Ch 2 -1 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Chapter 2 The Business Vision & Mission Strategic Management: Concepts & Cases 12 th Edition Fred David

Ch 2 -2 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Objectives of the chapter 1. Describe the nature and role of vision and mission statements in strategic management. 2. Discuss why the process of developing a mission statement is as important as the resulting document. 3. Identify the components of mission statements. 4. Discuss how clear vision and mission statements can benefit other strategic-management activities. 5. Evaluate mission statement of different organizations. 6. Write good vision and mission statements.

Ch 2 -3 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall “The last thing IBM needs right now is a vision.” (July 1993) Vision “What IBM needs most right now is a vision.” (March 1996) – Louis V. Gerstner, Jr., CEO, IBM Corporation

Ch 2 -4 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Vision Agreement on the basic vision for which the firm strives to achieve in the long run is critically important to the firm’s success.

Ch 2 -5 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall “What do we want to become?” Vision

Ch 2 -6 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Comprehensive Mission Statement Vision Clear Business Vision

Ch 2 -7 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Shared Vision – Creates commonality of interests Reduce daily monotony\repeatative Provides opportunity & challenge Vision & Mission

Ch 2 -8 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Vision Statement Examples Tyson Foods’ vision is to be the world’s first choice for protein solutions while maximizing shareholder value.

Ch 2 -9 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Vision Statement Many organizations have both a vision and a mission statement. but the vision statement should be established first and foremost\prime. The vision statement should be short, preferably one sentence, as many managers as possible should have input into developing the statement.

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall General Motors’ vision is to be the world leader in transportation products and related services. Vision Statement Examples

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall PepsiCo’s responsibility is to continually improve all aspects of the world in which we operate – environment, social, economic – creating a better tomorrow than today. Vision Statement Examples

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Dell’s vision is to create a company culture where environmental excellence is second nature. Vision Statement Examples

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall – 90% of all companies have used a mission statement in the previous five years Mission Statements

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall “What is our business?” Mission Statements

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Mission Statements Enduring\lasting statement of purpose Distinguishes one firm from another Declares the firm’s reason for being

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Mission Statements Creed/faith statement Statement of purpose Statement of philosophy Statement of business principles Also referred to as:

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Reveal what an organization wants to be and whom it wants to serve Mission Statements

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Essential for effectively establishing objectives and formulating strategies Mission Statements

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Vision & Mission Many organizations develop both vision & mission statements

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Vision & Mission Profit & vision are necessary to effectively motivate a workforce

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Vision & Mission Shared vision creates a community of interests

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Developing Vision & Mission Clear mission is needed before alternative strategies can be formulated and implemented

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Developing Vision & Mission Participation from diverse managers is important in developing the mission

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Developing Vision & Mission 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 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 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. Mission Statement Examples

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall We aspire to make PepsiCo the world’s 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. Mission Statement Examples

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Dell’s 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. Mission Statement Examples

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Proctor & Gamble will provide branded products and services of superior quality and value that improve the lives of the world’s 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. Mission Statement Examples

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall At L’Oreal, 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. Mission Statement Examples

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 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 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Benefits from a strong mission 1. To ensure unanimity of purpose within the organization 2. To provide a basis, or standard, for allocating organizational resources 3. To establish a general tone or organizational climate 4. To serve as a focal point for individuals to identify with the organization’s purpose and direction, and to deter those who cannot from participating further in the organization’s activities 5. To facilitate the translation of objectives into a work structure involving the assignment of tasks to responsible elements within the organization 6. 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 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 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

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 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

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 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

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 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

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Anticipates customer needs Identifies customer needs Provides product/service to satisfy needs Mission & Customer Orientation An Effective Mission Statement –

The following are relevant to develop mission Do not offer me clothes. Offer me attractive look. Do not offer me shoes. Offer me comfort for feet and 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 a book. Offer me ours of pleasure and the benefit of knowledge, Do not offer me records. Offer me leisure and sound of music. Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Affects development of vision & mission Responsibilities to –  Consumers  Environmentalists  Minorities  Communities Social Policy & Mission Managerial philosophy shapes social policy –

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Social Policy & Mission Social policy should be integrated in all strategic-management activities Mission should convey the social responsibility of the firm

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Mission Statements 1. CHS 2. United Parcel Service 3. Whole Foods Market 4. McDonald’s 5. Alcan 2007 Most Admired in Social Responsibility 6. YRC Worldwide 7. Starbucks 8. International Paper 9. Vulcan Materials 10. Walt Disney

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Mission Statements 1. Visteon 2. Dana 3. CA 4. Delphi 5. Federal-Mogul 2007 Least Admired in Social Responsibility 6. Arvin Meritor 7. Huntsman 8. Navistar International 9. Lyondell Chemical 10. Toys “R” Us

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 2x average return on shareholders’ equity Positive relationship to company performance 30% higher return on certain financial measures Vision & Mission Research results are mixed, however, firms with formal mission statements generally see a:

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 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 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Mission Components Customers Markets Employees Public Image Self-Concept Philosophy Survival, Growth, Profits Products or Services Technology

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall MISSION STATEMENT COMPONENTS 1.Customers: Who are the firm’s customers? 2.Products or services: What are the firm’s 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 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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Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Mission Statement Evaluation Matrix COMPONENT OrganizationCustomers Products or ServicesMarkets Concern for Survival, Growth, ProfitabilityTechnology Fleetwood Ent.Yes NoYes Ben & Jerry'sNoYes NoYes Royal CaribbeanYes No DellYes Proctor & GambleYesNoYesNoYes L’OrealNo

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Mission Statement Evaluation Matrix COMPONENT OrganizationPhilosophy Self- Concept Concern for Public Image Concern for Employees Fleetwood Ent.Yes NoYes PepsiCoYesNoYes Royal Caribbean Yes NoYes DellYes No Proctor & GambleNoYes L’OrealNoYes

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Teamwork Write a mission statement, either for a business, personal or family.

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 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 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 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 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 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 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Review What is your college or university’s self- concept? How would you state that in a mission statement? Why is it important for a mission statement to be reconciliatory? (different stakeholders)

Ch Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 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.