WEEK 2 The Business Vision & Mission

A business is not defined by its names, statues or articles of incorporation. It is defined by the business mission. Only a clear definition of the mission and purpose of the organization makes possible clear and realistic business objectives (Peter Druncker)

Comprehensive Strategic Management Model (Vision & Mission) External Audit Vision & Mission Long-Term Objectives Generate, Evaluate, Select Strategies Implement Strategies: Mgmt Issues Implement Strategies: Marketing, Fin/Acct, R&D, CIS Measure & Evaluate Performance Internal Audit

Often can be found in the front of annual report Vision & Mission Often can be found in the front of annual report Display throughout a firm premises Distributed with company information sent to constituencies

Vision & Mission Profit is not mission or vision but necessary to effectively motivate a workforce

Vision Statement “What Do We What to Become?”

Vision Statement Should answer the question “what do we want to be?” A simple statement of understanding of the firm will be in the future A clear vision provide a foundation for developing mission statement Vision should be established first and foremost Should be short, preferable one sentence Should be develop based on input from as many managers as possible

Vision statement (US firms) Vision Statement Examples Vision statement (US firms) Comments Tyson Food - “To be the world’s first choice for protein solutions while maximizing shareholders value Good statement General motor “To be the world class leader in transportation products and related services Procter & Gamble “to be and be recognized as consumer products company in the world” Too vague

Mission Statement “What is our business?”

Mission Statements Enduring statement of purpose Distinguishes one firm from another Declares the firm’s reason for being

Mission Statement Examples Vision statement Comments Tyson Food - “To be the world’s first choice for protein solutions while maximizing shareholders value Good statement General motor “To be the world class leader in transportation products and related services Procter & Gamble “to be and be recognized as consumer products company in the world” Too vague

Vision statement (Malaysian firms) Vision Statement Examples Vision statement (Malaysian firms) Comments TM Berhad - "To be Malaysia’s leading new generation communications provider, embracing customer needs through innovation and execution excellence"   ? Malayan Banking - To be a Regional Financial Services Leader Petronas Dagang Berhad - to be the “Brand of 1st Choice”

The process of developing vision and mission Select several articles about the statements and ask managers to read as background information Then, ask them to prepare a vision and mission During the process some organizations use discussion groups of managers to develop or modify existing statements Some hire outside consultant or facilitator to manage the process and help draft the language Some use outside person with expertise in developing such statement

The Importance of Vision & Mission Research results: 2x average return on shareholder’s equity Positive relationship to company performance 30% higher return on certain financial measures

Importance of Vision and Mission To ensure unanimity of Purpose within the organization Vision & Mission To provide a basis or standard for resource allocation Establish a general organizational Climate To serve as a focal point for individuals to indentify with the organization’s purpose To facilitate the translation of objective for work structure involving the assignment of tasks To specify organizational purpose and translate the purpose into objectives

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

Social Policy & Mission Social policy should be integrated in all strategic-management activities Mission should convey the social responsibility of the firm

Ten Benefits of Having a Clear Mission and Vision Achieve clarity of purpose among all managers and employees Provide a basis for all other strategic planning activities Provide direction Provide a focal point for all stakeholders of the firm Resolve divergent views among managers Promote a sense of shared expectations among all managers and employees Project a sense of worth and intent to all stakeholders Project an organized, motivated organization worthily of support Achieve higher organizational performance Achieve synergy among all managers and employees

Characteristics of Mission Statement Broad in scope – do not include money amounts, numbers, percentages, ratios or objective Less than 250 words in length Inspiring Indentify the unity of a firm’s products Reveal that the firm is socially responsible Reveal that the firm is environmentally responsible Include nine components (next slide) Reconciliatory Enduring

Nine Components of Mission Statement 1. Customers Who are the firm’s customers 2. Product or services What are the firm’s major product of services 3. Markets Geographically, where does the firm compete? 4. Technology Is the firm technology current? 5. Concern for survival, growth and profitability Is the firm committed to growth and financial soundness? 6. Philosophy What are the basic belief, values, aspiration 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 concern? 9. Concern for employees Are employees a valuable assets of the firm?

Examples of Mission Statement Humanising Financial Services from the Heart of ASEAN (Maybank) TM Mission Strive towards customer service excellence and operational efficiency Enrich consumer lifestyle and experience by providing innovative new generation services Improve the performance of our business customers by providing high value information and communications solutions Deliver value for stakeholders by generating shareholder value and supporting Malaysia’s growth and development

Mission Statement Evaluation Matrix COMPONENTS  1 2  3  4  5  Organization Customers Products Services Markets Concern for Survival, Growth, Profitability Technology   PepsiCo Yes No Ben & Jerry's

Mission Statement Evaluation Matrix COMPONENTS  6 7 8 9   Organization Philosophy Self-Concept Concern for Public Image Concern for Employees PepsiCo Yes No Ben & Jerry's

Issues for review and discussion Find a mission statement. Analyze it in term of it characteristics Identify two mission statements examples (profit and non profit organization). Using the evaluation matrix analysis in the class based on the 9 components of mission statement.