Masters program

Strategic management

Lecture 2
The Business Vision and Mission

Year 2023
After this lecture you should be able to :
Describe the nature and role of vision and mission
statements in strategic management.
Discuss why the process of developing a mission
statement is as important as the resulting document.
Identify the components of mission statements.
Discuss how clear vision & mission statements can
benefit other strategic-management activities.
Write good vision and mission statements.
Notable Quotes

"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 and
purpose of the organization makes possible clear and
realistic business objectives."
—Peter Drucker

"Where there is no vision, the people perish."

—Proverbs 29:18
vision

 Vision is a picture of what the firm wants to be and,

in broad terms, what it wants to ultimately achieve
(Hitt, Ireland & Hoskisson, 2007 ).
 A vision statement should answer the basic
question, “What do we want to become?”
 Many organizations have both a vision and mission
statement, but the vision statement should be
established first and foremost. The vision statement
should be short, preferably one sentence. For e.g.
Our vision is to be the world’s best quick service restaurant (McDonald’s)

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Mission

The mission statement is a declaration of an

organization’s “reason for being.”
It answers the pivotal question “What is our
business?”
A mission specifies the business or businesses in
which the firm intends to compete and the customers it
intends to serve.
Be the best employer for our people in each community
around the world and deliver operational excellence to
our customers in each of our restaurants (McDonald’s)

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Mission Statements are also called

 Creed statement
 Statement of purpose
 Statement of philosophy
 Statement of beliefs
 Statement of business principles
 A statement “defining our business”

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Vision vs mission

Many organizations develop both a mission statement

and a vision statement.
The vision statement answers the question
“What do we want to become?”
Whereas the 1 statement answers the question “What is
our business?”
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.

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Cont.
Mission Statement Examples

Dell’s mission is to be the most successful computer

company (2) in the world (3) at delivering the best
customer experience in markets we serve (1). In doing so,
Dell will meet consumer expectations of highest quality;
leading technology (4); competitive pricing; individual
and company accountability (6); best-in-class service and
support (7); flexible customization capability; superior
corporate citizenship (8); financial stability (5).

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Cont.

At L’Oreal, we believe that lasting business success is

built upon ethical (6) standards which guide growth and
on a genuine sense of responsibility to our employees (9),
our consumers, our environment and to the communities
in which we operate (8).

(Author comment: Statement lacks six components:

Customers, Products/Services, Markets, Technology,
Concern for Survival/Growth/Profits, Concern for Public
Image)

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Review question 1

Which statement is TRUE?

A.Companies must choose between having a mission
statement or a vision statement.
B.A company can't have a mission statement unless it
has a vision statement.
C.Companies are required by law to have both mission
and vision statements.
D.The vision statement should be established before the
mission statement.

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cDeveloping Vision & Mission

Participation by as many managers as possible is

important in developing the mission because through
involvement people become committed to an
organization.
During the process of developing vision and mission
statements, some organizations use discussion groups of
managers to develop and modify existing statements.
Some organizations hire an outside consultant or
facilitator to manage the process and help draft the
language.

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Steps to Developing Vision & Mission Statements

1. Have managers read related articles – about vision and

mission statement
2. Have managers prepare a vision and mission statement
for the organization
3. Merge the documents into one and distribute
4. Gather feedback from managers
5. Meet to revise the final document – A request for
modifications, additions, and deletions is needed

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Benefits of Vision & Mission Statements

1. Achieve clarity of purpose among all managers and

employees.
2. Provide a basis for all other strategic planning
activities, including the internal and external
assessment, establishing objectives, developing
strategies, choosing among alternative strategies,
devising policies, establishing organizational structure,
allocating resources, and evaluating performance.
3. Provide direction.
4. Provide a focal point for all stakeholders of the firm.

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Cont.

5. Resolve divergent views among managers.

6. Promote a sense of shared expectations among all
managers and employees.
7. Project a sense of worth and intent to all stakeholders.
8. Project an organized, motivated organization worthy
of support.
9. Achieve higher organizational performance.
10. Achieve synergy among all managers and employees.

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Cont.

The following utility statements are relevant in

developing a mission statement:
Do not offer me things.
Do not offer me clothes. Offer me attractive looks.
Do not offer me shoes. Offer me comfort for my feet
and the pleasure of walking.
Do not offer me a house. Offer me security, comfort,
and a place that is clean and happy.
Do not offer me books. Offer me hours of pleasure and
the benefit of knowledge.

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Cont.

 Do not offer me CDs. Offer me leisure and the sound

of music.
 Do not offer me tools. Offer me the benefits and the
pleasure that come from making beautiful things.
 Do not offer me furniture. Offer me comfort and the
quietness of a cozy place.
 Do not offer me things. Offer me ideas, emotions,
ambience, feelings, and benefits.
 Please, do not offer me things.

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Review question 2

Which of these examples of a mission statement focus area

does NOT identify the utility of the firm's products to its
customers?
A.AT&T focuses on communication rather than telephones.
B.ExxonMobil focuses on oil and gas rather than energy.
C.Universal Studios focuses on entertainment rather than
movies.
D.A clothing retailer focuses on attractive looks rather than
on clothes.

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Components of Mission Statement

Mission statements can and do vary in length, content,

format, and specificity. Most practitioners and
academicians of strategic management feel that an
effective statement should include nine components.
1.Customers— Who are the firm’s customers?
2.Products or services— What are the firm’s major
products or services?
3.Markets— Geographically, where does the firm
compete?
4.Technology— Is the firm technologically current?

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Cont.

5. Concern for survival, growth, and profitability— Is

the firm committed to growth & financial soundness?
6. Philosophy— What are the basic beliefs, values,
aspirations, and ethical priorities of the firm?
7. Self-concept— What is the firm’s distinctive
competence or major competitive advantage?
8. Concern for public image— Is the firm responsive to
social, community, and environmental concerns?
9. Concern for employees— Are employees a valuable
asset of the firm?

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Characteristics of a Mission Statement

 Broad in scope; do not include monetary amounts,

numbers, percentages, ratios, or objectives
 Less than 250 words in length
 Inspiring
 Identify the utility of a firm’s products
 Reveal that the firm is socially responsible
 Reveal that the firm is environmentally responsible
 Include nine components
 Reconciliatory
 Enduring

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Writing & Evaluating Mission Statements

Perhaps the best way to develop a skill for writing &

evaluating mission statements is to study actual company
missions. Therefore, the mission statements are evaluated
based on the nine desired components.
Among the statements given in the example, note that the
Dell mission statement is the best because it lacks only
one component.
whereas the L’Oreal statement, mentioned in the previos
slide is the worst, lacking six of the nine recommended
components. See below!

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Cont.

There is no one best mission statement for a particular

organization, so good judgment is required in evaluating
mission statements.
Realize that some individuals are more demanding than
others in assessing mission statements in this manner.
For example, if a statement merely includes the word
“customers” without specifying who the customers are, is
that satisfactory?

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Cont.

Ideally a statement would provide more than simply

inclusion of a single word such as “products” or
“employees” regarding a respective component.
Why? Because the statement should be informative,
inspiring, enduring, and serve to motivate stakeholders to
action.

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Conclusion

Every organization has a unique purpose and reason for

being. This uniqueness should be reflected in vision and
mission statements. The nature of a business vision and
mission can represent either a competitive advantage or
disadvantage for the firm. An organization achieves a
heightened sense of purpose when strategists, managers,
and employees develop and communicate a clear
business vision and mission. Drucker says that
developing a clear business vision and mission is the
“first responsibility of strategists.”

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Cont.

A good mission statement reveals an organization’s

customers; products or services; markets; technology;
concern for survival, growth, and profitability;
philosophy; self-concept; concern for public image; and
concern for employees. These nine basic components
serve as a practical framework for evaluating and writing
mission statements. As the first step in strategic
management, the vision and mission statements provide
direction for all planning activities.

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Cont.

Well-designed vision & mission statements are essential

for formulating, implementing, & evaluating strategy.
Developing & communicating a clear business vision &
mission are the most commonly overlooked tasks in
strategic management. Vision & mission statements
always should be subject to revision, but, if carefully
prepared, they will require infrequent major changes.
Firms usually reexamine their vision & mission
statements annually. Effective mission statements stand
the test of time.

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End of Lecture 2

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