1. Defining the Company’s Mission
Session 3
Defining the Company’s Mission

2. Session Objectives
To explore the concept and usefulness of mission and mission statements
Develop Guidelines for Formulating a Mission
Introduce the Concept of Corporate Governance

3. What is a Company Mission?
A broadly framed but enduring statement of a firm’s intent. It is the unique purpose that sets a company apart from others of its type and identifies the scope of its operations in product, market, and technology terms.

4. Benefits of a Well-Developed Mission Statement
DISTINGUISH ORGANIZATIONS FROM THE COMPETITION
FEDERATE AND BOND THE WORKFORCE
CHALLENGE THE ORGANIZATION TO ACHIEVE OBJECTIVES
ENHANCE DECISION-MAKING BY HARMONIZING VALUES AND VISION
IMPROVE THE PLANNING PROCESS

5. Characteristics of a Mission Statement
Embodies the business philosophy of the firm’s strategic decision makers
Implies image firm seeks to project
Reflects firm’s self-concept
Indicates
firm’s principal product or service areas
primary customer needs the firm will attempt to satisfy

6. Mission Statement Components
Customer-market
Product-service
Geographic Domain
Technology
Concern for Survival
Philosophy
Self-concept
Concern for Public Image

7. Three Essential Components:
Basic Product or Service
Primary Market
Principal Technology
If a firm uses a “silver bullet” mission for outsiders to read, it will include these three components.

8. CISCO SYSTEMS MISSION STATEMENT
SHAPE THE FUTURE OF THE INTERNET BY CREATING UNPRECEDENTED VALUE AND OPPORTUNITY FOR OUR CUSTOMERS

9. Primary Company Goals:
Survival – failure means incapable of satisfying the aims of any of its stakeholders.
Profitability –mainstay goal of a business.
Growth –Growth in this sense must be broadly defined.

10. Company Philosophy AKA company creed.
Usually appears within the mission statement
Beliefs, values, aspirations, and philosophical priorities

11. GE’S VALUE STATEMENT ALL OF …ALWAYS WITH UNYIELDING INTEGRITY…
ARE PASSIONATELY FOCUSED ON DRIVING CUSTOMER SUCCESS
LIVE SIX SIGMA QUALITY…ENSURE THAT THE CUSTOMER IS ALWAYS ITS FIRST BENEFICIARY..AND USE IT TO ACCELERATE GROWTH
INSIST ON EXCELLENCE AND ARE INTOLERANT OF BUREAUCRACY
ACT IN BOUNDARYLESS FASHION
DEMONSTRATE WITH INFECTIOUS ENTHUSIASM FOR THE CUSTOMER THE FOUR E’S OF GE LEADERSHIP
PERSONAL ENERGY
CREATE ENERGIZING ATMOSPHERE
EDGE TO MAKE DIFFICULT DECISIONS
ABILITY TO CONSISTENTLY EXECUTE

12. Public Image
Customers attribute certain qualities to particular businesses.
Firms seldom address the question of their public image.
Chance to define public image (the elevator conversation).

13. Company Self-Concept
Extent to which the firm can relate functionally to its external environment.
Demonstrates an understanding of their impact on others or of others on them.
Ordinarily, do not appear in mission statements.

14. Newest Trends in Mission Components
The following are increasingly integral parts in the development of missions:
Customers as a priority
Quality as a priority
Inspirational vision statement

15. Newest Trends in Mission Components
Statements of company vision
Developed to express the aspirations of the executive leadership
Presents the firm’s strategic intent
“A computer on every desk, and in every home, running on Microsoft software”

16. Word of the Day
Corporate Governance

17. Corporate Governance Essentially the management of management
Purpose is to monitor management decision-making and behavior to ensure they are in best interest of shareholder wealth creation

18. Boards of Directors
The Chief Governing Body of Corporations

19. Boards of Directors
The board of directors is the group of stockholder representatives and strategic managers responsible for overseeing the creation and accomplishment of the company mission.

20. Major Board Responsibilities:
Establish and update mission
Elect and set pay of top officers & CEO
Set amount & timing of dividends
Set broad company policy, objectives and authorize managers to implement long-term strategy
Mandate company’s legal and ethics compliance

21. The Agent - Principle Relationship
Involves separation of owners (principals) and managers (agents) of a firm
Potential exists for owners’ wishes to be ignored
Involves delegation of decision-making authority by owners to managers

22. How Can Agency Problems Occur?
Moral hazard problem
Owners have access to limited information
Owners cannot monitor every executive decision
Executives often free to pursue own interests
Adverse selection
Stockholders have limited ability to determine competencies of executives at time of hire
Problems of overlapping priorities between owners and executives likely to occur

23. Potential Agency Relationship Problems
Executives pursue growth in company size rather than in earnings
Executives attempt to diversify their corporate risk
Executives avoid risk
Managers act to optimize their personal payoffs
Executives act to protect their status

24. Agency Theory
Agency theory is a set of ideas on organizational control based on the belief that the separation of the ownership from management creates the potential for the wishes of owners to be ignored.

25. Aligning Executive Interests with Owner Interests
Stock Option Plans
Bonus plans
Incentives for Long-Term Performance

26. Solutions to the Agency Problem
Define agent’s responsibilities in a contract, including elements like bonuses to align executives’ and owners’ interests
Pay executives a premium for their services
Structure a backloaded compensation plan for executives
Create teams of executives across different organizational units to focus on overall organizational performance

27. Wal Mart
To provide value and service to our customer by offering a wide variety of quality merchandise at the lowest possible price in an atmosphere of prompt and courteous service in our small town markets. To be an innovative and forward-looking company that controls expenses to the maximum degree possible. To be dedicated to continuing and profitable growth. To maintain a partnership with our associates and to remain committed to the communities in which we operate stores; by enhancing the quality of life in those local communities through a commitment to good business, economic development and philanthropy.

28. Tam's Tavern
At Tam's Tavern it is our mission to make sure that you come back soon. Here is how we are going to do that. We are going to give you good food and good service in a pleasant environment. We are  going to do it for a very fair price. There, that wasn't so hard was it? But there is more. We are going to try and be a good corporate citizen. We are going to recycle all of our glass, plastic, paper and every thing else our city and county will let us. We are going to take good care of the employees of Tam's because, well, there are many reasons why we should but mainly because it's the right thing to do. It is the people of Tam's that make it special.  Our only limitations are the imagination. What can we do for you?