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smu mba solved assignments of mb0038 Q1. (a) A vision statement is a formal statement of what a business wants to be. According to Collins and Porras, a vision statement should have four parts. What are those four parts?

Answer: According to Collins and Porras, a vision statement should have four parts.  Those four parts are:
1) Core values,
2) Core purposes,
3) The Big Hairy Audacious Goal or BHAG (pronounced as ‘Beehag’) and
4) The vivid description.
  1. The core values are those things very close to your heart that you will not give up at any cost. It can be integrity (for example, I will never cheat on the taxes I have to pay) or quality (I will never use a lower quality wood), etc. Usually we say that you should have only 4 to 6 core values. Of course, personal values and business values may differ. For example, love may be a very important personal value but it may not be so relevant in your business of furniture though it can be relevant if you were having a home for the aged. If you have too many of them, they fail to remain ‘core’ and loses their impact. Why are core values important? When you have a decision dilemma, they come up like a lighthouse to navigate you.
  2. Core purpose is the purpose of the organisation, for example, to make furniture. This is something that you want to achieve within the framework of our core values. It gives the achievement orientation to the business and therefore the focus. When we get an opportunity to expand or sell off and if we are in a decision dilemma, this acts as another light house.
  3. The BHAG is about having a goal which qualifies the purpose. For example, to be the best furniture maker in the town in five years or to be the most well known furniture supplier in India by 2025, etc. We say that BHAG should be big, yet specific and that your chance of attaining it is only 70%. If the probability of attaining it is more than 70%, perhaps your BHAG is not big enough and not audacious enough and you have set your goals too low. (Don’t read too much into the word ‘hairy’. This is an American expression that depicts a huge bear with lot of hair, an animal which is the depiction of power. Children’s stories of bear and the toy ‘teddy bear’ is an American creation perhaps now popular in India too).

The vivid description should make the entire vision statement very inspiring to all stakeholders. It should be simple and easily understandable. For example, ‘Quit India’ is a very simple statement, but it is very vivid and easily understandable by all. Let us be very clear that the vision statement is meant for the stakeholders and therefore, the importance of the vivid and simple statement. We say that your grandmother should be able to understand it or a twelve-year-old child should be able to understand it and you should test it on them. This is also called ‘The Grandma’s Test’ or the ’12-Year-Old Test’. 


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