Chapter 2The Business Mission

Strategic Management: Concepts and Cases.

Slides prepared byMr. Muhammad Ali Chohan

Chapter Outline

What Do We Want to Become?

What Is Our Business?

Importance of Vision and Mission Statements

Chapter Outline

Characteristics of a Mission Statement

Components of a Mission Statement

Writing and Evaluating Mission Statements

New Business

Collection of Ideas Set of Beliefs i.e. new organizations can

offer some products or services to some customers, in some geographic area, using some type of technology, at a profitable place

Vision statement

Vision statement answers the question:

“What do we want to become?”

Vision

Clear vision

Provides foundation for comprehensive mission statement

It’s important for managers and executives in any organization to agree on the basic vision that the firm strives to achieve in the long term.

Vision statement

Vision statement developed first Short – preferably one sentence Broad management involvement

Mission Statements

Mission statement answers the question:

“What is our business?”

Mission Statements

Mission Statement:

Statement of purpose that distinguishes one organization from another in similar enterprises.

Declaration of an organization’s “reason for being”.

Disclose what an organization wants to be and whom it wants to serve.

Essential for effectively establishing objectives and formulating strategies.

Mission Statements

Mission Statements also referred to as:

Creed statement Statement of purpose Statement of philosophy Statement of business principles

Vision and Mission

Many organizations develop both vision and mission statements

Profit and vision are necessary to effectively motivate a workforce

Shared vision creates a commonality of interests

Basic difference between Vision and Mission

Vision is a possible and desirable future state of an organization that includes specific goals.

Mission is more associated with behavior and the present.

The Process of Developing Vision & Mission statements

Clear vision and mission statements are needed before alternative strategies can be formulated and implemented

Managers should be involved in the process of developing these statements.

Now the question is “Why all managers should be involved ?”

The Process of Developing Vision & Mission statements

Select several related articles about these statements.

Ask the managers to read these as background information.

Ask managers to prepare a vision and mission statements for the organization.

Committee of top managers should then merge all these statements into single document.

Then a request for modification, additions and deletions is needed to revise the document.

Importance of Vision & Mission

Although research results are mixed, firms with formal mission statements…

• 2X average return on shareholder’s equity

• Positive relationship to organizational performance

• 30% higher return on certain financial measures

Importance of Mission

Unanimity of purpose within the organization

Basis for allocating resources Establish organizational climate Focal point for direction Translate objectives into work structure Cost, time and performance parameters

assessed and controlled

A Resolution of divergent views

Divergent views among managers can be revealed and resolved through the process.

Raising questions often reveals differences among strategists in the organization. Why ?

“ Individuals who have worked together for a long time and who think they know each

others suddenly may realize that they are in fundamental disagreement.”

A change in mission always leads to changes in objectives, strategies,

organization and behavior.

Characteristics of mission statement

Effective mission statements:• Broad in scope• Generate range of feasible strategic

alternatives• Not excessively specific• Reconcile interests among diverse

stakeholders• Finely balanced between specificity &

generality

Characteristics of mission statement

Effective mission statements:

• gives positive feelings and emotions• Motivate readers to take action• Generate the impression that firm is

successful, has direction, and is worthy of time, support, and investment

Characteristics of mission statement

Effective mission statements:

• Reflect judgments about future growth directions and strategies that are based on forward looking external and internal analysis.

• Provide criteria for selecting strategies• Basis for generating & screening strategic

options• Should be dynamic in orientation

Customer Orientation

According to Vern McGinnis, mission should:

Define what the organization is Define what the organization aspires to be Limited to exclude some ventures Broad enough to allow for creative growth Distinguish the firm from all others Serve as framework to evaluate current

activities Stated clearly so that it is understood by all

Customer Orientation

A good mission statement reflects the anticipations of customers.

Identify customer needs Provide product/service to satisfy needs

For example: Do not offer me books. Offer me hours of pleasure and

the benefit of knowledge Do not offer me clothes. Offer me attractive looks. Do not offer me shoes. Offer me comfort for my feet and

the pleasure of walking.

Components of Mission

Mission statements vary in…

Length Content Format Specificity

Must include the 9 elements, as the mission statement is the most public and visible part of the strategic-management process

Components of Mission

1. Customers2. Products or services3. Markets4. Technology5. Survival, growth, and profitability6. Philosophy7. Self-concept8. Concern for public image9. Concern for employees

Components of MissionComponents of mission and corresponding

questions to be answered:

Customers: “Who are the firm’s customers?”

Products or services: “What are the firm's major products or services?”

Markets: “Geographically, where does the firm compete?”

Components of Mission

Technology: “Is the firm technologically current?”

Concern for survival, growth, and profitability: “Is the firm committed to growth and financial

soundness?”

Philosophy: “What are the basic beliefs, values, aspirations,

and ethical priorities of the firm?”

Components of Mission

Self-concept: “What is the firm’s distinctive competence or

major competitive advantage?”

Concern for public image: “Is the firm responsive to social, community,

and environmental concerns?”

Concern for employees: “Are employees a valuable asset of the firm?”