.

Describe the benefits of having a clear mission and vision statement

The importance (benefits) of vision and mission statements to effective strategic management is
well documented in the literature, although research results are mixed.

Rarick and Vitton found that firms with a formalized mission statement have twice the average
return on shareholders’ equity than those firms without a formalized mission statement have;
Bart and Baetz found a positive relationship between mission statements and organizational
performance; BusinessWeek reports that firms using mission statements have a 30 percent
higher return on certain financial measures than those without such statements; however, some
studies have found that having a mission statement does not directly contribute positively to
financial performance.6 The extent of manager and employee involvement in developing vision
and mission statements can make a difference in business success

1 Benefits of a clear Mission Statement

According to King and Cleland, strategic planning and policy (New York: Van, Nostrand
Reinhold, 1978) p.124, benefits or need for an explicit or a clear a company Mission Statement
designed to accomplishes the following seven points

1. To ensure unanimity of purpose within the organization.

2. To provide a basis for motivating the use of the organization’s resources.
3. To develop a basis, or standard, for allocating organizational resources.
4. To establish a general tone or organizational climate, for example, to suggest a businesslike
operation.
5. To serve as a focal point for those who can identify with the organization’s purpose and
direction, and to deter those wo cannot from participating further in the organization’s
activities
6. To facilitate the translation of objective and goals into a work structure involving th
assignment of tasks to responsible elements within the organization
7. To specify organizational purposes and the translation of these purposes into goals in such a
way that cost, time, and performance parameters can be assessed and controlled.
2. Benefits of a clear Vision Statement

Parikh and Neubauer (1993) point out the several benefits accruing to an organization having a
vision. According to them:

 Good visions are inspiring and exhaling.

 Visions represent a discontinuity, a step function, and a jump ahead so that the company
knows what it is to be.
 Good visions help in the creation of a common identity and shared sense of purpose.

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  Good visions are competitive, original, and unique. They make sense in the marketplace
as they are practical
 Good vision fosters risk taking and experimentation.
 Good vision fosters long-term thinking.
 Good visions represent integrity-they are truly genuine and can be used to the benefit of
people. Next we learn about envisioning-the process of creating a vision.

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