PART TWO: STRATEGY FORMULATION

CHAPTER TWO
THE BUSINESS VISION, MISSION AND VALUES

Mulugeta K. (MBA, PhD Scholar at Punjabi

University)
Department of Management
Debre Markos University
1. Overview
• 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.
• Vision and mission statements are displayed throughout
a firm’s premises
 "A strategist’s job is to see the company not as it is ..
but as it can become.“
—John W. Teets, Chairman of Greyhound, Inc.
2. Business Vision
• A vision statement is sometimes called a picture of your
company in the future but it’s so much more than that.
• It is your inspiration, the framework for all your
strategic planning.
• It answers the question, “Where do we want to go?”.
• It also answers the question “What do we want to
become?”
• It is the reminder of what you are trying to build.
• A clear vision provides the foundation for developing a
comprehensive mission statement.
 Cont…
• A vision usually precedes the mission statement.
• It is usually short, concise and preferably limited to one
sentence.
• It defines the desired future state of an organization in
terms of its objective and/or strategic direction.
• In short, vision statement;
۩ is a statement about a company’s long-term direction;
۩ hope for the “reality to be” instead of the “reality that is”
۩ desired situation opposing the existing situation;
۩ not realized in short or one’s life time;
۩ keeps an organization moving forward
 Cont…

• Vision is what keeps an organization moving forward

even against discouraging odds.
• Visions are broad, but point where to go.
• It must be compelling, inspiring and make people want
to join the organization.
• If vision is vivid and meaningful enough, people can do
outstanding things to bring to realization.
• If it is lacking meaning, no amount of resources will
induce people to move forward.
• It concentrates on the future and provides clear
decision-making criteria.
Purpose of Vision

• Vision provides the following purposes.

– It is used as an initial force that brings people together.
– It can provide energy, momentum and strengths to
individuals.
– It inspires stakeholders.
– It is life-blood of an organization.
– It helps to see what you are working towards.
– It provides bases for partnership
– It binds an organization together in times of crises.
 Cont…
• A firm’s vision is determined by asking the following
questions:
 What would the country lose if our organization
ceased to exist?
 Why do we want to dedicate our creative energies to
this organization’s effort?
 What does our organization do to fill basic human
needs?
 What does our organization do that impact the
country?
Features of a Vision Statement

• Features of an effective vision include:

– Clarity and lack of ambiguity
– Vivid and clear picture
– Description of a bright future
– Memorable and engaging wording
– Realistic aspirations
– Alignment with organizational values and culture
3. Business Mission

• The word "mission" dates from 1598, originally of

Jesuits sending "missio", Latin for "act of sending
members abroad".
• Mission statement is an enduring statement of purpose
that distinguishes one firm from another in the same
business.
• It is a declaration of a firm’s reason for existence.
• It identifies scope of it operation in terms of product
offered and market served.
• Mission also means what we are and what we do.
• It indicates “the reality that is.”
 Cont…
• Mission statement is;
 general statement about the basic purpose of the
organization
 the description of an organization’s reasons for existence
 defines company’s business: Product, market; Territory/
geography
 Is the guiding principle that drives the processes of goal and
action plan formulation
 It shows the moral and ethical principles and climate that will
shape the philosophy and character of the organization
 Thus mission outlines the firm’s identity and provides a guide
for shaping strategies as all organization
 Cont…

• According to Vern McGinis, a mission should:

• define what the company is
• define what the company aspires to be
• limited to exclude some ventures
• broad enough to allow for creative growth
• distinguish the company from all others
• serve as framework to evaluate current activities
• stated clearly so that it is understood by all
Elements of a Mission Statement
 There are four elements which are incorporated in the
definition of mission statement
 Cont…
A. Purpose
– It is believed that leaders will find it easier to create
employees with commitment and enthusiasm if they
choose a purpose aimed at a higher ideal.
– What is the organization?
– For whose benefit is all the effort being put in?
– Why should a manager or an employee do more
than the minimum required?
– The basic reason for the existence of the
organization.
 Cont…
B. Strategy
– To achieve a purpose, there needs to be a strategy.
– If the purpose is to be the best, there must be a strategy
explaining the principles around which the company will
become the best.
C. Behavior Standards
– Purpose and strategy are empty intellectual thoughts
unless they can be converted into action/policy..
– To capture the emotional energy of an organization the
mission needs to provide some philosophical or moral
rationale for the people
 Cont…
D. Values
– Values are the beliefs and moral principles that lie
behind the organization’s culture.
– Values give meanings to norms and behaviors in the
organization.
– In many organizations, organizational values are not
explicit
– They can only be understood by perceiving the
philosophical rational of the management behavior.
– But explicit values are of high importance
Characteristics of a Good Mission Statement

• Mission statement should be:

a) Feasible: It should not be an impossible statement.
• In addition it should be realistic and achievable.
b) Precise: It should not be so narrow to restrict the
organization’s activities nor should it be too broad to
make itself meaningless.
c) Clear: should be clear enough to lead to action and
should not be a high sounding set platitudes meant
for publicity purposes.
 Cont…
e) Motivating: should be inspiring for members of the
organization or being its customers.
f) Distinctive: the indiscriminate one (random,
arbitrary) is likely to have little impact.
g) Indicate major components of strategy: along with
the organizational purpose.
h) Indicate how objectives are to be accomplished: it
should provide clues regarding the manner in which
the objectives are to be accomplished.
i) Enduring: it has to be long lasting
Strategic Vision Vs Mission
Here are some of the differences between vision and
mission
Components of a Mission Statement
• Components of a mission statement include:
1. Customer: 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 highly committed to growth and financial
soundness?
 Cont…

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?
Examples of Mission Statements
 Pepsi cola’s mission statement:
“. . . . is to increase the value of our shareholders’
investment. We do this through sales growth, cost
controls, and wise investment resources. We believe
our commercial success depends upon offering quality
and value to our consumers and customers; providing
products that are safe, wholesome, economically
efficient and environmentally sound; and providing a
fair return to our investors while adhering to the
highest standards of integrity.”
• Evaluate, using the elements of mission statement.
Importance of Mission Statements

– Harmony of purpose within the organization

– Basis for allocating resources
– Establish organizational climate
– Focal point for direction
– Translate objectives into work structure
– Cost, time and performance parameters assessed and
controlled
Resolve divergent views among managers. [direction]
Promote synergy among managers and employees
4. Organizational Objectives and Goals

 The two key sides of writing goals and objectives: be

persistent with your goals, but flexible.
• Strategic goals/ objectives
– Convert vision & mission into specific performance
targets
– Create yardsticks to track performance
– Pushes firms to be inventive & focused on results
– Helps prevent complacency & coasting.
 Cont…
A. Goals/Aims
• Aims and goals are often use interchangeably.
• Aims are general statements of what we intend to
achieve in relation to clients’ needs.
• Aim is a broad statement of what we are trying to
achieve.
• Aims/ goals are not usually written in a way that we
would know whether we have achieved them.
• Goals (aims) are where you want to go
 Cont…
B. Objective(s)
• Indicates how goals are achieved.
• Desirable outcomes of organizational activity
• Are more specific than goals.
• Is a very specific statement on what is to be done to
accomplish the mission.
• Ideally should be SMART:
Specific, Measurable, Attainable, Realistic, Time
bound
 Cont…
• A statement of an objective makes the following clear:
– What is to be accomplished?
– How much is to be accomplished?
– By when it is to be accomplished?
– By whom it is to be accomplished?
• Examples Of Goals, Objectives And Targets
– Goal: earn $20,
– Objective: sell second hand shirts for $2 each,
– Target: 10 people
 Cont…
• Objectives are the end results of planned activity.
• They state what is to be accomplished by when and
should be quantified if possible.
• Some other examples of objectives
o To achieve 10% annual growth in earning per share.
o To achieve 20% - 25% return on equity.
o For 35 parents each week with to have a 2 hour break
from their children for the next 12 months.
o increase the number of variety research output that
improve productivity from the existing 5% to 20% by
the end of 2010.
Characteristics of Objectives
 Objectives should be understandable:
– Understandable object may lead to no action even a
wrong action.
 Objectives should be concrete and specific:
– Better to say “Our company plans to achieve a 12%
increase in sale” than “our company seeks to
increase its sales”.
 Objectives should be related to a time frame
– “our company plans to increase its sales by 12% by
the end of two years”
 Cont…
 Objectives should be measurable and controllable:
– Achievement of objectives should be measured and
controlled
 Objectives should be challenging
– Objectives that are too high and too low are both de-
motivating
– Should be set at challenging but not unrealistic levels.
 Different objective should correlate with each other
– If objectives set in one area are disregarding the other
areas, it leads to problems.
 Objectives should be set within constraints
– Internal and external environmental situations
Difference between Goals and Objectives

• Goals are general directions that may not be measured,

whereas objectives are specific and measurable.
• Goals are broad objectives are narrow.
• Goals are general intentions; objectives are precise.
• Goals are intangible; objectives are tangible.
• Goals are abstract; objectives are concrete.
• Goals can't be validated as is; objectives can be
validated
THE END!