Chapter Two: Mission, Objectives and Goals

Learning Outcome:
After completing this module the students will be able to:
 Understand the role and meaning of corporate vision and mission.
 Differentiate between vision and mission
 Describe the characteristics of an effective vision.
 Understand the concepts of goals and objectives
2. Introduction
The first step in the strategic formulation process is to establish the strategic intent in form of
vision, mission, goals and objectives. This the starting point of all the managerial actions. Vision
and mission are often considered as an essential part of strategic management. There is probably
not a strategic management book that does not mention or explain the importance of these two
elements. In history we can find beautiful examples of great visions of e.g. Bill Gates, Steve Jobs
or Henry Ford that stay behind companies’ success .
In a business it’s difficult or impossible to agree on strategic or even tactical decisions if everyone
in the organization is not headed in the same direction, toward some common purpose. Therefore
experts believe that developing shared mission, vision and values is the first step in laying a strong
foundation for making strategic and tactical decisions that will help the business grow and succeed.
Many a times these terms are used interchangeably therefore it is important to understand the
differences between them. This module focuses on introducing these concepts in detail,
highlighting various characteristics and differences between these terms.
2.1 Meaning of Vision
The vision is the source and the main idea of a company. Vision refers to what an organization
aspires to be in future. It acts as a company’s roadmap and depicts what a company wants to
become. Nanus, (1992) defines vision as realistic, credible, attractive future for an organization.
Over decades the management researchers and practitioners have argued that vision is important
to leadership, strategy implementation and organizational change.
Clarifying the vision of the company and communicating it to the employees of an organization
can have powerful results. Visionary organizations are capable of leading change, when the
leaders realize that their visions of the future are not firmly fixed and remain flexible to
accommodate change.

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A vision paints a vivid picture of an organization and serves as a concrete foundation for the
organization. It serves as an enduring promise and does not fluctuate from year to year. On the
basis of vision statement, the organization aligns all its activities. In simple words we can say
that a vision of an organization tells that where organization want to reach in future.
When developing a vision statement, it should be seen that the following questions are
answered:
 What do we want to do going forward?
 When do we want to do it?
 How do we want to do it?
Characteristics of Vision statement
An effective vision statement should be compelling and meaningful for the employees working
in an organization. A vision statement can be evaluated on the basis of the following
characteristics
1. Future Focused – An effective vision statement should describe the organizations desired
future. It should answer the following question – “How will our organization look like in 10
years from now?” It should promote long term thinking within an organization.
2. Clarity – A good vision statement should be clearly articulated and should be easy to
understand for even the junior most employees in an organization.
3. Relevant – An effective vision statement should be relevant to an organization in all times and
should relate with the history and values of an organization.
4. Challenging – Vision statement should be challenging enough and should set high standards
enabling the members of the organization to perform.
5. Inspirational – A good vision statement should inspire the employees on an organization to
move them emotionally and guide them towards a meaningful purpose.
According to a leading management thinker Philip Kotler, a well worded vision statement
should be
Graphic (painting a picture of the kind of company that management intends to create),
directional (indicate kind of business and strategic changes that may be forthcoming),
Focused (should be specific so that managers are able allocate resources and make decisions),
flexible (should be capable of change whenever required), feasible (should be achievable),
durable (should cater to the long term interest of the stakeholders) and easy to communicate.

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Vision Formulation
An important question that comes next is how can companies develop their vision? In other
words Jim Collins and Jerry Porras in their classic article published in Harvard Business Review
in September 1996 proposed how successful companies create their vision statement. They
further proposed a Built to Last Vision Framework according to which there are two major
components of establishing an effective vision statement. These are core ideology and
envisioned future.
According to Collins and Porras, “Core ideology defines a company’s timeless character.” This
is integral to the process of setting up the company’s vision. They emphasized it is essential to
identify those elements of company which will never change.
Core Ideology includes two components i.e. core values and core purpose. Core values are the
handful of beliefs, guiding principles or tenets that are absolutely non-negotiable within an
organization. Similarly the core purpose is the organization’s fundamental reason for being. The
core purpose guides and directs an organization and it motivates and inspires the employees
working for the company. Purpose is essentially permanent.
Collins and Porras suggest that the core values should revolve around 3-5 major issues and more
important the values are reflected in the actions and not merely on the website or company
related material.
According to Collins and Porras, an envisioned future is the means through which core ideology
is translated into a tangible goal. It includes a long term goal which was described by them as
BHAG [Big, Hairy, Audacious Goals]. BHAG can be measured and companies can easily make
an assessment on the progress. The goals should be inspiring so that it stimulates the employees
and get the people going. The BHAG’s can change once they are achieved are they are major
milestones which take the company towards its path of purpose. While formulating BHAG’s the
company should think about the four categories i.e. Target (For example : Become a 10,000 core
company by 2030), Common enemy (For example : Nike is 1960’s had a goal – Crush Adidas),
Role Model (For example : Become the Apple of the footwear industry) and Internal
Transformation (For example : Transform the company from telecom service provider to a total
communication solution provider)
While formulating or revising the vision the top level executives can answer the following
questions
 Where are we Now?

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  Where do we want to Go?
 Where do we want to be?
 Why is this important to us?
 What are the obstacles in the way?
 What actions can we take to overcome them?
 What are our priorities?
 When do we know that we are on track?
Finding answers to these questions can help the executives to formulate a vision.
Meaning of Mission
Mission gives the answer of why organization exists and also defines the path to achieve vision
of an organization. Mission statement is written process that communicate why organization
exist.
A firm’s mission describes the organization in terms of business it is in, the customers it serves,
and the skills it intends to develop to fulfill its vision. In other words, the mission statement is the
heart of a company.
The mission statement guides the actions of employees, partners, and management.
The mission statement tries to answer the following questions
 What do we do today?
 For whom do we do it?
 What is the benefit?
Characteristics of a Mission Statement
There are no hard and fast rules to develop a mission statement; however, if an organization
keeps in mind the following characteristics, it can develop an effective mission statement.
1. Simple – Generally companies tend to develop mission statements which are long and full of
management words. Research indicates that if the mission statements are small, they are not only
memorable but also effective. Many experts believe that mission statements which are 8 words
or less are easy to remember and are effective. For example, the mission of Domino is “Sell
More Pizza, Have More Fun”.
2. Be Specific – A good mission statement should include some description about the function of
the business. For example, a mission that includes “become the industry leader” does not specify
anything and mean nothing to the stakeholders. However, if the mission statement indicates “To
provide world class travel services” is more specific.

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3. Be Realistic - Mission statements should be developed in a way that it includes something that
is possible. Generally mission statements include statements which are impossible to achieve and
then later discourage the employees.
4. Strategic Positioning – An effective mission statement should include a brief description of
the strategic position of the company within the market.
5. Relevant to Stakeholders – A good mission statement should focus on the interest of the
relevant stakeholders especially the customers. The mission statement should aim at satisfying
the customer needs.
6. Long Term Orientation – An effective mission statement should take a long term view and
should be designed keeping in view a long term perspective. However, the flexibility should not
be compromised.

Goals and Objectives

A goal is an overarching principle that guides decision making. A goal illustrates what is to be
achieved in some future time. Goals are related directly to vision and mission and they direct
everyday actions and decisions. Objectives are specific, measurable steps that can be taken to
meet the goal. They specify organization issues and milestones. The objectives should fulfill the
SMART criterion which stands for Specific, Measurable, Attainable, Relevant and Time-Bound.
For example a company could set its objective as “We want to increase our sales by 35% in the
next 12 months” or “We will recruit 35 new engineers from a premier technical institute and they
will start working on the new projects by the end of the current financial year”

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To differentiate between goals and objectives one can view it like this

For example, some of the common business goals can be

 Increase customer satisfaction
 Improve employee satisfaction
 Introduce new product or services
 Increase the Brand Equity
 Diversify into new markets
 Penetrate into existing markets
 Reduce Operational costs
 Increase the network with stakeholders
 Enhance profitability by reducing costs.
While developing goals and objectives the executive should keep the following points into
consideration
 Goals and Objectives should be linked to the mission and vision of the company
 Goals should always be measurable
 Goals can be designed keeping view the acronym ACES i.e. Achieve, Conserve, Eliminate and
Steer Clear. In other words, goals are also meant to identify what a company intends to eliminate
in addition to what it intends to achieve.
 Goals can be of various types including – day to day work goals, problem solving goals,
development goals, innovation goals and profitability goals.
The goals set forth should be clear and simple
 The goals should be specific and realistic  The goals should be acceptable with the values of
the company and employees 
The goals should be flexible so that it can be changed and adopted whenever needed.
The following example can help to understand how goals and objectives can be setup

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2.5 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 that listed below:
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?
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.
Examples of the Nine Essential Components of a Mission Statement
1. Customers
To earn our customers’ loyalty, we listen to them, anticipate their needs, and act to create value
in their eyes. (Lexmark International)
2. Products or Services

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Standard Oil Company (Indiana) is in business to find and produce crude oil, natural gas, and
natural gas liquids; to manufacture high-quality products useful to society from these raw
materials; and to distribute and market those products and to provide dependable related services
to the consuming public at reasonable prices. (Standard Oil Company)
3. Markets
We are dedicated to the total success of Corning Glass Works as a worldwide competitor.
(Corning Glass Works)
4. Technology
We will continually strive to meet the preferences of adult smokers by developing technologies
that have the potential to reduce the health risks associated with smoking. (RJ Reynolds)
5. Concern for Survival, Growth, and Profitability
To serve the worldwide need for knowledge at a fair profit by adhering, evaluating, producing,
and distributing valuable information in a way that benefits our customers, employees, other
investors, and our society. (McGraw-Hill)
6. Philosophy
Our world-class leadership is dedicated to a management philosophy that holds people above
profits. (Kellogg)
7. Self-Concept
Crown Zellerbach is committed to leapfrogging ongoing competition within 1,000 days by
unleashing the constructive and creative abilities and energies of each of its employees.
8. Concern for Public Image
To contribute to the economic strength of society and function as a good corporate citizen on a
local, state, and national basis in all countries in which we do business. (Pfizer)
9. Concern for Employees
To recruit, develop, motivate, reward, and retain personnel of exceptional ability, character, and
dedication by providing good working conditions, superior leadership, compensation on the basis
of performance, an attractive benefit program, opportunity for growth, and a high degree of
employment security. (The Wachovia Corporation)
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.

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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.

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