Chapter 2 The Business Mission

Chapter 2The Business Mission Strategic Management: Concepts and Cases. 9th edition Fred R. David PowerPoint Slides by Anthony F. Chelte Western New England College Fred R. David Prentice Hall

Chapter Outline • What Do We Want to Become? • What Is Our Business? • Importance of Vision and Mission Statements Fred R. David Prentice Hall

Chapter Outline • Characteristics of a Mission Statement • Components of a Mission Statement • Writing and Evaluating Mission Statements Fred R. David Prentice Hall

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 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. Fred R. David Prentice Hall

Vision Vision statement answers the question: “What do we want to become?” Fred R. David Prentice Hall

Vision Clear vision • Provides foundation for comprehensive mission statement Fred R. David Prentice Hall

Vision & Mission • Vision statement developed first • Short – preferably one sentence • Broad management involvement Fred R. David Prentice Hall

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 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 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. 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

Mission Statements Recent Data indicate that: • 90% of all companies have used a mission statement sometime in the previous five years. Fred R. David Prentice Hall

Mission Statements Mission statement answers the question: “What is our business?” 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” 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

Mission Statements Mission Statements • Reveal what an organization wants to be and whom it wants to serve Fred R. David Prentice Hall

Mission Statements Mission Statements • Essential for effectively establishing objectives and formulating strategies Fred R. David Prentice Hall

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 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 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.” 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. 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.” 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 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

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 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 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

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 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 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. 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. Fred R. David Prentice Hall

Mission Components • Customers • Products or services • Markets • Technology • Survival, growth, and profitability • Philosophy • Self-concept • Concern for public image • Concern for employees Fred R. David Prentice Hall

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

Components of Mission • Markets: • “Geographically, where does the firm compete?” • Technology: • “Is the firm technologically current?” Fred R. David Prentice Hall

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

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?” 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 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. 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. Fred R. David Prentice Hall

Evaluation Matrix of Mission Statements Fred R. David Prentice Hall

Concern for Employees Concern for Public Image Concern for Survival, Growth, and Profitability Creed Statement Key Terms & Concepts Fred R. David Prentice Hall

Customers Markets Mission Statement Components Philosophy Key Terms & Concepts Fred R. David Prentice Hall

Self-Concept Social Policy Stakeholders Vision Statement Key Terms & Concepts Fred R. David Prentice Hall

Chapter 2 The Business Mission