that a company might want to remain a small company. If that’s what you want, then you still need a vision. Why? Because if you’re good, there will be opportunities to grow. The only way to remain small or big if that’s what you want is to have a clear vision about what you want the company to be in the first place.


All organizations need to ask themselves where they intend to be X years from now. Only then can they make good strategic decisions. Strategy is impossible without first setting a vision.


Don’t get me wrong. I don’t mean to imply that tactical excellence (as illustrated in the Case study of the United States Vs. Vietnam) is unimportant. It’s essential, but it should be within the context of a clear overall vision. Vision, then strategy, then tactics.


REFERENCES


1. Richard Barret The power of Purpose (London Macmillian, 18), pp. 10-15


. David K. Hurst Crisis & Renewal Meeting the challenges of Organizational


Change (Havard Business School Press, 15), p








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