Defining the mission statement for a company is often one of the most slighted tasks in strategic management. It is much easier for many executives to emphasize operational aspects of long-term management activities rather than making sure short-term activities are in sync with the long-term goals.
The principal value of the mission statement is its specification of the firm’s ultimate aims. A firm gains a heightened sense of purpose when its board of directors and its top executives address these issues: “What business are we in?” “What customers do we serve?” and “Why does this organization exist?” Ambiguous generalizations are not ...view middle of the document...
6. Describe the role of a company’s board of directors.
7. Explain agency theory and its value in helping a board of directors improve corporate governance.
I. What is a Company Mission?
A. Company mission is 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. Exhibit 2.1, Strategy in Action, gives an example of the company mission statement.
1. The Need for an Explicit Mission
a) No external body requires a company to define its mission. Furthermore, defining it can be time-consuming and tedious. It contains broadly outlined objectives and strategies rather than specific directives.
b) The mission statement is a message designed to include the expectations of all stakeholders regarding company performance over the long run.
c) The writers attempt to provide a unifying purpose for the company that will provide a basis for strategic objective setting and decision making.
d) Mission statements address the following questions:
(1) Why is this firm in business?
(2) What are our economic goals?
(3) What is our operating philosophy in terms of quality, company image, and self-concept?
(4) What are our core competencies and competitive advantages?
(5) What customers do and can we serve?
(6) How do we view our responsibilities to stockholders, employees, communities, environment, social issues, and competitors?
II. Formulating a Mission
A. The typical business begins with the beliefs, desires, and aspirations of a single entrepreneur.
1. Such an owner-manager’s sense of mission usually is based on the following fundamental beliefs:
a) The product or service of the business can provide benefits at least equal to its price.
b) The product or service can satisfy a customer need of specific market segments that is currently not being met adequately.
c) The technology that is to be used in production will provide a cost- and quality-competitive product or service.
d) With hard work and the support of others, the business can not only survive but also grow and be profitable.
e) The management philosophy of the business will result in a favorable public image and will provide financial and psychological rewards for those who are willing to invest their labor and money in helping the business succeed.
f) The entrepreneur’s self-concept of the business can be communicated to and adopted by employees and stockholders.
2. As the business grows or is forced to alter its product, market, or technology, redefining the company mission may be necessary. Exhibit 2.2, Strategic Action, illustrates...