Module no. and Module No.

2: Business Vission and Mission

Title

Lesson no. and  Lesson 1: What do we want to become?

Title
 Lesson 2: What is Our Business?

Learning At the end of the session, the students are expected to:
Outcomes
1) Describe the nature and role of vision and mission statements in strategic
management.
2) Discuss why the process of developing a mission statement is as important as
the resulting document.
3) Identify the components of mission statements.
4) Discuss how clear vision and mission statements can benefit other strategic-
management activities.
5) Evaluate mission statements of different organizations.
6) Write good vision and mission statements.

Time Frame 2 weeks

Introduction Welcome to the second module of Strategic Business Analysis. This module will
help you understand the importance of Vission and Mission statements in an
organization and how it can benefit the business.
Activity When You are young, What do you want to become?

Analysis If you would have a business, what is it and what is it’s vision statement?

Abstraction LESSON 1: What do we want to become?

It is especially important for managers and executives in any organization to

agree on the basic vision that the firm strives to achieve in the long term. A vision
statement should answer the basic question, “What do we want to become?” A
clear vision provides the foundation for developing a comprehensive mission
statement. Many organizations have both a vision and mission statement, but the
vision statement should be established first and foremost. The vision statement
should be short, preferably one sentence, and as many managers as possible
should have input into developing the statement.

Examples of Vision Statements:

Tyson Foods’ vision is to be the world’s first choice for protein solutions while
 maximizing shareholder value.

General Motors’ vision is to be the world leader in transportation products and

related services.

PepsiCo’s responsibility is to continually improve all aspects of the world in

which we operate—environment, social, economic— creating a better tomorrow
than today.

Dell’s vision is to create a company culture where environmental excellence is

second nature.

The vision of First Reliance Bank is to be recognized as the largest and most
profitable bank in South Carolina.

Samsonite’s vision is to provide innovative solutions for the traveling world.

Royal Caribbean’s vision is to empower and enable our employees to deliver the
best vacation experience for our guests, thereby generating superior returns for
our shareholders and enhancing the well-being of our communities.

Procter & Gamble’s vision is to be, and be recognized as, the best consumer
products company in the world.

Application Describe how vission statements affect the performance of an

organization/business

Activity 1. Describe your ideal day. This is not about being practical. Include as many
sides of you, and your interests and passions as possible – You have 24 hours
with all the resources you need….
2. Imagine yourself 150 years old and surrounded by your descendants and/or the
descendants of your friends in comfortable surroundings. What would you say to
them is important in life?
3. Imagine it is your 30th, 50th, 75th birthday, or another milestone in your life.
You have been asked by national media to write a press release about your
achievements. Consider what you would want your family, friends, co-workers in
your profession, peers and community to say about you. What kind of difference
would you like to have made in their lives? How do you want to be remembered?
4. Answer these questions in your perspective Who am I? What do I stand for?
What do I do? Why do I do it?

Analysis What do you think is your mission in Life?

Abstraction Lesson 2: What is our Business?

Current thought on mission statements is based largely on guidelines set forth in

the mid-1970s by Peter Drucker, who is often called “the father of modern
management”

Drucker says that asking the question “What is our business?” is synonymous
with asking the question “What is our mission?” An enduring statement of
purpose that distinguishes one organization from other similar enterprises, the
mission statement is a declaration of an organization’s “reason for being.” It
answers the pivotal question “What is our business?” A clear mission statement is
essential for effectively establishing objectives and formulating strategies.

Mission Statement is sometimes called a creed statement, a statement of purpose,

a statement of philosophy, a statement of beliefs, a statement of business
principles, or a statement “defining our business,” a mission statement reveals
what an organization wants to be and whom it wants to serve. All organizations
have a reason for being, even if strategists have not consciously transformed this
reason into writing.

A business mission is the foundation for priorities, strategies, plans, and work
assignments. It is the starting point for the design of managerial jobs and, above
all, for the design of managerial structures. Nothing may seem simpler or more
obvious than to know what a company’s business is. A steel mill makes steel, a
railroad runs trains to carry freight and passengers, an insurance company
underwrites fire risks, and a bank lends money. Actually, “What is our business?”
is almost always a difficult question and the right answer is usually anything but
obvious. The answer to this question is the first responsibility of strategists. Only
strategists can make sure that this question receives the attention it deserves and
that the answer makes sense and enables the business to plot its course and set its
objectives.

Examples of Mission Statements

“Fleetwood Enterprises will lead the recreational vehicle and manufactured

housing industries in providing quality products, with a passion for customer-
driven innovation. We will emphasize training, embrace diversity and provide
growth opportunities for our associates and our dealers We will lead our
industries in the application of appropriate technologies. We will operate at the
highest levels of ethics and compliance with a focus on exemplary corporate
governance. We will deliver value to our shareholders, positive operating results
and industry-leading earnings.”

“We aspire to make PepsiCo the world’s premier consumer products company,
focused on convenient foods and beverages . We seek to produce healthy
financial rewards for investors as we provide opportunities for growth and
enrichment to our employees , our business partners and the communities in
which we operate. And in everything we do, we strive to act with honesty,
openness, fairness and integrity”

“We are loyal to Royal Caribbean and Celebrity and strive for continuous
improvement in everything we do. We always provide service with a friendly
greeting and a smile. We anticipate the needs of our customers and make all
efforts to exceed our customers’ expectations. We take ownership of any problem
that is brought to our attention. We engage in conduct that enhances our corporate
reputation and employee morale . We are committed to act in the highest ethical
manner and respect the rights and dignity of others.”

“Dell’s mission is to be the most successful computer company in the world at

delivering the best customer experience in markets we serve . In doing so, Dell
will meet customer expectations of highest quality; leading technology ;
competitive pricing; individual and company accountability ; best-in-class service
and support ; flexible customization capability; superior corporate citizenship ;
financial stability”

“Procter & Gamble will provide branded products and services of superior quality
and value that improve the lives of the world’s consumers. As a result,
consumers will reward us with industry leadership in sales, profit , and value
creation, allowing our people , our shareholders, and the communities in which
we live and work to prosper.”

“At L’Oreal, we believe that lasting business success is built upon ethical
standards which guide growth and on a genuine sense of responsibility to our
employees , our consumers, our environment and to the communities in which we
operate .”

The Process of Developing a Vission and Mission Statements

Clear vision and mission statements are needed before alternative strategies can
be formulated and implemented. As many managers as possible should be
involved in the process of developing these statements because through
involvement, people become committed to an organization.

A widely used approach to developing a vision and mission statement is first to

select several articles about these statements and ask all managers to read these as
background information. Then ask managers themselves to prepare a vision and
mission statement for the organization.

A facilitator, or committee of top managers, should then merge these statements

into a single document and distribute the draft statements to all managers.

A request for modifications, additions, and deletions is needed next, along with a
meeting to revise the document. To the extent that all managers have input into
and support the final documents, organizations can more easily obtain managers’
support for other strategy formulation, implementation, and evaluation activities.
Thus, the process of developing a vision and mission statement represents a great
opportunity for strategists to obtain needed support from all managers in the firm.

During the process of developing vision and mission statements, some

organizations use discussion groups of managers to develop and modify existing
statements. Some organizations hire an outside consultant or facilitator to manage
the process and help draft the language. Sometimes an outside person with
expertise in developing such statements, who has unbiased views, can manage the
process more effectively than an internal group or committee of managers.
Decisions on how best to communicate the vision and mission to all managers,
employees, and external constituencies of an organization are needed when the
documents are in final form. Some organizations even develop a videotape to
explain the statements, and how they were developed.

Importance (Benefits) of Vision and Mission Statements

1. Firms with a formalized mission statement have twice the average return on
shareholders’ equity than those firms without a formalized mission statement
have;
2. There is a positive relationship between mission statements and organizational
performance;
3. Firms using mission statements have a 30 percent higher return on certain
financial measures than those without such statements;
4. To ensure unanimity of purpose within the organization
5. To provide a basis, or standard, for allocating organizational resources
6. To establish a general tone or organizational climate
7. To serve as a focal point for individuals to identify with the organization’s
purpose and direction, and to deter those who cannot from participating further in
the organization’s activities
8. To facilitate the translation of objectives into a work structure involving the
assignment of tasks to responsible elements within the organization
9. To specify organizational purposes and then to translate these purposes into
objectives in such a way that cost, time, and performance parameters can be
assessed and controlled.

Characteristics of a mission statement

 Broad in scope;
 do not include monetary amounts, numbers, percentages, ratios, or objectives
 Less than 250 words in length
 Inspiring
 Identify the utility of a firm’s products
 Reveal that the firm is socially responsible
 Reveal that the firm is environmentally responsible
 Include nine components customers, products or services, markets,
technology, concern for survival/growth/ profits, philosophy, self-concept,
concern for public image, concern for employees
 Reconciliatory
 Enduring

A mission statement is more than a statement of specific details; it is a declaration

of attitude and outlook. It usually is broad in scope for at least two major reasons:

1. First, a good mission statement allows for the generation and consideration of a
range of feasible alternative objectives and strategies without unduly stifling
management creativity. Excess specificity would limit the potential of creative
growth for the organization. However, an overly general statement that does not
exclude any strategy alternatives could be dysfunctional.
2. Second, a mission statement needs to be broad to reconcile differences
effectively among, and appeal to, an organization’s diverse stakeholders, the
individuals and groups of individuals who have a special stake or claim on the
company. Thus a mission statement should be reconcilatory.

Ten Benefits of Having a Clear Mission and Vision

1. Achieve clarity of purpose among all managers and employees.

2. Provide a basis for all other strategic planning activities, including the internal
and external assessment, establishing objectives, developing strategies, choosing
among alternative strategies, devising policies, establishing organizational
structure, allocating resources, and evaluating performance.
3. Provide direction.
4. Provide a focal point for all stakeholders of the firm.
5. Resolve divergent views among managers.
6. Promote a sense of shared expectations among all managers and employees.
7. Project a sense of worth and intent to all stakeholders.
8. Project an organized, motivated organization worthy of support.
9. Achieve higher organizational performance.
10. Achieve synergy among all managers and employees.

Mission Statement Components

Mission statements can and do vary in length, content, format, and specificity.
Most practitioners and academicians of strategic management feel that an
effective statement should include nine components. Because a mission statement
is often the most visible and public part of the strategic-management process, it is
important that it includes the nine characteristics as summarized in Table 2-4, as
well as the following nine components:

1. Customers—Who are the firm’s customers?

2. Products or services—What are the firm’s major products or services?
3. Markets—Geographically, where does the firm compete?
4. Technology—Is the firm technologically current?
5. Concern for survival, growth, and profitability—Is the firm committed to
growth and financial soundness?
6. Philosophy—What are the basic beliefs, values, aspirations, and ethical
priorities of the firm?
7. 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 employees a valuable asset of the firm?

Application Given a chance to have a business or to establish an organization, make a mission

statement for your business/organization.

Module Every organization has a unique purpose and reason for being. This
Summary uniqueness should be reflected in vision and mission statements. The nature
of a business vision and mission can represent either a competitive advantage
or disadvantage for the firm. An organization achieves a heightened sense of
purpose when strategists, managers, and employees develop and communicate
a clear business vision and mission. Drucker says that developing a clear
business vision and mission is the “first responsibility of strategists.”

A good mission statement reveals an organization’s customers; products or

services; markets; technology; concern for survival, growth, and profitability;
philosophy; self-concept; concern for public image; and concern for
employees. These nine basic components serve as a practical framework for
evaluating and writing mission statements. As the first step in strategic
management, the vision and mission statements provide direction for all
planning activities.

Well-designed vision and mission statements are essential for formulating,

implementing, and evaluating strategy. Developing and communicating a
clear business vision and mission are the most commonly overlooked tasks in
strategic management. Without clear statements of vision and mission, a
firm’s short-term actions can be counterproductive to long-term interests.
Vision and mission statements always should be subject to revision, but, if
carefully prepared, they will require infrequent major changes. Organizations
usually reexamine their vision and mission statements annually. Effective
mission statements stand the test of time.

Module Why do you think organizations that have a comprehensive mission tend to be
Assessment high performers? Does having a comprehensive mission cause high performance?

References 1. David F. R. (2011) Strategic Management Concepts and Cases ( 13 th Ed.)

Pearson Education, Inc., publishing as Prentice Hall, One Lake Street,
Upper Saddle River, New Jersey 07458.

Closure Congratulations! You are done with the second lesson. I hope that you will be
enticed to know about the “EXTERNAL ASSESSMENT” Which will be our
next lesson for this subject