Purpose, vision and values

Welcome to E3 Strategic Management: Purpose, Vision, and Values

Hello there! Welcome to this guide on one of the most foundational parts of your E3 journey. This chapter sits within the section "Generating strategic options." Think of this as the "Compass" phase. Before a company can decide how to get somewhere, it first needs to know why it exists and where it wants to go. Don't worry if this seems a bit "fluffy" at first; we will break it down into very practical steps that you can use in your exam.

By the end of these notes, you’ll understand how an organization’s identity shapes the strategic choices it makes. Let's dive in!

1. The Purpose: Why Do We Exist? (Mission Statements)

The Mission is the fundamental reason why an organization exists. It answers the question: "What is our business and why are we here?"

The Ashridge Mission Model
This is a very popular model in CIMA E3. It suggests that a strong mission is more than just a catchy sentence; it should have four integrated elements:

1. Purpose: Why does the company exist? (e.g., to create value for shareholders or to provide healthcare for all?).
2. Strategy: The commercial logic. What is our competitive advantage? (e.g., are we the cheapest or the most innovative?).
3. Policies and Standards of Behavior: The "how we do things here." How do employees act on a daily basis?
4. Values: The core beliefs of the organization (e.g., integrity, sustainability, or speed).

Analogy: Imagine you are a professional athlete. Your Purpose is to be the best runner. Your Strategy is to train harder than everyone else. Your Policies are your diet and sleep schedule. Your Values are your commitment to "fair play" and never cheating.

Quick Review: A good mission statement should be brief, easy to understand, and serve as a "guiding light" for strategic decisions.

Key Takeaway: If a strategic option (like a new product) doesn't fit the Mission, it should usually be rejected.

2. The Vision: Where Are We Going?

While the Mission is about the present, the Vision is about the future. It describes a desired future state of what the organization wants to become over a long period (usually 5–10 years).

Characteristics of a Good Vision:

• Aspirational: It should be bold and exciting.
• Clear: Everyone should understand what "success" looks like.
• Challenging: It should push the organization to grow.

Example: A famous vision was Microsoft’s early goal: "A computer on every desk and in every home." It was bold, clear, and gave the company a specific destination to work toward.

Did you know? A Vision statement is often called a "BHAG" (Big Hairy Audacious Goal). This term was coined by Jim Collins and Jerry Porras to describe goals that are so ambitious they might seem impossible at first!

Key Takeaway: The Vision helps managers choose strategic options that move the company closer to its ultimate long-term goal.

3. Corporate Values: How Do We Behave?

Values are the moral and ethical principles that guide an organization’s actions. They define the "culture" and tell stakeholders what the company stands for.

In the context of generating strategic options, values act as a filter. If an organization values "Environmental Sustainability," a strategic option to open a factory that produces high CO2 emissions would be rejected, even if it is very profitable.

Common Values include:

• Integrity and Honesty
• Innovation and Creativity
• Customer Focus
• Diversity and Inclusion

Memory Aid: The "Mirror Test"
When a company is looking at a new strategy, they should look in the mirror and ask: "Does this option reflect our values?" If the answer is no, the strategy is likely to fail because employees won't support it and customers will see it as hypocritical.

Key Takeaway: Values ensure that the way a company achieves its goals is as important as the goals themselves.

4. Linking Purpose, Vision, and Values to Strategic Options

In your E3 exam, you might be asked to evaluate several strategic options. You must check if these options align with the organization's "Identity" (Mission, Vision, and Values).

Step-by-Step Evaluation Process:

1. Identify the core Identity: What does the case study say about the company's mission and values?
2. Filter the Options: Does Option A move us toward our Vision? Does Option B violate our core Values?
3. Assess the "Fit": The best strategic options are those that leverage the company's purpose to gain a competitive advantage.

Common Mistake to Avoid:
Students often think Mission and Vision are the same. Remember: Mission = Current Purpose (Why we exist today); Vision = Future State (Where we want to be tomorrow).

5. Summary and Quick Review

This chapter is all about setting the boundaries for strategy. Without a clear Purpose, Vision, and set of Values, an organization will be "rowing in different directions."

Quick Review Box:

• Mission: The current "Reason for Being." Use the Ashridge Model (Purpose, Strategy, Values, Behavior).
• Vision: The future "Destination." Needs to be aspirational and clear.
• Values: The "Moral Compass." Guides behavior and ethical choices.
• Strategic Options: Must be consistent with all of the above to be successful.

Final Encouragement: You're doing great! While these concepts can feel a bit theoretical, they are the "soul" of strategic management. Master these, and you'll have a much easier time justifying why one strategy is better than another in your exam answers. Keep going!