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Vision, Mission and Objectives – Key Pillars of Strategic Management

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 Vision, Mission and Objectives – Key Pillars
2.1
of Strategic Management

Prof. (Dr.) Sasmita Rani Samanta

Pro Vice-Chancellor
Kalinga Institute of Industrial Technology (KIIT)
(Deemed to be University)
Bhubaneswar, Odisha (India)

Vision, Mission and Objectives are the focal points of an organization’s strategic management function.
They determine the direction of an organization’s functioning and its ability to grow in a fiercely compet-
itive and dynamic environment. In short, vision, mission and objectives are the raison d’etre (i.e., reason
or justification for existence) of an organization.

VISION
Vision is an organization’s fundamental aspiration for a desired future state. A vision describes, often in precise
terms, what the entrepreneurs and key managers of an organization would like to achieve in future. An organiza-
tion’s vision, which is often called ‘purpose of the organization’, may endure for generations as it expresses, in
precise terms, its fundamental aspirations and articulates its desired future state. A vision is a snapshot of an orga-
nization’s future direction and destination.

In the words of two corporate strategy experts, G. Hamel and C.K. Prahalad, “Good vision statements are meant
to stretch a company by articulating some ambitions but attainable future state that will help to energise and moti-
vate employees at all levels in the organization and unite them in a common purpose.” Since vision is of strategic
importance, it must be stated in unambiguous terms so as to clearly reflect company’s culture and core values to
chater its future destination.

Here are Vision Statements of a few organizations which their top leadership have tirelessly worked to develop
and pursue to best explain the purposes of their existence:

∑ PepsiCo
“Be the global leader in convenient foods and beverages by winning with a purpose.”
∑ Aditya Birla Group
“Our vision is to be a premium global conglomerate with a clear focus on each of the businesses.”
∑ Ford Motor Company
“Our vision is to become the world’s most trusted company, designing smart vehicles for a smart world.”
∑ Dell Computers
“It’s the way we do business. It’s the way we interact with the community. It’s the way we interpret the world
around us– our customers’ needs, the future of technology, and the global business climate. Whatever changes
52 Emerging Dimensions of Business & Management in the Present-day Competitive Environment

the future may bring our vision — Dell Vision — will be our guiding force. So Dell needs full customer satis-
faction. In order to become the most successful computer company, they need the newest technology and loyal
customers.”
∑ McDonald’s
“Our vision is to move with velocity to drive profitable growth and become an even better McDonald’s serving
more customers delicious food each day around the world.”

MISSION
Mission is an organization’s ‘reason for existence’. It describes in clear and concise terms what the organization
does, who does it for, and its values that distinguish the organization from others of its type. Mission statements
are made up of elements like customers, products or services, technology, concern for public image, concern for
employees, etc. It is often longer and more explanatory than vision statements and sometimes also includes a sum-
mation of the organization’s societal concerns and aspirations.

Mission statements are also of strategic importance to organizations and serve several useful purposes. Man-
agers use mission statements as a benchmark to evaluate organizational success; employees derive motivation to
work for the success of the organization; external stakeholders get insight into the organization’s values and future
directiation. In brief, an organization justifies its existence and gets social acceptance by faithfully and consistently
adhering to its mission statements.

Here are Mission Statements of some organizations:

∑ PepsiCo
“To provide consumers around the world with delicious, affordable, and convenient foods and beverages from
wholesome breakfasts to … evening treats.”
∑ Aditya Birla Group
“Our mission is to deliver superior value to our customers, shareholders, employees and society at large.”
∑ Ford Motor Company
“Our mission is to make people’s lives better by making mobility accessible and affordable.”
∑ Dell Computers
“Our mission is to be the most successful computer company in the world at delivering the best customer ex-
perience in markets we serve. In doing so, Dell will meet customer expectations of the Highest quality.”
∑ McDonald’s
“Our mission is to be our customers’ favorite place and way to eat and drink.”

Vision and mission are critical elements of organizational strategy as both provide unanimity of purpose to the
organization, define the context in which the organization operates, spell out the directional thrust of organizational
functioning, and endow its stakeholders a sense of belonging and identity.

OBJECTIVES
Objectives represent the end-results that an organization and the managers have selected and are committed to
achieve. Objectives are specific commitments to achieve measurable results within time frame. A statement of ob-
jectives should express in quantitative, measurable and concrete terms what is to be accomplished and when it is
to be accomplished. The other terms that are also used to convey the sense of end result are ‘goal’ and ‘purpose’.
Purpose relates to the reason for an organization’s existence. Therefore, the terms purpose and mission can be used
interchangeably.
 Vision, Mission and Objectives – Key Pillars of Strategic Management  53

Objectives basically denote long-term end results and are expressed in general and broad terms e.g., survival
and growth objectives. Goals, on the other hand, denote end results in a more specific, time-bound manner – for
example, 5 percent increase in sales during a year. Like the terms purpose and mission, the terms objective and goal
are used synonymously.

Here are a few objectives of organizations:

Profitability objective: “To obtain a 10 per cent return on investment by the end of the current financial year.”

Productivity objective: “To increase the number of units of product X by 6 per cent, without an increase in cost or
a reduction of the current quality level by the end of the current financial year.”

Sales objective: “To achieve an increase of 18 per cent in Brand X sales by the closes of the current financial year.”

Objectives provide directional thrust to the efforts of organizations and individuals. They also provide a stan-
dard against which the organization can measure its performance and results. In short, objectives provide legitimacy
to the very existence of an organization.

Vision, Mission and Objectives are Interrelated

Since an organization’s vision statement articulates the aspirations of what it wants to achieve in future,
it is enduring in nature – for example, PepsiCo’s vision signifies its aspiration to acquire global leadership
in convenient foods and beverages. An organization’s mission statement, on the other hand, explains the
reason for its existence, and therefore, is more specific in content – for example, McDonald’s mission
to become customers’ favourite eating joint. A vision statement adds concrete content and meaning to a
mission statement.

Hierarchy of Objectives and Means-End Chain Structure

Over time, statements of mission may change but the organization’s vision may endure for generations. This
is due to the fact that mission is customer-oriented, and this may change with the preferences of customers. As
D.F. Abell, a celebrated author of “Defining the Business: The Starting Point of Strategic Planning” (1980), states,
54 Emerging Dimensions of Business & Management in the Present-day Competitive Environment

“There is general agreement that a good mission statement focuses on the customer needs an organization is satis-
fying rather than goods and services it is producing”. By focusing on customer needs, a mission statement can help
an organization anticipate changes in its environment and adopt new products to satisfy those needs. Thus, while
vision places emphasis on organization’s long-term imagination of desired future position, mission emphasises or-
ganization’s viability with customer orientation.

Objectives help entrepreneurs and managers build a bridge between their vision and mission and on achievable
reality. From a planning perspective, vision, mission and objectives serve the common end result of justifying the
reason for an organization’s existence. Vision, mission and objectives are not developed in isolation. They are af-
fected by an assessment of environmental threats and opportunities, and organizational strengths and weaknesses.
They form a hierarchy in terms of their relative importance, beginning with vision and followed by mission and then
the objective, which are in broad and then specific terms. The hierarchy reflects a deductive reasoning approach and
its structure forms a means-end chain.

Network of Objectives
Objectives form a network just as they form a hierarchy. There exist objectives for every department and activity
in the organization and they are interconnected and mutually supportive. This is a difficult task as a network of pro-
grams that is guided by specific goals requires the utmost cooperation and coordination among managers so that the
components can mesh together properly. Managers must ensure that the components of the network ‘fit’ one another
in terms of their timings of completion so that it facilitates the completion of the total programme. An example of
the network of contributing programs that constitute a typical staffing program in an organization is:

Network of Objectives for a staffing Program

Multiplicity of Objectives
Most organizations support multiple goals and do not subscribe to the idea of only one all important goal of making
a profit, for example. This is partly out of the recognition that this is more realistic; partly out of a broader sense of
responsibility to others than profit-making alone implies; and partly as a result of the claims being made on business
by others. It has often been observed that everyone who has a stake in a business organization is interested in its
goals, and their interests often conflict. They may include maintaining high profits for owners, survival and growth
for managers, quality goods at reasonable prices to consumers, fair wages, bonus, participation in decision-making
bodies to employees, regular and correct payment of taxes to the government, continuing technological advance-
ment, and also maximising the use of human resources. A list of multiple objectives emphasises careful and proper
 Vision, Mission and Objectives – Key Pillars of Strategic Management  55

balancing for the efficient functioning of the enterprise. The basic consideration for multiplicity of objectives should
be to not adversely impact the managerial efficiency and organizational effectiveness.

Time Horizon of Objectives

Organizations may have long-range, medium-range and short-range objectives. Long-range objectives usually ex-
tend up to 5 years or more, and short-range objectives extend up to or less than a period of one year, while medi-
um-range ones extend over a two to four year period. Short-range and medium-range objectives should be treated
as steps towards the realisation of long-range objectives. In order for long-term objectives to be accomplished, they
must relate to short-range objectives. The rationale for setting objectives for different time periods is that certain
items in a programme must be accomplished first and are a pre-requisite to accomplishing other objectives. For
instance, before a new product can be manufactured and launched into the market (long-term objective), it must be
developed and tested (short-term objective) by the R&D department. Just as there are interconnections among short,
medium and long-range objectives there must also be alignment between the long-range objectives and the stated
organizational purpose.

The objectives of an organization must be measurable in order to be manageable. This helps in understanding
and improving effectiveness. The table here illustrates some objectives and how they can be restated to facilitate
measurement.

Measurability of Objectives

Levels of Objectives
There are three levels of organizational objectives corresponding to the three levels of planning used in organizations.

∑ Strategic Objectives: These are broadly defined and officially stated objectives of the organization as a whole.
Formulated by top-level managers, strategic objectives ensure the survival and continuation of an organiza-
tion. Organizations need strategic objectives in areas, such as innovation, work performance and attitude,
productivity, profitability, and public responsibility.
∑ Tactical Objectives: Formulated by the middle-level managers, tactical objectives are more specific in nature
and are meant for the various departments of the organization like production, marketing, finance, R&D, etc.
∑ Operational Objectives: Formulated by the lower-level managers, operational objectives are highly specific in
nature and are required for activities performed in sub-units of each department of the organization. Operation-
al objectives are formulated for activities like production runs, delivery schedules, etc. Operational objectives
help in the achievement of tactical and strategic objectives.
56 Emerging Dimensions of Business & Management in the Present-day Competitive Environment

Levels of Objectives and Corresponding Levels of Planning

APPROACHES TO ESTABLISHING OBJECTIVES

Organizations may choose between the following approaches to establish objectives:

1. Traditional approach to establishing objectives, and

2. Management by objectives (MBO).
∑ Traditional Approach: Under the traditional approach, objectives are formulated by the top-level executives
of the organization and handed down to middle and lower levels. For example, the top-level managers tell the
production manager about the quantity, quality and cost structure of production; to the marketing manager
about the sales volume; and so on. These objectives are then passed on to the next level. Under the traditional
approach, the process of accomplishment of goals forms a means-end chain. This is how the traditional ap-
proach to goal setting works: essentially, a one-way approach. The practice of imposing objectives from above
can arise from several underlying assumptions, some realistic for the situation and some mere rationalisations
to justify authoritarianism of top management.
There are several problems with this approach to goal setting. The goals lack clarity as at each succeeding
level, managers define the goals, applying their own interpretations and bias as they make them more specific.
They may also lose unity as they make their way down the organizational hierarchy. As the goals are decided
top down, it is felt as an imposition on the lower levels, causing resentment and reduced motivation as they are
constrained to implement them.
∑ Management by Objectives (MBO)
It is a managerial approach that involves establishing objectives jointly by the superior and the subordinate.
The MBO process ideally begins at the top of the organization to develop overall organizational objectives
that are consistent with the mission and vision of the organization and identify key result areas (KRAs). Then,
at the middle level, divisional and departmental managers and their subordinates establish objectives for their
 Vision, Mission and Objectives – Key Pillars of Strategic Management  57

respective divisions and departments that are more specific and consistent with the objectives developed by
the top management. This exercise is then repeated by the first-line supervisory managers in the organization.
A comprehensive idea of MBO process can be gathered from the given diagram.

MBO can be described as a comprehensive managerial system as it covers all the levels of management of col-
laborative participation between managers and subordinates in establishing objectives at various levels of the orga-
nization. Joint goal setting redistributes authority and redefines their relationship with peers, superiors and subordi-
nates. It also integrates many key managerial activities such as planning, budgeting, authority distribution, resource
allocation, communication, performance appraisal, reward system, motivation, human resource development, and
others that come into play during the operationalisation of MBO. Rationality and objectivity are the characteristic
features of MBO. Goals are laid down in verifiable terms both for job performance and personal development. In the
periodical evaluation of performance, personal traits or characteristics of the subordinates are excluded and rewards
are governed by the results obtained.

While advocating and popularising the ideas behind MBO, Peter Drucker, the originator of the concept, stressed
that “Performance requires that each job be directed towards the objectives of the whole organization. In particular,
each manager’s job must be focused on the success of the whole.”

The concept of MBO has become so popular that several of its variants have been presented. It has been de-
scribed as an objective-setting process, a technique of appraisal and a budgeting device. But it is much more than
58 Emerging Dimensions of Business & Management in the Present-day Competitive Environment

that. It is a management philosophy. George S. Odiorne of USA, a great proponent of MBO, describes it as “a
process whereby the superior and subordinate managers jointly identify its common goals, define each individual’s
major areas of responsibility in terms of the results expected of him and use these measures as guides for operating
the unit and assessing the contributions of each of its members.” MBO has also been called ‘Management by Re-
sults’, ‘Management by Goals and Results’ and ‘Goals Management’.

Here are some examples of MBOs in the workplace:

∑ Human resources: HR manager might plan on employee satisfaction and performance level, discuss with
their employees and tweak the levels, and then monitor employee performance to ensure that satisfaction and
performance goals are benefiting the business. This monitoring can be a used as a guide to modify satisfac-
tion-performance goals.
∑ Marketing: Marketing department might plan goals to increase social media following, share this plan with
employees and listen to their suggestions (roping in some celebrity, for example) to make plan more acceptable
on social media platforms, and then evaluate performance to see that the desired results are ensure achieved.
∑ Sales: The sales department might plan to achieve a target of new bookings by distributing fliers and announc-
ing special discounts on a few initial bookings, taking suggestions from salespersons to further increase effec-
tiveness of the plan (by distributing, say pens, along with fliers, to potential customers), and finally evaluating
whether the targets have been achieved. On the basis of this evaluation, goals and strategies can be revised.
∑ Hi-Tech Manufacturing: MBO here might be a joint consultation about productivity improvement and sus-
tainable manufacturing through the use of motivating and rewarding schemes so that teams produce less waste
and emit fewer greenhouse gases during manufacturing.

Making MBO Successful

MBO is not a technique but a comprehensive management system organically linked with a number of other sub-sys-
tems like planning, resource allocation, performance appraisal, reward, etc. Such a system can neither be installed,
nor operated, and much less sustained without the whole-hearted support of top management.

MBO needs to be properly understood by the managers as well as subordinates so that its benefits and positive
contributions can be fully reaped. Members should be trained in establishing realistic and achievable objectives,
in sorting out difficulties involved in setting objectives and evaluating performance when group effort is involved.
Education about MBO also necessitates that members have a clear understanding of their role, authority and expec-
tations, and prepare them to participate in its implementation with a full sense of responsibility in order to ensure
its success.

The MBO program cannot meet with success unless it is properly supported by and integrated with other
sub-systems like planning, delegation of authority, performance evaluation, rewards and benefits, and feedback and
controlling. Proper integration requires that the associated sub-systems are genuinely in place in the organization.
MBO, for example, should be integrated with the planning process in such a way that short-term goals do not jeop-
ardise the achievement of long-term goals which are so important for the effectiveness of the organization.

The organization must also have a fair reward system in place. The time, efforts, experience and skills used by
members in installing, operationalising and overseeing the MBO program must be adequately rewarded. Likewise,
the organization must also provide for an honest and objective performance-based evaluation system. One reason
why MBO programs fail is that they are not integrated or institutionalised into the performance evaluation, feedback
and control systems.

It is to be always remembered that MBO is not a magic wand that will solve all the problems of the organization
instantly. It must be allowed sufficient time to show results. The experience gained after one round of MBO cyle
 Vision, Mission and Objectives – Key Pillars of Strategic Management  59

should be used to remove gaps and deficiencies in the next round of MBO process. It is not surpring that a full-
blown MBO system would be possible after 4 to 5 rounds to tie together all the essential components of planning,
control, performance appraisal and the reward system.

SMART OBJECTIVES
SMART objectives are a part of MBO introduced by Peter F. Drucker. SMART objectives are used by companies to
put in place structure and tractability together. SMART is an acronym that stands for:

∑ S – Specific. This dimension provides preciseness to objectives by removing ambiguity about what is to done,
who is to it, and what plan of action is to be used to achieve goals and objectives.
∑ M – Measurable. This dimension provides quantitative measure to goal accomplishment -- for example,
achieving 20 percent return on investment (ROI).
∑ A – Achievable. This dimension focuses on the feasibility of goal achievement. Achievable goals are based
on a realistic assessment of an organization’s strengths and weaknesses in terms of resource position, cultural
values, and external environmental constraints. Pursuing unrealistic goals have a negative effect on motivation
and morale of employees and may tarnish the image of the organization.
∑ R – Relevant. This dimension is directly linked up with the vision and value system of top management and
also the availability of requisite resources with the organization.
∑ T - Time-based. This dimension signifies the timeframe within which goals and objectives should be achieved.
Time overruns lead to cost overruns and jeopardise their relevance.

SMART is a buzz word popular with executives and managers associated within technology-driven world to
highlight the need for achieving higher levels of efficiency in a time-bound manner.

GOAL SUCCESSION
Goals initially adopted by the organization may change subsequently. Goal succession takes place when the old
goals have been attained or cannot be attained and it is essential to find new goals if the organization is to survive.
Goal succession may take the form of goal multiplication, expansion, or substitution of existing goals. For example,
Red Cross was established primarily for helping those who suffered from war or other casualty. But after World
War I when this goal was not meaningful, the goal of preserving and improving public health was adopted. Goal
succession is generally deliberate and warranted by the changed circumstances.

New goals adopted by the organization must meet the requirements of changed circumstances. Almost all orga-
nizations in our country, for example, felt compelled to modify their existing goals in favour of the new goals ac-
 60 Emerging Dimensions of Business & Management in the Present-day Competitive Environment

commodating the pressure generated by the new regime of liberalisation, privatisation and globalisation introduced
in our country in 1991.

REFERENCES
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Top Companies.1st edition, Berkeley, CA: Ten Speed press, chapter 1, pp. 1-8.
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Carmichael Centre of Knowledge.
3. Baetz, M.C., & Bart, C.K. (1996). Developing Mission Statements Which Work. Long range planning. Vol. 29,
no. 4, pp. 290-305.
4. Bart, C.K., & Tabone, J.C. (1998). Mission Statement Rationales and Organizational Alignment in the Not-for-
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