Chapter 2 The Business Mission

Strategic Management: Concepts and Cases

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9

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edition

Fred R. David PowerPoint Slides by Anthony F. Chelte Western New England College Fred R. David Prentice Hall Ch. 2-1

Chapter Outline • What Do We Want to Become?

• What Is Our Business?

• Importance of Vision and Mission Statements

Fred R. David Prentice Hall Ch. 2-2

Chapter Outline

• Characteristics of a Mission Statement • Components of a Mission Statement • Writing and Evaluating Mission Statements Fred R. David Prentice Hall Ch. 2-3

Vision & Mission

Vision is the art of seeing things invisible --

Jonathan Swift

The very essence of leadership is that you have to have vision. You can’t blow an uncertain trumpet.

--

Theodore Hesburgh Ch. 2-4 Fred R. David Prentice Hall

Vision

Management and executive agreement on the basic vision for which the firm strives to achieve in the long run is critically important.

Ch. 2-5 Fred R. David Prentice Hall

Vision

Vision statement answers the question:

“What do we want to become?”

Ch. 2-6 Fred R. David Prentice Hall

Vision

Clear vision – Provides foundation for comprehensive mission statement Fred R. David Prentice Hall Ch. 2-7

Vision & Mission

• Vision statement developed first • Short – preferably one sentence • Broad management involvement Fred R. David Prentice Hall Ch. 2-8

Vision Statements

The Vision of the National Pawnbrokers Association is to have complete and vibrant membership that enjoys a positive public and political image and is the focal organization of all pawn associations.

--National Pawnbrokers Association Ch. 2-9 Fred R. David Prentice Hall

Vision Statements

The Bellevue Hospital is the LEADER in providing resources necessary to realize the community’s highest level of HEALTH throughout life.

--The Bellevue Hospital Ch. 2-10 Fred R. David Prentice Hall

Vision Statements

To be the first choice in the printed communications business. The first choice is the best choice, and being the best is what Atlanta Web pledges to work hard at being - every day!

--Atlanta Web Printers, Inc.

Ch. 2-11 Fred R. David Prentice Hall

Vision Statements

It is the vision of the California Energy Commission for Californians to have energy choices that are affordable, reliable, diverse, safe, and environmentally acceptable.

--California Energy Commission Fred R. David Prentice Hall Ch. 2-12

Mission Statements

Recent Data indicate that: – 90% of all companies have used a mission statement sometime in the previous five years.

Ch. 2-13 Fred R. David Prentice Hall

Mission Statements

Mission statement answers the question:

“What is our business?”

Ch. 2-14 Fred R. David Prentice Hall

Mission Statements

Mission Statement: – Enduring statement of purpose – Distinguishes one organization from another in similar enterprises – Declaration of an organization’s “reason for being” Ch. 2-15 Fred R. David Prentice Hall

Mission Statements

Mission Statements also referred to as: – Creed statement – Statement of purpose – Statement of philosophy – Statement of business principles Fred R. David Prentice Hall Ch. 2-16

Mission Statements

Mission Statements – Reveal what an organization wants to be and whom it wants to serve Ch. 2-17 Fred R. David Prentice Hall

Mission Statements

Mission Statements – Essential for effectively establishing objectives and formulating strategies Fred R. David Prentice Hall Ch. 2-18

Vision and Mission

• Many organizations develop both vision and mission statements • Profit and vision are necessary to effectively motivate a workforce • Shared vision creates a commonality of interests Ch. 2-19 Fred R. David Prentice Hall

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. 2-20 Fred R. David Prentice Hall

Mission Statements

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. 2-21 Fred R. David Prentice Hall

Mission Statements

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. 2-22 Fred R. David Prentice Hall

Mission Statements

“It is the California Energy Commission’s mission to assess, advocate, and act through improve energy systems that promote a strong economy and a healthy environment.” Ch. 2-23 Fred R. David Prentice Hall

Importance of Mission

• • • • • • Unanimity 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 Ch. 2-24 Fred R. David Prentice Hall

Mission Characteristics

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 Fred R. David Prentice Hall Ch. 2-25

Mission Characteristics

Effective mission statements: • 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. 2-26 Fred R. David Prentice Hall

Mission Characteristics

Effective mission statements: • Reflect judgments re: future growth • Provide criteria for selecting strategies • Basis for generating & screening strategic options • Are dynamic in orientation Ch. 2-27 Fred R. David Prentice Hall

Customer Orientation

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 Fred R. David Prentice Hall Ch. 2-28

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. 2-29 Fred R. David Prentice Hall

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. 2-30 Fred R. David Prentice Hall

Social Policy & Mission

• 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. 2-31 Fred R. David Prentice Hall

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. 2-32 Fred R. David Prentice Hall

Mission Components

1. Customers 2. Products or services 3. Markets 4. Technology 5. Survival, growth, and profitability 6. Philosophy 7. Self-concept 8. Concern for public image 9. Concern for employees Fred R. David Prentice Hall Ch. 2-33

Components of Mission

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?” Fred R. David Prentice Hall Ch. 2-34

Components of Mission

• Markets:  “Geographically, where does the firm compete?” • Technology:  “Is the firm technologically current?” Fred R. David Prentice Hall Ch. 2-35

Components of Mission

• 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?” Fred R. David Prentice Hall Ch. 2-36

Components of Mission

• 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. 2-37 Fred R. David Prentice Hall

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. 2-38 Fred R. David Prentice Hall

PepsiCo Mission Statement

PepsiCo’s mission 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.

Ch. 2-39 Fred R. David Prentice Hall

Ben & Jerry’s Mission Statement

Ben & Jerry’s mission is to make, distribute and sell the finest quality all-natural ice cream and related products in a wide variety of innovative flavors made from Vermont dairy products. To operate the Company on a sound financial basis of profitable growth, increasing value for our shareholders, and creating career opportunities and financial rewards for our employees. To operate the Company in a way that actively recognizes the central role that business plays in the structure of society by initiating innovative ways to improve the quality of life of a broad community —local, national and international.

Ch. 2-40 Fred R. David Prentice Hall

Evaluation Matrix of Mission Statements

COMPONENTS

Organization Customers Products Services Markets Concern for Survival, Growth, Profitability Technology

PepsiCo Ben & Jerry's Yes No No Yes No Yes Yes Yes No No Ch. 2-41 Fred R. David Prentice Hall

Evaluation Matrix of Mission Statements

COMPONENTS

Organization Philosophy Self Concept Concern for Public Image Concern for Employees

PepsiCo Ben & Jerry's Yes No No Yes No Yes No Yes Ch. 2-42 Fred R. David Prentice Hall

Key Terms & Concepts

• Concern for Employees • Concern for Public Image • Concern for Survival, Growth, and Profitability • Creed Statement Fred R. David Prentice Hall Ch. 2-43

Key Terms & Concepts

• Customers • Markets • Mission Statement Components • Philosophy Fred R. David Prentice Hall Ch. 2-44

Key Terms & Concepts

• Self-Concept • Social Policy • Stakeholders • Vision Statement Fred R. David Prentice Hall Ch. 2-45