Regarding the “survival, growth, and profitability” component, for publicly held firms, share- holders often expect at least a 4 percent annual growth in revenues because otherwise individuals could redirect their money to achieve this rate of growth (usually) in the stock market. Regarding the “philosophy” component, CEO Mark Zuckerberg of Facebook recently condensed his com- pany’s mission statement to focus only on the “philosophy” component, as revealed in Ethics Capsule 2. Note: The authors feel that component 7 (distinctive competence) is the most impor- tant among the nine, followed by “customers” and then “philosophy,” but all nine components are important and need including.
strategists in the organization. Individuals who have worked together for a long time and who think they know each other suddenly may realize that they are in fundamental disagreement.
For example, in a college or university, divergent views among faculty regarding the relative importance of teaching, research, and service often are expressed during the development of the mission statement. Negotiation, compromise, and eventual agreement on important issues are needed before people in any organization or company can focus on more specific strategy- formulation activities.
Considerable disagreement among an organization’s strategists over vision and mission statements can cause trouble if not resolved. For example, unresolved disagreement over the business mission was one of the reasons for W. T. Grant’s bankruptcy and eventual liquidation.
Top executives of the firm, including Ed Staley and Lou Lustenberger, were firmly entrenched in opposing positions that W. T. Grant should be like Kmart or J. C. Penney, respectively. W. T.
Grant decided to adopt attributes of both Kmart and J. C. Penney; this compromise was a huge strategic mistake. In other words, top executives of W. T. Grant never resolved their vision or mission issue, which ultimately led to the firm’s disappearance.9
Too often, strategists develop vision and mission statements only when the organization is in trouble. Of course, the documents are needed then. Developing and communicating these state- ments during troubled times indeed may have spectacular results and may even reverse decline.
However, to wait until an organization is in trouble to develop a vision and mission statement is a gamble that characterizes irresponsible management. According to Drucker, as indicated, the most important time to ask seriously, “What do we want to become?” and “What is our busi- ness?” is when a company has been successful:
Success always obsoletes the very behavior that achieved it, always creates new realities, and always creates new and different problems. Only the fairy tale story ends, “They lived happily ever after.” It is never popular to argue with success or to rock the boat. It will not be long before success will turn into failure. Sooner or later, even the most successful an- swer to the question “What is our business?” becomes obsolete.10
In multidivisional organizations, strategists should ensure that divisional units perform strategic-management tasks (sometimes referred to as business-level strategy), including the development of a statement of vision and mission for their unique division. Each division should involve its own managers and employees in developing vision and mission statements that are consistent with and supportive of the corporate mission. The benefits of having a clear vision and mission are summarized in Table 2-5.
An organization that fails to develop an effective vision and mission statement loses the opportunity to present itself favorably to existing and potential stakeholders. All organizations need customers, employees, and managers, and most firms need creditors, suppliers, and dis- tributors. Vision and mission statements are effective vehicles for communicating with important TABLE 2-5 10 Benefits of Having a Clear Vision and Mission
1. Achieve clarity of purpose among all managers and employees.
2. Provide a basis for all other strategic planning activities, including internal and external assessment, establishing objectives, developing strategies, choosing among alternative strategies, devising policies, establishing organizational structure, allocating resources, and evaluating performance.
3. Provide direction.
4. Provide a focal point for all stakeholders of the firm.
5. Resolve divergent views among managers.
6. Promote a sense of shared expectations among all managers and employees.
7. Project a sense of worth and intent to all stakeholders.
8. Project an organized, motivated organization worthy of support.
9. Achieve higher organizational performance.
10. Achieve synergy among all managers and employees.
internal and external stakeholders. The principal benefit of these statements as tools of strategic management is derived from their specification of the ultimate aims of a firm. Vision and mission statements reveal the firm’s shared expectations internally among all employees and managers, and for external constituencies, reveal the firm’s long-term commitment to responsible, ethical action in providing a needed product or service to customers.
The Process of Developing Vision and Mission Statements
As many managers as possible should be involved in the process of developing these statements because, through involvement, people become committed to an organization. A widely used approach to developing vision and mission statements is first to select several articles (such as those listed as Current Readings at the end of this chapter) and ask all managers to read them as background information. Then, managers are asked to individually prepare vision and mission statements for the organization. A facilitator or committee of top managers should then merge these statements into a single document and distribute the draft statements to all managers.
A request for modifications, additions, and deletions is needed next, along with a meeting to revise the document. To the extent that all managers have input into and support the final docu- ments, organizations can more easily obtain managers’ support for other strategy formulation, implementation, and evaluation activities. Thus, the process of developing vision and mission statements represents a great opportunity for strategists to obtain needed support from all manag- ers in the firm.
Some organizations use discussion groups of managers to develop and modify existing statements. Other organizations hire an outside consultant or facilitator to manage the process and help draft the language. At times an outside person with expertise in developing such state- ments, who has unbiased views, can manage the process more effectively than an internal group or committee of managers.
When an effective process is followed, developing a mission statement can create an “emo- tional bond” and “sense of mission” among employees and customers. Commitment to a com- pany’s strategy and intellectual agreement on the strategies to be pursued do not necessarily translate into an emotional bond; hence, strategies that have been formulated may not be imple- mented. An emotional bond comes when an individual personally identifies with the underlying values and behavior of a firm, thus turning intellectual agreement and commitment to strategy into a sense of mission. Involving marketers and sales representatives in the development of the mission statement and writing statements from a customer perspective could enable firms to cre- ate an emotional bond with customers and enhance the likelihood that salespersons would be “on a mission” to provide excellent customer service.
Evaluating and Writing Mission Statements
A mission statement should provide more than mere inclusion of a single word such as products or employees regarding a respective component. Why? Because the statement should motivate stakeholders to action, as well as be customer-oriented, informative, inspiring, and enduring.
Perhaps the best way to develop a skill for writing and evaluating mission statements is to study actual company missions. Thus, Table 2-6 provides a component-by-component critique of an actual mission statement from Hershey. The Hershey statement is too brief, being only 14 words total, is too vague, and is missing six of the nine components.
As additional guidance for practitioners (and students), mission statements are written from a customer perspective and proposed for four companies as presented in Table 2-7. The state- ments include the 10 characteristics and 9 components presented previously. The statements are written to enhance customer satisfaction, especially if communicated to customers by market- ers, and backed by company commitment to and implementation of the mission message. The proposed statement for the footwear company Crocs, Inc., for example, talks about “dependable and lasting comfort all day,” whereas the UPS proposed statement talks about “the most timely, dependable, and accurate delivery times in the world.”
LO 2.8
TABLE 2-6 Two Mission Statements Critiqued
Hershey’s Actual Mission Statement (paraphrased) (12 words) We bring sweet moments (2) of Hershey happiness (6) to the world (3) every day.
(Author Comment: Statement lacks six components: Customers (1), Technology (4), Survival/Growth/
Profits (5), Distinctive Competence (7), Public Image (8), and Employees (9).
A Proposed Mission Statement for Hershey (73 words)
We aim to serve consumers of all ages and lifestyles (1) by providing high-quality chocolate, candy, and snack products (2) globally (3). We intend to grow and expand our product offerings (5) using robotics and business analytics (4). We are dedicated to supporting all communities where we operate (8), espe- cially to the boys and girls in the Milton Hershey School (6). Through our friendly and well-trained em- ployees (9), we provide consumers the best chocolate anywhere and wrapped in Hershey Happiness (7).
Key: Mission Statement Components 1. Customers
2. Products or services 3. Markets
4. Technology
5. Concern for survival, growth, and profitability 6. Philosophy
7. Distinctive competence 8. Concern for public image 9. Concern for employees
Source: Based on information at the various corporate websites.
TABLE 2-7 Four Mission Statements Revised
The numbers in parentheses correspond to the nine mission statement components.
Rite Aid
We are on a mission to offer the best possible drugstore experience for people of all ages (1) around the United States (3). We have a state-of-the-art information system (4) that provides our pharmacists (9) with warnings of any possible drug interactions to help better ensure customer safety (8). We are determined to improve our customers’ overall health through our wellness programs (5). We offer an ex- tensive line of other beauty, food, drink, cosmetic, and vitamin products through our alliance with GNC (2). We believe in treating our customers like family (6) and strive to maintain our reputation as the most personable drugstore (7). (88 words total)
Best Buy
We are committed to providing individuals and businesses (1) the latest high-tech products (2) at the lowest prices of any retail store (7). Serving North America, China, and other markets (3), all Best Buy employees (9) are exceptionally knowledgeable about the products we offer. We believe good ethics is good business (6) and use business analytics (4) to better understand customer trends. We strive to make a profit for our shareholders (5) and be a good community citizen everywhere we operate (8). (72 words) United Parcel Service (UPS)
We strive to be the most timely and dependable parcel and freight forwarding delivery service (2) in the world (3). By implementing the latest tracking technology (4), we are able to profitably grow (5) by offer- ing individuals and businesses (1) dependable and accurate delivery times (7). We promote from within to improve morale among all employees (9). Our philosophy (6) is to responsibly balance the needs of our customers, employees, shareholders, and communities (8) in an exemplary manner. (68 words)
Crocs, Inc.
Crocs is committed to providing profound comfort, fun and innovation in all the shoe models (2) we produce.
Through our Croslite technology (4) (7), we are able to provide men, women, and children (1) dependable and lasting comfort all day. We strive to expand our brand throughout the world (3) and are able to save on costs (5), while protecting the environment (8) with our package-less shoes. We adhere to the belief that good ethics is good business (6) in all that we do as we strive to take care of our employees and shareholders. (85 words) Source: Reprinted with permission from Fred. R. David, “Mission Statement Theory and Practice:
A Content Analysis and New Direction,” International Journal of Business, Marketing, and Decision Sciences 7, no. 1 (Summer 2014): 95–109.
IMPLICATIONS FOR STRATEGISTS
Figure 2-2 reveals that establishing and nurturing an effective vision and mission is a vital first step in gaining and maintaining competitive advantages. Businesses succeed by attracting and keeping customers, and they do this by providing value for customers through unique experiences, products, and/or services. Firms nurture their unique- ness as evidenced in the “distinctive competence” component in mission statements. Marketers continually assess customers’ chang- ing needs and wants and make appropriate adjustments in the design and delivery of products and services to sustain competitive advantage. Developing and communicating a clear business vision and mission is essential because without effective vision and mission statements, a firm’s short-term actions may be counterproductive to long-term interests. A clear vision and mission provides direction for all subsequent activities that endeavor to see customers, employ- ees, and shareholders concurrently “on a mission” to see the firm succeed.
Vision and mission statements are not just words that look nice when framed or engraved; they provide a basis for strategy and ac- tion; they reveal the reason a business opens its doors every day, the reason salespersons sell, the reason customers buy, and the reason employees work. The statements ideally are the passion behind the company, the foundation for employee morale, and the basis for customer loyalty. Written from a customer perspective and included in both oral and written communication with customers, the state- ments could be used to attract and keep customers. Vision and mis- sion statements do matter. Marketers pursue projects and managers make daily decisions mindful of the firm’s basic vision, mission, and resources. Managers work hard every day to motivate employees.
Executives are on a mission to present the firm favorably to many stakeholders. A clear vision and mission enables strategists to lead the way as a firm strives to gain, sustain, and grow its customer base and competitive advantages.
Establish A Clear Vision & Mission
Evaluate & Monitor Results:
Take Corrective Actions; Adapt
To Change
Gain & Sustain Competitive Advantages
Formulate Strategies:
Collect, Analyze, &
Prioritize Data Using Matrices; Establish A Clear Strategic Plan
Implement Strategies:
Establish Structure;
Allocate Resources;
Motivate & Reward;
Attract Customers;
Manage Finances
FIGURE 2-2
How to Gain and Sustain Competitive Advantages
Chapter Summary
Every organization has a unique purpose and reason for being. This uniqueness should be re- flected in vision and mission statements. The nature of a business’ core values, vision, and mis- sion can represent either a competitive advantage or disadvantage for the firm. An organization achieves a heightened sense of purpose when strategists, managers, and employees develop and communicate clear core values, vision, and mission. Drucker says that developing a clear busi- ness vision and mission is the “first responsibility of strategists.”
A quality mission statement reveals an organization’s customers; products or services; mar- kets; technology; concern for survival, growth, and profitability; philosophy; distinctive com- petence; concern for public image; and concern for employees. These nine basic components serve as a practical framework for evaluating and writing mission statements. As the first step in strategic management, the vision and mission statements provide direction for all planning activities. As indicated next in the mini-case, even Under Armour’s vision and mission state- ments can be improved.
Well-designed vision and mission statements are essential for formulating, implementing, and evaluating strategy. Developing and communicating a clear business vision and mission are the most commonly overlooked tasks in strategic management. Without clear statements of vision and mission, a firm’s short-term actions can be counterproductive to long-term in- terests. Vision and mission statements always should be subject to revision, but, if carefully prepared, they will require infrequent major changes. Vision and mission statements should serve as guidance and be reviewed often when divergent views arise among managers on vari- ous strategies to implement. Organizations usually reexamine their vision and mission state- ments annually. Effective vision and mission statements stand the test of time.
Core values, vision, and mission statements are essential tools for strategists—a fact illus- trated in a short story told by Porsche’s former CEO Peter Schultz (paraphrased):
Three guys were at work building a large church. All were doing the same job, but when each was asked what his job was, the answers varied: “Pouring cement,” the first re- plied; “Earning a paycheck,” responded the second; “Helping to build a cathedral,” said the third. Few of us can build cathedrals. But to the extent we can see the cathedral in whatever cause we are following, the job seems more worthwhile. Good strategists and a clear mission help us find those cathedrals in what otherwise could be dismal issues and empty causes.11
IMPLICATIONS FOR STUDENTS
Because gaining and sustaining competitive advantage is the es- sence of strategic management, when presenting your vision and mission statements as part of a case analysis, be sure to address the “distinctive competence” component. Compare your rec- ommended vision and mission statements with the firm’s exist- ing statements and with rival firms’ statements to clearly reveal how your recommendations or strategic plan enables the firm to gain and sustain competitive advantage. Your proposed mission statement should certainly include the 10 characteristics and 9
components, but in your discussion about the vision or mission, focus on competitive advantage. In other words, be prescriptive, forward-looking, and insightful—couching your vision or mission overview in terms of how you believe the firm can best gain and sustain competitive advantage. Do not be content with merely showing a 9-component comparison of your proposed statement with rival firms’ statements, although that would be nice to in- clude in your analysis.
Key Terms and Concepts
concern for employees (p. 78) concern for public image (p. 78) concern for survival, growth,
and profitability (p. 78) core values statement (p. 72) creed statement (p. 75) customers (p. 77)
distinctive competence (p. 78) markets (p. 77)
mission statement (p. 75) mission statement
components (p. 77) philosophy (p. 78)
products or services (p. 77) reconciliatory (p. 76) stakeholders (p. 76) technology (p. 78) vision statement (p. 73)
Issues for Review and Discussion
2-1. This chapter’s exemplary strategist is CEO and founder of FedEx, Frederick W. Smith. How closely aligned do you think Smith’s personal vision statement would be or should be with his corporate vision statement?
2-2. This chapter’s ethics capsule is about Facebook chang- ing its mission to become more ethical. How closely aligned do you think Facebook Chairman Mark Zuck- erberg’s personal mission statement would be or should be with his corporate mission statement?
2-3. Regarding the “survival, growth, and profitability com- ponent, for publicly held firms, shareholders oftentimes expect at least a 4 percent annual growth in revenues.”
Explain why is this statement true.
2-4. Explain the 5-out-of-5 test associated with vision statements.
2-5. At the website http://www.themarketingblender.com/
vision-mission-statements/ it defines vision as “the dreaming piece” and defines mission as “the doing piece.” How effective is this distinction?
2-6. Discuss the relative importance of vision and mission documents for managers compared with employees, customers, and shareholders.
2-7. Define reconciliatory, and give an example of how this
“characteristic” can be met in a mission statement.
2-8. Which mission statement component most closely reveals the firm’s competitive advantage? Give an example.
2-9. Critique the following vision statement by Stokes Eye Clinic: “Our vision is to take care of your vision.”
2-10. For a university, students are the customer. Write a single sentence that could be included in your universi- ty’s mission statement to reveal the institution’s market components written from a customer perspective.
2-11. Some excellent nine-component mission statements consist of just two sentences. Write a two-sentence mis- sion statement for a company of your choice.
2-12. How do you think an organization can best align com- pany mission with employee mission?
2-13. What are some different names for “mission statement,”
and where will you likely find a firm’s mission statement?
2-14. If your company does not have a vision or mission statement, describe a good process for developing these documents.
2-15. Explain how developing a mission statement can help resolve divergent views among managers in a firm.
2-16. Drucker says the most important time to seriously reexamine the firm’s vision or mission is when the firm is successful. Why is this?
2-17. Explain why a mission statement should not include monetary amounts, numbers, percentages, ratios, goals, or objectives.
2-18. Discuss the meaning of the following statement: “Good mission statements identify the utility of a firm’s prod- ucts to its customers.”
2-19. Distinguish between the “distinctive competence” and the “philosophy” components in a mission statement.
Give an example of each for your university.
2-20. When someone or some company is “on a mission” to achieve something, many times the person or company cannot be stopped. List three things in prioritized order that you are on a mission to achieve in life.
2-21. Compare and contrast vision statements with mission statements in terms of composition and importance.
2-22. Do local service stations need to have written vision and mission statements? Why or why not?
2-23. Why do you think organizations that have a comprehen- sive mission tend to be high performers? Does having a comprehensive mission cause high performance?
2-24. What is your college or university’s distinctive compe- tence? How would you state that in a mission statement?
2-25. Explain the principal value of a vision and a mission statement.
2-26. Why is it important for a mission statement to be recon- ciliatory?