Transcript Defining the Business

Defining the Business:
Vision, Mission and
Long-term Objectives
By D. J. Power
Defining the Vision

What is a company vision statement?

A company vision summarizes the
organization’s hopes for the future, values
and aspirations in the most general terms.
A vision statement SHOULD NOT include
statements about the strategies used to
attain a vision.
Defining the mission

What is a company mission?

A company mission is the fundamental
purpose that sets a firm apart from other
firms of its type and identifies the scope of
its operations in product and market terms.
It is a broadly framed but enduring
statement of a firm’s intent.
What is a mission statement?


formal, written document
broad statement of a firm’s purpose, intent and
direction.

must specify product/market niche.
Customer-market
Geographic domain
Product-service





may identify principal technology for production/delivery.
may contain the firm’s fundamental concern for survival
through growth and profitability;
may contain the firm’s managerial philosophy;
may contain the public image the firm seeks;
may contain characteristics of corporate self-concept.
What questions does a
mission statement address?




What business or businesses are we in?
What customers do we serve?
What is the purpose of this
organization?
Why does the organization exist?
What should be the focus of
the mission statement?



Market focus rather than product focus
External rather than an internal focus
Future-oriented focus
Do all firms need an explicit,
written mission statement?


No. But a formal, written mission statement
can be a useful strategic tool.
What are the benefits of a formal mission
statement?






Creates a shared purpose and unanimity of purpose in the
company
Creates shared expectations among stakeholders
Projects a sense of worth, values and intent to stakeholders
Improves resource allocation and use
Improves communications about organization intent and purpose
Focuses and guides the setting of goals and objectives
Involving Stakeholders in formulating
a mission statement


Stakeholders should be appropriately involved
in formulating a formal mission statement or
in reviewing an existing mission statement.
Why? Because they have a “stake” in the
existence of the firm.
Involve in a mission review process:
stockholders, customers, employees,
creditors, suppliers, relevant government
agencies (as appropriate), any relevant
unions, and community leaders.
A suggested process

Explicitly take the following steps:




Identify relevant stakeholder
representatives
Understand the stake holder's “stake” in
the firm—legitimate claims
Reconcile claims and prioritize them
Coordinate claims with political and
economic realities
Criteria for evaluating a business
mission statement







Is the content appropriate?
Is it easy to understand?
Is it clearly written?
Is it reasonably short and memorable?
Can we share it with all stakeholders?
Is it acceptable to strategic decision makers?
Does it project a positive image and tone?
Examples of mission
statement
Coca-Cola
 PepsiCo

Coca-Cola mission statement


We exist to create value for our share owners
on a long-term basis by building a business
that enhances the Coca-Cola Company’s
trademarks. This also is our ultimate
commitment.
As the world’s largest beverage company, we
refresh the world. We do this by developing
superior soft drinks, both carbonated and noncarbonated, and profitable non-alcoholic beverage
systems that create value for our Company, our
bottling partners and our customers.
In creating value, we succeed or fail based on
our ability to perform as stewards of
several key assets:






Coca-Cola, the world’s most powerful trademark, and other
highly valuable trademarks.
The world’s most effective and pervasive distribution system.
Satisfied customers, who make a good profit selling our
products.
Our people, who are ultimately responsible for building this
enterprise.
Our abundant resources, which must be intelligently allocated.
Our strong global leadership in the beverage industry in
particular and in the business world in general.
PepsiCo mission statement

PepsiCo’s mission is to increase the value of our
shareholder’s investment. We do this through sales
growth, cost controls and wise investment of
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.
Identifying Mission Statement
Components




Customer-market “To anticipate and meet market
needs of farmers, ranchers and rural communities.”
(CENEX)
Product-service “AMAX’s principal products are
molybdenum, coal, iron ore, copper, lead, zinc,
petroleum and natural gas.”
Geographic domain “We are dedicated to the total
success of Corning Glass Works as a worldwide
competitor.”
Technology “The common technology in these areas
relates to discrete particle coatings.” (NASHUA)
Identifying components




Concern for survival “the company will conduct its
operations prudently, and will provide profits and
growth which will assure Hoover’s ultimate success.”
(Hoover Universal)
Philosophy “We are committed to improve health
care throughout the world.” (Baxter Travenol)
Self-concept “Hoover Universal is a diversified, multiindustry corporation with strong manufacturing
capabilities, entrepreneurial policies, and individual
business unit autonomy.”
Concern for public image “We are responsible to the
communities in which we live and work and to the
world community as well.” (Johnson & Johnson)
Establishing Long-term
Objectives

What is a long-term objective?




specific targets with time frames
help managers assess how well they are
doing in reaching more general aims and
objectives that deal with long-term
profitability, growth and survival.
statements of the results a firm seeks over
a specific time period, usually 5 years.
Also called strategic objectives
Other key terms

Planning horizon is the time frame for
planning strategic activities and for
accomplishing strategic long-term
objectives.
What are common categories
of long-term objectives?








Profitability – To achieve an 8% ROI by 20XX
Employee Development – To have employees spend 10%
of their time each year in skills development activities by 20XX
Productivity – To decrease the cost of producing product A
5% by 20XX
Technological Leadership -- By 20XX derive 30% of each
divisions revenue from products introduced in previous 4 year
period
Employee Relations – By 20XX every technical employee
should use 15% of working week to pursue a project he or
she desires
Competitive Position – To increase our relative market
share by 5% by 20XX
Public and Social Responsibility – To contribute 1% of
annual gross revenues to community projects by 20XX
PEP TECS
Evaluating Long-term objectives




Acceptable - Is the objective acceptable to managers
and KEY stakeholders?
Flexible - Is the objective adaptable to unforeseen
changes in the firm’s environment?
Measurable - Does the objective clearly state what
will be achieved and when it will be achieved?
Achievable - Is the objective achievable?




Motivating - Is the objective’s target high enough to
challenge, yet realistic and achievable?
Suitable - Does the objective fit with the mission
statement and with other important long-term
objectives of the firm?
Understandable - Will managers at all levels
understand what senior managers are trying to
accomplish and achieve by setting the specific longterm objective?
AFMAMSU