How poor business decisions affect credit
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May.25,2010
The demise of this company was probably due not to any single factor or even to poor business decisions, but to a lack of focus on vision. At the very least its vision became blurred. Scrambling with temporary solutions failed to address the company’s fundamental issue. As its market changed, it needed to clarify and expand its vision rather than busy itself with diversions.
As the vision defines the ethereal qualities of the organization, the mission statement defines the task functions. It states how the vision will be accomplished. Generally the mission statement defines the area of the organization’s expertise and targets a specific industry or population. For example, the Minnesota Council for Preventive Medicine, a nonprofit organization of physicians, has the following mission statement:
- To create a network of physicians interested in preventive medicine
- To offer expertise in preventive medicine to interested individuals, organizations, learning institutions, and media
- To influence public policy toward the prevention of physical and mental illness and injury
- To support and promote specific initiatives that seek to prevent illness and injury
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People from departments, branches, or any other unit can combine their estimates and analyze their group rating. Some may see themselves as being close to the future orientation end of the spectrum; others may see themselves at the opposite end. Assessing each department using a graph like the one in Exercise 11 should help identify prospective areas where readiness for partnering activities is evident—and indicate where more developmental activities are needed before the decision to create a partnership is made.
Focus on major items of expenditure. Costs should be categorised as major or peripheral items. Undue emphasis is often given to the 80% of activities accounting for 20% of costs, rather than focusing on the priorities: