The Business Mission: Strategic Management Concepts & Cases

Strategic Management
Concepts & Cases

8th edition
Fred R. David
Chapter 2:
The Business Mission
PowerPoint Slides By:
Anthony F. Chelte
Western New England College
Ch. 2-1
© 2001 Prentice Hall

Comprehensive Strategic Management
Model
External
Audit
Chapter 3
Implement
Long-Term Generate, Implement Measure &
Strategies:
Objectives Evaluate, Strategies: Evaluate
Marketing,
Vision Select Mgmt Issues Performance
Fin/Acct,
& Strategies
R&D, CIS
Mission
Statements Chapter 6
Chapter 5 Chapter 7 Chapter 8 Chapter 9
Chapter 2
Internal
Audit
Chapter 4
Ch. 2-2

Vision & Mission
That business mission is so rarely

given adequate thought is perhaps
the most important single cause of
business frustration.
—Peter Drucker—
Ch. 2-3

Vision & Mission (Cont’d)
Mission statement answers the

question:
“What is our business?”
Ch. 2-4

Vision statement answers the question:
“What do we want to become?”
Ch. 2-5

• Many companies develop both

• Shared vision can motivate employees
• Develops a commonality of interests
• Helps focus on opportunity & challenge
Ch. 2-6

Developing Vision &
Mission
• Clear mission is needed before
alternative strategies can be
formulated and implemented
• Important to have as broad range

of participation as possible among
managers in developing the mission
Ch. 2-7

Examples
Vision Statement
“The Bellevue Hospital is the

LEADER in providing resources
necessary to realize the
community’s highest level of
HEALTH throughout life.”
Ch. 2-8

Examples (Cont’d)
Mission Statement
“The Bellevue Hospital, with respect,

compassion, integrity, and courage,
honors the individuality and
confidentiality of our patients,
employees, and community, and is
progressive in anticipating and
providing future health care services.”
Ch. 2-9

Examples (Cont’d)
Vision Statement
“The Vision of USGS is to be a world

leader in the natural sciences
through our scientific excellence and
responsiveness to society’s needs.”
-U.S. Geological Survey (USGS)-
Ch. 2-10

Examples (Cont’d)
Mission Statement
“The Mission of USGS is to serve the Nation by

providing reliable scientific information to
• Describe and understand the Earth;

• Minimize loss of life and property from natural
disasters;
• Manage water, biological, energy, and mineral
resources; and enhance and protect our
quality of life.
Ch. 2-11

Examples (Cont’d)
Vision Statement
“It is the vision of the California

Energy Commission for Californians
to have energy choices that are
affordable, reliable, diverse, safe,
and environmentally acceptable.”
Ch. 2-12

Examples (Cont’d)
Mission Statement
“It is the California Energy Commission’s

mission to assess, advocate, and act
through public/private partnerships to
improve energy systems that promote a
strong economy and a healthy
environment.”
Ch. 2-13

Characteristics of a Mission
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
Ch. 2-14

(Cont’d)
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
Ch. 2-15

(Cont’d)
• Arouse positive feelings and emotions

• Motivate readers to action
• Generate the impression that firm is
successful, has direction, and is worthy of
time, support, and investment
Ch. 2-16

(Cont’d)
• Reflect judgments re: future growth

• Provide criteria for selecting strategies
• Basis for generating & screening
strategic options
• Are dynamic in orientation
Ch. 2-17

Customer Orientation
A good mission statement reflects the anticipations
of customers.
• Identify customer needs

• Provide product/service to satisfy needs
 AT&T’s mission focuses on communications, not telephones
 Exxon’s mission focuses on energy, not on oil and gas
Ch. 2-18

Social Policy & Mission
Managerial philosophy and thinking at the
highest levels in the organization reflect
social policy.
• Affects development of vision & mission

• Responsibilities to consumers,
environmentalists, minorities,
communities, & other groups
Ch. 2-19

Social Policy & Mission
(Cont’d)
Social policy should be integrated in all
strategic-management activities.
Mission statement is an effective

instrument for conveying the social
responsibility of the firm.
Ch. 2-20

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.
Ch. 2-21

(Cont’d)
• Customers
• Products or services
• Markets
• Technology
• Survival, growth, and profitability
• Philosophy
• Self-concept
• Concern for public image
• Concern for employees
Ch. 2-22

(Cont’d)
Components 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?”
Ch. 2-23

(Cont’d)
• Markets:
“Geographically, where does the firm
compete?”
• Technology:
“Is the firm technologically current?”
Ch. 2-24

(Cont’d)
• 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?”
Ch. 2-25

(Cont’d)
• 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?”
Ch. 2-26

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
Ch. 2-27

Global Perspective
Major Challenges in 2000
USA Europ Japan
e
Customer loyalty 44% 28% 3%
Managing M&As, 30% 42% 16%
alliances
Reducing costs 29% 32% 41%
Engaging emp. in 28% 32% 38%
mission
Competing for talent 26% 9% 3%
Incr. flexibility & speed 24% 39% 31%
Ch. 2-28

Key Terms & Concepts
• Concern for employees • Mission statement
• Concern for public components
image • Philosophy
• Concern for survival, • Products or services
growth, and
profitability • Self-concept
• Creed statement • Social policy
• Customers • Stakeholders
• Markets • Technology
• Mission statement • Vision statement
Ch. 2-29

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Strategic Management

Concepts & Cases

© 2001 Prentice Hall

© 2001 Prentice Hall

That business mission is so rarely

© 2001 Prentice Hall

Mission statement answers the

“What is our business?”

© 2001 Prentice Hall

Vision statement answers the question:

“What do we want to become?”

© 2001 Prentice Hall

• Many companies develop both

© 2001 Prentice Hall

• Important to have as broad range

© 2001 Prentice Hall

“The Bellevue Hospital is the

© 2001 Prentice Hall

“The Bellevue Hospital, with respect,

© 2001 Prentice Hall

“The Vision of USGS is to be a world

-U.S. Geological Survey (USGS)-

© 2001 Prentice Hall

“The Mission of USGS is to serve the Nation by

• Describe and understand the Earth;

© 2001 Prentice Hall

“It is the vision of the California

© 2001 Prentice Hall

“It is the California Energy Commission’s

© 2001 Prentice Hall

• Define what the organization is

© 2001 Prentice Hall

© 2001 Prentice Hall

• Arouse positive feelings and emotions

© 2001 Prentice Hall

Effective mission statements:

• Reflect judgments re: future growth

© 2001 Prentice Hall

• Identify customer needs

© 2001 Prentice Hall

• Affects development of vision & mission

© 2001 Prentice Hall

Mission statement is an effective

© 2001 Prentice Hall

Must include the 9 elements, as the mission

© 2001 Prentice Hall

© 2001 Prentice Hall

© 2001 Prentice Hall

© 2001 Prentice Hall

© 2001 Prentice Hall

• Concern for public image:

• Concern for employees:

© 2001 Prentice Hall

• 2X average return on shareholder’s equity

• Positive relationship to organizational performance

• 30% higher return on certain financial measures

© 2001 Prentice Hall

© 2001 Prentice Hall

© 2001 Prentice Hall