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

Chapter Outline What Do We Want to Become? What Is Our Business? Importance of Vision and Mission Statements Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Chapter Outline (cont’d) Characteristics of a Mission Statement Components of a Mission Statement Writing & Evaluating Mission Statements Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

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

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

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

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

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

Vision Statement Examples 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. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Mission Statement Examples 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. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Mission Statement Examples 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. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Mission Statement Examples 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. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Mission Statement Examples 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. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Organizational Climate Focal Point for Work Structure Importance of Mission Benefits from a strong mission Unanimity of Purpose Mission Resource Allocation Organizational Climate Focal Point for Work Structure Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Effective Missions Broad in scope Generate strategic alternatives Not overly specific Reconciles interests among diverse stakeholders Finely balanced between specificity & generality Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Effective Missions Arouse positive feelings & emotions Motivate readers to action Generate favorable impression of the firm Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Effective Missions Reflect future growth Provide criteria for strategy selection Basis for generating & evaluating strategic options Are dynamic in nature Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

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

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

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

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

Mission Statements 2007 Most Admired in Social Responsibility CHS United Parcel Service Whole Foods Market McDonald’s Alcan YRC Worldwide Starbucks International Paper Vulcan Materials Walt Disney Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Mission Statements 2007 Least Admired in Social Responsibility Visteon Dana CA Delphi Federal-Mogul Arvin Meritor Huntsman Navistar International Lyondell Chemical Toys “R” Us Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

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

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

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

Mission Statement Evaluation Matrix COMPONENT   COMPONENT Organization Customers Products or Services Markets Concern for Survival, Growth, Profitability Technology   Fleetwood Ent. Yes No Ben & Jerry's Royal Caribbean  No Dell Proctor & Gamble L’Oreal Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Mission Statement Evaluation Matrix   COMPONENT COMPONENT COMPONENT     Organization Philosophy Self-Concept Concern for Public Image Concern for Employees Fleetwood Ent. Yes No PepsiCo Royal Caribbean   Yes Dell Proctor & Gamble L’Oreal Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

For Review (Chapter 2) Key Terms & Concepts Concern for Employees Customers Concern for Public Image Markets Survival, Growth, & Profitability Mission Statement Components Creed Statement Managerial Philosophy Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

For Review (Chapter 2) Key Terms & Concepts Self-Concept Stakeholders Social Policy Vision Statement Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall