The Business Vision

and Mission

Chapter Two

Copyright ©2017 Pearson Education, Inc.

Learning Objectives

1. Describe the nature and role of vision statements in strategic
2. Describe the nature and role of mission statements in
strategic management.
3. Discuss the process of developing a vision and mission
4. Discuss how clear vision and mission statements can benefit
other strategic-management activities.
5. Describe the characteristics of a good mission statement.
6. Identify the components of mission statements.
7. Evaluate mission statements of different organizations and
write effective vision and mission statements.
Copyright ©2017 Pearson Education, Inc.
Module Code and Module Title Title of Slides

A Comprehensive Strategic-
Management Model

Module Code and Module Title Title of Slides

What is a Vision Statement Copyright ©2017 Pearson Education. 2-4 Module Code and Module Title Title of Slides . Inc.

Inc. 2-5 Module Code and Module Title Title of Slides . Vision Statement A vision statement should answer the basic question: “What do we want to become?” Copyright ©2017 Pearson Education.

but the vision statement should be established first and foremost. What Do We Want to Become? • The vision statement should be short. Copyright ©2017 Pearson Education. Many organizations have both a vision and mission statement. • The vision statement should reveal the type of business the firm engages. Inc. and as many managers as possible should have input into developing the statement. preferably one sentence. 2-6 Module Code and Module Title Title of Slides .

long-term “dream” about what the organization will achieve in the future • Represents a destination driven by and invoking passion Where we Want to Be Module Code and Module Title Title of Slides . Vision • An inspiring.

" 8 Module Code and Module Title Title of Slides . Good Vision • Works at multiple levels • Must be inspirational at all levels • Encourages independent action • Self-reference American Express "Customers will never love a company until the employees love it first.

Inc. What are the characteristics of good Vision statements Copyright ©2017 Pearson Education. 2-9 Module Code and Module Title Title of Slides .

Be realistic. The vision statement is supposed to challenge. Take as much space as you need to get your vision across 6. Characteristics of a ‘Good’ Vision Statement 1. Ambitious targets will help create the impression of an organization that aims high 3. Need to think imaginatively about what your vision is and how you describe it to help stand out from the crowd 5. 2. keep sentences short and to the point and use precise. Be inspirational. 2-10 Module Code and Module Title Title of Slides . enthuse and inspire. Be creative. 7. in themselves organization. Be ambitious. There should still be an element of continuity between your mission and vision statements. People need to believe that what is envisaged is actually achievable 4. uncluttered language. Be descriptive. Avoid jargon. Be consistent. Be clear. What targets you set and how high you aim will.

’ [Short. it is not simple. bold. Examples • There will be a personal computer on every desk running Microsoft software. and innovation of GM people. clear.’ [It is not short. unequivocal. teamwork. inspiring] - Amazon Kindle • ‘GM's vision is to be the world leader in transportation products and related services. it is not memorable and contains too many words open to interpretation of meaning] – General Motors2-11 Module Code and Module Title Title of Slides . simple. We will earn our customers‘ enthusiasm through continuous improvement driven by the integrity. memorable and long term] – Microsoft • ‘Our vision is every book ever printed in any language all available in 60 seconds’ – [Simple.

social. Vision Statement Examples • Amazon "Our [Amazon's] vision is to be earth's most customer centric company. to build a place where people can come to find and discover anything they might want to buy online. it should reveal how the firm’s food and beverage business benefits people) Copyright ©2017 Pearson Education.“ (Good Statement) • PepsiCo’s responsibility is to continually improve all aspects of the world in which we operate— environment. Inc. (Author comment: Statement is too vague. economic—creating a better tomorrow than today. 2-12 Module Code and Module Title Title of Slides .

Question: Is this a good Vision Statement • Short • Specific to your business and describe a unique outcome • Do not use words that are open to interpretation. Copyright ©2017 Pearson Education. • No technical jargon. Disney – To make people happy. no metaphors and no business buzz-words if at all possible! • Ambitious enough to be exciting but not too ambitious that it seems unachievable. Disney 1. 2-13 . • Simple enough for people both inside and outside your organization to understand. Inc.

Toys 'R' Us “To put joy in kids' hearts and a smile on parents' faces. 2-14 ." Copyright ©2017 Pearson Education. Inc.

Copyright ©2017 Pearson Education. Inc. 2-15 . Ford Motor To become the world's leading consumer company for automotive products and services.

” .“To make technical contribution for the advancement and welfare of humanity.

“To experience the emotion of competition. and crushing competitors. winning.” .

Imagine you are in a dark room. How do you get out? STOP IMAGINING .

What is a Mission Statement Copyright ©2017 Pearson Education. Inc. 2-19 .

Why Do we Exist Copyright ©2017 Pearson Education. 2-20 . Mission Statement A declaration of an organization's “reason for being.” It answers the pivotal question “What is our business?” It is essential for effectively establishing objectives and formulating strategies. Inc.

and a statement of business principles Copyright ©2017 Pearson Education. Mission Statement It reveals what an organization wants to be and whom it wants to serve It is also called a creed statement. a statement of purpose. a statement of beliefs. 2-21 . Inc. a statement of philosophy.

Mission Examples ‘To organize the world’s information and make it universally accessible and useful’ – Google ‘To give ordinary folk the chance to buy the same thing as rich people’ – Wal-Mart Why Do we Exist 2-22 .

an organization's diverse stakeholders Copyright ©2017 Pearson Education. A mission statement needs to be broad to reconcile differences effectively among. and appeal to. 2-23 . Inc. Characteristics of a Mission Statement A good mission statement allows for the generation and consideration of a range of feasible alternative objectives and strategies without unduly stifling management creativity.

Characteristics of a Mission Statement Stakeholders include employees. Inc. creditors. 2-24 . governments (local. Copyright ©2017 Pearson Education. suppliers. unions. distributors. stockholders. federal. customers. boards of directors. environmental groups. state. competitors. and the general public. and foreign). managers.

ratios. 2-25 . Reconciliatory 9. Inc. Includes nine components: customers. technology. markets. Identifies the utility of a firm’s products 5. Fewer than 150 words in length 3. Reveals that the firm is environmentally responsible 7. or objectives 2. products or services. self-concept. Enduring Copyright ©2017 Pearson Education. concern for employees 8. does not include monetary amounts. Characteristics of a Mission Statement 1. Broad in scope. Inspiring 4. percentages. concern for public image. concern for survival/growth/profits. Reveals that the firm is socially responsible 6. numbers. philosophy.

a mission statement should: (1) define what the organization is and what the organization aspires to be. and (5) be stated in terms sufficiently clear to be widely understood Copyright ©2017 Pearson Education. customers. 2-26 . (3) distinguish a given organization from all others. throughout the organization. (4) serve as a framework for evaluating both current and prospective activities. Inc. philosophy. markets. products or services. Effective Mission An effective mission statement describes an organization’s purpose. and basic technology. According to Vern McGinnis. (2) be limited enough to exclude some ventures and broad enough to allow for creative growth.

2-27 . Inc. A Customer Orientation A mission statement should: define what the organization is and what the organization aspires to be be limited enough to exclude some ventures and broad enough to allow for creative growth distinguish a given organization from all others Copyright ©2017 Pearson Education.

A Customer Orientation A mission statement should also:  serve as a framework for evaluating both current and prospective activities  be stated in terms sufficiently clear to be widely understood throughout the organization Copyright ©2017 Pearson Education. 2-28 . Inc.

A Customer Orientation A good mission statement reflects the anticipations of customers. Copyright ©2017 Pearson Education. 2-29 . Inc. The operating philosophy of organizations should be to identify customers' needs and then provide a product or service to fulfill those needs.

we're obligated to deliver profits and growth to our shareholders. Of equal importance is to deliver those profits and generate growth responsibly. Like any other public company. 2-30 . Citigroup Our goal for Citigroup is to be the most respected global financial services company. Inc. Copyright ©2017 Pearson Education.

Ford Motor Company We are a global family with a proud heritage passionately committed to providing personal mobility for people around the world. Inc. 2-31 . We anticipate consumer need and deliver outstanding products and services that improve people's lives Copyright ©2017 Pearson Education.

Inc. Harley-Davidson. by providing to motorcyclists and to the general public an expanding line of motorcycles and branded products and services in selected market segments. Inc We fulfill dreams through the experience of motorcycling. 2-32 . Copyright ©2017 Pearson Education.

Offer me hours of pleasure and the benefit of knowledge. Copyright ©2017 Pearson Education. Do not offer me clothes. and a place that is clean and happy. comfort. Do not offer me books. Offer me security. Inc. Considerations Do not offer me things. Do not offer me a house. Do not offer me shoes. 2-33 . Do not offer me CDs. Offer me attractive looks. Offer me leisure and the sound of music. Offer me comfort for my feet and the pleasure of walking.

Offer me the benefits and the pleasure that come from making beautiful things. Considerations Do not offer me tools. Do not offer me furniture. and benefits. emotions. ambience. Do not offer me things. 2-34 . Offer me ideas. feelings. Copyright ©2017 Pearson Education. Inc. do not offer me things. Please. Offer me comfort and the quietness of a cozy place.

growth. 2-35 . Markets—Geographically.Mission Statement Components 1. Customers—Who are the firm’s customers? 2. Technology—Is the firm technologically current? 5. and profitability—Is the firm committed to growth and financial soundness? Copyright ©2017 Pearson Education. Products or services—What are the firm’s major products or services? 3. Survival. Inc. where does the firm compete? 4.

community. Mission Statement Components 6. Self-concept (distinctive competence)— What is the firm’s major competitive advantage? 8. Public image—Is the firm responsive to social. and environmental concerns? 9. values. aspirations. Inc. Philosophy—What are the basic beliefs. Employees—Are employees a valuable asset of the firm? An effective statement shouldCopyright include the nine mission statement components ©2017 Pearson Education. 2-36 . and ethical priorities of the firm? 7.

Example Mission Statements
Does it cover the 9 components

 We aspire to make PepsiCo the world’s (3) premier
consumer products company, focused on convenient
foods and beverages (2). We seek to produce healthy
financial rewards for investors (5) as we provide
opportunities for growth and enrichment to our
employees (9), our business partners and the
communities (8) in which we operate. And in
everything we do, we strive to act with honesty,
openness, fairness and integrity (6).
 Author comment: Statement lacks three components:
Customers (1), Technology (4), and Distinctive
Competence (7); 62 words
Copyright ©2017 Pearson Education, Inc. 2-37

Example Mission Statements
Royal Caribbean
 We are loyal to Royal Caribbean and Celebrity and strive for
continuous improvement in everything we do. We always
provide service with a friendly greeting and a smile (7). We
anticipate the needs of our customers and make all efforts
to exceed our customers’ expectations. We take ownership
of any problem that is brought to our attention. We engage
in conduct that enhances our corporate reputation and
employee morale (9). We are committed to act in the
highest ethical manner and respect the rights and dignity of
others (6).
 Author comment: Statement lacks six components:
Customers (1), Products/Services (2), Markets (3),
Technology (4), Survival/Growth/Profits (5), and Public
Image (8); 86 words
Copyright ©2017 Pearson Education, Inc. 2-38

Exemplary mission statements for
Avon and L’Oreal
These rival firms have uniquely different competitive

Avon utilizes door-to-door sales representatives to gain
competitive advantage,

L’Oreal markets products in thousands of retail outlets.

The proposed Avon and L’Oreal statements have the
characteristics described earlier, and include the nine
components written from a customer
Copyright ©2017 perspective
Pearson Education, Inc. 2-39

(58 words) Copyright ©2017 Pearson Education. and jewelry (2) at reasonable prices backed by outstanding customer service provided by our thousands of door-to-door sales representatives (7. We use the latest technology (4) to profitably develop and market products desired by women all over the world (5). 9) operating globally (3). Exemplary Proposed Mission Statement Avon  Our mission is to provide women (1) quality fragrances. Avon representatives put integrity first (6) in setting a good example in every community (8) they operate—as they sell beauty. cosmetics. 2-40 . Inc.

and personal care products (2) to women. and children (1) by utilizing the latest technological improvements (4). (85 words) Copyright ©2017 Pearson Education. Inc. We strive to be one of the most socially responsible (8) firms on the planet (3) and appreciate our employees (9) making that happen. 2-41 . and distribute the world’s best fragrances. We empower our highly creative team of researchers to develop safe. Exemplary Proposed Mission Statement L’Oreal  Our mission is to design. perfumes. while following the “golden rule” in all that we do (6). men. produce. eco-friendly (7) products that will enable our firm to profitably grow (5) through thousands of retail outlets.

Copyright ©2017 Pearson Education. along with a meeting to revise the document. Developing Vision & Mission Statements A widely used approach includes:  Select several articles about these statements and ask all managers to read these as background information. additions.  A request for modifications.  A facilitator or committee of top managers should then merge these statements into a single document and distribute the draft statements to all managers. and deletions is needed next. 2-42 .  Ask managers themselves to prepare a vision and mission statement for the organization. Inc.

To provide a basis for the allocation of resources. departments. 2-43 . To provide a basis for organizing work. Importance of Vision and Mission Statements To make sure all employees/managers understand the firm’s purpose or reason for being. To provide a basis for prioritization of key internal and external factors utilized to formulate feasible strategies. Inc. and segments around a common purpose. Copyright ©2017 Pearson Education. activities.

Inc. 2-44 .Benefits of Having a Clear Mission and Vision Copyright ©2017 Pearson Education.

Objectives 2-45 .

objectives are Long-term Short-term . As interim steps. Objectives Provides more specific direction on what the organization must do to achieve its vision and mission—interim steps toward achieving the vision and mission.

Objectives Strategic Financial Outcomes focused on Outcomes focused on improving long-term improving financial competitive position of performance the organization .

and human capital with strategy .Balanced Scorecard Objectives Financial Strategic Objectives Objectives Customer Outcomes focused  Value creation Internal Processes on improving  Value creating processes Financial Learning and Growth  Aligning organizational. Performance information.

Examples of Financial Objectives  X % increase in annual revenues  X % increase annually in after-tax profits  Profit margins of X %  X % return on capital employed (ROCE)  Sufficient internal cash flows to fund 100% of new capital investment .

Examples of Strategic Objectives  Customer  Winning an X % market share  Achieving a customer retention rate of X %  Acquire X number of new customers  Internal Processes  Reduce product defects to X %  Introduction of X number of new products in the next three years  Learning and Growth  Increase employee training to X hours/year  Reduce turnover to X % per year .

Example Strategic Objectives Increase firm’s market share Boost firm’s reputation with customers Strengthen presence in international markets Become leader in new product innovation Attain lower overall costs than rivals Surpass competitors in quality or product performance .

Example Financial Objectives Increase sales growth 6 to 8% per year Cut costs by 5% per year every year Increase annual dividends to shareholders by 5% per year Achieve highest Return on Investment (ROI) in industry .

. .Examples: Corporate Objectives Citigroup (strategic objective) To attain one billion customers worldwide. . in every restaurant . everyday . . . for every customer. . . McDonald’s (strategic objective) To achieve 100 percent total customer satisfaction .

Criteria for Objectives Specific: precisely what needs to be achieved Measurable: at least one indicator that measures progress toward fulfilling objective Appropriate: consistent with vision and mission statements Realistic: must be achievable Time-based: must have a deadline for achieving the objective .

2-55 . Inc. Copyright ©2017 Pearson Education. Question Discuss the differences between vision and mission statements of an organization.

It lists the broad goals for which the organization is formed. Inc. your understanding of why you are working here. South Carolina. It shapes one business from other similar firms. For example. It inspires statements of purpose that distinguish you to give your best. your future. 2-56 . “Where do? What makes us different?” do we aim to be?” Time A mission statement talks about the A vision statement talks about present leading to its future." Copyright ©2017 Pearson Education. Defines the purpose and Communicates both the purpose primary objectives related to your and values of your business. Its prime function is internal. is "Our vision is to take care of your vision. to be. Answer It answers the question. customer needs and team values. Clinic in Florence. “What do we It answers the question. Length Longer as the mission statement Many vision statements are a identifies the scope of a firm's single sentence. the operations in product and market vision statement of Stokes Eye terms. Enduring some years from now. Function It lists the broad goals for which the It lists where you see yourself organization is formed. Mission Vision About A Mission statement talks about A Vision statement outlines HOW you will get to where you want WHERE you want to be.

Tutorial Analyze the Vision and Mission Statement for your company or University Module Code and Module Title Title of Slides .

with reference to such criteria as safety and customer satisfaction. Thus. • Commitment to technological innovation. Toyota’s mission statement is holistic and aligned to its vision statement. • Considers the preferences and expectations of consumers • Emphasizes quality of products. Analysis • Focuses on products. and corporate social responsibility. Inc. Innovation is seen as a way for the company to achieve its aims in product quality. Copyright ©2017 Pearson Education. customer satisfaction. 2-58 Module Code and Module Title Title of Slides .

ethical and environmentally friendly environment. affordable. and innovative education and research for all aspects of technology management. To design and deliver a range of high quality programmes of internationally benchmarked standards to address an International community of scholars leading to globally recognized qualifications. 2-59 Module Code and Module Title Title of Slides . Inc. in a professional. APU The Vision To be a leading Technological University with innovative approaches to enhancing lifelong career opportunities. The Mission To be a University which provides high quality. Copyright ©2017 Pearson Education.

. keep sentences short and to the point and use precise. • Be creative Albert Einstein once said that ‘imagination is more important than knowledge'. Inc. • Be realistic People need to believe that what is envisaged is actually achievable. there should still be an Copyright ©2017 Pearson Education. also say something about you as an organisation. • Be consistent • Though bearing in mind their different purposes. in themselves. enthuse and inspire. uncluttered language. • Be ambitious What targets you set and how high you aim will. • Be clear As with your mission statement it pays to avoid jargon. Good Vision • Be inspirational The vision statement is supposed to challenge. Use powerful words and vivid phrases to articulate the kind of institution you are trying to become. element of continuity between your Module Code and Module Title mission and vision 2-60 Title of Slides statements.

• Futurecasting: Your vision provides a picture of what your business looks like in the future. Good Vision statements • Audacious: Your vision represents a dream that’s beyond what you think is possible. It represents the mountaintop your company is striving to reach. Inc. resources. • Purpose-driven: Your vision gives employees a larger sense of purpose. Visioning takes you out beyond your present reality. It builds on what you’ve already established: company history. customer base. and unique capabilities. so they see themselves as building a cathedral instead of laying stones Copyright ©2017 Pearson Education. • Capitalizes on core competencies: Your vision builds on your company’s core competencies. 2-61 Module Code and Module Title Title of Slides . • Inspiring: Your vision engages language that inspires. strengths. and assets. It creates enthusiasm and poses a challenge. • Motivating: Your vision clarifies the direction in which your organization needs to move and keeps everyone pushing forward to reach it. It creates a vivid image in people’s heads that provokes emotion and excitement.

Characteristics of a Mission Statement 2-62 Module Code and Module Title Title of Slides .

Products Services Markets Customers Technology Employees Mission Elements Survival Growth Profit Public Image Self-Concept Distinctive Module Code and Module Title Title of Slides .

Why do organizations create a shared Vision Module Code and Module Title Title of Slides .

Building Shared Vision SENGE’S PRINCIPLE .

short-term benefits better appreciation of systems leads to more appropriate action Module Code and Module Title Title of Slides . Systems Thinking interdependency and change focus on whole not individual parts long-term goals vs.

built of the individual • That goal must often a visions of its members. • SHARING AN IMAGE sometimes that can be OF THE FUTURE YOU leading star for the WANT TO REALIZE individual. long term goal. TOGETHER (definition of Senge) Module Code and Module Title Title of Slides . Vision Shared Vision • The vision is often a • The shared vision of an goal that the individual organization must be wants to reach.

no matter how heartfelt. Shared Vision  A genuine vision leads to people wanting to excel and learn  Leaders must translate personal visions into shared visions  Unearthing shared ‘pictures of the future’ that foster genuine commitment rather than compliance  Leaders learn the counter-productiveness of trying to dictate a vision. (Senge 1990: 9) Module Code and Module Title Title of Slides .

• In mastering this discipline. What does it means to have a shared vision? • The practice of shared vision involves the skills of unearthing shared “pictures of the future” that foster genuine commitment and enrolment rather than compliance. leaders learn the counter-productiveness of trying to dictate a vision. (Senge 1990) Module Code and Module Title Title of Slides . no matter how heartfelt.

.. What this mean for the leader…. • The vision must be created through interaction with the individuals in organization Module Code and Module Title Title of Slides . Rather. • in the learning organization is that the organizational vision must not be created by the leader.

The leaders role in creating a SHARED VISION is: • TO SHARE HER OWN VISION TO THE EMPLOYEES Module Code and Module Title Title of Slides .

Many leaders have personal visions that never get translated into shared visions that galvanize an organization… What has been lacking is a discipline for translating vision into shared vision . The reality is….

Only by compromising • Between the individual visions & the development of these visions in a common direction can the shared vision be created Module Code and Module Title Title of Slides .

Module Code and Module Title Title of Slides . How can someone start to share the organization’s vision? • For a shared vision to develop. • Senge (1990) stresses that vision can not be sold. members of the organization must enroll in the vision.

The answer is…. Module Code and Module Title Title of Slides . NO… But…. • The individuals who do not share the vision might not contribute as much to the organization. Reflection on SHARED VISION • Brings the question of whether each individual in the organization must share the rest of the organization’s vision.

• Base on these visions. people excel and learn • Not because they are told to do. BUT…because… THEY WANT TO • When an organization has a shared vision. the driving force for change comes from what Senge calls “creative tension”. the organization’s should evolve Module Code and Module Title Title of Slides . • With truly committed members the creative tension will drive the organization towards its goals. Effect of SHARED VISION • When there is a genuine vision.