Question: Define Vision and Mission? Differentiate between both? Components of Vision and Mission?

Issues to
be considered while formulating Vision and Mission? How to formulate Vision and Mission? Role of Vision and
Mission? Need of Vision and Mission? Examples of multinational organizations?

Introduction of vision:

Vision can be defined as “a mental image of a possible and desirable future state of the organisation”
(Bennis and Nanus). It is “a vividly descriptive image of what a company wants to become in future”. Vision
represents top management’s aspirations about the company’s direction and focus. Every organisation
needs to develop a vision of the future. A clearly articulated vision moulds organisational identity,
stimulates managers in a positive way and prepares the company for the future.
“The critical point is that a vision articulates a view of a realistic, credible, attractive future for the
organisation, a condition that is better in some important ways than what now exists.”
Vision, therefore, not only serves as a backdrop for the development of the purpose and strategy of a firm,
but also motivates the firm’s employees to achieve it.
Defining Vision

Vision has been defined in several different ways. Richard Lynch defines vision as “ a challenging and
imaginative picture of the future role and objectives of an organisation, significantly going beyond its
current environment and competitive position.” E1-Namaki defines it as “a mental perception of the kind of
environment that an organisation aspires to create within a broad time horizon and the underlying
conditions for the actualization of this perception”. Kotter defines it as “a description of something (an
organisation, corporate culture, a business , a technology, an activity) in the future.”

Box 2.1 sets out a range of definitions of organisational vision. Most refer to a future or ideal to
which organisational efforts should be directed. The vision itself is presented as a
picture or image that serves as a guide or goal. Depending on the definition, it is
referred to as inspiring, motivating, emotional and analytical. For Boal and
Hooijberg, effective visions have two components:
1. A cognitive component (which focuses on outcomes and how to achieve
them)
2. An affective component (which helps to motivate people and gain their
Box 2.1: Definitions of Vision

1. Johnson: Vision is "clear mental picture of a future goal created jointly by a group for the
benefit of other people, which is capable of inspiring and motivating those whose support
is necessary for its achievement".
2. Kirkpatrick et al: Vision is "an ideal that represents or reflects the shared values to which the
organisation should aspire".
3. Thornberry: Vision is "a picture or view of the future. Something not yet real, but
imagined. What the organisation could and should look like. Part analytical and part
emotional".
4. Shoemaker: Vision is "the shared understanding of what the firm should be and how it
must change".
5. Kanter et al: Vision is "a picture of a destination aspired to, an end state to be achieved via
the change. It reflects the larger goal needed to keep in mind while concentrating on
concrete daily activities".
6. Stace and Dunphy: Vision is "an ambition about the future, articulated today, it is a process of
managing the present from a stretching view of the future".
commitment to it)

Some more examples of vision statements are given in Box 2.2

 Box 2.2: Examples of Vision Statements

1. A Coke within arm's reach of everyone on the planet (Coca Cola)

2. Encircle Caterpillar (Komatsu)

3. Become the Premier Company in the World (Motorola)

4. Put a man on the moon by the end of the decade (John F. Kennedy, April 1961)

5. Eliminate what annoys our bankers and customers (Texas Commerce Bank)

6. The one others copy (Mobil)

NEED, Thus vision statements serve as:
1. A basis for performance: A vision creates a mental picture of an organisation’s path and direction in the
minds of people in the organisation and motivates them for high performance.
2. Reflects core values: A vision is generally built around core values of an organisation, and channelises
the group’s energies towards such values and serves as a guide to action.
3. Way to communicate: A vision statement is an exercise in communication. A well- communicated
vision statement will bring the employees together and galvanize them into action.
4. A desirable challenge: A vision provides a desirable challenge for both senior and junior managers.
While providing a sense of direction, strategic vision also serves as a kind of “emotional commitment”.
Thompson and Strickland point out the significance (ROLE) of “vision” which is broadly as follows:
1. It crystallizes top management’s own view about firm’s long-term direction.
2. It reduces the risk of rudderless decision-making.
3. It serves as a tool for maximizing the support of organisation members for internal changes.
4. It serves as a “beacon” to guide managers in decision-making.
5. It helps the organisation to prepare for the future.
Vision poses a challenge and addresses the human need for something to strive for. It can depict an image of
the future that is both attractive and worthwhile.
Indeed, developing a strategic vision may be regarded as a managerial imperative in the strategic
management process. This is because strategic management presupposes the necessity to look beyond
today, to anticipate the impact of new technology, changes in customer needs and market opportunities.
Creating a well-conceived vision illuminates an organisation’s direction and purpose, and then using it
repeatedly as a reminder of “where we are headed and why” helps keep organisation members on the
chosen path.

Although the idea of vision is widely accepted as a useful backdrop for the development of purpose and strategy, there is
a problem. Vision has little meaning unless it can be successfully communicated to those working in the organisation,
since these are the people who will have to realize it.

ISSUE, When does a vision fail?

A vision may fail when it is:

1. Too specific (fails to contain a degree of uncertainty)
2. Too vague (fails to act as a landmark)
3. Too inadequate (only partially addresses the problem)
 4. Too unrealistic (perceived as unachievable)
A.D. Jick observes that a vision is also likely to fail when leaders spend 90 percent
of their time articulating it to their staff and only 10 percent of their time in
implementing it. There are two other reasons for vision failure:
1. Adaptability of vision over time
2. Presence of competing visions

Formulating a Vision Statement

Generally, in most cases, vision is inherited from the founder of the organisation
who creates a vision. Otherwise, some of the senior strategists in the organisation
formulate the vision statement as a part of strategic planning exercise.
Nutt and Backoff identify three different processes for crafting a vision:
1. Leader-dominated Approach: The CEO provides the strategic vision for the
organisation. This approach is criticized because it is against the philosophy
of empowerment, which maintains that people across the organisation
should be involved in processes and decisions that affect them.
2. Pump-priming Approach: The CEO provides visionary ideas and selects people
and groups within the organisation to further develop those ideas within the
broad parameters set out by the CEO.
3. Facilitation Approach: It is a “co-creating approach” in which a wide range
of people participate in the process of developing and articulating a vision.
The CEO acts as a facilitator, orchestrating the crafting process. According to
Nutt and Backoff, it is this approach that is likely to produce better visions
and more successful organisational change and performance as more people
have contributed to its development and will therefore be more willing to
act in accordance with it.

To develop a strategy with a coherent internal logic, the strategists need to understand where the firm and
industry are headed. As the future cannot be precisely and definitely described, the strategist has to make
some assumptions about it. This requires foresight. Foresight requires imagination of how events might
unfold and the role the firm might play in shaping that future to the firm’s advantage. “Vision” is therefore
needed to guide the strategists’ plan for bridging the gap between current reality and a potential future.

Introduction to Mission

“A mission statement is an enduring statement of purpose”. A clear mission statement is essential for
effectively establishing objectives and formulating strategies.
A mission statement is the purpose or reason for the organisation’s existence. A well-conceived mission
statement defines the fundamental, unique purpose that sets it apart from other companies of its type and
identifies the scope of its operations in terms of products offered and markets served. It also includes the
firm’s philosophy about how it does business and treats its employees. In short, the mission describes the
company’s product, market and technological areas of emphasis in a way that reflects the values and
priorities of the strategic decision makers.
As Fred R. David observes, mission statement is also called a creed statement, a statement of purpose, a
statement of philosophy etc. It reveals what an organisation wants to be and whom it wants to serve. It
describes an organisation’s purpose, customers, products, markets, philosophy and basic technology. In
combination, these components of a mission statement answer a key question about the enterprise: “What
is our business?”
 Defining Mission

Thompson defines mission as “The essential purpose of the organisation, concerning particularly why it is in
existence, the nature of the business it is in, and the customers it seeks to serve and satisfy”. Hunger and
Wheelen simply call the mission as the “purpose or reason for the organisation’s existence”.
A mission can be defined as a sentence describing a company's function, markets and competitive advantages.
It is a short written statement of your business goals and philosophies. It defines what an organisation is, why
it exists and its reason for being. At a minimum, a mission statement should define who are the primary
customers of the company, identify the products and services it produces, and describe the geographical
location in which it operates.

Example:

l. Ranboxy Petrochemicals: To become a research based global company.

2. Reliance Industries: To become a major player in the global chemicals business and simultaneously
grow in other growth industries like infrastructure.
3. ONGC: To stimulate, continue and accelerate efforts to develop and maximize the contribution of the
energy sector to the economy of the country.
4. Cadbury India: To attain leadership position in the confectionery market and achieve a strong national
presence in the food drinks sector.
5. Hindustan Lever: Our purpose is to meet everyday needs of people everywhere – to anticipate the
aspirations of our consumers and customers, and to respond creatively and competitively with branded
products and services which raise the quality of life.
6. McDonald: To offer the customer fast food prepared in the same high quality worldwide, tasty and
reasonably priced, delivered in a consistent low key décor and friendly manner.
Most of the above mission statements set the direction of the business organisation by identifying the key
markets which they plan to serve.

Missions have one or more of the five distinct and identifiable components:
1. Customers
2. Products or services
3. Markets
4. Concern for growth
5. Philosophy

Once a mission statement has been set, every organisation needs to

periodically review and possibly revise it to make sure it accurately
reflects its goals and the business and economic climates evolve.
Importance of Mission Statement

The purpose of the mission statement is to communicate to all the

stakeholders inside and outside the organisation what the company stands
for and where it is headed. It is important to develop a mission statement
for the following reasons:
1. It helps to ensure unanimity of purpose within the organisation.
2. It provides a basis or standard for allocating organisational resources.
3. It establishes a general tone or organisational climate.
4. It serves as a focal point for individuals to identify with the
organisation’s purpose and direction.
5. It facilitates the translation of objectives into tasks assigned to
responsible people within the organisation.
6. It specifies organisational purpose and then helps to translate this
purpose into objectives in such a way that cost, time and performance
parameters can be assessed and controlled.
Developing a comprehensive mission statement is also important because
divergent views among managers can be revealed and resolved through
the process.
According to Pearce (1982), vision and mission statements have the following value:
1. They provide managers with a unity of direction that transcends
individual, parochial and transitory needs.
2. They promote a sense of shared expectations among all levels and
generations of employees.
3. They consolidate values over time and across individuals and interest groups.

4. They project a sense of worth and intent that can be identified and
assimilated by company outsiders.
5. Finally, they affirm the company’s commitment to responsible action, in
order to preserve and protect the essential claims of insiders for
sustained survival, growth and profitability of the firm.
According to Fred R. David, a mission statement is more than a statement of purpose.
It is
1. A declaration of attitude and outlook
2. A declaration of customer orientation
3. A declaration of social policy and responsibility

Components of a Mission Statement

Mission statements may vary in length, content, format and specificity. But most agree that an effective mission
statement must be comprehensive enough to include all the key components. Because a mission statement is
often the most visible and public part of the strategic management process, it is important that it includes all
the following essential components:
1. Basic product or service: What are the firm’s major products or services?
2. Primary markets: Where does the firm compete?
3. Principal technology: Is the firm technologically current?
4. Customers: Who are the firm’s customers?
5. Concern for survival, growth and profitability: Is the firm committed to growth and financial soundness?
6. Company philosophy: What are the basic beliefs, values, aspirations and ethical priorities of the firm?
7. Company self-concept: What is the firm’s distinctive competence or major competitive advantage?
8. Concern for public image: Is the firm responsive to social, community and environmental concerns?
9. Concern for employees: Are employers considered a valuable asset of the firm?
10. Concern for quality: Is the firm committed to highest quality ?
Products or Services, Markets and Technology

An indispensable component of the mission statement is specification of the firm’s basic product or service,
markets and technology. These three components describe the company’s activity.

Survival, Growth and Profitability

Every firm has to secure its survival through growth and profitability. These three economic goals guide the
strategic direction of almost every business organisation.
A firm that is unable to survive will be incapable of satisfying the aims of any of its stakeholders. Profitability
is the mainstay goal of a business organisation, and profit over the long term is the clearest indication of a
firm’s ability to satisfy the claims and desires of all stakeholders. A firm’s growth is inextricably linked to its
survival and profitability.

Company Philosophy

The statement of a company’s philosophy (also called company creed) generally appears within the mission
statement. It specifies the basic values, beliefs and aspirations to which the strategic decision-makers are
committed in managing the company. The company philosophy provides a distinctive and accurate picture
of the company’s managerial outlook.

Company Self-concept

Both individuals and companies have a crucial need to know themselves. The ability of a company to
survive in a highly competitive environment depends on its realistic evaluation of its strengths and weaknesses.
Description of the firm’s self-concept provides a strong impression of the firm’s self-image.

Public Image

Mission statements should reflect the public expectations of the firm since
this makes achievement of the firm’s goals more likely.

Example: “Johnson & Johnson make safe products” reflects the

customer expectations of the company in making safe products.
Sometimes, a negative public image can be corrected by emphasizing the
beneficial aspects in the mission statements.

Concern for Employees

Mission statements should also emphasize their concern for improvement

of quality of work life, equal opportunity for all, measures for employee
welfare etc.

Customers

“The customer is our top priority” is a slogan that would be claimed by

most of the businesses the world over. A focus on customer satisfaction
causes managers to realize the importance of providing an excellent
customer service. So, many companies have made customer service a key
 component of their mission statement.

Quality

The emphasis on quality has received added importance in many corporate

philosophies.

Example: Motorola’s mission statement contains a statement that

“dedication to quality is a way of life at our company, so much so that it
goes beyond rhetorical slogans.”

Formulation of MissionStatements

There is no standard method for formulating mission statements. Different

firms follow different approaches. As indicated in the strategic management
model, a clear mission statement is needed before alternative strategies can
be formulated and implemented. It is important to involve as many
managers as possible in the process of developing a mission statement,
because through involvement, people become committed to the mission of
the organisation.
Mission statements are generally formulated as follows:
1. In many cases, the mission is inherited i.e. the founder establishes the
mission which may remain unchanged down the years or may be
modified as the conditions change.
2. In some cases, the mission statement is drawn up by the CEO and
board of directors or a committee of strategists constituted for the
purpose.

3. Engaging consultants for drawing up the mission statement is also common.

4. Many companies hold brainstorming sessions of senior executives to develop a mission statement.
Soliciting employee’s views is also common.
5. According to Fred R. David, an ideal approach for developing a mission statement would be to select
several articles about mission statements and ask all managers to read these as background information.
Then ask managers to prepare a draft mission statement for the organisation. A facilitator or a
committee of top managers, merge these statements into a single document and distribute this draft
mission statement to all managers. Then the mission statement is finalized after taking inputs from all
the managers in a meeting. Thus, the process of developing a mission statement represents a great
opportunity for strategists to obtain needed support from all managers in the firm.
6. Decision on how best to communicate the mission to all managers, employees and external
constituencies of an organisation are needed when the document is in its final form. Some organisations
even develop a videotape to explain the mission statement and how it was developed.
7. The practice in Indian companies appears to be a consultative-participative route. For example, at
Mahindra and Mahindra, workshops were conducted at two levels within the organisation with
corporate planning group acting as facilitators. The State Bank of India went one step ahead by inviting
labour unions to partake in the exercise. Satyam Computers went one more step ahead by involving their
joint venture companies and overseas clients in the process.
 Caselet
Caselet Mission
Mission of
of two
two Global
Global Companies
Companies

Mission
Mission Statement
Statement of
of IBM
IBM

At
At IBM,
IBM, we
we strive
strive to
to lead
lead in
in the
the invention,
invention, development
development and
and manufacture
manufacture of
of the industry's most
the industry's most
advanced
advanced information technologies, including computer systems, software, storage systems and
information technologies, including computer systems, software, storage systems and
microelectronics.
microelectronics.

We
We translate
translate these
these advanced
advanced technologies
technologies into
into value
value for
for our
our customers
customers through
through our
our professional
professional
solutions, services and consulting businesses worldwide
solutions, services and consulting businesses worldwide

Mission
Mission Statement
Statement of
of FedEx
FedEx
Source: ibm.com and fedex.com
"FedEx is
"FedEx is committed
committed toto our
our People-Service-Profit
People-Service-Profit Philosophy.
Philosophy. We
We will
will produce
produce outstanding
outstanding
financial
financial returns by providing totally reliable, competitively superior, global, air-ground
returns by providing totally reliable, competitively superior, global, air-ground
transportation
transportation of
of high-priority goods and
high-priority goods and documents
documents that
that require
require rapid,
rapid, time-certain
time-certain delivery."
delivery."

Distinction between Vision and Mission

While a mission statement describes what the

organisation is now; a vision statement describes
what the organisation would like to become. A vision
statement defines more of a direction as to “where are
we headed” and “what do we want to become”,
whereas the company’s mission broadly indicates the
“business purpose” of the organisation. The
distinction between vision and mission can be
summarized as follows:

Table 3.1: Distinction between Vision and Mission

Vision Mission
1. A mental image of a possible and 1. Enduring statement of philosophy, a creed
desirable future state of the organization. statement.
2. A dream. 2. The purpose or reason for a firm’s
existence.
3. Broad. 3. More specific than vision
4. Answers the question “what we want to 4. Answers the question “what is our
become?” business”.