Chapter 2 The Business Vision & Mission

Strategic Management: Concepts & Cases 11th Edition Fred David

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Ch 2 -1

Chapter Outline
What do we want to become?

What is our business?

Importance of Vision and Mission Statements

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Ch 2 -2

Chapter Outline (cont’d)
Characteristics of a mission statement

Components of a mission statement

Writing & evaluating mission statements

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Ch 2 -3

Vision

“The last thing IBM needs right now is a vision.” (July 1993)

What IBM needs most right now is a vision.” (March 1996)
-- Louis V. Gerstner, Jr., CEO, IBM Corporation
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Vision

Agreement on the basic vision for which the firm strives to achieve in the long run is critically important to the firm’s success.

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Ch 2 -5

Vision

“What do we want to become?”

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Ch 2 -6

Vision

“A corporate vision can focus, direct, motivate, unify, & even excite a business into a superior performance. The job of a strategist is to identify & project a clear vision” John Keane

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Vision

Clear Business Vision Comprehensive Mission Statement

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Vision & Mission

Shared Vision -Creates commonality of interests  Reduce daily monotony  Provides opportunity & challenge

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Vision Statement Examples

A national organization which represents its members in all aspects of poultry and eggs on both a national and international level
-- U.S. Poultry & Egg Association

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Vision Statement Examples

The Vision of Manley Baptist Church is to be the people of God, on mission with God, motivated by a love for God, and a love for others

-- Manley Baptist Church
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Vision Statement Examples

The Vision of USGS is to be a world leader in the natural sciences through our scientific excellence and responsiveness to society’s needs

-- U.S. Geological Survey (USGS)
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Vision Statement Examples

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.
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Mission Statements

-- 90% of all companies have used a mission statement in the previous five years

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Ch 2 -14

Mission Statements

“What is our business?”

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Ch 2 -15

Mission Statements

Answers the Q’s •Tell me something about your company •Introduce / Define your company

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Ch 2 -16

Mission Statements

•What does your company do
•How does it do •Why does it do •Why the various stakeholders would want to work with you

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Ch 2 -17

Mission Statements

What is your business / What does your company do. Also defined by •Statement of purpose •Reason of it’s existence •Reason of its’ being
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Ch 2 -18

Mission Statements

Sample Mission Statements My company's purpose is to: Sell shoes Provide educational services Grow market vegetables

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Mission Statements How do you do it

Not looking for a detailed description of your business's physical operations here; But a description of your core values, beliefs,principles and generally these would be driving from your core competencies
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Ch 2 -20

Mission Statements
Sample Values

•Provide high product quality •Provide superior customer service •Protect the quality of the environment •Ensure equal access to resources •Encourage innovation/creativity •Practice sustainable development
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Ch 2 -21

Mission Statements
Sample Mission Statements My company's purpose is to: Sell shoes of the highest quality Provide educational services that allow all children to experience learning success Grow market vegetables using organic sustainable farming practices
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Mission Statements
Why does it do that This is the part that describes your spark, or the passion behind your business. Why does your business do what it does? For some people, it helps to think back on why they started their business in the first place. What the company aspires to be

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Mission Statements
Sample Mission Statements
My company's purpose is to: Sell shoes of the highest quality so every customer can find a pair of shoes they actually love to wear. Provide educational services that allow all children to experience learning success and become life-long earners and contributing members of our community. Grow market vegetables using organic, sustainable farming practices to give people safe and healthy food Copyright 2007 Prentice Hall choices.

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Mission Statements
Why would various stakeholders work with you

•Shareholders •Employees / Managers •Suppliers, creditors, distributors •Customers •Society / Government
Thus this statement needs to be highly visible
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Ch 2 -25

Mission Statements
What markets are you serving, and what benefits do you offer them? Do you solve a problem for your customers? What are you doing for your customers? Let’s hope this is something that sets you apart, makes you different, and that your customers will recognize. What kind of internal work environment do you want for your employees? What are you doing for your employees? Fair compensation, good tools, professional development, encouragement, or whatever
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Mission Statements

What does the company do for its owners? Don’t apologize for needing profits to stay in business, or for generating return on investment for those who invested

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Ch 2 -27

Mission Statements
They define the dimensions along which an organisation’s performance is to be measured and judged. The most common candidate (not surprisingly) is profit. DuPont, for example, said that it considered itself successful “only if we return to our shareholders a long-term financial reward comparable to the better performing large industrial companies”.
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Mission Statements
Corporations often acknowledge their responsibility to other stakeholders as well, mentioning their attitude to employees (“to treat them with respect, promote teamwork, and encourage personal freedom and growth”—Dow Chemical), or to customers (“to continually exceed our customers’ increasing expectations”— Johnson Controls).

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Mission Statements
Thus a mission statement should, According to Vern McGinis,
•Define what the company is •Define what the company aspires to be •Limited to exclude some ventures •Broad enough to allow for creative growth •Distinguish the company from all others •Serve as framework to evaluate current activities. Guides the plans & actions, spells out its overall goals, helps sets priorities
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Stated clearly so that it is understood by all

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Mission Statements
“A business is not defined by its name, statutes, or articles of incorporation. It is defined by the business mission. Only a clear definition of the mission & the purpose of the organization make possible clear & realistic business objectives” Peter Drucker

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Mission Statements
•What is a business •How do you define it
What do you expect a steel manufacturer to tell you

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Mission Statements
•Don’t “box” yourself in.
Your mission statement should be able to withstand the changes that come up over time in your product or service offerings, or customer base. A cardboard box company isn’t in the business of making cardboard boxes; it’s in the business of providing protection for items that need to be stored or shipped. The broader understanding helps them see the big

picture. E.gs Notes
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Ch 2 -33

Mission Statements
Don’t “box” yourself in.

•Dental Care VS Tooth Brush business •Corning glass Co & Flat TV •California energy commission
But Not Overly Broad So IT Does Not Exclude Any strategy

•E.G. GuccI

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Ch 2 -34

Mission Statements
•How Specific Should You Be? Normally, the Mission Statement should represent the broadest perspective of the enterprise's mission.
You may want to take the approach of being very specific. For instance, a Mission Statement for a fictitious airline could be worded as follows:

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Mission Statements
•Airco, Inc. will be the 'guaranteed' on-time airline. Maintaining the most efficient equipment in the industry, we will target a customer base of mainly young businessmen and offer them the lowest cost service on the west coast, with an objective of a 20% profit before tax and a 30% per year revenue growth.

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Mission Statements
Or It Could Be More Broad In Scope

•Airco, Inc. will be recognized as the most progressive enterprise in the transportation business. We will offer our customers cost effective transportation service within geographical areas and market segments that can benefit from our services and will insure a return on investment and growth rate consistent with current management guidelines.
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Ch 2 -37

Mission Statements
More Egs.

•PTCL •OGDC •Pak Railways •Evernew Studios •Cambridge
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VS VS VS VS VS

AT&T EXXON Union Pacific Universal studios GAP
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Mission Statements
At The Same Time They help companies to focus their strategy by defining some boundaries within which to operate
•. Federal Express, for example, has said it is “dedicated to maximising financial returns by providing totally reliable, competitively superior, global air–ground transportation of high priority goods and documents that require rapid, timecertain delivery”. It is not, evidently, going to enter the business of bulk shipping oil products or semiconductors.
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Ch 2 -39

Mission Statements
Also referred to as:

•Creed statement •Statement of philosophy •Statement of business principles

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Mission Statement Examples

It is the California Energy Commission’s mission to assess, advocate, and act through public/private partnerships to improve energy systems that promote a strong economy and healthy environment.
-- California Energy Commission

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Mission Statement Examples

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.
-- The Bellevue Hospital

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Mission Statement Examples

John Deere has grown and prospered through a long-standing partnership with the world’s most productive farmers. Today, John Deere is a global company with several equipment operations and complementary service businesses. These businesses are closely interrelated, providing the company with significant growth opportunities and other synergistic benefits.
-- John Deere, Inc.
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Ch 2 -44

Importance of Mission
Benefits from a strong mission
Unanimity of Purpose

Resource Allocation

Mission
Organizational Climate Focal point for work structure
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Effective Missions

Broad in scope Broad in scope Generate strategic Generate strategic alternatives alternatives Not overly specific Not overly specific Reconciles interests among Reconciles interests among diverse stakeholders diverse stakeholders Finely balanced between Finely balanced between specificity & generality specificity & generality

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Ch 2 -46

Effective Missions

Arouse positive feelings & Arouse positive feelings & emotions emotions Motivate readers to action Motivate readers to action Generate favorable Generate favorable impression of the firm impression of the firm

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Ch 2 -47

Effective Missions

Reflect future growth Reflect future growth Provide criteria for strategy Provide criteria for strategy selection selection Basis for generating & Basis for generating & evaluating strategic options evaluating strategic options Are dynamic in nature Are dynamic in nature

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Ch 2 -48

Mission & Customer Orientation – Vern McGinnis
     

Define what the organization is Define what it aspires to be Limited to exclude some ventures Broad enough to allow for growth Distinguishes firm from all others Stated clearly – understood by all

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Ch 2 -49

Mission & Customer Orientation
An Effective Mission Statement -  

Anticipates customer needs Identifies customer needs Provides product/service to satisfy needs

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Ch 2 -50

Social Policy & Mission
Managerial philosophy shapes social policy -

Affects development of vision & mission Responsibilities to –
   

Consumers Environmentalists Minorities Communities

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Ch 2 -51

Social Policy & Mission

Social policy should be integrated in all strategic-management activities Mission should convey the social responsibility of the firm

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Ch 2 -52

Mission Statements
2005 Rated Best in Social Responsibility
1. Fannie Mae 2. Proctor & Gamble 3. Intel Corporation 4. St. Paul Companies 5. Green Mtn. Coffee 6. Deer & Company 7. Avon Products, Inc. 8. Hewlett-Packard Co. 9. Agilent Technologies 10. Ecolab, Inc. 11. Imation Corp 12. IBM

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Vision & Mission
Research results are mixed, however, firms with formal mission statements generally see a:
  

2x average return on shareholder’s equity Positive relationship to company performance 30% higher return on certain financial measures

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Ch 2 -54

Customers

Products Services

Markets

Technology Employees

Mission Elements
Survival Growth Profit Self-Concept Philosophy

Public Image

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Ch 2 -55

PepsiCo Mission
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.

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Ch 2 -56

Ben & Jerry’s Mission
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.
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Mission Statement Evaluation Matrix
COMPONENTS

Organization

Customers

Products Services

Markets

Concern for Survival, Growth, Profitability

Technology

PepsiCo

Yes

No

No

Yes

No

Ben & Jerry's

No

Yes

Yes

Yes

No

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Mission Statement Evaluation Matrix
COMPONENTS

Organization

Philosophy

SelfConcept

Concern for Public Image

Concern for Employees

PepsiCo Ben & Jerry's

Yes No

No Yes

No Yes

No Yes

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Ch 2 -59

For Review (Chapter 2)
Key Terms & Concepts
Concern for Employees Concern for Public Image Survival, Growth, & Profitability Creed Statement
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Customers Markets Mission Statement Components Managerial Philosophy
Ch 2 -60

For Review (Chapter 2)
Key Terms & Concepts
Self Concept Social Policy Stakeholders Vision Statement

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Ch 2 -61