Chapter2 Vision and Mission

Chapter 2
The Business Vision & Mission
Strategic Management:
Concepts & Cases
12th Edition
Fred David
Copyright © 2009 Pearson Education, Inc. Ch 2 -1

Publishing as Prentice Hall
Objectives of the chapter
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 statement of different
organizations.
6. Write good vision and mission statements.
Chapter Outline
What Do We Want to Become?
What Is Our Business?
Importance of Vision and Mission Statements

Chapter Outline (cont’d)
Characteristics of a Mission Statement
Components of a Mission Statement
Writing & Evaluating Mission Statements

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

Vision
Agreement on the basic vision for which the

firm strives to achieve in the long run is
critically important to the firm’s success.

Vision
“What do we want to become?”

Vision
Clear Business
Vision
Comprehensive
Mission Statement

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

Vision Statement Examples
Tyson Foods’ vision is to be the world’s first

choice for protein solutions while maximizing
shareholder value.

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.

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.

Mission Statements
– 90% of all companies have used a

mission statement in the previous five
years

Mission Statements
“What is our business?”

Mission Statements
•Enduring statement of purpose

•Distinguishes one firm from another
•Declares the firm’s reason for being

Mission Statements
Also referred to as:
•Creed/faith statement
•Statement of purpose
•Statement of philosophy
•Statement of business principles

Mission Statements
Reveal what an organization wants to be

and whom it wants to serve

Mission Statements
Essential for effectively establishing

objectives and formulating strategies

Vision & Mission
Many organizations develop both vision &

mission statements

Vision & Mission
Profit & vision are necessary to effectively

motivate a workforce

Vision & Mission
Shared vision creates a community of

interests

Developing Vision & Mission
Clear mission is needed before alternative

strategies can be formulated and
implemented

Participation from diverse managers is

important in developing the 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. Ask managers to prepare a mission statement for the organization.
3. A facilitator, or committee of top managers, should then merge these

statements into a single document and distribute this draft to all
managers.
4. A request for modifications, additions, and deletions is needed next along

with a meeting to revise the document.

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.

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.

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 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.

Proctor & 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.

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.

Importance of Mission
Benefits from a strong mission
Unanimity/unity of Purpose
Resource Allocation
Mission
Organizational Climate
Focal Point for Work

Structure

Benefits from a strong mission
1. To ensure unanimity of purpose within the organization
2. To provide a basis, or standard, for allocating organizational
resources
3. To establish a general tone or organizational climate
4. 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
5. To facilitate the translation of objectives into a work structure
involving the assignment of tasks to responsible elements within
the organization
6. 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

Effective Missions
Broad
Broadin
inscope
scope
Generate
Generatestrategic
strategic
alternatives
alternatives
Not
Notoverly
overlyspecific
specific
Reconciles
Reconcilesinterests
interestsamong
among
diverse
diversestakeholders
stakeholders
Finely
Finelybalanced
balancedbetween
between
specificity
specificity&&generality
generality

Effective Missions
Arouse
Arousepositive
positivefeelings
feelings&&
emotions
emotions
Motivate
Motivatereaders
readersto
toaction
action
Generate
Generatefavorable
favorable
impression
impressionofofthe
thefirm
firm

Effective Missions
Reflect
Reflectfuture
futuregrowth
growth
Provide
Providecriteria
criteriafor
forstrategy
strategy
selection
selection
Basis
Basisfor
forgenerating
generating&&
evaluating
evaluatingstrategic
strategicoptions
options
Are
Aredynamic
dynamicin
innature
nature

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

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

Mission & Customer
Orientation
An Effective Mission Statement –
 Anticipates customer needs

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

Social Policy & Mission
Managerial philosophy shapes social policy –
 Affects development of vision & mission
 Responsibilities to –
 Consumers
 Environmentalists
 Minorities
 Communities

Social Policy & Mission
Social policy should be integrated in all

strategic-management activities
Mission should convey the social

responsibility of the firm

Mission Statements
2007 Most Admired in Social Responsibility
1. CHS 6. YRC Worldwide

2. United Parcel Service 7. Starbucks
3. Whole Foods Market 8. International Paper
4. McDonald’s 9. Vulcan Materials
5. Alcan 10. Walt Disney

Mission Statements
2007 Least Admired in Social Responsibility
1. Visteon 6. Arvin Meritor

2. Dana 7. Huntsman
3. CA 8. Navistar International
4. Delphi 9. Lyondell Chemical
5. Federal-Mogul 10. Toys “R” Us

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

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

Products or
Services Markets
Customers
Mission Technology
Employees Components
Survival,
Growth,
Public Profits
Image
Self-Concept Philosophy

MISSION STATEMENT COMPONENTS
 1. Customers: Who are the firm’s customers?

 2. Products or services: What are the firm’s 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 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?
Mission Statement Evaluation Matrix
COMPONENT COMPONENT COMPONENT COMPONENT COMPONENT
Concern for
Survival,
Products Growth,
Organization Customers or Services Markets Profitability Technology

Fleetwood Ent. Yes Yes No Yes Yes
Ben & Jerry's No Yes Yes No Yes

Royal Caribbean Yes No No No No
Dell Yes Yes Yes Yes Yes
Proctor & Gamble Yes No Yes No Yes
L’Oreal No No No No No

Mission Statement Evaluation Matrix

COMPONENT COMPONENT COMPONENT COMPONENT
Self- Concern for Concern for

Organization Philosophy Concept Public Image Employees

Fleetwood Ent. Yes Yes No Yes
PepsiCo Yes No Yes Yes
Royal Caribbean Yes Yes No Yes
Dell Yes Yes Yes No
Proctor & Gamble No Yes Yes Yes
L’Oreal No Yes Yes Yes

Teamwork
 Write a mission statement, either for a

business, personal or family.

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.
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?

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.

Review
 What is your college or university’s self-

concept? How would you state that in a
mission statement?
 Why is it important for a mission
statement to be reconciliatory? (different
stakeholders)

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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Chapter 2

The Business Vision & Mission

Copyright © 2009 Pearson Education, Inc. Ch 2 -1

1. Describe the nature and role of vision and mission

What Do We Want to Become?

What Is Our Business?

Importance of Vision and Mission Statements

Copyright © 2009 Pearson Education, Inc. Ch 2 -3

Characteristics of a Mission Statement

Components of a Mission Statement

Writing & Evaluating Mission Statements

Copyright © 2009 Pearson Education, Inc. Ch 2 -4

“The last thing IBM needs right now is a

“What IBM needs most right now is a

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

Agreement on the basic vision for which the

Copyright © 2009 Pearson Education, Inc. Ch 2 -6

“What do we want to become?”

Copyright © 2009 Pearson Education, Inc. Ch 2 -7

Copyright © 2009 Pearson Education, Inc. Ch 2 -8

 Provides opportunity & challenge

Copyright © 2009 Pearson Education, Inc. Ch 2 -9

Tyson Foods’ vision is to be the world’s first

Copyright © 2009 Pearson Education, Inc. Ch 2 -10

Many organizations have both a vision and a

Copyright © 2009 Pearson Education, Inc. Ch 2 -11

General Motors’ vision is to be the world

Copyright © 2009 Pearson Education, Inc. Ch 2 -12

PepsiCo’s responsibility is to continually

Copyright © 2009 Pearson Education, Inc. Ch 2 -13

Dell’s vision is to create a company culture

Copyright © 2009 Pearson Education, Inc. Ch 2 -14

– 90% of all companies have used a

Copyright © 2009 Pearson Education, Inc. Ch 2 -15

“What is our business?”

Copyright © 2009 Pearson Education, Inc. Ch 2 -16

•Enduring statement of purpose

Copyright © 2009 Pearson Education, Inc. Ch 2 -17

Also referred to as:

Copyright © 2009 Pearson Education, Inc. Ch 2 -18

Reveal what an organization wants to be

Copyright © 2009 Pearson Education, Inc. Ch 2 -20

Essential for effectively establishing

Copyright © 2009 Pearson Education, Inc. Ch 2 -21

Many organizations develop both vision &

Copyright © 2009 Pearson Education, Inc. Ch 2 -22

Profit & vision are necessary to effectively

Copyright © 2009 Pearson Education, Inc. Ch 2 -23

Shared vision creates a community of

Copyright © 2009 Pearson Education, Inc. Ch 2 -24

Clear mission is needed before alternative

Copyright © 2009 Pearson Education, Inc. Ch 2 -25

Participation from diverse managers is

Copyright © 2009 Pearson Education, Inc. Ch 2 -26

A widely used approach to developing a mission statement is to:

2. Ask managers to prepare a mission statement for the organization.

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

4. A request for modifications, additions, and deletions is needed next along

Copyright © 2009 Pearson Education, Inc. Ch 2 -27