The Business Vision and Mission

Learning Outcomes
After studying this unit, you should be able to do the following:
Describe the nature and role of vision and mission statements in
strategic management
Discuss why the process of developing a mission statement is as
important as the resulting document
Identify the components of mission statements
Discuss how clear vision and mission statements can beneft other
strategic management activities
Evaluate mission statements of diferent organisations
Write good vision and mission statements
What Do We Want to Become?
It is especially important for managers and eecutives in any organi!ation
to agree upon the basic vision that the frm strives to achieve in the long
term" A vision statement should answer the basic #uestion, $What do we
want to become%& A clear vision provides the foundation for developing a
comprehensive mission statement" 'any organi!ations have both a vision
and mission statement, but the vision statement should be established
frst and foremost" (he vision statement should be short, preferably one
sentence, and as many managers as possible should have input into
developing the statement"
)everal eample vision statements:
(he *ision of the +ational ,awnbro-ers Association is to have
complete and vibrant membership that en.oys a positive public
and political image and is the focal organi!ation of all pawn
associations" / National Pawnbrokers Association
trategic Management in !ealth "nit# $ %
Lecturer# &alal Mohammed
0
1ur *ision as an independent community fnancial institution is
to achieve superior long/term shareholder value, eercise
eemplary corporate citi!enship, and create an environment
which promotes and rewards employee development and the
consistent delivery of #uality service to our customers" / 'irst
(eliance Bank o) 'lorence* outh +arolina
At 2I3+A, we intend to be the best at helping our customers
enhance and etend their lives and protect their fnancial
security" )atisfying customers is the -ey to meeting employee
needs and shareholder epectations, and will enable 2I3+A to
build on our reputation as a fnancially strong and highly
respected company"
What is Our Business?
2urrent thought on mission statements is based largely on guidelines set
forth in the mid 0456s by ,eter Druc-er, who is often called $the father of
modern management& for his pioneering studies at 3eneral 'otors
2orporation and for his 77 boo-s and hundreds of articles" 8arvard
9usiness :eview has called Druc-er $the preeminent management thin-er
of our time"&
Druc-er says that as-ing the #uestion $What is our business%& is
synonymous with as-ing the #uestion $What is our mission%& An enduring
statement of purpose that distinguishes one organi!ation from other
similar enterprises, the mission statement is a declaration of an
organi!ation;s $reason for being"& It answers the pivotal #uestion $What is
our business%& A clear mission statement is essential for efectively
establishing ob.ectives and formulating strategies"
trategic Management in !ealth "nit# $ %
Lecturer# &alal Mohammed
7
)ometimes called a creed statement, a statement of purpose, a statement
of philosophy, a statement of beliefs, a statement of business principles,
or a statement $defning our business,& a mission statement reveals what
an organi!ation wants to be and whom it wants to serve" All organi!ations
have a reason for being, even if strategists have not consciously
transformed this reason into writing"
)ome strategists spend almost every moment of every day on
administrative and tactical concerns, and strategists who rush #uic-ly to
establish ob.ectives and implement strategies often overloo- the
development of a vision and mission statement" (his problem is
widespread even among large organi!ations"
)ome companies develop mission statements simply because they feel it
is fashionable, rather than out of any real commitment" 8owever, frms
that develop and systematically revisit their vision and mission
statements, treat them as living documents, and consider them to be an
integral part of the frm;s culture reali!e great benefts" <ohnson =
<ohnson ><=<? is an eample frm" <=< managers meet regularly with
employees to review, reword, and rea@rm the frm;s vision and mission"
(he entire <=< wor-force recogni!es the value that top management places
on this eercise, and these employees respond accordingly"
Vision Versus Mission
'any organi!ations develop both a mission statement and a vision
statement" Whereas the mission statement answers the #uestion $What
is our business,& the vision statement answers the #uestion $What do we
trategic Management in !ealth "nit# $ %
Lecturer# &alal Mohammed
A
A business mission is the foundation for priorities, strategies, plans, and
wor- assignments" It is the starting point for the design of managerial
.obs and, above all, for the design of managerial structures" +othing may
seem simpler or more obvious than to -now what a company;s business
is" A steel mill ma-es steel, a railroad runs trains to carry freight and
passengers, an insurance company underwrites fre ris-s, and a ban-
lends money" Actually, $What is our business%& is almost always a di@cult
#uestion and the right answer is usually anything but obvious" (he
answer to this #uestion is the frst responsibility of strategists" 1nly
strategists can ma-e sure that this #uestion receives the attention it
deserves and that the answer ma-es sense and enables the business to
plot its course and set its ob.ectives"
want to become%& 'any organi!ations have both a mission and vision
statement"
It can be argued that proft, not mission or vision, is the primary corporate
motivator" 9ut proft alone is not enough to motivate people" ,roft is
perceived negatively by some employees in companies" Employees may
see proft as something that they earn and management then uses and
even gives away to shareholders" Although this perception is undesired
and disturbing to management, it clearly indicates that both proft and
vision are needed to efectively motivate a wor-force"
When employees and managers together shape or fashion the vision and
mission statements for a frm, the resultant documents can reBect the
personal visions that managers and employees have in their hearts and
minds about their own futures" )hared vision creates a commonality of
interests that can lift wor-ers out of the monotony of daily wor- and put
them into a new world of opportunity and challenge"
The Process o) De,elo-ing a Mission tatement
A clear mission statement is needed before alternative strategies can be
formulated and implemented" It is important to involve as many
managers as possible in the process of developing a mission statement,
because through involvement, people become committed to an
organi!ation"
A widely used approach to developing a mission statement is frst to
select several articles about mission statements and as- all managers to
read these as bac-ground information" (hen as- managers themselves to
prepare a mission statement for the organi!ation" A facilitator, or
committee of top managers, should then merge these statements into a
single document and distribute this draft mission statement to all
managers" A re#uest for modifcations, additions, and deletions is needed
net, along with meeting to revise the document" (o the etent that all
trategic Management in !ealth "nit# $ %
Lecturer# &alal Mohammed
C
managers have input into and support the fnal mission statement
document, organi!ations can more easily obtain managers; support for
other strategy formulation, implementation, and evaluation activities"
(hus, the process of developing a mission statement represents a great
opportunity for strategists to obtain needed support from all managers in
the frm"
During the process of developing a mission statement, organi!ations use
discussion groups of managers to develop and modify the mission
statement" )ome organi!ations hire an outside consultant or facilitator to
manage the process and help draft the language" )ometimes an outside
person with epertise in developing mission statements, who has
unbiased views, can manage the process more efectively than an internal
group or committee of managers" Decisions on how best to communicate
the mission to all managers, employees, and eternal constituencies of an
organi!ation are needed when the document is in fnal form" )ome
organi!ations even develop a videotape to eplain the mission statement
and how it was developed"
An article by 2ampbell and Deung emphasi!es that the process of
developing a mission statement should create an $emotional bond& and
$sense of mission& between the organi!ation and its employees"
2ommitment to a company;s strategy and intellectual agreement on the
strategies to pursued do not necessarily translate into an emotional bondE
hence, strategies that have been formulated may not be implemented"
(hese researchers stress that an emotional bond comes when an
individual personally identifes with the underlying values and behavior of
a frm, thus turning intellectual agreement and commitment to strategy
into a sense of mission" 2ampbell and Deung also diferentiate between
the terms vision and mission, saying that vision is $a possible and
desirable future state of an organi!ation& that includes specifc goals,
whereas mission is more associated with behavior and the present"
.m-ortance o) Vision and Mission tatements
(he importance of vision and mission statements to efective strategic
management is well documented in the literature, although research
results are mied" :aric- and *itton found that frms with a formali!ed
mission statement have twice the average return on shareholders; e#uity
trategic Management in !ealth "nit# $ %
Lecturer# &alal Mohammed
F
than those frms without a formali!ed mission statement haveE 9art and
9aet! found a positive relationship between mission statements and
organi!ational performanceE 9usiness Wee- reports that frms using
mission statements have a A6 percent higher return on certain fnancial
measures than those without such statementsE however, some studies
have found that having a mission statement does not directly contribute
positively to fnancial performance" (he etent of manager and employee
involvement in developing vision and mission statements can ma-e a
diference in business success" (his chapter provides guidelines for
developing these important documents" In actual practice, wide
variations eist in the nature, composition, and use of both vision and
mission statements" Ging and 2leland recommend that organi!ations
carefully develop a written mission statement for the following reasons:
0" (o ensure unanimity of purpose within the organi!ation
7" (o provide a basis, or standard, for allocating organi!ational
resources
A" (o establish a general tone or organi!ational climate
C" (o serve as a focal point for individuals to identify with the
organi!ation;s purpose and direction, and to deter those who
cannot from participating further in the organi!ation;s
activities
F" (o facilitate the translation of ob.ectives into a wor- structure
involving the assignment of tas-s to responsible elements
within the organi!ation
H" (o specify organi!ational purposes and then to translate these
purposes into ob.ectives in such a way that cost, time, and
performance parameters can be assed and controlled"
+haracteristics o) a Mission tatement
A Declaration o) Attitude
A mission statement is more than a statement of specifc detailsE it is a
declaration of attitude and outloo-" It usually is broad in scope for at least
two ma.or reasons" Iirst a good mission statement allows for the
generation and consideration of a range of feasible alternative ob.ectives
and strategies without unduly stiBing management creativity" Ecess
specifcity would limit the potential of creative growth for the organi!ation"
trategic Management in !ealth "nit# $ %
Lecturer# &alal Mohammed
H
1n the other hand, an overly general statement that does not eclude any
strategy alternatives could be dysfunctional"
)econd, a mission statement needs to be broad to efectively reconcile
diferences among, and appeal to, an organi!ation;s diverse sta-eholders,
the individuals and groups of individuals who have a special sta-e or claim
on the company" )ta-eholders include employees, managers,
stoc-holders, boards of directors, customers, suppliers, distributors,
creditors, governments >local, state, federal, and foreign?, unions,
competitors, environmental groups, and the general public" )ta-eholders
afect and are afected by an organi!ation;s strategies, yet the claims and
concerns of diverse constituencies vary and often conBict" Ior eample,
the general public is especially interested in social responsibility, whereas
stoc-holders are more interested in proftability" 2laims on any business
literally may number in the thousands, and they often include clean air,
.obs, taes, investment opportunities, career opportunities, e#ual
employment opportunities, employee benefts, salaries, wages, clean
water, and community services" All sta-eholders; claims on an
organi!ation cannot be pursued with e#ual emphasis" A good mission
statement indicates the relative attention that an organi!ation will devote
to meeting the claims of various sta-eholders"
An efective mission statement should not be too lengthyE recommended
length is less than 766 words" An efective mission statement also
arouses positive feelings and emotions about an organi!ationE it is
inspiring in the sense that it motivates readers to action" An efective
mission statement generates the impression that a frm is successful, has
direction, and is worthy of time, support, and investment///from all
socioeconomic groups of people"
It reBects .udgments about future growth directions and strategies that
are based upon forward/loo-ing eternal and internal analyses" A
business mission should provide useful criteria for selecting among
alternative strategies" A clear mission statement provides a basis for
generating and screening strategic options" (he statement of mission
should be dynamic in orientation, allowing .udgments about the most
promising growth directions and those considered less promising"
trategic Management in !ealth "nit# $ %
Lecturer# &alal Mohammed
5
A +ustomer Orientation
A good mission statement describes an organi!ation;s purpose,
customers, products or services, mar-ets, philosophy, and basic
technology" According to *ern 'c3innis, a mission statement should:
0" Defne what the organi!ation is and what the organi!ation aspires
to be
7" 9e limited enough to eclude some ventures and broad enough
to allow for creative growth
A" Distinguish a given organi!ation from all others
C" )erve as a framewor- for evaluating both current and
prospective activities
F" 9e stated in terms su@ciently clear to be widely understood
throughout the organi!ation"
A good mission statement reBects the anticipations of customers" :ather
than developing a product and then trying to fnd a mar-et, the operating
philosophy of organi!ations should be to identify customer;s needs and
then provide a product or service to fulfll those needs" )ince more and
more customers are using the Internet, all frms should post their vision
and mission statements at the company;s home page///as indicated in the
$E/2ommerce ,erspective"&
trategic Management in !ealth "nit# $ %
Lecturer# &alal Mohammed
J
A ma.or reason for developing a business mission statement is to attract
customers who give meaning to an organi!ation" A classic description of
the purpose of a business reveals the relative importance of customers in
a statement of mission:
A Declaration o) ocial Polic/
(he term social policy embraces managerial philosophy and thin-ing at
the highest levels of an organi!ation" Ior this reason, social policy afects
the development of a business mission statement" )ocial issues mandate
that strategists consider not only what the organi!ation owes its various
sta-eholders but also what responsibilities the frm has to consumers,
environmentalists, minorities, communities, and other groups" After
decades of debate on the topic of social responsibility, many frms still
struggle to determine appropriate social policies"
(he issue of social responsibility arises when a company establishes its
business mission" (he impact of society on business and vice versa is
becoming more pronounced each year" )ocial policies directly afect a
frm;s customers, products and services, mar-ets, technology, proftability,
self/concept, and public image" An organi!ation;s social policy should be
integrated into all strategic/management activities, including the
development of a mission statement" 2orporate social policy should be
designed and articulated during strategy formulation, set and
administered during strategy implementation, and rea@rmed or changed
trategic Management in !ealth "nit# $ %
Lecturer# &alal Mohammed
4
It is the customer who determines what a business is" It is the customer
alone whose willingness to pay for a good or service converts economic
resources into wealth and things into goods" What a business thin-s it
produces is not of frst importance, especially not to the future of the
business and to its success" What the customer thin-s heKshe is
buying , what heKshe considers value, is decisive///it determines what a
business is, what it produces, and whether it will prosper" And what the
customer buys and considers value is never a product" It is always
utility, meaning what a product or service does for him or her" (he
customer is the foundation of a business and -eeps it in eistence"
during strategy evaluation" (he emerging view of social responsibility
holds that social issue should be attended to both directly and indirectly in
determining strategies"
Iirms should strive to engage in social activities that have economic
benefts" Ior eample, 'erc- = 2o" recently developed the drug
ivermectin for treating river blindness, a disease caused by a By/borne
parasitic worm endemic in poor, tropical areas of Africa, the 'iddle East,
and Latin America" In an unprecedented gesture that reBected its
corporate commitment to social responsibility, 'erc- then made
ivermectin available at no cost to medical personnel throughout the world"
'erc-;s action highlights the dilemma of orphan drugs, which ofer
pharmaceutical companies no economic incentive for development and
distribution"
)ome strategists agree with :alph +ader, who proclaims that
organi!ations have tremendous social obligations" 1thers agree with
'ilton Iriedman, the economist, who maintains that organi!ations have no
obligation to do any more for society than is legally re#uired" 'ost
strategists agree that the frst social responsibility of any business must
be to ma-e enough proft to cover the costs of the future, because if this is
not achieved, no other social responsibility can be met" )trategists should
eamine social problems in terms of potential costs and benefts to the
frm, and they should address social issues that could beneft the frm
most"
Mission tatement +om-onents
'ission statements can and do vary in length, content, format, and
specifcity" 'ost practitioners and academicians of strategic management
feel that an efective statement ehibits nine characteristics or
components" 9ecause a mission statement is often the most visible and
public part of the strategic/management process, it is important that it
includes all of these essential components:
0" +ustomers000Who are the frm;s customers%
7" Products or ser,ices000What are the frm;s ma.or products or
services%
A" Markets0003eographically, where does the frm compete%
trategic Management in !ealth "nit# $ %
Lecturer# &alal Mohammed
06
C" Technolog/000Is the frm technologically current%
F" +oncern )or sur,i,al* growth* and -ro1tabilit/000Is the frm
committed to growth and fnancial soundness%
H" Philoso-h/000What are the basis beliefs, values, aspirations, and
ethical priorities of the frm%
5" el)0conce-t000What is the frm;s distinctive competence or
ma.or competitive advantage%
J" +oncern )or -ublic image000Is the frm responsive to social,
community, and environmental concerns%
4" +oncern )or em-lo/ees000Are employees a valuable asset of
the frm%
Writing and 2,aluating Mission tatements
,erhaps the best way to develop a s-ill for writing and evaluating mission
statements is to study actual company missions" (here is no one best
mission statement for a particular organi!ation, so good .udgment is
re#uired in evaluating mission statements" )ome individuals are more
demanding than others in rating mission statements in this manner" Ior
eample, if a statement includes the word employees or customer, is that
alone su@cient for the respective component% )ome companies answer
this #uestion in the a@rmative and some in the negative" Dou may as-
yourself this #uestion: $If I wor-ed for this company, would I have done
better with regard to including a particular component in its mission
statement%& ,erhaps the important issue here is that mission statements
include each of the nine components in some manner"
Note#
All notes )or this cha-ter are sourced )rom the )ollowing te3t
book#
Da,id* ' $445* Strategic Management: Cases and Concepts,
Pearson 2ducation* New &erse/
trategic Management in !ealth "nit# $ %
Lecturer# &alal Mohammed
00
trategic Management in !ealth "nit# $ %
Lecturer# &alal Mohammed
07