Chapter2 Vision and Mission

Ch 2 -1Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Chapter 2The Business Vision & Mission

Strategic Management: Concepts & Cases

12th Edition

Fred David


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


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

Vision

“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.


“What do we want to become?”

Vision


ComprehensiveMission Statement

Vision

Clear Business Vision


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

Vision & Mission


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.



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

Mission Statements


“What is our business?”

Mission Statements


Mission Statements

•Enduring statement of purpose

•Distinguishes one firm from another

•Declares the firm’s reason for being


Mission Statements

•Creed/faith statement

•Statement of purpose

•Statement of philosophy

•Statement of business principles

Also referred to as:


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

Mission Statements


Essential for effectively establishing objectives and formulating strategies

Mission Statements


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.


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.

Mission Statement Examples


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

MissionResource Allocation

Unanimity/unity of Purpose

Organizational Climate

Focal Point for Work Structure

Benefits from a strong mission


Benefits from a strong mission1. To ensure unanimity of purpose within the organization2. To provide a basis, or standard, for allocating organizational

resources3. To establish a general tone or organizational climate4. 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


Broad in scope

Generate strategic alternatives

Not overly specific

Reconciles interests among diverse stakeholders

Finely balanced between specificity & generality

Broad in scope

Generate strategic alternatives

Not overly specific

Reconciles interests among diverse stakeholders

Finely balanced between specificity & generality

Effective Missions


Arouse positive feelings & emotions

Motivate readers to action

Generate favorable impression of the firm

Arouse positive feelings & emotions

Motivate readers to action

Generate favorable impression of the firm

Effective Missions


Reflect future growth

Provide criteria for strategy selection

Basis for generating & evaluating strategic options

Are dynamic in nature

Reflect future growth

Provide criteria for strategy selection

Basis for generating & evaluating strategic options

Are dynamic in nature

Effective Missions


Natural Environmental PerspectiveIs 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


Define what the organization is Define what it aspires to be Limited to exclude some ventures

Mission & Customer Orientation – Vern McGinnis

Broad enough to allow for growth Distinguishes firm from all others Stated clearly – understood by all


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

Mission & Customer Orientation

An Effective Mission Statement –


Affects development of vision & mission

Responsibilities to – Consumers Environmentalists Minorities Communities

Social Policy & Mission

Managerial philosophy shapes social policy –


Social Policy & Mission

Social policy should be integrated in all strategic-management activities

Mission should convey the social responsibility of the firm


Mission Statements

1. CHS

2. United Parcel Service

3. Whole Foods Market

4. McDonald’s

5. Alcan

2007 Most Admired in Social Responsibility

6. YRC Worldwide

7. Starbucks

8. International Paper

9. Vulcan Materials

10.Walt Disney


Mission Statements

1. Visteon

2. Dana

3. CA

4. Delphi

5. Federal-Mogul

2007 Least Admired in Social Responsibility

6. Arvin Meritor

7. Huntsman

8. Navistar International

9. Lyondell Chemical

10.Toys “R” Us


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

Vision & Mission

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


Global PerspectiveSocial 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


Mission Components

CustomersMarkets

Employees

PublicImage

Self-Concept Philosophy

Survival,Growth,Profits

Products orServices

Technology


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

Organization CustomersProducts

or Services Markets

Concern for Survival, Growth,

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

Organization PhilosophySelf-

ConceptConcern for Public Image

Concern for 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.

Chapter2 Vision and Mission

Documents

Transcript of Chapter2 Vision and Mission