DEFINING THE CORPORATE

MISSION, OBJECTIVE AND GOALS

Whether developing a new business or reformulating direction for an ongoing

corporate, the basic goals, characteristics, and philosophies that will shape a firm’s
corporate posture must be determined. This corporate mission will guide future executive
action. Thus, the corporate mission is defined as the fundamental, unique purpose that
sets a business apart from other firms of its type and identifies the scope of its operations
in product and market terms. The mission is a broadly framed but enduring statement of
corporate intent. It embodies the business philosophy of strategic decision-makers;
implies the image the corporate seeks to project; reflects the firm’s self-concept; indicates
the principal product or service areas and primary customer needs the company will
attempt to satisfy. In short, the mission describes the product, market and technological
areas of emphasis for the business. And it does so in a way that reflects the values and
priorities of strategic decision-makers.

The Need for an Explicit Mission

Defining the corporate mission is time consuming, tedious, and not required by
any external body. The mission contains few specific directives, only broadly outlined or
implied objectives and strategies. Characteristically, it is a statement of attitude, outlook,
and orientation rather than of details and measurable targets.

What then is a corporate mission designed to accomplish? King and Cleland

provide seven good answers:

1. To ensure unanimity of purpose within the organisation.

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 organisation’s purpose
and direction, and to deter those who cannot from participating further in the
organization’s activities.
6. To facilitate the translation of objectives and goals into a work structure involving the
assignment to tasks to responsible elements within the organization.
7. To specify organisational purpose and the translation of these purposes into goals in
such a way that cost, time and performance parameters can be assessed and
controlled.
Formulating a Corporate Mission

The process of defining the mission for a specific business can perhaps be best
understood by thinking about a firm at its inception. The typical business organisation
begins with the beliefs, desires, and aspirations of a single entrepreneur. The sense of
mission for such an owner-manager is usually based on several fundamental elements:

1. Belief that the product or service can provide benefits at least equal to its price.
2. Belief that the product or service can satisfy a customer need currently not met
adequately for specific market segments.
3. Belief that the technology to be used in production will provide a product or service
that is cost and quality competitive.
4. Belief that with hard work and the support of others the business can do better than
just survive, it can grow and be profitable.
5. Belief that the management philosophy of the business will result in a favourable
public image and will provide financial and psychological rewards for those
willing to invest their labour and money in helping the firm to succeed.
6. Belief that the entrepreneur’s self-concept of the business can be communicated to
and adopted by employees and stockholders.

As the business grows or is forced by competitive pressures to alter its product /

market / technology, redefining the company mission may be necessary. If so, the revised
mission statement will reflect the same set of elements as the original. It will state the
basic type of product or service to be offered, the primary markets or customer groups to
be served, the technology to be used in production or delivery; the fundamental concern
for survival through growth and profitability; the managerial philosophy of the firm; the
public image sought; and the self-concept those affiliated with it should have of the firm.
These components will be discussed in this chapter.

Basic Product or Service; Primary Market; Principal Technology

Three components of a mission statement are indispensable: specification of the

basic product or service, primary market, and principal technology for production or
delivery. The three components are discussed under one heading because only in
combination do they describe the business activity of the company.
Company Goals: Survival, Growth, Profitability

Three economic goals guide the strategic direction of almost every viable
business organisation. Whether or not they are explicitly stated, a company mission
statement reflects the firm’s intention to secure its survival through sustained growth and
profitability.

Unless a firm is able to survive, it will be incapable of satisfying any of its

stakeholders’ aims. Unfortunately, like growth and profitability, survival is such an
assumed goal that it is often neglected as a principal criterion in strategic decision
making. When this happens, the firm often focuses on short-term aims at the expense of
the long run. Concerns for expediency, a quick fix, or a bargain displace the need for
assessing long-term impact. Too often the result is near-term economic failure owing to
lack of resource synergy and sound business practice.

Objective: to achieve profit to finance our company growth and to provide the resource
we need to achieve our other corporate objectives.

In our economic system, the profit we generate from our operations is the ultimate
source of the funds we need to prosper and grow. It is the one absolutely essential
measure of our corporate performance over the long term. Only if we continue to meet
our profit objective can we achieve our other corporate objectives.

A firm’s growth is inextricably tied to its survival and profitability. In this

context, the meaning of growth must be broadly defined. While growth in market share
has been shown by the product impact market studies (PIMS) to be correlated with firm
profitability, other important forms of growth do exist. For example, growth in the
number of markets served, in the variety of products offered, and in the technologies used
to provide goods or services frequently leads to improvements in the company’s
competitive ability. Growth means change, and proactive change is a necessity in a
dynamic business environment. Hewlett-Packard’s mission statement provides and
excellent example of corporate regard for growth:

Objective: To let our growth be limited only by our profits and our ability to develop and
produce technical products that satisfy real customer needs.

We do not believe that large size is important for its own sake; however, for at
least two basic reasons continuous growth is essential for us to achieve our other
objectives.
 In the first place, we serve a rapidly growing and expanding segment of our
technological society. To remain static would be to lose ground. We cannot maintain a
position of strength and leadership in our field without growth.

In the second place, growth is important in order to attract and hold high-caliber
people. These individuals will align their future only with a company that offers them
considerable opportunity for personal progress. Opportunities are greater and more
challenging in a growing company.

The issue of growth raises a concern about the definition of a company mission.
How can a business specify product, market, and technology sufficiently to provide
direction without delimiting unanticipated strategic options? How can a company define
its mission so opportunistic diversification can be considered while at the same time
maintaining parameters that guide growth decisions? Perhaps such questions are best
addressed when a firm outlines its mission conditions under which it might depart from
ongoing operations.

GOALS AND OBJECTIVES

Goals denote what an organisation hopes to accomplish in a future period of time.

They represent a future state or an outcome of the effort put in now. A broad category of
financial and non-financial issues are addressed by the goals that a firm sets for itself.

Objectives are the ends that state specifically how the goals shall be achieved.
They are concrete and specific in contrast to goals which are generalised. In this manner,
objectives make the goals operational. While goals may be qualitative, objectives tend to
be mainly quantitative in specification. In this way they are measurable and comparable.

In strategic management literature there has been a confusion with regard to the
usage of these terms: goals and objectives. The meaning assigned to these terms is
sometimes in contrast to what we have adopted here. Also, often they are used inter-
changeable. (In fact, the first edition of this book used these terms in a sense opposite to
what we are using now. We stand corrected. There is overwhelming evidence available
now, as inferred from recent strategic management literature, that goals connote the
broader sense of the term objectives.) Still we would prefer to use only the term
objective to denote both. After all, it must be remembered that objectives are the
manifestations of goals, whether quantified and specifically stated or not. Besides, it is
more convenient to use one term rather than both every time one refers to a future state
or the outcome of an effort.
 Any organisation shall always have a potential set of goals. It has to exercise a
choice from among these goals. This choice must be further elaborated and expressed in
terms of operational and measurable objective.

Note that an organisation has to translate its purpose into long-term goals and
short-term objectives for realising its mission and vision. This high- lights the role that
goals and objectives play in strategic management.

Role of Objectives in Strategic Management

Objectives play an important role in strategic management. We could identify the

various facets of such a role as shown below.

 Objectives define the organisation’s relationship with its environment. By stating its
objectives, an organisation commits itself to what it has to achieve for its
employees, customers and society at large.

 Objectives help an organisation to pursue its vision and mission. By defining the
long-term position that an organisation wishes to attain and the short-term targets
to be achieved, objectives help an organisation in pursing its vision and mission.

 Objectives provide the basis for strategic decision-making. By directing the attention
of strategists to those areas where strategic decisions need to be taken, objectives
lead to desirable standards of behaviour and, in this manner, help to coordinate
strategic decision-making.

 Objectives provide the standards for performance appraisal. By stating the targets to
be achieved in a given time period, and the measures to be adopted to achieve
them, objectives lay down the standards against which organisational as well as
individual performance could be judged. In the absence of objectives, an
organisation would have no clear and definite basis for evaluating its
performance.

Managers who set objectives for themselves and their organisations are most
likely to achieve them than those who do not specify their performance targets. The
importance of the role that objectives play in strategic management could be aptly
summed up in the truism: if one does not know where one has to go, any path will take
one there.
Characteristics of objectives

Objectives , as measures of organisational behaviour and performance, should

possess certain desirable characteristics in order to be effective. Given below are seven
such characteristics.

1. Objectives should be understandable. Because objectives play an important role in

strategic management and are put to use in a variety of ways, they should be
understandable to those who have to achieve them. A chief executive who says
that ‘something ought to be done to set thing right’ is not likely to be understood
by his managers. Subsequently, no action will be taken, or even a wrong action
might be taken.

2. Objectives should be concrete and specific. To say ‘our company plans to achieve a
12 per cent increase its sales’ is certainly better than stating that ‘our company
seeks to increase its sales’. The first statement implies a concrete and specific
objective and is more likely to lead and motivate the managers.

3. Objectives should be related to a time frame. If the first statement given above is
restated as ‘our company plans to increase its sales by 12 percent by the end of
two years’, it enhances the specificity of the objectives. If objectives are related to
a time frame, then managers know the duration within which they have to be
achieved.

4. Objectives should be measurable and controllable. Many organisations perceive

themselves as companies, which are attractive to work for. If measures like the
number and quality of job applications received, average emoluments offered, or
staff turnover per year could be devised, it would be possible to measure and
control the achievement of this objective with respect to comparable companies in
a particular industry, and in general.

5. Objectives should be challenging. Objectives that are too high or too low are both
demotivating and, therefore, should be set at challenging but not unrealistic levels.
To set a high sales targets in a declining market does not lead to success.
Conversely a low sales target in a burgeoning market is easily achievable and,
therefore, leads to a sub-optimal performance.

6. Different objectives should correlate with each other. Organisations set many
objectives in different areas. If objectives are set in one area disregarding the
other areas such an action is likely to lead to problems. A classic dilemma in
 organisations, and a source of interdepartmental conflicts, is setting sales and
production objectives. Marketing departments typically insist on a wider variety
of products to cater to a variety of market segments while production departments
generally prefer to have greater product uniformity in order to have economies of
scale. Obviously, trade-offs are required to be made so that different objectives
correlate with each other, are mutually supportive, and different objectives
correlate with each other, are mutually supportive, and result in synergistic
advantages. This is specially true for organisations which are organised on a
profit-centre basis.

7. Objectives should be set within constraints. There are many constraints –

internal as well as external - which have to be considered in objective- setting. For
example, resource availability is an internal constraint, which affects objective-
setting. Different objectives compete for scarce resources and trade-offs are
necessary for optimum resource utilisation. Organisations face many external
constraints like legal requirements, consumer activism and environmental
protection. All these limit the organisation’s ability to set and achieve objectives.

In sum, objectives-setting is a complex process. We will further examine a few

issues relevant to objectives, in order to understand this complex process.