Business Policy and Strategy Lecture 06 1Business Strategy and Policy

Recap Vision and Mission Statement – “What is our business?”- Mission Statement – “What do we want to become?” Vision Statement Examples Characteristic of Mission Statement 2Business Strategy and Policy

Today’s Lecture Importance of Vision and Mission Statement Reason for developing a written Mission Statement Components of Mission Statement 3Business Strategy and Policy

Importance of Vision and Mission Statement Mission Statements must be well documented – Firms with a formalized mission statement have twice the average return on shareholders equity than those firms without a formalized mission statement. – Research highlighted that there is positive relationship between mission statement and organizational performance. – Business Week reported that firms using mission statement have a 30 percent higher return on fina ncial measures than those without such statements. 4Business Strategy and Policy

Reasons for Developing a Written Mission Statement To ensure unity of purpose within the organization To provide a basis, or standard, for allocating organization al resources To establish a general tone or organizational climate To serve as a focal point for individuals to identify organization’s purpose and direction, and to discourage those who cannot from participating further in the organization’s activities 5Business Strategy and Policy

Reasons for Developing a Written Mission Statement To facilitate the translation of objectives into a work breakdown structure To specify organizational purposes and the translation of these purposes into objectives. It helps in – Assessment and controlling of cost time and performance parameters. 6Business Strategy and Policy

Why Written Mission Statement is important? Developing a comprehensive mission statement is important because divergent views important among managers can be revealed and resolved through this process. Considerable disagreement among an organization’s strategists over vision and mission can cause trouble if not resolved. An organization that fails to develop a vision statement loses the opportunity to present itself favorably to existing potential stakeholders. 7Business Strategy and Policy

Components of Mission Statement Customers: Who are the firm’s customers? Products or services: What are the firm’s major products? Markets: Geographically, where does the firm compete? Technology: Is the firm technologically current? Concern for survival, growth, and profitability: Is the firm committed to growth – and financial soundness? Business Strategy and Policy8

Philosophy: – What are the basic beliefs, values, aspirations, and eth ical priorities of the firm? Self Concept: – What is the firm’s distinctive competence or major competitive advantage? Concern for public image: – Is the firm responsive to social, community, and environmental concerns? Concern for employees: – Are employees a valuable asset of the firm? Business Strategy and Policy9

Summary Importance of Vision and Mission Statement – Business Week reported that firms using mission statement have a 30 percent higher return on financial measures that those without such statements. Reason for developing a written Mission Statement – Considerable disagreement among an organization’s strategists over vision and mission can cause trouble if not resolved. Business Strategy and Policy10

Components of Mission Statement 1.Customers 2.Products or services 3.Markets 4.Technology 5.Concern for survival, growth, and profitability 6.Philosophy 7.Self Concept 8.Concern for public image 9.Concern for employees Business Strategy and Policy11

Next Lecture Why Firms do not Plan strategically? Benefits of planning Strategically Business Strategy and Policy12