STRATEGIC MANAGEMENT

Concepts and Cases

Author: FRED R.DAVID

SUMMARY OF CHAPTER 2:

THE BUSINSESS VISION AND MISSION

This chapter tells what mission and vision statements are and how they develop, their importance and characteristics. Mission and vision statement can only be betterly understand when an established or new business is deeply focused. When a business is started it is simply a collection of ideas and beliefs. When the set of beliefs is put into writing, the resulting document mirrors the same basic ideas that underlie the vision and mission statements. Mostly owner and managers revised their vision and mission statements after a certain time to maintain their alliance with the original ideas.

WHAT DO WE WANT TO BECOME?

What do we want to become? The answer of this question is vision statement. A clear vision provides the foundation for developing comprehensive mission statement. Vision statement should be established first and foremost. The vision statement should be short, preferably one sentence, and as many managers as possible should have input into developing the statement.

Example: The Bellevue Hospital

Vision Statement The Bellevue Hospital is the LEADER in providing resources necessary to realize the communitys highest level of HEALTH throughout life. 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.

WHAT IS OUR BUSINESS?

The question What is our business? is synonymous with asking the question What is our mission? It is an enduring statement of purpose that is a declaration of an organizations reason for being. A business mission is the foundation for priorities, strategies, plans, and work assignments. It is the starting point for the design of managerial jobs and structures. What is our business? is almost always a difficult question and the answer to this question is the first responsibility of strategists. Some companies dont feel mission statement as important as other administrative and tactical function and develop it as just following a fashion.

VISION VERSUS MISSION:

Campbell and Yeung also differentiate between the terms vision and mission, saying that vision is a possible and desirable future state of an organization that includes specific goals, whereas mission is more associated with behavior and the present. It can be argued that profit, not mission or vision is the primary corporate motivator. Because employees may see profit as something that they earn and management then uses and even gives away to shareholders. While shared vision creates a commonality of interests that can lift workers out of the monotony of daily work and put them into a new world of opportunity and challenge.

THE PROCESS OF DEVELOPING A MISSION STATEMENT:

A widely used approach to developing a mission statement is Select several articles about mission statements and ask all managers to read these as background information. Ask managers themselves to prepare a mission statement for the organization. merge these statements into a single document and Distribute this draft mission statement to all managers. Ask for modifications, additions, and deletions needed along with a meeting to revise the document.

Organizations can more easily obtain managers support for other strategy formulation, implementation, and evaluation activities with this process. Some companies use discussion group of managers, an outside consultant or facilitator and an outside person with expertise in developing mission statements. An article by Campbell and Yeung emphasizes that the process of developing a mission statement should create an emotional bond and sense of mission between the organization and its employees.

IMPORTANCE OF VISION AND MISSION STATEMENT

Mission and vision statements are very important for the effective strategic management. Rarick and yitton found that firms with a formalized mission have twice the average return on stockholders equity than those firms without a formalized mission statement. Bart and baetz found a positive relationship between mission statement and organizational performance. Firms using mission statement have higher return on financial measures than without such statements. However some studies found that mission statement does not directly contribute positively to financial performance. Organizations develop mission statements for the following reasons. To ensure everyone is agree about something within the organization. To provide standards for allocating organizational resources. To establish organizational climate. Mission statement provides focal point for individuals to identify with the organizations purpose and direction.

To facilitate the translation of objective in to work structure involving the assignment of task to responsible elements within the organization. To specify organizational purposes and then to translate these purposes in to objectives that control cost time and performance.

A RESOLUTION OF DIVERGENT VIEWS

Developing comprehensive mission statement is very important in every organization because divergent views among managers can be resolved through the process. Disagreements among individuals who have worked together for a long time may arise so this can be resolve by the mission statement. Developing a mission statement is always a choice between alternatives which rest on different assumptions regarding the reality of business and its environment. A change in mission is always a change in objectives, strategies, organization and behavior. Developing a business mission is a big step toward management effectiveness. Too often, strategist develops vision and business mission statement only when the organization is in trouble. Of course, it is indeed then. In multidivisional organization each divisions should involve its own managers and employees in developing a mission and vision statement that is consistent with and supportive of the corporate mission. An organization that fails to develop vision and mission statement loses to present itself favorably to existing and potential stakeholders. Vision and mission are effective tool for communicating with internal and external stakeholders.

CHARACTERISTICS OF A MISSION STATEMENT

A DECLARATION OF ATTITUDE A mission statement is more than a statement of specific detail it is declaration of attitude and and outlook. It is broad in scope for at least two major reasons. First, a good mission statement allows a range of feasible alternative objectives and strategies without unduly stifling management creativity. Excess specificity would limit the potential of creative growth for the organization. Second, a mission statement needs to be broad to effectively reconcile differences among organizations diverse stakeholders, the individuals and the group of individuals. Stakeholders affect and are affected by an organizations strategies, yet meeting the claims and concerns of diverse constituencies vary and often conflict. A good mission statement indicates the relative attention that the organization will devote to meeting the claims of various stakeholders. An effective mission statement should not be too lengthy and arouses positive feelings and emotions about an organization it motivates readers to action. It reflects judgments about future growth directions and strategies that are based upon forward looking external and internal analyses.