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Chapter 2The Business Vision & Mission

Strategic Management: Concepts & Cases

10th EditionFred David

PowerPoint Slides by

Va Siheng, MBA.

National University of Management

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• Value• Vision statement• Mission statement• Goal and objective

Chapter Outline

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“Management’s job is not to

see the company as it

is….but as it can become.”

John W. Teets“Quote”

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I-Corporate Values

• Corporate values are the underlying principles which guide and also drive the actions and activities of individual companies.

– A set of principles that further clarifying what we stand for.

– A compass for individual and collective behavior.

– A clarification of what we are prepared to be judged on by audiences.

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I-Corporate Values

Each company or organization has their own set of values.

• “Heart and Soul” of the organization– Performance– Reputation

• Endure throughout the life of the organization.

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• Question: What values or beliefs do you want to represent your company?

• Facilitator selected top managers and key personnel to complete values form.

• Brainstorming Exercise • Final agreement by consensus on

the best values to represent company.

Developing a Corporate Values

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Accountability Innovation Social Responsibility

Commitment Leadership Speed

Creativity Loyalty Teamwork

Customer Service Multi-Cultural Technology

Dependability Partnership Transparency

Equality Privacy Trust

Entrepreneurial Progressive Unique

Excellence Quality Other Values:

Freedom Reliability

Honesty Safety

VALUES SELECTION FORM

Source: William Bean, Strategic Planning That Makes Things Happen, p. 101.

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Important values

Customers

Management & Employees

Living values

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II- Vision statement

Agreement on the basic vision for which the firm strives to achieve in the long run is critically important to the firm’s success.

“What do we want to become?”

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ComprehensiveMission Statement

Clear Business Vision

Vision & Mission

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Vision & Mission

Many organizations develop both vision & mission statements.

Vision statement--• Should be established first and foremost• Short – preferably one sentence• Broad management involvement

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National Pawnbrokers Association: “The Vision of the National Pawnbrokers Association is to have complete and vibrant membership that enjoys a positive public and political image and is the focal organization of all pawn associations”.

Vision Statement Examples

-- National Pawnbrokers Association (npa.ploygon.net)

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The Bellevue Hospital: “Is the LEADER in providing resources necessary to realize the community’s highest level of HEALTH throughout life”.

Vision Statement Examples

-- U.S POULTRY & EGG Association

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-- 90% of all companies have used a mission statement in the previous five years.

III- Mission statement

“What is our business?”

•Enduring statement of purpose

•Distinguishes one firm from another

•Declares the firm’s reason for being

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Mission Statements

•Creed statement

•Statement of purpose

•Statement of philosophy

•Statement of business principles

Also referred to as:

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Reveal what an organization wants to be and whom it wants to serve

Mission Statements

Essential for effectively establishing objectives and formulating strategies.

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Vision & Mission

Many organizations develop both vision & mission statements.

It can be argued that profit, not

mission or vision.

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Vision & Mission

Profit & vision are necessary to effectively motivate a workforce

Shared Vision --– Creates commonality of interests– Reduce daily monotony– Provides opportunity & challenge

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Developing Vision & Mission

Clear mission is needed before alternative strategies can be formulated and implemented

Participation from diverse managers is important in developing the mission.

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Developing Vision & Mission

Approach to developing --– Select several articles about vision

or mission– Read as background information– Ask to prepare a draft statement– A facilitator merge into document– Request for modifications, Additions,

and deletions– Revise the document

• Reach final agreement by consensus on vision or mission of the company.

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The Bellevue Hospital, with respect, compassion, integrity, and courage, honors the individuality and confidentiality of our patients, employees, and community, and is progressive in anticipating and providing future health care services.

Mission Statement Examples

-- The Bellevue Hospital

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Coca-Cola: “As the world’s largest beverage company, we refresh the world. We do this by developing superior soft drinks, both carbonated and non-carbonated, and profitable non-alcoholic beverage systems that create value for our company, our bottling partners and our customers.”

Mission Statement Examples

Microsoft: “Since its inception in 1975, Microsoft’s mission has been to create software for the personal computer that empowers and enriches people in the workplace, at school and at home.”

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Importance of Mission

MissionResource Allocation

Unanimity of Purpose

Organizational Climate

Focal point for work structure

Benefits from a strong mission

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Broad in scope

Generate strategic alternatives

Not overly specific

Reconciles interests among diverse stakeholders

Finely balanced between specificity & generality

Broad in scope

Generate strategic alternatives

Not overly specific

Reconciles interests among diverse stakeholders

Finely balanced between specificity & generality

Effective Missions

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Arouse positive feelings & emotions

Motivate readers to action

Generate favorable impression of the firm

Arouse positive feelings & emotions

Motivate readers to action

Generate favorable impression of the firm

Effective Missions

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Reflect future growth

Provide criteria for strategy selection

Basis for generating & evaluating strategic options

Are dynamic in nature

Reflect future growth

Provide criteria for strategy selection

Basis for generating & evaluating strategic options

Are dynamic in nature

Effective Missions

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• Define what the organization is

• Define what it aspires to be

• Limited to exclude some ventures

Mission & Customer Orientation – Vern McGinnis

• Broad enough to allow for growth

• Distinguishes firm from all others

• Stated clearly – understood by all

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• Anticipates customer needs

• Identifies customer needs

• Provides product/service to satisfy needs

Mission & Customer Orientation

An Effective Mission Statement --

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• 2x average return on shareholder’s equity

• Positive relationship to company performance

• 30% high return on certain financial measures

Vision & Mission

Research results are mixed, however, firms with formal mission statements --

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Mission Elements

CustomersMarkets

Employees

PublicImage

Self-Concept Philosophy

SurvivalGrowthProfit

ProductsServices

Technology

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PepsiCo MissionPepsiCo’s mission is to increase the value of our

shareholders’ investment. We do this through sales growth, cost controls, and wise investment resources. We believe our commercial success depends upon offering quality and value to our consumers and customers; providing products that are safe, wholesome, economically efficient and environmentally sound; and providing a fair return to our investors while adhering to the highest standards of integrity.

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Ben & Jerry’s MissionBen & Jerry’s mission is to make, distribute and sell the

finest quality all-natural ice cream and related products in a wide variety of innovative flavors made from Vermont dairy products. To operate the Company on a sound financial basis of profitable growth, increasing value for our shareholders, and creating career opportunities and financial rewards for our employees. To operate the Company in a way that actively recognizes the central role that business plays in the structure of society by initiating innovative ways to improve the quality of life of a broad community—local, national and international.

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Mission Statement Evaluation Matrix

COMPONENTS          

Organization CustomersProducts Services Markets

Concern for

Survival, Growth,

Profitability Technology

           

PepsiCo Yes No No Yes No

Ben & Jerry's No Yes Yes Yes No

           

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Mission Statement Evaluation Matrix

COMPONENTS          

Organization PhilosophySelf-

ConceptConcern for Public Image

Concern for Employees

         

PepsiCo Yes No No No

Ben & Jerry's No Yes Yes Yes

         

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THE AEROSPACE CORPORATION

-- VISION --

To be the world's leader in the application of space technology.

-- MISSION --

To apply our technical knowledge and expertise to enable our customers to successfully exploit the full potential of space and

space technology.

-- VALUES --

Integrity - Technical Excellence - ObjectivityDedication to Mission Success - Commitment to Our People.

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The VISION of Northwest Airlines : To build together the world's most preferred airline with the best people; each committed to exceeding our customers' expectations every day.

Our MISSION: The people of Northwest Airlines will provide reliable, convenient and consistent air transportation that meets or exceeds customer expectations and earns a sustainable profit.

Our VALUES: Northwest has eight essential values or standards that Northwest people are expected to uphold.

Safety first

Honesty and integrity

Trustworthiness

Respect for self, others and for property

Caring

Resourcefulness and innovation

Commitment to profitability

Enthusiasm and camaraderie

NORTHWEST AIRLINES

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Summary Values, Vision, Mission

• The reason for preparing Values, Vision and Mission statements is to provide a sense of purpose and direction for the organization which is much greater than simply making a profit.

• Once completed, these statements should be shared with the company’s management, employees and primary customers.

• These statements should also serve to both motivate and guide the actions of the company’s managers and employees.

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• Goals and objectives are statements focusing on “what” the company or organization wants to do, accomplish or achieve.

• Strategies are the methods or actions necessary to achieve or accomplish goals and objectives.

IV-Goals and Objectives

• Goals and objectives can have: Short-term range (1 year or less); Intermediate term range (1 to 2 years); Long-term range (2 to 5 years or more);

• Strategic goals/objectives have a long term range.

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• It is important to note that for some people, goals and objectives are slightly different.– Some people define “goals” as being

general statements (usually long-term) of what a company wants to do or accomplish, while defining “objectives” as specific statements (usually short-term).

• We can therefore use the terms strategic goals or strategic objectives in an equivalent or interchangeable manner.

Goals & Objectives

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Goals/Objectives should be SMART

• Specific• Measurable• Attainable• Results-Oriented• Time-Limited

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Areas for Strategic Goals

Prentice Hall, 2000 Chapter 1 19

Areas in Which to Areas in Which to Set ObjectivesSet Objectives

• Profitability• Efficiency• Growth• Shareholder wealth• Utilization of resources• Reputation• Contributions to employees• Contributions to society• Market leadership• Technological leadership• Survival• Personal needs of management

1.19 Areas for Objectives

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Benchmarking

• The benchmarking process can help to facilitate the formulation of strategic goals /objectives.

• Benchmarking is a process of identifying best practices in specific areas in organizations both within and outside of an industry for the purpose of matching or exceeding them.

• After monitoring the performance of industry competitors and outsiders, challenging strategic goals/objectives can be set which seek to rival or surpass main competitors in regards to key strategic areas.

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Conclusion• Strategic goals/objectives are not formulated

in isolation from the general environment.• The internal and external audits, which are

the focus of the next lesson, have an impact on the quantitative and qualitative aspects of long term goals.

• In other words, strategic goals/objectives are set and periodically revised in relation to the firms existing strengths and weaknesses and external opportunities and threats.

• Strategic management is very much a dynamic process.