Chapter2 Vision and Mission

Chapter 2
The Business Vision & Mission
Strategic Management:
Concepts & Cases
12th Edition
Fred David
Copyright 2009 Pearson Education, Inc.
Ch 2 -1
Objectives of the chapter

1.
2.
3.
4.
5.
6.
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 and mission statements
can benefit other strategic-management activities.
Evaluate mission statement of different
organizations.
Write good vision and mission statements.
Ch 2 -2
Chapter Outline
What Do We Want to Become?
What Is Our Business?
Importance of Vision and Mission Statements
Ch 2 -3
Chapter Outline (contd)

Characteristics of a Mission Statement
Components of a Mission Statement
Writing & Evaluating Mission Statements
Ch 2 -4
Vision
The last thing IBM needs right now is a

vision. (July 1993)
What IBM needs most right now is a

vision. (March 1996)
Louis V. Gerstner, Jr., CEO, IBM Corporation
Ch 2 -5
Vision
Agreement on the basic vision for which the

firm strives to achieve in the long run is
critically important to the firms success.
Ch 2 -6
Vision
What do we want to become?
Ch 2 -7
Vision
Clear Business
Vision
Comprehensive
Mission Statement
Ch 2 -8
Vision & Mission
Shared Vision
Creates commonality of interests
Reduce daily monotony
Provides opportunity & challenge
Ch 2 -9
Vision Statement Examples
Tyson Foods vision is to be the worlds first

choice for protein solutions while maximizing
shareholder value.
Ch 2 -10
Vision Statement
Many organizations have both a vision and a

mission statement.
but the vision statement should be established
first and foremost.
The vision statement should be short, preferably
one sentence,
as many managers as possible should have
input into developing the statement.
Ch 2 -11
General Motors vision is to be the world

leader in transportation products and related
services.
Ch 2 -12
PepsiCos responsibility is to continually

improve all aspects of the world in which we
operate environment, social, economic
creating a better tomorrow than today.
Ch 2 -13
Dells vision is to create a company culture

where environmental excellence is second
nature.
Ch 2 -14
Mission Statements
90% of all companies have used a

mission statement in the previous five
years
Ch 2 -15
Mission Statements
What is our business?
Ch 2 -16
Mission Statements
Enduring statement of purpose

Distinguishes one firm from another
Declares the firms reason for being
Ch 2 -17
Mission Statements
Also referred to as:
Creed/faith statement
Statement of purpose
Statement of philosophy
Statement of business principles
Ch 2 -18
Ch 2 -19
Mission Statements
Reveal what an organization wants to be

and whom it wants to serve
Ch 2 -20
Mission Statements
Essential for effectively establishing

objectives and formulating strategies
Ch 2 -21
Vision & Mission
Many organizations develop both vision &

mission statements
Ch 2 -22
Vision & Mission
Profit & vision are necessary to effectively

motivate a workforce
Ch 2 -23
Vision & Mission
Shared vision creates a community of

interests
Ch 2 -24
Developing Vision & Mission
Clear mission is needed before alternative

strategies can be formulated and
implemented
Ch 2 -25
Participation from diverse managers is

important in developing the mission
Ch 2 -26

A widely used approach to developing a mission statement is to:
1. Select several articles about mission statements and ask all managers to
read these as background information.
2.
Ask managers to prepare a mission statement for the organization.
3.
A facilitator, or committee of top managers, should then merge these

statements into a single document and distribute this draft to all
managers.
4.
A request for modifications, additions, and deletions is needed next along

with a meeting to revise the document.
Ch 2 -27
Mission Statement Examples

Fleetwood Enterprises will lead the recreational
vehicle and manufactured housing industries in
providing quality products with a passion for
customer-driven innovation. We will emphasize
training, embrace diversity and provide growth
opportunities for our associates and our dealers.
We will lead our industry in the application of
appropriate technologies. We will operate at the
highest levels of ethics and compliance with a focus
on exemplary corporate governance. We will deliver
value to our shareholders, positive operating results
and industry-leading earnings.
Ch 2 -28

We aspire to make PepsiCo the worlds premier
consumer products company, focused on
convenient foods and beverages. We seek to
produce healthy financial rewards for investors as
we provide opportunities for growth and
enrichment to our employees, our business
partners and the communities in which we operate.
And in everything we do, we strive to act with
honesty, openness, fairness and integrity.
Ch 2 -29

Dells mission is to be the most successful
computer company in the world at delivering the
best customer experience in markets we serve. In
doing so, Dell will meet consumer expectations of
highest quality; leading technology; competitive
pricing; individual and company accountability;
best-in-class service and support; flexible
customization capability; superior corporate
citizenship; financial stability.
Ch 2 -30

Proctor & Gamble will provide branded products
and services of superior quality and value that
improve the lives of the worlds consumers. As a
result, consumers will reward us with industry
leadership in sales, profit, and value creation,
allowing our people, our shareholders, and the
communities in which we live and work to prosper.
Ch 2 -31

At LOreal, we believe that lasting business
success is built upon ethical standards which
guide growth and on a genuine sense of
responsibility to our employees, our consumers,
our environment and to the communities in which
we operate.
Ch 2 -32
Importance of Mission
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.
Bart and Baetz found a positive relationship
between mission statements and organizational
performance.
Business Week reports that firms using mission
statement have a 30 percent higher return on
financial measures than those without such
statements.
Ch 2 -33
Importance of Mission
Benefits from a strong mission
Unanimity/unity of Purpose
Resource Allocation
Mission
Organizational Climate
Focal Point for Work
Structure
Ch 2 -34
Benefits from a strong

mission
1.
2.
3.
4.
5.
6.
To ensure unanimity of purpose within the organization

To provide a basis, or standard, for allocating organizational
resources
To establish a general tone or organizational climate
To serve as a focal point for individuals to identify with the
organizations purpose and direction, and to deter those who
cannot from participating further in the organizations activities
To facilitate the translation of objectives into a work structure
involving the assignment of tasks to responsible elements within
the organization
To specify organizational purposes and the translation of these
purposes into objectives in such a way that cost, time, and
performance parameters can be assessed and controlled
Ch 2 -35
Effective Missions
Broad
Broadin
inscope
scope
Generate
Generatestrategic
strategic
alternatives
alternatives
Not
Notoverly
overlyspecific
specific
Reconciles
Reconcilesinterests
interestsamong
among
diverse
diversestakeholders
stakeholders
Finely
Finelybalanced
balancedbetween
between
specificity
specificity&&generality
generality
Ch 2 -36
Effective Missions
Arouse
Arousepositive
positivefeelings
feelings&&
emotions
emotions
Motivate
Motivatereaders
readersto
toaction
action
Generate
Generatefavorable
favorable
impression
impressionof
ofthe
thefirm
firm
Ch 2 -37
Effective Missions
Reflect
Reflectfuture
futuregrowth
growth
Provide
Providecriteria
criteriafor
forstrategy
strategy
selection
selection
Basis
Basisfor
forgenerating
generating&&
evaluating
evaluatingstrategic
strategicoptions
options
Are
Aredynamic
dynamicin
innature
nature
Ch 2 -38
Natural Environmental
Perspective
Is
Your Firm Environmentally Proactive?
Preserving the natural

resources is good
business!
Reactive environmental
policies can be
expensive
Proactive policies force
companies to innovate
and upgrade processes
Ch 2 -39
Mission & Customer

Orientation Vern McGinnis
Define what the organization is

Define what it aspires to be
Limited to exclude some ventures
Broad enough to allow for growth
Distinguishes firm from all others
Stated clearly understood by all
Ch 2 -40
Mission & Customer

Orientation
An Effective Mission Statement
Anticipates customer needs

Identifies customer needs
Provides product/service to satisfy needs
Ch 2 -41
Social Policy & Mission

Managerial philosophy shapes social policy
Affects development of vision & mission
Responsibilities to
Consumers
Environmentalists
Minorities
Communities
Ch 2 -42
Social Policy & Mission
Social policy should be integrated in all

strategic-management activities
Mission should convey the social
responsibility of the firm
Ch 2 -43
Mission Statements
2007 Most Admired in Social Responsibility
1. CHS
6. YRC Worldwide
2. United Parcel Service
7. Starbucks
3. Whole Foods Market
8. International Paper
4. McDonalds
9. Vulcan Materials
5. Alcan
10. Walt Disney
Ch 2 -44
Mission Statements
2007 Least Admired in Social Responsibility
1. Visteon
6. Arvin Meritor
2. Dana
7. Huntsman
3. CA
8. Navistar International
4. Delphi
9. Lyondell Chemical
5. Federal-Mogul
10. Toys R Us
Ch 2 -45
Vision & Mission

Research results are mixed, however, firms
with formal mission statements generally
see a:
2x average return on shareholders equity

Positive relationship to company performance
30% higher return on certain financial measures
Ch 2 -46
Global Perspective
Social Policies on Retirement: Japan Versus the
World
Labor shortages due to
aging population
Shortages can be met by
immigration
Historical barriers to
immigration in Japan lead
to significant economic
problems
Ch 2 -47
Customers
Employees
Public
Image
Products or
Services
Markets
Mission
Components
Technology
Survival,
Growth,
Profits
Self-Concept
Philosophy
Ch 2 -48
MISSION STATEMENT COMPONENTS
1. Customers: Who are the firms customers?

2. Products or services: What are the firms major products?
3. Markets: Geographically, where does the firm compete?
4. Technology: Is the firm technologically current?
5. Concern for survival, growth, and profitability: Is the firm
committed to growth and financial soundness?
6. Philosophy: What are the basic beliefs, values, aspirations,
and ethical priorities of the firm?
7. Self-concept: What is the firms 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?
Ch 2 -49
Ch 2 -50
Mission Statement Evaluation Matrix

COMPONENT
COMPONENT
COMPONENT
Customers
Products
or Services
Markets
Concern for
Survival,
Growth,
Profitability
Technology
Fleetwood Ent.
Yes
Yes
No
Yes
Yes
Ben & Jerry's
No
Yes
Yes
No
Yes
Royal Caribbean
Yes
No
No
No
No
Dell
Yes
Yes
Yes
Yes
Yes
Proctor & Gamble
Yes
No
Yes
No
Yes
LOreal
No
No
No
No
No
Organization
COMPONENT
COMPONENT
Ch 2 -51
Mission Statement Evaluation Matrix

COMPONENT
COMPONENT
COMPONENT
COMPONENT
Philosophy
SelfConcept
Concern for
Public Image
Concern for
Employees
Fleetwood Ent.
Yes
Yes
No
Yes
PepsiCo
Yes
No
Yes
Yes
Royal Caribbean
Yes
Yes
No
Yes
Dell
Yes
Yes
Yes
No
Proctor & Gamble
No
Yes
Yes
Yes
LOreal
No
Yes
Yes
Yes
Organization
Ch 2 -52
Teamwork
Write a mission statement, either for a

business, personal or family.
Ch 2 -53
Review
Compare and contrast vision statements

with mission statements in terms of
composition and importance.
Many organizations develop both a mission
statement and a vision statement. Whereas
the mission statement answers the question,
What is our business? the vision statement
answers the question, What do we want to
become? Both statements are essential for
firm success.
Ch 2 -54
Review
Do local petrol stations need to have

written vision and mission statements?
Why or why not?
Why do you think organizations that have
a comprehensive mission statement tend
to be high performers? Does having a
comprehensive mission cause high
performance?
Ch 2 -55
Review
Explain why a mission statement should not

include strategies and objectives.
The statement needs to be broad in scope to
effectively provide a basis for performing an external
and internal audit and for generating and selecting
among alternative strategies.
specific strategies and objectives in a mission
statement could reduce the level of innovative and
creative thinking in an organization.
jeopardizes the potential for the statement to be
widely accepted by all managers and employees of
the organization.
Ch 2 -56
Review
What is your college or universitys selfconcept? How would you state that in a
mission statement?
Why is it important for a mission
statement to be reconciliatory? (different
stakeholders)
Ch 2 -57
Review
In your opinion, what are the three most

important components to include in
writing a mission statement? Why?
All of the evaluative criteria described in
Chapter 2 are important, but three are
particularly important: customers, products or
services, and markets.
Ch 2 -58

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Chapter 2

The Business Vision & Mission

Copyright 2009 Pearson Education, Inc.

Objectives of the chapter

Describe the nature and role of vision and mission

Copyright 2009 Pearson Education, Inc.

What Is Our Business?

Importance of Vision and Mission Statements

Copyright 2009 Pearson Education, Inc.

Chapter Outline (contd)

Components of a Mission Statement

Writing & Evaluating Mission Statements

Copyright 2009 Pearson Education, Inc.

The last thing IBM needs right now is a

What IBM needs most right now is a

Agreement on the basic vision for which the

Copyright 2009 Pearson Education, Inc.

What do we want to become?

Copyright 2009 Pearson Education, Inc.

Copyright 2009 Pearson Education, Inc.

Vision & Mission

Copyright 2009 Pearson Education, Inc.

Vision Statement Examples

Tyson Foods vision is to be the worlds first

Copyright 2009 Pearson Education, Inc.

Many organizations have both a vision and a

Copyright 2009 Pearson Education, Inc.

Vision Statement Examples

General Motors vision is to be the world

Copyright 2009 Pearson Education, Inc.

Vision Statement Examples

PepsiCos responsibility is to continually

Copyright 2009 Pearson Education, Inc.

Vision Statement Examples

Dells vision is to create a company culture

Copyright 2009 Pearson Education, Inc.

90% of all companies have used a

Copyright 2009 Pearson Education, Inc.

What is our business?

Copyright 2009 Pearson Education, Inc.

Enduring statement of purpose

Copyright 2009 Pearson Education, Inc.

Copyright 2009 Pearson Education, Inc.

Reveal what an organization wants to be

Copyright 2009 Pearson Education, Inc.

Essential for effectively establishing

Copyright 2009 Pearson Education, Inc.

Vision & Mission

Many organizations develop both vision &

Copyright 2009 Pearson Education, Inc.

Vision & Mission

Profit & vision are necessary to effectively

Copyright 2009 Pearson Education, Inc.

Vision & Mission

Shared vision creates a community of

Copyright 2009 Pearson Education, Inc.

Developing Vision & Mission

Clear mission is needed before alternative

Copyright 2009 Pearson Education, Inc.

Developing Vision & Mission

Participation from diverse managers is

Copyright 2009 Pearson Education, Inc.

Developing Vision & Mission

Ask managers to prepare a mission statement for the organization.