Chapter 2 The Business Vision & Mission

Strategic Management: Concepts & Cases 12th Edition Fred David

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Objectives of the chapter

1.

2.

3.
4.

5.

6.

Describe the nature and role of vision and mission statements in strategic management. Discuss why the process of developing a mission statement is as important as the resulting document. Identify the components of mission statements. Discuss how clear vision and mission statements can benefit other strategic-management activities. Evaluate mission statement of different organizations. Write good vision and mission statements.
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Chapter Outline
What Do We Want to Become?

What Is Our Business?

Importance of Vision and Mission Statements

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Chapter Outline (contd)

Characteristics of a Mission Statement

Components of a Mission Statement

Writing & Evaluating Mission Statements

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Vision

The last thing IBM needs right now is a vision. (July 1993)

What IBM needs most right now is a vision. (March 1996)

Louis V. Gerstner, Jr., CEO, IBM Corporation
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Vision

Agreement on the basic vision for which the firm strives to achieve in the long run is critically important to the firms success.

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Vision

What do we want to become?

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Vision

Clear Business Vision Comprehensive Mission Statement

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Vision & Mission

Shared Vision
Creates commonality of interests Reduce daily monotony Provides opportunity & challenge

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Vision Statement Examples

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

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Vision Statement

Many organizations have both a vision and a mission statement. but the vision statement should be established first and foremost. The vision statement should be short, preferably one sentence, as many managers as possible should have input into developing the statement.

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Vision Statement Examples

General Motors vision is to be the world leader in transportation products and related services.

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Vision Statement Examples

PepsiCos responsibility is to continually improve all aspects of the world in which we operate environment, social, economic creating a better tomorrow than today.

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Vision Statement Examples

Dells vision is to create a company culture where environmental excellence is second nature.

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Mission Statements

90% of all companies have used a mission statement in the previous five years

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Mission Statements

What is our business?

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Mission Statements

Enduring statement of purpose

Distinguishes one firm from another Declares the firms reason for being

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Mission Statements
Also referred to as:

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

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Mission Statements

Reveal what an organization wants to be and whom it wants to serve

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Mission Statements

Essential for effectively establishing objectives and formulating strategies

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Vision & Mission

Many organizations develop both vision & mission statements

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Vision & Mission

Profit & vision are necessary to effectively motivate a workforce

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Vision & Mission

Shared vision creates a community of interests

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Developing Vision & Mission

Clear mission is needed before alternative strategies can be formulated and implemented

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Developing Vision & Mission

Participation from diverse managers is important in developing the mission

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Developing Vision & Mission

A widely used approach to developing a mission statement is to: 1. Select several articles about mission statements and ask all managers to read these as background information. 2. 3. Ask managers to prepare a mission statement for the organization. A facilitator, or committee of top managers, should then merge these statements into a single document and distribute this draft to all managers. A request for modifications, additions, and deletions is needed next along with a meeting to revise the document.

4.

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Mission Statement Examples

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 industry 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.

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Mission Statement Examples

We aspire to make PepsiCo the worlds 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.

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Mission Statement Examples

Dells 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 consumer 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.

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Mission Statement Examples

Proctor & Gamble will provide branded products and services of superior quality and value that improve the lives of the worlds 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.

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Mission Statement Examples

At LOreal, 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.

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Importance of Mission

Rarick and Vitton found that firms with a formalized mission statement have twice the average return on shareholders equity than those firms without a formalized mission statement. Bart and Baetz found a positive relationship between mission statements and organizational performance. Business Week reports that firms using mission statement have a 30 percent higher return on financial measures than those without such statements.
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Importance of Mission
Benefits from a strong mission

Unanimity/unity of Purpose

Resource Allocation

Mission
Organizational Climate Focal Point for Work Structure
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Benefits from a strong mission

1. 2.

3. 4.

5.

6.

To ensure unanimity of purpose within the organization To provide a basis, or standard, for allocating organizational resources To establish a general tone or organizational climate To serve as a focal point for individuals to identify with the organizations purpose and direction, and to deter those who cannot from participating further in the organizations activities To facilitate the translation of objectives into a work structure involving the assignment of tasks to responsible elements within the organization To specify organizational purposes and the translation of these purposes into objectives in such a way that cost, time, and performance parameters can be assessed and controlled
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Effective Missions

Broad in scope Generate strategic alternatives Not overly specific Reconciles interests among diverse stakeholders Finely balanced between specificity & generality

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Effective Missions

Arouse positive feelings & emotions Motivate readers to action Generate favorable impression of the firm

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Effective Missions

Reflect future growth

Provide criteria for strategy selection

Basis for generating & evaluating strategic options Are dynamic in nature

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Natural Environmental Perspective

Is Your Firm Environmentally Proactive?

Preserving the natural resources is good business! Reactive environmental policies can be expensive Proactive policies force companies to innovate and upgrade processes

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Mission & Customer Orientation Vern McGinnis

Define what the organization is Define what it aspires to be Limited to exclude some ventures Broad enough to allow for growth Distinguishes firm from all others Stated clearly understood by all

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Mission & Customer Orientation

An Effective Mission Statement

Anticipates customer needs Identifies customer needs Provides product/service to satisfy needs

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Social Policy & Mission

Managerial philosophy shapes social policy

Affects development of vision & mission Responsibilities to

Consumers Environmentalists Minorities Communities

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Social Policy & Mission

Social policy should be integrated in all strategic-management activities

Mission should convey the social responsibility of the firm

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Mission Statements
2007 Most Admired in Social Responsibility
1. CHS
2. United Parcel Service 3. Whole Foods Market

6. YRC Worldwide
7. Starbucks 8. International Paper

4. McDonalds
5. Alcan

9. Vulcan Materials
10. Walt Disney

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Mission Statements
2007 Least Admired in Social Responsibility
1. Visteon
2. Dana 3. CA

6. Arvin Meritor
7. Huntsman 8. Navistar International

4. Delphi
5. Federal-Mogul

9. Lyondell Chemical
10. Toys R Us

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Ch 2 -45

Vision & Mission

Research results are mixed, however, firms with formal mission statements generally see a:

2x average return on shareholders equity Positive relationship to company performance 30% higher return on certain financial measures

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Ch 2 -46

Global Perspective
Social Policies on Retirement: Japan Versus the World

Labor shortages due to aging population Shortages can be met by immigration Historical barriers to immigration in Japan lead to significant economic problems

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Products or Services Customers

Markets

Employees

Mission Components

Technology

Public Image Self-Concept

Survival, Growth, Profits Philosophy

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Ch 2 -48

MISSION STATEMENT COMPONENTS

1. Customers: Who are the firms customers? 2. Products or services: What are the firms major products? 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 firms 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?
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Mission Statement Evaluation Matrix

COMPONENT COMPONENT COMPONENT COMPONENT COMPONENT

Organization

Customers

Products or Services

Markets

Concern for Survival, Growth, Profitability

Technology

Fleetwood Ent.

Yes

Yes

No

Yes

Yes

Ben & Jerry's

Royal Caribbean Dell Proctor & Gamble LOreal

No
Yes Yes Yes No

Yes
No Yes No No

Yes
No Yes Yes No

No
No Yes No No

Yes
No Yes Yes No

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Mission Statement Evaluation Matrix

COMPONENT COMPONENT COMPONENT COMPONENT

Organization

Philosophy

SelfConcept

Concern for Public Image

Concern for Employees

Fleetwood Ent.
PepsiCo Royal Caribbean Dell Proctor & Gamble LOreal

Yes
Yes Yes Yes No No

Yes
No Yes Yes Yes Yes

No
Yes No Yes Yes Yes

Yes
Yes Yes No Yes Yes

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Teamwork

Write a mission statement, either for a business, personal or family.

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Ch 2 -53

Review

Compare and contrast vision statements with mission statements in terms of composition and importance. Many organizations develop both a mission statement and a vision statement. Whereas the mission statement answers the question, What is our business? the vision statement answers the question, What do we want to become? Both statements are essential for firm success.
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Review

Do local petrol stations need to have written vision and mission statements? Why or why not? Why do you think organizations that have a comprehensive mission statement tend to be high performers? Does having a comprehensive mission cause high performance?
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Review

Explain why a mission statement should not include strategies and objectives. The statement needs to be broad in scope to effectively provide a basis for performing an external and internal audit and for generating and selecting among alternative strategies. specific strategies and objectives in a mission statement could reduce the level of innovative and creative thinking in an organization. jeopardizes the potential for the statement to be widely accepted by all managers and employees of the organization.
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Review

What is your college or universitys selfconcept? How would you state that in a mission statement? Why is it important for a mission statement to be reconciliatory? (different stakeholders)

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Review

In your opinion, what are the three most important components to include in writing a mission statement? Why? All of the evaluative criteria described in Chapter 2 are important, but three are particularly important: customers, products or services, and markets.

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